[Federal Register Volume 65, Number 49 (Monday, March 13, 2000)]
[Proposed Rules]
[Pages 13418-13509]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-4880]



[[Page 13417]]

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Part II





Department of Energy





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48 CFR Chapter 9



Department of Energy Acquisition Regulation; Rewrite of Regulations 
Governing Management and Operating Contracts; Proposed Rule

  Federal Register / Vol. 65, No. 49 / Monday, March 13, 2000 / 
Proposed Rules  

[[Page 13418]]


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DEPARTMENT OF ENERGY

48 CFR Chapter 9

RIN 1991-AB49


Department of Energy Acquisition Regulation; Rewrite of 
Regulations Governing Management and Operating Contracts

AGENCY: Department of Energy.

ACTION: Notice of proposed rulemaking.

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SUMMARY: The Department of Energy (DOE) proposes to amend its 
Acquisition Regulation to streamline the policies, procedures, 
provisions and clauses that are applicable to its management and 
operating contracts. This rulemaking proposes to eliminate coverage 
that is obsolete or which duplicates the Federal Acquisition Regulation 
(FAR), and retain only that coverage which either implements or 
supplements the FAR for the award and administration of the 
Department's management and operating contracts. The rule also proposes 
the addition of four new clauses, and amendments to several existing 
clauses which will promote more uniform application of the Department's 
award and administration policies for management and operating 
contracts.

DATES: Written comments (see Section III., Public Comments) must be 
submitted no later than May 12, 2000.

ADDRESSES: Comments (3 copies) should be addressed to: John R. 
Bashista, Office of Procurement and Assistance Management, Office of 
Procurement and Assistance Policy (MA-51), Department of Energy, 1000 
Independence Avenue SW., Washington, D.C. 20585.

FOR FURTHER INFORMATION CONTACT: John R. Bashista (202) 586-8192; e-
mail [email protected]; fax (202) 586-0545.

SUPPLEMENTARY INFORMATION:  

I. Background
II. Section by Section Analysis
III. Public Comments
IV. Procedural Requirements
    A. Review Under Executive Order 12866
    B. Review Under Executive Order 12988
    C. Review Under the Regulatory Flexibility Act
    D. Review Under the Paperwork Reduction Act
    E. Review Under the National Environmental Policy Act
    F. Review Under Executive Order 12612
    G. Review Under the Unfunded Mandates Reform Act of 1995
    H. Review Under the Treasury and General Government 
Appropriations Act, 1999

I. Background

    Over the past several years, DOE has achieved significant 
improvements in the way it conducts business with its management and 
operating (M&O) contractors. Contract management policies and practices 
have been strengthened and new processes implemented throughout the 
Department complex. In its report entitled ``Making Contracting Work 
Better and Cost Less,'' dated February 1994, the DOE Contract Reform 
Team recommended a number of changes for improving the Department's 
acquisition system. New policies were implemented in the Department of 
Energy Acquisition Regulation (DEAR) to provide for a more uniform 
contract management approach in the award and administration of the 
Department's major contracts.
    The Department's Office of Procurement and Assistance Management 
recently completed a review of additional policies and procedures which 
had been in place for decades. These policies had been developed over 
many years to provide contract terms and conditions applicable to the 
unique M&O contracting environment. Further, these policies implement 
and supplement Subpart 17.6 of the FAR. The purpose of the review was 
to determine whether the Department's unique regulatory coverage for 
M&O contracts is still necessary, and if so, what improvements are 
required to maintain the credibility of the system.
    In general, the conclusion of the review was that DEAR Part 970 
should be retained and that most of the Department's procurement 
regulations pertaining to the award and administration of its M&O 
contracts implement statutory, regulatory or current DOE policy 
requirements that are not addressed in other Federal regulations. 
However, the review also concluded that certain policy and procedural 
requirements should be eliminated, and that several contract clauses 
are considered unnecessary or redundant of coverage already prescribed 
in the FAR. Notable recommendations include: (1) Developing guidance 
and establishing an internal control system to better manage deviations 
from or modifications to regulatorily prescribed clauses while ensuring 
that the flexibility exists to do so when necessary; (2) eliminating 
most of the DOE cost principles that are used for determining the 
allowability of costs under M&O contracts as they are largely redundant 
of the cost principles set forth in the FAR; (3) clarifying the 
applicability of the Uniform Contract Format for M&O contracts pursuant 
to FAR requirements; (4) clarifying the applicability of FAR 
provisions, and developing a clause matrix to be used by DOE's 
contracting professionals as the primary source of guidance for 
determining the applicability of FAR and DEAR clauses to M&O contracts; 
and (5) codifying commonly used, but unprescribed, terms and conditions 
unique to M&O contracts. Implementation of the recommendations 
resulting from the review will be accomplished through the issuance of 
internal Departmental guidance, as well as through amendment of the 
DEAR.
    This rule proposes to rewrite DEAR Part 970, in its entirety, to 
streamline the policies, procedures, provisions and clauses that are 
applicable to the Department's M&O contracts. The rule proposes to 
eliminate coverage that is obsolete or that unnecessarily duplicates 
coverage contained in the FAR. The rule also proposes updates and 
revisions to the prescriptions and text of certain clauses that will 
provide greater flexibility for DOE contracting personnel to make 
administrative modifications to the text of these clauses and to 
eliminate the need for commonly used deviations to such clauses. Four 
new clauses are also proposed for inclusion in the DEAR. The new 
clauses will prescribe uniform Departmental policies concerning: (1) 
Cooperation between the Department and its contractors in disseminating 
information to the public; (2) technical direction provided to 
contractors by a designated Contracting Officer's Representative; (3) 
collaborating to identify, evaluate, and institutionalize processes 
that will improve the effectiveness or efficiency of any aspect of 
contract performance, and collaboration regarding such improvements 
with the Department and other major site and facility management 
contractors; (4) implementation of FAR 35.017 regarding the 
establishment, use, review, and termination of Federally Funded 
Research and Development Centers which are sponsored by the Department; 
and (5) outreach to the local communities in which DOE conducts 
business.
    Moreover, it is proposed that Part 970 be reorganized and 
renumbered so that the coverage corresponds, to the extent practicable, 
with the FAR Part, subpart, section, and subsection(s) being 
implemented or supplemented, as appropriate, in Part 970. Accordingly, 
technical and conforming amendments to DEAR Part 970 and other DEAR 
Parts are also proposed.
    A separate rulemaking will be issued to implement certain 
recommendations concerning the amendment or removal

[[Page 13419]]

of certain DEAR Part 970 cost principles and related provisions and 
clause. It is anticipated that the final rules for both proposed 
rulemakings will be issued concurrently.

II. Section by Section Analysis

    1. Several sections of Parts 901 through 952 are amended to revise 
cross-references to coverage that is contained in Part 970 to conform 
with the new Part 970 numbering system proposed in this rule.
    2. Section 902.200 is amended by correcting paragraph citations, 
and adding a sentence that authorizes the contracting officer to 
include additional definitions to those contained in the prescribed 
clause.
    3. Part 903 is amended by adding subpart 903.9 to relocate and 
consolidate coverage currently contained in subpart 922.71 and section 
970.2274. New subpart 903.9 will include new section 903.902, which 
provides a cross-reference to the definition for Contractor which is 
contained in 10 CFR 708.2, and which is specific to DOE's Employee 
Protection Program.
    4. Subpart 904.72 is added to prescribe a uniform Departmental 
policy regarding the release of unclassified information relating to 
M&O contracts to the public and the news media.
    5. Section 911.604 is amended to revise the prescription for the 
use of the clauses at 48 CFR 952.211-70 and 48 CFR 952.211-71 to 
conform to changes proposed to 48 CFR 970.5204-33.
    6. Subsection 915.408-70 is added to prescribe the use of a new 
clause at 48 CFR 952.215-70, Key Personnel. The new clause will 
accommodate both M&O and other than M&O contracts, thus replacing the 
two clauses currently prescribed at 48 CFR 952.235-70 (for other than 
M&O contracts) and 48 CFR 970.5204-42 (for M&O contracts).
    7. Section 917.600 is amended to clarify the scope of Subpart 
917.6.
    8. Section 917.601 is amended to revise the definition of 
performance-based contracting to cross-reference the definition of the 
term that is already contained in the FAR.
    9. Section 917.602 is amended to add a new paragraph (a), which 
contains certain text that is currently contained in section 970.0000 
that implements FAR 17.602.
    10. Section 917.604 is removed as unnecessary.
    11. Section 917.605 is removed and the coverage is relocated to 
proposed new subsection 970.1706-1(c) consistent with the 
reorganization and renumbering of Part 970.
    12. Subpart 922.71 is removed due to amendments addressed in 
paragraph 3.
    13. Section 927.303 is amended by revising paragraph (a) to 
prescribe the use of the clauses at 952.227-11 and 952.227-13 for M&O 
contracts pursuant to the removal of sections 970.5204-71 and 970.5204-
72 from Part 970 proposed in this rule. Proposed new Alternate I to the 
clause at 952.227-11, and proposed new Alternate I for the clause at 
952.227-13 contain, verbatim, the text currently in 970.5204-71 and 
970.5204-72, respectively.
    14. Section 935.070 is removed due to the amendments addressed in 
paragraph 6.
    15. Subpart 942.2 is added to prescribe uniform DOE policy 
regarding technical direction that is provided to contractors by a 
designated Contracting Officer's Representative.
    16. Subpart 947.70 is added to incorporate guidance in the DEAR 
regarding contractor foreign travel and to add a prescription for the 
use of the clause that is currently contained in section 952.247-70, 
Foreign Travel. Currently, there is no policy section in the regulation 
to prescribe the basis and use of the existing clause.
    17. Section 952.203-70 is added to accommodate the proposed 
redesignation of section 970.5204-59 as section 952.203-70.
    18. Section 952.204-75 is added to prescribe a uniform clause 
pertaining to the dissemination of unclassified information relating to 
M&O contracts to the public and the news media (see paragraph 4.).
    19. Section 952.215-70 is added to provide for a single clause 
which will accommodate M&O and other than M&O contracts (see paragraph 
6.).
    20. Section 952.222-70 is removed due to amendments addressed in 
paragraph 3.
    21. Section 952.227-11 is amended by revising the prescription and 
clause date and adding an Alternate I to provide a single clause for 
M&O and other than M&O contracts (see paragraph 13.).
    22. Section 952.227-13 is amended by revising the prescription and 
clause date and adding an Alternate I to provide a single clause for 
M&O and other than M&O contracts (see paragraph 13.).
    23. Section 952.242-70 is added to prescribe a uniform clause 
pertaining to Contracting Officer's Representative authorities and 
limitations in providing technical direction to DOE contractors (see 
paragraph 15.).
    24. Section 952.247-70 is amended by revising the prescription in 
the preface to the clause pursuant to the addition of new Subpart 
947.70 (see paragraph 16.).
    25. Section 952.250-70 is amended to revise an incorrect clause 
reference in paragraph (h) of the clause.
    26. The table below provides a crosswalk reflecting, by section, 
the proposed reorganization and redesignation of Part 970, and 
descriptions of the amendments being proposed. The Department is 
seeking comments on only those changes marked with an ``'' in 
the comments column. The ``Remarks'' column of the table explains the 
specific changes to the section. Comments are not solicited on the 
amendments addressed in the table which are not marked with an 
``'' since they are technical and conforming changes only.

                                                Part 970 Rewrite
----------------------------------------------------------------------------------------------------------------
         New citation            Current citation           Title                 Remarks            Comments
----------------------------------------------------------------------------------------------------------------
970.01........................  N/A..............  Management and          Subpart number and     
                                                    Operating Contract      title are added for
                                                    Regulatory System.      organizational
                                                                            purposes.
970.0100......................  970.0000.........  Scope of Part.........  970.0000 is            
                                                                            redesignated as
                                                                            970.0100 and the
                                                                            text revised to
                                                                            clarify the scope of
                                                                            Part 970.
N/A...........................  970.0001.........  [Reserved]............  Section is removed as  
                                                                            unnecessary.
970.0103......................  N/A..............  Publication and         Section number, title  
                                                    Codification.           and text are added.
                                                                            The new coverage in
                                                                            this section
                                                                            supplements FAR
                                                                            1.303 to describe
                                                                            the new organization
                                                                            and numbering system
                                                                            for Part 970.

[[Page 13420]]

 
970.03........................  970.03 [Note:      Improper Business       Subpart number and     
                                 Current 970.03     Practices and           title are added for
                                 is reserved].      Personal Conflicts of   organizational
                                                    Interest.               purposes.
970.0309......................  970.2274.........  Whistleblower           970.2274 is
                                                    Protection of           redesignated as
                                                    Contractor Employees.   970.0309..
970.0309-1....................  970.2274-1(a)....  Applicability.........  Section is added to    
                                                                            prescribe the
                                                                            applicability of the
                                                                            coverage contained
                                                                            in new subpart
                                                                            903.9, as proposed
                                                                            in this rule, to
                                                                            management and
                                                                            operating contracts.
                                                                            New subpart 903.9
                                                                            contains coverage
                                                                            currently contained
                                                                            in sections 970.2274-
                                                                            1 and 970.2274-2
                                                                            which is proposed
                                                                            for relocation to
                                                                            subpart 903.9.
970.0370......................  970.0901 (Title).  Management Controls     970.0901 (Title only)
                                                    and Improvements.       is redesignated as
                                                                            970.0370 and
                                                                            amended. The new
                                                                            subsections of this
                                                                            section contain the
                                                                            text of 970.0901 as
                                                                            described below.
970.0370-1....................  970.0901(a), (b),  Policy................  970.0901, paragraphs   
                                 and (c).                                   (a), (b) and (c), is
                                                                            redesignated as
                                                                            970.0370-1. The
                                                                            subsection is also
                                                                            amended to add new
                                                                            paragraph (d) to
                                                                            implement new DOE
                                                                            policy to facilitate
                                                                            collaboration of
                                                                            improvements in any
                                                                            aspect of
                                                                            performance among
                                                                            the contractor, DOE,
                                                                            and other major
                                                                            facility contractors.
970.0370-2....................  N/A..............  Contract Clause.......  Subsection is added    
                                                                            to prescribe the use
                                                                            of the existing
                                                                            clause at 970.5204-
                                                                            20, Management
                                                                            Controls. Although
                                                                            use of the clause is
                                                                            prescribed in the
                                                                            preface to the
                                                                            clause itself, there
                                                                            is no coverage in
                                                                            the policy section
                                                                            of the regulation to
                                                                            prescribe the basis
                                                                            and use of the
                                                                            clause. The
                                                                            subsection also
                                                                            prescribes the use
                                                                            of new clause
                                                                            970.5203-2,
                                                                            Performance
                                                                            Improvement and
                                                                            Collaboration, to
                                                                            implement the policy
                                                                            proposed at new
                                                                            970.0370-1(d).
970.0371......................  970.2272 (Title).  Conduct of Employees    970.2272 (Title only)  
                                                    of DOE Management and   is redesignated as
                                                    Operating Contractors.  970.0371 and
                                                                            modified to remove
                                                                            the term
                                                                            ``Consultants.'' The
                                                                            subsections of this
                                                                            section contain the
                                                                            text of 970.2272, as
                                                                            amended (see
                                                                            following
                                                                            subsections for
                                                                            summary of
                                                                            amendments).
970.0371-1....................  970.2272(a)......  Scope of Section......  Contains coverage      
                                                                            codified at
                                                                            970.2272, paragraph
                                                                            (a).
970.0371-2....................  970.2272(b)(1)...  Applicability.........  Contains coverage      
                                                                            codified at
                                                                            970.2272,
                                                                            subparagraph (b)(1).
                                                                            The text is revised
                                                                            to remove the
                                                                            prescription for the
                                                                            use of DEAR clauses
                                                                            970.5204-27(a) and
                                                                            (b) which are
                                                                            proposed for removal.
970.0371-3....................  N/A..............  Definition............  Subsection is added    
                                                                            to clarify the
                                                                            definition of
                                                                            ``Employee'' for the
                                                                            purposes of the
                                                                            policies contained
                                                                            in section 970.0371.
970.0371-4....................  970.2272(c)......  Gratuities............  Contains coverage      
                                                                            codified at
                                                                            970.2272, paragraph
                                                                            (c). Text is revised
                                                                            to remove the
                                                                            reference to ``41
                                                                            U.S.C. 51-54'' and
                                                                            to substitute in
                                                                            lieu thereof a
                                                                            reference to ``FAR
                                                                            3.502.''
970.0371-5....................  970.2272(d)......  Use of Privileged       Contains coverage      
                                                    Information.            codified at
                                                                            970.2272, paragraph
                                                                            (d).
970.0371-6....................  970.2272(g)......  Incompatibility         Contains coverage      
                                                    Between Regular         codified at
                                                    Duties and Private      970.2272, paragraph
                                                    Interests.              (g).
970.0371-7....................  970.2272(e)......  Outside Employment of   Contains coverage      
                                                    Contractor Employees.   codified at
                                                                            970.2272, paragraph
                                                                            (e).

[[Page 13421]]

 
970.0371-8....................  970.2272(f)......  Employee Disclosure     Contains coverage      
                                                    Concerning Other        codified at
                                                    Employment Service.     970.2272, paragraph
                                                                            (f). Title and text
                                                                            are revised to
                                                                            prescribe a
                                                                            requirement for a
                                                                            disclosure
                                                                            (previously required
                                                                            by 970.5204-27) in
                                                                            lieu of an
                                                                            information
                                                                            statement.
970.0371-9....................  970.2272(b)(2)     Contract Clause.......  Contains coverage      
                                 and (3).                                   codified at
                                                                            970.2272,
                                                                            subparagraph (b)(2).
                                                                            Prescription at
                                                                            970.2272(b)(3) is
                                                                            removed.
970.04........................  970.04...........  Administrative Matters  No change.
970.0404......................  970.0404.........  Safeguarding            No change.
                                                    Classified
                                                    Information.
970.0404-1....................  970.0404-1.......  Definitions...........  No change.
970.0404-2....................  970.0404-2.......  General...............  No change.
970.0404-3....................  970.0404-3 (a)     Responsibilities of     970.0404-3,
                                 and (b) 970.0404-  Contracting Officers.   paragraphs (a) and
                                 4 (d).                                     (b) are unchanged.
                                                                            970.0404-4,
                                                                            paragraph (d) is
                                                                            redesignated as
                                                                            970.0404-3,
                                                                            paragraph (c).
970.0404-4....................  970.0404-4 (a),    Solicitation Provision  Subsection is amended  
                                 (b) and (c).       and Contract Clauses.   to revise the title,
                                                                            and to: (a) remove
                                                                            the redundant
                                                                            prescription for the
                                                                            use of several DEAR
                                                                            952 clauses which
                                                                            are already
                                                                            prescribed in
                                                                            904.404 and
                                                                            904.7103; and (b)
                                                                            substitute a cross-
                                                                            reference to these
                                                                            sections. The
                                                                            prescription for the
                                                                            clause entitled
                                                                            Counterintelligence
                                                                            is retained.
N/A...........................  970.0406.........  [Reserved]............  Section is removed
970.0407......................  N/A..............  Contractor Records      Section number and
                                                    Retention.              title are added for
                                                                            organizational
                                                                            purposes. The
                                                                            subsections of this
                                                                            section contain
                                                                            coverage relocated
                                                                            from 970.0407.
970.0407-1....................  970.0407.........  Applicability.........  970.0407 is
                                                                            redesignated as
                                                                            970.0407-1 and the
                                                                            title revised to
                                                                            conform with related
                                                                            FAR coverage.
970.0407-1-1..................  970.0407-1.......  Alternate Retention     970.0407-1 is
                                                    Schedules.              redesignated as
                                                                            970.0407-1-1and
                                                                            revised to update
                                                                            the DOE directive
                                                                            reference.
970.0407-1-2..................  970.0407-2.......  Access to and           970.0407-2 is
                                                    Ownership of Records.   redesignated as
                                                                            970.0407-1-2.
970.0407-1-3..................  970.0407-3.......  Contract Clause.......  970.0407-3 is
                                                                            redesignated as
                                                                            970.0407-1-3.
970.0470......................  970.0470.........  Department of Energy    No change.
                                                    Directives.
970.0470-1....................  970.0470-1.......  General...............  Subsection is revised  
                                                                            to prescribe DOE
                                                                            policy pertaining to
                                                                            requirements
                                                                            addressed in
                                                                            paragraphs (a) and
                                                                            (c) of the clause at
                                                                            970.5204-78, Laws,
                                                                            Regulations and DOE
                                                                            Directives. Current
                                                                            coverage addresses
                                                                            only requirements
                                                                            addressed in
                                                                            paragraph (b) of the
                                                                            clause.
970.0470-2....................  970.0470-2.......  Contract Clause.......  No change.
970.08........................  970.08...........  Required Sources of     No change
                                                    Supplies and Services.
970.0801......................  970.0801 (Title).  Excess Personal         No change (Title
                                                    Property.               only).
970.0801-1....................  970.0801 (Text)..  Policy................  Section and title are
                                                                            added. Contains text
                                                                            of coverage
                                                                            currently codified
                                                                            at 970.0801.
970.0808......................  N/A..............  Acquisition of          Section number and
                                                    Printing..              title are added for
                                                                            organizational
                                                                            purposes. Currently,
                                                                            there is no coverage
                                                                            in the policy
                                                                            section of the
                                                                            regulation to
                                                                            prescribe the basis
                                                                            and use of the
                                                                            clause entitled
                                                                            ``Printing.''.
970.0808-1....................  N/A..............  Scope of Section......  Section number and
                                                                            title are added for
                                                                            organizational
                                                                            purposes (see
                                                                            970.0808 above).
970.0808-2....................  N/A..............  Policy................  Section number and
                                                                            title are added for
                                                                            organizational
                                                                            purposes (see
                                                                            970.0808 above).
970.0808-3....................  N/A..............  Contract Clause.......  Section number and
                                                                            title are added (see
                                                                            970.0808 above).
970.09........................  970.09...........  Contractor              No change.
                                                    Qualifications.

[[Page 13422]]

 
970.0905......................  970.0905.........  Organizational          No change.
                                                    Conflicts of Interest.
970.0970......................  N/A..............  Performance Guarantees  Section number and
                                                                            title are added for
                                                                            organizational
                                                                            purposes.
970.0970-1....................  970.0902(a), (b)   Determination of        970.0902, paragraphs
                                 and (c).           Responsibility.         (a), (b) and (c) are
                                                                            redesignated as
                                                                            970.0970-1.
970.0970-2....................  970.0902(d)......  Solicitation Provision  970.0902, paragraph
                                                                            (d), is redesignated
                                                                            as 970.0970-2.
970.11........................  970.10...........  Describing Agency       970.10 is
                                                    Needs.                  redesignated as
                                                                            1970.11.
970.1100......................  N/A..............  Policy................  Section number and
                                                                            title are added for
                                                                            organizational
                                                                            purposes.
970.11.00-1...................  970.1001.........  Performance-based       970.1001 is
                                                    Contracting.            redesignated as
                                                                            970.1100-1.
970.11.00-2...................  970.1002.........  Additional              970.1002 is
                                                    Considerations.         redesignated as
                                                                            970.1100-2.
970.15........................  970.15...........  Contracting by          No change.
                                                    Negotiation.
970.1504......................  N/A..............  Contract Pricing......  Section number and
                                                                            title are added for
                                                                            organizational
                                                                            purposes.
970.1504-1....................  N/A..............  Price Analysis........  Subsection number and
                                                                            title are added for
                                                                            organizational
                                                                            purposes.
970.1504-1-1..................  970.15404-4......  Fees for Management     970.15404-4 is
                                                    and Operating           redesignated as
                                                    Contracts.              970.1504-1-1.
970.1504-1-2..................  970.15404-4-1....  Fee Policy............  970.15404-4-1 is
                                                                            redesignated as
                                                                            970.1504-1-2.
970.1504-1-3..................  970.15404-4-2....  Special                 970.15404-4-2 is
                                                    Considerations:         redesignated as
                                                    Laboratory Management   970.1504-1-3.
                                                    and Operation.
970.1504-1-4..................  970.15404-4-3....  Types of Contracts and  970.15404-4-3 is
                                                    Fee Arrangements.       redesignated as
                                                                            970.1504-1-4.
970.1504-1-5..................  970.15404-4-4....  General Considerations  970.15404-4-4 is
                                                    and Techniques for      redesignated as
                                                    Determining Fixed       970.1504-1-5.
                                                    Fees.
970.1504-1-6..................  970.15404-4-5....  Calculating Fixed Fee.  970.15404-4-5 is
                                                                            redesignated as
                                                                            970.1504-1-6.
970.1504-1-7..................  970.15404-4-6....  Fee Base..............  970.15404-4-6 is
                                                                            redesignated as
                                                                            970.1504-1-7.
970.1504-1-8..................  970.15404-4-7....  Special Equipment       970.15404-4-7 is
                                                    Purchases.              redesignated as
                                                                            970.1504-1-8.
970.1504-1-9..................  970.15404-4-8....  Special                 970.15404-4-8 is
                                                    Considerations: Cost-   redesignated as
                                                    plus-award-fee.         970.1504-1-9.
970.1504-1-10.................  970.15404-4-9....  Special                 970.15404-4-9 is
                                                    Considerations: Fee     redesignated as
                                                    Limitations.            970.1504-1-10.
970.1504-1-11.................  970.15404-4-10...  Documentation.........  970.15404-4-10 is
                                                                            redesignated as
                                                                            970.1504-1-11.
970.1504-2....................  970.15405........  Price Negotiation.....  970.15405 is
                                                                            redesignated as
                                                                            970.1504-2.
970.1504-3....................  N/A..............  Documentation.........  Subsection number and
                                                                            title are added for
                                                                            organizational
                                                                            purposes.
970.1504-3-1..................  970.15406-2......  Cost or Pricing Data..  970.15406-2 is
                                                                            redesignated as
                                                                            970.1504-3-1.
970.1504-4....................  N/A..............  Special Cost or         Subsection number and
                                                    Pricing Areas.          title are added for
                                                                            organizational
                                                                            purposes.
970.1504-4-1..................  970.15407-2......  Make-Or-Buy Plans.....  970.15407-2 is
                                                                            redesignated as
                                                                            970.1504-4-1.
970.1504-4-2..................  970.15407-2-1....  Policy................  970.15407-2-1 is
                                                                            redesignated as
                                                                            970.1504-4-2.

[[Page 13423]]

 
970.1504-4-3..................  970.15407-2-2....  Requirements..........  970.15407-2-2 is       
                                                                            redesignated as
                                                                            970.1504-4-3. The
                                                                            section is also
                                                                            amended in paragraph
                                                                            (a) to specifically
                                                                            assign to the Head
                                                                            of the Contracting
                                                                            Activity (HCA) the
                                                                            responsibility for
                                                                            ensuring that
                                                                            program specific
                                                                            make-or-buy criteria
                                                                            are developed and
                                                                            provided to the
                                                                            contractor for use
                                                                            in its make-or-buy
                                                                            plan administration
                                                                            activities for the
                                                                            facility, site, or
                                                                            specific program, as
                                                                            appropriate. It is
                                                                            recognized that the
                                                                            HCA must rely on
                                                                            program, technical,
                                                                            and business
                                                                            specialists within
                                                                            the agency for the
                                                                            actual development
                                                                            of the program
                                                                            specific make-or-buy
                                                                            criteria so that the
                                                                            criteria
                                                                            appropriately
                                                                            reflect program
                                                                            considerations
                                                                            applicable to the
                                                                            contractor's make-or-
                                                                            buy decisions. The
                                                                            section also is
                                                                            being amended by
                                                                            adding language
                                                                            recognizing the
                                                                            collaboration needed
                                                                            to develop effective
                                                                            program specific
                                                                            make-or-buy
                                                                            criteria.
970.1504-5....................  970.15404-4-11,    Solicitation Provision  970.15404-11 is
                                 970.15407-2-3.     and Contract Clauses.   redesignated as
                                                                            970.1504-5,
                                                                            paragraphs (a), (c),
                                                                            (d) and (e).
                                                                            970.15407-2-3 is
                                                                            redesignated as
                                                                            970.1504-5,
                                                                            paragraph (b), and
                                                                            amended to revise
                                                                            the clause
                                                                            prescription to
                                                                            authorize an
                                                                            administrative
                                                                            modification to the
                                                                            clause.
970.17........................  970.17...........  Special Contracting     No change.
                                                    Methods.
970.1706......................  N/A..............  Management and          Section number and
                                                    Operating Contracts.    title are added for
                                                                            organizational
                                                                            purposes.
970.1706-1....................  970.1702-1.......  Award, Renewal, and     970.1702-1,
                                                    Extension.              paragraphs (a) and
                                                                            (b), is redesignated
                                                                            as 970.1706-1,
                                                                            paragraphs (a) and
                                                                            (b), and the title
                                                                            revised. Coverage
                                                                            contained at 917.605
                                                                            is redesignated as
                                                                            970.1706-1,
                                                                            paragraph (c).
970.1706-2....................  970.1702-2.......  Contract Clause.......  970.1702-2 is          
                                                                            redesignated as
                                                                            970.1706-2 and the
                                                                            title revised. The
                                                                            subsection is
                                                                            further revised to:
                                                                            (a) remove the
                                                                            prescription for use
                                                                            of the provision at
                                                                            970.5204-73 and the
                                                                            clause at 970.5204-
                                                                            74, which are
                                                                            proposed for removal
                                                                            under this rule; and
                                                                            (b) add supplemental
                                                                            coverage to FAR
                                                                            17.208(g) to
                                                                            prescribe the use of
                                                                            FAR clause 52.217-9
                                                                            in DOE M&O
                                                                            contracts..
970.19........................  970.19...........  Small, Small            No change.
                                                    Disadvantaged and
                                                    Women-owned Small
                                                    Business Concerns.
970.1907......................  N/A..............  Subcontracting with     Section number and
                                                    Small Business, Small   title are added for
                                                    Dis-advantaged          organizational
                                                    Business and Woman-     purposes.
                                                    owned Small Business
                                                    Concerns.
970.1907-1....................  970.1901.........  Subcontracting Plan     970.1901 is            
                                                    Requirements.           redesignated as
                                                                            970.1907-1. Section
                                                                            is revised to remove
                                                                            paragraph (a) in
                                                                            favor of existing
                                                                            FAR coverage (FAR
                                                                            19.708)..
N/A...........................  970.20...........  [Reserved]............  Subpart is removed.
970.22........................  970.22...........  Application of Labor    No change.
                                                    Policies.
970.2200......................  N/A..............  Scope of Subpart......  Section number and
                                                                            title are added for
                                                                            organizational
                                                                            purposes.
970.2201......................  970.2201.........  Basic Labor Policies..  No change.
970.2201-1....................  N/A..............  Labor Relations.......  Section number and
                                                                            title are added for
                                                                            organizational
                                                                            purposes.
970.2201-1-1..................  970.2201(a)......  General...............  Contains coverage
                                                                            codified at
                                                                            970.2201, paragraph
                                                                            (a).

[[Page 13424]]

 
970.2201-1-2..................  970.2201(b)......  Policies..............  Contains coverage
                                                                            codified at
                                                                            970.2201, paragraph
                                                                            (b).
970.2201-1-3..................  970.2201(b)(5)     Contract Clause.......  Contains coverage
                                 (ii).                                      codified at
                                                                            970.2201, last
                                                                            sentence of
                                                                            paragraph
                                                                            (b)(5)(ii).
970.2201-2....................  970.2275.........  Overtime Management...  970.2275 is
                                                                            redesignated as
                                                                            970.2201-2.
970.2201-2-1..................  970.2275-1.......  Policy................  970.2275-1 is
                                                                            redesignated as
                                                                            970.2201-2-1.
970.2201-2-2..................  970.2275-2.......  Contract Clause.......  970.2275-2 is
                                                                            redesignated as
                                                                            970.2201-2-2.
N/A...........................  970.2206.........  Walsh-Healey Public     Section is removed.    
                                                    Contracts Act.          Coverage to be
                                                                            reissued as internal
                                                                            DOE guidance..
970.2204......................  N/A..............  Labor Standards for     Subpart number and
                                                    Contracts Involving     title are added for
                                                    Construction.           organizational
                                                                            purposes. The
                                                                            subordinate sections/
                                                                            subsections of this
                                                                            Subpart contain
                                                                            coverage codified at
                                                                            970.2273. These
                                                                            changes conform the
                                                                            numbering of
                                                                            supplemental DEAR
                                                                            coverage with
                                                                            related FAR coverage
                                                                            to the extent
                                                                            practicable.
970.2204-1....................  N/A..............  Statutory and           Section number and
                                                    Regulatory              title are added for
                                                    Requirements.           organizational
                                                                            purposes.
970.2204-1-1..................  970.2273.........  Administrative          Section 970.2273 is
                                                    Controls and Criteria   redesignated as
                                                    for Application of      970.2204-1-1.
                                                    the Davis-Bacon Act
                                                    in Operational or
                                                    Maintenance
                                                    Activities.
970.2208......................  970.2208.........  Equal Employment        No change.
                                                    Opportunity.
970.2210......................  970.2210.........  Service Contract Act..  No change.
970.2270......................  970.2270.........  Unemployment            No change.
                                                    Compensation.
970.23........................  970.23...........  Environmental,          No change.
                                                    Conservation, and
                                                    Occupational Safety
                                                    Programs.
970.2303......................  970.2303.........  Hazardous Materials     No change.
                                                    Identification and
                                                    Material Safety.
970.2303-1....................  970.2303-1.......  General...............  No change.
970.2303-2....................  970.2303-2.......  Clauses...............  No change.
970.2304......................  970.2304.........  Use of Recovered/       No change.
                                                    Recycled Materials.
970.2304-1....................  970.2304-1.......  General...............  No change.
970.2304-2....................  970.2304-2.......  Contract Clause.......  No change.
970.2305......................  970.2305.........  Workplace Substance     No change.
                                                    Abuse Programs--
                                                    Management and
                                                    Operating Contracts.
970.2305-1....................  970.2305-1.......  General...............  No change.
970.2305-2....................  970.2305-2.......  Applicability.........  No change.
970.2305-3....................  970.2305-3.......  Definitions...........  No change.
970.2305-4....................  970.2305-4.......  Solicitation Provision  No change.
                                                    and Contract Clause.
970.2306......................  970.2305-5.......  Suspension of           970.2305-5 is
                                                    Payments, Termination   redesignated as
                                                    of Contract, and        970.2306.
                                                    Debarment and
                                                    Suspension Actions.
N/A...........................  970.25...........  Foreign Acquisition...  Subpart is removed.
                                                                            The coverage
                                                                            codified at 970.2501
                                                                            is relocated to new
                                                                            subsection 970.3701-
                                                                            1(see below).
970.26........................  970.26...........  Other Socioeconomic     No change.
                                                    Programs.
970.2670......................  970.2601 (Title).  Implementation of       970.2601 (Title only)
                                                    Section 3021 of the     is redesignated as
                                                    Energy Policy Act of    970.2670. The text
                                                    1992.                   of 970.2601 is
                                                                            contained in new
                                                                            subsections 970.2670-
                                                                            1 and 970.2671-1,as
                                                                            noted below.
970.2670-1....................  970.2601(a)......  Requirements..........  Contains coverage
                                                                            codified at
                                                                            970.2601, paragraph
                                                                            (a).
970.2671......................  N/A..............  Diversity.............  Section number and
                                                                            title are added for
                                                                            organizational
                                                                            purposes.
970.2671-1....................  970.2601(b)......  Policy................  Contains coverage
                                                                            codified at
                                                                            970.2601, paragraph
                                                                            (b).
970.2671-2....................  970.2602-2(b)....  Contract Clause.......  Contains coverage
                                                                            codified at 970.2602-
                                                                            2, paragraph (b).
970.2672......................  970.2602-1.......  Implementation of       970.2602-1 (Title
                                                    Section 3161 of the     only) is
                                                    National Defense        redesignated as
                                                    Authorization Act for   970.2672. The text
                                                    Fiscal Year 1993.       of 970.2602-1 is
                                                                            contained in new
                                                                            subsections 970.2672-
                                                                            1 and 970.2672-2 as
                                                                            noted below.
970.2672-1....................  970.2602-1(a)....  Policy................  Contains coverage
                                                                            codified at 970.2602-
                                                                            1, paragraph (a).

[[Page 13425]]

 
970.2672-2....................  970.2602-1(b)....  Requirements..........  Contains coverage
                                                                            codified at 970.2602-
                                                                            1, paragraph (b).
970.2672-3....................  970.2602-2(a)....  Contract Clause.......  Contains coverage
                                                                            codified at 970.2602-
                                                                            2, paragraph (a).
970.2673......................  N/A..............  Regional Partnerships.  New section number     
                                                                            and title are added.
970.2673-1....................  N/A..............  Policy................  New subsection added   
                                                                            to prescribe DOE
                                                                            policy concerning
                                                                            the establishment of
                                                                            constructive
                                                                            business
                                                                            partnerships in
                                                                            geographic regions
                                                                            in which DOE
                                                                            conducts business.
970.2673-2....................  N/A..............  Contract Clause.......  Prescribes the use of  
                                                                            new contract clause
                                                                            970.5226-3,
                                                                            Community Commitment.
970.27........................  970.27...........  Patents, Data, and      No change.
                                                    Copyrights.
970.2701......................  970.2701 (Title).  General...............  No change (Title)
970.2701-1....................  970.2701 (Text)..  Applicability.........  Contains the text of
                                                                            the coverage
                                                                            codified at
                                                                            970.2701.
970.2703......................  970.2702 (Title).  Patent Rights.........  970.2702 (Title only)
                                                                            is redesignated as
                                                                            970.2703
970.2703-1....................  970.2702 (Text)..  Policy................  Contains the text of
                                                                            the coverage
                                                                            codified at
                                                                            970.2702.
970.2703-2....................  970.2704.........  Contract Clauses......  970.2704 is            
                                                                            redesignated as
                                                                            970.2703-2. Section
                                                                            is revised to remove
                                                                            existing coverage
                                                                            pursuant to
                                                                            amendments to
                                                                            927.303, 952.227-11
                                                                            and 952.227-13
                                                                            proposed in this
                                                                            rule, and to add a
                                                                            cross-reference to
                                                                            927.303.
970.2704......................  N/A..............  Rights in Data........  Section number and
                                                                            title are added for
                                                                            organizational
                                                                            purposes.
970.2704-1....................  970.2705.........  General...............  970.2705 is
                                                                            redesignated as
                                                                            970.2704-1 and the
                                                                            title revised.
970.2704-2....................  970.2706.........  Procedures............  970.2706 is
                                                                            redesignated as
                                                                            970.2704-2 and the
                                                                            title revised.
970.2704-3....................  970.2707.........  Contract Clauses......  970.2707 is
                                                                            redesignated as
                                                                            970.2704-3 and the
                                                                            title revised.
970.2770......................  970.73...........  Technology Transfer...  970.73 is
                                                                            redesignated as
                                                                            970.2770.
970.2770-1....................  970.7310.........  General...............  970.7310 is
                                                                            redesignated as
                                                                            970.2770-1.
970.2770-2....................  970.7320.........  Policy................  970.7320 is
                                                                            redesignated as
                                                                            970.2770-2.
970.2770-3....................  970.2703.........  Technology Transfer     970.2703 is
                                                    and Data Rights.        redesignated as
                                                                            970.2770-3 and the
                                                                            title revised.
970.2770-4....................  970.7330.........  Contract Clause.......  970.7330 is
                                                                            redesignated as
                                                                            970.2770-4.
970.28........................  970.28...........  Bonds and Insurance...  No change.
970.2803......................  N/A..............  Insurance.............  Section number and
                                                                            title are added for
                                                                            organizational
                                                                            purposes.
970.2803-1....................  970.2271.........  Workers' Compensation   970.2271 is
                                                    Insurance.              redesignated as
                                                                            970.2803-1.
970.2803-2....................  970.2830.........  Contract Clause.......  970.2830 is
                                                                            redesignated as
                                                                            970.2803-2.
970.29........................  970.29...........  Taxes.................  No change.
970.2902......................  N/A..............  Federal Excise Taxes..  Section number and
                                                                            title are added for
                                                                            organizational
                                                                            purposes.
970.2902-1....................  970.2901.........  Exemptions from         970.2901 is
                                                    Federal Excise Taxes.   redesignated as
                                                                            970.2902-1.
970.2903......................  N/A..............  State and Local Taxes.  Section number and
                                                                            title are added for
                                                                            organizational
                                                                            purposes.
970.2903-1....................  970.2902.........  Applicability of State  970.2902 is
                                                    and Local Taxes to      redesignated as
                                                    the Government.         970.2903-1 and the
                                                                            title revised.
970.2904......................  N/A..............  Contract Clauses......  Section number and
                                                                            title are added for
                                                                            organizational
                                                                            purposes.
970.2904-1....................  970.2903.........  Management and          970.2903 is            
                                                    Operating Contracts.    redesignated as
                                                                            970.2904-1 and
                                                                            revised to add a
                                                                            prescription for the
                                                                            modification of the
                                                                            clause at 48 CFR
                                                                            52.229-10 for
                                                                            management and
                                                                            operating contracts.
970.30........................  970.30...........  Cost Accounting         No change.
                                                    Standards.
970.3002......................  970.3001.........  CAS Program             970.3001 is
                                                    Requirements.           redesignated as
                                                                            970.3002 and the
                                                                            title revised.
970.3002-1....................  970.3001-1.......  Applicability.........  970.3001-1 is
                                                                            redesignated as
                                                                            970.3002-1.

[[Page 13426]]

 
970.3002-2....................  970.3001-2.......  Limitations...........  970.3001-2 is
                                                                            redesignated as
                                                                            970.3002-2.
970.31........................  970.31...........  Contract Cost           No change.
                                                    Principles and
                                                    Procedures.
970.3100......................  970.3100.........  Scope of Subpart......  The section title is
                                                                            revised.
970.3100-1....................  970.3100-1.......  Definitions...........  No change.
970.3100-2....................  970.3100-2.......  Responsibilities......  No change.
970.3101......................  N/A..............  Applicability.........  Section number and
                                                                            title are added for
                                                                            organizational
                                                                            purposes.
970.3101-1....................  970.3100-3.......  Objectives............  970.3100-3 is
                                                                            redesignated as
                                                                            970.3101-1 and the
                                                                            title revised.
970.3101-2....................  970.3101-6.......  Advance Agreements....  970.3101-6 is
                                                                            redesignated as
                                                                            970.3101-2 and the
                                                                            title revised.
970.3101-3....................  970.3101-7.......  Cost Certification and  970.3101-7 is
                                                    Penalties on            redesignated as
                                                    Unallowable Costs.      970.3101-3 and the
                                                                            title revised.
970.3102......................  N/A..............  Contracts with          Section number and
                                                    Management and          title are added for
                                                    Operating Contractors.  organizational
                                                                            purposes.
970.3102-1....................  970.3101.........  General...............  970.3101 is
                                                                            redesignated as
                                                                            970.3102-1 and the
                                                                            title revised.
970.3102-1-1..................  970.3101-1.......  Actual Cost Basis.....  970.3101-1 is
                                                                            redesignated as
                                                                            970.3102-1-1.
970.3102-1-2..................  970.3102.........  Application of Cost     970.3102 is
                                                    Principles.             redesignated as
                                                                            970.3102-1-2.
970.3102-1-3..................  970.3101-3.......  General Basis for       970.3101-3 is
                                                    Reimbursement of        redesignated as
                                                    Costs.                  970.3102-1-3.
970.3102-1-4..................  970.3101-4.......  Cost Determination      970.3101-4 is
                                                    Based on Audit.         redesignated as
                                                                            970.3102-1-4.
970.3102-1-5..................  970.3101-5.......  Contractor's System of  970.3101-5 is
                                                    Accounting.             redesignated as
                                                                            970.3102-1-5.
970.3102-2....................  970.3101-2.......  Direct and Indirect     970.3101-2 is
                                                    Costs.                  redesignated as
                                                                            970.3102-2.
970.3102-3....................  N/A..............  Selected Costs........  Section number and
                                                                            title are added for
                                                                            organizational
                                                                            purposes.
970.3102-3-1..................  970.3102-19......  Public Relations and     970.3102-19 is
                                                    Advertising.            redesignated as
                                                                            970.3102-3-1.
970.3102-3-2..................  970.3102-2.......  Compensation for        970.3102-2 is
                                                    Personal Services.      redesignated as
                                                                            970.3102-3-2.
970.3102-3-3..................  970.3102-3.......  Cost of Money.........  970.3102-3 is
                                                                            redesignated as
                                                                            970.3102-3-3.
970.3102-3-4..................  970.3102-4.......  Depreciation..........  970.3102-4 is
                                                                            redesignated as
                                                                            970.3102-3-4.
970.3102-3-5..................  970.3102-5.......  Employee Morale,        970.3102-5 is
                                                    Health, Welfare, Food   redesignated as
                                                    Service, and            970.3102-3-5.
                                                    Dormitory Costs.
970.3102-3-6..................  970.3102-21......  Fines, Penalties, and   970.3102-21 is
                                                    Mischarging Costs.      redesignated as
                                                                            970.3102-3-6.
970.3102-3-7..................  970.3102-7.......  Lobbying and Political  970.3102-7 is
                                                    Activity Costs.         redesignated as
                                                                            970.3102-3-7 and the
                                                                            title revised.
970.3102-3-8..................  970.3102-1.......  General and             970.3102-1 is
                                                    Administrative          redesignated as
                                                    Expenses.               970.3102-3-8.
970.3102-3-9..................  970.3102-12......  Plant Reconversion      970.3102-12 is
                                                    Costs.                  redesignated as
                                                                            970.3102-3-9.
970.3102-3-10.................  970.3102-13......  Precontract Costs.....  970.3102-13 is
                                                                            redesignated as
                                                                            970.3102-3-10.
970.3102-3-11.................  970.3102-9.......  Professional and        970.3102-9 is
                                                    Consultant Service      redesignated as
                                                    Costs.                  970.3102-3-11.
970.3102-3-12.................  970.3102-16......  Relocation Costs......  970.3102-16 is
                                                                            redesignated as
                                                                            970.3102-3-12.
970.3102-3-13.................  970.3102-8.......  Trade, Business and     970.3102-8 is
                                                    Professional Activity   redesignated as
                                                    Costs.                  970.3102-3-13 and
                                                                            the title revised.
970.3102-3-14.................  970.3102-17......  Travel Costs..........  970.3102-17 is
                                                                            redesignated as
                                                                            970.3102-3-14.
970.3102-3-15.................  970.3102-20......  Cost Related to Legal   970.3102-20 is
                                                    and Other Proceedings.  redesignated as
                                                                            970.3102-3-15 and
                                                                            the title revised.
970.3102-3-16.................  970.3102-10......  Overtime, Shift, and    970.3102-10 is
                                                    Holiday Premiums.       redesignated as
                                                                            970.3102-3-16.
970.3102-3-17.................  970.3102-11......  Page Charges in         970.3102-11 is
                                                    Scientific Journals.    redesignated as
                                                                            970.3102-3-17.
970.3102-3-18.................  970.3102-14......  Preparatory and Make-   970.3102-14 is
                                                    Ready Costs.            redesignated as
                                                                            970.3102-3-18.
970.3102-3-19.................  970.3102-6.......  Facilities (Plant and   970.3102-6 is
                                                    Equipment).             redesignated as
                                                                            970.3102-3-19.
970.3102-3-20.................  970.3102-18......  Special Funds in the    970.3102-18 is
                                                    Construction Industry.  redesignated as
                                                                            970.3102-3-20.

[[Page 13427]]

 
970.3102-3-21.................  970.3102-15......  Procurement:            970.3102-15 is
                                                    Subcontracts,           redesignated as
                                                    Contractor-Affiliated   970.3102-3-21.
                                                    Sources, and Leases.
970.3170......................  970.3103.........  Contract Clauses......  970.3103 is
                                                                            redesignated as
                                                                            970.3170.
970.32........................  970.32...........  Contract Financing....  No change.
970.3200......................  970.3201.........  Policy................  970.3201 is
                                                                            redesignated as
                                                                            970.3200 and the
                                                                            title revised.
970.3200-1....................  970.3272(a) and    Reduction or            970.3272, paragraphs
                                 (b).               Suspension of           (a) and (b) are
                                                    Advance, Partial, or    redesignated as
                                                    Progress Payments.      970.3200-1.
970.3200-1-1..................  970.3272 (c).....  Contract Clause.......  970.3272, paragraph
                                                                            (c) is redesignated
                                                                            as 970.3200-1-1.
970.3204......................  970.3202 (Title).  Advance Payments......  970.3202 (Title only)
                                                                            is redesignated as
                                                                            970.3204.
970.3204-1....................  970.3202 (Text)..  Applicability.........  Contains the text of
                                                                            the coverage
                                                                            codified at 970.3204-
                                                                            1.
970.3204-2....................  970.3171.........  Special Bank Account    970.3171 is
                                                    Agreement.              redesignated as
                                                                            970.3204-2.
970.3204-3....................  970.3170.........  Contract Clause.......  970.3170 is
                                                                            redesignated as
                                                                            970.3204-3 and the
                                                                            title revised.
970.3270......................  N/A..............  Standard Financial      Section number and     
                                                    Management Clauses.     title are added for
                                                                            organizational
                                                                            purposes. The
                                                                            section consolidates
                                                                            the prescriptions
                                                                            for certain
                                                                            financial management
                                                                            clauses contained in
                                                                            subpart 970.52.which
                                                                            are now only
                                                                            prescribed in the
                                                                            preface of each
                                                                            clause.
970.34........................  970.70...........  Major System            970.70 is
                                                    Acquisition.            redesignated as
                                                                            970.34 and the title
                                                                            revised
970.3400......................  N/A..............  General Requirements..  Section number and
                                                                            title are added for
                                                                            organizational
                                                                            purposes.
970.3400-1....................  970.7000.........  Mission-oriented        970.7000 is
                                                    Solicitation.           redesignated as
                                                                            970.3400-1.
970.35........................  N/A..............  Research and            Subpart number and     
                                                    Development             title are added to
                                                    Contracting.            prescribe uniform
                                                                            policies and
                                                                            procedures for DOE
                                                                            implementation of
                                                                            FAR 35.017.
970.3500......................  N/A..............  Scope of Subpart......  Section number and     
                                                                            title are added to
                                                                            prescribe the scope
                                                                            of new Subpart
                                                                            970.35.
970.3501......................  N/A..............  Federally Funded        Section number and     
                                                    Research and            title are added for
                                                    Development Centers.    organizational
                                                                            purposes.
970.3501-1....................  N/A..............  Sponsoring Agreements.  Subsection number and  
                                                                            title are added to
                                                                            prescribe
                                                                            implementing
                                                                            requirements for FAR
                                                                            35.017-1.
970.3501-2....................  N/A..............  Using an FFRDC........  Subsection number and  
                                                                            title are added to
                                                                            prescribe
                                                                            implementing
                                                                            requirements for FAR
                                                                            35.017-3.
970.3501-3....................  N/A..............  Reviewing FFRDC's.....  Subsection number and  
                                                                            title are added to
                                                                            prescribe
                                                                            implementing
                                                                            requirements for FAR
                                                                            35.017-4.
970.3501-4....................  N/A..............  Contract Clause.......  Subsection number and  
                                                                            title are added to
                                                                            prescribe a uniform
                                                                            clause for
                                                                            implementing Subpart
                                                                            970.35.
970.36........................  970.36...........  Construction and        No change.
                                                    Architect-Engineer
                                                    Contracts.
970.3605......................  N/A..............  Contract Clauses......  Section number and
                                                                            title are added for
                                                                            organizational
                                                                            purposes.
970.3605-1....................  970.5204-43......  Other Contracts.......  970.5204-43 is         
                                                                            redesignated as
                                                                            970.3605-1and the
                                                                            title and text
                                                                            revised. The DOE
                                                                            clause is removed
                                                                            and a supplement to
                                                                            the FAR prescription
                                                                            for the use of FAR
                                                                            clause 52.236-8 is
                                                                            added..
970.3605-2                      970.3601.........  Special Construction    970.3601 is
                                                    Clause for Operating    redesignated as
                                                    Contracts.              970.3605-2.
970.37........................  N/A..............  Facilities Management   Subpart number and
                                                    Contracting.            title are added for
                                                                            organizational
                                                                            purposes.
970.3701......................  N/A..............  General...............  Section number and
                                                                            title are added for
                                                                            organizational
                                                                            purposes.
970.3701-1....................  970.2501.........  Severance Payments for  970.2501 is
                                                    Foreign Nationals.      redesignated as
                                                                            970.3701-1.
970.3701-1-1..................  970.2501(a)......  Waiver of Cost          Contains coverage
                                                    Allowability            codified at
                                                    Provisions.             970.2501, paragraph
                                                                            (a).

[[Page 13428]]

 
970.3701-1-2..................  970.2501(b)......  Solicitation Provision  Contains coverage
                                                    and Contract Clause.    codified at
                                                                            970.2501, paragraph
                                                                            (b).
970.3770......................  970.72...........  Facilities Management.  970.72 is
                                                                            redesignated as
                                                                            970.3770.
970.3770-1....................  970.7201.........  Policy................  970.7201 is
                                                                            redesignated as
                                                                            970.3770-1 (except
                                                                            the clause
                                                                            prescription).
970.3770-2....................  970.7201.........  Contract Clause.......  970.7201 (clause
                                                                            prescription) is
                                                                            redesignated as
                                                                            970.3770-2.
970.41........................  970.41...........  Acquisition of Utility  No change.
                                                    Services.
970.4102......................  N/A..............  Acquiring Utility       Section number and
                                                    Services.               title are added for
                                                                            organizational
                                                                            purposes.
970.4102-1....................  970.4100.........  Policy................  970.4100 is
                                                                            redesignated as
                                                                            970.4102-1 and the
                                                                            title revised.
970.43........................  N/A..............  Contract Modifications  Subpart number and
                                                                            title are added for
                                                                            organizational
                                                                            purposes.
970.4302......................  N/A..............  Changes...............  Section number and
                                                                            title are added for
                                                                            organizational
                                                                            purposes.
970.4302-1....................  N/A..............  Contract Clause.......  Section number and
                                                                            title are added for
                                                                            organizational
                                                                            purposes. Subsection
                                                                            prescribes the use
                                                                            of existing DEAR
                                                                            clause entitled
                                                                            ``Changes.''
                                                                            Currently, there is
                                                                            no coverage in the
                                                                            policy section of
                                                                            the regulation to
                                                                            prescribe the basis
                                                                            and use of the
                                                                            clause.
970.44........................  970.71...........  Management and          970.71 is
                                                    Operating Contractor    redesignated as
                                                    Purchasing.             970.44.
970.4400......................  N/A..............  Scope.................  Section number and
                                                                            title are added for
                                                                            organizational
                                                                            purposes.
970.4401......................  N/A..............  Responsibilities......  Section number and
                                                                            title are added for
                                                                            organizational
                                                                            purposes.
970.4401-1....................  970.7102.........  General...............  970.7102 is            
                                                                            redesignated as
                                                                            970.4401-1 and the
                                                                            title and text
                                                                            revised. Paragraph
                                                                            (b)(4) is revised to
                                                                            provide for two
                                                                            alternative methods
                                                                            which may be used by
                                                                            the contracting
                                                                            officer for
                                                                            conducting periodic
                                                                            appraisals of the
                                                                            contractor's
                                                                            purchasing function.
970.4401-2....................  970.7108.........  Review and Approval...  970.7108 is
                                                                            redesignated as
                                                                            970.4401-2.
970.4401-3....................  970.7109.........  Advance Notification..  970.7109 is
                                                                            redesignated as
                                                                            970.4401-3.
970.4402......................  N/A..............  Contractor Purchasing   Section number and
                                                    System.                 title are added for
                                                                            organizational
                                                                            purposes.
970.4402-1....................  970.7101.........  Policy................  970.7101 is
                                                                            redesignated as
                                                                            970.4402-1 and the
                                                                            title revised.
970.4402-2....................  970.7103.........  General Requirements..  970.7103 is            
                                                                            redesignated as
                                                                            970.4402-2 and the
                                                                            title revised. The
                                                                            subsection is also
                                                                            revised to add new
                                                                            paragraph (d)(9) to
                                                                            emphasize the
                                                                            Department's policy
                                                                            regarding the
                                                                            maximization of
                                                                            opportunities for
                                                                            small, small
                                                                            disadvantaged, and
                                                                            woman-owned small
                                                                            business concerns in
                                                                            the performance of
                                                                            its major site and
                                                                            facility management
                                                                            contracts.
970.4402-3....................  970.7105.........  Purchasing From         970.7105 is
                                                    Contractor-Affiliated   redesignated as
                                                    Sources.                970.4402-3.
970.4402-4....................  970.7110.........  Nuclear Material        970.7110 is
                                                    Transfers.              redesignated as
                                                                            970.4402-4.
970.4403......................  N/A..............  Contract Clause.......  Section number and
                                                                            title are added for
                                                                            organizational
                                                                            purposes. Subsection
                                                                            prescribes the use
                                                                            of existing DEAR
                                                                            clause entitled
                                                                            ``Contractor
                                                                            Purchasing System.''
                                                                            Currently, there is
                                                                            no coverage in the
                                                                            policy section of
                                                                            the regulation to
                                                                            prescribe the basis
                                                                            and use of the
                                                                            clause.
970.45........................  970.45...........  Government Property...  No change.
970.4501......................  N/A..............  General...............  Section number and
                                                                            title are added for
                                                                            organizational
                                                                            purposes.

[[Page 13429]]

 
970.4501-1....................  970.4501.........  Contract Clause         970.4501 is            
                                                                            redesignated as
                                                                            970.4501-1 and
                                                                            amended to authorize
                                                                            the contracting
                                                                            officer to list
                                                                            specific managerial
                                                                            personnel in
                                                                            paragraph (j) of the
                                                                            clause.
970.49........................  970.49...........  Termination of          No change.
                                                    Contracts.
970.4905......................  N/A..............  Contract Termination    Section number and
                                                    Clause.                 title are added for
                                                                            organizational
                                                                            purposes.
970.4905-1....................  970.4901 and       Termination for         970.4901 and 970.4902  
                                 970.4902.          Convenience and         are redesignated as
                                                    Default.                970.4905-1 and the
                                                                            coverage revised to
                                                                            reflect the removal
                                                                            of the clause at
                                                                            970.5204-45 in favor
                                                                            of FAR clause 52.249-
                                                                            6.
970.50........................  N/A..............  Extraordinary           Subpart number and
                                                    Contractual Actions.    title are added for
                                                                            organizational
                                                                            purposes.
970.5070......................  970.2870 (Title).  Indemnification.......  970.2870 (Title only)
                                                                            is redesignated as
                                                                            970.5070. The text
                                                                            of 970.2870 is
                                                                            contained in the
                                                                            subordinate
                                                                            subsections to this
                                                                            new section 970.5070
                                                                            as noted below.
970.5070-1....................  970.2870(a) and    Scope and               Contains coverage
                                 (b).               Applicability.          codified at
                                                                            970.2870, paragraphs
                                                                            (a) and (b).
970.5070-2....................  970.2870(e)......  General...............  Contains coverage
                                                                            codified at
                                                                            970.2870, paragraph
                                                                            (e).
970.5070-3....................  970.2870(c) and    Contract Clauses......  Contains coverage
                                 (d).                                       codified at
                                                                            970.2870, paragraphs
                                                                            (c) and (d).
N/A...........................  970.51...........  Use of Government       Subpart and            
                                                    Sources by              subordinate sections
                                                    Contractors.            are removed.
                                                                            Coverage to be
                                                                            reissued as internal
                                                                            DOE guidance.
970.52........................  970.52...........  Solicitation            No change.
                                                    Provisions and
                                                    Contract Clauses for
                                                    Management and
                                                    Operating Contracts.
970.5200......................  970.5201.........  Scope of Subpart......  970.5201 is            
                                                                            redesignated as
                                                                            970.5200 and the
                                                                            title and text
                                                                            revised. The section
                                                                            is revised to
                                                                            clarify the use of
                                                                            the clauses
                                                                            prescribed in the
                                                                            Subpart in relation
                                                                            to the clauses
                                                                            prescribed in the
                                                                            FAR and in DEAR part
                                                                            952.
N/A...........................  970.5203.........  Modifications and       Section is removed as  
                                                    Notes to Far Clauses.   the coverage
                                                                            contained in the
                                                                            subordinate sections
                                                                            are unnecessarily
                                                                            duplicative of FAR
                                                                            coverage.
970.5201......................  970.5204.........  Text of Provisions and  970.5204 is
                                                    Clauses.                redesignated as
                                                                            970.5201 and the
                                                                            title is revised.
970.5203-1....................  970.5204-20......  Management Controls...  970.5204-20 is         
                                                                            redesignated as
                                                                            970.5203-1. The text
                                                                            of paragraph (a) has
                                                                            been divided into
                                                                            paragraphs (a)(1)
                                                                            through (a)(4). The
                                                                            text of current
                                                                            paragraph (a) is
                                                                            unchanged except
                                                                            that paragraph
                                                                            (a)(2) contains new
                                                                            coverage to
                                                                            contractually
                                                                            implement the
                                                                            requirement that is
                                                                            already prescribed
                                                                            at current
                                                                            970.0901(b)(10)
                                                                            (which is
                                                                            redesignated as
                                                                            970.0371-1 in this
                                                                            rule), but which was
                                                                            not previously set
                                                                            forth in the clause.
                                                                            Paragraph (b) of the
                                                                            clause is unchanged.
970.5203-2....................  N/A..............  Performance             Subsection is added    
                                                    Improvement and         for proposed new
                                                    Collaboration.          clause. The new
                                                                            clauses implement
                                                                            new DOE policy to
                                                                            facilitate
                                                                            collaboration of
                                                                            improvements in any
                                                                            aspect of
                                                                            performance among
                                                                            the contractor, DOE,
                                                                            and other major
                                                                            facility contractors.

[[Page 13430]]

 
970.5203-3....................  970.5204-12......  Contractor's            970.5204-12 is         
                                                    Organization.           redesignated as
                                                                            970.5203-3. The
                                                                            clause is further
                                                                            amended to remove
                                                                            alternate paragraph
                                                                            (c) of the current
                                                                            clause, and to add a
                                                                            new paragraph (d) to
                                                                            the standard clause
                                                                            to contractually
                                                                            implement the
                                                                            requirements set
                                                                            forth in proposed
                                                                            new section 970.0371.
970.5204-1....................  970.5204-1.......  Counterintelligence...  970.5204-1 is          
                                                                            redesignated as
                                                                            970.5204-1 and the
                                                                            title and text
                                                                            revised. The section
                                                                            is revised to remove
                                                                            paragraph (a), which
                                                                            is unnecessarily
                                                                            duplicative of the
                                                                            prescription at DEAR
                                                                            904.404 for the use
                                                                            of certain DEAR
                                                                            clauses. The
                                                                            coverage in
                                                                            paragraph (b) of the
                                                                            section is retained
                                                                            with technical and
                                                                            conforming
                                                                            amendments
970.5204-2....................  970.5204-78......  Laws, Regulations, and  970.5204-78 is         
                                                    DOE Directives.         redesignated as
                                                                            970.5204-2 and
                                                                            amended to add a new
                                                                            paragraph (d) to
                                                                            merge the substance
                                                                            of the clause at
                                                                            970.5204-29 (which
                                                                            is proposed for
                                                                            removal), and to
                                                                            redesignated current
                                                                            paragraph (d) as
                                                                            paragraph (e). The
                                                                            clause is also
                                                                            revised to clarify
                                                                            applicability of
                                                                            requirements to
                                                                            subcontracts.
970.5204-3....................  970.5204-79......  Access to and           970.5204-79 is         
                                                    Ownership of Records.   redesignated as
                                                                            970.5204-3. The
                                                                            clause is further
                                                                            amended in paragraph
                                                                            (b)(1) to recognize
                                                                            non-employee patient
                                                                            medical/health
                                                                            related records as
                                                                            property of the
                                                                            contractor, and to
                                                                            update a DOE
                                                                            directive reference
                                                                            in paragraph (f).
970.5208-1....................  970.5204-19......  Printing..............  970.5204-19 is
                                                                            redesignated as
                                                                            970.5208-1 and the
                                                                            title revised.
970.5209-1....................  970.5204-89......  Requirement for         970.5204-89 is
                                                    Guarantee of            redesignated as
                                                    Performance.            970.5209-1.
970.5215-1....................  970.5204-54......  Total Available Fee:    970.5204-54 is
                                                    Base Fee Amount and     redesignated as
                                                    Performance Fee         970.5215-1.
                                                    Amount.
970.5215-2....................  970.5204-76......  Make-or-Buy Plan......  970.5204-76 is
                                                                            redesignated as
                                                                            970.5215-2.
970.5215-3....................  970.5204-86......  Conditional Payment of  970.5204-86 is
                                                    Fee, Profit, or         redesignated as
                                                    Incentives.             970.5215-3.
970.5215-4....................  970.5204-87......  Cost Reduction........  970.5204-87 is
                                                                            redesignated as
                                                                            970.5215-4.
970.5215-5....................  970.5204-88......  Limitation on Fee.....  970.5204-88 is
                                                                            redesignated as
                                                                            970.5215-5.
970.5222-1....................  970.5204-63......  Collective Bargaining   970.5204-63 is
                                                    Agreements--Managemen   redesignated as
                                                    t and Operating         970.5222-1.
                                                    Contracts.
970.5222-2....................  970.5204-80......  Overtime Management...  970.5204-80 is
                                                                            redesignated as
                                                                            970.5222-2.
970.5223-1....................  970.5204-2.......  Integration of          970.5204-2 is
                                                    Environment, Safety     redesignated as
                                                    and Health into Work    970.5223-1. The
                                                    Planning and            clause is also
                                                    Execution.              revised to clarify
                                                                            applicability of
                                                                            requirements to
                                                                            subcontracts.
970.5223-2....................  970.5204-39......  Acquisition and Use of  970.5204-39 is
                                                    Environmentally         redesignated as
                                                    Preferable Products     970.5223-2. The
                                                    and Services.           clause is amended in
                                                                            paragraph (a)(1) to
                                                                            update the reference
                                                                            to the applicable
                                                                            Executive Order.
970.5223-3....................  970.5204-57......  Agreement Regarding     970.5204-57 is
                                                    Workplace Substance     redesignated as
                                                    Abuse Programs at DOE   970.5223-3.
                                                    Facilities.
970.5223-4....................  970.5204-58......  Workplace Substance     970.5204-58 is
                                                    Abuse Programs at DOE   redesignated as
                                                    Sites.                  970.5223-4.
970.5226-1....................  970.5204-81......  Diversity Plan........  970.5204-81 is
                                                                            redesignated as
                                                                            970.5226-1.
970.5226-2....................  970.5204-77......  Workforce               970.5204-77 is
                                                    Restructuring under     redesignated as
                                                    Section 3161 of the     970.5226-2.
                                                    National Defense
                                                    Authorization Act for
                                                    Fiscal Year 1993.

[[Page 13431]]

 
970.5227-1....................  970.5204-82......  Rights in Data-         970.5204-82 is
                                                    Facilities.             redesignated as
                                                                            970.5227-1.
970.5227-2....................  970.5204-83......  Rights in Data-         970.5204-83 is
                                                    Technology Transfer.    redesignated as
                                                                            970.5227-2.
970.5227-3....................  970.5204-40......  Technology Transfer     970.5204-40 is
                                                    Mission.                redesignated as
                                                                            970.5227-3.
970.5228-1....................  970.5204-31......  Insurance--Litigation   970.5204-31 is         
                                                    and Claims.             redesignated as
                                                                            970.5228-1. The
                                                                            clause is also
                                                                            amended in paragraph
                                                                            (h) by removing the
                                                                            words ``including
                                                                            employees'' from the
                                                                            phrase
                                                                            ``contractor's
                                                                            liabilities to third
                                                                            persons'' for
                                                                            clarification and
                                                                            consistency with
                                                                            paragraphs (a) and
                                                                            (e)(2) of the
                                                                            clause.
970.5229-1....................  970.5204-23......  State and Local Taxes.  970.5204-23 is
                                                                            redesignated as
                                                                            970.5229-1, and the
                                                                            title revised.
970.5231-1....................  970.5204-13......  Allowable Costs and     970.5204-13 is
                                                    Fee (Management and     redesignated as
                                                    Operating Contracts).   970.5231-1. Amended
                                                                            to convert the
                                                                            ``Notes'' to
                                                                            ``Alternates.'' The
                                                                            title is also
                                                                            amended to
                                                                            accommodate other
                                                                            types of fee (see
                                                                            Alternate I of the
                                                                            clause).
970.5231-2....................  970.5204-17......  Political Activity      970.5204-17 is
                                                    Cost Prohibition.       redesignated as
                                                                            970.5231-2.
970.5231-3....................  970.5204-61......  Cost Prohibitions       970.5204-61 is
                                                    Related to Legal and    redesignated as
                                                    Other Proceedings.      970.5231-3.
970.5231-4....................  970.5204-75......  Preexisting Conditions  970.5204-75 is
                                                                            redesignated as
                                                                            970.5231-4.
970.5232-1....................  970.5204-85......  Reduction or            970.5204-85 is
                                                    Suspension of           redesignated as
                                                    Advance, Partial, or    970.5232-1.
                                                    Progress Payments
                                                    upon Finding of
                                                    Substantial Evidence
                                                    of Fraud.
970.5232-2....................  970.5204-16......  Payments and Advances.  970.5204-16 is         
                                                                            redesignated as
                                                                            970.5232-2. The
                                                                            clause is amended to
                                                                            convert the
                                                                            ``Notes'' to
                                                                            ``Alternates.'' The
                                                                            clause is also
                                                                            amended in
                                                                            paragraphs (b) and
                                                                            (e) and in paragraph
                                                                            (a) of Alternate II
                                                                            to update and
                                                                            conform the clause
                                                                            with the recently
                                                                            amended DOE fee
                                                                            policy (64 FR
                                                                            12220)--e.g., update
                                                                            certain terms
                                                                            pertaining to fee,
                                                                            negotiated fixed
                                                                            amounts, and other
                                                                            items specifically
                                                                            approved by the
                                                                            contracting officer.
970.5232-3....................  970.5204-9.......  Accounts, Records, and  970.5204-9 is          
                                                    Inspection.             redesignated as
                                                                            970.5232-3. The
                                                                            clause is amended to
                                                                            convert the
                                                                            ``Notes'' to
                                                                            ``Alternates.'' The
                                                                            clause is also
                                                                            amended in paragraph
                                                                            (a) to address
                                                                            ``negotiated fixed
                                                                            amounts'', which are
                                                                            authorized and
                                                                            frequently included
                                                                            in M&O contracts.
970.5232-4....................  970.5204-15......  Obligation of Funds...  970.5204-15 is
                                                                            redesignated as
                                                                            970.5232-4. Amended
                                                                            to convert the
                                                                            ``Notes'' to
                                                                            ``Alternates.''
970.5235-1....................  N/A..............  Federally Funded        Section is added to    
                                                    Research and            add a uniform clause
                                                    Development Center.     to implement the
                                                                            requirements
                                                                            prescribed at 970.35.
970.5236-1....................  970.5204-38......  Government Facility     970.5204-38 is
                                                    Subcontract Approval.   redesignated as
                                                                            970.5236-1 and the
                                                                            title revised.
970.5237-1....................  970.5204-84......  Waiver of Limitations   970.5204-84 is
                                                    on Severance Payments   redesignated as
                                                    to Foreign Nationals.   970.5237-1.
970.5237-2....................  970.5204-60......  Facilities Management.  970.5204-60 is
                                                                            redesignated as
                                                                            970.5237-2.
970.5243-1....................  970.5204-11......  Changes...............  970.5204-11 is
                                                                            redesignated as
                                                                            970.5243-1.

[[Page 13432]]

 
970.5244-1....................  970.5204-22......  Contractor Purchasing   970.5204-22 is         
                                                    System.                 redesignated as
                                                                            970.5244-1.
                                                                            Paragraph (a) is
                                                                            revised to provide
                                                                            for two alternative
                                                                            methods which may be
                                                                            used by the
                                                                            contracting officer
                                                                            for conducting
                                                                            periodic appraisals
                                                                            of the contractor's
                                                                            purchasing function.
                                                                            The clause is also
                                                                            amended to add
                                                                            paragraph (x), which
                                                                            incorporates certain
                                                                            coverage from
                                                                            970.5204-44, which
                                                                            is proposed for
                                                                            removal in this
                                                                            rule. Amended
                                                                            coverage addresses
                                                                            subcontract flowdown
                                                                            requirements which
                                                                            are not otherwise
                                                                            required by the
                                                                            terms and conditions
                                                                            of the prime
                                                                            contract.
970.5245-1....................  970.5204-21......  Property..............  970.5204-21 is
                                                                            redesignated as
                                                                            970.5245-1. Amended
                                                                            to convert the
                                                                            ``Notes'' to
                                                                            ``Alternates.''
N/A...........................  970.5204-3.......  Buy American Act--      Section is removed in  
                                                    Construction            favor of existing
                                                    Materials.              FAR coverage (FAR
                                                                            52.225-5).
N/A...........................  970.5204-4.......  New Mexico Gross        Section is removed.    
                                                    Receipts and            The prescription for
                                                    Compensating Tax.       modified text of FAR
                                                                            clause 52.229-10 is
                                                                            located at new
                                                                            970.2904-1(a).
N/A...........................  970.5204-5.......  Disclosure of           Section is removed in  
                                                    Information.            favor of existing
                                                                            DEAR coverage (DEAR
                                                                            952.204-72).
N/A...........................  970.5204-6.......  Nuclear Hazards         Section is removed in  
                                                    Indemnity.              favor of existing
                                                                            DEAR coverage (DEAR
                                                                            952.250-70).
N/A...........................  970.5204-7.......  Protecting the          Section is removed in  
                                                    Government's Interest   favor of existing
                                                    When Subcontracting     FAR coverage. (FAR
                                                    with Contractors        52.209-6).
                                                    Debarred, Suspended,
                                                    or Proposed for
                                                    Debarment.
N/A...........................  970.5204-8.......  Indemnity Assurance to  Section is removed in  
                                                    Architect-Engineer or   favor of existing
                                                    Supplier Prior to       DEAR coverage (DEAR
                                                    Operation of a          952.250-70).
                                                    Nuclear Facility.
N/A...........................  970.5204-10......  Foreign Ownership,      Section is removed in  
                                                    Control, or Influence   favor of existing
                                                    over Contractors        DEAR coverage (DEAR
                                                    (FOCI).                 952.204-73).
N/A...........................  970.5204-14......  Allowable Costs and     Section is removed as  
                                                    Fixed-fee (Support      obsolete.
                                                    Contracts).
N/A...........................  970.5204-25......  Workmanship and         Section is removed in  
                                                    Materials.              favor of existing
                                                                            FAR coverage (FAR
                                                                            52.211-5).
N/A...........................  970.5204-27......  Consultant or Other     Section is removed     
                                                    Comparable Employment   pursuant to changes
                                                    Services of             proposed to 970.2272
                                                    Contractor Employees.   (redesignated as
                                                                            970.0371) and
                                                                            970.5204-12
                                                                            (redesignated as
                                                                            970.5203-3).
N/A...........................  970.5204-28......  Assignment............  Section is removed in  
                                                                            favor of existing
                                                                            FAR coverage (FAR
                                                                            52.232-23 and 52.232-
                                                                            24).
N/A...........................  970.5204-29......  Permits or Licenses...  Section is removed     
                                                                            and the substance of
                                                                            the clause
                                                                            incorporated into
                                                                            new paragraph (d) of
                                                                            the clause at
                                                                            970.5204-78
                                                                            (redesignated as
                                                                            970.5204-2).
N/A...........................  970.5204-30......  Notice of Labor         Section is removed in  
                                                    Disputes.               favor of existing
                                                                            FAR coverage (FAR
                                                                            52.222-1).
N/A...........................  970.5204-33......  Priorities and          Section is removed in  
                                                    Allocations.            favor of existing
                                                                            DEAR coverage (DEAR
                                                                            952.211-71).
N/A...........................  970.5204-35......  Controls in the         Section is removed in  
                                                    National Interest       favor of existing
                                                    (Unclassified           DEAR coverage (see
                                                    Contracts with          DEAR 970.5204-78,
                                                    Educational             redesignated as
                                                    Institutions).          970.5204-2 in this
                                                                            rule).
N/A...........................  970.5204-36......  Preventing Conflicts    Section is removed as  
                                                    of Interest in          obsolete.
                                                    University Research.
N/A...........................  970.5204-37......  Statement of Work       Section is removed as  
                                                    (Management and         obsolete.
                                                    Operating Contracts).
N/A...........................  970.5204-42......  Key Personnel.........  Section is removed     
                                                                            pursuant to the
                                                                            consolidation of the
                                                                            clauses at 952.235-
                                                                            70 and 970.5204-42
                                                                            into a single
                                                                            clause, as proposed
                                                                            in this rule.
N/A...........................  970.5204-43......  Other Government        Section is removed in  
                                                    Contractors.            favor of existing
                                                                            FAR coverage (FAR
                                                                            52.236-8); see
                                                                            proposed new
                                                                            subsection 970.3605-
                                                                            1.

[[Page 13433]]

 
N/A...........................  970.5204-44......  Flowdown of Contract    Section is removed as  
                                                    Requirements to         unnecessary. Certain
                                                    Subcontracts.           portions of the
                                                                            coverage in this
                                                                            section are
                                                                            incorporated into
                                                                            970.5204-22,
                                                                            redesignated as
                                                                            970.5244-1 in this
                                                                            rule.
N/A...........................  970.5204-45......  Termination...........  Section is removed in  
                                                                            favor of existing
                                                                            FAR coverage (FAR
                                                                            52.249-6).
N/A...........................  970.5204-52......  Foreign Travel........  Section is removed in  
                                                                            favor of existing
                                                                            DEAR coverage (DEAR
                                                                            952.247-70).
N/A...........................  970.5204-53......  Contractor Employee     Section is removed in  
                                                    Travel Discounts.       favor of existing
                                                                            DEAR coverage (DEAR
                                                                            952.251-70).
952.203-70....................  970.5204-59......  Whistleblower           Section 970.5204-59    
                                                    Protection for          is redesignated as
                                                    Contractor Employees.   952.203-70.
N/A...........................  970.5204-71......  Patent Rights-          Section is removed     
                                                    nonprofit Management    pursuant to
                                                    and Operating           amendments to
                                                    Contractors.            927.303 and 952.227-
                                                                            11 proposed in this
                                                                            rule.
N/A...........................  970.5204-72......  Patent Rights-profit-   Section is removed     
                                                    making Management and   pursuant to
                                                    Operating Contractors.  amendments to
                                                                            927.303 and 952.227-
                                                                            13 proposed in this
                                                                            rule.
N/............................  A970.5204-73.....  Notice Regarding        Section is removed in  
                                                    Options.                favor of existing
                                                                            FAR coverage (FAR
                                                                            52.217-9).
N/A...........................  970.5204-74......  Option to Extend the    Section is removed in  
                                                    Term of the Contract.   favor of existing
                                                                            FAR coverage (FAR
                                                                            52.217-9).
----------------------------------------------------------------------------------------------------------------

III. Public Comments

    The amendments proposed in this rulemaking constitute primarily 
technical and conforming changes resulting from the reorganization of 
Part 970 and the elimination of coverage determined to be obsolete or 
unnecessarily duplicative of other governing regulations. Because these 
amendments involve extensive changes to the composition of the existing 
regulation, Part 970 is being republished, in its entirety, for the 
convenience of the reader. This rule also proposes to amend the text of 
several clauses and add material in order to ensure that uniform DOE 
policies and procedures are prescribed for certain issues. Interested 
persons are invited to submit comments regarding the proposed 
reorganization and numbering system for Part 970. Comments are also 
solicited regarding those amendments described in Section II., Section 
by Section Analysis, paragraphs 1. through 25., and to those amendments 
addressed in the table contained in paragraph 26., which are marked 
with a ``''
    Three copies of written comments should be submitted to the address 
indicated in the ADDRESSES section of this notice. All comments 
received will be available for public inspection in the DOE Reading 
Room, Room lE-190, Forrestal Building, 1000 Independence Avenue, SW., 
Washington, D.C. 20585, between the hours of 9 a.m. and 4 p.m., Monday 
through Friday, except Federal holidays. All written comments received 
by the date indicated in the ``DATES'' section of this notice and all 
other relevant information in the record will be carefully assessed and 
fully considered prior to publication of the final rule. Any 
information considered to be confidential must be so identified and 
submitted in writing, one copy only. DOE reserves the right to 
determine the confidential status of the information and to treat it 
according to our determination (See 10 CFR 1004.11).
    The Department has concluded that this proposed rule does not 
involve a substantial issue of fact or law and that the proposed rule 
should not have substantial impact on the nation's economy or a large 
number of individuals or businesses. Therefore, pursuant to Public Law 
95-91, the DOE Organization Act, and the Administrative Procedure Act 
(5 U.S.C. 553), the Department does not plan to hold a public hearing 
on this proposed rule.

IV. Procedural Requirements

A. Review Under Executive Order 12866

    Today's regulatory action has been determined not to be a 
``significant regulatory action'' under Executive Order 12866, 
``Regulatory Planning and Review'' (58 FR 51735, October 4, 1993). 
Accordingly, this action was not subject to review under that Executive 
Order by the Office of Information and Regulatory Affairs of the Office 
of Management and Budget (OMB).

B. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of new regulations, section 3(a) of Executive Order 12988, 
``Civil Justice Reform,'' 61 FR 4729 (February 7, 1996), imposes on 
Executive agencies the general duty to adhere to the following 
requirements: (1) eliminate drafting errors and ambiguity; (2) write 
regulations to minimize litigation; and (3) provide a clear legal 
standard for affected conduct rather than a general standard and 
promote simplification and burden reduction. With regard to the review 
required by section 3(a), section 3(b) of Executive Order 12988 
specifically requires that Executive agencies make every reasonable 
effort to ensure that the regulation: (1) clearly specifies the 
preemptive effect, if any; (2) clearly specifies any effect on existing 
Federal law or regulation; (3) provides a clear legal standard for 
affected conduct while promoting simplification and burden reduction; 
(4) specifies the retroactive effect, if any; (5) adequately defines 
key terms; and (6) addresses other important issues affecting clarity 
and general draftsmanship under any guidelines issued by the Attorney 
General. Section 3(c) of Executive Order 12988 requires Executive 
agencies to review regulations in light of applicable standards in 
section 3(a) and section 3(b) to determine whether they are met or it 
is unreasonable to meet one or more of them. The Department of Energy 
has completed the required review and determined that, to the extent 
permitted by law, the proposed regulation meets the relevant standards 
of Executive Order 12988.

[[Page 13434]]

C. Review Under the Regulatory Flexibility Act

    This proposed rule was reviewed under the Regulatory Flexibility 
Act, 5 U.S.C. 601 et seq., which requires preparation of a regulatory 
flexibility analysis for any rule which is likely to have significant 
economic impact on a substantial number of small entities. Today's 
proposed rule streamlines the Department's policies, procedures, 
provisions and clauses that apply to its M&O contracts. M&O contractors 
are not small entities. Accordingly, DOE certifies that this proposed 
regulation will not have a significant economic impact on a substantial 
number of small entities, and, therefore, no regulatory flexibility 
analysis has been prepared.

D. Review Under the Paperwork Reduction Act

    No new information or recordkeeping requirements are imposed by 
this rulemaking. Accordingly, no OMB clearance is required under the 
Paperwork Reduction Act (44 U.S.C. 3501 et seq.).

E. Review Under the National Environmental Policy Act

    DOE has concluded that promulgation of this proposed rule falls 
into a class of actions which would not individually or cumulatively 
have significant impact on the human environment, as determined by 
DOE's regulations (10 CFR Part 1021, Subpart D) implementing the 
National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321 et 
seq.). Specifically, this rule is categorically excluded from NEPA 
review because the proposed amendments to the DEAR do not change the 
environmental effect of the rule being amended (categorical exclusion 
A5). Therefore, this proposed rule does not require an environmental 
impact statement or environmental assessment pursuant to NEPA.

F. Review Under Executive Order 12612

    Executive Order 12612 (52 FR 41685, October 30, 1987) requires that 
regulations, rules, legislation, and any other policy actions be 
reviewed for any substantial direct effects on States, on the 
relationship between the National Government and the States, or in the 
distribution of power and responsibilities among the various levels of 
Government. If there are sufficient substantial direct effects, then 
the Executive Order requires the preparation of a federalism assessment 
to be used in all decisions involved in promulgating and implementing a 
policy action. This proposed rule, when finalized, will revise certain 
policy and procedural requirements. States which contract with DOE will 
be subject to this rule. However, DOE has determined that this rule 
will not have a substantial direct effect on the institutional 
interests or traditional functions of the States.

G. Review Under the Unfunded Mandates Reform Act of 1995

    The Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) generally 
requires a Federal agency to perform a detailed assessment of costs and 
benefits of any rule imposing a Federal Mandate with costs to state, 
local or tribal governments, or to the private sector, of $100 million 
or more. This rulemaking affects private sector entities, and the 
impact is less than $100 million.

H. Review Under the Treasury and General Government Appropriations Act, 
1999

    Section 654 of the Treasury and General Government Appropriations 
Act, 1999 (Pub. L. No. 105-277) requires Federal agencies to issue a 
Family Policymaking Assessment for any proposed rule or policy that may 
affect family well-being. Today's proposal would not have any impact on 
the autonomy or integrity of the family as an institution. Accordingly, 
DOE has concluded that it is not necessary to prepare a Family 
Policymaking Assessment.

List of Subjects in 48 CFR Parts 901, 902, 903, 904, 909, 911, 915, 
917, 922, 923, 927, 941, 942, 947, 952 and 970.

    Government procurement.

    Issued in Washington, D.C. on February 15, 2000.
Richard H. Hopf,
Director, Office of Procurement and Assistance Management.
    For the reasons set out in the preamble, Chapter 9 of Title 48 of 
the Code of Federal Regulations is proposed to be amended as set forth 
below.
    1. The authority citations for parts 901, 902, 903, 904, 909, 911, 
915, 917, 922, 923, 941, 942, 947 and 952 continue to read as follows:

    Authority: 42 U.S.C. 7254; 40 U.S.C. 486(c).

PART 901--FEDERAL ACQUISITION REGULATIONS SYSTEM


901.105  [Amended]

    2. Section 901.105 is amended in the second sentence by revising 
``(see 48 CFR (DEAR) 970.5204-76)'' to read ``(see 48 CFR 970.5215-
2)'', and revising ``(see 48 CFR (DEAR) 970.5204-2)'' to read ``(see 48 
CFR 970.5223-1).''

PART 902--DEFINITIONS OF WORDS AND TERMS

    3. Section 902.200 is revised to read as follows:


902.200  Definitions clause.

    As prescribed by 48 CFR subpart 2.2, insert the clause at 48 CFR 
52.202-1, Definitions, but modify the clause to limit the definition at 
paragraph (a) to encompass only the Secretary, Deputy Secretary, or 
Under Secretary of the Department of Energy, and the Chairman, Federal 
Energy Regulatory Commission. The contracting officer shall also add a 
paragraph at the end of the clause that defines ``DOE'' as meaning the 
United States Department of Energy and ``FERC'' as meaning the Federal 
Energy Regulatory Commission. Additional definitions may be included, 
provided they are consistent with the clause, the Federal Acquisition 
Regulation and this Department of Energy Acquisition Regulation.

PART 903--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF 
INTEREST

    4. Subpart 903.9 is added to read as follows:
Subpart 903.9--Whistleblower Protection for Contractor Employees
Sec.
903.901   Scope.
903.902   Definition.
903.903   Applicability
903.970   Remedies
903.971   Contract clause.

Subpart 903.9--Whistleblower Protection for Contractor Employees


903.901  Scope.

    This subpart implements the DOE Contractor Employee Protection 
Program as set forth at 10 CFR part 708. Part 708 establishes criteria 
and procedures for the investigation, hearing, and review of 
allegations from DOE contractor employees of employer reprisal 
resulting from employee disclosure of information to DOE, to members of 
Congress, or to the contractor; employee participation in proceedings 
before Congress or pursuant to this rule; or employee refusal to engage 
in illegal or dangerous activities, when such disclosure, 
participation, or refusal pertains to employer practices which the 
employee believes to be unsafe; to violate laws, rules, or regulations; 
or to involve fraud, mismanagement, waste, or abuse.


903.902  Definition.

    Contractor, as used in this subject, has the meaning contained in 
10 CFR 708.2

[[Page 13435]]

903.903  Applicability.

    10 CFR part 708 is applicable to complaints of retaliation filed by 
employees of contractors, and subcontractors, performing work on behalf 
of DOE directly related to DOE-owned or leased facilities, if the 
complaint stems from a disclosure, participation, or refusal described 
in 10 CFR 708.5.


903.970  Remedies.

    (a) Contractors found to have retaliated against an employee in 
reprisal for such disclosure, participation or refusal are required to 
provide relief in accordance with decisions issued under 10 CFR part 
708.
    (b) 10 CFR part 708 provides that for the purposes of the Contract 
Disputes Act (41 U.S.C. 605 and 606), a final decision issued pursuant 
to 10 CFR part 708 shall not be considered to be a claim by the 
Government against a contractor or a decision by the contracting 
officer subject to appeal. However, a contractor's disagreement and 
refusal to comply with a final decision could result in a contracting 
officer's decision to disallow certain costs or to terminate the 
contract for default. In such case, the contractor could file a claim 
under the Disputes clause of the contract regarding the disallowance of 
cost or the termination of the contract.


903.971  Contract clause.

    The contracting officer shall insert the clause at 952.203-70, 
Whistleblower Protection for Contractor Employees, in management and 
operating contracts.

PART 904--ADMINISTRATIVE MATTERS

    5. Subpart 904.72 is added as follows:
Subpart 904.72--Public Affairs
Sec.
904.7200   Purpose.
904.7201   Contract clause.


904.7200  Purpose.

    It is the policy of the Department of Energy to provide to the 
public and the news media, accurate and timely unclassified information 
on Departmental policies, programs, and activities. The Department's 
contractors share the responsibility for releasing unclassified 
information related to efforts under their contracts and must 
coordinate the release of unclassified information with the cognizant 
contracting officer and appropriate DOE Public Affairs personnel.


904.7201  Contract clause.

    The contracting officer shall insert the clause at 952.204-75 in 
solicitations and contracts that require the contractor to release 
unclassified information related to efforts under its contract 
regarding DOE policies, programs, and activities.

PART 909--CONTRACTOR QUALIFICATIONS

    6. Subsection 909.104-1 is amended by revising ``48 CFR 970.5204-
57'' to read ``48 CFR 970.5223-3.''

PART 911--DESCRIBING AGENCY NEEDS

    7. Section 911.604 is amended by revising paragraphs (d) and (e) to 
read as follows:


911.604  Solicitation provision and contract clause.

* * * * *
    (d) The contracting officer shall insert the provision at 952.211-
70, Priorities and Allocations (Domestic Energy Supplies), with its 
Alternate I, in solicitations that may result in the placement of rated 
orders for authorized energy programs, and in all management and 
operating contracts.
    (e) The contracting officer shall insert the clause at 952.211-71, 
Priorities and Allocations (Domestic Energy Supplies), with its 
Alternate I, if it is believed the contract involves a program the 
purpose of which is to maximize domestic energy supplies, and in all 
management and operating contracts.

PART 915--CONTRACTING BY NEGOTIATION

    8. Subsection 915.408-70 is added to read as follows:


915.408-70  Solicitation provision and contract clause.

    The contracting officer shall insert the clause at 48 CFR 952.215-
70, Key Personnel, in contracts under which performance is largely 
dependent on the expertise of specific key personnel.

PART 917--SPECIAL CONTRACTING METHODS

    9. Section 917.600 is revised to read as follows:


917.600  Scope of subpart.

    (a) This subpart implements 48 CFR subpart 17.6, Management and 
Operating Contracts. Departmental policies, procedures, provisions and 
clauses to be used in the award and administration of management and 
operating contracts that either implement or supplement the Federal 
Acquisition Regulation and parts 901 through 952 of this Chapter are 
contained in 48 CFR part 970.
    (b) The requirements of this subpart apply to any Department of 
Energy management and operating contract, including performance-based 
management contracts as defined in 48 CFR 917.601. References in this 
Subpart to ``management and operating contracts'' include performance-
based management contracts.
    10. Section 917.601 is amended by revising the definition of 
performance-based contracting as follows:


917.601  Definitions.

    Performance-based contracting has the meaning contained in 48 CFR 
37.101.
* * * * *
    11. Section 917.602 is revised to read as follows:


917.602  Policy.

    (a) The use of a management and operating contract must be 
authorized by the Secretary, Deputy Secretary or Under Secretary.
    (b) It is the policy of the Department of Energy to provide for 
full and open competition in the award of management and operating 
contracts, including performance-based management contracts.
    (c) A management and operating contract may be awarded or extended 
at the completion of its term without providing for full and open 
competition only when such award or extension is justified under one of 
the statutory authorities identified in 48 CFR 6.302 and only when 
authorized by the Head of the Agency. Documentation and processing 
requirements for justifications for the use of other that full and open 
competition shall be accomplished in accordance with internal agency 
procedures


917.604 and 917.605  [Removed]

    12. Sections 917.604 and 917.605 are removed.

PART 922--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITION


922.71   [Removed]

    13. Subpart 922.71 is removed.

PART 923--ENVIRONMENT, CONSERVATION, OCCUPATIONAL SAFETY AND DRUG-
FREE WORKPLACE


923.570-2  [Amended]

    14. Subsection 923.570-2 is amended in paragraph (a) by revising 
``48 CFR 970.5204-57'' to read ``48 CFR 970.5223-3''; and in paragraph 
(b) by revising ``970.5204-58'' to read ``48 CFR 970.5223-4.''

[[Page 13436]]

923.570-3  [Amended]

    15. Subsection 923.570-3 is amended in paragraph (a) by revising 
``970.5204-58'' to read ``48 CFR 970.5223-4'', and in paragraph (b)(2) 
by revising ``970.5204-57'' to read ``970.5223-3.''

PART 927--PATENTS, DATA, AND COPYRIGHTS

    16. The authority citation for part 927 continues to read as 
follows:

    Authority: Sec. 644 of the Department of Energy Organization 
Act, Pub. L. 95-91 (42 U.S.C. 7254); Sec. 148 of the Atomic Energy 
Act of 1954, as amended (42 U.S.C. 2168); Federal Nonnuclear Energy 
Research and Development Act of 1974, Sec. 9 (42 U.S.C. 5908); 
Atomic Energy Act of 1954, as amended, Sec. 152 (42 U.S.C. 2182); 
Department of Energy National Security and Military Applications of 
Nuclear Energy Authorization Act of 1987, as amended, Sec. 3131(a), 
(42 U.S.C. 7261a.).

    17. Section 927.303 is amended by revising paragraph (a) to read as 
follows:


927.30  Contract clauses.

    (a) In solicitations and contracts for experimental, research, 
developmental, or demonstration work (but see 48 CFR 27.304-3 regarding 
contracts for construction work or architect-engineer services), and 
all management and operating contracts, the contracting officer shall 
include the following clauses:
    (1) Insert the clause at 48 CFR 952.227-11, Patent Rights by the 
Contractor (Short Form), in contracts in which the contractor is a 
domestic small business or nonprofit organization as defined at 48 CFR 
27.301, except where the work of the contract is subject to an 
Exceptional Circumstances Determination by DOE. In contracts with 
nonprofit entities for the management and operation of DOE laboratories 
and production facilities, the contracting officer shall insert the 
clause with its Alternate I.
    (2) Insert the clause at 48 CFR 952.227-13, Patent Rights 
Acquisition by the Government, in all contracts other than those 
described in paragraph (a)(1) of this section. In contracts with 
profit-making entities for the management and operation of DOE 
laboratories and production facilities, the contracting officer shall 
insert the clause with its Alternate I.
* * * * *


927.402-1  [Amended]

    18. Subsection 927.402-1 is amended in paragraph (b) by revising 
``(see 970.2705)'' to read ``(see 48 CFR 970.2704)'', and by revising 
``970.5204-82'' to read ``48 CFR 970.5227-1.''


927.404  [Amended]

    19. Section 927.404 is amended in paragraph (g)(4) by revising 
``970.5204-82'' to read ``48 CFR 970.5227-2.''
    20. Section 927.409 is amended in paragraph (a)(2)(vi) by revising 
``(See 970.2705)'' to read ``(see 48 CFR 970.2704).''

PART 935--RESEARCH AND DEVELOPMENT CONTRACTING


935.070  [Removed]

    21. Section 935.070 is removed.

PART 941--ACQUISITION OF UTILITY SERVICES

    22. Subsection 941.201-71 is amended by revising ``48 CFR 
970.0803'' to read ``48 CFR 970.4102-1.''

PART 942--CONTRACT ADMINISTRATION

    23. Subpart 942.2 is added as follows:

Subpart 942.2--Contract Administration Services


9427.2-1  Contract Administration Services.


942.270-1  Contracting officer's representatives.

    In accordance with internal agency procedures, a contracting 
officer may designate other qualified personnel to be the Contracting 
Officer's Representative (COR) for the purpose of performing certain 
technical functions in administering a contract. These functions 
include, but are not limited to, technical monitoring, inspection, 
approval of shop drawings, testing, and approval of samples. The COR 
acts solely as a technical representative of the contracting officer 
and is not authorized to perform any function that results in a change 
in the scope, price, terms or conditions of the contract. COR 
designations must be made in writing by the contracting officer, and 
shall identify the responsibilities and limitations of the designation. 
A copy of the COR designation must be furnished to the contractor and 
the contract administration office.


942.270-2  Contract clause.

    The clause at 952.242-70 may be inserted in solicitations and 
contracts when a designated Contracting Officer's Representative will 
issue technical direction to the contractor under the contract.

PART 947--TRANSPORTATION

    24. Subpart 947.70 is added to read as follows:
Subpart 947.70--Foreign Travel
Sec.
947.7000   Definition.
947.7001   Policy.
947.7002   Contract clause.

947.70--Foreign Travel


947.7000  Definition.

    Foreign travel, for purposes of this subpart, means any travel 
outside of Canada, Mexico and the United States and its territories and 
possessions.


947.7001  Policy.

    Prior approval of the contracting officer is required by the 
contractor when foreign travel by contractor personnel will be charged 
directly to a DOE contract. Such approval shall be required for each 
separate trip regardless of whether funds for such travel are contained 
in an approved budget.


947.7002  Contract clause.

    When foreign travel may be required under the contract, the 
contracting officer shall insert the clause at 48 CFR 952.247-70, 
Foreign Travel.

PART 952--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    25. Section 952.203-70 is added to read as follows:


952.203-70  Whistleblower protection for contractor employees.

    As prescribed in 48 CFR 903.971, insert the following clause:

Whistleblower Protection for Contractor Employees (Month and Year TBE)

    (a) The contractor shall comply with the requirements of ``DOE 
Contractor Employee Protection Program'' at 10 CFR part 708 for work 
performed on behalf of DOE directly related to activities at DOE-
owned or -leased sites.
    (b) The contractor shall insert or have inserted the substance 
of this clause, including this paragraph (b), in subcontracts at all 
tiers, for subcontracts involving work performed on behalf of DOE 
directly related to activities at DOE-owned or -leased sites.

(End of Clause)

    26. Section 952.204-75 is added as follows:


952.204-75  Public affairs.

    As prescribed in 48 CFR 904.7201, insert the following clause.

Public Affairs (Month and Year TBE)

    (a) The Contractor must cooperate with the Department in 
releasing unclassified information to the public and news media 
regarding DOE policies, programs, and activities relating its effort 
under the contract. The responsibilities under this clause must be 
accomplished through

[[Page 13437]]

coordination with the Contracting Officer and appropriate DOE public 
affairs personnel.
    (b) The Contractor is responsible for the development, planning, 
and coordination of proactive approaches for the timely 
dissemination of unclassified information regarding DOE activities 
onsite and offsite, including, but not limited to, operations and 
programs. Proactive public affairs programs may utilize a variety of 
communication media, including public workshops, meetings or 
hearings, open houses, newsletters, press releases, conferences, 
audio/visual presentations, speeches, forums, tours, and other 
appropriate stakeholder interactions.
    (c) The Contractor's internal procedures must ensure that all 
releases of information to the public and news media are coordinated 
through, and approved by, a management official at an appropriate 
level within the Contractor's organization.
    (d) The Contractor must comply with established DOE procedures 
for obtaining advance clearances on all oral, written, and audio/
visual informational material prepared for public dissemination or 
use.
    (e) Unless prohibited by law, the Contractor must notify the 
Contracting Officer and appropriate DOE public affairs personnel of 
any communications or contacts with Members of Congress relating to 
the effort performed under the contract.
    (f) The Contractor must notify the Contracting Officer and 
appropriate DOE public affairs personnel of any activities or 
situations that may attract regional or national news media 
attention and of non-routine inquiries from national news media 
relating to the effort performed under the contract.
    (g) In releases of information to the public and news media, the 
Contractor must fully and accurately identify the Contractor's 
relationship to the Department and fully and accurately credit the 
Department for its role in funding programs and projects resulting 
in scientific, technical, and other achievements.

    27. Section 952.215-70 is added as follows:


952.215-70  Key Personnel.

    As prescribed in 48 CFR 915.408-70(a), the contracting officer 
shall insert the following clause:

Key Personnel (Month and Year TBE)

    (a) The personnel listed below or elsewhere in this contract 
[Insert cross-reference, if applicable] are considered essential to 
the work being performed under this contract. Before removing, 
replacing, or diverting any of the listed or specified personnel, 
the Contractor must: (1) Notify the Contracting Officer reasonably 
in advance; (2) submit justification (including proposed 
substitutions) in sufficient detail to permit evaluation of the 
impact on this contract; and (3) obtain the Contracting Officer's 
written approval.
    (b) The list of personnel may, with the consent of the 
contracting parties, be amended from time to time during the course 
of the contract to add or delete personnel.
    [Insert List of Key Personnel unless listed elsewhere in the 
contract]

(End of clause)

952.222-70  [Removed]

    28. Section 952.222-70 is removed.


952.223-71  [Removed]

    29. Section 952.223-71 is amended by revising ``970.5204-2'' to 
read ``48 CFR 970.5223-1.''
    30. Section 952.227-11 is amended by revising the prescription and 
clause date, and adding Alternate I as follows:


952.227-11  Patent rights--retention by the contractor (short form).

    As prescribed in 48 CFR 927.303(a)(1), the contracting officer 
shall insert the following clause:

Patent Rights--Retention by the Contractor (Short Form) (Month and Year 
TBE)

* * * * *
    Alternate I (Month and Year TBE). As prescribed in 48 CFR 
927.303(a)(1), replace paragraph (e)(1) with the following paragraph 
(e)(1), and add the following paragraphs (m) and (n):
    (e)(1) The contractor may request the right to reserve a 
revocable, nonexclusive, royalty-free license throughout the world 
in each subject invention to which the Government obtains title, 
except if the contractor fails to disclose the invention within the 
times specified in paragraph (c) of this clause. When DOE approves 
such reservation, the contractor's license will extend to its 
domestic subsidiaries and affiliates, if any, within the corporate 
structure of which the contractor is a party and includes the right 
to grant sublicenses of the same scope to the extent the contractor 
was legally obligated to do so at the time the contract was awarded. 
The license is transferable only with the approval of DOE, except 
when transferred to the successor of that part of the contractor's 
business to which the invention pertains.
    (m) Transfer to successor contractor. (1) In the event of 
termination or expiration of this contract, the contractor shall 
transfer any unexpended balance of income received relating to 
intellectual property, in accordance with instructions from the 
contracting officer, to a successor contractor, or in the absence of 
a successor contractor, to such other entity as designated by the 
contracting officer. The contractor shall also transfer title, as 
one package, in all patents and patent applications, license 
agreements, accounts containing royalty revenues from such license 
agreements, including equity positions in third-party entities, and 
other intellectual property that arose under the performance of this 
contract, to the successor contractor or to the Government, as 
directed by the contracting officer. (2) The Government agrees that 
the recipient of such title shall assume any remaining obligations 
and liabilities in connection with the patents and patent 
applications.
    (n) Facilities license. In addition to the rights of the parties 
with respect to inventions or discoveries conceived or first 
actually reduced to practice in the course of or under this 
contract, the contractor agrees to and does hereby grant to the 
Government an irrevocable, nonexclusive, paid-up license in and to 
any inventions or discoveries regardless of when conceived or 
actually reduced to practice or acquired by the contractor at any 
time through completion of this contract and which are incorporated 
or embodied in the construction of the facility or which are 
utilized in the operation of the facility or which cover articles, 
materials, or products manufactured at the facility (1) to practice 
or have practiced by or for the Government at the facility, and (2) 
to transfer such license with the transfer of that facility. The 
acceptance or exercise by the Government of these rights shall not 
prevent the Government at any time from contesting the 
enforceability, validity or scope of, or title to, any rights or 
patents herein licensed.

    31. Section 952.227-13 is amended by revising the prescription and 
clause date, and adding Alternate I as follows:


952.227-13  Patent rights--acquisition by the Government.

    As prescribed in 48 CFR 927.303(a)(2), the contracting officer 
shall insert the following clause:

Patent Rights--Acquisition by the Government (Month and Year TBE)

* * * * *
    Alternate I (Month and Year TBE). As prescribed in 48 CFR 
927.303(a)(2), add the following paragraphs (j) and (k):
    (j) Transfer to successor contractor. (1) In the event of 
termination or expiration of this contract, the contractor shall 
transfer any unexpended balance of income received relating to 
intellectual property, in accordance with instructions from the 
contracting officer, to a successor contractor, or in the absence of 
a successor contractor, to such other entity as designated by the 
contracting officer. The contractor shall also transfer title, as 
one package, in all patents and patent applications, license 
agreements, accounts containing royalty revenues from such license 
agreements, including equity positions in third-party entities, and 
other intellectual property that arose under the performance of this 
contract, to the successor contractor or to the Government, as 
directed by the contracting officer.
    (2) The Government agrees that the recipient of such title shall 
assume any remaining obligations and liabilities in connection with 
the patents and patent applications.
    (k) Facilities License. In addition to the rights of the parties 
with respect to inventions or discoveries conceived or first 
actually reduced to practice in the course of or under this 
contract, the contractor agrees to and does hereby grant to the 
Government an irrevocable, nonexclusive, paid-up license in and to 
any inventions or discoveries regardless of when conceived or 
actually reduced to practice or acquired by the contractor at any 
time through completion of this contract and which are incorporated 
or embodied in the construction of the facility or which are 
utilized in the operation of the facility or which cover articles, 
materials, or products manufactured at the facility (1) to practice 
or have practiced by or for the

[[Page 13438]]

Government at the facility, and (2) to transfer such license with 
the transfer of that facility. The acceptance or exercise by the 
Government of these rights shall not prevent the Government at any 
time from contesting the enforceability, validity or scope of, or 
title to, any rights or patents herein licensed.

    32. Section 952.242-70 is added as follows:


952.242-70  Technical Direction

    As prescribed in 48 CFR 942.270-2, insert the following clause.

Technical Direction (Month and Year TBE)

    (a) Performance of the work under this contract shall be subject 
to the technical direction of the DOE Contracting Officer's 
Representative (COR). The term ``technical direction'' is defined to 
include, without limitation:
    (1) Providing direction to the contractor that redirects 
contract effort, shift work emphasis between work areas or tasks, 
require pursuit of certain lines of inquiry, fill in details, or 
otherwise serve to accomplish the contractual Statement of Work.
    (2) Providing written information to the contractor that assists 
in interpreting drawings, specifications, or technical portions of 
the work description.
    (3) Reviewing and, where required by the contract, approving, 
technical reports, drawings, specifications, and technical 
information to be delivered by the contractor to the Government.
    (b) The contractor will receive a copy of the written COR 
designation from the contracting officer. It will specify the extent 
of the COR's authority to act on behalf of the contracting officer.
    (c) Technical direction must be within the scope of work stated 
in the contract. The COR does not have the authority to, and may 
not, issue any technical direction that:
    (1) Constitutes an assignment of additional work outside the 
Statement of Work;
    (2) Constitutes a change as defined in the contract clause 
entitled ``Changes;''
    (3) In any manner causes an increase or decrease in the total 
estimated contract cost, the fee (if any), or the time required for 
contract performance;
    (4) Changes any of the expressed terms, conditions or 
specifications of the contract; or
    (5) Interferes with the contractor's right to perform the terms 
and conditions of the contract.
    (d) All technical direction shall be issued in writing by the 
COR.
    (e) The contractor must proceed promptly with the performance of 
technical direction duly issued by the COR in the manner prescribed 
by this clause and within its authority under the provisions of this 
clause. If, in the opinion of the contractor, any instruction or 
direction by the COR falls within one of the categories defined in 
(c)(1) through (c)(5) of this clause, the contractor must not 
proceed and must notify the Contracting Officer in writing within 
five (5) working days after receipt of any such instruction or 
direction and must request the Contracting Officer to modify the 
contract accordingly. Upon receiving the notification from the 
contractor, the Contracting Officer must:
    (1) Advise the contractor in writing within thirty (30) days 
after receipt of the contractor's letter that the technical 
direction is within the scope of the contract effort and does not 
constitute a change under the Changes clause of the contract; or
    (2) Advise the contractor in writing within a reasonable time 
that the Government will issue a written change order.
    (f) A failure of the contractor and Contracting Officer either 
to agree that the technical direction is within the scope of the 
contract or to agree upon the contract action to be taken with 
respect to the technical direction will be subject to the provisions 
of the clause entitled ``Disputes.''

(End of Clause)

    33. Section 952.247-70 is amended by revising the prescription to 
read as follows:


952.247-70  Foreign travel.

    As prescribed in 48 CFR 947.7002, insert the following clause:
* * * * *


952.250-70  [Amended]

    34. Section 952.250-70 is amended in paragraph (h) by revising 
``Audit and records--Negotiation'', to read ``Accounts, records, and 
inspection.''
    35. The authority citation for Part 970 continues to read as 
follows:

    Authority: Sec. 161 of the Atomic Energy Act of 1954 (42 U.S.C. 
2201), sec. 644 of the Department of Energy Organization Act, Public 
Law 95-91 (42 U.S.C. 7254).

    36. Part 970 is revised to read as follows:

PART 970--DOE MANAGEMENT AND OPERATING CONTRACTS

Sec.
Subpart 970.01--Management and Operating Contract Regulatory System
970.0100   Scope of part.
970.0103   Publication and codification.
Subpart 970.03--Improper Business Practices and Personal Conflicts of 
Interest
970.0309   Whistleblower protection of contractor employees.
970.0309-1   Applicability.
970.0370   Management controls and improvements.
970.0370-1   Policy.
970.0370-2   Contract clause.
970.0371   Conduct of employees of DOE management and operating 
contractors.
970.0371-1   Scope of section.
970.0371-2   Applicability.
970.0371-3   Definition.
970.0371-4   Gratuities.
970.0371-5   Use of privileged information.
970.0371-6   Incompatibility between regular duties and private 
interests.
970.0371-7   Outside employment of contractor employees.
970.0371-8   Employee disclosure concerning other employment 
services.
970.0371-9   Contract clause.
Subpart 970.04--Administrative Matters
970.0404   Safeguarding classified information.
970.0404-1   Definitions.
970.0404-2   General.
970.0404-3   Responsibilities of contracting officers.
970.0404-4   Solicitation provision and contract clauses.
970.0407   Contractor records retention.
970.0407-1   Applicability.
970.0407-1-1   Alternate retention schedules.
970.0407-1-2   Access to and ownership of records.
970.0407-1-3   Contract clause.
970.0470   Department of Energy directives.
970.0470-1   General.
970.0470-2   Contract clause.
Subpart 970.08--Required Sources of Supplies and Services
970.0801   Excess personal property.
970.0801-1   Policy.
970.0808   Acquisition of printing.
970.0808-1   Scope of section.
970.0808-2   Policy.
970.0808-3   Contract clause.
Subpart 970.09--Contractor Qualifications
970.0905   Organizational conflicts of interest.
970.0970   Performance guarantees.
970.0970-1   Determination of responsibility.
970.0970-2   Solicitation provision.
Subpart 970.11--Describing Agency Needs
970.1100   Policy.
970.1100-1   Performance-based contracting.
970.1100-2   Additional considerations.
Subpart 970.15--Contracting by Negotiation
970.1504   Contract pricing.
970.1504-1   Price analysis.
970.1504-1-1   Fees for management and operating contracts.
970.1504-1-2   Fee policy.
970.1504-1-3   Special considerations: Laboratory management and 
operation.
970.1504-1-4   Types of contracts and fee arrangements.
970.1504-1-5   General considerations and techniques for determining 
fixed fees.
970.1504-1-6   Calculating fixed fee.
970.1504-1-7   Fee base.
970.1504-1-8   Special equipment purchases.
970.1504-1-9   Special considerations: Cost-plus-award-fee.
970.1504-1-10   Special considerations: Fee limitations.
970.1504-1-11   Documentation.
970.1504-2   Price negotiation.
970.1504-3   Documentation.
970.1504-3-1   Cost or pricing data.
970.1504-4   Special cost or pricing areas.
970.1504-4-1   Make-or-Buy Plans.
970.1504-4-2   Policy.
970.1504-4-3   Requirements.
970.1504-5   Solicitation provision contract clauses.
Subpart 970.17--Special Contracting Methods
970.1706   Management and operating contracts.

[[Page 13439]]

970.1706-1   Award, renewal, and extension.
970.1706-2   Contract clause.
Subpart 970.19--Small, Small Disadvantaged and Women-Owned Small 
Business Concerns
970.1907   Subcontracting with Small Business, Small Disadvantaged 
Business and Woman-owned Small Business Concerns.
970.1907-1   Subcontracting plan requirements.
Subpart 970.22--Application of Labor Policies
970.2200   Scope of subpart.
970.2201   Basic labor policies.
970.2201-1   Labor relations.
970.2201-1-1   General.
970.2201-1-2   Policies.
970.2201-1-3   Contract clause.
970.2201-2   Overtime management.
970.2201-2-1   Policy.
970.2201-2-2   Contract clause.
970.2204   Labor standards for contracts involving construction.
970.2204-1   Statutory and regulatory requirements.
970.2204-1-1   Administrative controls and criteria for application 
of the Davis-Bacon Act in operational or maintenance activities.
970.2208   Equal employment opportunity.
970.2210   Service Contract Act.
970.2270   Unemployment compensation.
Subpart 970.23--Environmental, Conservation, and Occupational Safety 
Programs
970.2303   Hazardous materials identification and material safety.
970.2303-1   General.
970.2303-2   Contract clauses.
970.2304   Use of recovered/recycled materials.
970.2304-1   General.
970.2304-2   Contract clause.
970.2305   Workplace substance abuse programs--management and 
operating contracts.
970.2305-1   General.
970.2305-2   Applicability.
970.2305-3   Definitions.
970.2305-4   Solicitation provision and contract clause.
970.2306   Suspension of payments, termination of contract, and 
debarment and suspension actions.
Subpart 970.26--Other Socioeconomic Programs
970.2670   Implementation of section 3021 of the Energy Policy Act 
of 1992.
970.2670-1   Requirements.
970.2671   Diversity.
970.2671-1   Policy.
970.2671-2   Contract clause.
970.2672   Implementation of section 3161 of the National Defense 
Authorization Act for Fiscal Year 1993.
970.2672-1   Policy.
970.2672-2   Requirements.
970.2672-3   Contract clause.
970.2673   Regional partnerships.
970.2673-1   Policy.
970.2673-2   Contract clause.
Subpart 970.27--Patents, Data, and Copyrights
970.2701   General.
970.2701-1   Applicability.
970.2703   Patent rights.
970.2703-1   Policy.
970.2703-2   Contract clauses.
970.2704   Rights in data.
970.2704-1   General.
970.2704-2   Procedures.
970.2704-3   Contract clauses.
970.2770   Technology transfer.
970.2770-1   General.
970.2770-2   Policy.
970.2770-3   Technology transfer and patent rights.
970.2770-4   Contract clause.
Subpart 970.28--Bonds and Insurance
970.2803   Insurance.
970.2803-1   Workers' compensation insurance.
970.2803-2   Contract clause.
Subpart 970.29--Taxes
970.2902   Federal Excise Taxes.
970.2902-1   Exemptions from Federal Excise Taxes.
970.2903   State and Local Taxes.
970.2903-1   Applicability of State and Local Taxes to the 
Government.
970.2904   Contract clauses.
970.2904-1   Management and operating contracts.
Subpart 970.30--Cost Accounting Standards
970.3002 CAS   Program Requirements.
970.3002-1   Applicability.
970.3002-2   Limitations.
Subpart 970.31--Contract Cost Principles and Procedures
970.3100   Scope of Subpart.
970.3100-1   Definitions
970.3100-2   Responsibilities.
970.3101   Applicability.
970.3101-1   Objectives.
970.3101-2   Advance agreements.
970.3101-3   Cost certification and penalties on unallowable costs.
970.3102   Contracts with Management and Operating Contractors.
970.3102-1   General.
970.3102-1-1   Actual Cost Basis.
970.3102-1-2   Application of Cost Principles.
970.3102-1-3   General Basis for Reimbursement of Costs.
970.3102-1-4   Cost Determination Based on Audit.
970.3102-1-5   Contractor's System of Accounting.
970.3102-2   Direct and Indirect Costs.
970.3102-3   Selected Costs.
970.3102-3-1   Public Relations and Advertising.
970.3102-3-2   Compensation for Personal Services.
970.3102-3-3   Cost of Money.
970.3102-3-4   Depreciation.
970.3102-3-5   Employee Morale, Health, Welfare, Food Service, and 
Dormitory Costs.
970.3102-3-6   Fines, Penalties, and Mischarging Costs.
970.3102-3-7   Lobbying and Political Activity Costs.
970.3102-3-8   General and Administrative Expenses.
970.3102-3-9   Plant Reconversion Costs.
970.3102-3-10   Precontract Costs.
970.3102-3-11   Professional and Consultant Service Costs.
970.3102-3-12   Relocation Costs.
970.3102-3-13   Trade, Business, Technical and Professional Activity 
Costs.
970.3102-3-14   Travel Costs.
970.3102-3-15   Cost Related to Legal and Other Proceedings.
970.3102-3-16   Overtime, Shift and Holiday Premiums.
970.3102-3-17   Page Charges in Scientific Journals.
970.3102-3-18   Preparatory and Make-Ready Costs.
970.3102-3-19   Facilities (Plant and Equipment).
970.3102-3-20   Special Funds in the Construction Industry.
970.3102-3-21   Procurement: Subcontracts, Contractor-Affiliated 
Sources, and Leases.
970.3170   Contract Clauses.
Subpart 970.32--Contract Financing
970.3200   Policy.
970.3200-1   Reduction or Suspension of Advance, Partial, or 
Progress Payments.
970.3200-1-1   Contract Clause.
970.3204   Advance Payments.
970.3204-1   Applicability.
970.3204-2   Special Bank Account Agreement.
970.3204-3   Contract clause.
970.3270   Standard Financial Management Clauses.
Subpart 970.34--Major System Acquisition
970.3400   General Requirements.
970.3400-1   Mission-oriented Solicitation.
Subpart 970.35--Research and Development Contracting
970.3500   Scope of Subpart
970.3501   Federally Funded Research and Development Centers.
970.3501-1   Sponsoring Agreements.
970.3501-2   Using an FFRDC.
970.3501-3   Reviewing FFRDC's.
970.3501-4   Contract Clause.
Subpart 970.36--Construction and Architect-Engineer Contracts.
970.3605   Contract Clauses.
970.3605-1   Other Contracts.
970.3605-2   Special Construction Clause for Operating Contracts.
Subpart 970.37--Facilities Management Contracting
970.3701   General.
970.3701-1   Severance Payments to Foreign Nationals.
970.3701-1-1   Waiver of Cost Allowability Provisions.
970.3701-1-2   Solicitation Provision and Contract Clause.
970.3770   Facilities Management.
970.3770-1   Policy.
970.3770-2   Contract clause.

[[Page 13440]]

Subpart 970.41--Acquisition of Utility Services
970.4102  Acquiring Utility Services.
970.4102-1   Policy.
Subpart 970.43--Contract Modifications
970.4302   Changes.
970.4302-1  Contract Clause.
Subpart 970.44--Management and Operating Contractor Purchasing
970.4400  Scope.
970.4401  Responsibilities.
970.4401-1   General.
970.4401-2   Review and Approval.
970.4401-3   Advance Notification.
970.4402   Contractor Purchasing System.
970.4402-1   Policy.
970.4402-2   General Requirements.
970.4402-3   Purchasing from Contractor-Affiliated Sources.
970.4402-4   Nuclear Material Transfers.
970.4403   Contract Clause.
Subpart 970.45--Government Property
970.4501   General.
970.4501-1   Contract Clause.
Subpart 970.49--Termination of Contracts
970.4905   Contract Termination Clause.
970.4905-1   Termination for Convenience of the Government and 
Default.
Subpart 970.50--Extraordinary Contractual Actions
970.5070   Indemnification.
970.5070-1   Scope and Applicability.
970.5070-2   General.
970.5070-3   Contract Clauses.
Subpart 970.52--Solicitation Provisions and Contract Clauses for 
Management and Operating Contracts
970.5200  Scope of Subpart.
970.5201   Text of Provisions and Clauses.
970.5203-1   Management Controls.
970.5203-2   Performance Improvement and Collaboration.
970.5203-3  Contractor's Organization.
970.5204-1   Counterintelligence.
970.5204-2   Laws, Regulations, and DOE Directives.
970.5204-3   Access to and Ownership of Records.
970.5208-1   Printing.
970.5209-1   Requirement for Guarantee of Performance.
970.5215-1   Total Available Fee: Base Fee Amount and Performance 
Fee Amount.
970.5215-2   Make-or-Buy Plan.
970.5215-3   Conditional Payment of Fee, Profit, or Incentives.
970.5215-4   Cost Reduction.
970.5215-5   Limitation on Fee.
970.5222-1   Collective Bargaining Agreements--Management and 
Operating Contracts.
970.5222-2   Overtime Management.
970.5223-1   Integration of Environment, Safety, and Health into 
Work Planning and Execution.
970.5223-2   Acquisition and Use of Environmentally Preferable 
Products and Services.
970.5223-3   Agreement Regarding Workplace Substance Abuse Programs 
at DOE Facilities.
970.5223-4   Workplace Substance Abuse Programs at DOE Sites.
970.5226-1   Diversity Plan.
970.5226-2   Workforce Restructuring under Section 3161 of the 
National Defense Authorization Act for Fiscal Year 1993.
970.5226-3   Community Commitment.
970.5227-1   Rights in Data--Facilities.
970.5227-2   Rights in Data--Technology Transfer.
970.5227-3   Technology Transfer Mission.
970.5228-1   Insurance--Litigation and Claims.
970.5229-1   State and Local Taxes.
970.5231-1   Allowable Costs and Fee (Management and Operating 
Contracts).
970.5231-2   Political Activity Cost Prohibition.
970.5231-3   Cost Prohibitions Related to Legal and Other 
Proceedings.
970.5231-4   Preexisting Conditions.
970.5232-1   Reduction or Suspension of Advance, Partial, or 
Progress Payments Upon Finding of Substantial Evidence of Fraud.
970.5232-2   Payments and Advances.
970.5232-3   Accounts, Records, and Inspection.
970.5232-4   Obligation of Funds.
970.5235-1   Federally Funded Research and Development Center 
Sponsoring Agreement.
970.5236-1   Government Facility Subcontract Approval.
970.5237-1   Waiver of Limitations on Severance Payments to Foreign 
Nationals.
970.5237-2   Facilities Management.
970.5243-1   Changes.
970.5244-1   Contractor Purchasing System.
970.5245-1   Property.

Subpart 970.01--Management and Operating Contract Regulatory System


970.0100  Scope of Part.

    This part provides Departmental policies, procedures, provisions, 
and clauses that implement and supplement the Federal Acquisition 
Regulation (FAR) and other parts of the Department of Energy 
Acquisition Regulation (DEAR) for the award and administration of the 
Department's management and operating contracts, as defined at 48 CFR 
subpart 17.6.


970.0103  Publication and codification.

    (a) Organization of Part 970. (1) To the extent possible, the 
titles and text of the subparts, sections, and subsections of this part 
are numbered to correspond with related material that is contained in 
the FAR.
    (2) The number to the left of the decimal point represents the DEAR 
Part number (i.e., 970). The numbers to the right of the decimal point 
and to the left of the dash represent, in order, the DEAR subpart 
(first two digits), and the DEAR section number (second two digits). 
The numbers to the right of the dash represent the DEAR subsection. A 
second dash may follow the DEAR subsection number. As applicable, 
numbers to the right of the second dash represent subordinate 
subsections.
    (3) To the extent practicable, the subpart number corresponds with 
the FAR part which contains related coverage, and the section number 
corresponds with the FAR subpart which contains related coverage (e.g., 
the coverage contained in DEAR 970.0309 corresponds with material 
contained in FAR 3.9).
    (4) Where the FAR does not contain related coverage on a particular 
subject, the DEAR section number will be numbered using numbers of 70 
and up (e.g., 970.0370).
    (b) Special note regarding clause numbering. The section number for 
clauses prescribed in part 970 are numbered to correspond with the 
subpart in which the clause is prescribed (e.g., 970.5203-1 is 
prescribed for use at subpart 970.03).

Subpart 970.03--Improper Business Practices and Personal Conflicts 
of Interest


970.0309  Whistleblower Protection for Contractor Employees.


970.0309-1  Applicability.

    The contracting officer shall refer to 48 CFR subpart 903.9 
regarding the applicability of the DOE Employee Protection Program to 
management and operating contracts.


970.0370  Management Controls and Improvements.


970.0370-1  Policy.

    (a) Management and operating contractors shall develop and maintain 
systems of management and quality control to discourage waste, fraud 
and abuse; and to ensure that components, products, and services that 
are provided to DOE satisfy the contractor's obligations under the 
contract.
    (b) As a part of the required overall management structure, the 
contractor must maintain management control systems which, in 
compliance with the requirements of the clause at 48 CFR 970.5203-1:
    (1) Are documented and satisfactory to DOE;
    (2) Ensure that all levels of management are accountable for 
effective management systems and internal controls within their areas 
of assigned responsibility;
    (3) Cover both programmatic and administrative functions;
    (4) Provide reasonable assurance that Government resources are 
safeguarded against theft, fraud, waste, and unauthorized use;

[[Page 13441]]

    (5) Promote efficient and effective operations;
    (6) Ensure that all obligations and costs incurred are in 
compliance with the intended purposes and the terms and conditions of 
the contract;
    (7) Properly record, manage, and report all revenues, expenditures, 
transactions and assets;
    (8) Maintain financial, statistical and other reports necessary to 
maintain accurate, reliable, and timely accountability and management 
controls;
    (9) Are periodically reviewed to ensure that the systems provide 
reasonable assurance that the objectives of the system are being 
accomplished and that these controls are working effectively;
    (10) Are in accordance with the Comptroller General's standards for 
internal controls, as set forth in the General Accounting Office Policy 
and Procedures Manual For Guidance To Federal Agencies, (Oct 1984), as 
amended.
    (c) Management and operating contractors shall also develop and 
maintain a baseline program of quality assurance that will implement 
documented performance and quality standards, and management controls 
and assessment techniques to ensure components, services, and products 
meet DOE's, design criteria and other governing and applicable 
specifications.
    (d) DOE expects all its contractors to seek to identify 
improvements in any aspect of performance. Management and operating 
contracts are very large and complex; therefore, the opportunities to 
identify changes in performance that will increase the effectiveness or 
efficiency of contract performance are more prevalent than under other 
contracts. The clause at 48 CFR 970.5203-2 requires DOE management and 
operating contractors to affirmatively seek to identify, evaluate, and 
institute, where appropriate, processes that will improve the 
effectiveness or efficiency of any aspect of contract performance. It 
further requires the contractor to communicate any such improvements to 
DOE, other management and operating contractors, and DOE major 
facilities contractors. The contractor is required to participate in 
efforts by those contractors to address common problems or the 
institution of improvements. It allows the contractor to enlist the aid 
of the DOE contracting officer where necessary to institute or 
communicate the improvements. The obligations under the clause in no 
way affect the contractor's obligations under other provisions of the 
contract to notify or acquire the approval of the contracting officer.


970.0370-2  Contract clause.

    (a) The contracting officer shall insert the clause at 970.5203-1, 
Management Controls, in all management and operating contracts.
    (b) The contracting officer shall insert the clause at 970.5203-2, 
Performance Improvement and Collaboration, in all management and 
operating contracts.


970.0371  Conduct of employees of DOE management and operating 
contractors.


970.0371-1  Scope of section.

    This section establishes the policies for maintaining satisfactory 
standards of conduct on the part of individuals employed by DOE 
management and operating contractors.


970.0371-2  Applicability.

    The policies in this section are applicable to all DOE management 
and operating contractors.


970.0371-3  Definition.

    Employees, as used in this section, are defined to mean individuals 
employed by the contractor, both full and part-time, who are assigned 
to work under a DOE management and operating contract.


970.0371-4  Gratuities.

    Employees of a management and operating contractor shall not, under 
circumstances which might reasonably be interpreted as an attempt to 
influence the recipients in the conduct of their duties, accept any 
gratuity or special favor from individuals or organizations with whom 
the contractor is doing business, or proposing to do business, in 
accomplishing the work under the contract. Reference is made to the 
requirements prescribed in 48 CFR 3.502.


970.0371-5  Use of privileged information.

    Management and operating contractor employees shall not use 
privileged information for personal gain, or make other improper use of 
privileged information which is acquired in connection with their 
employment on contract work. For the purposes of this subsection, the 
term ``privileged information'' includes but is not limited to, 
unpublished information relating to technological and scientific 
developments; medical, personnel, or security records of individuals; 
anticipated materials' requirements or pricing action; possible new 
sites for DOE program operations; and knowledge of selections of 
contractors or subcontractors in advance of official announcement.


970.0371-6  Incompatibility between regular duties and private 
interests.

    Employees of a management and operating contractor shall not be 
permitted to make or influence any decisions on behalf of the 
contractor which directly or indirectly affect the interest of the 
Government, if the employee's personal concern in the matter may be 
incompatible with the interest of the Government. For example: An 
employee of a contractor will not negotiate, or influence the award of, 
a subcontract with a company in which the individual has an employment 
relationship or significant financial interest; and an employee of a 
contractor will not be assigned the preparation of an evaluation for 
DOE or for any DOE contractor of some technical aspect of the work of 
another organization with which the individual has an employment 
relationship, or significant financial interest, or which is a 
competitor of an organization (other than the contractor who is the 
individual's regular employer) in which the individual has an 
employment relationship or significant financial interest. The 
contractor shall be responsible for informing employees that they are 
expected to disclose any incompatibilities between duties performed for 
the contractor and their private interests and to refer undecided 
questions to the contractor.


970.0371-7  Outside employment of contractor employees.

    Employees of a management and operating contractor are entitled to 
the same rights and privileges with respect to outside employment as 
other citizens. Therefore, there is no general prohibition against 
contractor employees having outside employment. However, no employee of 
a contractor performing work on a full or part-time basis under a DOE 
management and operating contract may engage in employment outside 
official hours of duty or while on leave if such employment will:
    (a) In any manner interfere with the proper and effective 
performance of the duties of the position;
    (b) Appear to create a conflict-of-interest situation, or
    (c) Appear to subject DOE or the contractor to public criticism or 
embarrassment.


970.0371-8  Employee disclosure concerning other employment services.

    (a) Management and operating contractors are responsible for 
requiring its employees to file with the contractor, a written 
disclosure statement concerning outside employment

[[Page 13442]]

services which involve the use of information in the area of the 
employee's employment with the contractor. The disclosure shall contain 
such information concerning the outside employment as the contractor 
may prescribe. At a minimum, the employee's disclosure shall:
    (1) Acknowledge that the employee has read and is familiar with:
    (i) The requirements and restrictions prescribed in this section,
    (ii) DOE publication entitled, ``Reporting Results of Scientific 
and Technical Work Funded by DOE'', and
    (iii) The requirements of the contractor's contract with DOE 
relating to patents.
    (2) Include information concerning any rate of remuneration 
significantly in excess of the employee's regular rate of remuneration;
    (3) Identify any actual or potential conflicts with DOE's policies 
regarding conduct of employees of DOE's contractors set forth in this 
section;
    (4) Address any potential impacts that such employment may have on 
the contractor's responsibility to report fully and promptly to DOE all 
significant research and development information; and
    (5) Identify any potential conflicts such employment may have with 
the patent provisions of the contractor's contract with DOE.
    (b) The contractor shall provide a copy of all disclosures to the 
contracting officer.


970.0371-9  Contract clause.

    The contracting officer shall insert the clause at 970.5203-3, 
Contractor's Organization, in all management and operating contracts.

Subpart 970.04--Administrative Matters


970.0404  Safeguarding classified information.


970.0404-1  Definitions.

    Classified information means any information or material that is 
owned by or produced for, or is under the control of the United States 
Government, and determined pursuant to provisions of Executive Order 
12356, April 2, 1982 (47 FR 14874, April 6, 1982), or prior orders, or 
as authorized under the Atomic Energy Act of 1954, as amended, to 
require protection against unauthorized disclosure, and is so 
designated.
    Counterintelligence means information gathered and activities 
conducted to protect against espionage, other intelligence activities, 
sabotage, or assassinations conducted for or on behalf of foreign 
powers, organizations or persons, or international terrorist 
activities, but not including personnel, physical, document or 
communication security programs.
    Restricted data means data which is defined, in section 11, of the 
Atomic Energy Act of 1954, as amended, as ``all data concerning:
    (1) Design, manufacture, or utilization of atomic weapons;
    (2) The production of special nuclear material; or
    (3) The use of special nuclear material in the production of 
energy, but shall not include data declassified or removed from the 
Restricted Data category pursuant to section 142.''


970.0404-2  General.

    (a) The basis of DOE's security requirements is the Atomic Energy 
Act of 1954, as amended.
    (b) DOE regulations concerning national security information are 
codified at 10 CFR parts 1045 and 710. Supplemental security material 
is found in the DOE Directives system. Foreign ownership, control, or 
influence over contractors as it relates to security is discussed at 48 
CFR 904.70 also applies to management and operating contracts. 
Regulations pertaining to the protection of restricted data are found 
under 10 CFR part 1016.
    (c) Statutory requirements to be observed in connection with the 
release of Restricted Data to foreign governments are contained in the 
Atomic Energy Act of 1954, Sections 141 and 144 (42 U.S.C. 2161 and 
2164).
    (d) Section 148 of the Atomic Energy Act (42 U.S.C. 2168) prohibits 
the unauthorized dissemination of unclassified nuclear information with 
respect to the atomic energy defense programs pertaining to:
    (1) The design of production facilities or utilization facilities;
    (2) Security measures (including security plans, procedures, and 
equipment) for the physical protection of:
    (i) Production or utilization facilities,
    (ii) Nuclear material contained in such facilities, or
    (iii) Nuclear materials in transit; or
    (3) The design, manufacture, or utilization of any atomic weapon or 
component if the design, manufacture, or utilization of such weapon or 
component was contained in any information declassified or removed from 
the Restricted Data category pursuant to section 142 of the Atomic 
Energy Act (42 U.S.C. 2162).
    (e) Executive Order 12333, United States Intelligence Activities, 
provides for the organization and control of United States foreign 
intelligence and counterintelligence activities. In accordance with 
this Executive Order, DOE has established a counterintelligence program 
which is described in DOE Order 5670.3 (as amended). All DOE elements, 
including management and operating contractors and other contractors 
managing DOE-owned facilities which require access authorizations, 
should undertake the necessary precautions to ensure that DOE and 
covered contractor personnel, programs and resources are properly 
protected from foreign intelligence threats and activities.


970.0404-3  Responsibilities of contracting officers.

    (a) If access to Restricted Data may be required during the 
solicitation process for a management and operating contract, security 
clearances shall be obtained in accordance with applicable DOE 
Directives in the safeguards and security series.
    (b) Management and operating contracts which may require the 
processing or storage of Restricted Data or Special Nuclear Material 
require application of the applicable DOE Directives in the safeguards 
and security series.
    (c) The contracting officer shall refer to 48 CFR 904.71 for 
guidance concerning the prohibition on award of a DOE contract under a 
national security program to a company owned by an entity controlled by 
a foreign government when access to proscribed information is required 
to perform the contract.


970.0404-4  Solicitation provision and contract clauses.

    (a) The contracting officer shall insert the clause at 970.5204-1, 
Counterintelligence, into all management and operating contracts and 
other contracts for the management of DOE-owned facilities which 
include the security and classification/declassification clauses.
    (b) The contracting officer shall refer to 48 CFR 904.404 and 48 
CFR 904.7103 for the prescription of solicitation provisions and 
contract clauses relating to safeguarding classified information and 
foreign ownership, control, or influence over contractors.


970.0407  Contractor records retention.


970.0407-1  Applicability.


970.0407-1-1  Alternate retention schedules.

    Records produced under the Department's contracts involving 
management and operation

[[Page 13443]]

responsibilities relative to DOE-owned or--leased facilities are to be 
retained and disposed of in accordance with the guidance contained in 
DOE G 1324.5B, Records Management Program and DOE Records Schedules 
(see current version), rather than those set forth at 48 CFR subpart 
4.7, Contractor Records Retention.


970.0407-1-2  Access to and ownership of records.

    Contracting officers may agree to contractor ownership of certain 
categories of records designated in the instruction contained in 
paragraph (b) of the clause at 48 CFR 970.5204-3, Access to and 
Ownership of Records, provided the Government's rights to inspect, 
copy, and audit these records are not limited. These rights must be 
retained by the Government in order to carry out the Department's 
statutory responsibilities required by the Atomic Energy Act and other 
statutes for oversight of its contractors, including compliance with 
the Department's health, safety and reporting requirements, and 
protection of the public interest.


970.0407-1-3  Contract clause.

    The contracting officer shall insert the clause at 48 CFR 970.5204-
3, Access to and Ownership of Records, in management and operating 
contracts.


970.0470  Department of Energy Directives.


970.0470-1  General.

    (a) The contractor is required to comply with the requirements of 
applicable Federal, State and local laws and regulations, unless relief 
has been granted by the appropriate authority. For informational 
purposes, the contracting officer may append the contract with a list 
of applicable laws or regulations (see 970.5204-2, Laws, Regulations, 
and DOE Directives, paragraph (a)).
    (b) The Department of Energy Directives System is a system of 
instructions, including orders, notices, manuals, guides, and 
standards, for Departmental elements. In certain circumstances, 
requirements contained in these directives may apply to a contractor 
through operation of a contract clause. Program and requirements 
personnel are responsible for identifying requirements in the 
Directives System which are applicable to a contract, and for 
developing a list of applicable requirements and providing it to the 
contracting officer for inclusion in the contract.
    (c) Where directives requirements are established using either the 
Standards/Requirements Identification Process or the Work Smart 
Standards Process, the applicable process should also be used to 
establish the environment, safety, and health portion of the list 
identified in paragraph (b) of this section.
    (d) Environmental, safety, and health (ES&H) requirements 
appropriate for work conducted under a management and operating 
contract may be determined by a DOE approved process to evaluate the 
work and the associated hazards, and identify an appropriately tailored 
set of standards, practices, and controls, such as a tailoring process 
included in a DOE approved Safety Management System implemented under 
48 CFR 970.5223-1, Integration of Environment, Safety, and Health into 
Work Planning and Execution. When such a process is used, the 
contracting officer shall ensure that the set of tailored requirements, 
as approved by DOE pursuant to the process, is incorporated into the 
list identified in paragraph (b) of this section. These requirements 
shall supersede, in whole or in part, the contractual environmental, 
safety, and health requirements previously made applicable to the 
contract by List B. If the tailored set of requirements identifies an 
alternative requirement which varies from an ES&H requirement of an 
otherwise applicable law or regulation, the contractor must request an 
exemption or other appropriate regulatory relief that may be specified 
in the governing regulation.


970.0470-2  Contract clause.

    The contracting officer shall insert the clause at DEAR 970.5204-2, 
Laws, Regulations, and DOE Directives, in management and operating 
contracts.

Subpart 970.08--Required Sources of Supplies and Services


970.0801  Excess personal property.


970.0801-1  Policy.

    The provisions of 48 CFR subpart 8.1 (Federal Acquisition 
Regulation), 41 CFR 101-43 (Federal Property Management Regulation), 
and 41 CFR 109-43 (DOE Property Management Regulation) apply to DOE's 
management and operating contracts.


970.0808  Acquisition of printing.


970.0808-1  Scope of section.

    This section prescribes the Department's policy concerning 
duplicating or printing services which may be required in the 
performance of management and operating contracts.


970.0808-2  Policy.

    Management and operating contractors shall provide or secure 
duplication and printing services in accordance with the Government 
Printing and Binding Regulations, Title 44 of the U.S. Code, and 
applicable DOE Directives.


970.0808-3  Contract clause.

    The contracting officer shall insert the clause at 970.5208-1, 
Printing, in all management and operating contracts.

Subpart 970.09--Contractor Qualifications


970.0905  Organizational conflicts of interest.

    Management and operating contracts shall contain an organizational 
conflict of interest clause substantially similar to the clause at 48 
CFR 952.209-72, Organizational Conflicts of Interest, and which is 
appropriate to the statement of work of the individual contract. In 
addition, the contracting officer shall assure that the clause contains 
appropriate restraints on intra-corporate relations between the 
contractor's organization and personnel operating the Department's 
facility and its parent corporate body and affiliates. Such retrains 
shall include personnel access to the facility, technical transfer of 
information from the facility, and the availability from the facility 
of other advantages flowing from performance of the contract. The 
contracting officer is responsible for ensuring that M&O contractors 
adopt policies and procedures in the award of subcontracts that will 
meet the Department's need to safeguard against a biased work product 
and an unfair competitive advantage. To this end, the organizational 
conflicts of interest clause in management and operating contracts 
shall include Alternate I.


970.0970  Performance Guarantees.


970.0970-1  Determination of Responsibility.

    (a) In the award of a management and operating contract, the 
contracting officer shall determine that the prospective contractor is 
a responsible contractor and is capable of providing all necessary 
financial, personnel, and other resources in performance of the 
contract.
    (b) DOE contracts with entities that have been created solely for 
the purpose of performing a specific management and operating contract. 
Generally, such newly created entities will have very limited financial 
and other resources. In such instances, when making the determination 
of responsibility required under this section, the contracting officer 
may evaluate the financial resources of other entities only to the

[[Page 13444]]

extent that those entities are legally bound, jointly and severally if 
more than one, by means of a performance guarantee or other equivalent 
enforceable commitment to supply the necessary resources to the 
prospective contractor and to assume all contractual obligations of the 
prospective contractor. A performance guarantee should be the means 
used unless an equivalent degree of commitment can be obtained by an 
alternative means.
    (c) The guaranteeing corporate entity(ies) must be found to have 
sufficient resources in order to satisfy its guarantee.


970.0970-2  Solicitation provision.

    The contracting officer shall insert the provision at 48 CFR 
970.5209-1, Requirement for Guarantee of Performance, in solicitations 
when the awardee will be required to be organized solely for 
performance of the requirement.

Subpart 970.11--Describing Agency Needs


970.1100  Policy.


970.1100-1  Performance-based contracting.

    (a) It is the policy of the Department of Energy to use, to the 
maximum extent practicable, performance-based contracting methods in 
its management and operating contracts. Office of Federal Procurement 
Policy Letter 91-2 provides guidance concerning the development and use 
of performance-based contracting concepts and methodologies that may be 
generally applied to management and operating contracts. Performance-
based contracts: describe performance requirements in terms of results 
rather than methods of accomplishing the work; use measurable (i.e., 
terms of quality, timeliness, quantity) performance standards and 
objectives and quality assurance surveillance plans; provide 
performance incentives (positive or negative) where appropriate; and 
specify procedures for award or incentive fee reduction when work 
activities are not performed or do not meet contract requirements.
    (b) The use of performance-based statements of work, where 
feasible, is the preferred method for establishing work requirements. 
Such statements of work and other documents used to establish work 
requirements (such as work authorization directives) should describe 
performance requirements and expectations in terms of outcome, results, 
or final work products, as opposed to methods, processes, or design.
    (c) Contract performance requirements and expectations should be 
consistent with the Department's strategic planning goals and 
objectives, as made applicable to the site or facility through 
Departmental programmatic and financial planning processes. Measurable 
performance criteria, objective measures, and where appropriate, 
performance incentives, shall be structured to correspond to the 
performance requirements established in the statement of work and other 
documents used to establish work requirements.
    (d) Quality assurance surveillance plans shall be developed to 
facilitate the assessment of contractor performance and ensure the 
appropriateness of any award or incentive fee payment. Such plans shall 
be tailored to the contract performance objectives, criteria, and 
measures, and shall, to the maximum extent practicable, focus on the 
level of performance required by the performance objectives rather than 
the methodology used by the contractor to achieve that level of 
performance.


970.1100-2  Additional considerations.

    (a) While it is not feasible to set forth standard language which 
would apply to every contract situation, language must be designed for 
inclusion in a management and operating contract to describe clearly 
the work being undertaken; the controls, as appropriate, to be 
exercised by DOE over the performance of that work; and the 
relationship contemplated between the parties.
    (b) The language shall also include the following with respect to 
subcontracting performance of the work described pursuant to paragraph 
(a) of this section: ``The contractor shall, when directed by DOE and 
may, but only when authorized by DOE, enter into subcontracts for the 
performance of any part of the work under this clause.''
    (c) The provisions required in paragraphs (a) and (b) of this 
section shall be set forth in the statement of work of the contract.

Subpart 970.15--Contracting by Negotiation


970.1504  Contract pricing.


970.1504-1  Price analysis.


970.1504-1-1  Fees for management and operating contracts.

    This subsection sets forth the Department's policies on fees for 
management and operating contracts and may be applied to other 
contracts as determined by the Procurement Executive, or designee.


970.1504-1-2  Fee policy.

    (a) DOE management and operating contractors may be paid a fee in 
accordance with the requirements of this subsection.
    (b) There are three basic principles underlying the Department's 
fee policy:
    (1) The amount of available fee should reflect the financial risk 
assumed by the contractor.
    (2) It is the policy of the Department, when work elements cannot 
be fixed price, incentive fees (including award fees) tied to objective 
measures should be used to the maximum extent appropriate.
    (3) When work elements cannot be fixed price and award fees are 
employed, they should be tied to either objective or subjective 
measures. Each measure should, to the maximum extent appropriate, be 
directly tied to a specific portion of the fee pool.
    (c) Fee objectives and amounts are to be determined for each 
contract. Standard fees or across-the-board fee agreements will not be 
used or made. Due to the nature of funding management and operating 
contracts, it is anticipated that fee shall be established in 
accordance with the annual funding cycle; however, with the prior 
approval of the Procurement Executive, or designee, a longer period may 
be used where necessary to incentivize performance objectives that span 
funding cycles or to optimize cost reduction efforts.
    (d) Annual fee amounts shall be established in accordance with this 
subsection. Annual amounts shall not exceed maximum amounts derived 
from the appropriate fee schedule (and Classification Factor, if 
applicable) unless approved in advance by the Procurement Executive, or 
designee. In no event shall any fee exceed statutory limits imposed by 
41 U.S.C. 254(b).
    (e)(1) Contracting Officers shall include negative fee incentives 
in contracts when appropriate. A negative fee incentive is one in which 
the contractor will not be paid the full target fee amount when the 
actual performance level falls below the target level established in 
the contract.
    (2) Negative fee incentives may only be used when:
    (i) A target level of performance can be established, which the 
contractor can reasonably be expected to reach;
    (ii) The value of the negative incentive is commensurate with the 
lower level of performance and any additional administrative costs;
    (iii) Factors likely to prevent attainment of the target level of 
performance are clearly within the control of the contractor; and

[[Page 13445]]

    (iv) The contract indicates clearly a level below which performance 
is not acceptable.
    (f) Prior to the issuance of a competitive solicitation or the 
initiation of negotiations for an extension of an existing contract, 
the HCA shall coordinate the maximum available fee, as allowed by 48 
CFR 970.1504-1-1, and the fee amount targeted for negotiation, if less, 
with the Procurement Executive, or designee. Solicitations shall 
identify maximum available fee under the contract and may invite 
offerors to propose fee less than the maximum available.
    (g) When a contract subject to this subsection requires a 
contractor to use its own facilities or equipment, or other resources 
to make its own cost investment for contract performance (e.g., when 
there is no letter-of-credit financing), consideration may be given, 
subject to approval by the Procurement Executive, or designee, to 
increasing the total available fee amount above that otherwise provided 
by this subsection.
    (h) Multiple fee arrangements should be used in accordance with 48 
CFR 970.1504-1-4.


970.1504-1-3  Special considerations: Laboratory management and 
operation.

    (a) For the management and operation of a laboratory, the 
contracting officer shall consider whether any fee is appropriate. 
Considerations should include:
    (1) The nature and extent of financial or other liability or risk 
assumed or to be assumed under the contract;
    (2) The proportion of retained earnings (as established under 
generally accepted accounting methods) that are utilized to fund the 
performance of work related to the DOE contracted effort;
    (3) Facilities capital or capital equipment acquisition plans;
    (4) Other funding needs, to include contingency funding, working 
capital funding, and provision for funding unreimbursed costs deemed 
ordinary and necessary;
    (5) The utility of fee as a performance incentive; and
    (6) The need for fee to attract qualified contractors, 
organizations, and institutions.
    (b) In the event fee is considered appropriate, the contracting 
officer shall determine the amount of fee in accordance with this 
subsection.
    (1) Costs incurred in the operation of a laboratory that are 
allowable and allocable under the cost principles (i.e., commercial 
using 48 CFR 31.2, nonprofit using OMB Circular A-122, or university-
affiliated using OMB Circular A-21), regulations, or statutes 
applicable to the operating contractor should be classified as direct 
or indirect (overhead or G&A) charges to the contract and not included 
as proposed fee. Exceptions must be approved by the Procurement 
Executive, or designee.
    (2) Except as specified in 48 CFR 970.1504-1-3(c)(3), the maximum 
total amount of fee shall be calculated in accordance with 48 CFR 
970.1504-1-5 or 48 CFR 970.1504-1-9, as appropriate. The total amount 
of fee under any laboratory management and operating contract or other 
designated contract shall not exceed, and may be significantly less 
than, the result of that calculation. In determining the total amount 
of fee, the contracting officer shall consider the evaluation of the 
factors in paragraph (a) of this subsection as well as any benefits the 
laboratory operator will receive due to its tax status.
    (c) In the event fee is considered appropriate, the contracting 
officer shall establish the type of fee arrangement in accordance with 
this subsection.
    (1) The amount of fee may be established as total available fee 
with a base fee portion and a performance fee portion. Base fee, if 
any, shall be an amount in recognition of the risk of financial 
liability assumed by the contractor and shall not exceed the cost risk 
associated with those liabilities or the amount calculated in 
accordance with 48 CFR 970.1504-1-5, whichever is less. The total 
available fee, excepting any base fee, shall normally be associated 
with performance at or above the target level of performance as defined 
by the contract. If performance in either of the two general work 
categories appropriate for laboratories (science/technology and 
support) is rated at less than the target level of performance, the 
total amount of the available fee shall be subject to downward 
adjustment. Such downward adjustment shall be subject to the terms of 
the clause at 48 CFR 970.5215-3, Conditional Payment of Fee, Profit, or 
Incentives, if contained in the contract.
    (2) The amount of fee may be established as a fixed fee in 
recognition of the risk of financial liability to be assumed by the 
contractor, with such fixed fee amount not exceeding the cost risk 
associated with the liabilities assumed or the amount of fee calculated 
in accordance with 48 CFR 970.1504-1-5, whichever is less.
    (3) If the fixed fee or total available fee exceeds 75% of the fee 
that would be calculated per 48 CFR 970.1504-1-5 or 48 CFR 970.1504-1-
9; or if a fee arrangement other than one of those set forth in 
paragraphs (c) (1) or (2) of this subsection is considered appropriate, 
the approval of the Procurement Executive, or designee, shall be 
obtained prior to its use.
    (4) Fee, if any, as well as the type of fee arrangement, will 
normally be established for the life of the contract. It will be 
established at time of award, as part of the extend/compete decision, 
at the time of option exercise, or at such other time as the parties 
can mutually reach agreement, e.g., negotiations. Such agreement shall 
require the approval of the Procurement Executive, or designee.
    (5) Fee established for longer than one year shall be subject to 
adjustment in the event of a significant change (greater than +/-10% or 
a lessor amount if appropriate) to the budget or work scope.
    (6) Retained earnings (reserves) shall be identified and a plan for 
their use and disposition developed.
    (7) The use of retained earnings as a result of performance of 
laboratory management and operation may be restricted if the operator 
is an educational institution.


970.1504-1-4  Types of contracts and fee arrangements.

    (a) Contract types and fee arrangements suitable for management and 
operating contracts may include cost, cost-plus-fixed-fee, cost-plus-
award-fee, cost-plus-incentive-fee, fixed-price incentive, firm-fixed-
price or any combination thereof (see 48 CFR 16.1). In accordance with 
48 CFR 970.1504-1-2(b)(1), the fee arrangement chosen for each work 
element should reflect the financial risk for project failure that 
contractors are willing to accept. Contracting officials shall 
structure each contract and the elements of the work in such a manner 
that the risk is manageable and, therefore, assumable by the 
contractor.
    (b) Consistent with the concept of a performance-based management 
contract, those contract types which incentivize performance and cost 
control are preferred over a cost-plus-fixed-fee arrangement. 
Accordingly, a cost-plus-fixed-fee contract in instances other than 
those set forth in 48 CFR 970.1504-1-3(c)(2) may only be used when 
approved in advance by the Procurement Executive, or designee.
    (c) A cost-plus-award-fee contract is generally the appropriate 
contract type for a management and operating contract.
    (1) Where work cannot be adequately defined to the point that a 
fixed price contract is acceptable, the attainment of acquisition 
objectives generally will be enhanced by using a cost-plus-award-fee 
contract or other incentive fee

[[Page 13446]]

arrangement to effectively motivate the contractor to superior 
performance and to provide the Department with flexibility to evaluate 
actual performance and the conditions under which it was achieved.
    (2) The construct of fee for a cost-plus-award-fee management and 
operating contract is that total available fee will equal a base fee 
amount and a performance fee amount. The total available fee amount 
including the performance fee amount the contractor may earn, in whole 
or in part during performance, shall be established annually (or as 
otherwise agreed to by the parties and approved by the Procurement 
Executive, or designee), in an amount sufficient to motivate 
performance excellence.
    (3) However, consistent with concepts of performance-based 
contracting, it is Departmental policy to place fee at risk based on 
performance. Accordingly, a base fee amount will be available only when 
approved in advance by the Procurement Executive, or designee, except 
as permitted in 48 CFR 970.1504-1-3(c)(1). Any base fee amount shall be 
fixed, expressed as a percent of the total available fee at inception 
of the contract, and shall not exceed that percent during the life of 
the contract.
    (4) The performance fee amount may consist of an objective fee 
component and a subjective fee component. Objective performance 
measures, when appropriately applied, provide greater incentives for 
superior performance than do subjective performance measures and should 
be used to the maximum extent appropriate. Subjective measures should 
be used when it is not feasible to devise effective predetermined 
objective measures applicable to cost, technical performance, or 
schedule for particular work elements.
    (d) Consistent with performance-based contracting concepts, 
performance objectives and measures related to performance fee should 
be as clearly defined as possible and, where feasible, expressed in 
terms of desired performance results or outcomes. Specific measures for 
determining performance achievement should be used. The contract should 
identify the amount and allocation of fee to each performance result or 
outcome.
    (e) Because the nature and complexity of the work performed under a 
management and operating contract may be varied, opportunities may 
exist to utilize multiple contract types and fee arrangements. 
Consistent with paragraph (a) of this subsection and 48 CFR 16.1, the 
contracting officer should apply that contract type or fee arrangement 
most appropriate to the work component. However, multiple contract 
types or fee arrangements:
    (1) Must conform to the requirements of 48 CFR part 915 and 48 CFR 
parts 15 and 16, and
    (2) Where appropriate to the type, must be supported by:
    (i) Negotiated costs subject to the requirements of the Truth in 
Negotiations Act,
    (ii) A pre-negotiation memorandum, and
    (iii) A plan describing how each contract type or fee arrangement 
will be administered.
    (f) Cost reduction incentives are addressed in the clause at 48 CFR 
970.5215-4, Cost Reduction. This clause provides for incentives for 
quantifiable cost reductions associated with contractor proposed 
changes to a design, process, or method that has an established cost, 
technical, and schedule baseline, is defined, and is subject to a 
formal control procedure. The clause is to be included in management 
and operating contracts as appropriate. Proposed changes must be: 
initiated by the contractor, innovative, applied to a specific project 
or program, and not otherwise included in an incentive under the 
contract. Such cost reduction incentives do not constitute fee and are 
not subject to statutory or regulatory fee limitations; however, they 
are subject to all appropriate requirements set forth in this subpart.
    (g) Operations and field offices shall take the lead in developing 
and implementing the most appropriate pricing arrangement or cost 
reduction incentive for the requirements. Pricing arrangements which 
provide incentives for performance and cost control are preferred over 
those that do not. The operations and field offices are to ensure that 
the necessary resources and infrastructure exist within both the 
contractor's and government's organizations to prepare, evaluate, and 
administer the pricing arrangement or cost reduction incentive prior to 
its implementation.


970.1504-1-5  General considerations and techniques for determining 
fixed fees.

    (a) The Department's fee policy recognizes that fee is remuneration 
to contractors for the entrepreneurial function of organizing and 
managing resources, the use of their resources (including capital 
resources), and, as appropriate, their assumption of the risk that some 
incurred costs (operating and capital) may not be reimbursed.
    (b) Use of a purely cost-based structured approach for determining 
fee objectives and amounts for DOE management and operating contracts 
is inappropriate considering the limited level of contractor cost, 
capital goods, and operating capital outlays for performance of such 
contracts. Instead of being solely cost-based, the desirable approach 
calls for a structure that allows evaluation of the following eight 
significant factors, as outlined in order of importance, and the 
assignment of appropriate fee values (subject to the limitations on 
fixed fee in 48 CFR 970.1504-1-6):
    (1) The presence or absence of financial risk, including the type 
and terms of the contract;
    (2) The relative difficulty of work, including specific performance 
objectives, environment, safety and health concerns, and the technical 
and administrative knowledge, and skill necessary for work 
accomplishment and experience;
    (3) Management risk relating to performance, including:
    (i) Composite risk and complexity of principal work tasks required 
to do the job;
    (ii) Labor intensity of the job;
    (iii) Special control problems; and
    (iv) Advance planning, forecasting and other such requirements;
    (4) Degree and amount of contract work required to be performed by 
and with the contractor's own resources, as compared to the nature and 
degree of subcontracting and the relative complexity of subcontracted 
efforts, subcontractor management and integration;
    (5) Size and operation (number of locations, plants, differing 
operations, etc.);
    (6) Influence of alternative investment opportunities available to 
the contractor (i.e., the extent to which undertaking a task for the 
Government displaces a contractor's opportunity to make a profit with 
the same staff and equipment in some other field of activity);
    (7) Benefits which may accrue to the contractor from gaining 
experience and knowledge of how to do something, from establishing or 
enhancing a reputation, or from having the opportunity to hold or 
expand a staff whose loyalties are primarily to the contractor; and
    (8) Other special considerations, including support of Government 
programs such as those relating to small and minority business 
subcontracting, energy conservation, etc.
    (c) The total fee objective for a particular annual fixed fee 
negotiation is established by evaluating the factors in this 
subsection, assigning fee values to them, and totaling the resulting 
amounts

[[Page 13447]]

(subject to limitations on total fixed fee in 48 CFR 970.1504-1-6).


970.1504-1-6  Calculating fixed fee.

    (a) In recognition of the complexities of the fee determination 
process, and to assist in promoting a reasonable degree of consistency 
and uniformity in its application, the following fee schedules set 
forth the maximum amounts of fee that contracting activities are 
allowed to award for a particular fixed fee transaction calculated 
annually.
    (b) Fee schedules representing the maximum allowable annual fixed 
fee available under management and operating contracts have been 
established for the following management and operating contract 
efforts:


    (1) Production;
    (2) Research and Development; and
    (3) Environmental Management.

    (c) The schedules are:

                                               Production Efforts
----------------------------------------------------------------------------------------------------------------
                                                                                                       Incr.
                       Fee base  (dollars)                        Fee  (dollars)  Fee  (percent)     (percent)
----------------------------------------------------------------------------------------------------------------
Up to $1 Million................................................  ..............  ..............            7.66
1,000,000.......................................................         $76,580            7.66            6.78
3,000,000.......................................................         212,236            7.07            6.07
5,000,000.......................................................         333,670            6.67            4.90
10,000,000......................................................         578,726            5.79            4.24
15,000,000......................................................         790,962            5.27            3.71
25,000,000......................................................       1,161,828            4.65            3.35
40,000,000......................................................       1,663,974            4.16            2.92
60,000,000......................................................       2,247,076            3.75            2.57
80,000,000......................................................       2,761,256            3.45            2.34
100,000,000.....................................................       3,229,488            3.23            1.45
150,000,000.....................................................       3,952,622            2.64            1.12
200,000,000.....................................................       4,510,562            2.26            0.61
300,000,000.....................................................       5,117,732            1.71            0.53
400,000,000.....................................................       5,647,228            1.41            0.45
500,000,000.....................................................       6,097,956            1.22  ..............
Over $500 Million...............................................       6,097,956  ..............            0.45
----------------------------------------------------------------------------------------------------------------


                                        Research and Development Efforts
----------------------------------------------------------------------------------------------------------------
                                                                                                       Incr.
                       Fee base  (dollars)                        Fee  (dollars)  Fee  (percent)     (percent)
----------------------------------------------------------------------------------------------------------------
Up to $1 Million................................................  ..............  ..............            8.42
1,000,000.......................................................         $84,238            8.42            7.00
3,000,000.......................................................         224,270            7.48            6.84
5,000,000.......................................................         361,020            7.22            6.21
10,000,000......................................................         671,716            6.72            5.71
15,000,000......................................................         957,250            6.38            4.85
25,000,000......................................................       1,441,892            5.77            4.22
40,000,000......................................................       2,075,318            5.19            3.69
60,000,000......................................................       2,813,768            4.69            3.27
80,000,000......................................................       3,467,980            4.33            2.69
100,000,000.....................................................       4,006,228            4.01            1.69
150,000,000.....................................................       4,850,796            3.23            1.14
200,000,000.....................................................       5,420,770            2.71            0.66
300,000,000.....................................................       6,083,734            2.03            0.53
400,000,000.....................................................       6,667,930            1.67            0.50
500,000,000.....................................................       7,172,264            1.43  ..............
Over $500 Million...............................................       7,172,264  ..............            0.50
----------------------------------------------------------------------------------------------------------------


                                        Environmental Management Efforts
----------------------------------------------------------------------------------------------------------------
                                                                                                       Incr.
                       Fee base  (dollars)                        Fee  (dollars)  Fee  (percent)     (percent)
----------------------------------------------------------------------------------------------------------------
Up to $1 Million................................................  ..............  ..............            7.33
1,000,000.......................................................         $73,298            7.33            6.49
3,000,000.......................................................         203,120            6.77            5.95
5,000,000.......................................................         322,118            6.44            5.40
10,000,000......................................................         592,348            5.92            4.83
15,000,000......................................................         833,654            5.56            4.03
25,000,000......................................................       1,236,340            4.95            3.44
40,000,000......................................................       1,752,960            4.38            3.29
60,000,000......................................................       2,411,890            4.02            3.10
80,000,000......................................................       3,032,844            3.79            2.49
100,000,000.....................................................       3,530,679            3.53            1.90
150,000,000.....................................................       4,479,366            2.99            1.48
200,000,000.....................................................       5,219,924            2.61            1.12

[[Page 13448]]

 
300,000,000.....................................................       6,337,250            2.11            0.88
400,000,000.....................................................       7,219,046            1.80            0.75
500,000,000.....................................................       7,972,396            1.59            0.58
750,000,000.....................................................       9,423,463            1.26            0.55
1,000,000,000...................................................      10,786,788            1.08  ..............
Over $1.0 Billion...............................................      10,786,788  ..............            0.55
----------------------------------------------------------------------------------------------------------------

970.1504-1-7  Fee Base.

    (a) The fee base is an estimate of necessary allowable costs, with 
some exclusions. It is used in the fee schedules to determine the 
maximum annual fee for a fixed fee contract. That portion of the fee 
base that represents the cost of the Production, Research and 
Development, or Environmental Management work to be performed, shall be 
exclusive of the cost of source and special nuclear materials; 
estimated costs of land, buildings and facilities whether to be leased, 
purchased or constructed; depreciation of Government facilities; and 
any estimate of effort for which a separate fee is to be negotiated.
    (b) Such portion of the fee base, in addition to the adjustments in 
paragraph (a) of this subsection, shall exclude:
    (1) Any part of the estimated cost of capital equipment (other than 
special equipment) which the contractor procures by subcontract or 
other similar costs which is of such magnitude or nature as to distort 
the technical and management effort actually required of the 
contractor;
    (2) At least 20% of the estimated cost or price of subcontracts and 
other major contractor procurements;
    (3) Up to 100% of the estimated cost or price of subcontracts and 
other major contractor procurements if they are of a magnitude or 
nature as to distort the technical and management effort actually 
required of the contractor;
    (4) Special equipment as defined in 48 CFR 970.1504-1-8;
    (5) Estimated cost of Government-furnished property, services and 
equipment;
    (6) All estimates of costs not directly incurred by or reimbursed 
to the operating contractor;
    (7) Estimates of home office or corporate general and 
administrative expenses that shall be reimbursed through the contract;
    (8) Estimates of any independent research and development cost or 
bid and proposal expenses that may be approved under the contract;
    (9) Any cost of work funded with uncosted balances previously 
included in a fee base of this or any other contract performed by the 
contractor;
    (10) Cost of rework attributable to the contractor; and
    (11) State taxes.
    (c) In calculating the annual fee amounts associated with the 
Production, Research and Development, or Environmental Management work 
to be performed, the fee base is to be allocated to the category 
reflecting the work to be performed and the appropriate fee schedule 
utilized.
    (d) The portion of the fee base associated with the Production, 
Research and Development, or Environmental Management work to be 
performed and the associated schedules in this part are not intended to 
reflect the portion of the fee base or related compensation for unusual 
architect-engineer, construction services, or special equipment 
provided by the management and operating contractor. Architect-engineer 
and construction services are normally covered by special agreements 
based on the policies applying to architect-engineer or construction 
contracts. Fees paid for such services shall be calculated using the 
provisions of 48 CFR 91504-1-5 relating to architect-engineer or 
construction fees and shall be in addition to the operating fees 
calculated for the Production, Research and Development, or 
Environmental Management work to be performed. Special equipment 
purchases shall be addressed in accordance with the provisions of 48 
CFR 970.1504-1-8 relating to special equipment.
    (e) No schedule set forth in 48 CFR 915.404-4-71-5 or 48 CFR 
970.1504-1-6 shall be used more than once in the determination of the 
fee amount for an annual period, unless prior approval of the 
Procurement Executive, or designee, is obtained.


970.1504-1-8  Special equipment purchases.

    (a) Special equipment is sometimes procured in conjunction with 
management and operating contracts. When a contractor procures special 
equipment, the DOE negotiating official shall determine separate fees 
for the equipment which shall not exceed the maximum fee allowable as 
established using the schedule in 48 CFR 915.404-4-71-5(h).
    (b) In determining appropriate fees, factors such as complexity of 
equipment, ratio of procurement transactions to volume of equipment to 
be purchased and completeness of services should be considered. Where 
possible, the reasonableness of the fees should be checked by their 
relationship to actual costs of comparable procurement services.
    (c) For purposes of this subsection, special equipment is equipment 
for which the purchase price is of such a magnitude compared to the 
cost of installation as to distort the amount of technical direction 
and management effort required of the contractor. Special equipment is 
of a nature that requires less management attention. When a contractor 
procures special equipment, the DOE negotiating official shall 
determine separate fees for the equipment using the schedule in 48 CFR 
915.404-4-71-5(h). The determination of specific items of equipment in 
this category requires application of judgment and careful study of the 
circumstances involved in each project. This category of equipment 
would generally include:
    (1) Major items of prefabricated process or research equipment; and
    (2) Major items of preassembled equipment such as packaged boilers, 
generators, machine tools, and large electrical equipment. In some 
cases, it would also include special apparatus or devices such as 
reactor vessels and reactor charging machines.


970.1504-1-9  Special Considerations: Cost-plus-award-fee.

    (a) When a management and operating contract is to be awarded on a 
cost-plus-award-fee basis, several special considerations are 
appropriate.
    (b) All annual performance incentives identified under these 
contracts are funded from the annual total available fee, which 
consists of a base fee amount (which may be zero) and a performance fee 
amount (which typically will consist of an incentive fee component for

[[Page 13449]]

objective performance requirements, an award fee component for 
subjective performance requirements, or both).
    (c) The annual total available fee for the contract shall equal the 
product of the fee(s) that would have been calculated for an annual 
fixed fee contract and the classification factor(s) most appropriate 
for the facility/task. If more than one fee schedule is applicable to 
the contract, the annual total available fee shall be the sum of the 
available fees derived proportionately from each fee schedule; 
consideration of significant factors applicable to each fee schedule; 
and application of a Classification Factor(s) most appropriate for the 
work.
    (d) Classification Factors applied to each Facility/Task Category 
are:

------------------------------------------------------------------------
                                                         Classification
                Facility/task category                       factor
------------------------------------------------------------------------
A.....................................................               3.0
B.....................................................               2.5
C.....................................................               2.0
D.....................................................              1.25
------------------------------------------------------------------------

    (e) The contracting officer shall select the Facility/Task Category 
after considering the following:
    (1) Facility/Task Category A. The main focus of effort performed is 
related to:
    (i) The manufacture, assembly, retrieval, disassembly, or disposal 
of nuclear weapons with explosive potential;
    (ii) The physical cleanup, processing, handling, or storage of 
nuclear radioactive or toxic chemicals with consideration given to the 
degree the nature of the work advances state of the art technologies in 
cleanup, processing or storage operations and/or the inherent 
difficulty or risk of the work is significantly demanding when compared 
to similar industrial/DOE settings (i.e., nuclear energy processing, 
industrial environmental cleanup);
    (iii) Construction of facilities such as nuclear reactors, atomic 
particle accelerators, or complex laboratories or industrial units 
especially designed for handling radioactive materials;
    (iv) Research and development directly supporting paragraphs 
(e)(1)(i), (ii), or (iii) of this subsection and not conducted in a 
laboratory, or
    (v) As designated by the Procurement Executive, or designee. 
(Classification factor 3.0)
    (2) Facility/Task Category B. The main focus of effort performed is 
related to:
    (i) The safeguarding and maintenance of nuclear weapons or nuclear 
material;
    (ii) The manufacture or assembly of nuclear components;
    (iii) The physical cleanup, processing, handling, or storage of 
nuclear radioactive or toxic chemicals, or other substances which pose 
a significant threat to the environment or the health and safety of 
workers or the public, if the nature of the work uses state of the art 
technologies or applications in such operations and/or the inherent 
difficulty or risk of the work is more demanding than that found in 
similar industrial/DOE settings (i.e., nuclear energy, chemical or 
petroleum processing, industrial environmental cleanup);
    (iv) The detailed planning necessary for the assembly/disassembly 
of nuclear weapons/components;
    (v) Construction of facilities involving operations requiring a 
high degree of design layout or process control;
    (vi) Research and development directly supporting paragraphs 
(e)(2)(i), (ii), (iii), (iv) or (v) of this subsection and not 
conducted in a laboratory; or
    (vii) As designated by the Procurement Executive, or designee. 
(Classification factor 2.5)
    (3) Facility/Task Category C. The main focus of effort performed is 
related to:
    (i) The physical cleanup, processing, or storage of nuclear 
radioactive or toxic chemicals if the nature of the work uses routine 
technologies in cleanup, processing or storage operations and/or the 
inherent difficulty or risk of the work is similar to that found in 
similar industrial/DOE settings (i.e., nuclear energy, chemical 
processing, industrial environmental cleanup);
    (ii) Plant and facility maintenance;
    (iii) Plant and facility security (other than the safeguarding of 
nuclear weapons and material);
    (iv) Construction of facilities involving operations requiring 
normal processes and operations; general or administrative service 
buildings; or routine infrastructure requirements;
    (v) Research and development directly supporting paragraphs 
(e)(3)(i), (ii), (iii) or (iv) of this subsection and not conducted in 
a laboratory; or
    (vi) As designated by the Procurement Executive, or designee. 
(Classification factor 2.0)
    (4) Facility/Task Category D. The main focus of the effort 
performed is research and development conducted at a laboratory. 
(Classification factor 1.25)
    (f) Where the Procurement Executive, or designee, has approved a 
base fee, the Classification Factors shall be reduced, as approved by 
the Procurement Executive, or designee.
    (g) Any risks which are indemnified by the Government (for example, 
by the Price-Anderson Act) will not be considered as risk to the 
contractor.
    (h) All management and operating contracts awarded on a cost-plus-
award-fee basis shall set forth in the contract, or the Performance 
Evaluation and Measurement Plan(s) required by the contract clause at 
48 CFR 970.5215-1, Total Available Fee: Base Fee Amount and Performance 
Fee Amount, a site specific method of rating the contractor's 
performance of the contract requirements and a method of fee 
determination tied to the method of rating.
    (i) Prior approval of the Procurement Executive, or designee, is 
required for an annual total available fee amount exceeding the 
guidelines in paragraph (c) of this subsection.
    (j) DOE Operations/Field Office Managers must ensure that all 
important areas of contract performance are specified in the contract 
or Performance Evaluation and Measurement Plan(s), even if such areas 
are not assigned specific weights or percentages of available fee.


970.1504-1-10  Special considerations: Fee limitations.

    In situations where the objective performance incentives are of 
unusual difficulty or where the successful completion of the 
performance incentives would provide extraordinary value to the 
Government, fees in excess of those allowed under 48 CFR 970.1504-1-5 
and 48 CFR 970.1504-1-9 may be allowed with the approval of the 
Procurement Executive, or designee. Requests to allow fees in excess of 
those provided under other provisions of this fee policy must be 
accompanied by a written justification with detailed supporting 
rationale as to how the specific circumstances satisfy the two criteria 
listed in this subsection.


970.1504-1-11  Documentation.

    The contracting officer shall tailor the documentation of the 
determination of fee prenegotiation objective based on 48 CFR 15.406-1, 
Prenegotiation objectives, and the determination of the negotiated fee 
in accordance with 48 CFR 15.406-3, Documenting the negotiation. The 
contracting officer shall include as part of the documentation: the 
rationale for the allocation of cost and the assignment of Facility/
Task Categories; a discussion of the calculations described in 48 CFR 
970.1504-1-5; and discussion of any other relevant provision of this 
subsection.


970.1504-2  Price negotiation.

    (a) Management and operating contract prices (fee) and DOE

[[Page 13450]]

obligations to support contract performance shall be governed by:
    (1) The level of activity authorized and the amount of funds 
appropriated for DOE approved programs by specific program legislation;
    (2) Congressional budget and reporting limitations;
    (3) The amount of funds apportioned to DOE;
    (4) The amount of obligational authority allotted to program 
officials and Approved Funding Program limitations; and
    (5) The amount of funds actually available to the DOE operating 
activity as determined in accordance with applicable financial 
regulations and directives.
    (b) Funds shall be obligated and made available by contract 
provision or modification after the funds become available for 
obligation for payment to support performance of DOE approved projects, 
tasks, work authorizations, or services.
    (c) Contractor expenditures shall be limited to the overall amount 
of funds available and obligated on the contract. As prescribed at 48 
CFR 970.3270(b), the clause at 48 CFR 970.5232-4, Obligation of Funds, 
is used for this purpose.


970.1504-3  Documentation.


970.1504-3-1  Cost or pricing data.

    (a) The certification requirements of 48 CFR 15.406-2 are not 
applied to DOE cost-reimbursement management and operating contracts.
    (b) The contracting officer shall ensure that management and 
operating contractors and their subcontractors obtain cost or pricing 
data prior to the award of a negotiated subcontract or modification of 
a subcontract in accordance with 48 CFR 15.406-2, and incorporate 
appropriate contract provisions similar to those set forth at 48 CFR 
52.215-10 and 48 CFR 52.215-11 that provide for the reduction of a 
negotiated subcontract price by any significant amount that the 
subcontract price was increased because of the submission of defective 
cost or pricing data by a subcontractor at any tier.
    (c) The clauses at 48 CFR 52.215-12 and 48 CFR 52.215-13 shall be 
included in management and operating contracts.


970.1504-4  Special cost or pricing areas.


970.1504-4-1  Make-or-buy plans.


970.1504-4-2  Policy.

    (a) Contracting officers shall require management and operating 
contractors to develop and implement make-or-buy plans that establish a 
preference for providing supplies or services (including construction 
and construction management) on a least-cost basis, subject to program 
specific make-or-buy criteria. The emphasis of this make-or-buy 
structure is to eliminate bias for in-house performance where an 
activity may be performed at less cost or otherwise more efficiently 
through subcontracting.
    (b) A work activity, supply or service is provided at ``least 
cost'' when, after consideration of a variety of appropriate 
programmatic, business, and financial factors, it is concluded that 
performance by either ``in-house'' resources or by contracting out is 
likely to provide the property or service at the lowest overall cost. 
Programmatic factors include, but are not limited to, program specific 
make-or-buy criteria established by the Department of Energy, the 
impact of a ``make'' or a ``buy'' decision on mission accomplishment, 
and anticipated changes to the mission of the facility or site. 
Business factors pertain to such elements as market conditions, past 
experience in obtaining similar supplies or services, and overall 
operational efficiencies that might be available through either in-
house performance or contracting out. Among the financial factors that 
may be considered to determine a least-cost alternative in a make-or-
buy analysis are both recurring and one-time costs attributable to 
either retaining or contracting out a particular item, financial risk, 
and the anticipated contract price.
    (c) In developing and implementing its make-or-buy plan, a 
contractor shall be required to assess subcontracting opportunities and 
implement subcontracting decisions in accordance with the following:
    (1) The contractor shall conduct internal productivity improvement 
and cost-reduction programs so that in-house performance options can be 
made more efficient and cost-effective.
    (2) The contractor shall consider subcontracting opportunities with 
the maximum practicable regard for open communications with potentially 
affected employees and their representatives. Similarly, a contractor 
will communicate its plans, activities, cost-benefit analyses, and 
decisions with those stakeholders likely to be affected by such 
decisions, including representatives of the community and local 
businesses.


970.1504-4-3  Requirements.

    (a) Development of program-specific make-or-buy criteria.
    (1) Program specific make-or-buy criteria are those factors that 
reflect specific mission or program objectives (including operational 
efficiency, contractor diversity, environment, safety and health, work 
force displacement and restructuring, and collective bargaining 
agreements) and that, upon their application to a specific work effort, 
would override a decision based on a purely economic rationale. These 
criteria are to be used to assess each work effort identified in a 
facility's or site's make-or-buy plan to determine the appropriateness 
of a contractor's make-or-buy decisions.
    (2) Heads of Contracting Activities shall ensure that program 
specific make-or-buy criteria are developed and provided to the 
contractor for use in its make-or-buy plan administration activities 
for the facility, site, or specific program, as appropriate. Although 
the Head of the Contracting Activity has the responsibility for 
ensuring that the program-specific make-or-buy criteria are developed 
and provided to the contractor, the actual development of the program 
specific make or buy criteria should be accomplished by the appropriate 
collaboration of headquarters and field office program, technical, and 
business specialists. Accordingly, these organizations and individuals 
should be relied on for the development of the program specific make or 
buy criteria so that they appropriately reflect program considerations 
applicable to the contractor's make-or-buy decisions.
    (b) Make-or-buy plan property and services. Supplies or services 
estimated to cost less than one (1) percent of the estimated total 
operating cost for a year or $1 million for the same year, whichever is 
less, need not be included in the contractor's make-or-buy plan. 
However, adjustments may be made to these thresholds where programmatic 
or cost considerations would indicate that a particular supply or 
service should be included in the make-or-buy plan.
    (c) Competitive solicitation requirements. (1) To the extent 
practicable, a competitive solicitation for the management and 
operation of a Department of Energy facility or site should:
    (i) Identify those programs, projects, work areas, functions or 
services that the Department intends for the successful offeror to 
include in any make-or-buy plan; and
    (ii) Require the submission of a preliminary make-or-buy plan for 
the period of performance of the contract from each offeror as part of 
its proposal submitted in response to the competitive solicitation.
    (2) If the requirement for each offeror to submit a preliminary 
make-or-buy plan as part of its proposal is

[[Page 13451]]

impractical or otherwise incompatible with the acquisition strategy, 
consideration should be given to structuring the evaluation criteria 
for the competitive solicitation in such a manner as to permit the 
evaluation of an offeror's approach to conducting its make-or-buy 
program within the context of the contractual requirements.
    (3) The successful offeror's preliminary make-or-buy plan shall be 
submitted for final approval within 180 days after contract award, 
consistent with the requirements of 48 CFR 970.5215-2(c), Make-or-Buy 
Plan.
    (d) Evaluation of the contractor's make-or-buy plan. In evaluating 
the contractor's make-or-buy plan, the contracting officer shall 
consider the following factors:
    (1) The program specific make-or-buy criteria (such as operational 
efficiency, contractor diversity, environment, safety and health, work 
force displacement and restructuring, and collective bargaining 
agreements) with particular attention to the effect of a ``buy'' 
decision on the contractor's ability to maintain core competencies 
needed to accomplish mission-related programs and projects;
    (2) The impact of a ``make'' or ``buy'' decision on contract cost, 
schedule, and performance and financial risk;
    (3) The potential impact of a ``make'' or ``buy'' decision on known 
future mission or program activities at the facility or site;
    (4) Past experience at the facility or site regarding ``make-or-
buy'' decisions for the same, or similar, supplies or services;
    (5) Consistency with the contractor's approved subcontracting plan, 
as required by the clause entitled ``Small, Small Disadvantaged and 
Women-Owned Small Business Subcontracting Plan'' (48 CFR 52.219-9), and 
implementation of Section 3021 of the Energy Policy Act of 1992.
    (6) Local market conditions, including contractor work force 
displacement and the availability of firms that can meet the work 
requirements with regard to quality, quantity, cost, and timeliness;
    (7) Where the construction of new or additional facilities is 
required, that the cost of such facilities is in the Government's best 
interest when compared to subcontracting or privatization alternatives; 
and
    (8) Whether all relevant requirements and costs of performing the 
work by the contractor and through subcontracting are considered and 
any different requirements for the same work are reconciled.
    (e) Approval. The contracting officer shall approve all plans and 
revisions thereto. Once approved, a make-or-buy plan shall remain 
effective for the term of the contract (up to a period of five years), 
unless circumstances warrant a change.
    (f) Administration. The contractor's performance against the 
approved make-or-buy plan shall be monitored to ensure that:
    (1) The contractor is complying with the plan;
    (2) Items identified for deferral decisions are addressed in a 
timely manner; and
    (3) The contractor periodically updates the make-or-buy plan based 
on changed circumstances or significant new work.


970.1504-5  Solicitation provision contract clauses.

    (a) The contracting officer shall insert the clause at 48 CFR 
970.5215-1, Total Available Fee: Base Fee Amount and Performance Fee 
Amount, in management and operating contracts, and other contracts 
determined by the Procurement Executive, or designee, that include 
cost-plus-award-fee arrangements.
    (1) The contracting officer shall include the clause with its 
Alternate I when the award fee cycle consists of two or more evaluation 
periods.
    (2) The contracting officer shall include the clause with its 
Alternate II when the award fee cycle consists of one evaluation 
period.
    (3) The contracting officer shall include the clause with its 
Alternate III when the DOE Operations/Field Office Manager, or 
designee, requires the contractor to submit a self-assessment.
    (4) The contracting officer shall include the clause with its 
Alternate IV when the DOE Operations/Field Office Manager, or designee, 
permits the contractor to submit a self-assessment at the contractor's 
option.
    (b) The contracting officer shall insert the clause at 48 CFR 
970.5215-2, Make-or-Buy Plan, in management and operating contracts. 
The contracting officer may add a sentence at the end of paragraph (d) 
of the clause to identify where in the contract the make-or-buy plan is 
located.
    (c) The contracting officer shall insert the clause at 48 CFR 
970.5215-3, Conditional Payment of Fee, Profit, or Incentives, in 
management and operating contracts, and other contracts determined by 
the Procurement Executive, or designee. The contracting officer shall 
include the clause with its Alternate I in contracts awarded on cost-
plus-award-fee, multiple fee, or incentive fee basis which may include 
various types of fee and incentive arrangements.
    (d) The contracting officer shall insert the clause at 48 CFR 
970.5215-4, Cost Reduction, in management and operating contracts, and 
other contracts determined by the Procurement Executive, or designee, 
if cost savings programs are contemplated.
    (e) The Contracting officer shall insert the provision at 48 CFR 
970.5215-5, Limitation on Fee, in solicitations for management and 
operating contracts, and other contracts determined by the Procurement 
Executive, or designee.

Subpart 970.17--Special Contracting Methods


970.1706  Management and operating contracts.


970.1706-1  Award, renewal, and extension.

    (a) Contract term. Effective work performance under a management 
and operating contract is facilitated by the use of a relatively long 
contract term of up to ten (10) years. Accordingly, management and 
operating contracts shall provide for a basic contract term not to 
exceed five (5) years and may include an option(s) to extend the term 
for additional periods; provided, that no one option period exceeds 
five (5) years in duration and the total term of the contract, 
including any options exercised, does not exceed ten (10) years. The 
specific term of the base period and of any options periods shall be 
determined at the time of the authorization to compete or extend the 
contract. The term ``option'' as used herein means a unilateral right 
in the contract by which the Government can extend the term of the 
contract. Accordingly, except as may be provided for through the 
inclusion of an option(s) in the contract to extend the term, any 
extension to continue the contract with the incumbent contractor beyond 
its term shall only occur when such extension can be justified under 
one of the statutory authorities identified in 48 CFR 6.302 and when 
authorized by the Head of the Agency.
    (b) Exercise of option. As part of the review required by 48 CFR 
17.605(b), the contracting officer shall assess whether competing the 
contract will produce a more advantageous offer than exercising the 
option. The incumbent contractor's past performance under the contract, 
the extent to which performance-based management contract provisions 
are present, or can be negotiated into, the contract, and the impact of 
a change in a contractor on the Department's discharge of its programs 
are considerations that shall

[[Page 13452]]

be addressed in the contracting officer's decision that the exercise of 
the option is in the Government's best interest. The contracting 
officer's decision shall be approved by the Procurement Executive and 
the cognizant Assistant Secretary(s).
    (c) Conditional authorization of non-competitive extension made 
pursuant to authority under CICA. Authorization to extend a management 
and operating contract by the Head of the Agency shall be considered 
conditional upon the successful negotiation of the contract to be 
extended in accordance with the Department's negotiation objectives. 
The Head of the Contracting Activity shall advise the Procurement 
Executive no later than 6 months after receipt of the conditional 
authorization as to whether the Department's objectives will be met 
and, if not, the contracting activity's plans for competing the 
requirement.


970.1706-2  Contract clause.

    The contracting officer shall insert the clause at 48 CFR 52.217-9, 
Option to Extend the Term of the Contract, in all management and 
operating contracts when the inclusion of an option is appropriate.

Subpart 970.19--Small, Small Disadvantaged and Women-Owned Small 
Business Concerns


970.1907  Subcontracting with Small Business, Small Disadvantaged 
Business and Woman-Owned Small Business Concerns.


970.1907-1  Subcontracting plan requirements.

    Pursuant to the clause at 48 CFR 52.219-9, Small, Small 
Disadvantaged and Woman-Owned Small Business Subcontracting Plan, which 
is required for all management and operating contracts, each management 
and operating contract shall include a subcontracting plan which is 
effective for the term of the contract. Goals for the contract shall be 
negotiated annually when revised funding levels are determined. The 
plan should include provisions for revising the goals or any other 
sections of the plan. Such revisions shall be in writing, approved by 
the contracting officer, and shall be specifically made a material part 
of the contract.

Subpart 970.22--Application of Labor Policies


970.2200  Scope of Subpart.

    This Subpart prescribes Department of Energy labor policies 
pertaining to the award and administration of management and operating 
contracts.


970.2201  Basic labor policies.


970.2201-1  Labor relations.


970.2201-1-1  General.

    Contracting officers shall, in appropriate circumstances, follow 
the guidance in 48 CFR subpart 22.1, as supplemented in this section, 
in the award and administration of management and operating contracts.


970.2201-1-2  Policies.

    (a) The extent of Government ownership of the nation's energy plant 
and materials, and the overriding concerns of national defense and 
security, impose special conditions on personnel and labor relations in 
the energy program. Such special conditions include the need for 
continuity of vital operations at DOE installations; retention by DOE 
of absolute authority on all questions of security; and DOE review of 
labor expenses under management and operating contracts as a part of 
its responsibility for assuring judicious expenditure of public funds. 
It is the intent of DOE that personnel and labor policies throughout 
the energy program reflect the best experience of American industry in 
aiming to achieve the type of stable labor-management relations that 
are essential to the proper development of the energy program. The 
following enunciates the principles upon which the DOE policy is based:
    (1) Employment standards. (i) Management and operating contractors 
are expected to bring experienced, proven personnel from their private 
operations to staff key positions on the contract work and to recruit 
other well-qualified personnel as needed. Such personnel should be 
employed and treated during employment without discrimination by reason 
of race, color, religion, sex, or national origin. Contractors shall be 
required to take affirmative action to achieve these objectives.
    (ii) The job qualifications and suitability of prospective 
employees should be established by the contractor prior to employment 
by careful personnel investigations. Such personnel investigations 
should include, as appropriate: a credit check; verification of high 
school degree/diploma or degree/diploma granted by an institution of 
higher learning within the last 5 years; contacts with listed personal 
references; contacts with listed employers for the past 3 years 
(excluding employment of less than 60 days duration, part-time 
employments, and craft/union employments); and local law enforcement 
checks when such checks are not prohibited by State or local law or 
regulation, and when the individual resides in the jurisdiction where 
the contractor is located. When a DOE access authorization (security 
clearance) will be required, the aforementioned preemployment checks 
must be conducted and the applicant's job qualifications and 
suitability must be established before a request is made to the DOE to 
process the applicant for access authorization. Evidence must be 
furnished to the DOE with the applicant's security forms that specify: 
the date each check was conducted, the entity contacted that provided 
information concerning the applicant, a synopsis of the information 
provided as a result of each contact, and a statement that all 
information available has been reviewed and favorably adjudicated in 
accordance with the contractor's personnel policies. When an applicant 
is being hired specifically for a position which requires a DOE access 
authorization, the applicant shall not be placed in that position prior 
to the access authorization being granted by the DOE unless an 
exception has been obtained from the Head of the Contracting Activity, 
or designee. If an applicant is placed in that position prior to access 
authorization being granted by the DOE, the applicant may not be 
afforded access to classified matter or special nuclear materials (in 
categories requiring access authorization) until the DOE notifies the 
employer that access authorization has been granted. Management and 
operating contractors and other contractors operating DOE facilities 
may include the requirements set forth in this subsection in 
subcontracts (appropriately modified to identify the parties) wherein 
subcontract employees will be required to hold DOE access authorization 
in order to perform on-site duties, such as protective force 
operations.
    (iii) Consistent with the policies set forth in this subpart, the 
contractor is responsible for maintaining satisfactory standards for 
employee qualifications, performance, conduct, and business ethics 
under its own personnel policies.
    (2) Security. On all matters of security at its facilities, DOE 
retains absolute authority and neither the regulations and policies 
pertaining to security, nor their administration, are matters for 
collective bargaining between the contractor's management and labor. 
Insofar as DOE security regulations affect the collective bargaining 
process, the security policies and regulations will be made known to 
both parties. To the fullest extent feasible, DOE will consult with 
representatives of the contractor's management and labor when 
formulating security regulations

[[Page 13453]]

and policies that may affect the collective bargaining process.
    (3) Wages, salaries, and employee benefits. (i) Wages, salaries, 
and employee benefits shall be administered in a manner designated to 
adapt the normal practices and conditions of industry or institutions 
of higher education to the contract work, and to provide for 
appropriate review by DOE. Area practices, valid patterns, and well-
established commercial or academic practices of the contractors, as 
appropriate, form the criteria for the establishment and adjustment of 
compensation schedules.
    (ii) The aspects of wages, hours, and working conditions which are 
the substance of collective bargaining in normal organized industries 
will be left to the orderly processes of negotiation and agreement 
between DOE contractor management and employee representatives with 
maximum possible freedom from Government interference.
    (4) Employee relations. The handling of employee relations on 
contract work, including such matters as the conduct and discipline of 
the work force and the handling of employee grievances, is part of the 
normal management responsibility of the contractor.
    (5) Collective bargaining. (i) DOE review of collective bargaining 
practices will be premised on the view that management's trusteeship 
for the operation of the Government facilities includes the duty to 
adopt practices which are fundamental to the friendly adjustment of 
disputes, and which experience has shown, promote orderly collective 
bargaining relationships. Practices inconsistent with this view may be 
objected to if not found to be otherwise clearly warranted.
    (ii) Consistent with the policy of assuring continuity of operation 
of vital facilities, all collective bargaining agreements at DOE-owned 
facilities should provide that grievances and disputes involving the 
interpretation or application of the agreement will be settled without 
resorting to strike, lockout, or other interruption of normal 
operations. For this purpose, each collective bargaining agreement 
entered into during the period of performance of this contract should 
provide an effective grievance procedure with arbitration as its final 
step, unless the parties mutually agree upon some other method of 
assuring continuity of operation for the term of the collective 
bargaining agreement.
    (iii) DOE expects its management and operating contractors and the 
unions representing the contractor's employees to cooperate fully with 
the Federal Mediation and Conciliation Service.
    (6) Personnel training. DOE encourages and supports personnel 
training programs aimed at improving work efficiency or developing 
needed skills which are not otherwise obtainable.
    (7) Working conditions. Accident, fire, health, and occupational 
hazards associated with DOE activities will be held to a practical 
minimum level and controlled in the interest of maintenance of health 
and prevention of accidents. Subject to DOE control, contractors shall 
be required to maintain comprehensive continuous preventive and 
protective programs appropriate to the particular activities throughout 
all operations. Appropriate financial protection in case of 
occupational disability must be provided to employees on DOE projects.
    (c) Title to payroll and associated records under certain contracts 
for the management and operation of DOE facilities, and for necessary 
miscellaneous construction incidental to the function of these 
facilities, shall vest in the Government. Such records are to be 
disposed of in accordance with DOE directions. For such contracts, the 
Solicitor of Labor has granted a tolerance from the Department of Labor 
Regulations to omit from the prescribed labor clauses the requirement 
for the retention of payrolls and associated records for a period of 
three years after completion of the contract. Under this tolerance, the 
records retention requirements for all labor clauses in the contract 
and the Fair Labor Standards Act are satisfied by disposal of such 
records in accordance with applicable DOE directives.


970.2201-1-3  Contract clause.

    In addition to the clause at 48 CFR 52.222-1, Notice to the 
Government of Labor Disputes, the contracting officer shall insert the 
clause at 970.5222-1, Collective Bargaining Agreements' Management and 
Operating Contracts, in all management and operating contracts.


970.2201-2  Overtime management.


970.2201-2-1  Policy.

    Contracting officers shall ensure that management and operating 
contractors manage overtime cost effectively and use overtime only when 
necessary to ensure performance of work under the contract.


970.2201-2-2  Contract clause.

    The contracting officer shall insert the clause at 48 CFR 970.5222-
2, Overtime Management, in management and operating contracts.


970.2204  Labor standards for contracts involving construction.


970.2204-1  Statutory and regulatory requirements.


970.2204-1-1  Administrative controls and criteria for application of 
the Davis-Bacon Act in operational or maintenance activities.

    (a) Particular work items falling within one or more of the 
following criteria normally will be classified as noncovered by the 
Davis-Bacon Act, hereinafter referred to in this section as the 
``Act.''
    (1) Individual work items estimated to cost $2,000 or less. The 
total dollar amount of the management and operating contract is not a 
factor to be considered and bears no relation to individual work items 
classified as construction, alteration and/or repair, including 
painting and decorating. However, no item of work, the cost of which is 
estimated to be in excess of $2,000, shall be artificially divided into 
portions less than $2,000 for the purpose of avoiding the application 
of the Act.
    (2) Work and services that are a part of operational and 
maintenance activities or which, being very closely and directly 
involved therewith, are more in the nature of operational activities 
than construction, alteration, and/or repair work. This includes work 
and services which would involve a material risk to continuity of 
operations, to life or property, or to DOE operating requirements, if 
performed by persons other than the contractor's regular production and 
maintenance forces. However, any decision that contracts or work items 
are noncovered for these reasons must be made by the Head of the 
Contracting Activity without power of delegation.
    (3) Assembly, modification, setup, installation, replacement, 
removal, rearrangement, connection, testing, adjustment, and 
calibration of machinery and equipment. However, it is noted that these 
activities are covered if they are part of, or would be a logical part 
of, the construction of a facility, or if construction-type work which 
is not ``incidental'' to the overall effort is involved.
    (4) Experimental development of equipment, processes, or devices, 
including assembly, fitting, installation, testing, reworking, and 
disassembly. This refers to equipment, processes, and devices which are 
assembled for the purpose of conducting a test or experiment. The 
design may be only conceptual in character, and professional personnel 
who are responsible for the experiment participate in the assembly. 
Specifically

[[Page 13454]]

excluded from the category of experimental development are buildings 
and building utility services, as distinguished from temporary 
connections thereto. Also specifically excluded from this category is 
equipment to be used for continuous testing (e.g., a machine to be 
continuously used for testing the tensile strength of structural 
members).
    (5) Experimental work in connection with peaceful uses of nuclear 
energy. This refers to equipment, processes and devices which are 
assembled and/or set in place and interconnected for the purpose of 
conducting a test or experiment. The nature of the test or experiment 
is such that professional personnel who are responsible for the test or 
experiment and/or data to be derived therefrom must, by necessity, 
participate in the assembly and interconnections. Specifically excluded 
from experimental work are buildings, building utility services, 
structural changes, drilling, tunneling, excavation, and back-filling 
work which can be performed according to customary drawings and 
specifications, and utility services of modifications to utility 
services, as distinguished from temporary connections thereto. Work in 
this category may be performed in mines or in other locations 
specifically constructed for tests or experiments.
    (6) Emergency work to combat the effects of fire, flood, 
earthquake, equipment failure, accident, or other casualties, and to 
restart the operational activity following the casualty. Work which is 
not directly related to restarting the activity or which involves 
rebuilding or replacement of a structure, structural components, or 
equipment is excluded from this category.
    (7) Decontamination, including washing, scrubbing, and scraping to 
remove contamination; removal of contaminated soil or other material; 
and painting or other resurfacing, provided that such painting or 
resurfacing is an integral part of the decontamination activity and 
performed by the employees of the contractors performing the 
decontamination.
    (8) Burial of contaminated soil waste or contained liquid; however, 
initial preparatory work readying the burial ground for use (e.g., any 
grading or excavating that is a part of initial site preparation, 
fencing, drilling wells for continued monitoring of contamination, 
construction of guard or other office space) is covered. Work performed 
subsequent to burial which involves the placement of concrete or other 
like activity is also covered.
    (b) The classification of a contract as a contract for operational 
or maintenance activities does not necessarily mean that all work and 
activities at the contract location are classifiable as outside 
coverage of the Act since it may be necessary to separate work which 
should be classified as covered. Therefore, the Heads of Contracting 
Activities shall establish and maintain controls for the careful 
scrutiny of proposed work assignments under such contracts to assure 
that:
    (1) Contractors whose contracts do not contemplate the performance 
of work covered by the Act with the contractor's own forces are neither 
asked nor authorized to perform work within the scope of the Act. If 
the actual work assignments do involve covered work, the contract 
should be modified to include applicable provisions of the Act.
    (2) Where covered work is performed by a contractor whose contract 
contains provisions required by the Act, such work is performed as 
required by law and the contract. After the contractor has been 
informed, as provided in paragraph (b)(3) of this subsection, that 
certain work is covered, the responsibilities of the Head of the 
Contracting Activity to assure compliance is the same as it would be if 
the work were being performed under a separate construction contract.
    (3) Controls provided for above include consideration by the Head 
of the Contracting Activity and the contractor, before work is begun or 
contracted out, of the relation of the Act to (i) the annual 
programming of work; (ii) the contractor's work orders; and (iii) work 
contracted out in excess of $2,000. The Head of the Contracting 
Activity may, if consistent with DOE's responsibilities as described in 
this subsection, prescribe from time to time classes of work as to 
which applicability or nonapplicability of the Act is clear, for which 
the Head of the Contracting Activity will require no further DOE 
determination on coverage in advance of the work. For all work, 
controls to be established by the Head of the Contracting Activity 
should provide for notification to the contractor before work is begun 
as to whether such work is covered. The Head of the Contracting 
Activity is responsible for submitting to the Wage and Hours Division, 
Employment Standards Administration, Department of Labor, Washington, 
D.C. 20210, all DOE requests for project area or installation wage 
determinations, or individual determinations, or extensions or 
modification thereto. Requests for such determinations shall be made on 
Standard Form 308, at least 30 calendar days before they are required 
for use in advertising for bids or requests for proposals.
    (c) Experimental installations. Within DOE programs, a variety of 
experiments are conducted involving materials, fuels, coolants, and 
processing equipment. Certain types of situations where tests and 
experiments have presented coverage questions are described as follows:
    (1) Set-ups of device and/or processes. The proving out of 
investigative findings and theories of a scientific and technical 
nature may require the set-up of various devices and/or processes at an 
early, pre-prototype stage of development. These may range from 
laboratory bench size to much larger set-ups. As a rule, these set-ups 
are made within established facilities (normally laboratories), 
required utility connections are made to services provided as a part of 
the basic facilities, and the activity as a whole falls within the 
functional purpose of the facility. Such set-ups are generally not 
covered. However, the erection of structures which are public works is 
covered if construction type work, other than incidental work, is 
involved. Preparatory work for the set-up requiring structural changes 
or modifications of basic utility services, as distinguished from 
connections thereto, is covered. The following are illustrations of 
noncovered set-ups of devices and/or processes:
    (i) Assembly of piping and equipment within existing ``hot cell'' 
facilities for proving out a conceptual design of a chemical processing 
unit;
    (ii) Assembly of equipment, including adaptation and modification 
thereof, in existing ``hot cell'' facilities to prove out a conceptual 
design for remotely controlled machining equipment;
    (iii) Assembly of the first graphite pile in a stadium at Stagg 
Field in Chicago;
    (iv) Assembly of materials and equipment for particular aspects of 
the direct current thermonuclear experiments to explore feasibility and 
to study other ramifications of the concept of high energy injection 
and to collect data thereon.
    (2) Loops. Many experiments are carried on in equipment assemblies, 
called loops, in which liquids or gases are circulated under monitored 
and controlled conditions. For purposes of determining coverage under 
the Act, loops may be classed as loop facilities or as loop set-ups. 
Both of these classes of loops can include in-reactor loops and out-of-
reactor loops. In differentiating between clearly identified loop set-
ups and loop facilities, an area exists in which there have been some 
questions of coverage,

[[Page 13455]]

such as certain loops at the Material Test Reactor and at Engineering 
Test Reactor and the Idaho National Engineering and Environmental 
Laboratory site. Upon clarification of this area, further illustrations 
will be added. In the meantime, the differentiation between loop set-
ups and loop facilities must be made on a case-by-case basis, taking 
into account the total criteria set forth in this subpart.
    (i) Loop set-ups. The assembly, erection, modification, and 
disassembly of a loop set-up is noncovered. A noncontroversial example 
of a loop set-up is one which is assembled in a laboratory, e.g., Oak 
Ridge National Laboratory, Argonne National Laboratory, or Lawrence 
Livermore National Laboratory, for a particular test and thereafter 
disassembled. However, preparatory work for a loop set-up requiring 
structural changes or modifications of basic utility services as 
distinguished from connections thereto is covered, as are material and 
equipment that are installed for a loop set-up which is a permanent 
part of the facility or which is use for a succession of experimental 
programs.
    (ii) Loop facilities. A loop facility differs from a loop set-up in 
that it is of a more permanent character. It is usually, but not 
always, of greater size. It normally involves the building or 
modification of a structure. Sometimes it is installed as a part of 
construction of the facility. It may be designed for use in a 
succession of experimental programs over a longer period of time. 
Examples of loop facilities are the in-reactor ``K'' loops at Hanford 
and the large Aircraft Nuclear Propulsion loop at the Idaho National 
Engineering and Environmental Laboratory site. The on-site assembly and 
erection of such loop facilities are covered. However, once a loop 
facility is completed and becomes operational, the criteria set forth 
above for operational and maintenance activities apply.
    (3) Reactor component experiments. Other experiments are carried on 
by insertion of experimental components within reactor systems without 
the use of a loop assembly. An example of reactor facilities erected 
for such experimental purposes are the special power excursion test 
reactors (SPETRs) at the National Reactor Test Site which are designed 
for studying reactor behavior and performance characteristics of 
certain reactor components. Such a facility may consist of a reactor 
vessel, pressurizing tank, coolant loops, pumps, heat exchangers, and 
other auxiliary equipment as needed. The facility also may include 
sufficient shielding to permit work on the reactor to proceed following 
a short period of power interruption, and buildings as needed to house 
the reactor and its auxiliary equipment. The erection and on-site 
assembly of such a reactor facility is covered, but the components 
whose characteristics are under study are excluded from coverage. To 
illustrate, one of the SPETRs planned for studies of nuclear reactor 
safety is designed to accommodate various internal fuel and control 
assemblies. The internal structure of the pressure vessel is designed 
so that cores of different shapes and sizes may be placed in the vessel 
for investigation, or the entire internal structure may be easily 
removed and replaced by a structure which will accept a different core 
design. Similarly, the control rod assembly is arranged to provide for 
flexibility in the removal of instrument leads and experimental 
assemblies from within the core.
    (4) Tests or experiments in peaceful uses of nuclear energy. These 
tests or experiments are varied in nature and some are only in a 
planning stage. They consist of one or more nuclear or nonnuclear 
detonations for the purposes of acquiring data. The data can include 
seismic effects, radiation effects, amount of heat generated, amount of 
material moved and so forth. Some of these tests are conducted in 
existing mines, while others are conducted in facilities specifically 
constructed for the tests or experiments. In general, all work which 
can be performed in accordance with customary drawings and 
specifications, as well as other work in connection with preparation of 
facilities is treated as covered work. Such work includes tunneling, 
drilling, excavation and back-filling, erection of buildings or other 
structures, and installation of utilities. The installation of the 
nonnuclear material or nuclear device to be detonated, and the 
instrumentation and connection between such material or device and the 
instrumentation are treated as noncovered work.
    (5) Tests or experiments in military uses of nuclear energy. As in 
970.2204-1-1(c)(4), these tests or experiments can be varied in nature. 
However, under this category it is intended to include only detonation 
of nonnuclear material or nuclear devices. The material or devices can 
be detonated either underground, at ground level, or above the ground. 
These tests or experiments have been conducted in, on, or in connection 
with facilities specifically constructed for such tests or experiments. 
As in tests or experiments in peaceful uses of nuclear energy, all work 
which can be performed in accord with customary drawings and 
specifications, as well as other work in connection with preparation of 
facilities are treated as covered work. Such work includes building 
towers or similar structures, tunneling, drilling, excavation and 
backfilling, erection of buildings or other structures, and 
installation of utilities. The installation of the nonnuclear material 
or nuclear devices and instrumentation are treated as noncovered work.
    (d) Construction site contiguous to an established manufacturing 
facility. As DOE-owned property sometimes encompasses several thousand 
acres of real estate, a number of separate facilities may be located in 
areas contiguous to each other on the same property. These facilities 
may be built over a period of years, and established manufacturing 
activities may be regularly carried on at one site at the same time 
that construction of another facility is underway at another site. On 
occasion, the regular manufacturing activities of the operating 
contractor at the first site may include the manufacture, assembly, and 
reconditioning of components and equipment which in other industries 
would normally be done in established commercial plants. While the 
manufacture of components and equipment in the manufacturing plant is 
noncovered, the installation of any such manufactured items on a 
construction job is covered.


970.2208  Equal employment opportunity.

    The equal employment opportunity provisions of 48 CFR subpart 22.8 
and subpart 922.8 of this chapter, including Executive Order 11246 and 
41 CFR part 60, are applicable to DOE management and operating 
contracts.


970.2210  Service Contract Act.

    The Service Contract Act of 1965 is not applicable to contracts for 
the management and operation of DOE facilities.


970.2270  Unemployment compensation.

    (a) Each state has its own unemployment compensation system to 
provide payments to workers who become unemployed involuntarily and 
through no fault of their own. Funds are provided for unemployment 
compensation benefits through a payroll tax on employers. Most DOE 
contractors are subject to the unemployment compensation tax laws of 
the states in which they are located. It is the policy to assure, both 
in the negotiation and administration of cost-reimbursement type 
contracts, that economical and practical arrangements are made and

[[Page 13456]]

practiced with respect to unemployment compensation.
    (b) Contract exempt from state laws. (1) Some contractors are 
exempt from state unemployment compensation laws, usually on grounds 
that they are nonprofit organizations or subdivisions of State 
governments. Most states, however, permit such employers to elect 
unemployment compensation coverage on a voluntary basis. Under such 
circumstances, all existing or prospective cost-reimbursement 
contractors shall be encouraged to provide unemployment compensation 
coverage or equivalent substitutes.
    (2) It is also DOE policy that, prior to the award or extension of 
a management and operating contract, exempt contractors or prospective 
contractors shall be required to submit to the contracting officer a 
statement that they will either elect coverage or provide equivalent 
substitutes for unemployment compensation, or in the alternative, 
submit evidence that it is impractical to do so. If any exempt 
contractor or prospective contractor submits that it is impractical to 
elect coverage or to provide an equivalent substitute, appropriate 
Office of Contract and Resource Management, within the Headquarters 
procurement organization, staff shall review that position prior to 
recommending an award or extension of the contract. If there are 
substantial reasons for not electing coverage or for not providing 
equivalent substitutes, a contract may be awarded or extended. 
Headquarters' staff review and recommendation shall be based on such 
factors as:
    (i) The specific provisions of the unemployment compensation law of 
the State;
    (ii) The extent to which the establishment of special conditions on 
DOE work may have an adverse effect on the contractor's general 
policies and operating costs in its private operations;
    (iii) The numerical relationship between the contractor's private 
work force and its employees performing only work for DOE;
    (iv) The contractor's record with respect to work force stability 
and the general outlook with respect to future work force stability;
    (v) In a replacement contractor situation, whether or not the prior 
contractor had coverage or suitable substitutes; and
    (vi) The particular labor relations implications involved.

Subpart 970.23--Environmental, Conservation, and Occupational 
Safety Programs


970.2303  Hazardous materials identification and material safety.


970.2303-1  General.

    (a) The Department of Energy regulates the nuclear safety of its 
major facilities under its own statutory authority derived from the 
Atomic Energy Act and other legislation. The Department also regulates, 
under certain specific conditions, the use by its contractors of 
radioactive materials and ionizing radiation producing machines.
    (b) The inclusion of environmental, safety and health clauses in 
DOE contracts shall be made by the contracting officer in accordance 
with this subpart and in consultation with appropriate environmental, 
safety and health program management personnel.


970.2303-2  Contract clauses.

    (a) When work under management and operating contracts and 
subcontracts thereunder is to be performed at a facility where DOE will 
exercise its statutory authority to enforce occupational safety and 
health standards applicable to the working conditions of the contractor 
and subcontractor employees at such facility, the clause at 48 CFR 
970.5223-1, Integration of Environment, Safety and Health into Work 
Planning and Execution, shall be used in such contract or subcontract 
and made applicable to the work if conditions in paragraphs (a)(1) 
through (3) of this section, are satisfied:
    (1) DOE work is segregated from the contractor's or subcontractor's 
other work;
    (2) The operation is of sufficient size to support its own safety 
and health services; and
    (3) The facility is government-owned, or leased by or for the 
account of the government.
    (b) The clause set forth in 952.223-72, Radiation Protection and 
Nuclear Criticality, shall be included in those contracts or 
subcontracts for, and be made applicable to, work to be performed at a 
facility where DOE does not elect to assert its statutory authority to 
enforce occupational safety and health standards applicable to the 
working conditions of contractor and subcontractor employees, but does 
need to enforce radiological safety and health standards pursuant to 
provisions of the contract or subcontract rather than by reliance upon 
Nuclear Regulatory Commission licensing requirements (including 
agreements with States under section 274 of the Atomic Energy Act).


970.2304  Use of recovered/recycled materials.


970.2304-1  General.

    The policy for the acquisition and use of environmentally 
preferable products and services is described at 48 CFR subpart 923.4.


970.2304-2  Contract clause.

    The contracting officer shall insert the clause at 48 CFR 970.5223-
2, Acquisition and Use of Environmentally Preferable Products and 
Services, in management and operating contracts.


970.2305  Workplace substance abuse programs--management and operating 
contracts.


970.2305-1  General.

    (a) The Department of Energy (DOE), as part of its overall 
responsibilities to protect the environment, maintain public health and 
safety, and safeguard the national security, has established policies, 
criteria, and procedures for management and operating contractors to 
develop and implement programs that help maintain a workplace free from 
the use of illegal drugs.
    (b) Regulations concerning DOE's management and operating 
contractor workplace substance abuse programs are promulgated at 10 CFR 
part 707, Workplace Substance Abuse Programs at DOE Sites.


970.2305-2  Applicability.

    (a) All management and operating contracts awarded under the 
authority of the Atomic Energy Act of 1954, as amended, are required to 
implement the policies, criteria, and procedures of 10 CFR part 707, 
Workplace Substance Abuse Programs at DOE Sites.
    (b) Except as otherwise provided for in this subpart, management 
and operating contracts subject to the requirements of 10 CFR part 707 
and this subpart shall not be subject to 48 CFR 23.5, Drug Free 
Workplace.


970.2305-3  Definitions.

    Terms and words relating to DOE's Workplace Substance Abuse 
Programs, as used in this section, have the same meanings assigned to 
such terms and words in 10 CFR part 707.


970.2305-4  Solicitation provision and contract clause.

    (a) The contracting officer shall insert the provision at 48 CFR 
970.5223-3, Agreement Regarding Workplace Substance Abuse Programs at 
DOE Sites, in solicitations for the management and operation of DOE-
owned or -controlled sites operated under the authority of the Atomic 
Energy Act of 1954, as amended.

[[Page 13457]]

    (b) The contracting officer shall insert the clause at 970.5223-4, 
Workplace Substance Abuse Programs at DOE Sites, in contracts for the 
management and operation of DOE-owned or -controlled sites operated 
under the authority of the Atomic Energy Act of 1954, as amended.


970.2306  Suspension of payments, termination of contract, and 
debarment and suspension actions.

    (a) The contracting officer shall comply with the procedures of 48 
CFR 23.506 regarding the suspension of contract payments, the 
termination of the contract for default, and the debarment and 
suspension of a contractor relative to failure to comply with the 
clause at 48 CFR 970.5223-4, Workplace Substance Abuse Programs at DOE 
Sites.
    (b) For purposes of 10 CFR part 707, the specific causes for 
suspension of contract payments, termination of the contract for 
default, and debarment and suspension of the contractor are:
    (1) The contractor fails to either comply with the requirements of 
10 CFR part 707 or perform in a manner consistent with its approved 
program;
    (2) The contractor has failed to comply with the terms of the 
provision at 48 CFR 970.5223-3, Agreement Regarding Workplace Substance 
Abuse Programs at DOE Sites;
    (3) Such a number of contractor employees having been convicted of 
violations of criminal drug statutes for violations occurring on the 
DOE-owned or -controlled site, as to indicate that the contractor has 
failed to make a good faith effort to provide a drug free workplace; 
or,
    (4) The offeror has submitted a false certification in response to 
the provision at 48 CFR 970.5223-3, Agreement Regarding Workplace 
Substance Abuse Programs at DOE Sites.

Subpart 970.26--Other Socioeconomic Programs


970.2670  Implementation of Section 3021 of the Energy Policy Act of 
1992.


970.2670-1  Requirements.

    The goal requirements of Section 3021 of the Energy Policy Act of 
1992, and the attendant reporting requirements shall be included in the 
subcontracting plan for the management and operating contract and shall 
apply to the annual dollar obligations specifically provided to the 
contractor for competitively awarded subcontracts that fulfill Energy 
Policy Act requirements.


970.2671  Diversity.


970.2671-1  Policy.

    Department of Energy policy recognizes that full utilization of the 
talents and capabilities of a diverse work force is critical to the 
achievement of its mission. The principal goals of this policy are to 
foster and enhance partnerships with small, small disadvantaged, women-
owned small businesses, and educational institutions; to match 
capabilities with existing opportunities; to track small, small 
disadvantaged, women-owned small business, and educational activity; 
and to develop innovative strategies to increase opportunities.


970.2671-2  Contract clause.

    The contracting officer shall insert the clause at 48 CFR 970.5226-
1, Diversity Plan, in all management and operating contracts.


970.2672  Implementation of Section 3161 of the National Defense 
Authorization Act for Fiscal Year 1993.


970.2672-1  Policy.

    Consistent with the objectives of Section 3161 of the National 
Defense Authorization Act for Fiscal Year 1993, 42 U.S.C. 7274h, in 
instances where the Department of Energy has determined that a change 
in work force at a DOE Defense Nuclear Facility is necessary, DOE 
contractors and subcontractors at DOE Defense Nuclear Facilities shall 
accomplish work force restructuring or displacement so as to mitigate 
social and economic impacts and in a manner consistent with any DOE 
work force restructuring plan in effect for the facility or site. In 
all cases, mitigation shall include the requirement for hiring 
preferences for employees whose positions have been terminated (except 
for termination for cause) as a result of changes to the work force at 
the facility due to restructuring accomplished under the requirements 
of Section 3161. Where applicable, contractors may take additional 
actions to mitigate consistent with the Department's Workforce 
Restructuring Plan for the facility or site.


970.2672-2  Requirements.

    The requirements set forth in 48 CFR 926.71, Implementation of 
Section 3161 of the National Defense Authorization Act for Fiscal Year 
1993, for contractors and subcontractors to provide a hiring preference 
for employees under Department of Energy contracts whose employment in 
positions at a Department of Energy Defense Nuclear Facility is 
terminated (except for a termination for cause) applies to management 
and operating contracts.


970.2672-3  Contract clause.

    The contracting officer shall insert the clause at 48 CFR 970.5226-
2, Workforce Restructuring Under Section 3161 of the National Defense 
Authorization Act for Fiscal Year 1993, in contracts for the management 
and operation of Department of Energy Defense Nuclear Facilities and, 
as appropriate, in other contracts that include site management 
responsibilities at a Department of Energy Defense Nuclear Facility.


970.2673  Regional partnerships.


970.2673-1  Policy.

    It is the policy of the DOE to be a constructive partner in the 
geographic region in which DOE conducts its business. The basic 
elements of this policy include:
    (1) Recognizing the diverse interests of the region and its 
stakeholders,
    (2) Engaging regional stakeholders in issues and concerns of mutual 
interest, and
    (3) Recognizing that giving back to the community is a worthwhile 
business practice.


970.2673-2  Contract clause.

    The contracting officer shall insert the clause at 48 CFR 970.5226-
3, Community Commitment, in all management and operating contracts.

Subpart 970.27--Patents, Data, and Copyrights


970.2701  General.


970.2701-1  Applicability.

    This Subpart applies to negotiation of patent rights and rights in 
technical data provisions for the Department of Energy contracts for 
the management and operation of its research and development and 
production facilities.


970.2703  Patent rights.


970.2703-1  Policy.

    (a) Whenever a contract has as a purpose, the design, construction, 
or operation of a Government-owned research, development, demonstration 
or production facility, it is necessary that the Government be accorded 
certain rights with respect to further use of the facility by or on 
behalf of the Government upon termination of the contract, including 
the right to make, use, transfer, or otherwise dispose of all articles, 
materials, products, or processes embodying inventions or discoveries 
used or embodied in the facility regardless of whether or not conceived 
or first actually reduced to

[[Page 13458]]

practice under or in the course of such a contract. Thus, both versions 
of the Department's clauses which address patent rights for management 
and operating contracts (952.227-11, Alternate I, and 952.227-13, 
Alternate I) contain a facilities license.
    (b) In the case of contractors operating and managing DOE research 
and development or production facilities that are not the beneficiaries 
of the Bayh-Dole Act (35 U.S.C. 200, et. seq., as amended), the 
Department is statutorily obligated to take title to inventions 
conceived or first actually reduced to practice in the performance of 
the contracts. Here, as in all other circumstances in which the 
Department takes title to inventions by statute, the contractors may 
request a waiver at the time of contracting for a class of inventions 
or during contract performance for identified inventions. DOE includes 
the considerations at 42 U.S.C. 5908 in its determination as to whether 
to approve the request.
    (c) While no contractor that manages and operates a DOE research 
and development or production facility is a small business, several 
have historically been nonprofit organizations. As such, they are the 
beneficiaries of the Bayh-Dole Act (35 U.S.C. 200 et seq., as amended) 
and, therefore, receive the right to retain title to inventions 
conceived or first actually reduced to practice in the performance of 
their contracts with the Department, except in areas of technology 
covered by Exceptional Circumstances Determinations made by DOE or of 
nuclear weapons and naval nuclear propulsion. In these latter two 
areas, the contractor may request that the Department waive its title 
and, therefore, subject to the exceptions identified in the subsection 
below, may be granted title to inventions conceived or first actually 
reduced to practice in the performance of its contract with the 
Department.
    (d) DOE has exercised the statutory authority granted under 35 
U.S.C. 202(a)(ii) and 202(a)(iv). In accordance with 35 U.S.C. 
202(a)(ii), DOE has issued several Exceptional Circumstances 
Determinations pursuant to which DOE nonprofit management and operating 
contractors have no right to elect title to inventions conceived or 
first actually reduced to practice in the course of or under their 
contracts within covered areas of technology. However, those 
contractors may be given some lesser property right in an invention 
within limits set by DOE in a particular Exceptional Circumstances 
Determination so that the contractor can effectively assist with a 
mission of DOE, such as technology transfer. As new technologies 
evolve, DOE may issue additional Exceptional Circumstances 
Determinations, as appropriate.
    (e) In accordance with 35 U.S.C. 202(a)(iv), DOE has exempted its 
weapons-related and naval nuclear propulsion programs from the broad 
Bayh-Dole right of its nonprofit management and operating contractors 
to elect title to inventions conceived or first actually reduced to 
practice in the course of or under their contracts. The effect of this 
exemption is that, if the contractors want to acquire title, they must 
request title to covered inventions. DOE may then grant the request 
subject to a case-by-case determination that the contractor has met all 
procedural requirements unilaterally set by DOE to insure that all 
national security concerns of DOE relating to the contractor's use of 
an invention in either of these two areas for commercialization have 
been met.


970.2703-2  Contract clauses.

    The contracting officer shall refer to 48 CFR 927.303 for guidance 
concerning the use of clauses in management and operating contracts 
addressing patent rights.


970.2704  Rights in data.


970.2704-1  General.

    (a) Rights in data relating to the performance of the contract and 
to all facilities are significant in assuring continuity of the 
management and operation of DOE facilities. It is crucial in assuring 
DOE's continuing ability to perform its statutory missions that DOE 
obtain rights to all data produced or specifically used by its 
management and operating contractors and appropriate subcontractors. In 
order to obtain the necessary rights in technical data, DOE contracting 
officers shall assure that management and operating contracts contain 
either the Rights in Data clause at 48 CFR 970.5227-1, Rights in Data-
Facilities, or the clause at 48 CFR 970.5227-2, Rights in Data-
Technology Transfer. Selection of the appropriate clause is dependent 
upon whether technology transfer is a mission of the management and 
operating contract pursuant to the National Competitiveness Technology 
Transfer Act of 1989, Public Law 101-189, (15 U.S.C. 3711 et seq., as 
amended). If technology transfer is not a mission of the management and 
operating contract, the clause at 48 CFR 970.5227-1, Rights in Data-
Facilities, shall be used. In those instances in which technology 
transfer is a mission of the contract, the clause at 48 CFR 970.5227-2, 
Rights in Data-Technology Transfer, shall be used.
    (b) Employees of the management and operating contractor may not be 
used to assist in the preparation of a proposal or bid for services 
which are similar or related to those being performed under the 
contract, which are to be performed by the contractor or its parent or 
affiliate organization for commercial customers unless the employee has 
been separated from work under the DOE contract for such period as the 
Head of the Contracting Activity or designee shall have directed.


970.2704-2  Procedures.

    (a) The clauses at 48 CFR 970.5227-1, Rights in Data-Facilities, 
and 48 CFR 970.5227-2, Rights in Data-Technology Transfer, both provide 
generally for Government ownership and for unlimited rights in the 
Government for all data first produced in the performance of the 
contract and unlimited rights in data specifically used in the 
performance of the contract. Both clauses provide that, subject to 
patent, security, and other provisions of the contract, the contractor 
may use contract data for its private purposes. The contractor, under 
either clause, must treat any data furnished by DOE or acquired from 
other Government agencies or private entities in the performance of 
their contracts in accordance with any restrictive legends contained 
therein.
    (b) Since both clauses secure access to and, if requested, delivery 
of technical data used in the performance of the contract, there is 
generally no need to use the Additional Technical Data Requirements 
clause at 48 CFR 52.227-16 in the management and operating contract.
    (c)(1) Paragraph (d) of the clause at 48 CFR 970.5227-1, Rights in 
Data-Facilities, and paragraph (f) of the clause at 48 CFR 970.5227-2, 
Rights in Data-Technology Transfer, provide for the inclusion in 
subcontracts of the Rights in Technical Data-General clause at 48 CFR 
52.227-14, with Alternate V, and modified in accordance with DEAR 
927.409. Those clauses also provide for the inclusion in appropriate 
subcontracts Alternates II, III, and IV to the clause at 48 CFR 52.227-
14 with DOE's prior approval and the inclusion of the Additional 
Technical Data Requirements clause at 48 CFR 52.227-16 in all 
subcontracts for research, development, or demonstration and all other 
subcontracts having special requirements for the production or delivery 
of data. In subcontracts, including subcontracts for related support 
services, involving the design or

[[Page 13459]]

operation of any plants or facilities or specially designed equipment 
for such plants or facilities that are managed or operated by the 
contractor under its contract with DOE, the management and operating 
contractor shall use the Rights in Data-Facilities clause at 48 CFR 
970.5227-1.
    (2) Where, however, a subcontract is to be awarded by the 
management and operating contractor in connection with a program, as 
discussed at 927.404-70, which provides statutory authority to protect 
from public disclosure, data first produced under contracts awarded 
pursuant to the program, contracting officers shall ensure that the 
management and operating contractor includes in that subcontract the 
rights in data clause provided by DOE Patent Counsel, consistent with 
any accompanying guidance.
    (3) Management and operating contractors and higher-tier 
subcontractors shall not use their power to award subcontracts as 
economic leverage to acquire rights in a subcontractor's limited rights 
data or restricted computer software for their private use, nor may 
they acquire rights in a subcontractor's limited rights data or 
restricted computer software except through the use of Alternate II or 
III to the clause at 48 CFR 52.227-14, respectively, without the prior 
approval of DOE Patent Counsel.
    (d)(1) Paragraphs (e) and (f) of the clause at 48 CFR 970.5227-1, 
Rights in Data-Facilities, and paragraphs (g) and (h) of the clause at 
48 CFR 970.5227-2, Rights in Data-Technology Transfer, provide for the 
contractor's granting a nonexclusive license in any limited rights data 
and restricted computer software specifically used in performance of 
the contract.
    (2) In certain instances the objectives of DOE would be frustrated 
if the Government did not obtain, at the time of contracting, limited 
license rights on behalf of responsible third parties and the 
Government, and to limited rights data or restricted computer software 
or both necessary for the practice of subject inventions or data first 
produced or delivered in the performance of the contract. This 
situation may arise in the performance of management and operating 
contracts and contracts for the management or operation of a DOE 
facility or site. Contracting officers should consult with program 
officials and Patent Counsel. No such rights should be obtained from a 
small business or non-profit organization, unless similar rights in 
background inventions of the small business or non-profit organization 
have been authorized in accordance with 35 U.S.C. 202(f). Where such a 
background license is in DOE's interest, a provision that provides 
substantially as Alternate VI at 48 CFR 952.227-14 should be added to 
the appropriate clause, 48 CFR 970.5227-1, Rights in Data-Facilities, 
or 48 CFR 970.5227-2, Rights in Data-Technology Transfer.
    (e) The Rights in Data-Technology Transfer clause at 48 CFR 
970.5227-2 differs from the clause at 48 CFR 970.5227-1, Rights in 
Data'Facilities, in the context of its more detailed treatment of 
copyright. In management and operating contracts that have technology 
transfer as a mission, the right to assert copyright in data first 
produced under the contract will be a valuable right, and 
commercialization of such data, including computer software, will 
assist the management and operating contractor in advancing the 
technology transfer mission of the contract. The clause at 48 CFR 
970.5227-2, Rights in Data-Technology Transfer, provides for DOE 
approval of DOE's taking a limited copyright license for a period of 
five years, and, in certain rare cases, specified longer periods in 
order to contribute to commercialization of the data.
    (f) Contracting officers should consult with Patent Counsel to 
assure that requirements regarding royalties and conflicts of interest 
associated with asserting copyright in data first produced under the 
contract are appropriately addressed in the Technology Transfer Mission 
clause (48 CFR 970.5227-3) of the management and operating contract. 
Where it is not otherwise clear which DOE program funded the 
development of a computer software package, such as where the 
development was funded out of a contractor's overhead account, the DOE 
program which was the primary source of funding for the entire contract 
is deemed to have administrative responsibility. This issue may arise, 
among others, in the decision whether to grant the contractor 
permission to assert copyright. See paragraph (e) of the Rights in 
Data-Technology Transfer clause at 970.5227-2.
    (g) In management and operating contracts involving access to DOE-
owned Category C-24 restricted data, as set forth in 10 CFR part 725, 
DOE has reserved the right to receive reasonable compensation for the 
use of its inventions and discoveries, including its related restricted 
data and technology. Alternate I to each clause shall be used where 
access to Category C-24 restricted data is contemplated in the 
performance of a contract.


970.2704-3  Contract clauses.

    (a) The contracting officer shall insert the clause at 48 CFR 
970.5227-1, Rights in Data-Facilities, in management and operating 
contracts which do not contain the clause at 48 CFR 970.5227-2, Rights 
in Data-Technology Transfer Mission. The contracting officer shall 
include the clause with its Alternate I in contracts where access to 
Category C-24 restricted data, as set forth in 10 CFR part 725, is to 
be provided to contractors.
    (b) The contracting officer shall insert the clause at 970.5227-2, 
Rights in Data-Technology Transfer, in management and operating 
contracts which contain the clause at 970.5227-3, Technology Transfer 
Mission. The contracting officer shall include the clause with its 
Alternate I in contracts where access to Category C-24 restricted data, 
as set forth in 10 CFR part 725, is to be provided to contractors.


970.2770  Technology transfer.


970.2770-1  General.

    This subpart prescribes policies and procedures for implementing 
the National Competitiveness Technology Transfer Act of 1989, Public 
Law 101-189, (15 U.S.C. 3711 et seq., as amended). The Act requires 
that technology transfer be established as a mission of each 
Government-owned laboratory operated under contract by a non-Federal 
entity. The National Defense Authorization Act for Fiscal Year 1994 
expanded the definition of ``laboratory'' to include weapon production 
facilities that are operated for national security purposes and are 
engaged in the production, maintenance, testing, or dismantlement of a 
nuclear weapon or its components.


970.2770-2  Policy.

    All new awards for or extensions of existing DOE laboratory or 
weapon production facility management and operating contracts shall 
have technology transfer, including authorization to award Cooperative 
Research and Development Agreements (CRADAs), as a laboratory or 
facility mission under Section 11(a)(1) of the Stevenson-Wydler 
Technology Innovation Act of 1980, Public Law 96-480 (15 U.S.C. 3701 et 
seq., as amended). A management and operating contractor for a facility 
not deemed to be a laboratory or weapon production facility may be 
authorized on a case-by-case basis to support the DOE technology 
transfer mission including, but not limited to, participating in CRADAs 
awarded by DOE laboratories and weapon production facilities.

[[Page 13460]]

970.2770-3  Technology transfer and patent rights.

    The National Competitiveness Technology Transfer Act of 1989 
(NCTTA) established technology transfer as a mission for Government-
owned, contractor-operated laboratories, including weapons production 
facilities, and authorizes those laboratories to negotiate and award 
cooperative research and development agreements with public and private 
entities for purposes of conducting research and development and 
transferring technology to the private sector. In implementing the 
NCTTA, DOE has negotiated technology transfer clauses with the 
contractors managing and operating its laboratories. Those technology 
transfer clauses must be read in concert with the patent rights clause 
required by this subpart. Thus, each management and operating 
contractor holds title to subject inventions for the benefit of the 
laboratory or facility being managed and operated by that contractor.


970.2770-4  Contract clause.

    (a) The contracting officer shall insert the clause at 970.5227-3, 
Technology Transfer Mission, in each solicitation for a new or an 
extension of an existing laboratory or weapon production facility 
management and operating contract.
    (b) If the contractor is a nonprofit organization or small business 
eligible under 35 U.S.C. 200 et seq., to receive title to any 
inventions under the contract and proposes to fund at private expense 
the maintaining, licensing, and marketing of the inventions, the 
contracting officer shall use the basic clause with its Alternate I.
    (c) If the facility is operated for national security purposes and 
engaged in the production, maintenance, testing, or dismantlement of a 
nuclear weapon or its components, the contracting officer shall use the 
basic clause with its Alternate II.

Subpart 970.28--Bonds and Insurance


970.2803  Insurance.


970.2803-1  Workers' compensation insurance.

    (a) Policies and requirements. (1) Workers' compensation insurance 
protects employers against liability imposed by workers' compensation 
laws for injury or death to employees arising out of, or in the course 
of, their employment. This type of insurance is required by state laws 
unless employers have acceptable programs of self-insurance.
    (2) Special requirements. Certain workers' compensation laws 
contain provisions which result in limiting the protection afforded 
persons subject to such laws. The policy with respect to these 
limitations as they affect persons employed by management and operating 
contractors is set forth as follows:
    (i) Elective provisions. Some worker's compensation laws permit an 
employer to elect not to be subject to its provisions. It is DOE policy 
to require these contractors to be subject to workers' compensation 
laws in jurisdictions permitting election.
    (ii) Statutory immunity. Under the provisions of some workers' 
compensation laws, certain types of employers; e.g., nonprofit 
educational institutions, are relieved from liability. If a contractor 
has a statutory option to accept liability, it is DOE policy to require 
the contractor to do so.
    (iii) Limited medical benefits. Some workers' compensation laws 
limit the liability of the employer for medical care to a maximum 
dollar amount or to a specified period of time. In such cases, a 
contractor's workers' compensation insurance policy should contain a 
standard extrastatutory medical coverage endorsement.
    (iv) Limits on occupational disease coverage and employers' 
liability. Some workers' compensation laws do not provide coverage for 
all occupational diseases. In such situations, a contractor's workers' 
compensation insurance policy should contain voluntary coverage for all 
occupational diseases.
    (3) Contractor ``employees' benefit plan''--self-insurers. The 
policies and requirements set forth in paragraph (a)(2) of this section 
apply where management and operating contractors purchase workers' 
compensation insurance. With respect to self-insured contractors, the 
objectives specified in paragraph (a)(2) also shall be met through 
primary or excess workers' compensation and employers' liability 
insurance policy(ies) or an approved combination thereof. ``Employees' 
benefit plans'' which were established in prior years may be continued 
to contrast termination at existing benefit levels.
    (b) Assignment of responsibilities. (1) Office of Contract and 
Resource Management, within the Headquarters procurement organization, 
other officials, and the Heads of Contracting Activities, consistent 
with their delegations of responsibility, shall assure management and 
operating contracts are consistent with the policies and requirements 
of paragraph (a) of this section.
    (2) In discharging assigned responsibility, the Heads of 
Contracting Activities shall:
    (i) Periodically review workers' compensation insurance programs of 
management and operating contractors in the light of applicable 
workers' compensation statutes to assure conformance with the 
requirements of paragraph (a) of this section.
    (ii) Evaluate the adequacy of coverage of ``self-insured'' workers' 
compensation programs;
    (iii) Provide arrangements for the administration of any existing 
``employees' benefit plans until such plans'' are terminated; and
    (iv) Submit to the Office of Contract and Resource Management, 
within the Headquarters procurement organization, all proposals for the 
modification of existing ``employees' benefit plans.''
    (3) The Office of Contract and Resource Management, within the 
Headquarters procurement organization, is responsible for approving 
management and operating contractor ``employees' benefit plans.''


970.2803-2  Contract clause.

    The contracting officer shall insert the clause at 48 CFR 970.5228-
1, Insurance--Litigation and Claims, in all management and operating 
contracts. Paragraphs (h)(3) and (j)(2) apply to a nonprofit contractor 
only to the extent specifically provided in the individual contract.

Subpart 970.29--Taxes


970.2902  Federal excise taxes.


970.2902-1  Exemptions from Federal Excise Taxes.

    (a) The exemption respecting taxes on communication services or 
facilities has been held to extend to such services when furnished to 
DOE management and operating contractors who pay for such services or 
facilities from advances made to them by DOE under their contracts.
    (b) Where it is considered that a request for an additional 
exemption in the performance of a management and operating contract 
would be justified, a recommendation that such a request be made should 
be forwarded to the Chief Financial Officer, Headquarters.
    (c) Where tax exemption certificates are required in connection 
with the foregoing taxes, the Head of the Contracting Activity will 
supply standard Government forms (SF 1094, U.S. Tax Exemption 
Certificate) on request.

[[Page 13461]]

970.2903  State and local taxes.


970.2903-1  Applicability of state and local taxes to the Government.

    It is DOE policy to secure those immunities or exemptions from 
state and local taxes to which it is entitled under the Federal 
Constitution or state laws. In carrying out this policy, the Heads of 
Contracting Activities shall:
    (a) Take all necessary steps to preclude payment of any taxes for 
which any of the foregoing immunities or exemptions are available. 
Advice of Counsel should be sought as to the availability of such 
immunities or exemptions;
    (b) Acquire directly and furnish to contractors as Government 
furnished property, equipment, material, or services when, in the 
opinion of the Head of the Contracting Activity:
    (1) Such direct acquisition will result in substantial savings to 
the Government, taking into consideration any additional administrative 
costs;
    (2) Such direct acquisition will not have a substantial adverse 
effect on the relationship between DOE and its contractor; and
    (3) Such direct acquisition will not have a substantial adverse 
effect on the DOE program or schedules.


970.2904  Contract clauses.


970.2904-1  Management and operating contracts.

    (a) Pursuant to 48 CFR 29.401-6(b), the clause at 48 CFR 52.229-10, 
State of New Mexico Gross Receipts And Compensating Tax, is applicable 
to all management and operating contracts. For all DOE management and 
operating contracts, the contracting officer shall modify paragraph (b) 
of the clause to replace the phrase ``Allowable Cost and Payment 
clause'' with the phrase ``Allowable Costs and Fixed Fee Clause.''
    (b) Contracting officers shall include the clause at 48 CFR 
970.5229-1, State and Local Taxes, in management and operating 
contracts.

Subpart 970.30--Cost Accounting Standards


970.3002  CAS program requirements.


970.3002-1  Applicability.

    The provisions of 48 CFR part 30 and 48 CFR 9904.414 shall be 
followed for management and operating contracts.


970.3002-2  Limitations.

    Cost of money as an element of the cost of facilities capital (CAS 
414) and as an element of the cost of capital assets under construction 
(CAS 417) is not recognized as an allowable cost under management and 
operating contracts (see 970.3102-3-3).

Subpart 970.31--Contract Cost Principles and Procedures


970.3100  Scope of subpart.

    The cost principles, procedures and general policy for the 
determination of reimbursable costs that are applicable to the 
administration of management and operating contracts are set forth in 
this subpart. The terms ``reimbursement'' and ``reimbursable'' are used 
interchangeably as they pertain to ``allowable costs'' as a matter of 
editorial convenience. No ``reimbursement'' is actually involved in 
those situations where the cost-type contractor makes payments for 
``allowable cost'' from Government funds advanced to the contractor by 
DOE.


970.3100-1  Definitions.

    Off-site work is contract required work (under a contract covered 
by 48 CFR subpart 17.6) performed in contractor-owned facilities, such 
as a central or branch office.
    On-site work (under a contract covered by 48 CFR subpart 17.6) is 
work performed at the Government site.
    Direct costs of a management and operating contract are defined as 
follows:
    (a) With respect to on-site work, ``direct costs'' technically 
include all performance costs; i.e., such costs are identified 
specifically for, or account of, the contract. However, in some 
circumstances it may be desirable or necessary because of the 
requirements of the contract to distinguish between direct and indirect 
types of costs. ``Direct costs,'' when the foregoing circumstances 
apply, are those which are identified as having been incurred 
specifically for, or on account of a designated cost objective, such as 
a particular product (or groups of similar products), work order, job, 
project, program or contract. Materials, labors or expenses which 
relate specifically and solely to the manufacture of a particular 
product or to the performance of a distinct job or work are broad 
examples of direct costs. Direct costs are not limited to items 
incorporated in an end product.
    (b) With respect to ``off-site'' work, ``direct costs'' are as 
defined in 48 CFR 31.202 and discussed in other sections of this 
subpart. ``Indirect costs'' of a management and operating contract are 
defined as follows:
    (1) With respect to ``on-site'' work, when it is desirable or 
necessary to distinguish them from direct costs, ``indirect costs'' are 
those items of material, labor, and expenses not directly identified 
with a single final cost accumulation point, but identified with 
applicability to two or more objectives or with at least one 
intermediate cost objective.
    (2) With respect to ``off-site'' work, ``indirect cost'' are as 
defined in 48 CFR 31.203 and discussed in other sections of this 
subpart.


970.3100-2  Responsibilities.

    (a) The Senior Procurement Executive is responsible for developing 
and revising the policy and procedures for the determination of 
allowable costs reimbursable under a management and operating contract, 
and for seeing that they are properly coordinated with other 
Headquarters' offices having joint interests.
    (b) The Head of the Contracting Activity is responsible for 
following the policy, principles and standards set forth herein in 
establishing the compensation provisions of contracts and subcontracts 
and for submission of deviations for Headquarters consideration.


970.3101  Applicability.


970.3101-1  Objectives.

    Deviations from the policies and principles set forth in this 
subpart shall not be made unless authorized by the Senior Procurement 
Executive on the basis of a written justification stating clearly the 
special circumstances involved. As appropriate, approved deviations 
shall be reflected in the compensation provisions of the contract.


970.3101-2  Advance agreements.

    (a) In order to avoid the potential for subsequent disallowance or 
dispute of certain costs, it is important that agreement between DOE 
and its management and operating contractors be reached in advance of 
the incurrence of costs in categories where reasonableness as to 
amounts, or allocability of costs to the management and operating 
contract are difficult to determine. Any such agreement should be 
incorporated in the contract. However, the absence of such agreement on 
any element of cost will not, in itself, serve to make the element 
either allowable or unallowable. Examples of costs on which advance 
agreements may be particularly important are:
    (1) Deferred maintenance costs;
    (2) Precontract costs;
    (3) Professional or technical consulting services;
    (4) Reconversion costs;
    (5) Research and development costs;
    (6) Royalties;

[[Page 13462]]

    (7) Selling and distribution costs;
    (8) Unemployment insurance experience ratings;
    (9) Employee compensation, including amounts of money or percentage 
of payment authorized to be expended annually for groups of employees 
for all types of wage and salary increases, travel, relocation expenses 
and other personnel costs.
    (10) Lobbying costs;
    (11) Public relations and advertising; and
    (12) Travel and relocation costs as related to special or mass 
personnel movements and as related to travel via contractor-owned 
leased, or chartered aircraft.
    (b) Generally, DOE utilizes the following two basic methods of 
achieving and recording understandings with contractors regarding the 
allowability of employee compensation, travel, relocation, and other 
personnel costs: Negotiation of a personnel appendix to the contract, 
which sets forth the policies, programs, and schedules which are 
accepted as the basis for determining the allowability of costs; or 
reviewing and reaching agreements on established policies, programs, 
and schedules (and any changes thereto during the contract term) that 
are applicable to the contractor's private operations which are 
acceptable for contract work and which will be consistently followed 
throughout the contractor's organization. A personnel appendix to the 
contract setting forth advance understandings covering compensation for 
personal services shall be utilized in management and operating 
contracts when one or more of the following circumstances exist: when 
policies, programs, and schedules are established specifically for 
contract work; when the contractor's work is predominantly or 
exclusively made up of negotiated Government contract work; when 
contract work is so different from the organization's private work that 
existing established policies, programs, and schedules cannot 
reasonably be extended to and consistently applied on contract work; 
or, when established policies, programs, and schedules proposed for 
contract work are not sufficiently definitive to permit a clear advance 
mutual understanding of allowable costs and to provide a basis for 
audit. The Head of the Contracting Activity is authorized to select the 
alternative method of achieving and recording advance understandings 
that they find most appropriate pursuant to the facts of the particular 
contract situation.
    (c) With regard to the costs described in paragraph (a)(9) of this 
subsection:
    (1) Compensation for personal services includes wages and salaries, 
bonuses and incentives, premium payments, pay for time not worked, and 
supplementary compensation and benefits, such as pension and 
retirement, group insurance, severance pay plans, and other forms of 
compensation covered by 970.3102-3-2.
    (2) Employee travel costs include transportation expenses incurred 
while on official business, within the U.S. or outside the U.S. as 
necessary. Travel of executive officers is covered in 970.3102-3-14. 
Contractor travel policies must be acceptable to the Department, and 
result in reasonable cost necessary for contract performance. To avoid 
disputes and to clearly state the treatment that applies to travel 
cost, advance understandings should be reached with the management and 
operating contractor. They should be sufficiently definitive to 
evidence the contractor's responsibility to minimize costs consistent 
with contract performance. The allowability to certain travel costs, 
such as air travel, are specifically limited by Department policy. For 
example, the added cost of first class air travel is prohibited as a 
reimbursable cost, except under stringent conditions, which must be 
justified in writing. Contractually enforceable understandings 
concerning the allowability and reimbursement of other potentially 
significant travel costs (such as the use of Government-furnished 
automobiles or Government-contract provided rental automobiles) should 
be reached with the contractor. A reasonable basis for such 
understandings is the Federal travel policy applicable to Government 
and directly paid contractor employees.
    (3) Other personnel costs include:
    (i) Morale, health, welfare, food service and dormitory costs 
covered in 970.3102-3-5;
    (ii) Training and education costs covered in 970.5231-1;
    (iii) Relocation costs for relocating employees as discussed in 
970.3102-3-12; and special or mass personnel movement covered in 
970.3102-3-2(i).


970.3101-3  Cost certification and penalties on unallowable costs.

    (a) The contracting officer shall require that management and 
operating contractors provide a submission for settlement of costs 
incurred during the period stipulated on the submission and a 
certification that the costs included in the submission are allowable. 
The contracting officer shall assess a penalty if unallowable costs are 
included in the submission. Unallowable costs are either expressly 
unallowable or determined unallowable.
    (1) An expressly unallowable cost is a particular item or type of 
cost which, under the express provisions of an applicable law, 
regulation, or this contract, is specifically named and stated to be 
unallowable.
    (2) A cost determined unallowable is one which, for that 
contractor:
    (i) Was subject to a contracting officer's final decision and not 
appealed;
    (ii) The Department's Board of Contract Appeals or a court has 
previously ruled as unallowable; or
    (iii) Was mutually agreed to be unallowable.
    (b) If, during the review of the submission, the contracting 
officer determines that the submission contains an expressly 
unallowable cost or a cost determined to be unallowable prior to the 
submission, the contracting officer shall assess a penalty.
    (c) If the contracting officer determines that a cost submitted by 
the contractor in its submission for settlement is:
    (1) Expressly unallowable, then the contracting officer shall 
assess a penalty in an amount equal to the disallowed cost allocated to 
this contract plus interest on the paid portion of the disallowed cost. 
Interest shall be computed from the date of overpayment to the date of 
repayment using the interest rate specified by the Secretary of the 
Treasury pursuant to 26 U.S.C. 6621(a)(2).
    (2) Determined unallowable, then the contracting officer shall 
assess a penalty in an amount equal to two times the amount of the 
disallowed cost allocated to this contract.
    (d) The contracting officer may waive the penalty provisions when:
    (1) The contractor withdraws the submission before the formal 
initiation of an audit of the submission and submits a revised 
submission;
    (2) The amount of the unallowable costs allocated to covered 
contracts is $10,000 or less; or
    (3) The contractor demonstrates to the contracting officer's 
satisfaction that:
    (i) It has established appropriate policies, personnel training, 
and an internal control and review system that provides assurances that 
unallowable costs subject to penalties are precluded from the 
contractor's submission for settlement of costs; and
    (ii) The unallowable costs subject to the penalty were 
inadvertently incorporated into the submission.
    (e) The Head of the Contracting Activity may waive the 
certification when:

[[Page 13463]]

    (1) It is determined that it would be in the best interest to waive 
such certification; and
    (2) The Head of the contracting Activity states in writing the 
reasons for that determination and makes such determination available 
to the public.


970.3102  Contracts with management and operating contractors.


970.3102-1  General.

    The cost policies of the DOE regarding management and operating 
contracting are as discussed in this subsection.


970.3102-1-1  Actual cost basis.

    (a) DOE shall reimburse its contractors for costs incurred in the 
performance of a management and operating contract in accordance with 
its terms and the provisions of this subpart. Such costs are those 
allowable costs provided for in the contract to the extent that they 
are necessary or incident, and either directly attributable or 
equitably allocable to the work under the contract. This broad 
expression of the DOE's cost-reimbursement policy is further developed 
and elaborated upon throughout this subpart.
    (b) DOE uses retrospective or after-the-fact determination, usually 
called the actual cost basis, to establish the amount reimbursable. 
This general policy precludes the use of predetermined fixed percentage 
rates except for provisional payments.
    (c) When a fixed compensation for any otherwise allowable cost is 
separately negotiated, the items of such costs covered by the fixed 
amount shall be identified with maximum clarity and set forth in an 
appropriate appendix to the contract as an amount otherwise exclusive 
of other reimbursable costs (this is done in order to distinguish 
between those allowable costs subject to reimbursement and those costs 
which are covered by the negotiated fixed amount).


970.3102-1-2  Application of cost principles.

    (a) The incurred costs of performing management and operating 
contracts shall be reimbursed to the extent they are reasonable, 
allocable, and determined to be allowable under the provisions of this 
Subpart and the terms of the contract.
    (b) This subsection does not cover every element of cost. Failure 
to include any item of cost does not imply that it is either allowable 
or unallowable. The determination of allowability shall be based on the 
principles and standards in this subpart and the treatment of similar 
or related items. When more than one paragraph in this subsection is 
relevant to a contractor cost, the cost shall be apportioned among the 
applicable subsections, and the determination of allowability of each 
portion shall be based on the guidance contained in the applicable 
subsection. As an example, the cost of meals while in a travel status 
would normally be allowable if reasonable. However, the cost of 
alcoholic beverages associated with a meal would be unallowable. In no 
case shall costs made specifically unallowable under one cost principle 
be made allowable under another cost principle.


970.3102-1-3  General basis for reimbursement of costs.

    (a) The total reimbursable cost of a DOE management and operating 
contract is the sum of the allowable direct costs necessary or incident 
to the performance of the contract, plus any properly allocable portion 
of allowable indirect costs, (including corporate or home office G&A 
expense, or branch office indirect expenses), if any, less applicable 
income and other credits. In determining allowability and 
reimbursability of costs, the following shall be considered:
    (1) Allowability and reasonableness in accordance with 48 CFR 
31.201-2(d) and 31.201-3;
    (2) Allocability of a cost to management and operating contract. A 
cost is allocable if it is assignable or chargeable for work and 
performance of the contract in accordance with the relative benefits 
received or other equitable relationship;
    (3) Application of generally accepted accounting principles and 
practices appropriate to identifying and measuring costs of performing 
the contract in accordance with this subpart;
    (4) All exclusions of and limitations of types and amounts of items 
of cost set forth in the contract;
    (5) Approvals by the contracting officer required under the 
contract terms; and
    (6) Cost accounting standards if applicable.
    (b) A contracting officer shall not resolve any questioned costs 
until the contracting officer has obtained:
    (1) Adequate documentation with respect to such costs; and
    (2) The opinion of the Department of Energy's auditor on the 
allowability of such costs.
    (c) The contracting officer shall ensure that the documentation 
supporting the final settlement addresses the amount of the questioned 
costs and the subsequent disposition of such questioned costs.
    (d) The contracting officer shall ensure, to the maximum extent 
practicable, that the Department of Energy's auditor is afforded an 
opportunity to attend any negotiation or meeting with the contractor 
regarding a determination of allowability.


970.3102-1-4  Cost determination based on audit.

    The amount reimbursable under management and operating contracts 
shall be determined in accordance with the principles set forth in this 
subpart and in accordance with the terms of the respective contract on 
the basis of audit. In the event that the contractual terms differ, or 
are inconsistent with (see 48 CFR 970.3101-1 for approval of 
deviations) the principles stated in this subpart, the contractual 
terms control; however, it is expected that contractual terms be based 
on the principles stated in the subpart. The audit may be performed 
directly by DOE, or by the cognizant Federal agency pursuant to 
arrangements made by the DOE.


970.3102-1-5  Contractor's system of accounting.

    (a) Careful DOE study of a management and operating contractor's 
usual accounting procedures shall be made prior to arriving at an 
understanding with the contractor as to the accounting system to be 
employed by the contractor during the period of contract performance.
    (b) A contractor's customary accounting practices are usually 
accepted for management and operating contracts if they conform to 
generally accepted accounting principles, produce equitable results, 
are consistently applied, are not in conflict with the provisions of 
this subpart, are conducive to accurate costing of the contract work, 
and produce reports required by the DOE.


970.3102-2  Direct and indirect costs.

    (a) Direct costs identified specifically with a management and 
operating contract are direct cost of performing that contract and are 
to be charged directly thereto. All costs specifically identified with 
other final cost objectives of the management and operating contractor 
are direct cost of those cost objectives and are not to be charged to 
the contract directly or indirectly. For reasons of practicality, any 
direct cost of minor dollar amount may be treated as an indirect cost 
if the accounting treatment.
    (1) Is consistently applied; and
    (2) Produces substantially the same results as treating the cost as 
a direct cost.

[[Page 13464]]

    (b) Indirect cost are not subject to treatment as a direct cost and 
thus directly chargeable to a contract. After direct costs have been 
determined and charged directly to the contract or other work, indirect 
costs are those remaining to be allocated from an appropriate indirect 
cost accumulation account. The following principles and procedures 
shall apply to indirect costs to the extent that they are incurred 
under management and operating contracts.
    (1) Indirect costs to the extent required to be or otherwise 
incurred in the accounting system of the operating contractor shall be 
accumulated by logical cost groupings with due consideration of the 
reasons for incurring such costs. Each grouping should be determined so 
as to permit distribution of the grouping on the basis of the benefits 
accruing to the cost objectives to which it is to be allocated. 
Generally, overhead and general and administrative (G&A) expenses are 
separately grouped. Similarly, the particular case may require 
subdivision of these groupings; e.g., building occupancy costs might be 
separable from those of personnel administration within a specific 
overhead group such as manufacturing overhead. This necessitates 
selecting a distribution base common to all cost objectives to which 
the grouping is to be allocated. The base should be selected so as to 
permit allocation of the grouping on the basis of the benefits accruing 
to the cost objectives. The number and composition of cost groupings 
should be governed by practical considerations and should not unduly 
complicate the allocation.
    (2) Once an appropriate base for distributing indirect costs has 
been accepted, it shall not be fragmented by removing individual 
elements. For example, when a cost input base is used for the 
distribution of G&A costs, all items that would properly be part of the 
costs input base, whether allowable or unallowable, shall be included 
in the base and bear their pro rata share or G&A costs.
    (3) The method of allocating indirect costs shall be in accordance 
with generally accepted accounting principles which are consistently 
applied.
    (4) A base period for allocating indirect costs is the cost 
accounting period during which such costs are incurred and accumulated 
for distribution to work performed in that period.


970.3102-3  Selected costs.


970.3102-3-1  Public relations and advertising.

    (a) Public relations means all functions and activities dedicated 
to:
    (1) Maintaining, protection, and enhancing the image of a concern 
or its products; or
    (2) Maintaining or promoting reciprocal understanding and favorable 
relations with the public at large, or any segment of the public. The 
term ``public relations'' includes activities associated with areas 
such as advertising, customer relations, community service, etc.
    (b) Advertising means the use of media to promote the sale of 
products or services and to accomplish the activities referred to in 
paragraph (d) of this subsection regardless of the medium employed, 
when the advertiser has control over the form and content of what will 
appear, the media in which it will appear, and when it will appear. 
Advertising media include but are not limited to conventions, exhibits, 
free goods, samples, magazines, trade papers, direct mail, dealer 
cards, window displays, outdoor advertising, radio, and television.
    (c) Public relations and advertising costs include the costs of 
media time and space, purchased services performed by outside 
organizations, as well as the applicable portion of salaries, travel, 
and fringe benefits of employees engaged in the functions and 
activities identified in paragraphs (a) and (b) of this section.
    (d) The only advertising costs that are allowable are those 
specifically required by contract, approved in advance by the 
contracting officer, or that arise from requirements of the contract 
and that are exclusively for the following to the extent that they are 
determined by the contracting officer to be reasonable, necessary, and 
incident to contract performance:
    (1) Recruiting personnel required for contract performance;
    (2) Acquiring scarce items for contract performance;
    (3) Disposing of scrap or surplus materials acquired for contract 
performance;
    (4) The transfer of federally owned or originated technology to 
State and local governments and to the private sector; or
    (5) Obtaining supplies and services including contract-required 
equipment, leases, banking services, etc.
    (e) Allowable public relations costs include the following:
    (1) Costs specifically required by contract, or approved in advance 
by the contracting officer.
    (2) Costs of:
    (i) Responding to inquiries on company policies and activities.
    (ii) Communicating with the public, press, stockholders creditors, 
local communities, and customers, including responses to inquiries from 
and initiation of press releases and other communications with the news 
media.
    (iii) Conducting general liaison with news media and government 
public relations officers, to the extent that such activities are 
limited to communication and liaison necessary to keep the public 
informed matters of public concern such as notice of contract awards, 
plant closures or openings, employee layoffs or rehires, financial 
information environmental impact of plant operations, etc.
    (3) Costs of participation in community service activities (e.g., 
blood bank drives, charity drives, savings bond drives, disaster 
assistance, outreach programs, etc.), exclusive of contractor cash 
contributions and donations which are unallowable. The contractor's 
cost of services or contractor-owned property provided to support 
community service activities (e.g., the contractor's cost of making 
payroll deductions for employee contributions to a charity, cost of 
employee services provided to community organizations, or other 
similar, nominal in-kind participation) is allowable.
    (4) Costs of plant tours, visitors centers, and open houses (but 
see paragraph (f)(5) of this section).
    (f) Unallowable public relations and advertising costs include the 
following activities except when the principal purpose of the activity 
or event is to disseminate technical information or stimulate 
production in accordance with contract requirements:
    (1) All advertising costs other than those specified in paragraph 
(d) of this section.
    (2) Costs of air shows and other special events, such as 
conventions and trade shows including:
    (i) Costs of displays, demonstrations and exhibits;
    (ii) Costs of meeting rooms, hospitality suites, and other special 
facilities used in conjunction with shows and other special events; and
    (iii) Salaries and wages of employees engaged in setting up and 
displaying exhibits, making demonstrations, and providing briefings.
    (3) Costs of sponsoring meetings, symposia, seminars, and other 
special events.
    (4) Costs of ceremonies such as corporate celebrations and new 
product announcements.

[[Page 13465]]

    (5) Costs of promotional material, motion pictures, videotapes, 
brochures, handouts, magazines, and other media that are designed to 
benefit the contractor's organization by calling favorable public 
attention to contractor activities.
    (g) Unallowable public relations and advertising costs include the 
following:
    (1) Costs of souvenirs, models, imprinted clothing, buttons, and 
other mementos provided to customers or the public.
    (2) Cost of memberships in civic and community organizations.
    (3) All advertising and public relations costs, other than as 
specified in paragraphs (d), (e) and (f) of this section, whose primary 
purpose is to benefit the contractor's organization by promoting the 
sale of products or services by stimulating interest in a product or 
product line or by disseminating messages calling favorable attention 
to the contractor for purposes of enhancing the company image to sell 
the company's products or services unless such sales activities are 
required under the management and operating contract to support the DOE 
mission. Nothing in this paragraph (g)(3) modifies the express 
unallowability of costs listed in paragraphs (f), (g)(1) and (g)(2) of 
this section. The purpose of this paragraph is to provide criteria for 
determining whether advertising and public relations costs not 
specifically identified should be unallowable.


970.3102-3-2  Compensation for personal services.

    (a) General. Compensation for personal services includes all 
remuneration paid currently or accrued, in whatever form and whether 
paid immediately or deferred, for services rendered by employees to the 
contractor during the period of contract performance (except as 
otherwise provided for severance pay costs in paragraph (b)(4)(i) of 
this subsection and for pension cost in paragraph (b)(1) of this 
subsection). It includes, but is not limited to, salaries; wages; 
directors' and executive committee members' fees; bonuses (including 
stock bonuses); incentive awards; employee stock options, stock 
appreciation rights, and stock ownership plans; employee insurance; 
fringe benefits; contributions to pension, annuity, and management 
employee incentive compensation plans; and allowances for off-site pay, 
incentive pay, location allowances, hardship pay, severance pay, and 
cost of living differential.
    (b) Allowability. Reimbursable costs for compensation for personal 
services are to be set forth in a personnel appendix in the contract as 
discussed at 970.3101-2. This personnel appendix shall be negotiated 
using the principles and policies of this 970.3102-3-2, and other 
pertinent parts of the DEAR. However, costs that are unallowable 
pursuant to other paragraphs of 970.3102-3 or contract terms shall not 
be allowable under this 970.3102-3-2 on the basis they constitute 
compensation for personnel services. Costs of compensation for personal 
services are reimbursable to the extent that:
    (1) The compensation is for personal services work performed by the 
employee in the current year and must not represent a retroactive 
adjustment of prior year's salaries or wages (but see 970.3102-3-2(i), 
(j), (l), (m), and (n));
    (2) The compensation in total is reasonable for the work performed; 
however, specific restrictions on individual compensation elements must 
be observed where they are prescribed;
    (3) The compensation is based upon and conforms to the terms and 
conditions of the contractor's established compensation plan or 
practice followed so consistently as to imply, in effect, an agreement 
to make the payment;
    (4) Any approvals prescribed by this 970.3102-3-2 are obtained. No 
assumption of allowability will exist where the contractor introduces 
major revisions of existing compensation plans or new plans and the 
contractor.
    (i) Has not notified the cognizant contracting officer of the 
changes either before their implementation, or within a reasonable 
period after their implementation, and
    (ii) Has not provided the Government, either before implementation 
or within a reasonable period after it, an opportunity to review the 
allowability of the changes.
    (5) Costs that are unallowable under the contract terms or other 
paragraphs of this 970.3102-3 shall not be allowable under this 
970.3102-3-2 solely on the basis that they constitute compensation for 
personal services.
    (c) Reasonableness. Subject to 970.3102-3-2(d) of this subsection, 
compensation for personal services will be considered reasonable if the 
total compensation conforms generally to compensation paid by other 
firms of the same size, in the same industry, or in the same geographic 
area for similar services or work performed. This does not preclude the 
Government from challenging the reasonableness of an individual element 
of compensation where costs are excessive in comparison with 
compensation paid by other firms of the same size, same industry, or in 
the same geographic area for similar services. In administering this 
principle, it is recognized that not every compensation case need be 
subjected in detail to these requirements. The requirements need be 
applied only when a general review reveals amounts or types of 
compensation that appear unreasonable or unjustified. In questionable 
cases, the contractor has responsibility to support the reasonableness 
of compensation in relation to the effort performed. Compensation costs 
under certain conditions give rise to the need for special 
consideration. Among such conditions are the following:
    (1) Compensation to owners of closely held corporations, partners, 
sole proprietors, or members of their immediate families, or persons 
who are contractually committed to acquire a substantial financial 
interest in the contractor's enterprise. Determination should be made 
that salaries are reasonable for the personal services rendered rather 
than being a distribution of profits. Compensation in lieu of salary 
for services rendered by partners and sole proprietors will be allowed 
to the extent that it is reasonable and does not constitute a 
distribution of profits. For closely held corporations, compensation 
costs covered by this paragraph shall not be recognized in amounts 
exceeding those costs that are deductible as compensation under the 
Internal Revenue Code and its regulations.
    (2) Any change in a contractor's compensation policy that results 
in a substantial increase in the contractor's level of compensation, 
particularly when it was concurrent with an increase in the ratio of 
Government contracts to other business, or any change in the treatment 
of allowability of specific types of compensation due to changes in the 
treatment of allowability of specific types of compensation due to 
changes in Government policy. No presumption of reasonableness will 
exist where major revisions of existing compensation plans or new plans 
are introduced by the contractor; and the contractor.
    (i) Has not notified the cognizant contracting officer of the 
change either before their implementation or within a reasonable period 
after their implementation; and
    (ii) Has not provided the Government, either before implementation 
or within a reasonable period after it, an opportunity to review the 
reasonableness of the changes.
    (3) The contractor's business is such that its compensation levels 
are not subject to the restraints that normally

[[Page 13466]]

occur in the conduct of competitive business.
    (4) The contractor incurs costs for compensation in excess of the 
amounts which are deductible under the Internal Revenue Code and its 
regulations.
    (d) DOE review and approval of compensation paid individual 
employees. In determining the reasonableness of compensation, the 
compensation of each individual contractor employee normally need not 
be subjected to review and approval. Generally, the compensation paid 
individual employees should be left to the judgment of contractors 
subject to the limitations of DOE-approved compensation policies, 
programs, classification systems, and schedules, and amounts of money 
authorized for wage and salary increases for groups of employees. 
However, all compensation due an individual of $80,000 or more shall 
require the contracting officer's or designee's review and approval. In 
addition, it will often be necessary that employee compensation be 
subjected to review and approval on an individual basis at a level 
below $80,000, when the contracting officer finds it appropriate for 
the particular situation. The contract shall specifically provide for 
the approval by the contracting officer of the cost of compensating an 
individual contractor employee above the level determined by the 
contracting officer, if a total of 50 percent or more of such 
compensation is reimbursed under DOE cost-type contracts. For purposes 
of determining the level for individual review and approval, total 
compensation as used in this paragraph includes only the employee's 
salary and bonus or incentive compensation. As in the case of other 
personnel and compensation costs, it is intended that contracting 
officer review and approval of individual compensation normally will be 
prior to incurrence of costs.
    (e) Labor-management agreements. Notwithstanding any other DOE 
requirements, costs of compensation are not allowable to the extent 
that they result from provisions of labor-management agreements that, 
as applied to work in performing Government contracts, are determined 
to be unreasonable because they are either unwarranted by the character 
and circumstances of the work or discriminatory against the Government. 
The application of the provisions of a labor-management agreement 
designed to apply to a given set of circumstances and conditions of 
employment (e.g., work involving extremely hazardous activities or work 
not requiring recurrent use of overtime) is unwarranted when applied to 
a Government contract involving significantly different circumstances 
and conditions of employment (e.g., work involving less hazardous 
activities or work continually requiring use of overtime). It is 
discriminatory against the Government if it results in employee 
compensation (in whatever form or name) in excess of that being paid 
for similar non-Government work under comparable circumstances. 
Disallowance of costs will not be made under this paragraph (e) unless:
    (1) The contractor has been permitted an opportunity to justify the 
costs; and
    (2) Due consideration has been given to whether unusual conditions 
pertain to Government contract work, imposing burdens, hardships, or 
hazards on the contractor's employees, for which compensation that 
might otherwise appear unreasonable is required to attract and hold 
necessary personnel.
    (f) Salaries and wages. Salaries and wages for current services 
include gross compensation paid to employees in the form of cash, stock 
(see paragraph (h)(2) of this subsection regarding valuation), 
products, or services, and are allowable.
    (g) Domestic and foreign differential pay. When personal services 
are performed in a foreign country, compensation may also include a 
differential that may properly consider all expenses associated with 
foreign employment such as housing, cost of living adjustments, 
transportation, bonuses, additional Federal, state, local or foreign 
income taxes resulting from foreign assignment, and other related 
expenses.
    (h) Bonuses and incentive compensation. Incentive compensation and 
cash bonuses based on production, cost reduction or efficient 
performance, suggestion awards, and safety awards are to be treated as 
allowable, to the extent that the contractor's overall compensation 
plan is determined to be reasonable and such costs are paid or accrued, 
pursuant to an agreement entered into in good faith between the 
contractor and the employees before the services were rendered, or 
pursuant to an established plan followed by the contractor so 
consistently as to imply, in effect, an agreement to make such payment 
(see 970.3101-2). In determining reasonableness, it will be necessary 
to take into account, not only bonuses and incentive compensation 
payments charged directly to the contract, but also payments charged 
indirectly to the contract through overhead. Bonuses, awards, and 
incentive compensation, when any of them are deferred, are to be 
treated as allowable to the extent provided in paragraph (m) of this 
subsection.
    (1) Bonuses and incentive compensation paid to employees other than 
those whose pay is directly reimbursed will not be made allowable in 
on-site construction and management and operating contracts, where home 
office general and administrative expense is unallowable.
    (2) When the costs of bonuses and incentive compensation are paid 
in the stock of the contractor or of an affiliate, the following 
additional restrictions apply:
    (i) Valuation placed on the stock shall be the fair market value on 
the measurement date (i.e., the first date the number of shares awarded 
is known) determined upon the most objective basis available; and
    (ii) Accruals for the cost of stock before issuing the stock to the 
employees shall be subject to adjustment according to the possibilities 
that the employees will not receive the stock and that their interest 
in the accruals will be forfeited.
    (3) When the bonus and incentive compensation payments are 
deferred, the costs are subject to the requirements of paragraph (h)(1) 
of this subsection and of paragraph (m) of this subsection.
    (i) Severance pay. (1) Severance pay, also commonly referred to as 
dismissal wages, is a payment in addition to regular salaries and wages 
by contractors to workers whose employment is being involuntarily 
terminated. Payments for early retirement incentive plans are covered 
in paragraph (l)(6) of this subsection.
    (2) Severance pay to be allowable must meet the general 
allowability criteria in paragraph (i)(2)(i) of this subsection, and, 
depending upon whether the severance is normal or abnormal, criteria in 
paragraph (i)(2)(ii) of this subsection for normal severance pay or 
paragraph (i)(2)(iii) of this subsection for abnormal severance pay 
also apply. In addition, paragraphs (i)(2)(iv) and (v) of this 
subsection apply if the severance cost is for foreign nationals 
employed outside the United States.
    (i) Severance pay is allowable only to the extent that, in each 
case, it is required by law, employer-employee agreement, established 
policy that constitutes, in effect, an implied agreement on the 
contractor's part, or circumstances of the particular employment. 
Payments made in the event of employment with a replacement contractor 
where continuity of employment with credit for prior length of service 
is preserved under substantially equal conditions of employment, or 
continued employment by the contractor at another facility,

[[Page 13467]]

subsidiary, affiliate, or parent company of the contractor are not 
severance pay and are unallowable.
    (ii) Actual normal turnover severance payments shall be allocated 
to all work performed in the contractor's plant, or where the 
contractor provides for accrual of pay for normal severances, that 
method will be acceptable if the amount of the accrual is reasonable in 
light of payments actually made for normal severances over a 
representative past period and if amounts accrued are allocated to all 
work performed at the facility.
    (iii) Abnormal or mass severance pay is of such a conjectural 
nature that measurement of costs by means of an accrual will not 
achieve equity to both parties. Thus, accruals for this purpose are not 
allowable. However, the Government recognizes its obligation to 
participate, to the extent of its fair share, in any specific payment. 
Thus, allowability will be considered on a case-by-case basis.
    (iv) Notwithstanding the provision of paragraph (c) of this 
subsection, which references geographic area, under 41 U.S.C. 
256(e)(1)(M), the costs of severance payments to foreign nationals 
employed under a service contract performed outside the United States 
are unallowable to the extent that such payments exceed amounts 
typically paid to employees providing similar services in the same 
industry in the United States.
    (v) Further, under 41 U.S.C. 256(e)(1)(N), the costs of severance 
payments referred to in paragraph (i)(2)(iv) of this subsection are 
unallowable if the termination of employment is the result of the 
closing of, or curtailment of, activities at a United States facility 
in that country at the request of the government of that country.
    (vi) The Head of the Contracting Activity may waive the application 
of the provisions of paragraphs (i)(2)(iv) and (v) of this subsection 
under the conditions specified in subpart 970.37.
    (3) Subject to paragraph (a) of this subsection, the following 
standards apply in determining allowability of costs for severance pay 
plans of management and operating contractors:
    (i) Payments should be made only upon involuntary termination by 
reduction in force (RIF) of an employee which results in a permanent 
separation from the employment of the contractor. However, payments may 
also be made upon voluntary separation of an employee within a RIF 
grouping, but not otherwise scheduled for termination, which thereby 
eliminates the need for terminating another employee involuntarily.
    (ii) Payments should not be provided for in the event of temporary 
layoffs; employment or offer of employment with a replacement 
contractor (employer) where continuity of employment with credit for 
prior length of service is preserved under substantially equal 
conditions of employment; early or normal retirement; or continued 
employment by the contractor at another facility, subsidiary, 
affiliate, or parent company of the contractor. Contractor employees 
should not have the option of refusing employment to receive severance 
pay.
    (j) Backpay. (1) Backpay resulting from violations of Federal labor 
laws or the Civil Rights Act of 1964. Backpay may result from a 
negotiated settlement, order, or court decree that resolves a violation 
of Federal labor laws or the Civil Rights Act of 1964. Such backpay 
falls into two categories: one requiring the contractor to pay 
employees additional compensation for work performed for which they 
were underpaid, and the other resulting from other violations, such as 
when the employee was improperly discharged, discriminated against, or 
other circumstances for which the backpay was not additional 
compensation for work performed. Backpay resulting from underpaid work 
is compensation for the work performed and is allowable. All other 
backpay resulting from willful violation of Federal labor laws or the 
Civil Rights Act of 1964 is unallowable.
    (2) Other backpay. Backpay may also result from payments to union 
employees (union and non-union) for the difference in their past and 
current wage rates for working without a contract or labor agreement 
during labor management negotiations. Such backpay is allowable. 
Backpay to nonunion employee based upon results of union agreement 
negotiations is allowable only if:
    (i) A formal agreement or understanding exists between management 
and the employees concerning these payments, or
    (ii) An established policy or practice exists and is followed by 
the contractor so consistently as to imply, in effect, an agreement to 
make such payment.
    (k) Stock options, stock appreciation rights, and phantom stock 
plans. (1) The cost of stock options awarded to employees to purchase 
stock of the contractor or of an affiliate will be treated as deferred 
compensation and must comply with the requirements of paragraph (m) of 
this subsection and with the allowability criteria contained in 
paragraph (k)(2) of this subsection. The allowable cost of stock 
appreciation rights, whether offered separately or combined with stock 
options, will be determined in the same manner as stock options.
    (2) The allowable costs of stock options and stock appreciation 
rights will be limited to the difference between the option price or 
stock-appreciation-right price and the market price of the stock on the 
measurement date (i.e., the first date on which both the number of 
shares and the option or stock-appreciation-right price are known). 
Accordingly, when the option or stock-appreciation-right price is equal 
to or greater than the market price on the measurement date, then no 
costs are allowed for contract costing purposes.
    (3) In phantom-stock-type plans, contractors assign or attribute 
contingent shares of stock to employees as if the employees own the 
stock, even though the employees neither purchase the stock nor receive 
title to it. Under these plans, an employee's account may be increased 
by the equivalent of dividends issued and any appreciation in the 
market price of the stock over the price of the stock on the 
measurement date (i.e., the first date the number of shares awarded is 
known). Such increases in employee accounts for dividend equivalents 
and market price appreciation are unallowable.
    (l) Pension costs. (1) A pension plan is a deferred compensation 
plan that is established and maintained by one or more employers to 
provide systematically for paying benefits to plan participants after 
their retirement, provided that the benefits are paid for life or are 
payable for life at the option of the employee. Additional benefits 
such as permanent and total disability and death payments and 
survivorship payments to beneficiaries of deceased employees may be 
treated as pension costs, provided the benefits are an integral part of 
the pension plan and meet all the criteria pertaining to pension costs.
    (2) Pension plans are normally segregated into two types of plans: 
defined benefit or defined contribution pension plans. Except as 
provided by other DOE directives, the cost of all defined benefit 
pension plans shall be measured, allocated, and accounted for in 
compliance with the provisions of CAS 412, Composition and Measurement 
of Pension Costs, and CAS 413, Adjustment and Allocation of Pension 
Cost. The costs of all defined contribution pension plans shall be 
measured, allocated, and accounted for in accordance with the 
provisions of CAS 412. Pension costs are allowable subject to 
directives issued by the Office

[[Page 13468]]

of Contract and Resource Management, within the Headquarters 
procurement organization, the referenced standards and the cost 
limitations and exclusions set forth below in this paragraph and in 
paragraphs (l)(3), (4), (5), (6), and (7) of this subsection.
    (i) To be allowable in the current year, pension costs must be 
funded by the time set for filing the Federal income tax return or any 
extension thereof. Pension costs assigned to the current year, but not 
funded by the tax return time, shall not be allowable in any subsequent 
year.
    (ii) Pension payments must be reasonable in amount and be paid 
pursuant to: an agreement entered into in good faith between the 
contractor and employees before the work or services are performed and 
the terms and conditions of the established plan. The cost of changes 
in pension plans which are discriminatory to the Government or are not 
intended to be applied consistently for all employees under similar 
circumstances in the future are not allowable.
    (iii) Except as provided for early retirement benefits in paragraph 
(1)(6) of this subsection, one-time-only pension supplements not 
available to all participants of the basic plan are not allowable as 
pension costs unless the supplemental benefits represent a separate 
pension plan and the benefits are payable for life at the option of the 
employee.
    (iv) Increases in payments to previously retired plan participants 
covering cost-of-living adjustments are allowable if paid in accordance 
with a policy or practice consistently followed.
    (3) Defined benefit pension plans. This paragraph covers pension 
plans in which the benefits to be paid or the basis for determining 
such benefits are established in advance and the contributions are 
intended to provide the stated benefits. The cost limitations and 
exclusions pertaining to defined benefit plans are as follows:
    (i) Normal costs of pension plans not funded in the year incurred, 
and all other components of pension costs (see CAS 412.40(a)(1)) 
assignable to the current accounting period but not funded during it, 
shall not be allowable in subsequent years (except that a payment made 
to a fund by the time set for filing the Federal income tax return or 
any extension thereof is considered to have been made during such 
taxable year). However, any part of a pension cost that is computed for 
a cost accounting period that is deferred pursuant to a waiver granted 
under the provisions of the Employee's Retirement Income Security Act 
of 1974 (ERISA) (see CAS 412.50(c)(3)), will be allowable in those 
future accounting periods in which the funding does occur. The 
allowability of these deferred contributions will be limited to the 
amounts that would have been allowed had the funding occurred in the 
year the costs would have been assigned except for the waiver.
    (ii) Any amount paid or funded before the time it becomes 
assignable and allowable shall be applied to future years, in order of 
time, as if actually paid and deductible in those years. The interest 
earned on such premature funding, based on the valuation rate of 
return, may be excluded from future years' computations of pension 
costs in accordance with CAS 412.50(a)(7).
    (iii) Increased pension costs caused by delay in funding beyond 30 
days after each quarter of the year to which they are assignable are 
unallowable. If a composite rate is used for allocating pension costs 
between the segments of a company and if, because of differences in the 
timing of the funding by the segments, an inequity exists, allowable 
pension costs for each segment will be limited to that particular 
segment's calculation of pension costs as provided for in CAS 
413.50(c)(5). Determination of unallowable costs shall be made in 
accordance with the actuarial method used in calculating pension costs.
    (iv) Allowability of the cost of indemnifying the Pension Benefit 
Guaranty Corporation (PBGC) under ERISA section 4062 or 4064 arising 
from terminating an employee deferred compensation plan will be 
considered on a case-by-case basis; provided that if insurance was 
required by the PBGC under ERISA section 4023, it was so obtained and 
the indemnification payment is not recoverable under the insurance. 
Consideration under the foregoing circumstances will be primarily for 
the purpose of appraising the extent to which the indemnification 
payment is allocable to Government work. If a beneficial or other 
equitable relationship exists, the Government will participate in the 
indemnification payment to the extent of its fair share.
    (4) Defined contribution pension plans. This paragraph covers those 
pension plans in which the contributions to be made are established in 
advance and the level of benefits is determined by the contributions 
made. It also covers profit sharing, savings plans, and other such 
plans provided the plans fall within the definition of a pension plan 
in paragraph (l)(1) of this subsection.
    (i) The pension cost assignable to a cost accounting period is the 
net contribution required to be made for that period after taking into 
account dividends and other credits, where applicable. However, any 
portion of pension cost computed for a cost accounting period that is 
deferred pursuant to a waiver granted under the provisions of ERISA 
(see CAS 412.50(c)(3)) will be allowable in those future accounting 
periods when the funding does occur. The allowability of these deferred 
contributions will be limited to the amounts that would have been 
allowed had the funding been made in the year the costs would have been 
assigned except for the waiver.
    (ii) Any amount paid or funded to the trust before the time it 
becomes assignable and allowable shall be applied to future years, in 
order of time, as if actually paid and deductible in such years.
    (iii) The provisions of paragraph (l)(3)(vi) of this subsection 
concerning payments to PBGC apply to defined contribution plans.
    (5) Pension plans using pay-as-you-go methods. A pension plan using 
pay-as-you-go methods is a plan in which the contractor recognizes 
pension cost only when benefits are paid to retired employees or their 
beneficiaries. Regardless of whether the payment of pension benefits 
contribution can or cannot be compelled, allowable costs for these 
types of plans shall not exceed an amount computed as follows:
    (i) Compute, by using an actuarial cost method, the plan's 
actuarial liability for benefits earned by plan participants. This 
entire liability is always unfunded for a pay-as-you-go plan.
    (ii) Compute a level amount which, including an interest 
equivalent, would amortize the unfunded actuarial liability over a 
period of no less than 10 or more than 40 years from the inception of 
the liability.
    (iii) Compute, by using an actuarial cost method, a normal cost for 
the period.
    (iv) The sum of paragraphs (l)(5) (i), (ii), and (iii) of this 
subsection represents the amount of pension costs assignable to the 
current period. This amount, however, is limited to the amount paid in 
the year.
    (v) For purposes of determining contract cost where a pay-as-you-go 
plan is initiated as either a supplemental plan or an additional but 
separate plan to a basic funded plan, the plans will be treated as one 
plan; e.g., the actuarial cost method, past service amortization 
period, etc., of the basic plan will be used on the supplemental or 
additional pay-as-you-go plan in determining the proper costs 
assignable to the current period. Any costs in excess of those 
determined by using the actuarial cost method and assumptions

[[Page 13469]]

of the basic plan are unallowable. However, where assumption for salary 
progressions, mortality rates of the participants, and so forth are 
significantly different, the assumptions used for the basic and 
supplemental plan may be different.
    (vi) The requirements of paragraphs (l)(3) (i) through (iv) of this 
subsection are also applicable to pay-as-you-go plans.
    (6) Early retirement incentive plans. An early retirement incentive 
plan is a plan under which employees receive a bonus or incentive, over 
and above the requirement of the basic pension plan, to retire early. 
These plans normally are not applicable to all participants of the 
basic plan and do not represent life income settlements, and as such 
would not qualify as pension costs. However, for contract costing 
purposes, early retirement incentive payments are allowable subject to 
pension criteria contained in paragraphs (l)(3)(i) through (iv) 
provided:
    (i) The costs are accounted for and allocated in accordance with 
the contractor's system of accounting for pension costs (see paragraph 
(l)(5)(v) of this subsection for supplemental pension benefits);
    (ii) The payments are made in accordance with the terms and 
conditions of the contractor's plan;
    (iii) The plan is applied only to active employees. The cost of 
extending the plan to employees who retired or were terminated before 
the adoption of the plan is unallowable; and
    (iv) The total of the incentive payments to any employee may not 
exceed the amount of the employee's annual salary for the previous 
fiscal year before the employee's retirement.
    (7) Employee stock ownership plans (ESOP). (i) An ESOP is an 
individual stock bonus plan designed specifically to invest in the 
stock of the employer corporation. The contractor's contributions to an 
Employee Stock Ownership Trust (ESOT) may be in the form of cash, 
stock, or property. Costs of ESOP's are allowable subject to the 
following conditions:
    (A) Contributions by the contractor in any one year may not exceed 
15 percent (25 percent when a money purchase plan is included) of 
salaries and wages of employees participating in the plan in any 
particular year.
    (B) The contribution rate (ratio of contribution to salaries and 
wages of participating employees) may not exceed the last approved 
contribution rate except when approved by the contracting officer based 
upon justification provided by the contractor. When no contribution was 
made in the previous year for an existing ESOP, or when a new ESOP is 
first established, and the contractor proposes to make a contribution 
in the current year, the contribution rate shall be subject to the 
contracting officer's approval.
    (C) When a plan or agreement exists wherein the liability for the 
contribution can be compelled for a specific year, the expense 
associated with that liability is assignable only to that period. Any 
portion of the contribution not funded by the time set for filing of 
the Federal income tax return for that year or any extension thereof 
shall not be allowable in subsequent years.
    (D) When a plan or agreement exists wherein the liability for the 
contribution cannot be compelled, the amount contributed for any year 
is assignable to that year provided the amount is funded by the time 
set for filing of the Federal income tax return for that year.
    (E) When the contribution is in the form of stock, the value of the 
stock contribution shall be limited to the fair market value of the 
stock on the date that title is effectively transferred to the trust. 
Cash contributions shall be allowable only when the contractor 
furnishes evidence satisfactory to the contracting officer 
demonstrating that stock purchases by the ESOT are or will be at a fair 
market price; e.g., makes arrangements with the trust permitting the 
contracting officer to examine purchases of stock by the trust to 
determine that prices paid are at fair market value. When excessive 
prices are paid, the amount of the excess will be credited to the same 
indirect cost pools that were charged for the ESOP contributions in the 
year in which the stock purchase occurs. However, when the trust 
purchases the stock with borrowed funds which will be repaid over a 
period of years by cash contributions from the contractor to the trust, 
the excess price over fair market value shall be credited to the 
indirect cost pools pro rata over the period of years during which the 
contractor contributes the cash used by the trust to repay the loan. 
When the fair market value of unissued stock or stock of a closely held 
corporation is not readily determinable, the valuation will be made on 
a case-by-case basis taking into consideration the guidelines for 
valuation used by the IRS.
    (ii) Amounts contributed to an ESOP arising from either:
    (A) An additional investment tax credit (see 1975 Tax Reduction 
Act); or
    (B) A payroll-based tax credit (see Economic Recovery Tax Act of 
1981) are unallowable.
    (iii) The requirements of paragraphs (l)(3)(ii) of this subsection 
are applicable to Employee Stock Ownership Plans.
    (m) Deferred compensation. (1) Deferred compensation is an award 
given by an employer to compensate an employee in a future cost 
accounting period or periods for services rendered in one or more cost 
accounting periods before the date of receipt of compensation by the 
employee. Deferred compensation does not include the amount of year-end 
accruals for salaries, wages, or bonuses that are paid within a 
reasonable period of time after the end of a cost accounting period. 
Subject to 970.3102-3-2(a), deferred awards are allowable when they are 
based on current or future services. Awards made in periods subsequent 
to the period when the work being remunerated was performed are not 
allowable.
    (2) The costs of deferred awards shall be measured, allocated, and 
accounted for in compliance with the provisions of CAS 415, Accounting 
for the Cost of Deferred Compensation.
    (3) Deferred compensation payments to employees under awards made 
before the effective date of CAS 415 are allowable to the extent they 
would have been allowable under prior acquisition regulations.
    (n) Fringe benefits. Fringe benefits are allowances and services 
provided by the contractor to its employees, as compensation, in 
addition to regular wages and salaries. Subject to the determination 
that total compensation is reasonable in accordance with this 970.3102-
3-2, costs of fringe benefits such as pay for vacations, holidays, sick 
leave, military leave, employee insurance, pension, retirement plans, 
and supplemental unemployment benefit plans are to be treated as 
allowable, provided such fringe benefits meet the following conditions:
    (1) The benefits contribute to the performance of contract work and 
are appropriate for reimbursement from public funds;
    (2) Such benefit plans as exist in the contractor's private 
operations that are inconsistent with DOE published requirements are 
appropriately modified or disallowed;
    (3) Employee benefit plans especially established to meet the 
particular needs of the contract are in conformity with published DOE 
policy and standards;
    (4) Appropriate controls under the contract are established to 
assure that employees on contract work are treated no more or no less 
favorably than employees in the contractor's private operation, except 
to the extent that

[[Page 13470]]

paragraphs (n)(2) and (3) of this subsection apply;
    (5) To the fullest extent possible, definite limitations or 
terminal points are established for each of the various benefit plans, 
so that DOE's full liability with respect thereto is established under 
the contract; and
    (6) DOE has access to all information necessary to complete 
understanding of the means of computing or determining the cost of the 
benefits afforded contract employees and their dependents under the 
benefit plans.
    (o) Training and education expenses. See 970.5231-1.
    (p) Special compensation. The following costs are unallowable:
    (1) Special compensation to employees pursuant to agreements which 
permit payments in excess of the contractor's normal severance pay 
practices, if their employment terminates following a change in the 
management control over, or ownership of, the contractor or a 
substantial portion of its assets.
    (2) Special compensation to employees pursuant to agreements which 
permit payments resulting from a change, whether actual or prospective, 
in the management control over, or ownership of, the contractor or a 
portion of its assets which is contingent upon the employee remaining 
with the contractor for a stated period of time.
    (q) Limitation on allowability of compensation for certain 
contractor personnel. Costs incurred for compensation of a senior 
executive in excess of the benchmark compensation amount determined 
applicable for the contractor fiscal year by the Administrator, Office 
of Federal Procurement Policy, are unallowable. Allowable costs of 
executive compensation shall be determined pursuant to Federal 
Acquisition Regulation 31.205-6(p).


970.3102-3-3  Cost of money.

    Cost of money as an element of the cost of facilities capital (CAS 
414) and cost of capital assets under construction (CAS 417) is not an 
allowable cost under DOE management and operating contracts. Under the 
provisions of CAS 414 and CAS 417, cost of money is an imputed cost 
applicable to contractor owned and financed tangible capital assets 
employed in contract performance or being constructed, fabricated, or 
developed for ultimate employment in contract performance. Cost of 
money is not applicable to DOE management and operating contracts since 
the Government provides for assets used, or under construction for use 
in performance of its contracts (such as through Government furnished 
or contractor-acquired Government property contract provisions and/or 
through granting cash advances, including letters-of-credit.)


970.3102-3-4  Depreciation.

    (a) Depreciation is allowable subject to the following:
    (1) The charge represents normal depreciation on a contractor's 
plant and equipment used in performance of management and operating 
work.
    (2) The charge to current operations is a distribution of the cost 
of acquisition of a tangible capital asset, less estimated residual 
value, over the estimated useful life of the asset, in a systematic and 
logical manner.
    (3) Any generally accepted accounting method consistently applied 
to assets concerned having the approval of the Internal Revenue Service 
for Federal income tax purposes, if subject to the Internal Revenue 
Code of 1954, as amended, may be used including:
    (i) The straight-line method;
    (ii) The declining balance method, using a rate not exceeding twice 
the rate which would have been used had the annual allowance been 
computed under the method described in paragraph (a)(3)(i) of this 
subsection;
    (iii) The sum-of-the-years digits method;
    (iv) Any other consistent method productive of an annual allowance 
which, when added to all allowances for the period commencing with the 
use of the property and including the current year, does not, during 
the first two-thirds of the useful life of the property, exceed the 
total of such allowances which would have been used, had such 
allowances been computed under the method described in paragraph 
(a)(3)(ii) of this subsection.
    (4) If a nonprofit or tax-exempt organization, the method shall be 
such that it could have had the approval of the Internal Revenue 
Service, had the organization been subject to the Internal Revenue Code 
of 1954, as amended.
    (5) The contractor must use the same approved method of 
depreciation for costing its contract work as for costing its other 
work at the same facility.
    (6) The method of depreciation shall produce equitable and 
reasonable results.
    (b) Depreciation of the following is unallowable:
    (1) Idle or excess facilities (machinery and equipment), other than 
reasonable standby facilities;
    (2) Assets fully amortized or depreciated on the contractor's 
books;
    (3) Unrealized appreciation of values of assets; and
    (4) Accelerated amortization under Certificates of Necessity or 
other system in excess of normal depreciation, as computed under 
paragraph (a) of this subsection.
    (c) In entering into contracts involving the use of ``special 
facilities'' under section 161 of the Atomic Energy Act of 1954, as 
amended (section 7 of Public Law 85-681 approved Aug. 19, 1958), the 
percentage of the total cost of such special facilities devoted to 
contract performance and chargeable to the DOE should not exceed the 
ratio between the period of contract deliveries and the anticipated 
useful life of such facilities.


970.3102-3-5  Employee morale, health, welfare, food service, and 
dormitory costs.

    (a) Employee morale, health, and welfare activities are those 
services or benefits provided by the contractor to its employees to 
improve working conditions, employer-employee relations, employee 
morale, and employee performance. These activities include such items 
as house or employee publications, health or first-aid clinics, 
wellness/fitness centers, employee counseling services, awards for 
performance or awards made in recognition of employee achievements 
pursuant to an established contractor plan or policy, and, for the 
purpose of this subsection, food service and dormitory costs. However, 
these activities do not include, and should be differentiated from 
compensation for personal services as defined in 970.3102-3-2. Food and 
dormitory services include operating or furnishing facilities for 
cafeterias, dining rooms, canteens, lunch wagons, vending machines, 
living accommodations, or similar types of services for the 
contractor's employees at or near the contractor's facilities or site 
of the contract work.
    (b) Costs of recreation, registration fees of employees 
participating in competitive fitness promotions, team activities, and 
sporting events are unallowable, except for the costs of employees' 
participation in company sponsored intramural sports teams or employee' 
organizations designed to improve company loyalty, team work, or 
physical fitness.
    (c) Except as limited by paragraph (d) of this subsection, the 
aggregate of costs incurred on account of all activities mentioned in 
paragraph (a) of this subsection, less income generated by all such 
activities, is allowable to the extent that the net aggregate cost of 
all such activities, as well as the net cost of each individual 
activity, is reasonable and allocable to the contract work. 
Additionally, advance understandings

[[Page 13471]]

with respect to the costs mentioned in paragraph (a) of this subsection 
are to be reached prior to the incurrence of these costs as required in 
48 CFR 970.3101-2.
    (d) Losses from the operation of food or dormitory services may be 
included as costs incurred under paragraph (c) of this subsection only 
if the contractor's objective is to operate such services at least on a 
break-even basis. Losses sustained because food services or lodging 
accommodations are furnished without charge or at prices or rates which 
obviously would not be conducive to operation on a break-even basis are 
not allowable, except in those instances where the contractor can 
demonstrate that unusual circumstances exist, such that, even with 
efficient management, operation of the services on a break-even basis 
would require charging inordinately high prices, or prices or rates 
higher than those charged by commercial establishments offering the 
same services in the same geographical areas. Typical examples of such 
unusual circumstances are:
    (1) Where the contractor must provide food or dormitory services at 
remote locations where adequate commercial facilities are not 
reasonably available, or (2) Where it is necessary to operate a 
facility at a lower volume than the facility could economically 
support. Cost of food and dormitory services shall include an allocable 
share of indirect expenses pertaining to these activities.
    (e) In those situations where the contractor has an arrangement 
authorizing an employee association to provide or operate a service 
such as vending machines in the contractor's plant, and retain the 
profits derived therefrom, such profits shall be treated in the same 
manner as if the contractor were providing the service, except as 
provided in paragraph (f) of this subsection.
    (f) Contributions by the contractor to an employee organization, 
including funds set over from vending machines receipts or similar 
sources, may be included as cost incurred under paragraph (c) of this 
subsection, only to the extent that the contractor demonstrates that an 
equivalent amount of the costs incurred by the employee organization 
would be allowable, if incurred by the contractor directly.


970.3102-3-6  Fines, penalties and mischarging costs.

    It is Department of Energy policy not to reimburse management and 
operating contractors for fines and penalties except as provided in 48 
CFR 970.5231-1(e)(12), Allowable Costs and Fixed Fee (Management and 
Operating Contracts), and 48 CFR 970.5231-4, Preexisting Conditions.


970.3102-3-7  Lobbying and political activity Costs.

    The following costs are unallowable, except for costs associated 
with providing information pursuant to 970.5231-2, Political Activity 
Cost Prohibition, unless approved by the contracting officer. 
Contractor costs incurred to influence either directly or indirectly:
    (a) Legislative action on any matter pending before Congress, a 
State legislature, or a legislative body of a political subdivision of 
a State; or
    (b) Federal, State, or executive body of a political subdivision of 
a State action on regulatory and contract matters.


970.3102-3-8  General and administrative expenses.

    (a) For on-site work, the DOE considers that its fee allowance for 
management and operating contracts provides for the recognition of 
appropriate compensation for home or corporate office general and 
administrative expenses incurred in the general management of the 
contractor's business as a whole.
    (b) The policy in paragraph (a) of this subsection is intended to 
preclude the payment of general and administrative expenses merely 
because they are incurred or accounted for at or by a contractor's home 
or corporate office and not the operating site. The DOE recognizes some 
benefit of such cost to the DOE program. The basis of recognition 
through fee allowance is associated with the difficulty of determining 
and assessing the dollar value of such expenses that might be 
applicable to or have benefit to a management and operating contract. 
Conventional allocation techniques; i.e., total operating costs, labor 
dollars or hours, etc., are generally not considered appropriate 
because they normally distribute such expenses over a base 
representative of contractor investment (in terms of its own resources, 
including labor, material, overhead, etc.). Contractor investments and 
home office contributions are minimal under DOE's operating and 
management contracts in as much as they are totally financed and 
supported by DOE advance payments under the letter-of-credit method and 
by DOE's provision of government-owned and project-exclusive 
facilities, property, and other needed resources.
    (c) Notwithstanding the concept in paragraph (a) of this 
subsection, it is recognized that from time to time the fee amounts 
established for a management and operating contract, to meet the 
purpose cited in 970.1504-1-2 and consideration of the factors in 
970.1504-1-5, may be considered insufficient to adequately recognize a 
contractor's general and administrative expenses incurred in general 
management and administration of the contractor's business as a whole 
and which appear to have a directly benefitting relationship to the DOE 
program. Such recognitions may be the basis of requesting fee amounts 
in excess of the limitations set forth in 970.1504-1-6 or 
alternatively, in any particular case, the contractor may be 
compensated on the basis of cost in accordance with 970.3102-1-1 if the 
Head of the Contracting Activity or other approving contract official 
authorizes or approves the procedure and a fair and reasonable amount 
can be agreed upon. Such amount shall normally be in addition to the 
applicable fee amounts.
    (d) The DOE allows company general and administrative expenses 
under off-site architect-engineer, supply and research contracts with 
commercial contractors performing the work in their own facilities. 
Contractor's general and administrative expenses, may, however, be 
included for reimbursement under such DOE off-site architect-engineer, 
supply and research contracts, only to the extent that they are 
established, after careful examination, to be allowable in nature an 
properly allocable to the work. Work performed in a contractor's own 
facilities under a management and operating or construction contract 
may likewise be allowed to bear the properly allocable portion of 
allowable company general and administrative expense.


970.3102-3-9  Plant reconversion costs.

    Plant reconversion costs are those incurred in the restoration of 
the contractor's facilities to approximately the same condition 
existing immediately prior to the commencement of the contract work, 
fair wear and tear excepted.


970.3102-3-10  Precontract costs.

    Precontract costs are those incurred prior to the effective date of 
the contract directly pursuant to the negotiation and in anticipation 
of the award of the contract, where such incurrence is necessary to 
comply with the proposed contract delivery schedule. Such costs are 
allowable to the extent that they would have been allowable if incurred 
after the effective date of the contract. They do not include costs of 
preparing bids or of participation in the negotiation. The allowability 
of

[[Page 13472]]

precontract costs is dependent upon appropriate coverage in the 
contract.


970.3102-3-11  Professional and consultant service costs.

    Technical and professional consultants, as used in this subpart, 
refer to private individuals acting in their own behalf, who make their 
services available on a fee or per diem basis. It does not refer to 
employees of firms acting in the firm's behalf whose services may be 
made available by the firm on, for example, a fixed rate basis. 
Consultant arrangements may permit bringing to contract work, the 
services of outstanding specialists who would not be available on a 
full-time basis, or whose employment on a full-time basis would not be 
economically feasible. Costs of such outside consultant services are 
normally allowable (however, see 970.5231-1 regarding compensation of 
an individual who is employed by another contractor and concurrently 
performing work on a full-time annual basis under a DOE cost-type 
contract), provided that the services are essential to, and will make a 
material contribution to, the performance of contract work; the 
services may be performed more economically or more successfully by a 
consultant than by the contractor's regular personnel; the fee or per 
diem charged is reasonable; and, when approved by the contracting 
officer. If the cost of such services is charged directly to the DOE 
contract, the cost of like items properly chargeable only to other work 
of the contractor must be eliminated from indirect costs allocable to 
the DOE contract (see 970.3102-2).


970.3102-3-12  Relocation costs.

    (a) Relocation costs are costs incident to the permanent change of 
duty assignment (for an indefinite period or for a stated period of not 
less than 12 months) of an existing employee or upon recruitment of a 
new employee. The following types of costs are allowable as noted, 
subject to provisions of paragraphs (b), (c), and (d) of this 
subsection.
    (1) Costs of travel of the employee and members of his/her 
immediate family and transportation of household and personal effects 
to the new location.
    (2) Costs of finding a new home, such as advance trips by employees 
and spouses to locate living quarters, and temporary lodging during the 
transition periods, not exceeding separate cumulative totals of 60 days 
for employees and 45 days for spouses and dependents, including advance 
trip time.
    (3) Closing costs (i.e., brokerage fees, legal fees, appraisal 
fees, points, finance charges, etc.) incident to the disposition of 
actual residence owned by the employee when notified of transfer; 
Provided that closing costs when added to the continuing costs 
described in (a)(6) of this subsection shall not exceed 14% of the 
sales price of the property sold.
    (4) Other necessary and reasonable miscellaneous expenses incident 
to relocation, such as disconnection and connecting household 
appliances; automobile registration; drivers license and use taxes; 
cutting and fitting rugs, draperies, and curtains; forfeited utility 
fees and deposits; and purchase of insurance against damage to or loss 
of personal property while in transit.
    (5) Costs incident to the acquisition of a home in a new location, 
except that these costs will not be allowable for existing employees or 
newly recruited employees who prior to the relocation were not 
homeowners and the total costs shall not exceed 5% of the purchase 
price of the new home.
    (6) Continuing costs of ownership of the vacant former actual 
residence being sold, such as maintenance of building and grounds 
(exclusive of fixing up expenses), utilities, taxes, property 
insurance, mortgage interest, etc., after settlement date or lease date 
of new permanent residence; provided that when added to the closing 
costs described in (a)(3) of this subsection, the costs shall not 
exceed 14% of the sales price of the property sold.
    (7) Mortgage interest differential payments, except that these 
costs are not allowable for existing or newly recruited employees who 
prior to the relocation were not homeowners, and the total payments are 
limited to an amount determined as follows:
    (i) Difference between the mortgage interest rates of the old and 
new residence times the current balance of the old mortgage times 3 
years; and
    (ii) When mortgage differential payments are made on a lump sum 
basis and the employee leaves or is transferred again in less than 3 
years, the amount initially recognized shall be proportionately 
adjusted to reflect payments only for the actual time of the 
relocation.
    (8) Rental differential payments covering situations where 
relocated employees retain ownership of a vacated home in the old 
location and rent at the new location. The rented quarters at the new 
location must be comparable to those vacated, and the allowable 
differential payment may not exceed the actual rental costs for the new 
home, less the fair market rent for the vacated home times 3 years.
    (9) Cost of canceling an unexpired lease.
    (b) The costs described in paragraph (a) of this subsection must 
also meet the following criteria to be considered allowable.
    (1) The move is for the benefit of the Government.
    (2) Reimbursement must be in accordance with an established policy 
or practice and program that is consistently followed and is designed 
to motivate employees to relocate promptly and economically.
    (3) Amounts to be reimbursed do not exceed the employee's actual 
expenses, except that for miscellaneous costs of the type discussed in 
paragraph (a)(4) of this subsection, a flat amount, not to exceed 
$1,000, may be paid in lieu of actual costs.
    (c) The following types of costs are not allowable:
    (1) Loss on sale of a home.
    (2) Continuing mortgage principle payments on residence being sold.
    (3) Cost incident to the acquisition of a home in a new location as 
follows:
    (i) Real estate brokers fees and commissions;
    (ii) Costs of litigation;
    (iii) Real and personal property insurance against damage or loss 
of property;
    (iv) Mortgage life insurance;
    (v) Owner's title policy insurance when such insurance was not 
previously carried by the employees on the old residence (however, 
costs of a mortgage title policy is allowable) and;
    (vi) Property taxes and operating or maintenance costs.
    (4) Payments for employee's income taxes or FICA (social security 
taxes) incident to reimbursed relocation costs.
    (5) Costs incident to furnishing equity or nonequity loans to 
employees or making arrangements with lenders for employees to obtain 
lower-than-market rate mortgage loans.
    (d) If relocation costs for an employee have been allowed and the 
employee resigns within 12 months for reasons within the employee's 
control, it is expected the contractor shall refund or credit the 
relocation costs to the Government.
    (e) Contractor payments to an independent relocation assistance 
firm handling acquisitions and sales of houses of transferred employees 
are allowable in amounts which otherwise represent payment for itemized 
cost which are allowable in accordance with the provisions of this 
subsection.

[[Page 13473]]

970.3102-3-13  Trade, business, technical and professional activity 
costs.

    (a) The costs of memberships in trade, business and technical 
organizations are unallowable, except as approved by the contracting 
officer.
    (b) In considering approval of membership dues, the contracting 
officer shall:
    (1) Ensure that dues payments to an organization are clearly 
justified and provide necessary and specific agency benefit;
    (2) Do not constitute payments for, or in support of partisan and 
political activity; and,
    (3) Are solely for purposes of enhancing trade, business, or 
technical knowledge necessary for, and related to, performance of DOE 
contracts.


970.3102-3-14  Travel costs.

    (a)(1) Commercial air travel. It is the policy of the DOE to 
require management and operating contractors to use the lowest 
commercial airfare accommodations for all necessary travel under the 
contract, except when such accommodations are not reasonably available. 
Airfare costs in excess of the lesser of the lowest available 
commercial discount airfare, Government contract airfare, or customary 
standard (coach or equivalent) airfare, shall be disallowed except 
where the use of such accommodations would: require circuitous routing; 
require travel during unreasonable hours; excessively prolong travel; 
result in increased cost that would offset transportation savings; 
would offer accommodations not reasonably adequate for the physical or 
medical needs of the traveler; or are not reasonably available to meet 
necessary mission requirements. The contractor shall be required to 
establish appropriate airfare travel policies and procedures requiring 
the use of the lowest available commercial airfare consistent with this 
paragraph and prudent travel management. Where a contractor can 
reasonably demonstrate to the contracting officer, or designee, the 
nonavailability of discount airfare or Government contract airfare for 
a particular trip or, on an overall basis, that it is the contractor's 
practice to make routine use of such airfare, specific contractor 
determinations of nonavailability should generally not be questioned, 
unless a pattern of avoidance is detected. However, in order for 
airfare costs in excess of the customary standard commercial airfare to 
be allowable; e.g., use of first-class airfare, the contractor must be 
able to justify and document on a case-by-case basis the applicable 
condition(s) set forth in this paragraph.
    (2) Air travel by other than commercial carrier. ``Cost of travel 
by contractor-owned, -leased, or -chartered aircraft,'' as used in this 
paragraph, includes the cost of lease, charter, operation (including 
personnel costs), maintenance, depreciation, insurance and other 
related costs. Costs of travel via contractor-owned, -leased, and -
chartered aircraft shall not exceed the cost of commercial air travel 
accommodations, unless the management and operating contractor can 
demonstrate that costs in excess of such amounts are necessary for 
contract performance and that the increase in cost, if any, in 
comparison with alternative means of transportation is commensurate 
with the advantage gained.
    (b) Government-owned, commercial rental, and company-furnished 
vehicles. Commercial rental automobile costs in excess of the cost of a 
Government-furnished automobile or, when a Government-furnished 
automobile is not available, the cost of a Government-contract rental 
automobile available under a GSA Federal Supply Schedule contract, is 
unallowable unless:
    (1) A Government-furnished or a Government contract rental 
automobile is not reasonably available to the traveler, or
    (2) The traveler's use and the cost of a commercial rental 
automobile are justified and authorized as more advantageous to the 
Government.
    (3) The costs of contractor-owned or -leased vehicles include the 
costs of lease, operation, maintenance, depreciation, insurance, and 
other similar costs. These costs are unallowable except as approved by 
the contracting officer. That portion of the cost of company-furnished 
automobiles that relates to personal use by employees, including 
transportation to and from work is unallowable.
    (c) Lodging, meals and incidental expenses. (1) Costs for lodging, 
meals, and incidental expenses incurred by management and operating 
contractor personnel traveling on official business in the performance 
of contract work are allowable costs but subject to the limitations set 
forth in this subsection. Payments for lodging, meals, and incidental 
expenses may be based on per diem, actual expenses, or a combination 
thereof, provided the method used results in a reasonable cost to DOE.
    (2) Except as provided in paragraph (c)(3) of this subsection, 
management and operating contractor payments for lodging, meals, and 
incidental expenses (as defined in the regulations cited in paragraphs 
(c)(2) (i) through (iii) of this subsection) shall be considered to be 
reasonable and allowable cost only to the extent that they do not 
exceed, on a daily basis, the maximum per diem rates in effect at the 
time of travel as set forth in the:
    (i) Federal Travel Regulation (41 CFR Chapters 300 through 304) 
prescribed by the General Services Administration, for travel in the 
conterminous 48 United States.
    (ii) Joint Travel Regulations, Volume 2, DOD Civilian Personnel, 
Appendix A. prescribed by the Department of Defense, for travel in 
Alaska, Hawaii, the Commonwealth of Puerto Rico, and territories and 
possessions of the United States; or
    (iii) Standardized Regulations (Government Civilians, Foreign 
Areas), section 925, ``Maximum Travel Per Diem Allowances for Foreign 
Areas,'' prescribed by the Department of State, for travel in areas not 
covered in paragraphs (c)(2) (i) and (ii) of this subsection.
    (3) In special or unusual situations, management and operating 
contractor personnel may be paid for actual expenses in excess of the 
above-referenced maximum per diem rates provided such payments do not 
exceed the higher amounts authorized for Federal civilian employees as 
permitted in the regulations referenced in paragraph (c)(2) (i), (ii) 
or (iii) of this subsection and all of the following conditions are 
met:
    (i) One of the conditions warranting approval of the actual expense 
method, as set forth in the regulations referenced in paragraph (c)(2) 
(i), (ii) or (iii) of this subsection exist.
    (ii) A written justification for payment of the higher amounts is 
approved by an officer or appropriate official of the management and 
operating contractor's organization.
    (iii) Documentation exists to support the payment of actual 
expenses incurred and each employee expenditure in excess of $25.00 is 
supported by a receipt. The approved justification required by 
paragraph (c)(3)(ii) and, if applicable, DOE advance approvals required 
under paragraph (c)(5) of this subsection must also be retained.
    (4) Paragraphs (c)(2) and (c)(3) of this subsection do not 
incorporate the regulations cited in paragraphs (c)(2) (i), (ii) and 
(iii) of this subsection in their entirety. Only the coverage in the 
referenced regulations dealing with special or unusual situations, the 
maximum per diem rates and the definitions of lodging, meals and

[[Page 13474]]

incidental expenses are to be applied to management and operating 
contractors.
    (5) An advance agreement with respect to compliance with paragraphs 
(c)(2) and (c)(3) of this subsection will be established in the 
personnel appendix of the contract. The management and operating 
contractor shall also be required to obtain advance approval from DOE, 
if it becomes necessary for the contractor to exercise the authority to 
make payments based in the higher actual expense method repetitively or 
on a continuing basis in a particular area. It is not intended that 
individual contractor authorizations to pay actual expenses in excess 
of applicable maximum per diem rates be approved in advance by DOE. 
Such before the fact, case-by-case approvals should only be invoked 
when the management and operating contractor does not have acceptable 
travel cost policies, procedures or practices in effect.
    (6)(i) The maximum per diem rates referenced in paragraph (c)(2) of 
this subsection generally would not constitute a reasonable daily 
charge:
    (A) When no lodging costs are incurred; and/or
    (B) On partial travel days (e.g., same day of departure and 
return).
    (ii) Appropriate downward adjustments from the maximum per diem 
rates would normally be required under these circumstances. While these 
adjustments need not be calculated pursuant to the Federal Travel 
Regulation, Joint Travel Regulations, or Standardized Regulations, they 
must result in a reasonable charge.


970.3102-3-15  Cost related to legal and other proceedings.

    (a) Contractor costs incurred in connection with a criminal, civil 
or administrative proceeding involving contractor violation of, or 
failure to comply with, a Federal, State, local or foreign statute or 
regulation are subject to the allowable costs limitations established 
in section 8 of The Major Fraud Act of 1988, Public Law 100-700 (41 
U.S.C. 256).
    (b) Implementation of the Major Fraud Act's contract cost 
limitations is specified in the applicable cost principles clauses at 
970.5231-1(e)(33). Definitive cost principle criteria for determining 
the allowability of an M&O contractor's costs incurred in connection 
with a criminal, civil or administrative proceeding are set forth in 
the contract clause at 970.5231-3, Cost Prohibitions Related to Legal 
and Other Proceedings. Any change made to the cost principle criteria 
specified therein constitutes a deviation requiring Senior Procurement 
Executive approval pursuant to 970.3101-1.


970.3102-3-16  Overtime, shift, and holiday premiums.

    (a) Overtime, shift, and holiday premiums are allowable only to the 
extent provided in the contract or approved by the contracting officer. 
The amount of such premiums charged to a management and operating 
contract shall be equitable in relation to the amount of such costs 
charged to other work currently performed in the contractor's plant and 
the factors which necessitate incurrence of the costs. When the 
necessity for overtime, shift, and holiday work arises from inadequacy 
of the contractor's plant or department to perform its total workload 
on a purely straight-time basis, inclusions in overhead for 
apportionment to all work of the plant or department, as the case may 
be, appears appropriate. When particular work, DOE or other, is being 
specially expedited to a point that its fair share of the contractor's 
purely straight-time efforts on a single-shift basis will not get the 
particular job completed within the time desired, direct charging of 
the related premiums appears appropriate.
    (b) When premiums for overtime, shift, and holiday work are charged 
direct to the work concerned, if the operating overhead of the plant or 
related department is distributed on the basis of direct labor (cost or 
hours), the premiums should be excluded from the direct labor base for 
purposes of overhead distribution. That is, the direct labor base 
should be, as appropriate, direct labor straight-time cost or direct 
labor hours actually worked. While the premiums for authorized 
overtime, shift, and holiday work are acceptable as reimbursable costs, 
it is generally recognized that direct labor hours worked on an 
overtime, shift, or holiday basis should participate in indirect costs 
to the same extent as hours worked on a straight-time basis.


970.3102-3-17  Page charges in scientific journals.

    It is a policy of the DOE to permit DOE contractors to budget for 
and pay page charges for scientific journal publication, as a necessary 
part of research costs, in all cases where:
    (a) The research papers report work supported by the Government.
    (b) The charges are levied impartially on all research papers 
published by the journal, whether by non-Government or by Government 
authors.
    (c) Payment of such charges is in no sense a condition for 
acceptance of manuscripts by the journal.
    (d) The journals involved are not operated for profit.
    (e) The author does not receive an emolument from the journal for 
the research paper.


970.3102-3-18  Preparatory and make-ready costs.

    Since indirect costs are usually apportioned to individual jobs 
wholly or substantially on the basis of the direct labor applied to the 
particular job, a contract will absorb no overhead by apportionment 
prior to the inception of the actual performance of direct work on the 
contract. The effort of the contractor's overhead organization in 
preparing for one job and in getting it underway, will thus be absorbed 
by jobs previously commenced and still being performed; later, the job, 
which in its initial stages of preparation and make-ready was relieved 
of expenses that were actually applicable to it, will partially absorb, 
through their apportionment as overhead, similar costs equally 
applicable in fact to other, subsequently undertaken jobs. This 
procedure is in accordance with generally accepted accounting practices 
and normally is reasonably equitable in its results. The initial 
advantages and subsequent disadvantages to the individual contract that 
result from consistent application of the procedure tend to offset each 
other and balance out. It is quite appropriate, however, to employ the 
direct charge method in connection with overhead costs in preparing for 
actual performance by segregating such preparatory and make-ready costs 
and identifying them specifically with the contract to which the effort 
actually pertains. However, if preparatory and make ready costs are 
charged direct to a DOE contract, care must be taken, as performance of 
the DOE contract work proceeds toward completion, to segregate 
subsequent indirect expenses similarly applicable to the preparation 
for, and commencement of, other jobs and to account for them as direct 
charges to those other jobs.


970.3102-3-19  Facilities (plant and equipment).

    (a) Use of Government-owned facilities. If the Government furnishes 
to the contractor, or the contractor acquires at Government expense, 
Government-owned equipment with which to do all or a significant amount 
of the work under the DOE contract, on which equipment the Government 
is bearing the expenses of depreciation, maintenance, insurance, and 
taxes, appropriate procedures must be established to avoid apportioning 
to DOE work performed with DOE-owned

[[Page 13475]]

equipment, a share of the expenses of depreciation, maintenance, 
insurance and taxes on the contractor's equipment not used to perform 
such work. If the Government-owned equipment is placed in a segregated 
area, that area should be accounted for as a separate department. If 
the Government-owned equipment is not placed at the separate area, 
other steps must be taken to avoid what would amount to a double 
equipment burden on work performed with the Government-owned 
facilities. Such work shall be so accounted for as to be relieved of 
charges for expenses related to contractor's equipment not used in its 
performance.
    (b) Contractor's costs covering plant and equipment. Charges 
relating to contractor-owned plant and equipment shall be restricted to 
the applicable costs, such as depreciation, maintenance, insurance, and 
taxes, and shall not be on a rental basis. (Compensation in excess of 
costs is covered by the fixed fee.) Rentals of plant or equipment owned 
by third parties are normally allowable, if the rates are reasonable in 
the light of the type, value, condition of the property involved, and 
option and other provisions of the lease agreement. However, where the 
plant and equipment used by the contractor is rented by the contractor 
under a sale and lease-back agreement, only the normal costs (such as 
depreciation, maintenance, insurance, and taxes) that would have been 
incurred if the contractor had retained title to the facilities, should 
be allowed. Allowances for plant and equipment rented under agreements 
that are not arms-length transactions should be similarly restrictive.


970.3102-3-20  Special funds in the construction industry.

    Costs of special ``funds,'' financed by employer contributions, in 
the construction industry for such purposes as methods and materials 
research, public and industry relations, market development, disaster 
relief, etc., are unallowable, except as specifically authorized by the 
contracting officer and provided for in the contract.


970.3102-3-21  Procurement: Subcontracts, contractor-affiliated 
sources, and leases.

    (a) Subcontracts. Award and management policies for subcontracts 
placed under operating contracts when necessary to the performance of 
the required services and work efforts of the management and operating 
contractor are set forth in 970.44. The cost of performing such 
subcontracts shall be allowable under the DOE contract when:
    (1) The award/approval is otherwise in accord with the contract 
terms and conditions and the provisions of 970.44 and
    (2) The reimbursement of subcontractor costs of the management and 
operating contractor is in accordance with the provisions of the DOE 
cost principles set forth in 48 CFR part 31, as appropriate to the type 
of subcontractor being selected; i.e., commercial, educational, state/
local government, or nonprofit organization.
    (b) Procurement or transfer from contractor-affiliated sources (See 
970.4402-3). Allowance for all equipment, materials, supplies, and 
services which are sold or transferred between any division, 
subsidiary, or affiliate of a management and operating contractor under 
a common control shall be on the basis of cost incurred in accordance 
with the terms of the contract; except, when it is the established 
practice of the transferring organization to price inter-organization 
transfers of equipment, materials, supplies, and services at other than 
cost for commercial work of the contractor or any division, subsidiary, 
or affiliate of the contractor under a common control, allowance may be 
at a price when:
    (1) It is based on an ``established catalog or market price of 
commercial items sold in substantial quantities to the general public'' 
in accordance with 48 CFR subpart 15.4 or
    (2) It is the result of ``adequate price competition'' in 
accordance with 48 CFR subpart 15.4 and is the price at which an award 
was made to the affiliated organization, after obtaining quotations of 
an equal basis from such organization and one or more outside sources 
which normally produce the item or its equivalent in significant 
quantity, provided that in either case:
    (i) The price is not in excess of the transferor's current sales 
price to its most favored customer (including any division, subsidiary, 
or affiliate of the contractor under a common control) for a like 
quantity under comparable conditions, and
    (ii) The price is not determined to be unreasonable by the 
contracting officer, provided, however, that if the price is determined 
unreasonable, such determination must be supported by an enumeration of 
facts on which it is based and approved at a level above the 
contracting officer. The price determined in accordance with paragraph 
(a) of this subsection should be adjusted, when appropriate, to reflect 
the quantities being procured and may be adjusted upward or downward to 
reflect the actual cost of any modifications necessary because of 
contract requirements.
    (c) Leases. Contractor lease payments will be considered an 
allowable cost when a leasing arrangement is not prohibited by the 
contract terms (e.g., see 970.5244-1). If a lease for property, plant 
or equipment (land and/or depreciable assets) is required to be 
classified as a capital lease under generally accepted accounting 
principles (GAAP), imputed interest costs determined in accordance with 
GAAP for any such contractor lease shall be an allowable contract 
charge if the following are met:
    (1) The specific decision to enter into a capital leasing 
arrangement is authorized by DOE in accordance with applicable DOE 
procedures, prior to execution of the lease,
    (2) The lease is accounted for in accordance with GAAP, and
    (3) The imputed interest costs are separately accounted for in 
special DOE accounts established for the recordation of such costs.


970.3170  Contract Clauses.

    (a) The contracting officer shall insert the clause at 48 CFR 
970.5231-1, Allowable Cost and Fixed Fee (Management and Operating 
Contracts), in all management and operating contracts.
    (1) The contracting officer shall include the clause with its 
Alternate I when necessary to address situations where the fee is for a 
period of time or different fees are allowed for various phases of the 
work.
    (2) The contracting officer shall include the clause with its 
Alternate II when personnel costs and related expenses will be incurred 
by the contractor in accordance with established policies, programs, 
and schedules that are applicable to the contractor's private 
operations and consistently followed throughout the contractor's 
organization.
    (3) The contracting officer shall include the clause with its 
Alternate III if the contractor will perform construction.
    (4) The contracting officer shall include the clause with its 
Alternate IV if no contractor-owned equipment is being utilized in the 
performance of the contract.
    (5) The contracting officer shall include the clause with its 
Alternate V in contracts with for-profit contractors.
    (b) The contracting officer shall insert the clause at 48 CFR 
970.5231-2, Political Activity Cost Prohibition, in all management and 
operating contracts.

[[Page 13476]]

    (c) The contracting officer shall insert the clause at 48 CFR 
970.5231-3, Cost Prohibitions Related to Legal and Other Proceedings, 
in all management and operating contracts.
    (d) The contracting officer shall insert the clause at 48 CFR 
970.5231-4, Preexisting Conditions, in all management and operating 
contracts.
    (1) The contracting officer shall include the clause with its 
Alternate I in contracts with incumbent management and operating 
contractors.
    (2) The contracting officer shall include the clause with its 
Alternate II in contracts with management and operating contractors not 
previously working at that particular site or facility.

Subpart 970.32--Contract Financing


970.3200  Policy.

    It is the policy of the DOE to finance management and operating 
contracts through advance payments and the use of special bank 
accounts. Appropriate procedures for properly managing and controlling 
funds for obligation and expenditure under a management and operating 
contract are maintained by the Chief Financial Officer of DOE.


970.3200-1  Reduction or suspension of advance, partial, or progress 
payments.

    (a) The procedures prescribed at 48 CFR 32.006 shall be followed 
regarding the reduction or suspension of payments under management and 
operating contracts.
    (b) Agency head responsibilities under 48 CFR 32.006 have been 
delegated to the Senior Procurement Executive.
    (c) The remedy coordination official is responsible for receiving, 
assessing, and making recommendations to the Senior Procurement 
Executive.


970.3200-1-1  Contract clause.

    The contracting officer shall insert the clause at 48 CFR 970.5232-
1, Reduction or suspension of contract payments, in management and 
operating contracts.


970.3204  Advance payments.


970.3204-1  Applicability.

    (a) The Head of the Contracting Activity shall authorize advance 
payments without interest, and approve the findings, determinations and 
the contract terms and conditions concerning advance payments in 
accordance with the procedures set forth in 48 CFR subpart 32.4, 
Advance Payments, as supplemented by 48 CFR subpart 932.4.
    (b) Advance payments shall be made under a letter-of-credit 
arrangement for deposit in a special bank account.
    (c) Prior to providing any advance payments, the contracting 
officer shall enter into an agreement with the contractor and a 
financial institution regarding a special bank account where the 
advanced funds are to be deposited by the Government. Such agreement 
shall: (1) Provide that DOE shall retain title to the unexpended 
balance of funds in the special bank account including revenues if any, 
deposited by the contractor, and that such title shall be superior to 
any claim or lien of the bank of deposit; and
    (2) Incorporate as necessary or appropriate, additional financial 
provisions required by Treasury or Departmental financial regulations.
    (d) Deviations from the requirements cited in paragraph (c) of this 
subsection shall be considered a deviation requiring approval of the 
Head of the Contracting Activity.
    (e) Letter-of-credit arrangements shall be prepared in accordance 
with 48 CFR 32.406, Letters of Credit, and shall be coordinated between 
the procurement and finance organizations.


970.3204-2  Special bank account agreement.

    The following agreement shall be used with special bank accounts in 
accordance with 970.3204-1(c).

    Agreement entered into this .. day of ..., 19 ., between the 
United States of America (hereinafter called the Government) 
represented herein by the Department of Energy (hereinafter called 
the ``DOE''), and .... (hereinafter called the ``Contractor,'') a 
corporation under the laws of the State of ...., and ...., 
(hereinafter called the ``Bank,'') a banking corporation under the 
laws of ...., located at .....

Recitals

    (a) On the date of ..., 19 ., DOE and the Contractor entered 
into Contract(s) No. ...., or a supplemental agreement thereto, 
providing for the making of advances of Government funds to the 
contractor a copy of such advance provisions has been furnished to 
the Bank.
    (b) DOE requires that amounts advanced to the Contractor under 
said contract or supplemental agreement be deposited in a Special 
Bank Account or accounts with a bank designated by the Treasury 
Department as depositary and financial agent of the Government 
(Section 10 of the Act of June 11, 1942, 56 Stat. 356; 12 U.S.C. 
265), separate from any of the Contractor's general or other funds; 
and, the Bank being such a bank, the parties are agreeable to so 
depositing said amounts with the Bank.
    (c) This Special Bank Account shall be designated ``... (Name of 
Contractor), ... (Contract Number), Department of Energy Special 
Bank Account.''

Covenants

    In consideration of the foregoing, and for other good and 
valuable considerations, it is agreed that,
    (1) The Government shall have title to the credit balance in 
said account to secure the return of all advances made to the 
contractor, which title shall be superior to any lien or claim of 
the Bank or others with respect to such account.
    (2) The Bank will be bound by the provisions of said contract or 
contracts relating to the deposit and withdrawal of funds in the 
above Special Bank Account, but shall not be responsible for the 
application of funds properly withdrawn from said account. After 
receipt by the Bank of written directions from the contracting 
officer, or from the duly authorized representative of the 
contracting officer, the Bank shall act thereon and shall be under 
no liability to any party hereto for any action taken in accordance 
with the said written directions.
    (3) The Government, or its authorized representatives, shall 
have access to the books and records maintained by the Bank with 
respect to such Special Bank Account at all reasonable times and for 
all reasonable purposes, including, without limitation, the 
inspection or copying of such books and records and any and all 
memoranda, checks, correspondence, or documents pertaining thereto. 
Except as agreed upon by the Government and the Bank, all books and 
records pertaining to the Special Bank Account in the possession of 
the Bank relating to the Special Bank Account agreement shall be 
preserved by the Bank for a period of three (3) years after final 
payment under the contract to which the Special Bank Account 
agreement pertains or otherwise disposed of in such manners as may 
be agreed upon by the Government and the Bank.
    (4) In the event of the services of any writ of attachment, levy 
of execution, or commencement of garnishment proceedings with 
respect to the Special Bank Account, the Bank will promptly notify 
the Head of the Contracting Activity, DOE.
    In witness whereof the parties hereto have caused this Agreement 
to be executed, as of the day and year first above written.

(Signatures and Official Titles) __________


970.3204-3  Contract clause.

    The clause at 970.5232-2, Payments and Advances, shall be included 
in management and operating contracts when advances of funds are to be 
placed in a special bank account.
    (a) The contracting officer shall insert the basic clause with its 
Alternate I if a separate fixed-fee is provided for a separate item of 
work.
    (b) The contracting officer shall insert the basic clause with its 
Alternate II when award-fee provisions in the basic clause are used.
    (c) The contracting officer shall insert the basic clause with its 
Alternate III in management and operating contracts with integrated 
contractors.

[[Page 13477]]

970.3270  Standard financial management clauses.

    (a) The contracting officer shall insert the clause at 48 CFR 
970.5232-3, Accounts, Records, and Inspection, in all management and 
operating contracts.
    (1) If the contract includes the clause at 48 CFR 52.215-22, Price 
Reduction for Defective Cost or Pricing Data, the contracting officer 
shall use the clause with its Alternate I.
    (2) If the contract is a cost-reimbursement contract involving an 
estimated cost exceeding $5 million and expected to run for more than 2 
years, or any other cost-reimbursement contract determined by the Head 
of the Contracting Activity in which the contractor has an established 
internal audit organization, the contracting officer shall insert the 
clause with its Alternate II.
    (b) The contracting officer shall insert the clause at 48 CFR 
970.5232-4, Obligation of funds, in all management and operating 
contracts. The contracting officer may use the clause with its 
Alternate I in contracts which, expressly or otherwise, provide a 
contractual basis for equivalent controls in a separate clause.

Subpart 970.34--Major System Acquisition


970.3400  General requirements.


970.3400-1  Mission-oriented solicitation.

    Contractors shall be required to promptly advise the DOE 
contracting officer of any advance notices of, or solicitations for, 
requirements which would logically involve DOE facilities or resources 
operated or managed by the contractor, which are received from another 
agency pursuant to 48 CFR 34.005. Management and operating contracts 
shall provide that the contractor shall not respond or otherwise 
propose to participate in response to the requirements of such 
solicitations unless the contractor has obtained the prior written 
approval of the DOE manager of the field activity having cognizance 
over the contract. Such approval shall not be given except in 
compliance with applicable DOE directives, and with the concurrence of 
the cognizant Senior Program Official.

970.35--Research and development contracting


970.3500  Scope of Subpart.

    This subpart implements 48 CFR 35.017 regarding the establishment, 
use, review, and termination of Federally Funded Research and 
Development Centers (FFRDCs) sponsored by the Department of Energy.


970.3501  Federally funded research and development centers.


970.3501-1  Sponsoring agreements.

    (a) The contract award document constitutes the sponsoring 
agreement between the Department of Energy and the contractor operating 
an FFRDC.
    (b) The contract statement of work shall define the purpose and 
mission of the FFRDC.
    (c) Other elements of the sponsoring agreement which shall be 
incorporated into the contract include:
    (1) The appropriate termination clause of the contract (as 
prescribed in 48 CFR Subpart 49.5).
    (2) The plan for the identification, use, and disposition of 
retained earnings developed pursuant to 48 CFR 970.1504-1-3(c)(6), if 
applicable;
    (3) The clause entitled ``Federally Funded Research and Development 
Center Sponsoring Agreement,'' which, in part, prescribes limitations 
on the FFRDC competing with the private sector, and requirements for 
the FFRDC's acceptance of work from a nonsponsor; and
    (4) Other terms and conditions considered necessary for the 
particular circumstances of the FFRDC (e.g., advance understandings on 
particular cost items).


970.3501-2  Using an FFRDC.

    The contractor may only accept work from a nonsponsor (as defined 
in 48 CFR 35.017) in accordance with the requirements of DOE Order 
481.1, Work for Others (Non-Department of Energy Funded Work).


970.3501-3  Reviewing FFRDC's.

    (a) All Department of Energy sponsored FFRDC's are operated by 
management and operating contractors.
    (b) Coincident with the review required by 48 CFR 17.605(b) and 48 
CFR 970.1702-1(b) regarding the decision to extend or compete a 
management and operating contract, the contracting officer shall, in 
accordance with internal Departmental procedures:
    (1) Conduct the review required by 48 CFR 35.017-4 concerning the 
use and need for the FFRDC; and
    (2) Recommend for Secretarial approval, the continuation or 
termination of the Department's sponsorship of an FFRDC at the time 
authorization is required to extend or compete a management and 
operating contract.


970.3501-4  Contract clause.

    The contracting officer shall insert the clause at 48 CFR 970.5235-
1, Federally Funded Research and Development Center Sponsoring 
Agreement, in all solicitations and contracts for the management and 
operation of an FFRDC sponsored by the Department of Energy.

Subpart 970.36--Construction and Architect-Engineer Contracts


970.3605  Contract clauses.


970.3605-1  Other contracts.

    The clause in 48 CFR 52.236-8, Other Contracts, shall be used in 
all management and operating contracts.


970.3605-2  Special construction clause for operating contracts.

    The clause in 48 CFR 970.5236-1, Government Facility Subcontract 
Approval, shall be used in management and operating contracts when the 
contractor will not perform covered work with its own forces but may 
procure construction by subcontract.

Subpart 970.37 Facilities Management Contracting


970.3701  General.


970.3701-1  Severance payments to foreign nationals.


970.3701-1-1  Waiver of cost allowability provisions.

    (a) The Head of the Contracting Activity may waive the application 
of the provisions of 48 CFR 970.3102-3-2(i)(2)(iv) and (v) in 
accordance with 41 U.S.C. 256(e)(2) if:
    (1) The application of the provisions would adversely affect the 
continuation of a program, project, or activity that provides 
significant support services for Department of Energy employees posted 
outside the United States;
    (2) The contractor has taken, or plans to take, appropriate actions 
within its control to minimize the amount and number of incidents of 
payment of severance pay to employees under the contract who are 
foreign nationals; and
    (3) The payment of severance pay under the contract is necessary to 
comply with a law that is generally applicable to a significant number 
of businesses in the country in which the foreign national receiving 
the payment performed services or is necessary to comply with a 
collective bargaining agreement.
    (b) [Reserved]


970.3701-1-2  Solicitation provision and contract clause.

    (a) The solicitation provision at 970.5237-1, Waiver of Limitations 
on Severance Payments to Foreign Nationals, shall be included in 
solicitations and resulting contracts involving support services for 
Department of Energy operations

[[Page 13478]]

outside of the United States expected to exceed $500,000, when, prior 
to the solicitation, the limitations on severance to foreign nationals 
has been waived.
    (b) The contracting officer shall use the clause with its Alternate 
I when the Head of the Contracting Activity may waive the limitations 
on severance to foreign nationals after contract award.


970.3770  Facilities management.


970.3770-1  Policy.

    Contractors managing DOE facilities shall be required to comply 
with the DOE Directives applicable to facilities management.


970.3770-2  Contract clause.

    The contracting officer shall insert the clause at 48 CFR 970.5237-
2, Facilities Management, in all management and operating contracts.

Subpart 970.41--Acquisition of Utility Services


970.4102  Acquiring utility services.


970.4102-1  Policy.

    (a) Utility services defined at 48 CFR 41.101 for the furnishing of 
electricity, gas (natural or manufactured), steam, water, and/or 
sewerage to facilities owned or leased by DOE shall be acquired 
directly by DOE and not by a contractor using a subcontractor 
arrangement, except as provided in paragraph (b) of this subsection.
    (b) Where it is determined to be in the best interest of the 
Government, a DOE contracting activity may authorize a management and 
operating contractor for a facility to acquire such utility service for 
the facility, after requesting and receiving concurrence to make such 
an authorization from the Director, Public Utilities Branch, 
Headquarters. Any request for such concurrence should be included in 
the Utility Service Requirements and Options Studies required by DOE 
directives in subseries 4540 (Public Services). Alternatively, it may 
be made in a separate document submitted to the Director of that office 
early in the acquisition cycle. Any request shall set forth why it is 
in the best interest of the DOE to acquire utility service(s) by 
subcontract, i.e., what the benefits are, such as economic advantage.
    (c) The requirements of 48 CFR part 41, this section, and DOE 
directives in subseries 4540 shall be applied to a subcontract level 
acquisition for furnishing utility services to a facility owned or 
leased by DOE.

Subpart 970.43--Contract Modifications


970.4302  Changes.


970.4302-1  Contract clause.

    The contracting officer shall insert the clause at 48 CFR 970.5243-
1, Changes, in all management and operating contracts.

Subpart 970.44--Management and Operating Contractor Purchasing


970.4400  Scope.

    This subpart prescribes policies and procedures concerning the 
purchasing systems and activities of management and operating 
contractors.


970.4401  Responsibilities.


970.4401-1  General.

    (a) In the Department of Energy, overall responsibility for the 
oversight of the performance of management and operating contractors, 
including their purchasing activities, rests with the cognizant DOE 
contracting activity and, in particular, the Head of the Contracting 
Activity (HCA). Contracting officers are responsible for the management 
and operating contractors' conformance with this subpart and the 
applicable terms and conditions of their contracts, and for determining 
whether those purchasing activities provide timely and effective 
support to DOE programs.
    (b) In carrying out their overall responsibilities, HCAs shall:
    (1) Require management and operating contractors to maintain 
written descriptions of their individual purchasing systems and methods 
and further require that, upon award or extension of the contract, the 
entire written description be submitted to the contracting officer for 
review and acceptance;
    (2) Require that any changes to the management and operating 
contractor's written description having any substantive impact upon the 
contractor's purchasing system and methods be submitted to the 
contracting officer for review and acceptance prior to issuance;
    (3) Ensure the review of individual purchasing actions of certain 
types, or above stated dollar levels, by the contracting officer 
pursuant to 48 CFR Subpart 44.2 or as set forth in the contractor's 
approved system and methods; and
    (4) Ensure that periodic appraisals of the contractor's management 
of all facets of the purchasing function, including compliance with the 
contractor's approved system and methods, are performed by the 
contracting officer. Such appraisals shall be performed through either 
of the following methodologies:
    (i) Contractor Purchasing System Reviews, conducted in accordance 
with 48 CFR Subpart 44.3; or
    (ii) When approved by the contracting officer, contractor 
participation in the conduct of the Balanced Scorecard performance 
measurement and performance management system.
    (c) In performing the reviews required by paragraphs (b)(1) and 
(2), and the appraisals required by paragraph (b)(4) of this 
subsection, HCAs shall assure that contracting officers determine that 
the contractors' written systems and methods are consistent with this 
subpart and the applicable terms and conditions of their contracts.


970.4401-2  Review and approval.

    (a) The Heads of the Contracting Activities shall establish 
thresholds, by subcontract type and dollar level, for the review and 
approval of proposed subcontracting actions by each management and 
operating contractor under their cognizance. Such thresholds may not 
exceed the authority delegated to the Head of the Contracting Activity 
by the Senior Procurement Executive. In establishing these thresholds, 
the Heads of the Contracting Activities should consider such factors as 
the following:
    (1) The nature of work to be performed under the management and 
operating contract;
    (2) The size, experience, ability, reliability, and organization of 
the management and operating contractor's purchasing function;
    (3) The internal controls, procedures, and organizational stature 
of the management and operating contractor's purchasing function; and
    (4) Policies with respect to such reviews and approvals established 
by the Senior Procurement Executive.
    (b) Prior approval shall be required for the subcontracting of any 
work a contractor is obligated to perform under a contract entered into 
under section 41, entitled Production of Special Nuclear Material, of 
the Atomic Energy Act of 1954, as amended.
    (c) The Heads of the Contracting Activities shall take such action 
as may be required to insure compliance with the procedure for 
purchasing from contractor-affiliated sources or the purchase of 
specific items, or classes of items, which by the terms of the contract 
may require DOE approval.
    (d) The Heads of the Contracting Activities may raise or lower the 
review and approval thresholds established pursuant to paragraph (a) of 
this

[[Page 13479]]

subsection at any time. Such action may be considered upon the periodic 
review of the contractor's purchasing system, but in any case those 
adjusted thresholds may not exceed the approval authority delegated to 
the Head of the Contracting Activity by the Senior Procurement 
Executive.
    (e) DOE approvals of specific proposed purchases pursuant to this 
Subpart shall communicate that such approval does not relieve the 
management and operating contractor of any obligation under its prime 
contract with DOE; is given without prejudice to any rights or claims 
of the Government thereunder; creates no obligation on the part of the 
Government to the subcontractor, and is not a predetermination of the 
allowability of costs to be incurred under the subcontract.
    (f) Contracting officers shall assure that management and operating 
contractors establish and maintain subcontract files which contain 
those documents essential to present an accurate and adequate record of 
all purchasing transactions.
    (g) Contracting officers shall assure that management and operating 
contractors document purchases in writing, setting forth the 
information and data used in determining that the purchases are in the 
best interest of the Government. The scope and detail of this 
documentation shall be consistent with the nature, dollar value, and 
complexity of the purchase.
    (h) The Heads of the Contracting Activities shall assure that the 
contracting activity establishes and maintains files of the documents 
associated with the review and approval of subcontract actions subject 
to DOE review and approval. Those files shall include, among other 
necessary documentation, an appraisal of the proposed action by the 
contracting activity and a copy of the approving or disapproving 
document forwarded to the management and operating contractor, 
including a listing of any deficiencies, a listing of any required 
corrective actions, any suggestions, or other relevant comments.


970.4401-3  Advance notification.

    (a) Contracting officers shall assure that the written description 
of the management and operating contractor's purchasing system and 
methods provides for advance notice to the DOE contracting officer of 
the proposed award of the following specified types of subcontracts, 
except as stated in paragraph (b) of this subsection:
    (1) Pursuant to section 304(b) of the Federal Property and 
Administrative Service Act of 1949, as amended (41 U.S.C. 254(b)):
    (i) Cost reimbursement-type subcontracts of any award value; and
    (ii) Fixed price-type subcontracts which exceed the simplified 
acquisition threshold, or 5 percent of the total estimated cost of the 
prime contract.
    (2) Purchases from contractor-affiliated sources over a value 
established by the HCA.
    (b) Pursuant to section 602(d)13 of the Act (40 U.S.C. 474(13)) 
referred to in paragraph (a) of this section, the advance notification 
requirement for the types of purchases listed in paragraphs (a) (1) and 
(2) of this subsection shall not apply to subcontracts relating to 
functions derived from the Atomic Energy Commission.
    (c) The advance notice shall contain, at a minimum, a description 
of work, estimated cost, type of contract or reimbursement provisions, 
and extent of competition, or justification for a noncompetitive 
purchase procurement. The contracting officer may at any time request 
additional information that must be furnished promptly and prior to 
award of the subcontract.


970.4402  Contractor purchasing system.


970.4402-1  Policy.

    (a) DOE contracts for the management and operation of its 
facilities, the design and production of nuclear weapons, energy 
research and development, and the performance of other services. These 
management and operating (M&O) contractors have been selected for their 
technical and managerial expertise and are expected to bring to bear 
these technical and managerial skills to accomplish the significant 
Federal mission(s) described in their contracts with, and work plans 
approved by, DOE.
    (b) Purchasing done by management and operating contractors is one 
area in which the particular skills of the contractors will be brought 
to bear in order to more readily accomplish the contractors' assigned 
missions. The contracting procedures of the contractor's organization, 
therefore, form the basis for the development of a purchasing system 
and methods that will comply with its contract with DOE and this 
subpart.


970.4402-2  General requirements.

    The following shall apply to the purchasing systems of management 
and operating contractors:
    (a) The objective of a management and operating contractor's 
purchasing system is to deliver to its customers on a timely basis 
those best value products and services necessary to accomplish the 
purposes of the Government's contract. To achieve this objective, 
contractors are expected to use their experience, expertise and 
initiative consistent with this subpart.
    (b) The purchasing systems and methods used by management and 
operating contractors shall be well-defined, consistently applied, and 
shall follow purchasing practices appropriate for the requirement and 
dollar value of the purchase. It is anticipated that purchasing 
practices and procedures will vary among contractors and according to 
the type and kinds of purchases to be made.
    (c) Contractor purchases are not Federal procurements, and are not 
directly subject to the Federal Acquisition Regulations in 48 CFR. 
Nonetheless, certain Federal laws, Executive Orders, and regulations 
may affect contractor purchasing, as required by statute, regulation, 
or contract terms and conditions.
    (d) Contractor purchasing systems shall identify and apply the best 
in commercial purchasing practices and procedures (although nothing 
precludes the adoption of Federal procurement practices and procedures) 
to achieve system objectives. Where specific requirements do not 
otherwise apply, the contractor purchasing system shall provide for 
appropriate measures to ensure the:
    (1) Acquisition of quality products and services at fair and 
reasonable prices;
    (2) Use of capable and reliable subcontractors who either:
    (i) Have track records of successful past performance, or
    (ii) Can demonstrate a current superior ability to perform;
    (3) Minimization of acquisition lead-time and administrative costs 
of purchasing;
    (4) Use of effective competitive techniques;
    (5) Reduction of performance risks associated with subcontractors, 
and facilitation of quality relationships which can include techniques 
such as partnering agreements, ombudsmen, and alternative disputes 
procedures;
    (6) Use of self-assessment and benchmarking techniques to support 
continuous improvement in purchasing;
    (7) Maintenance of the highest professional and ethical standards;
    (8) Maintenance of file documentation appropriate to the value of 
the purchase and which is adequate to establish the propriety of the 
transaction and the price paid; and
    (9) Maximization of opportunities for small business, HUBZone small

[[Page 13480]]

business, small disadvantaged business, and woman-owned small business 
concerns to participate in contract performance.


970.4402-3  Purchasing from contractor-affiliated sources.

    (a) A management and operating contractor may purchase from sources 
affiliated with the contractor (any division, subsidiary, or affiliate 
of the contractor or its parent company) in the same manner as from 
other sources, provided:
    (1) The management and operating contractor's purchasing function 
is independent of the proposed contractor-affiliated source;
    (2) The same terms and conditions would apply if the purchase were 
from a third party;
    (3) Award is made in accordance with policies and procedures 
designed to permit effective competition which have been approved by 
the contracting officer. (This requirement for competition shall not 
preclude acquisition of technical services from contractor-affiliated 
entities where those entities have a special expertise, and the basis 
therefor is documented.); and
    (4) The award is legally enforceable where the entities are 
separately incorporated.
    (b) Subcontracts for performance of contract work itself (as 
distinguished from the purchase of supplies and services needed in 
connection with the performance of work) require DOE authorization and 
may involve an adjustment of the contractor's fee, if any. If the 
management and operating contractor seeks authorization to have some 
part of the contract work performed by a contractor-affiliated source, 
and that contractor's performance of that work was a factor in the 
negotiated fee, DOE approval would normally require:
    (1) That the contractor-affiliated source perform such work without 
fee or profit, or
    (2) An equitable downward adjustment to the management and 
operating contractor's fee, if any.
    (c) Determination on cost of money allowance as prescribed at 48 
CFR 31.205-10 shall be treated as follows:
    (1) When a purchase from a contractor-affiliated source results 
from competition and is in accord with provisions and conditions of 
paragraphs (a)(1) through (a)(4) of this subsection, the contractor-
affiliated source may include cost of money as an allowable element of 
the costs of its goods or services supplied to the contractor; 
provided:
    (i) The purchase is based on cost as set forth in 48 CFR 970.3102-
3-21 and
    (ii) The cost of money amount is computed in accordance with 48 CFR 
31.205-10 and related procedures (see 48 CFR 970.30).
    (2) When a purchase from a contractor-affiliated source is made 
non-competitively, cost of money shall not be considered an allowable 
element of the cost of the contractor-affiliated source purchase.


970.4402-4  Nuclear material transfers.

    (a) Management and operating contractors, in preparing subcontracts 
or other agreements in which monetary payments or credits depend on the 
quantity and quality of nuclear material, shall be required to assure 
that each such subcontract or agreement contains a:
    (1) Description of the material to be transferred;
    (2) Provision specifying the method by which the quantities are to 
be measured and reported;
    (3) Provision specifying the procedures to be used in resolving any 
differences arising as a result of such measurements;
    (4) Provision for the use of an independent third party as an 
umpire to settle unresolved differences in the analytical samples; and
    (5) Provision specifying in detail which party shall bear the costs 
of resolving a difference and what constitutes such costs.
    (b) The provisions providing for resolution of measurement 
differences must be such that resolution is always accomplished, while 
at the same time minimizing any advantage one party may have over the 
other.


970.4403  Contract clause.

    The contracting officer shall insert the clause at 970.5244-1, 
Contractor Purchasing System, in all management and operating 
contracts.

Subpart 970.45--Government Property


970.4501  General.


970.4501-1  Contract clause.

    (a) The contracting officer shall insert the clause at 970.5245-1, 
Property, in management and operating contracts. Paragraph (f)(1)(iii) 
of the clause applies to a non-profit contractor only to the extent 
specifically provided in the individual contract. Specific managerial 
personnel may be listed in paragraph (j), provided their listing is 
consistent with the clause and the DEAR.
    (b) The contracting officer shall insert the basic clause with its 
Alternate I in contracts with nonprofit contractors.

Subpart 970.49--Termination of Contracts


970.4905  Contract termination clause.


970.4905-1  Termination for convenience of the Government and default.

    (a) The contracting officer shall include the clause at 48 CFR 
52.249-6, Termination (Cost Reimbursement), as modified pursuant to 
paragraph (b) of this subsection, in all cost-reimbursement management 
and operating contracts, regardless of whether the contract is for 
production, or research and development with an educational or 
nonprofit institution.
    (b) The contracting officer shall modify paragraph (i) of the 
clause to insert ``as supplemented in Subpart 970.31 of the Department 
of Energy Acquisition Regulation,'' after the phrase, ``Part 31 of the 
Federal Acquisition Regulation.''

Subpart 970.50--Extraordinary Contractual Actions


970.5070  Indemnification.


970.5070-1  Scope and applicability.

    (a) Section 170d. of the Atomic Energy Act of 1954, as amended, 
requires DOE to enter into agreements of indemnity with contractors 
whose work involves the risk of public liability for the occurrence of 
a nuclear incident or precautionary evacuation.
    (b) Details of such indemnification are discussed at 48 CFR 950.70.


970.5070-2  General.

    DOE contractors with whom statutory nuclear hazards indemnity 
agreements under the authority of section 170d. of the Atomic Energy 
Act of 1954, as amended, are executed will not normally be required or 
permitted to furnish financial protection by purchase of insurance to 
cover public liability for nuclear incidents. However, if authorized by 
the DOE Headquarters office having responsibility for contractor 
casualty insurance programs, DOE contractors may be:
    (a) Permitted to furnish financial protection to themselves, or
    (b) Permitted to continue to carry such insurance at cost to the 
Government if they currently maintain insurance for such liability.


970.5070-3  Contract clauses.

    (a) The clause at 48 CFR 952.250-70, Nuclear Hazards Indemnity 
Agreement, shall be included in all management and operating contracts 
involving the risk of public liability for the occurrence of a nuclear 
incident or precautionary evacuation arising out of or in

[[Page 13481]]

connection with the contract work, including such events caused by a 
product delivered to a DOE-owned, facility for use by DOE or its 
contractors. The clause at 48 CFR 952.250-70 also shall be included in 
any management and operating contract for the design of a DOE facility, 
the construction or operation of which may involve the risk of public 
liability for a nuclear incident or a precautionary evacuation.
    (b) The clause at 48 CFR 952.250-70 shall not be included in 
contracts in which the contractor is subject to Nuclear Regulatory 
Commission (NRC) financial protection requirements under section 170b. 
of the Act or NRC agreements of indemnification under section 170 c. or 
k. of the Act for activities to be performed under the contract.

Subpart 970.52--Solicitation Provisions and Contract Clauses for 
Management and Operating Contracts


970.5200  Scope of subpart.

    This subpart prescribes solicitation provisions and contract 
clauses for use in management and operating contracts. The provisions 
and clauses contained in this subpart supplement the provisions and 
clauses prescribed in the FAR and in other parts of the DEAR, and, 
pursuant to the individual provision or clause prescription, are to be 
used in addition to or in place of such clauses. To assist Departmental 
contracting personnel in determining the applicability of FAR and DEAR 
clauses to management and operating contracts, additional guidance is 
published and made available by the Office of Procurement and 
Assistance Policy, within the Headquarters procurement organization.


970.5201  Text of provisions and clauses.


970.5203-1  Management controls

    As prescribed in 48 CFR 970.0370-2(a), insert the following clause:

Management Controls (Month and Year TBE)

    (a)(1) The contractor shall be responsible for maintaining, as 
an integral part of its organization, effective systems of 
management controls for both administrative and programmatic 
functions. Management controls comprise the plan of organization, 
methods and procedures adopted by management to reasonably ensure 
that: the mission and functions assigned to the contractor are 
properly executed; efficient and effective operations are promoted; 
resources are safeguarded against theft, fraud, waste, and 
unauthorized use; all obligations and costs that are incurred under 
the contract are in compliance with applicable clauses and other 
current terms, conditions, and intended purposes; all revenues, 
expenditures, and all other transactions and assets are properly 
recorded, managed, and reported; and financial, statistical, and 
other reports necessary to maintain accountability and managerial 
control are accurate, reliable, and timely.
    (2) The systems of controls employed by the contractor shall be 
documented and satisfactory to DOE, and shall be developed and 
maintained in accordance with the Comptroller General's standards 
for internal controls, as set forth in General Accounting Office 
Policy and Procedures Manual for Guidance to Federal Agencies, (Oct 
1984), as amended.
    (3) Such systems shall be an integral part of the contractor's 
management functions, including defining specific roles and 
responsibilities for each level of management, and holding employees 
accountable for the adequacy of the management systems and internal 
controls in their areas of assigned responsibility.
    (4) The contractor shall, as part of the internal audit program 
required elsewhere in this contract, periodically review the 
management systems and internal controls employed in programs and 
administrative areas to ensure that they are adequate to provide 
reasonable assurance that the objectives of the system are being 
accomplished and that these systems and controls are working 
effectively.
    (b) The contractor shall be responsible for maintaining, as a 
part of its operational responsibilities, a baseline quality 
assurance program that implements documented performance, quality 
standards, and control and assessment techniques.

(End of Clause)


970.5203-2  Performance improvement and collaboration.

    As prescribed in 48 CFR 970.0370-2(b), insert the following clause:

Performance Improvement and Collaboration (Month and Year TBE)

    (a) The contractor agrees that it shall affirmatively identify, 
evaluate, and institute practices, where appropriate, that will 
improve performance in the areas of environmental and health, 
safety, scientific and technical, security, business and 
administrative, and any other areas of performance in the management 
and operation of the contract. This may entail the alteration of 
existing practices or the institution of new procedures to more 
effectively or efficiently perform any aspect of contract 
performance or reduce overall cost of operation under the contract. 
Such improvements may result from changes in organization, 
simplification of systems while retaining necessary controls, or any 
other approaches consistent with the statement of work and 
performance measures of this contract.
    (b) The contractor agrees to work collaboratively with the 
Department, all other management and operating, DOE major facilities 
management contractors and affiliated contractors which manage or 
operate DOE sites or facilities for the following purposes: (i) to 
exchange information generally, (ii) to evaluate concepts that may 
be of benefit in resolving common issues, in confronting common 
problems, or in reducing costs of operations, and (iii) to otherwise 
identify and implement DOE-complex-wide management improvements 
discussed in paragraph (a). In doing so, it shall also affirmatively 
provide information relating to its management improvements to such 
contractors, including lessons learned, subject to security 
considerations and the protection of data proprietary to third 
parties.
    (c) The contractor may consult with the contracting officer in 
those instances in which improvements being considered pursuant to 
paragraph (a) involve the cooperation of the DOE. The contractor may 
request the assistance of the contracting officer in the 
communication of the success of improvements to other management and 
operating contractors in accordance with paragraph (b) of this 
clause.
    (d) The contractor shall notify the contracting officer and seek 
approval where necessary to fulfill its obligations under the 
contract. Compliance with this clause in no way alters the 
obligations of the Contractor under any other provision of this 
contract.

(End of Clause)


970.5203-3  Contractor's organization.

    As prescribed in 48 CFR 970.0371-9, insert the following clause:

Contractor's Organization (Month and Year TBE)

    (a) Organization chart. As promptly as possible after the 
execution of this contract, the contractor shall furnish to the 
contracting officer a chart showing the names, duties, and 
organization of key personnel (see 48 CFR 952.215-70) to be employed 
in connection with the work, and shall furnish from time to time 
supplementary information reflecting changes therein.
    (b) Supervisory representative of contractor. Unless otherwise 
directed by the contracting officer, a competent full-time resident 
supervisory representative of the contractor satisfactory to the 
contracting officer shall be in charge of the work at the site, and 
any work off-site, at all times.
    (c) Control of employees. The contractor shall be responsible 
for maintaining satisfactory standards of employee competency, 
conduct, and integrity and shall be responsible for taking such 
disciplinary action with respect to its employees as may be 
necessary. In the event the contractor fails to remove any employee 
from the contract work whom DOE deems incompetent, careless, or 
insubordinate, or whose continued employment on the work is deemed 
by DOE to be contrary to the public interest, the Government 
reserves the right to require the contractor to remove the employee.
    (d) Standards and procedures. The contractor shall establish 
such standards and procedures as are necessary to implement the 
requirements set forth in 48 CFR 970.0371. Such standards and 
procedures shall be subject to the approval of the contracting 
officer.

(End of Clause)

[[Page 13482]]

970.5204-1  Counterintelligence.

    (a) As prescribed in 48 CFR 970.0404-4(a), insert the following 
clause in contracts containing the clauses at 48 CFR 952.204-2, 
Security, and 48 CFR 952.204-70, Classification/Declassification:

Counterintelligence (Month and Year TBE)

    (a) The contractor shall take all reasonable precautions in the 
work under this contract to protect DOE programs, facilities, 
technology, personnel, unclassified sensitive information and 
classified matter from foreign intelligence threats and activities 
conducted for governmental or industrial purposes, in accordance 
with DOE Order 5670.3, Counterintelligence Program; Executive Order 
12333, U.S. Intelligence Activities; and other pertinent national 
and Departmental Counterintelligence requirements.
    (b) The contractor shall appoint a qualified employee(s) to 
function as the Contractor Counterintelligence Officer. The 
Contractor Counterintelligence Officer will be responsible for 
conducting defensive Counterintelligence briefings and debriefings 
of employees traveling to foreign countries or interacting with 
foreign nationals; providing thoroughly documented written reports 
relative to targeting, suspicious activity and other matters of 
Counterintelligence interest; immediately reporting targeting, 
suspicious activity and other Counterintelligence concerns to the 
DOE Headquarters Counterintelligence Division; and providing 
assistance to other elements of the U.S. Intelligence Community as 
stated in the aforementioned Executive Order, the DOE 
Counterintelligence Order, and other pertinent national and 
Departmental Counterintelligence requirements.

(End of Clause)


970.5204-2  Laws, regulations, and DOE directives.

    As prescribed in 48 CFR 970.0470-2, insert the following clause:

Laws, Regulations, and DOE Directives (Month and Year TBE)

    (a) In performing work under this contract, the contractor shall 
comply with the requirements of applicable Federal, State, and local 
laws and regulations (including DOE regulations), unless relief has 
been granted in writing by the appropriate regulatory agency. A List 
of Applicable Laws and Regulations (List A) may be appended to this 
contract for information purposes. Omission of any applicable law or 
regulation from List A does not affect the obligation of the 
contractor to comply with such law or regulation pursuant to this 
paragraph.
    (b) In performing work under this contract, the contractor shall 
comply with the requirements of those Department of Energy 
directives, or parts thereof, identified in the List of Applicable 
Directives (List B) appended to this contract. Except as otherwise 
provided for in paragraph (d) of this clause, the contracting 
officer may, from time to time and at any time, revise List B by 
unilateral modification to the contract to add, modify, or delete 
specific requirements. Prior to revising List B, the contracting 
officer shall notify the contractor in writing of the Department's 
intent to revise List B and provide the contractor with the 
opportunity to assess the effect of the contractor's compliance with 
the revised list on contract cost and funding, technical 
performance, and schedule; and identify any potential 
inconsistencies between the revised list and the other terms and 
conditions of the contract. Within 30 days after receipt of the 
contracting officer's notice, the contractor shall advise the 
contracting officer in writing of the potential impact of the 
contractor's compliance with the revised list. Based on the 
information provided by the contractor and any other information 
available, the contracting officer shall decide whether to revise 
List B and so advise the contractor not later than 30 days prior to 
the effective date of the revision of List B. The contractor and the 
contracting officer shall identify and, if appropriate, agree to any 
changes to other contract terms and conditions, including cost and 
schedule, associated with the revision of List B pursuant to the 
clause of this contract entitled, ``Changes.''
    (c) Environmental, safety, and health (ES&H) requirements 
appropriate for work conducted under this contract may be determined 
by a DOE approved process to evaluate the work and the associated 
hazards and identify an appropriately tailored set of standards, 
practices, and controls, such as a tailoring process included in a 
DOE approved Safety Management System implemented under the clause 
entitled ``Integration of Environment, Safety, and Health into Work 
Planning and Execution.'' When such a process is used, the set of 
tailored (ES&H) requirements, as approved by DOE pursuant to the 
process, shall be incorporated into List B as contract requirements 
with full force and effect. These requirements shall supersede, in 
whole or in part, the contractual environmental, safety, and health 
requirements previously made applicable to the contract by List B. 
If the tailored set of requirements identifies an alternative 
requirement varying from an ES&H requirement of an applicable law or 
regulation, the contractor shall request an exemption or other 
appropriate regulatory relief specified in the regulation.
    (d) Except as otherwise directed by the contracting officer, the 
contractor shall procure all necessary permits or licenses required 
for the performance of work under this contract.
    (e) Regardless of the performer of the work, the contractor is 
responsible for compliance with the requirements of this clause. The 
contractor is responsible for flowing down the requirements of this 
clause to subcontracts at any tier to the extent necessary to ensure 
the contractor's compliance with the requirements.

(End of Clause)


970.5204-3  Access to and ownership of records.

    As prescribed in 48 CFR 970.0407-1-3, insert the following clause:

    Access to and Ownership of Records (Month and Year TBE)
    (a) Government-owned records. Except as provided in paragraph 
(b) of this clause, all records acquired or generated by the 
contractor in its performance of this contract shall be the property 
of the Government and shall be delivered to the Government or 
otherwise disposed of by the contractor either as the contracting 
officer may from time to time direct during the process of the work 
or, in any event, as the contracting officer shall direct upon 
completion or termination of the contract.
    (b) Contractor-owned records. The following records are 
considered the property of the contractor and are not within the 
scope of paragraph (a) of this clause. [The contracting officer 
shall identify which of the following categories of records will be 
included in the clause.]
    (1) Employment-related records (such as workers' compensation 
files; employee relations records, records on salary and employee 
benefits; drug testing records, labor negotiation records; records 
on ethics, employee concerns, and other employee related 
investigations conducted under an expectation of confidentiality; 
employee assistance program records; and personnel and medical/
health-related records and similar files), and non-employee patient 
medical/health related records, except for those records described 
by the contract as being maintained in Privacy Act systems of 
records.
    (2) Confidential contractor financial information, and 
correspondence between the contractor and other segments of the 
contractor located away from the DOE facility (i.e., the 
contractor's corporate headquarters);
    (3) Records relating to any procurement action by the 
contractor, except for records that under 48 CFR 970.5232-3, 
Accounts, Records, and Inspection, are described as the property of 
the Government; and
    (4) Legal records, including legal opinions, litigation files, 
and documents covered by the attorney-client and attorney work 
product privileges; and
    (5) The following categories of records maintained pursuant to 
the technology transfer clause of this contract:
    (i) Executed license agreements, including exhibits or 
appendices containing information on royalties, royalty rates, other 
financial information, or commercialization plans, and all related 
documents, notes and correspondence.
    (ii) The contractor's protected Cooperative Research and 
Development Agreement (CRADA) information and appendices to a CRADA 
that contain licensing terms and conditions, or royalty or royalty 
rate information.
    (iii) Patent, copyright, mask work, and trademark application 
files and related contractor invention disclosures, documents and 
correspondence, where the contractor has elected rights or has 
permission to assert rights and has not relinquished such rights or 
turned such rights over to the Government.
    (c) Contract completion or termination. In the event of 
completion or termination of this contract, copies of any of the 
contractor-owned records identified in paragraph (b) of this clause, 
upon the request of the Government, shall be delivered to DOE or its

[[Page 13483]]

designees, including successor contractors. Upon delivery, title to 
such records shall vest in DOE or its designees, and such records 
shall be protected in accordance with applicable federal laws 
(including the Privacy Act), as appropriate.
    (d) Inspection, copying, and audit of records. All records 
acquired or generated by the contractor under this contract in the 
possession of the contractor, including those described at paragraph 
(b) of this clause, shall be subject to inspection, copying, and 
audit by the Government or its designees at all reasonable times, 
and the contractor shall afford the Government or its designees 
reasonable facilities for such inspection, copying, and audit; 
provided, however, that upon request by the contracting officer, the 
contractor shall deliver such records to a location specified by the 
contracting officer for inspection, copying, and audit. The 
Government or its designees shall use such records in accordance 
with applicable federal laws (including the Privacy Act), as 
appropriate.
    (e) Applicability. Paragraphs (b), (c), and (d) of this clause 
apply to all records without regard to the date or origination of 
such records.
    (f) Records retention standards. Special records retention 
standards, described at DOE Order 200.1, Information Management 
Program (version in effect on effective date of contract), are 
applicable for the classes of records described therein, whether or 
not the records are owned by the Government or the contractor. In 
addition, the contractor shall retain individual radiation exposure 
records generated in the performance of work under this contract 
until DOE authorizes disposal. The Government may waive application 
of these record retention schedules, if, upon termination or 
completion of the contract, the Government exercises its right under 
paragraph (c) of this clause to obtain copies and delivery of 
records described in paragraphs (a) and (b) of this clause.
    (g) Subcontracts. The contractor shall include the requirements 
of this clause in all subcontracts that are of a cost-reimbursement 
type if any of the following factors is present:
    (1) The value of the subcontract is greater than $2 million 
(unless specifically waived by the contracting officer);
    (2) The contracting officer determines that the subcontract is, 
or involves, a critical task related to the contract; or
    (3) The subcontract includes 48 CFR 970.5223-1, Integration of 
Environment, Safety, and Health into Work Planning and Execution, or 
similar clause.

(End of Clause)


970.5208-1  Printing.

    As prescribed in 48 CFR 970.0808-3, insert the following clause:

Printing (Month and Year TBE)

    (a) To the extent that duplicating or printing services may be 
required in the performance of this contract, the Contractor shall 
provide or secure such services in accordance with the Government 
Printing and Binding Regulations, Title 44 of the U.S. Code, and DOE 
Directives relative thereto.
    (b) The term ``Printing'' includes the following processes: 
composition, platemaking, presswork, binding, microform publishing, 
or the end items produced by such processes. Provided, however, that 
performance of a requirement under this contract involving the 
duplication of less than 5,000 copies of a single page, or no more 
than 25,000 units in the aggregate of multiple pages, will not be 
deemed to be printing.
    (c) Printing services not obtained in compliance with this 
guidance shall result in the cost of such printing being disallowed.
    (d) The Contractor shall include the substance of this clause in 
all subcontracts hereunder which require printing (as that term is 
defined in Title I of the U.S. Government Printing and Binding 
Regulations).

(End of Clause)


970.5209-1  Requirement for guarantee of performance.

    As prescribed in 48 CFR 970.0970-2, the contracting officer shall 
insert the following provision in solicitations for management and 
operating contracts:

Requirement for Guarantee of Performance (Month and Year TBE)

    The successful offeror is required by other provisions of this 
solicitation to organize a dedicated corporate entity to carry out 
the work under the contract to be awarded as a result of this 
solicitation. The successful offeror will be required, as part of 
the determination of responsibility of the newly organized, 
dedicated corporate entity and as a condition of the award of the 
contract to that entity, to furnish a guarantee of that entity's 
performance. That guarantee of performance must be satisfactory in 
all respects to the Department of Energy.

(End of Clause)


970.5215-1  Total available fee: Base fee amount and performance fee 
amount.

    As prescribed in 48 CFR 970.1504-5(a), insert the following clause. 
The clause should be tailored to reflect the contract's actual 
inclusion of base fee amount and performance fee amount.

    Total Available Fee: Base Fee Amount and Performance Fee Amount 
(Month and Year TBE)
    (a) Total available fee. Total available fee, consisting of a 
base fee amount ( which may be zero) and a performance fee amount 
(consisting of an incentive fee component for objective performance 
requirements, an award fee component for subjective performance 
requirements, or both) determined in accordance with the provisions 
of this clause, is available for payment in accordance with the 
clause of this contract entitled, ``Payments and advances.''
    (b) Fee Negotiations. Prior to the beginning of each fiscal year 
under this contract, or other appropriate period as mutually agreed 
upon and, if exceeding one year, approved by the Senior Procurement 
Executive, or designee, the contracting officer and Contractor shall 
enter into negotiation of the requirements for the year or 
appropriate period, including the evaluation areas and individual 
requirements subject to incentives, the total available fee, and the 
allocation of fee. The contracting officer shall modify this 
contract at the conclusion of each negotiation to reflect the 
negotiated requirements, evaluation areas and individual 
requirements subject to incentives, the total available fee, and the 
allocation of fee. In the event the parties fail to agree on the 
requirements, the evaluation areas and individual requirements 
subject to incentives, the total available fee, or the allocation of 
fee, a unilateral determination will be made by the contracting 
officer. The total available fee amount shall be allocated to a 
twelve month cycle composed of one or more evaluation periods, or 
such longer period as may be mutually agreed to between the parties 
and approved by the Senior Procurement Executive, or designee.
    (c) Determination of Total Available Fee Amount Earned. (1) The 
Government shall, at the conclusion of each specified evaluation 
period, evaluate the contractor's performance of all requirements, 
including performance based incentives completed during the period, 
and determine the total available fee amount earned. At the 
contracting officer's discretion, evaluation of incentivized 
performance may occur at the scheduled completion of specific 
incentivized requirements.
    (2) The DOE Operations/Field Office Manager, or designee, will 
be (insert title of DOE Operations/Field Office Manager, or 
designee). The contractor agrees that the determination as to the 
total available fee earned is a unilateral determination made by the 
DOE Operations/Field Office Manager, or designee.
    (3) The evaluation of contractor performance shall be in 
accordance with the Performance Evaluation and Measurement Plan(s) 
described in subparagraph (d) of this clause unless otherwise set 
forth in the contract. The Contractor shall be promptly advised in 
writing of the fee determination, and the basis of the fee 
determination. In the event that the contractor's performance is 
considered to be less than the level of performance set forth in the 
Statement of Work, as amended to include the current Work 
Authorization Directive or similar document, for any contract 
requirement, it will be considered by the DOE Operations/Field 
Office Manager, or designee, who may at his/her discretion adjust 
the fee determination to reflect such performance. Any such 
adjustment shall be in accordance with the clause entitled, 
``Conditional Payment of Fee, Profit, or Incentives'' if contained 
in the contract.
    (d) Performance Evaluation and Measurement Plan(s). To the 
extent not set forth elsewhere in the contract:
    (1) The Government shall establish a Performance Evaluation and 
Measurement Plan(s) upon which the determination of the total 
available fee amount earned shall be based. The Performance 
Evaluation and Measurement Plan(s) will address all of the 
requirements of contract performance specified in the contract 
directly or by reference. A copy of the Performance Evaluation and 
Measurement Plan(s) shall be provided to the Contractor:
    (i) prior to the start of an evaluation period if the 
requirements, evaluation areas, specific

[[Page 13484]]

incentives, amount of fee, and allocation of fee to such evaluation 
areas and specific incentives have been mutually agreed to by the 
parties; or
    (ii) not later than thirty days prior to the scheduled start 
date of the evaluation period, if the requirements, evaluation 
areas, specific incentives, amount of fee, and allocation of fee to 
such evaluation areas and specific incentives have been unilaterally 
established by the contracting officer.
    (2) The Performance Evaluation and Measurement Plan(s) will set 
forth the criteria upon which the Contractor will be evaluated 
relating to any technical, schedule, management, and/or cost 
objectives selected for evaluation. Such criteria should be 
objective, but may also include subjective criteria. The Plan(s) 
shall also set forth the method by which the total available fee 
amount will be allocated and the amount earned determined.
    (3) The Performance Evaluation and Measurement Plan(s) may, 
consistent with the contract statement of work, be revised during 
the period of performance. The contracting officer shall notify the 
contractor:
    (i) of such unilateral changes at least ninety calendar days 
prior to the end of the affected evaluation period and at least 
thirty calendar days prior to the effective date of the change;
    (ii) of such bilateral changes at least sixty calendar days 
prior to the end of the affected evaluation period; or
    (iii) if such change, whether unilateral or bilateral, is urgent 
and high priority, at least thirty calendar days prior to the end of 
the evaluation period.
    (e) Schedule for total available fee amount earned 
determinations. The DOE Operations/Field Office Manager, or 
designee, shall issue the final total available fee amount earned 
determination in accordance with the schedule set forth in the 
Performance Evaluation and Measurement Plan(s). However, a 
determination must be made within sixty calendar days after the 
receipt by the contracting officer of the Contractor's self-
assessment, if one is required or permitted by paragraph (f) of this 
clause, or seventy calendar days after the end of the evaluation 
period, whichever is later. If the contracting officer evaluates the 
Contractor's performance of specific requirements on their 
completion, the payment of any earned fee amount must be made within 
seventy calendar days (or such other time period as mutually agreed 
to between the contracting officer and the Contractor) after such 
completion. If the determination is delayed beyond that date, the 
Contractor shall be entitled to interest on the determined total 
available fee amount earned at the rate established by the Secretary 
of the Treasury under section 12 of the Contract Disputes Act of 
1978 (41 U.S.C. 611) that is in effect on the payment date. This 
rate is referred to as the ``Renegotiation Board Interest Rate,'' 
and is published in the Federal Register semiannually on or about 
January 1 and July 1. The interest on any late total available fee 
amount earned determination will accrue daily and be compounded in 
30-day increments inclusive from the first day after the schedule 
determination date through the actual date the determination is 
issued. That is, interest accrued at the end of any 30-day period 
will be added to the determined amount of fee earned and be subject 
to interest if not paid in the succeeding 30-day period.

(End of Clause)

    Alternate I (Month and Year TBE). As prescribed in 48 CFR 
970.1504-5(a)(1), when the award fee cycle consists of two or more 
evaluation periods, add the following to paragraph (c):
    (4) At the sole discretion of the Government, unearned total 
available fee amounts may be carried over from one evaluation period 
to the next, so long as the periods are within the same award fee 
cycle.
    Alternate II (Month and Year TBE). As prescribed in 48 CFR 
970.1504-5(a)(2), when the award fee cycle consists of one 
evaluation period, add the following to paragraph (c):
    (4) Award fee not earned during the evaluation period shall not 
be allocated to future evaluation periods.
    Alternate III (Month and Year TBE). As prescribed in 48 CFR 
970.1504-5(a)(3), when the DOE Operations/Field Office Manager, or 
designee, requires the contractor to submit a self-assessment, add 
the following as paragraph (f):
    (f) Contractor self-assessment. Following each evaluation 
period, the Contractor shall submit a self-assessment within (Insert 
Number) calendar days after the end of the period. This self-
assessment shall address both the strengths and weaknesses of the 
Contractor's performance during the evaluation period. Where 
deficiencies in performance are noted, the Contractor shall describe 
the actions planned or taken to correct such deficiencies and avoid 
their recurrence. The DOE Operations/Field Office Manager, or 
designee, will review the Contractor's self-assessment, if 
submitted, as part of its independent evaluation of the contractor's 
management during the period. A self-assessment, in and of itself 
may not be the only basis for the award fee determination.
    Alternate IV (Month and Year TBE). As prescribed in 48 CFR 
970.1504-5(a)(4), when the DOE Operations/Field Office Manager, or 
designee, permits the contractor to submit a self-assessment at the 
contractor's option, add the following text as paragraph (f):
    (f) Contractor self-assessment. Following each evaluation 
period, the Contractor may submit a self-assessment, provided such 
assessment is submitted within (Insert Number) calendar days after 
the end of the period. This self-assessment shall address both the 
strengths and weaknesses of the Contractor's performance during the 
evaluation period. Where deficiencies in performance are noted, the 
Contractor shall describe the actions planned or taken to correct 
such deficiencies and avoid their recurrence. The DOE Operations/
Field Office Manager, or designee, will review the Contractor's 
self-assessment, if submitted, as part of its independent evaluation 
of the Contractor's management during the period. A self-assessment, 
in and of itself may not be the only basis for the award fee 
determination.


970.5215-2  Make-or-buy plan.

    As prescribed in 48 CFR 970.1504-5(b), insert the following clause:

Make-or-Buy Plan (Month and Year TBE)

    (a) Definitions. Buy item means a work activity, supply, or 
service to be produced or performed by an outside source, including 
a subcontractor or an affiliate, subsidiary, or division of the 
contractor.
    Make item means a work activity, supply, or service to be 
produced or performed by the contractor using its personnel and 
other resources at the Department of Energy facility or site.
    Make-or-buy plan means a contractor's written program for the 
contract that identifies work efforts or requirements that either 
are ``make items'' or ``buy items''.
    (b) Make-or-buy plan. The contractor shall develop and implement 
a make-or-buy plan that establishes a preference for providing 
supplies and services on a least-cost basis, subject to any specific 
make or buy criteria identified in the contract or otherwise 
provided by the contracting officer. In developing and implementing 
its make-or-buy plan, the contractor agrees to assess subcontracting 
opportunities and implement subcontracting decisions in accordance 
with the following:
    (1) The contractor shall conduct internal productivity 
improvement and cost-reduction programs so that in-house performance 
options can be made more efficient and cost-effective.
    (2) The contractor shall consider subcontracting opportunities 
with the maximum practicable regard for open communications with 
potentially affected employees and their representatives. Similarly, 
a contractor shall communicate its plans, activities, cost-benefit 
analyses, and decisions to those stakeholders, including 
representatives of the community and local businesses, likely to be 
affected by such actions.
    (c) Submission and approval. For new contract awards, the 
contractor shall submit an initial make-or-buy plan, for approval, 
within 180 days after contract award. If the existing contract is to 
be extended, the contractor shall submit a make-or-buy plan for 
review and approval at least 90 days prior to the commencement of 
the negotiations for the extension. The following documentation 
shall be prepared and submitted:
    (1) A description of each work item, and if appropriate, the 
identification of the associated Work Authorization or Work 
Breakdown Structure element;
    (2) The categorization of each work item as ``must make,'' 
``must buy,'' or ``can make or buy,'' with the reasons for such 
categorization in consideration of the program specific make or buy 
criteria (including least cost considerations). For non-core 
capabilities categorized as ``must make,'' a cost/benefit analysis 
must be performed for each item if:
    (i) The contractor is not the least-cost performer, and
    (ii) A program specific make-or-buy criterion does not otherwise 
justify a ``must make'' categorization;
    (3) A decision to either ``make'' or ``buy'' in consideration of 
the program specific

[[Page 13485]]

make or buy criteria (including least cost considerations) for work 
effort categorized as ``can make or buy'';
    (4) Identification of potential suppliers and subcontractors, if 
known, and their location and size status;
    (5) A recommendation to defer a make or buy decision where 
categorization of an identifiable work effort is impracticable at 
the time of initial development of the plan and a schedule for 
future re-evaluation;
    (6) A description of the impact of a change in current practice 
of making or buying on the existing work force; and
    (7) Any additional information appropriate to support and 
explain the plan.
    (d) Conduct of operations. Once a make-or-buy plan is approved, 
the contractor shall perform in accordance with the plan.
    (e) Changes to the make-or-buy plan. The make-or-buy plan 
established in accordance with paragraph (b) of this clause shall 
remain in effect for the term of the contract, unless:
    (1) A lesser period is provided either for the total plan or for 
individual items or work effort;
    (2) The circumstances supporting the make-or-buy decisions 
change, or
    (3) New work is identified.
    At least annually, the contractor shall review its approved 
make-or-buy plan to ensure that it reflects current conditions. 
Changes to the approved make-or-buy plan shall be submitted in 
advance of the effective date of the proposed change in sufficient 
time to permit evaluation and review. Changes shall be submitted in 
accordance with the instructions provided by the contracting 
officer. Modification of the make-or-buy plan to incorporate 
proposed changes or additions shall be effective upon the 
contractor's receipt of the contracting officer's written approval.

(End of Clause)


970.5215-3  Conditional payment of fee, profit, or incentives.

    As prescribed in 48 CFR 970.1504-5(c), insert the following clause:
Conditional Payment of Fee, Profit, or Incentives (Month and Year TBE)
    In order for the Contractor to receive all otherwise earned fee, 
fixed fee, profit, or share of cost savings under the contract in an 
evaluation period, the Contractor must meet the minimum requirements 
in paragraphs (a) and (b) of this clause, and if Alternate I is 
applicable, (a) through (d) of this clause. If the Contractor does 
not meet the minimum requirements, the DOE Operations/Field Office 
Manager or designee may make a unilateral determination to reduce 
the evaluation period's otherwise earned fee, fixed fee, profit or 
share of cost savings as described in the following paragraphs of 
this clause.
    (a) Minimum requirements for Environment, Safety & Health (ES&H) 
Program. The Contractor shall develop, obtain DOE approval of, and 
implement a Safety Management System in accordance with the 
provisions of the clause entitled, ``Integration of Environment, 
Safety and Health into Work Planning and Execution,'' if included in 
the contract, or as otherwise agreed to with the contracting 
officer. The minimal performance requirements of the system will be 
set forth in the approved Safety Management System, or similar 
document. If the Contractor fails to obtain approval of the Safety 
Management System or fails to achieve the minimum performance 
requirements of the system during the evaluation period, the DOE 
Operations/Field Office Manager or designee, at his/her sole 
discretion, may reduce any otherwise earned fees, fixed fee, profit 
or share of cost savings for the evaluation period by an amount up 
to the amount earned.

    (b) Minimum requirements for catastrophic event. If, in the 
performance of this contract, there is a catastrophic event (such as 
a fatality, or a serious workplace-related injury or illness to one 
or more Federal, contractor, or subcontractor employees or the 
general public, loss of control over classified or special nuclear 
material, or significant damage to the environment), the DOE 
Operations/Field Office Manager or designee may reduce any otherwise 
earned fee for the evaluation period by an amount up to the amount 
earned. In determining any diminution of fee, fixed fee, profit, or 
share of cost savings resulting from a catastrophic event, the DOE 
Operations/Field Office Manager or designee will consider whether 
willful misconduct and/or negligence contributed to the occurrence 
and will take into consideration any mitigating circumstances 
presented by the contractor or other sources.

(End of Clause)

    Alternate I (Month and Year TBE). As prescribed in 48 CFR 
970.1504-5(c), for contracts awarded on a cost-plus-award-fee, 
incentive fee or multiple fee basis, add the following paragraphs 
(c) and (d):
    (c) Minimum requirements for specified level of performance. (1) 
At a minimum the Contractor must perform the following:
    (i) the requirements with specific incentives at the level of 
performance set forth in the Statement of Work, Work Authorization 
Directive, or similar document unless an otherwise minimal level of 
performance has been established in the specific incentive;
    (ii) all of the performance requirements directly related to 
requirements specifically incentivized at a level of performance 
such that the overall performance of these related requirements is 
at an acceptable level; and
    (iii) all other requirements at a level of performance such that 
the total performance of the contract is not jeopardized.
    (2) The evaluation of the Contractor's achievement of the level 
of performance shall be unilaterally determined by the contracting 
officer. To the extent that the Contractor fails to achieve the 
minimum performance levels specified in the Statement of Work, Work 
Authorization Directive, or similar document, during the evaluation 
period, the DOE Operations/Field Office Manager, or designee, may 
reduce any otherwise earned fee, fixed fee, profit, or shared net 
savings for the evaluation period. Such reduction shall not result 
in the total of earned fee, fixed fee, profit, or shared net savings 
being less than 25% of the total available fee amount. Such 25% 
shall include base fee, if any.
    (d) Minimum requirements for cost performance. (1) Requirements 
incentivized by other than cost incentives must be performed within 
their specified cost constraint and must not adversely impact the 
costs of performing unrelated activities.
    (2) The performance of requirements with a specific cost 
incentive must not adversely impact the costs of performing 
unrelated requirements.
    (3) The Contractor's performance within the stipulated cost 
performance levels for the evaluation period shall be determined by 
the contracting officer. To the extent the Contractor fails to 
achieve the stipulated cost performance levels, the DOE Operations/
Field Office Manager, or designee, at his/her sole discretion, may 
reduce in whole or in part any otherwise earned fee, fixed fee, 
profit, or shared net savings for the evaluation period. Such 
reduction shall not result in the total of earned fee, fixed fee, 
profit or shared net savings being less than 25% of the total 
available fee amount. Such 25% shall include base fee, if any.

970.5215-4  Cost reduction.

    As prescribed in 48 CFR 970.1504-5(d), insert the following clause:

Cost Reduction (Month and Year TBE)

    (a) General. It is the Department of Energy's (DOE's) intent to 
have its facilities and laboratories operated in an efficient and 
effective manner. To this end, the Contractor shall assess its 
operations and identify areas where cost reductions would bring cost 
efficiency to operations without adversely affecting the level of 
performance required by the contract. The Contractor, to the maximum 
extent practical, shall identify areas where cost reductions may be 
effected, and develop and submit Cost Reduction Proposals (CRPs) to 
the contracting officer. If accepted, the Contractor may share in 
any shared net savings from accepted CRPs in accordance with 
paragraph (g) of this clause.
    (b) Definitions. Administrative cost is the contractor cost of 
developing and administering the CRP.
    Design, process, or method change is a change to a design, 
process, or method which has established cost, technical and 
schedule baseline, is defined, and is subject to a formal control 
procedure. Such a change must be innovative, initiated by the 
contractor, and applied to a specific project or program.
    Development cost is the Contractor cost of up-front planning, 
engineering, prototyping, and testing of a design, process, or 
method.
    DOE cost is the Government cost incurred implementing and 
validating the CRP.
    Implementation cost is the Contractor cost of tooling, 
facilities, documentation, etc., required to effect a design, 
process, or method change once it has been tested and approved.
    Net Savings means a reduction in the total amount (to include 
all related costs and fee) of performing the effort where the 
savings revert to DOE control and may be available for deobligation. 
Such savings may result from a specific cost reduction effort which 
is

[[Page 13486]]

negotiated on a cost-plus-incentive-fee, fixed-price incentive, or 
firm-fixed-price basis, or may result directly from a design, 
process, or method change. They may also be savings resulting from 
formal or informal direction given by DOE or from changes in the 
mission, work scope, or routine reorganization of the Contractor due 
to changes in the budget.
    Shared Net Savings are those net savings which result from:
    (1) A specific cost reduction effort which is negotiated on a 
cost-plus-incentive-fee or fixed-price incentive basis, and is the 
difference between the negotiated target cost of performing an 
effort as negotiated and the actual allowable cost of performing 
that effort; or
    (2) A design, process, or method change, which occurs in the 
fiscal year in which the change is accepted and the subsequent 
fiscal year, and is the difference between the estimated cost of 
performing an effort as originally planned and the actual allowable 
cost of performing that same effort utilizing a revised plan 
intended to reduce costs along with any Contractor development 
costs, implementation costs, administrative costs, and DOE costs 
associated with the revised plan. Administrative costs and DOE costs 
are only included at the discretion of the contracting officer. 
Savings resulting from formal or informal direction given by the DOE 
or changes in the mission, work scope, or routine reorganization of 
the Contractor due to changes in the budget are not to be considered 
as shared net savings for purposes of this clause and do not qualify 
for incentive sharing.
    (c) Procedure for submission of CRPs. (1) CRPs for the 
establishment of cost-plus-incentive-fee, fixed-price incentive, or 
firm-fixed-price efforts or for design, process, or methods changes 
submitted by the Contractor shall contain, at a minimum, the 
following:
    (i) Current Method (Baseline)--A verifiable description of the 
current scope of work, cost, and schedule to be impacted by the 
initiative, and supporting documentation.
    (ii) New Method (New Proposed Baseline)--A verifiable 
description of the new scope of work, cost, and schedule, how the 
initiative will be accomplished, and supporting documentation.
    (iii) Feasibility Assessment--A description and evaluation of 
the proposed initiative and benefits, risks, and impacts of 
implementation. This evaluation shall include an assessment of the 
difference between the current method (baseline) and proposed new 
method including all related costs.
    (2) In addition, CRPs for the establishment of cost-plus-
incentive-fee, fixed-price incentive, or firm-fixed-price efforts 
shall contain, at a minimum, the following:
    (i) The proposed contractual arrangement and the justification 
for its use; and
    (ii) A detailed cost/price estimate and supporting rationale. If 
the approach is proposed on an incentive basis, minimum and maximum 
cost estimates should be included along with any proposed sharing 
arrangements.
    (d) Evaluation and Decision. All CRPs must be submitted to and 
approved by the contracting officer. Included in the information 
provided by the CRP must be a discussion of the extent the proposed 
cost reduction effort may:
    (1) Pose a risk to the health and safety of workers, the 
community, or to the environment;
    (2) Result in a waiver or deviation from DOE requirements, such 
as DOE Orders and joint oversight agreements;
    (3) Require a change in other contractual agreements;
    (4) Result in significant organizational and personnel impacts;
    (5) Create a negative impact on the cost, schedule, or scope of 
work in another area;
    (6) Pose a potential negative impact on the credibility of the 
Contractor or the DOE; and
    (7) Impact successful and timely completion of any of the work 
in the cost, technical, and schedule baseline.
    (e) Acceptance or Rejection of CRPs. Acceptance or rejection of 
a CRP is a unilateral determination made by the contracting officer. 
The contracting officer will notify the Contractor that a CRP has 
been accepted, rejected, or deferred within (Insert Number) days of 
receipt. The only CRPs that will be considered for acceptance are 
those which the Contractor can demonstrate, at a minimum, will:
    (1) Result in net savings (in the sharing period if a design, 
process, or method change);
    (2) Not reappear as costs in subsequent periods; and
    (3) Not result in any impairment of essential functions.
    (f) The failure of the contracting officer to notify the 
Contractor of the acceptance, rejection, or deferral of a CRP within 
the specified time shall not be construed as approval.
    (g) Adjustment to Original Estimated Cost and Fee. If a CRP is 
established on a cost-plus-incentive-fee, fixed-price incentive or 
firm-fixed-price basis, the originally estimated cost and fee for 
the total effort shall be adjusted to remove the estimated cost and 
fee amount associated with the CRP effort.
    (h) Sharing Arrangement. If a CRP is accepted, the Contractor 
may share in the shared net savings. For a CRP negotiated on a cost-
plus-incentive-fee or fixed-price incentive basis, with the specific 
incentive arrangement (negotiated target costs, target fees, share 
lines, ceilings, profit, etc.) set forth in the contractual document 
authorizing the effort, the Contractor's share shall be the actual 
fee or profit resulting from such an arrangement. For a CRP 
negotiated as a cost savings incentive resulting from a design, 
process, or method change, the Contractor's share shall be a 
percentage, not to exceed 25% of the shared net savings. The 
specific percentage and sharing period shall be set forth in the 
contractual document.
    (i) Validation of Shared Net Savings. The contracting officer 
shall validate actual shared net savings. If actual shared net 
savings cannot be validated, the contractor will not be entitled to 
a share of the net shared savings.
    (j) Relationship to Other Incentives. Only those benefits of an 
accepted CRP not rewardable under other clauses of this contract 
shall be rewarded under this clause.
    (k) Subcontracts. The Contractor may include a clause similar to 
this clause in any subcontract. In calculating any estimated shared 
net savings in a CRP under this contract, the Contractor's 
administration, development, and implementation costs shall include 
any subcontractor's allowable costs, and any CRP incentive payments 
to a subcontractor resulting from the acceptance of such CRP. The 
Contractor may choose any arrangement for subcontractor CRP 
incentive payments, provided that the payments not reduce the DOE's 
share of shared net savings.

(End of Clause)


970.5215-5  Limitation on fee.

    As prescribed in 48 CFR 970.1504-5(e), the contracting officer 
shall insert the following provision:

Limitation on Fee (Month and Year TBE)

    (a) For the purpose of this solicitation, fee amounts shall not 
exceed the total available fee allowed by the fee policy at 48 CFR 
970.1504-1-1,or as specifically stated elsewhere in the 
solicitation.
    (b) The Government reserves the unilateral right, in the event 
an offeror's proposal is selected for award, to limit: fixed fee to 
not exceed an amount established pursuant to 48 CFR 970.1504-1-5; 
and total available fee to not exceed an amount established pursuant 
to 48 CFR 970.1504-1-9; or fixed fee or total available fee to an 
amount as specifically stated elsewhere in the solicitation.

(End of Clause)

970.5222-1  Collective bargaining agreements--management and operating 
contracts.

    As prescribed in 48 CFR 970.2201-1-3, insert the following clause:

Collective Bargaining Agreements--Management and Operating Contracts 
(Month and Year TBE)

    When negotiating collective bargaining agreements applicable to 
the work force under this contract, the Contractor shall use its 
best efforts to ensure such agreements contain provisions designed 
to assure continuity of services. All such agreements entered into 
during the contract period of performance should provide that 
grievances and disputes involving the interpretation or application 
of the agreement will be settled without resorting to strike, 
lockout, or other interruption of normal operations. For this 
purpose, each collective bargaining agreement should provide an 
effective grievance procedure with arbitration as its final step, 
unless the parties mutually agree upon some other method of assuring 
continuity of operations. As part of such agreements, management and 
labor should agree to cooperate fully with the Federal Mediation and 
Conciliation Service. The contractor shall include the substance of 
this clause in any subcontracts for protective services or other 
services performed on the DOE-owned site which will affect the 
continuity of operation of the facility.

(End of Clause)


[[Page 13487]]




970.5222-2  Overtime management.

    As prescribed in 48 CFR 970.2201-2-2, insert the following clause:

Overtime Management (Month and Year TBE)

    (a) The contractor shall maintain adequate internal controls to 
ensure that employee overtime is authorized only if cost effective 
and necessary to ensure performance of work under this contract.
    (b) The contractor shall notify the contracting officer when in 
any given year it is likely that overtime usage as a percentage of 
payroll may exceed 4%.
    (c) The contracting officer may require the submission, for 
approval, of a formal annual overtime control plan whenever 
contractor overtime usage as a percentage of payroll has exceeded, 
or is likely to exceed, 4%, or if the contracting officer otherwise 
deems overtime expenditures excessive. The plan shall include, at a 
minimum:
    (1) An overtime premium fund (maximum dollar amount);
    (2) Specific controls for casual overtime for non-exempt 
employees;
    (3) Specific parameters for allowability of exempt overtime;
    (4) An evaluation of alternatives to the use of overtime; and
    (5) Submission of a semi-annual report that includes for exempt 
and non-exempt employees:
    (i) Total cost of overtime;
    (ii) Total cost of straight time;
    (iii) Overtime cost as a percentage of straight-time cost;
    (iv) Total overtime hours;
    (v) Total straight-time hours; and
    (vi) Overtime hours as a percentage of straight-time hours.

(End of Clause)

970.5223-1  Integration of environment, safety, and health into work 
planning and execution.

    As prescribed in 48 CFR 970.2303-2(a), insert the following clause:

Integration of Environment, Safety, and Health Into Work Planning and 
Execution (Month and Year TBE)

    (a) For the purposes of this clause,
    (1) Safety encompasses environment, safety and health, including 
pollution prevention and waste minimization; and
    (2) Employees include subcontractor employees.
    (b) In performing work under this contract, the contractor shall 
perform work safely, in a manner that ensures adequate protection 
for employees, the public, and the environment, and shall be 
accountable for the safe performance of work. The contractor shall 
exercise a degree of care commensurate with the work and the 
associated hazards. The contractor shall ensure that management of 
environment, safety and health (ES&H) functions and activities 
becomes an integral but visible part of the contractor's work 
planning and execution processes. The contractor shall, in the 
performance of work, ensure that:
    (1) Line management is responsible for the protection of 
employees, the public, and the environment. Line management includes 
those contractor and subcontractor employees managing or supervising 
employees performing work.
    (2) Clear and unambiguous lines of authority and responsibility 
for ensuring (ES&H) are established and maintained at all 
organizational levels.
    (3) Personnel possess the experience, knowledge, skills, and 
abilities that are necessary to discharge their responsibilities.
    (4) Resources are effectively allocated to address ES&H, 
programmatic, and operational considerations. Protecting employees, 
the public, and the environment is a priority whenever activities 
are planned and performed.
    (5) Before work is performed, the associated hazards are 
evaluated and an agreed-upon set of ES&H standards and requirements 
are established which, if properly implemented, provide adequate 
assurance that employees, the public, and the environment are 
protected from adverse consequences.
    (6) Administrative and engineering controls to prevent and 
mitigate hazards are tailored to the work being performed and 
associated hazards. Emphasis should be on designing the work and/or 
controls to reduce or eliminate the hazards and to prevent accidents 
and unplanned releases and exposures.
    (7) The conditions and requirements to be satisfied for 
operations to be initiated and conducted are established and agreed-
upon by DOE and the contractor. These agreed-upon conditions and 
requirements are requirements of the contract and binding upon the 
contractor. The extent of documentation and level of authority for 
agreement shall be tailored to the complexity and hazards associated 
with the work and shall be established in a Safety Management 
System.
    (c) The contractor shall manage and perform work in accordance 
with a documented Safety Management System (System) that fulfills 
all conditions in paragraph (b) of this clause at a minimum. 
Documentation of the System shall describe how the contractor will:
    (1) Define the scope of work;
    (2) Identify and analyze hazards associated with the work;
    (3) Develop and implement hazard controls;
    (4) Perform work within controls; and
    (5) Provide feedback on adequacy of controls and continue to 
improve safety management.
    (d) The System shall describe how the contractor will establish, 
document, and implement safety performance objectives, performance 
measures, and commitments in response to DOE program and budget 
execution guidance while maintaining the integrity of the System. 
The System shall also describe how the contractor will measure 
system effectiveness.
    (e) The contractor shall submit to the contracting officer 
documentation of its System for review and approval. Dates for 
submittal, discussions, and revisions to the System will be 
established by the contracting officer. Guidance on the preparation, 
content, review, and approval of the System will be provided by the 
contracting officer. On an annual basis, the contractor shall review 
and update, for DOE approval, its safety performance objectives, 
performance measures, and commitments consistent with and in 
response to DOE's program and budget execution guidance and 
direction. Resources shall be identified and allocated to meet the 
safety objectives and performance commitments as well as maintain 
the integrity of the entire System. Accordingly, the System shall be 
integrated with the contractor's business processes for work 
planning, budgeting, authorization, execution, and change control.
    (f) The contractor shall comply with, and assist the Department 
of Energy in complying with, ES&H requirements of all applicable 
laws and regulations, and applicable directives identified in the 
clause of this contract entitled ``Laws, Regulations, and DOE 
Directives.'' The contractor shall cooperate with Federal and non-
Federal agencies having jurisdiction over ES&H matters under this 
contract.
    (g) The contractor shall promptly evaluate and resolve any 
noncompliance with applicable ES&H requirements and the System. If 
the contractor fails to provide resolution or if, at any time, the 
contractor's acts or failure to act causes substantial harm or an 
imminent danger to the environment or health and safety of employees 
or the public, the contracting officer may issue an order stopping 
work in whole or in part. Any stop work order issued by a 
contracting officer under this clause (or issued by the contractor 
to a subcontractor in accordance with paragraph (i) of this clause) 
shall be without prejudice to any other legal or contractual rights 
of the Government. In the event that the contracting officer issues 
a stop work order, an order authorizing the resumption of the work 
may be issued at the discretion of the contracting officer. The 
contractor shall not be entitled to an extension of time or 
additional fee or damages by reason of, or in connection with, any 
work stoppage ordered in accordance with this clause.
    (h) Regardless of the performer of the work, the contractor is 
responsible for compliance with the ES&H requirements applicable to 
this contract. The contractor is responsible for flowing down the 
ES&H requirements applicable to this contract to subcontracts at any 
tier to the extent necessary to ensure the contractor's compliance 
with the requirements.
    (i) The contractor shall include a clause substantially the same 
as this clause in subcontracts involving complex or hazardous work 
on site at a DOE-owned or -leased facility. Such subcontracts shall 
provide for the right to stop work under the conditions described in 
paragraph (g) of this clause. Depending on the complexity and 
hazards associated with the work, the contractor may require that 
the subcontractor submit a Safety Management System for the 
contractor's review and approval.

(End of Clause)

[[Page 13488]]

970.5223-2  Acquisition and use of environmentally preferable products 
and services.

    As prescribed in 48 CFR 970.2304-2, insert the following clause:

Acquisition and Use of Environmentally Preferable Products and Services 
(Month and Year TBE)

    (a) In the performance of this contract, the Contractor shall 
comply with the requirements of the following issuances:
    (1) Executive Order 13101 of September 14, 1998, entitled 
``Greening the Government Through Waste Prevention, Recycling and 
Federal Acquisition.''
    (2) Section 6002 of the Resource Conservation and Recovery Act 
(RCRA) of 1976, as amended (42 U.S.C. 6962, Pub. L. 94-580, 90 Stat. 
2822).
    (3) Title 40 of the Code of Federal Regulations, Subchapter I, 
Part 247 (Comprehensive Guidelines for the Procurement of Products 
Containing Recovered Materials) and such other Subchapter I Parts or 
Comprehensive Procurement Guidelines as the Environmental Protection 
Agency may issue from time to time as guidelines for the procurement 
of products that contain recovered/recycled materials.
    (4) ``U.S. Department of Energy Affirmative Procurement Program 
for Products Containing Recovered Materials'' and related guidance 
document(s), as they are identified in writing by the Department.
    (b) The Contractor shall prepare and submit reports on matters 
related to the use of environmentally preferable products and 
services from time to time in accordance with written direction 
(e.g., in a specified format) from the contracting officer.
    (c) In complying with the requirements of paragraph (a) of this 
clause, the Contractor shall coordinate its concerns and seek 
implementing guidance on Federal and Departmental policy, plans, and 
program guidance with the DOE recycling point of contact, who shall 
be identified by the contracting officer. Reports required pursuant 
to paragraph (b) of this clause, shall be submitted through the DOE 
recycling point of contact.

(End of Clause)


970.5223-3  Agreement regarding workplace substance abuse programs at 
DOE facilities.

    As prescribed in 970.2305-4(a), the contracting officer shall 
insert the following provision:

Agreement Regarding Workplace Substance Abuse Programs at DOE Sites 
(Month and Year TBE)

    (a) Any contract awarded as a result of this solicitation will 
be subject to the policies, criteria, and procedures of 10 CFR part 
707, Workplace Substance Abuse Programs at DOE Sites.
    (b) By submission of its offer, the officer agrees to provide to 
the contracting officer, within 30 days after notification of 
selection for award, or award of a contract, whichever occurs first, 
pursuant to this solicitation, its written workplace substance abuse 
program consistent with the requirements of 10 CFR part 707.
    (c) Failure of the offeror to agree to the condition of 
responsibility set forth in paragraph (b) of this provision, renders 
the offeror unqualified and ineligible for award.

(End of Provision)


970.5223-4  Workplace substance abuse programs at DOE sites.

    As prescribed in 48 CFR 970.2305-4(b), insert the following clause:

Workplace Substance Abuse Programs at DOE Sites (Month and Year TBE)

    (a) Program Implementation. The contractor shall, consistent 
with 10 CFR part 707, Workplace Substance Abuse Programs at DOE 
Sites, incorporated herein by reference with full force and effect, 
develop, implement, and maintain a workplace substance abuse 
program.
    (b) Remedies. In addition to any other remedies available to the 
Government, the contractor's failure to comply with the requirements 
of 10 CFR part 707 or to perform in a manner consistent with its 
approved program may render the contractor subject to: the 
suspension of contract payments, or, where applicable, a reduction 
in award fee; termination for default; and suspension or debarment.
    (c) Subcontracts. (1) The contractor agrees to notify the 
contracting officer reasonably in advance of, but not later than 30 
days prior to, the award of any subcontract the contractor believes 
may be subject to the requirements of 10 CFR part 707.
    (2) The DOE prime contractor shall require all subcontracts 
subject to the provisions of 10 CFR part 707 to agree to develop and 
implement a workplace substance abuse program that complies with the 
requirements of 10 CFR part 707, Workplace Substance Abuse Programs 
at DOE Sites, as a condition for award of the subcontract. The DOE 
prime contractor shall review and approve each subcontractor's 
program, and shall periodically monitor each subcontractor's 
implementation of the program for effectiveness and compliance with 
10 CFR part 707.
    (3) The contractor agrees to include, and require the inclusion 
of, the requirements of this clause in all subcontracts, at any 
tier, that are subject to the provisions of 10 CFR part 707.

(End of clause)


970.5226-1  Diversity Plan.

    As prescribed in 48 CFR 970.2671-2, insert the following clause:

Diversity Plan (Month and Year TBE)

    The Contractor shall submit a Diversity Plan to the contracting 
officer for approval within 90 days after the effective date of this 
contract. The contractor shall submit an update to its Plan with its 
annual fee proposal. Guidance for preparation of a Diversity Plan is 
provided in Appendix ____. The Plan shall include innovative 
strategies for increasing opportunities to fully use the talents and 
capabilities of a diverse work force. The Plan shall address, at a 
minimum, the Contractor's approach for promoting diversity through 
(1) the Contractor's work force, (2) educational outreach, (3) 
community involvement and outreach, (4) subcontracting, and (5) 
economic development (including technology transfer).

(End of Clause)


970.5226-2  Workforce restructuring under section 3161 of the National 
Defense Authorization Act for Fiscal Year 1993.

    As prescribed in 48 CFR 970.2672-3, insert the following clause:

Workforce Restructuring under Section 3161 of the National Defense 
Authorization Act for Fiscal Year 1993 (Month and Year TBE)

    (a) Consistent with the objectives of Section 3161 of the 
National Defense Authorization Act for Fiscal Year 1993, 42 U.S.C. 
7274h, in instances where the Department of Energy has determined 
that a change in workforce at a Department of Energy Defense Nuclear 
Facility is necessary, the contractor agrees to (1) comply with the 
Department of Energy Workforce Restructuring Plan for the facility, 
if applicable, and (2) use its best efforts to accomplish workforce 
restructuring or displacement so as to mitigate social and economic 
impacts.
    (b) The requirements of this clause shall be included in 
subcontracts at any tier (except subcontracts for commercial items 
pursuant to 41 U.S.C. 403) expected to exceed $500,000.

(End of Clause)


970.5226-3  Community Commitment.

    As prescribed in 48 CFR 970.2673-2, insert the following clause:

Community Commitment (Month and Year TBE)

    It is the policy of the DOE to be a constructive partner in the 
geographic region in which DOE conducts its business. The basic 
elements of this policy include: (1) recognizing the diverse 
interests of the region and its stakeholders, (2) engaging regional 
stakeholders in issues and concerns of mutual interest, and (3) 
recognizing that giving back to the community is a worthwhile 
business practice. Accordingly, the Contractor agrees that its 
business operations and performance under the Contract will be 
consistent with the intent of the policy and elements set forth 
above.

(End of Clause)


970.5227-1  Rights in Data--Facilities.

    As prescribed in 48 CFR 970.2704-3(a), insert the following clause:

Rights in Data--Facilities (Month and Year TBE)

    (a) Definitions. (1) Computer data bases, as used in this 
clause, means a collection of data in a form capable of, and for the 
purpose of, being stored in, processed, and operated on by a 
computer. The term does not include computer software.
    (2) Computer software, as used in this clause, means (i) 
computer programs which are data comprising a series of 
instructions, rules, routines, or statements, regardless of the 
media in which recorded, that allow or

[[Page 13489]]

cause a computer to perform a specific operation or series of 
operations and (ii) data comprising source code listings, design 
details, algorithms, processes, flow charts, formulae, and related 
material that would enable the computer program to be produced, 
created, or compiled. The term does not include computer data bases.
    (3) Data, as used in this clause, means recorded information, 
regardless of form or the media on which it may be recorded. The 
term includes technical data and computer software. The term 
``data'' does not include data incidental to the administration of 
this contract, such as financial, administrative, cost and pricing, 
or management information.
    (4) Limited rights data, as used in this clause, means data, 
other than computer software, developed at private expense that 
embody trade secrets or are commercial or financial and confidential 
or privileged. The Government's rights to use, duplicate, or 
disclose limited rights data are as set forth in the Limited Rights 
Notice of subparagraph (e) of this clause.
    (5) Restricted computer software, as used in this clause, means 
computer software developed at private expense and that is a trade 
secret; is commercial or financial and is confidential or 
privileged; or is published copyrighted computer software, including 
minor modifications of any such computer software. The Government's 
rights to use, duplicate, or disclose restricted computer software 
are as set forth in the Restricted Rights Notice of paragraph (f) of 
this clause.
    (6) Technical data, as used in this clause, means recorded data, 
regardless of form or characteristic, that are of a scientific or 
technical nature. Technical data does not include computer software, 
but does include manuals and instructional materials and technical 
data formatted as a computer data base.
    (7) Unlimited rights, as used in this clause, means the rights 
of the Government to use, disclose, reproduce, prepare derivative 
works, distribute copies to the public, including by electronic 
means, and perform publicly and display publicly, in any manner, 
including by electronic means, and for any purpose whatsoever, and 
to have or permit others to do so.
    (b) Allocation of Rights. (1) The Government shall have:
    (i) Ownership of all technical data and computer software first 
produced in the performance of this Contract;
    (ii) Unlimited rights in technical data and computer software 
specifically used in the performance of this Contract, except as 
provided herein regarding copyright, limited rights data, or 
restricted computer software, or except for other data specifically 
protected by statute for a period of time or, where, approved by 
DOE, appropriate instances of the DOE Work for Others Program;
    (iii) The right to inspect technical data and computer software 
first produced or specifically used in the performance of this 
Contract at all reasonable times. The Contractor shall make 
available all necessary facilities to allow DOE personnel to perform 
such inspection;
    (iv) The right to have all technical data and computer software 
first produced or specifically used in the performance of this 
Contract delivered to the Government or otherwise disposed of by the 
Contractor, either as the contracting officer may from time to time 
direct during the progress of the work or in any event as the 
contracting officer shall direct upon completion or termination of 
this Contract. The Contractor agrees to leave a copy of such data at 
the facility or plant to which such data relate, and to make 
available for access or to deliver to the Government such data upon 
request by the contracting officer. If such data are limited rights 
data or restricted computer software, the rights of the Government 
in such data shall be governed solely by the provisions of paragraph 
(e) of this clause (``Rights in Limited Rights Data'') or paragraph 
(f) of this clause (``Rights in Restricted Computer Software''); and
    (v) The right to remove, cancel, correct, or ignore any markings 
not authorized by the terms of this Contract on any data furnished 
hereunder if, in response to a written inquiry by DOE concerning the 
propriety of the markings, the Contractor fails to respond thereto 
within 60 days or fails to substantiate the propriety of the 
markings. In either case DOE will notify the Contractor of the 
action taken.
    (2) The Contractor shall have:
    (i) The right to withhold limited rights data and restricted 
computer software unless otherwise provided in accordance with the 
provisions of this clause; and
    (ii) The right to use for its private purposes, subject to 
patent, security or other provisions of this Contract, data it first 
produces in the performance of this Contract, except for data in 
DOE's Uranium Enrichment Technology, including diffusion, 
centrifuge, and atomic vapor laser isotope separation, provided the 
data requirements of this Contract have been met as of the date of 
the private use of such data.
    (3) The Contractor agrees that for limited rights data or 
restricted computer software or other technical, business or 
financial data in the form of recorded information which it receives 
from, or is given access to by, DOE or a third party, including a 
DOE Contractor or subcontractor, and for technical data or computer 
software it first produces under this Contract which is authorized 
to be marked by DOE, the Contractor shall treat such data in 
accordance with any restrictive legend contained thereon.
    (c) Copyrighted Material. (1) The Contractor shall not, without 
prior written authorization of the Patent Counsel, assert copyright 
in any technical data or computer software first produced in the 
performance of this contract. To the extent such authorization is 
granted, the Government reserves for itself and others acting on its 
behalf, a nonexclusive, paid-up, irrevocable, world-wide license for 
Governmental purposes to publish, distribute, translate, duplicate, 
exhibit, and perform any such data copyrighted by the Contractor.
    (2) The Contractor agrees not to include in the technical data 
or computer software delivered under the contract any material 
copyrighted by the Contractor and not to knowingly include any 
material copyrighted by others without first granting or obtaining 
at no cost a license therein for the benefit of the Government of 
the same scope as set forth in paragraph (c)(1) of this clause. If 
the Contractor believes that such copyrighted material for which the 
license cannot be obtained must be included in the technical data or 
computer software to be delivered, rather than merely incorporated 
therein by reference, the Contractor shall obtain the written 
authorization of the contracting officer to include such material in 
the technical data or computer software prior to its delivery.
    (d) Subcontracting. (1) Unless otherwise directed by the 
contracting officer, the Contractor agrees to use in subcontracts in 
which technical data or computer software is expected to be produced 
or in subcontracts for supplies that contain a requirement for 
production or delivery of data in accordance with the policy and 
procedures of 48 CFR Subpart 27.4 as supplemented by 48 CFR 927.401 
through 927.409, the clause entitled, ``Rights in Data-General'' at 
48 CFR 52.227-14 modified in accordance with 927.409(a) and 
including Alternate V. Alternates II through IV of that clause may 
be included as appropriate with the prior approval of DOE Patent 
Counsel, and the Contractor shall not acquire rights in a 
subcontractor's limited rights data or restricted computer software, 
except through the use of Alternates II or III, respectively, 
without the prior approval of DOE Patent Counsel. The clause at 48 
CFR 52.227-16, Additional Data Requirements, shall be included in 
subcontracts in accordance with DEAR 927.409(h). The contractor 
shall use instead the Rights in Data-Facilities clause at 48 CFR 
970.5227-1 in subcontracts, including subcontracts for related 
support services, involving the design or operation of any plants or 
facilities or specially designed equipment for such plants or 
facilities that are managed or operated under its contract with DOE.
    (2) It is the responsibility of the Contractor to obtain from 
its subcontractors technical data and computer software and rights 
therein, on behalf of the Government, necessary to fulfill the 
Contractor's obligations to the Government with respect to such 
data. In the event of refusal by a subcontractor to accept a clause 
affording the Government such rights, the Contractor shall:
    (i) Promptly submit written notice to the contracting officer 
setting forth reasons or the subcontractor's refusal and other 
pertinent information which may expedite disposition of the matter, 
and (ii) Not proceed with the subcontract without the written 
authorization of the contracting officer.
    (3) Neither the Contractor nor higher-tier subcontractors shall 
use their power to award subcontracts as economic leverage to 
acquire rights in a subcontractor's limited rights data or 
restricted computer software for their private use.
    (e) Rights in Limited Rights Data. Except as may be otherwise 
specified in this Contract as data which are not subject to this 
paragraph, the Contractor agrees to and does hereby grant to the 
Government an irrevocable, nonexclusive, paid-up license by or for 
the Government, in any limited rights data of the Contractor 
specifically used in the performance of this Contract, provided,

[[Page 13490]]

however, that to the extent that any limited rights data when 
furnished or delivered is specifically identified by the Contractor 
at the time of initial delivery to the Government or a 
representative of the Government, such data shall not be used within 
or outside the Government except as provided in the ``Limited Rights 
Notice'' set forth. All such limited rights data shall be marked 
with the following ``Limited Rights Notice'':

Limited Rights Notice

    These data contain ``limited rights data,'' furnished under 
Contract No. ____ with the United States Department of Energy which 
may be duplicated and used by the Government with the express 
limitations that the ``limited rights data'' may not be disclosed 
outside the Government or be used for purposes of manufacture 
without prior permission of the Contractor, except that further 
disclosure or use may be made solely for the following purposes:
    (a) Use (except for manufacture) by support services contractors 
within the scope of their contracts;
    (b) This ``limited rights data'' may be disclosed for evaluation 
purposes under the restriction that the ``limited rights data'' be 
retained in confidence and not be further disclosed;
    (c) This ``limited rights data'' may be disclosed to other 
contractors participating in the Government's program of which this 
Contract is a part for information or use (except for manufacture) 
in connection with the work performed under their contracts and 
under the restriction that the ``limited rights data'' be retained 
in confidence and not be further disclosed;
    (d) This ``limited rights data'' may be used by the Government 
or others on its behalf for emergency repair or overhaul work under 
the restriction that the ``limited rights data'' be retained in 
confidence and not be further disclosed; and
    (e) Release to a foreign government, or instrumentality thereof, 
as the interests of the United States Government may require, for 
information or evaluation, or for emergency repair or overhaul work 
by such government. This Notice shall be marked on any reproduction 
of this data in whole or in part.

(End of Notice)

    (f) Rights in Restricted Computer Software. (1) Except as may be 
otherwise specified in this Contract as data which are not subject 
to this paragraph, the Contractor agrees to and does hereby grant to 
the Government an irrevocable, nonexclusive, paid-up, license by or 
for the Government, in any restricted computer software of the 
Contractor specifically used in the performance of this Contract, 
provided, however, that to the extent that any restricted computer 
software when furnished or delivered is specifically identified by 
the Contractor at the time of initial delivery to the Government or 
a representative of the Government, such data shall not be used 
within or outside the Government except as provided in the 
``Restricted Rights Notice'' set forth below. All such restricted 
computer software shall be marked with the following ``Restricted 
Rights Notice'':

Restricted Rights Notice--Long Form

    (a) This computer software is submitted with restricted rights 
under Department of Energy Contract No. ____ . It may not be used, 
reproduced, or disclosed by the Government except as provided in 
paragraph (b) of this notice.
    (b) This computer software may be:
    (1) Used or copied for use in or with the computer or computers 
for which it was acquired, including use at any Government 
installation to which such computer or computers may be transferred;
    (2) Used, copied for use, in a backup or replacement computer if 
any computer for which it was acquired is inoperative or is 
replaced;
    (3) Reproduced for safekeeping (archives) or backup purposes;
    (4) Modified, adapted, or combined with other computer software, 
provided that only the portions of the derivative software 
consisting of the restricted computer software are to be made 
subject to the same restricted rights; and
    (5) Disclosed to and reproduced for use by contractors under a 
service contract (of the type defined in 48 CFR 37.101) in 
accordance with subparagraphs (b)(1) through (4) of this Notice, 
provided the Government makes such disclosure or reproduction 
subject to these restricted rights.
    (c) Notwithstanding the foregoing, if this computer software has 
been published under copyright, it is licensed to the Government, 
without disclosure prohibitions, with the rights set forth in the 
restricted rights notice above.
    (d) This Notice shall be marked on any reproduction of this 
computer software, in whole or in part.

(End of Notice)

    (2) Where it is impractical to include the Restricted Rights 
Notice on restricted computer software, the following short-form 
Notice may be used:

Restricted Rights Notice--Short Form

    Use, reproduction, or disclosure is subject to restrictions set 
forth in the Long Form Notice of DOE Contract No. ____ with (name of 
Contractor ).

(End of Notice)

    (3) If the software is embedded, or if it is commercially 
impractical to mark it with human readable text, then the symbol R 
and the clause date (mo/yr), in brackets or a box, a [R-mo/yr], may 
be used. This will be read to mean restricted computer software, 
subject to the rights of the Government as described in the Long 
Form Notice, in effect as of the date indicated next to the symbol. 
The symbol shall not be used to mark human readable material. In the 
event this Contract contains any variation to the rights in the Long 
Form Notice, then the contract number must also be cited.
    (4) If restricted computer software is delivered with the 
copyright notice of 17 U.S.C. 401, the software will be presumed to 
be published copyrighted computer software licensed to the 
Government without disclosure prohibitions and with unlimited 
rights, unless the Contractor includes the following statement with 
such copyright notice ``Unpublished-rights reserved under the 
Copyright Laws of the United States.''
    (g) Relationship to patents. Nothing contained in this clause 
creates or is intended to imply a license to the Government in any 
patent or is intended to be construed as affecting the scope of any 
licenses or other rights otherwise granted to the Government under 
any patent.

(End of Clause)

    Alternate I (Month and Year TBE). As prescribed in 48 CFR 970.2704-
3(a), where access to Category C-24 restricted data is contemplated in 
the performance of a contract the contracting officer shall insert the 
phrase ``and except Restricted Data in category C-24, 10 CFR part 725, 
in which DOE has reserved the right to receive reasonable compensation 
for the use of its inventions and discoveries, including related data 
and technology'' after ``laser isotope separation'' and before the 
comma in paragraph (b)(2)(ii) of the clause at 48 CFR 970.5227-1, 
Rights in Data--Facilities, as appropriate.

(End of Clause)

970.5227-2  Rights in Data--Technology Transfer.

    As prescribed in 48 CFR 970.2704-3(b), insert the following clause:

Rights in Data Technology Transfer (Month and Year TBE)

    (a) Definitions. (1) Computer data bases, as used in this 
clause, means a collection of data in a form capable of, and for the 
purpose of, being stored in, processed, and operated on by a 
computer. The term does not include computer software.
    (2) Computer software, as used in this clause, means (i) 
computer programs which are data comprising a series of 
instructions, rules, routines, or statements, regardless of the 
media in which recorded, that allow or cause a computer to perform a 
specific operation or series of operations and (ii) data comprising 
source code listings, design details, algorithms, processes, flow 
charts, formulae, and related material that would enable the 
computer program to be produced, created, or compiled. The term does 
not include computer data bases.
    (3) Data, as used in this clause, means recorded information, 
regardless of form or the media on which it may be recorded. The 
term includes technical data and computer software. The term 
``data'' does not include data incidental to the administration of 
this contract, such as financial, administrative, cost and pricing, 
or management information.
    (4) Limited rights data, as used in this clause, means data, 
other than computer software, developed at private expense that 
embody trade secrets or are commercial or financial and confidential 
or privileged. The Government's rights to use, duplicate, or 
disclose limited rights data are as set forth in the Limited Rights 
Notice of paragraph (g) of this clause.
    (5) Restricted computer software, as used in this clause, means 
computer software developed at private expense and that is a

[[Page 13491]]

trade secret; is commercial or financial and is confidential or 
privileged; or is published copyrighted computer software, including 
minor modifications of any such computer software. The Government's 
rights to use, duplicate, or disclose restricted computer software 
are as set forth in the Restricted Rights Notice of subparagraph (h) 
of this clause.
    (6) Technical data, as used in this clause, means recorded data, 
regardless of form or characteristic, that are of a scientific or 
technical nature. Technical data does not include computer software, 
but does include manuals and instructional materials and technical 
data formatted as a computer data base.
    (7) Unlimited rights, as used in this clause, means the rights 
of the Government to use, disclose, reproduce, prepare derivative 
works, distribute copies to the public, including by electronic 
means, and perform publicly and display publicly, in any manner, 
including by electronic means, and for any purpose whatsoever, and 
to have or permit others to do so.
    (b) Allocation of Rights. (1) The Government shall have:
    (i) Ownership of all technical data and computer software first 
produced in the performance of this Contract;
    (ii) Unlimited rights in technical data and computer software 
specifically used in the performance of this Contract, except as 
provided herein regarding copyright, limited rights data, or 
restricted computer software, and except for data subject to the 
withholding provisions for protected Cooperative Research and 
Development Agreement (CRADA) information in accordance with 
Technology Transfer actions under this Contract, or other data 
specifically protected by statute for a period of time or, where, 
approved by DOE, appropriate instances of the DOE Work for Others 
Program;
    (iii) The right to inspect technical data and computer software 
first produced or specifically used in the performance of this 
Contract at all reasonable times. The Contractor shall make 
available all necessary facilities to allow DOE personnel to perform 
such inspection;
    (iv) The right to have all technical data and computer software 
first produced or specifically used in the performance of this 
Contract delivered to the Government or otherwise disposed of by the 
Contractor, either as the contracting officer may from time to time 
direct during the progress of the work or in any event as the 
contracting officer shall direct upon completion or termination of 
this Contract. The Contractor agrees to leave a copy of such data at 
the facility or plant to which such data relate, and to make 
available for access or to deliver to the Government such data upon 
request by the contracting officer. If such data are limited rights 
data or restricted computer software. the rights of the Government 
in such data shall be governed solely by the provisions of paragraph 
(g) of this clause (``Rights in Limited Rights Data'') or paragraph 
(h) of this clause (``Rights in Restricted Computer Software''); and 
(v) The right to remove, cancel, correct, or ignore any markings not 
authorized by the terms of this Contract on any data furnished 
hereunder if, in response to a written inquiry by DOE concerning the 
propriety of the markings, the Contractor fails to respond thereto 
within 60 days or fails to substantiate the propriety of the 
markings. In either case DOE will notify the Contractor of the 
action taken.
    (2) The Contractor shall have:
    (i) The right to withhold limited rights data and restricted 
computer software unless otherwise provided in provisions of this 
clause;
    (ii) The right to use for its private purposes, subject to 
patent, security or other provisions of this Contract, data it first 
produces in the performance of this Contract, except for data in 
DOE's Uranium Enrichment Technology, including diffusion, 
centrifuge, and atomic vapor laser isotope separation, provided the 
data requirements of this Contract have been met as of the date of 
the private use of such data; and
    (iii) The right to assert copyright subsisting in scientific and 
technical articles as provided in paragraph (d) of this clause and 
the right to request permission to assert copyright subsisting in 
works other than scientific and technical articles as provided in 
paragraph (e) of this clause.
    (3) The Contractor agrees that for limited rights data or 
restricted computer software or other technical business or 
financial data in the form of recorded information which it receives 
from, or is given access to by DOE or a third party, including a DOE 
contractor or subcontractor, and for technical data or computer 
software it first produces under this Contract which is authorized 
to be marked by DOE, the Contractor shall treat such data in 
accordance with any restrictive legend contained thereon.
    (c) Copyright (General). (1) The Contractor agrees not to mark, 
register, or otherwise assert copyright in any data in a published 
or unpublished work, other than as set forth in paragraphs (d) and 
(e) of this clause.
    (2) Except for material to which the Contractor has obtained the 
right to assert copyright in accordance with either paragraph (d) or 
(e) of this clause, the Contractor agrees not to include in the data 
delivered under this Contract any material copyrighted by the 
Contractor and not to knowingly include any material copyrighted by 
others without first granting or obtaining at no cost a license 
therein for the benefit of the Government of the same scope as set 
forth in paragraph (d) of this clause. If the Contractor believes 
that such copyrighted material for which the license cannot be 
obtained must be included in the data to be delivered, rather than 
merely incorporated therein by reference, the Contractor shall 
obtain the written authorization of the contracting officer to 
include such material in the data prior to its delivery.
    (d) Copyrighted works (scientific and technical articles). (1) 
The Contractor shall have the right to assert, without prior 
approval of the contracting officer, copyright subsisting in 
scientific and technical articles composed under this contract or 
based on or containing data first produced in the performance of 
this Contract, and published in academic, technical or professional 
journals, symposia, proceedings, or similar works. When assertion of 
copyright is made, the Contractor shall affix the applicable 
copyright notice of 17 U.S.C. 401 or 402 and acknowledgment of 
Government sponsorship (including contract number) on the data when 
such data are delivered to the Government as well as when the data 
are published or deposited for registration as a published work in 
the U.S. Copyright Office. The Contractor grants to the Government, 
and others acting on its behalf, a nonexclusive, paid-up, 
irrevocable, world-wide license in such copyrighted data to 
reproduce, prepare derivative works, distribute copies to the 
public, and perform publicly and display publicly, by or on behalf 
of the Government.
    (2) The contractor shall mark each scientific or technical 
article first produced or composed under this Contract and submitted 
for journal publication or similar means of dissemination with a 
notice, similar in all material respects to the following, on the 
front reflecting the Government's non-exclusive, paid-up, 
irrevocable, world-wide license in the copyright.

    Notice: This manuscript has been authored by [insert the name of 
the Contractor] under Contract No. [insert the contract number] with 
the U.S. Department of Energy. The United States Government retains 
and the publisher, by accepting the article for publication, 
acknowledges that the United States Government retains a non-
exclusive, paid-up, irrevocable, world-wide license to publish or 
reproduce the published form of this manuscript, or allow others to 
do so, for United States Government purposes.


(End of Notice)

    (3) The title to the copyright of the original of unclassified 
graduate theses and the original of related unclassified scientific 
papers shall vest in the author thereof, subject to the right of DOE 
to retain duplicates of such documents and to use such documents for 
any purpose whatsoever without any claim on the part of the author 
or the contractor for additional compensation.
    (e) Copyrighted works (other than scientific and technical 
articles and data produced under a CRADA). The Contractor may obtain 
permission to assert copyright subsisting in technical data and 
computer software first produced by the Contractor in performance of 
this Contract, where the Contractor can show that commercialization 
would be enhanced by such copyright protection, subject to the 
following:
    (1) Contractor Request to Assert Copyright.
    (i) For data other than scientific and technical articles and 
data produced under a CRADA, the Contractor shall submit in writing 
to Patent Counsel its request to assert copyright in data first 
produced in the performance of this Contract pursuant to this 
clause. The right of the Contractor to copyright data first produced 
under a CRADA is as described in the individual CRADA. Each request 
by the Contractor must include:
    (A) The identity of the data (including any computer program) 
for which the Contractor requests permission to assert copyright, as

[[Page 13492]]

well as an abstract which is descriptive of the data and is suitable 
for dissemination purposes, (B) The program under which it was 
funded, (C) Whether, to the best knowledge of the Contractor, the 
data is subject to an international treaty or agreement, (D) Whether 
the data is subject to export control, (E) A statement that the 
Contractor plans to commercialize the data in compliance with the 
clause of this contract entitled, ``Technology Transfer Mission,'' 
within five (5) years after obtaining permission to assert copyright 
or, on a case-by-case basis, a specified longer period where the 
Contractor can demonstrate that the ability to commercialize 
effectively is dependent upon such longer period, and (F) For data 
other than computer software, a statement explaining why the 
assertion of copyright is necessary to enhance commercialization and 
is consistent with DOE's dissemination responsibilities.
    (ii) For data that is developed using other funding sources in 
addition to DOE funding, the permission to assert copyright in 
accordance with this clause must also be obtained by the Contractor 
from all other funding sources prior to the Contractor's request to 
Patent Counsel. The request shall include the Contractor's 
certification or other documentation acceptable to Patent Counsel 
demonstrating such permission has been obtained.
    (iii) Permission for the Contractor to assert copyright in 
excepted categories of data as determined by DOE will be expressly 
withheld. Such excepted categories include data whose release (A) 
would be detrimental to national security, i.e., involve classified 
information or data or sensitive information under Section 148 of 
the Atomic Energy Act of 1954, as amended, or are subject to export 
control for nonproliferation and other nuclear-related national 
security purposes, (B) would not enhance the appropriate transfer or 
dissemination and commercialization of such data, (C) would have a 
negative impact on U.S. industrial competitiveness, (D) would 
prevent DOE from meeting its obligations under treaties and 
international agreements, or (E) would be detrimental to one or more 
of DOE's programs. Additional excepted categories may be added by 
the Assistant General Counsel for Technology Transfer and 
Intellectual Property. Where data are determined to be under export 
control restriction, the Contractor may obtain permission to assert 
copyright subject to the provisions of this clause for purposes of 
limited commercialization in a manner that complies with export 
control statutes and applicable regulations. In addition, 
notwithstanding any other provision of this Contract, all data 
developed with Naval Reactors' funding and those data that are 
classified fall within excepted categories. The rights of the 
Contractor in data are subject to the disposition of data rights in 
the treaties and international agreements identified under this 
Contract as well as those additional treaties and international 
agreements which DOE may from time to time identify by unilateral 
amendment to the Contract; such amendment listing added treaties and 
international agreements is effective only for data which is 
developed after the date such treaty or international agreement is 
added to this Contract. Also, the Contractor will not be permitted 
to assert copyright in data in the form of various technical reports 
generated by the Contractor under the Contract without first 
obtaining the advanced written permission of the contracting 
officer.
    (2) DOE Review and Response to Contractor's Request. The Patent 
Counsel shall use its best efforts to respond in writing within 90 
days of receipt of a complete request by the Contractor to assert 
copyright in technical data and computer software pursuant to this 
clause. Such response shall either give or withhold DOE's permission 
for the Contractor to assert copyright or advise the Contractor that 
DOE needs additional time to respond, and the reasons therefor.
    (3) Permission for Contractor to Assert Copyright.
    (i) For computer software, the Contractor shall furnish to the 
DOE designated, centralized software distribution and control point, 
the Energy Science and Technology Software Center, at the time 
permission to assert copyright is given under paragraph (e)(2) of 
this clause: (A) an abstract describing the software suitable for 
publication, (B) the source code for each software program, and (C) 
the object code and at least the minimum support documentation 
needed by a technically competent user to understand and use the 
software. The Patent Counsel, for good cause shown by the 
Contractor, may allow the minimum support documentation to be 
delivered within 60 days after permission to assert copyright is 
given or at such time the minimum support documentation becomes 
available. The Contractor acknowledges that the DOE designated 
software distribution and control point may provide a technical 
description of the software in an announcement identifying its 
availability from the copyright holder.
    (ii) Unless otherwise directed by the contracting officer, for 
data other than computer software to which the Contractor has 
received permission to assert copyright under paragraph (e)(2) of 
this clause above, the Contractor shall within sixty (60) days of 
obtaining such permission furnish to DOE's Office of Scientific and 
Technical Information (OSTI) a copy of such data as well as an 
abstract of the data suitable for dissemination purposes. The 
Contractor acknowledges that OSTI may provide an abstract of the 
data in an announcement to DOE, its contractors and to the public 
identifying its availability from the copyright holder.
    (iii) For a five year period or such other specified period as 
specifically approved by Patent Counsel beginning on the date the 
Contractor is given permission to assert copyright in data, the 
Contractor grants to the Government, and others acting on its 
behalf, a paid-up, nonexclusive, irrevocable worldwide license in 
such copyrighted data to reproduce, prepare derivative works and 
perform publicly and display publicly, by or on behalf of the 
Government. Upon request, the initial period may be extended after 
DOE approval. The DOE approval will be based on the standard that 
the work is still commercially available and the market demand is 
being met.
    (iv) After the period approved by Patent Counsel for application 
of the limited Government license described in paragraph (e)(3)(iii) 
of this clause, or if, prior to the end of such period(s), the 
Contractor abandons commercialization activities pertaining to the 
data to which the Contractor has been given permission to assert 
copyright, the Contractor grants to the Government, and others 
acting on its behalf, a paid-up, nonexclusive, irrevocable worldwide 
license in such copyrighted data to reproduce, distribute copies to 
the public, prepare derivative works, perform publicly and display 
publicly, and to permit others to do so.
    (v) Whenever the Contractor asserts copyright in data pursuant 
to this paragraph (e), the Contractor shall affix the applicable 
copyright notice of 17 U.S.C. 401 or 402 on the copyrighted data and 
also an acknowledgment of the Government sponsorship and license 
rights of paragraphs (e)(3) (iii) and (iv) of this clause. Such 
action shall be taken when the data are delivered to the Government, 
published, licensed or deposited for registration as a published 
work in the U.S. Copyright Office. The acknowledgment of Government 
sponsorship and license rights shall be as follows: Notice: These 
data were produced by (insert name of Contractor) under Contract No. 
____ with the Department of Energy. For (period approved by DOE 
Patent Counsel) from (date permission to assert copyright was 
obtained), the Government is granted for itself and others acting on 
its behalf a nonexclusive, paid-up, irrevocable worldwide license in 
this data to reproduce, prepare derivative works, and perform 
publicly and display publicly, by or on behalf of the Government. 
There is provision for the possible extension of the term of this 
license. Subsequent to that period or any extension granted, the 
Government is granted for itself and others acting on its behalf a 
nonexclusive, paid-up, irrevocable worldwide license in this data to 
reproduce, prepare derivative works, distribute copies to the 
public, perform publicly and display publicly, and to permit others 
to do so. The specific term of the license can be identified by 
inquiry made to Contractor or DOE. Neither the United States nor the 
United States Department of Energy, nor any of their employees, 
makes any warranty, express or implied, or assumes any legal 
liability or responsibility for the accuracy, completeness, or 
usefulness of any data , apparatus, product, or process disclosed, 
or represents that its use would not infringe privately owned 
rights.

(End of Notice)

    (vi) With respect to any data to which the Contractor has 
received permission to assert copyright, the DOE has the right, 
during the five (5) year or specified longer period approved by 
Patent Counsel as provided for in paragraph (e) of this clause, to 
request the Contractor to grant a nonexclusive, partially exclusive 
or exclusive license in any field of use to a responsible 
applicant(s) upon terms that are reasonable under the circumstances, 
and if the Contractor refuses such request, to grant such license 
itself, if the DOE determines that the Contractor has not made

[[Page 13493]]

a satisfactory demonstration that either it or its licensee(s) is 
actively pursuing commercialization of the data as set forth in 
subparagraph (e)(1)(A) of this clause. Before licensing under this 
subparagraph (vi), DOE shall furnish the Contractor a written 
request for the Contractor to grant the stated license, and the 
Contractor shall be allowed thirty (30) days (or such longer period 
as may be authorized by the contracting officer for good cause shown 
in writing by the Contractor) after such notice to show cause why 
the license should not be granted. The Contractor shall have the 
right to appeal the decision of the DOE to grant the stated license 
to the Invention Licensing Appeal Board as set forth in 10 CFR 
781.65--''Appeals.''
    (vii) No costs shall be allowable for maintenance of copyrighted 
data, primarily for the benefit of the Contractor and/or a licensee 
which exceeds DOE Program needs, except as expressly provided in 
writing by the contracting officer. The Contractor may use its net 
royalty income to effect such maintenance costs.
    (viii) At any time the Contractor abandons commercialization 
activities for data for which the Contractor has received permission 
to assert copyright in accordance with this clause, it shall advise 
OSTI and Patent Counsel and upon request assign the copyright to the 
Government so that the Government can distribute the data to the 
public.
    (4) The following notice may be placed on computer software 
prior to any publication and prior to the Contractor's obtaining 
permission from the Department of Energy to assert copyright in the 
computer software pursuant to paragraph (c)(3) of this section.
    Notice: This computer software was prepared by [insert the 
Contractor's name and the individual author], hereinafter the 
Contractor, under Contract [insert the Contract Number] with the 
Department of Energy (DOE). All rights in the computer software are 
reserved by DOE on behalf of the United States Government and the 
Contractor as provided in the Contract. You are authorized to use 
this computer software for Governmental purposes but it is not to be 
released or distributed to the public. NEITHER THE GOVERNMENT NOR 
THE CONTRACTOR MAKES ANY WARRANTY, EXPRESS OR IMPLIED, OR ASSUMES 
ANY LIABILITY FOR THE USE OF THIS SOFTWARE. This notice including 
this sentence must appear on any copies of this computer software.

(End of Notice)

    (5) a similar notice can be used for data, other than computer 
software, upon approval of DOE Patent Counsel.
    (f) Subcontracting. (1) Unless otherwise directed by the 
contracting officer, the Contractor agrees to use in subcontracts in 
which technical data or computer software is expected to be produced 
or in subcontracts for supplies that contain a requirement for 
production or delivery of data in accordance with the policy and 
procedures of 48 CFR Subpart 27.4 as supplemented by 48 CFR 927.401 
through 927.409, the clause entitled, ``Rights in Data-General'' at 
48 CFR 52.227-14 modified in accordance with 927.409(a) and 
including Alternate V. Alternates II through IV of that clause may 
be included as appropriate with the prior approval of DOE Patent 
Counsel, and the Contractor shall not acquire rights in a 
subcontractor's limited rights data or restricted computer software, 
except through the use of Alternates II or III, respectively, 
without the prior approval of DOE Patent Counsel. The clause at 48 
CFR 52.227-16, Additional Data Requirements, shall be included in 
subcontracts in accordance with 48 CFR 927.409(h). The Contractor 
shall use instead the Rights in Data-Facilities clause at 48 CFR 
970.5227-1 in subcontracts, including subcontracts for related 
support services, involving the design or operation of any plants or 
facilities or specially designed equipment for such plants or 
facilities that are managed or operated under its contract with DOE.
    (2) It is the responsibility of the Contractor to obtain from 
its subcontractors technical data and computer software and rights 
therein, on behalf of the Government, necessary to fulfill the 
Contractor's obligations to the Government with respect to such 
data. In the event of refusal by a subcontractor to accept a clause 
affording the Government such rights, the Contractor shall:
    (i) Promptly submit written notice to the contracting officer 
setting forth reasons or the subcontractor's refusal and other 
pertinent information which may expedite disposition of the matter, 
and
    (ii) Not proceed with the subcontract without the written 
authorization of the contracting officer.
    (3) Neither the Contractor nor higher-tier subcontractors shall 
use their power to award subcontracts as economic leverage to 
acquire rights in a subcontractor's limited rights data and 
restricted computer software for their private use.
    (g) Rights in Limited Rights Data. Except as may be otherwise 
specified in this Contract as data which are not subject to this 
paragraph, the Contractor agrees to and does hereby grant to the 
Government an irrevocable nonexclusive, paid-up license by or for 
the Government, in any limited rights data of the Contractor 
specifically used in the performance of this Contract, provided, 
however, that to the extent that any limited rights data when 
furnished or delivered is specifically identified by the Contractor 
at the time of initial delivery to the Government or a 
representative of the Government, such data shall not be used within 
or outside the Government except as provided in the ``Limited Rights 
Notice'' set forth below. All such limited rights data shall be 
marked with the following ``Limited Rights Notice:''

Limited Rights Notice

    These data contain ``limited rights data,'' furnished under 
Contract No. ____ with the United States Department of Energy which 
may be duplicated and used by the Government with the express 
limitations that the ``limited rights data'' may not be disclosed 
outside the Government or be used for purposes of manufacture 
without prior permission of the Contractor, except that further 
disclosure or use may be made solely for the following purposes:
    (a) Use (except for manufacture) by support services contractors 
within the scope of their contracts;
    (b) This ``limited rights data'' may be disclosed for evaluation 
purposes under the restriction that the ``limited rights data'' be 
retained in confidence and not be further disclosed;
    (c) This ``limited rights data'' may be disclosed to other 
contractors participating in the Government's program of which this 
Contract is a part for information or use (except for manufacture) 
in connection with the work performed under their contracts and 
under the restriction that the ``limited rights data'' be retained 
in confidence and not be further disclosed;
    (d) This ``limited rights data'' may be used by the Government 
or others on its behalf for emergency repair or overhaul work under 
the restriction that the ``limited rights data'' be retained in 
confidence and not be further disclosed; and
    (e) Release to a foreign government, or instrumentality thereof, 
as the interests of the United States Government may require, for 
information or evaluation, or for emergency repair or overhaul work 
by such government.
    This Notice shall be marked on any reproduction of this data in 
whole or in part.

(End of Notice)

    (h) Rights in Restricted Computer Software. (1) Except as may be 
otherwise specified in this Contract as data which are not subject 
to this paragraph, the Contractor agrees to and does hereby grant to 
the Government an irrevocable, nonexclusive, paid-up, license by or 
for the Government, in any restricted computer software of the 
Contractor specifically used in the performance of this Contract; 
provided, however, that to the extent that any restricted computer 
software when furnished or delivered is specifically identified by 
the Contractor at the time of initial delivery to the Government or 
a representative of the Government, such data shall not be used 
within or outside the Government except as provided in the 
``Restricted Rights Notice'' set forth below. All such restricted 
computer software shall be marked with the following ``Restricted 
Rights Notice:''

Restricted Rights Notice--Long Form

    (a) This computer software is submitted with restricted rights 
under Department of Energy Contract No. ____. It may not be used, 
reproduced, or disclosed by the Government except as provided in 
paragraph (b) of this notice.
    (b) This computer software may be:
    (1) Used or copied for use in or with the computer or computers 
for which it was acquired, including use at any Government 
installation to which such computer or computers may be transferred;
    (2) Used, copied for use, in a backup or replacement computer if 
any computer for which it was acquired is inoperative or is 
replaced;
    (3) Reproduced for safekeeping (archives) or backup purposes;
    (4) Modified, adapted, or combined with other computer software, 
provided that only the portions of the derivative software 
consisting of the restricted computer software are to be made 
subject to the same restricted rights; and
    (5) Disclosed to and reproduced for use by contractors under a 
service contract (of the

[[Page 13494]]

type defined in 48 CFR 37.101) in accordance with subparagraphs 
(b)(1) through (4) of this Notice, provided the Government makes 
such disclosure or reproduction subject to these restricted rights.
    (c) Notwithstanding the foregoing, if this computer software has 
been published under copyright, it is licensed to the Government, 
without disclosure prohibitions, with the rights set forth in the 
restricted rights notice above.
    (d) This Notice shall be marked on any reproduction of this 
computer software, in whole or in part.

(End of Notice)

    (2) Where it is impractical to include the Restricted Rights 
Notice on restricted computer software, the following short-form 
Notice may be used in lieu thereof:

Restricted Rights Notice--Short Form

    Use, reproduction, or disclosure is subject to restrictions set 
forth in the Long Form Notice of DOE Contract No. ____ with (name of 
Contractor).

(End of Notice)

    (3) If the software is embedded, or if it is commercially 
impractical to mark it with human readable text, then the symbol R 
and the clause date (mo/yr) in brackets or a box, a [R-mo/yr], may 
be used. This will be read to mean restricted computer software, 
subject to the rights of the Government as described in the Long 
Form Notice, in effect as of the date indicated next to the symbol. 
The symbol shall not be used to mark human readable material. In the 
event this Contract contains any variation to the rights in the Long 
Form Notice, then the contract number must also be cited.
    (4) If restricted computer software is delivered with the 
copyright notice of 17 U.S.C. 401, the software will be presumed to 
be published copyrighted computer software licensed to the 
Government without disclosure prohibitions and with unlimited 
rights, unless the Contractor includes the following statement with 
such copyright notice ``Unpublished-rights reserved under the 
Copyright Laws of the United States.''
    (i) Relationship to patents. Nothing contained in this clause 
creates or is intended to imply a license to the Government in any 
patent or is intended to be construed as affecting the scope of any 
licenses or other rights otherwise granted to the Government under 
any patent.

(End of Clause)

    Alternate I (Month and Year TBE). As prescribed in 48 CFR 
970.2704-3(b), where access to Category C-24 restricted data is 
contemplated in the performance of a contract the contracting 
officer shall insert the phrase ``and except Restricted Data in 
category C-24, 10 CFR part 725, in which DOE has reserved the right 
to receive reasonable compensation for the use of its inventions and 
discoveries, including related data and technology'' after ``laser 
isotope separation'' and before the comma in paragraph (b)(2)(ii) of 
the clause at 48 CFR 970.5227-2, Rights in Data--Technology 
Transfer, as appropriate.

(End of Clause)


970.5227-3  Technology Transfer Mission.

    As prescribed in 48 CFR 970.2770-4(a), insert the following clause:

 Technology Transfer Mission (Month and Year TBE)

    This clause has as its purpose implementation of the National 
Competitiveness Technology Transfer Act of 1989 (Sections 3131, 
3132, 3133, and 3157 of Pub. L. 101-189 and as amended by Pub. L. 
103-160, Sections 3134 and 3160). The Contractor shall conduct 
technology transfer activities with a purpose of providing benefit 
from Federal research to U.S. industrial competitiveness.
    (a) Authority. (1) In order to ensure the full use of the 
results of research and development efforts of, and the capabilities 
of, the Laboratory, technology transfer, including Cooperative 
Research and Development Agreements (CRADAs), is established as a 
mission of the Laboratory consistent with the policy, principles and 
purposes of Sections 11(a)(1) and 12(g) of the Stevenson-Wydler 
Technology Innovation Act of 1980, as amended (15 U.S.C. 3710a); 
Section 3132(b) of Pub. L. 101-189, Sections 3134 and 3160 of Pub. 
Law 103-160, and of Chapter 38 of the Patent Laws (35 U.S.C. 200 et 
seq.); Section 152 of the Atomic Energy Act of 1954, as amended (42 
U.S.C. 2182); Section 9 of the Federal Nonnuclear Energy Research 
and Development Act of 1974 (42 U.S.C. 5908); and Executive Order 
12591 of April 10, 1987.
    (2) In pursuing the technology transfer mission, the Contractor 
is authorized to conduct activities including but not limited to: 
identifying and protecting Intellectual Property made, created or 
acquired at or by the Laboratory; negotiating licensing agreements 
and assignments for Intellectual Property made, created or acquired 
at or by the Laboratory that the Contractor controls or owns; 
bailments; negotiating all aspects of and entering into CRADAs; 
providing technical consulting and personnel exchanges; conducting 
science education activities and reimbursable Work for Others (WFO); 
providing information exchanges; and making available laboratory or 
weapon production user facilities. It is fully expected that the 
Contractor shall use all of the mechanisms available to it to 
accomplish this technology transfer mission, including, but not 
limited to, CRADAs, user facilities, WFO, science education 
activities, consulting, personnel, assignments, and licensing in 
accordance with this clause.
    (b) Definitions (1) Contractor's Laboratory Director means the 
individual who has supervision over all or substantially all of the 
Contractor's operations at the Laboratory.
    (2) Intellectual Property means patents, trademarks, copyrights, 
mask works, protected CRADA information, and other forms of 
comparable property rights protected by Federal Law and other 
foreign counterparts.
    (3) Cooperative Research and Development Agreement (CRADA) means 
any agreement entered into between the Contractor as operator of the 
Laboratory, and one or more parties including at least one non-
Federal party under which the Government, through its laboratory, 
provides personnel, services, facilities, equipment, intellectual 
property, or other resources with or without reimbursement (but not 
funds to non-Federal parties) and the non-Federal parties provide 
funds, personnel, services, facilities, equipment, intellectual 
property, or other resources toward the conduct of specified 
research or development efforts which are consistent with the 
missions of the Laboratory; except that such term does not include a 
procurement contract, grant, or cooperative agreement as those terms 
are used in sections 6303, 6304, and 6305 of Title 31 of the United 
States Code.
    (4) Joint Work Statement (JWS) means a proposal for a CRADA 
prepared by the Contractor, signed by the Contractor's Laboratory 
Director or designee which describes the following:
    (i) Purpose;
    (ii) Scope of Work which delineates the rights and 
responsibilities of the Government, the Contractor and Third 
Parties, one of which must be a non-Federal party;
    (iii) Schedule for the work; and
    (iv) Cost and resource contributions of the parties associated 
with the work and the schedule.
    (5) Assignment means any agreement by which the Contractor 
transfers ownership of Laboratory Intellectual Property, subject to 
the Government's retained rights.
    (6) Laboratory Biological Materials means biological materials 
capable of replication or reproduction, such as plasmids, 
deoxyribonucleic acid molecules, ribonucleic acid molecules, living 
organisms of any sort and their progeny, including viruses, 
prokaryote and eukaryote cell lines, transgenic plants and animals, 
and any derivatives or modifications thereof or products produced 
through their use or associated biological products, made under this 
contract by Laboratory employees or through the use of Laboratory 
research facilities.
    (7) Laboratory Tangible Research Product means tangible material 
results of research which
    (i) Are provided to permit replication, reproduction, evaluation 
or confirmation of the research effort, or to evaluate its potential 
commercial utility;
    (ii) Are not materials generally commercially available; and
    (iii) Were made under this contract by Laboratory employees or 
through the use of Laboratory research facilities.
    (8) Bailment means any agreement in which the Contractor permits 
the commercial or non-commercial transfer of custody, access or use 
of Laboratory Biological Materials or Laboratory Tangible Research 
Product for a specified purpose of technology transfer or research 
and development, including without limitation evaluation, and 
without transferring ownership to the bailee.
    (c) Allowable Costs. (1) The Contractor shall establish and 
carry out its technology transfer efforts through appropriate 
organizational elements consistent with the requirements for an 
Office of Research and Technology Applications (ORTA) pursuant to 
paragraphs (b) and (c) of Section 11 of the

[[Page 13495]]

Stevenson-Wydler Technology Innovation Act of 1980, as amended (15 
U.S.C. 3710). The costs associated with the conduct of technology 
transfer through the ORTA including activities associated with 
obtaining, maintaining, licensing, and assigning Intellectual 
Property rights, increasing the potential for the transfer of 
technology, and the widespread notice of technology transfer 
opportunities, shall be deemed allowable provided that such costs 
meet the other requirements of the allowable costs provisions of 
this Contract. In addition to any separately designated funds, these 
costs in any fiscal year shall not exceed an amount equal to 0.5 
percent of the operating funds included in the Federal research and 
development budget (including Work For Others) of the Laboratory for 
that fiscal year without written approval of the contracting 
officer.
    (2) The Contractor's participation in litigation to enforce or 
defend Intellectual Property claims incurred in its technology 
transfer efforts shall be as provided in the clause entitled 
``Insurance--Litigation and Claims'' of this contract.
    (d) Conflicts of Interest--Technology Transfer. The Contractor 
shall have implementing procedures that seek to avoid employee and 
organizational conflicts of interest, or the appearance of conflicts 
of interest, in the conduct of its technology transfer activities. 
These procedures shall apply to other persons participating in 
Laboratory research or related technology transfer activities. Such 
implementing procedures shall be provided to the contracting officer 
for review and approval within sixty (60) days after execution of 
this contract. The contracting officer shall have thirty (30) days 
thereafter to approve or require specific changes to such 
procedures. Such implementing procedures shall include procedures 
to:
    (1) Inform employees of and require conformance with standards 
of conduct and integrity in connection with the CRADA activity in 
accordance with the provisions of paragraph (n)(5) of this clause;
    (2) Review and approve employee activities so as to avoid 
conflicts of interest arising from commercial utilization activities 
relating to Contractor-developed Intellectual Property;
    (3) Conduct work performed using royalties so as to avoid 
interference with or adverse effects on ongoing DOE projects and 
programs;
    (4) Conduct activities relating to commercial utilization of 
Contractor-developed Intellectual Property so as to avoid 
interference with or adverse effects on user facility or WFO 
activities of the Contractor;
    (5) Conduct DOE-funded projects and programs so as to avoid the 
appearance of conflicts of interest or actual conflicts of interest 
with non-Government funded work;
    (6) Notify the contracting officer with respect to any new work 
to be performed or proposed to be performed under the Contract for 
DOE or other Federal agencies where the new work or proposal 
involves Intellectual Property in which the Contractor has obtained 
or intends to request or elect title;
    (7) Except as provided elsewhere in this Contract, obtain the 
approval of the contracting officer for any licensing of or 
assignment of title to Intellectual Property rights by the 
Contractor to any business or corporate affiliate of the Contractor;
    (8) Obtain the approval of the contracting officer prior to any 
assignment, exclusive licensing, or option for exclusive licensing, 
of Intellectual Property to any individual who has been a Laboratory 
employee within the previous two years or to the company in which 
the individual is a principal; and
    (9) Notify non-Federal sponsors of WFO activities, or non-
Federal users of user facilities, of any relevant Intellectual 
Property interest of the Contractor prior to execution of WFOs or 
user agreements.
    (10) Notify DOE prior to evaluating a proposal by a third party 
or DOE, when the subject matter of the proposal involves an elected 
or waived subject invention under this contract or one in which the 
Contractor intends to elect to retain title under this contract.
    (e) Fairness of Opportunity. In conducting its technology 
transfer activities, the Contractor shall prepare procedures and 
take all reasonable measures to ensure widespread notice of 
availability of technologies suited for transfer and opportunities 
for exclusive licensing and joint research arrangements. The 
requirement to widely disseminate the availability of technology 
transfer opportunities does not apply to a specific application 
originated outside of the Laboratory and by entities other than the 
Contractor.
    (f) U.S. Industrial Competitiveness. (1) In the interest of 
enhancing U.S. Industrial Competitiveness, the Contractor shall, in 
its licensing and assignments of Intellectual Property, give 
preference in such a manner as to enhance the accrual of economic 
and technological benefits to the U.S. domestic economy. The 
Contractor shall consider the following factors in all of its 
licensing and assignment decisions involving Laboratory intellectual 
property where the Laboratory obtains rights during the course of 
the Contractor's operation of the Laboratory under this contract:
    (i) whether any resulting design and development will be 
performed in the United States and whether resulting products, 
embodying parts, including components thereof, will be substantially 
manufactured in the United States; or
    (ii) (A) whether the proposed licensee or assignee has a 
business unit located in the United States and whether significant 
economic and technical benefits will flow to the United States as a 
result of the license or assignment agreement; and
    (B) in licensing any entity subject to the control of a foreign 
company or government, whether such foreign government permits 
United States agencies, organizations or other persons to enter into 
cooperative research and development agreements and licensing 
agreements, and has policies to protect United States Intellectual 
Property rights.
    (2) If the Contractor determines that neither of the conditions 
in paragraphs (f)(1)(i) or (ii) of this clause are likely to be 
fulfilled, the Contractor, prior to entering into such an agreement, 
must obtain the approval of the contracting officer. The contracting 
officer shall act on any such requests for approval within thirty 
(30) days.
    (3) The Contractor agrees to be bound by the provisions of 35 
U.S.C. 204 (Preference for United States industry).
    (g) Indemnity--Product Liability. In entering into written 
technology transfer agreements, including but not limited to, 
research and development agreements, licenses, assignments and 
CRADAs, the Contractor agrees to include in such agreements a 
requirement that the U.S. Government and the Contractor, except for 
any negligent acts or omissions of the Contractor, be indemnified 
for all damages, costs, and expenses, including attorneys' fees, 
arising from personal injury or property damage occurring as a 
result of the making, using or selling of a product, process or 
service by or on behalf of the Participant, its assignees or 
licensees which was derived from the work performed under the 
agreement. The Contractor shall identify and obtain the approval of 
the contracting officer for any proposed exceptions to this 
requirement such as where State or local law expressly prohibit the 
Participant from providing indemnification or where the research 
results will be placed in the public domain.
    (h) Disposition of Income. (1) Royalties or other income earned 
or retained by the Contractor as a result of performance of 
authorized technology transfer activities herein shall be used by 
the Contractor for scientific research, development, technology 
transfer, and education at the Laboratory, consistent with the 
research and development mission and objectives of the Laboratory 
and subject to Section 12(b)(5) of the Stevenson-Wydler Technology 
Innovation Act of 1980, as amended (15 U.S.C. 3710a(b)(5)) and 
Chapter 38 of the Patent Laws (35 U.S.C. 200 et seq.) as amended 
through the effective date of this contract award or modification. 
If the net amounts of such royalties and income received from patent 
licensing after payment of patenting costs, licensing costs, 
payments to inventors and other expenses incidental to the 
administration of Subject Inventions during any fiscal year exceed 5 
percent of the Laboratory's budget for that fiscal year, 75 percent 
of such excess amounts shall be paid to the Treasury of the United 
States, and the remaining amount of such excess shall be used by the 
Contractor for the purposes as described above in this paragraph. 
Any inventions arising out of such scientific research and 
development activities shall be deemed to be Subject Inventions 
under the Contract.
    (2) The Contractor shall include as a part of its annual 
Laboratory Institutional Plan or other such annual document a plan 
setting out those uses to which royalties and other income received 
as a result of performance of authorized technology transfer 
activities herein will be applied at the Laboratory, and at the end 
of the year, provide a separate accounting for how the funds were 
actually used. Under no circumstances shall these royalties and 
income be used for an illegal augmentation of funds furnished by the 
U.S. Government.
    (3) The Contractor shall establish subject to the approval of 
the contracting officer a

[[Page 13496]]

policy for making awards or sharing of royalties with Contractor 
employees, other coinventors and coauthors, including Federal 
employee coinventors when deemed appropriate by the contracting 
officer.
    (i) Transfer to Successor Contractor. In the event of 
termination or upon the expiration of this Contract, any unexpended 
balance of income received for use at the Laboratory shall be 
transferred, at the contracting officer's request, to a successor 
contractor, or in the absence of a successor contractor, to such 
other entity as designated by the contracting officer. The 
Contractor shall transfer title, as one package, to the extent the 
Contractor retains title, in all patents and patent applications, 
licenses, accounts containing royalty revenues from such license 
agreements, including equity positions in third party entities, and 
other Intellectual Property rights which arose at the Laboratory, to 
the successor contractor or to the Government as directed by the 
contracting officer.
    (j) Technology Transfer Affecting the National Security.
    (1) The Contractor shall notify and obtain the approval of the 
contracting officer, prior to entering into any technology transfer 
arrangement, when such technology or any part of such technology is 
classified or sensitive under Section 148 of the Atomic Energy Act 
(42 U.S.C. 2168). Such notification shall include sufficient 
information to enable DOE to determine the extent that 
commercialization of such technology would enhance or diminish 
security interests of the United States, or diminish communications 
within DOE's nuclear weapon production complex. DOE shall use its 
best efforts to complete its determination within sixty (60) days of 
the Contractor's notification, and provision of any supporting 
information, and DOE shall promptly notify the Contractor as to 
whether the technology is transferable.
    (2) The Contractor shall include in all of its technology 
transfer agreements with third parties, including, but not limited 
to, CRADAs, licensing agreements and assignments, notice to such 
third parties that the export of goods and/or Technical Data from 
the United States may require some form of export control license or 
other authority from the U.S. Government and that failure to obtain 
such export control license may result in criminal liability under 
U.S. laws.
    (3) For other than fundamental research as defined in National 
Security Decision Directive 189, the Contractor is responsible to 
conduct internal export control reviews and assure that technology 
is transferred in accordance with applicable law.
    (k) Records. The Contractor shall maintain records of its 
technology transfer activities in a manner and to the extent 
satisfactory to the DOE and specifically including, but not limited 
to, the licensing agreements, assignments and the records required 
to implement the requirements of paragraphs (e), (f), and (h) of 
this clause and shall provide reports to the contracting officer to 
enable DOE to maintain the reporting requirements of Section 
12(c)(6) of the Stevenson-Wydler Technology Innovation Act of 1980, 
as amended (15 U.S.C. 3710a(c)(6)). Such reports shall be made 
annually in a format to be agreed upon between the Contractor and 
DOE and in such a format which will serve to adequately inform DOE 
of the Contractor's technology transfer activities while protecting 
any data not subject to disclosure under the Rights in Technical 
Data clause and paragraph (n) of this clause. Such records shall be 
made available in accordance with the clauses of this Contract 
pertaining to inspection, audit and examination of records.
    (l) Reports to Congress. To facilitate DOE's reporting to 
Congress, the Contractor is required to submit annually to DOE a 
technology transfer plan for conducting its technology transfer 
function for the upcoming year, including plans for securing 
Intellectual Property rights in Laboratory innovations with 
commercial promise and plans for managing such innovations so as to 
benefit the competitiveness of United States industry. This plan 
shall be provided to the contracting officer on or before October 
1st of each year.
    (m) Oversight and Appraisal. The Contractor is responsible for 
developing and implementing effective internal controls for all 
technology transfer activities consistent with the audit and record 
requirements of this Contract. Laboratory Contractor performance in 
implementing the technology transfer mission and the effectiveness 
of the Contractor's procedures will be evaluated by the contracting 
officer as part of the annual appraisal process, with input from the 
cognizant Secretarial Officer or program office.
    (n) Technology Transfer Through Cooperative Research and 
Development Agreements. Upon approval of the contracting officer and 
as provided in a DOE approved Joint Work Statement (JWS), the 
Laboratory Director, or designee, may enter into CRADAs on behalf of 
the DOE subject to the requirements set forth in this paragraph.
    (1) Review and Approval of CRADAs. (i) Except as otherwise 
directed in writing by the contracting officer, each JWS shall be 
submitted to the contracting officer for approval. The Contractor's 
Laboratory Director or designee shall provide a program mission 
impact statement and shall include an impact statement regarding 
related Intellectual Property rights known by the Contractor to be 
owned by the Government to assist the contracting officer in the 
approval determination.
    (ii) The Contractor shall also include (specific to the proposed 
CRADA), a statement of compliance with the Fairness of Opportunity 
requirements of paragraph (e) of this clause.
    (iii) Within ninety (90) days after submission of a JWS, the 
contracting officer shall approve, disapprove or request 
modification to the JWS. If a modification is required, the 
contracting officer shall approve or disapprove any resubmission of 
the JWS within thirty (30) days of its resubmission, or ninety (90) 
days from the date of the original submission, whichever is later. 
The contracting officer shall provide a written explanation to the 
Contractor's Laboratory Director or designee of any disapproval or 
requirement for modification of a JWS.
    (iv) Upon approval of a JWS, the Contractor's Laboratory 
Director or designee may submit a CRADA, based upon the approved 
JWS, to the contracting officer. The contracting officer, within 
thirty (30) days of receipt of the CRADA, shall approve or request 
modification of the CRADA. If the contracting officer requests a 
modification of the CRADA, an explanation of such request shall be 
provided to the Laboratory Director or designee.
    (v) Except as otherwise directed in writing by the contracting 
officer, the Contractor shall not enter into, or begin work under, a 
CRADA until approval of the CRADA has been granted by the 
contracting officer. The Contractor may submit its proposed CRADA to 
the contracting officer at the time of submitting its proposed JWS 
or any time thereafter. However, the contracting officer is not 
obligated to respond under paragraph (n)(1)(iv) of this clause until 
within thirty (30) days after approval of the JWS or thirty (30) 
days after submittal of the CRADA, whichever is later.
    (2) Selection of Participants. The Contractor's Laboratory 
Director or designee in deciding what CRADA to enter into shall:
    (i) Give special consideration to small business firms, and 
consortia involving small business firms;
    (ii) Give preference to business units located in the United 
States which agree that products or processes embodying Intellectual 
Property will be substantially manufactured or practiced in the 
United States and, in the case of any industrial organization or 
other person subject to the control of a foreign company or 
government, take into consideration whether or not such foreign 
government permits United States agencies, organizations, or other 
persons to enter into cooperative research and development 
agreements and licensing agreements;
    (iii) Provide Fairness of Opportunity in accordance with the 
requirements of paragraph (e) of this clause; and
    (iv) Give consideration to the Conflicts of Interest 
requirements of paragraph (d) of this clause.
    (3) Withholding of Data. (i) Data that is first produced as a 
result of research and development activities conducted under a 
CRADA and that would be a trade secret or commercial or financial 
data that would be privileged or confidential, if such data had been 
obtained from a non-Federal third party, may be protected from 
disclosure under the Freedom of Information Act as provided in the 
Stevenson-Wydler Technology Innovation Act of 1980, as amended (15 
U.S.C. 3710a(c)(7)) for a period as agreed in the CRADA of up to 
five (5)years from the time the data is first produced. The DOE 
shall cooperate with the Contractor in protecting such data.
    (ii) Unless otherwise expressly approved by the contracting 
officer in advance for a specific CRADA, the Contractor agrees, at 
the request of the contracting officer, to transmit such data to 
other DOE facilities for use by DOE or its Contractors by or on 
behalf of the Government. When data protected pursuant

[[Page 13497]]

to paragraph (n)(3)(i) of this clause is so transferred, the 
Contractor shall clearly mark the data with a legend setting out the 
restrictions against private use and further dissemination, along 
with the expiration date of such restrictions.
    (iii) In addition to its authority to license Intellectual 
Property, the Contractor may enter into licensing agreements with 
third parties for data developed by the Contractor under a CRADA 
subject to other provisions of this Contract. However, the 
Contractor shall neither use the protection against dissemination 
nor the licensing of data as an alternative to the submittal of 
invention disclosures which include data protected pursuant to 
paragraph (n)(3)(i) of this clause.
    (4) Work For Others and User Facility Programs. (i) WFO and User 
Facility Agreements (UFAs) are not CRADAs and will be available for 
use by the Contractor in addition to CRADAs for achieving 
utilization of employee expertise and unique facilities for 
maximizing technology transfer. The Contractor agrees form 
prospective CRADA participants, which are intending to substantially 
pay full cost recovery for the effort under a proposed CRADA, of the 
availability of alternative forms of agreements, i.e., WFO and UFA, 
and of the Class Patent Waiver provisions associated therewith.
    (ii) Where the Contractor believes that the transfer of 
technology to the U.S. domestic economy will benefit from, or other 
equity considerations dictate, an arrangement other than the Class 
Waiver of patent rights to the sponsor in WFO and UFAs, a request 
may be made to the contracting officer for an exception to the Class 
Waivers.
    (iii) Rights to inventions made under agreements other than 
funding agreements with third parties shall be governed by the 
appropriate provisions incorporated, with DOE approval, in such 
agreements, and the provisions in such agreements take precedence 
over any disposition of rights contained in this Contract. 
Disposition of rights under any such agreement shall be in 
accordance with any DOE class waiver (including Work for Others and 
User Class Waivers) or individually negotiated waiver which applies 
to the agreement.
    (5) Conflicts of Interest. (i) Except as provided in paragraph 
(n)(5)(iii) of this clause, the Contractor shall assure that no 
employee of the Contractor shall have a substantial role (including 
an advisory role) in the preparation, negotiation, or approval of a 
CRADA, if, to such employee's knowledge:
    (A) Such employee, or the spouse, child, parent, sibling, or 
partner of such employee, or an organization (other than the 
Contractor) in which such employee serves as an officer, director, 
trustee, partner, or employee--
    (1) holds financial interest in any entity, other than the 
Contractor, that has a substantial interest in the preparation, 
negotiation, or approval of the CRADA;
    (2) receives a gift or gratuity from any entity, other than the 
Contractor, that has a substantial interest in the preparation, 
negotiation, or approval of the CRADA; or
    (B) A financial interest in any entity, other than the 
Contractor, that has a substantial interest in the preparation, 
negotiation, or approval of the CRADA, is held by any person or 
organization with whom such employee is negotiating or has any 
arrangement concerning prospective employment.
    (ii) The Contractor shall require that each employee of the 
Contractor who has a substantial role (including an advisory role) 
in the preparation, negotiation, or approval of a CRADA certify 
through the Contractor to the contracting officer that the 
circumstances described in paragraph (n)(5)(i) of this clause do not 
apply to that employee.
    (iii) The requirements of paragraphs (n)(5)(i) and (n)(5)(ii) of 
this clause shall not apply in a case where the contracting officer 
is advised by the Contractor in advance of the participation of an 
employee described in those paragraphs in the preparation, 
negotiation or approval of a CRADA of the nature of and extent of 
any financial interest described in paragraph (n)(5)(i) of this 
clause, and the contracting officer determines that such financial 
interest is not so substantial as to be considered likely to affect 
the integrity of the Contractor employee's participation in the 
process of preparing, negotiating, or approving the CRADA.
    (o) Technology Transfer in Other Cost-Sharing Agreements. In 
conducting research and development activities in cost-shared 
agreements not covered by paragraph (n) of this clause, the 
Contractor, with prior written permission of the contracting 
officer, may provide for the withholding of data produced thereunder 
in accordance with the applicable provisions of paragraph (n)(3) of 
this clause.

(End of clause)
    Alternate I (Month and Year TBE). As prescribed in 48 CFR 
970.2770-4(b), add the following definition under paragraph (b) and 
the following new paragraph (p):
    (b)(8) Privately funded technology transfer means the 
prosecuting, maintaining, licensing, and marketing of inventions 
which are not owned by the Government (and not related to CRADAs) 
when such activities are conducted entirely without the use of 
Government funds.
    (p) Nothing in paragraphs (c) Allowable Costs, (e) Fairness of 
Opportunity, (f) U.S. Industrial Competitiveness, (g) Indemnity--
Product Liability, (h) Disposition of Income, and (i) Transfer to 
Successor Contractor of this clause are intended to apply to the 
contractor's privately funded technology transfer activities if such 
privately funded activities are addressed elsewhere in the contract.
    Alternate II (Month and Year TBE). As prescribed in 48 CFR 
970.2770-4(c), the contracting officer shall substitute the phrase 
``weapon production facility'' wherever the word ``laboratory'' 
appears in the clause.


970.5228-1  Insurance--Litigation and Claims.

    As prescribed in 48 CFR 970.2803-2, insert the following clause:

Insurance--Litigation and Claims (Month and Year TBE)

    (a) The contractor may, with the prior written authorization of 
the contracting officer, and shall, upon the request of the 
Government, initiate litigation against third parties, including 
proceedings before administrative agencies, in connection with this 
contract. The contractor shall proceed with such litigation in good 
faith and as directed from time to time by the contracting officer.
    (b) The contractor shall give the contracting officer immediate 
notice in writing of any legal proceeding, including any proceeding 
before an administrative agency, filed against the contractor 
arising out of the performance of this contract. Except as otherwise 
directed by the contracting officer, in writing, the contractor 
shall furnish immediately to the contracting officer copies of all 
pertinent papers received by the contractor with respect to such 
action. The contractor, with the prior written authorization of the 
contracting officer, shall proceed with such litigation in good 
faith and as directed from time to time by the contracting officer.
    (c)(1) Except as provided in paragraph (c)(2) of this clause, 
the contractor shall procure and maintain such bonds and insurance 
as required by law or approved in writing by the contracting 
officer.
    (2) The contractor may, with the approval of the contracting 
officer, maintain a self-insurance program; provided that, with 
respect to workers' compensation, the contractor is qualified 
pursuant to statutory authority.
    (3) All bonds and insurance required by this clause shall be in 
a form and amount and for those periods as the contracting officer 
may require or approve and with sureties and insurers approved by 
the contracting officer.
    (d) The contractor agrees to submit for the contracting 
officer's approval, to the extent and in the manner required by the 
contracting officer, any other bonds and insurance that are 
maintained by the contractor in connection with the performance of 
this contract and for which the contractor seeks reimbursement. If 
an insurance cost (whether a premium for commercial insurance or 
related to self-insurance) includes a portion covering costs made 
unallowable elsewhere in the contract, and the share of the cost for 
coverage for the unallowable cost is determinable, the portion of 
the cost that is otherwise an allowable cost under this contract is 
reimbursable to the extent determined by the contracting officer.
    (e) Except as provided in subparagraphs (g) and (h) of this 
clause, or specifically disallowed elsewhere in this contract, the 
contractor shall be reimbursed--
    (1) For that portion of the reasonable cost of bonds and 
insurance allocable to this contract required in accordance with 
contract terms or approved under this clause, and
    (2) For liabilities (and reasonable expenses incidental to such 
liabilities, including litigation costs) to third persons not 
compensated by insurance or otherwise without regard to and as an 
exception to the clause of this contract entitled, ``Obligation of 
Funds.''
    (f) The Government's liability under paragraph (e) of this 
clause is subject to the availability of appropriated funds. Nothing 
in this contract shall be construed as implying that the Congress 
will, at a later date, appropriate funds sufficient to meet 
deficiencies.

[[Page 13498]]

    (g) Notwithstanding any other provision of this contract, the 
contractor shall not be reimbursed for liabilities (and expenses 
incidental to such liabilities, including litigation costs, counsel 
fees, judgment and settlements)--
    (1) Which are otherwise unallowable by law or the provisions of 
this contract; or
    (2) For which the contractor has failed to insure or to maintain 
insurance as required by law, this contract, or by the written 
direction of the contracting officer.
    (h) In addition to the cost reimbursement limitations contained 
in DEAR 970.3102-1-2, and notwithstanding any other provision of 
this contract, the contractor's liabilities to third persons (and 
any expenses incidental to such liabilities, including litigation 
costs, counsel fees, judgments and settlements) shall not be 
reimbursed if such liabilities were caused by contractor managerial 
personnel's--
    (1) Willful misconduct,
    (2) Lack of good faith, or
    (3) Failure to exercise prudent business judgment, which means 
failure to act in the same manner as a prudent person in the conduct 
of competitive business; or, in the case of a non-profit educational 
institution, failure to act in the manner that a prudent person 
would under the circumstances prevailing at the time the decision to 
incur the cost is made.
    (i) The burden of proof shall be upon the contractor to 
establish that costs covered by paragraph (h) of this clause are 
allowable and reasonable if, after an initial review of the facts, 
the contracting officer challenges a specific cost or informs the 
contractor that there is reason to believe that the cost results 
from willful misconduct, lack of good faith, or failure to exercise 
prudent business judgment by contractor managerial personnel.
    (j)(1) All litigation costs, including counsel fees, judgments 
and settlements shall be differentiated and accounted for by the 
contractor so as to be separately identifiable. If the contracting 
officer provisionally disallows such costs, then the contractor may 
not use funds advanced by DOE under the contract to finance the 
litigation.
    (2) Punitive damages are not allowable unless the act or failure 
to act which gave rise to the liability resulted from compliance 
with specific terms and conditions of the contract or written 
instructions from the contracting officer.
    (3) The portion of the cost of insurance obtained by the 
contractor that is allocable to coverage of liabilities referred to 
in paragraph (g)(1) of this clause is not allowable.
    (4) The term ``contractor's managerial personnel'' is defined in 
clause paragraph (j) of 48 CFR 970.5245-1.
    (k) The contractor may at its own expense and not as an 
allowable cost procure for its own protection insurance to 
compensate the contractor for any unallowable or unreimbursable 
costs incurred in connection with contract performance.
    (l) If any suit or action is filed or any claim is made against 
the contractor, the cost and expense of which may be reimbursable to 
the contractor under this contract, and the risk of which is then 
uninsured or is insured for less than the amount claimed, the 
contractor shall--
    (1) Immediately notify the contracting officer and promptly 
furnish copies of all pertinent papers received;
    (2) Authorize Department representatives to collaborate with: 
In-house or DOE-approved outside counsel in settling or defending 
the claim; or counsel for the insurance carrier in settling or 
defending the claim if the amount of the liability claimed exceeds 
the amount of coverage, unless precluded by the terms of the 
insurance contract; and
    (3) Authorize Department representatives to settle the claim or 
to defend or represent the contractor in and/or to take charge of 
any litigation, if required by the Department, if the liability is 
not insured or covered by bond. In any action against more than one 
Department contractor, the Department may require the contractor to 
be represented by common counsel. Counsel for the contractor may, at 
the contractor's own expense, be associated with the Department 
representatives in any such claim or litigation.

(End of Clause)


970.5229-1  State and Local Taxes.

    As prescribed in 48 CFR 970.2904-1(b), insert the following clause 
in management and operating contracts. The requirement for the notice 
prescribed in paragraph (a) of the clause may be broadened to include 
all State and local taxes which may be claimed as allowable costs when 
considered to be appropriate.

State and Local Taxes (Month and Year TBE)

    (a) The contractor agrees to notify the contracting officer of 
any State or local tax, fee, or charge levied or purported to be 
levied on or collected from the contractor with respect to the 
contract work, any transaction thereunder, or property in the 
custody or control of the contractor and constituting an allowable 
item of cost if due and payable, but which the contractor has reason 
to believe, or the contracting officer has advised the contractor, 
is or may be inapplicable or invalid; and the contractor further 
agrees to refrain from paying any such tax, fee, or charge unless 
authorized in writing by the contracting officer. Any State or local 
tax, fee, or charge paid with the approval of the contracting 
officer or on the basis of advice from the contracting officer that 
such tax, fee, or charge is applicable and valid, and which would 
otherwise be an allowable item of cost, shall not be disallowed as 
an item of cost by reason of any subsequent ruling or determination 
that such tax, fee, or charge was in fact inapplicable or invalid.
    (b) The contractor agrees to take such action as may be required 
or approved by the contracting officer to cause any State or local 
tax, fee, or charge which would be an allowable cost to be paid 
under protest; and to take such action as may be required or 
approved by the contracting officer to seek recovery of any payments 
made, including assignment to the Government or its designee of all 
rights to an abatement or refund thereof, and granting permission 
for the Government to join with the contractor in any proceedings 
for the recovery thereof or to sue for recovery in the name of the 
contractor. If the contracting officer directs the contractor to 
institute litigation to enjoin the collection of or to recover 
payment of any such tax, fee, or charge referred to above, or if a 
claim or suit is filed against the contractor for a tax, fee, or 
charge it has refrained from paying in accordance with this article, 
the procedures and requirements of the clause entitled ``Insurance-
Litigation and Claims'' shall apply and the costs and expenses 
incurred by the contractor shall be allowable items of costs, as 
provided in this contract, together with the amount of any judgment 
rendered against the contractor.
    (c) The Government shall hold the contractor harmless from 
penalties and interest incurred through compliance with this clause. 
All recoveries or credits in respect of the foregoing taxes, fees, 
and charges (including interest) shall inure to and be for the sole 
benefit of the Government.

(End of Clause)


970.5231-1  Allowable Costs and Fee (Management and Operating 
Contracts).

    As prescribed in 48 CFR 970.3170(a), insert the following clause:

Allowable Costs and Fee (Management And Operating Contracts) (Month and 
Year TBE)

    (a) Compensation for contractor's services. Payment for the 
allowable costs as hereinafter defined, and of the fixed-fee, if 
any, as hereinafter provided, shall constitute full and complete 
compensation for the performance of the work under this contract.
    (b) Fixed-fee. The fixed-fee payable to the contractor for the 
performance of the work under this contract is $____ There shall be 
no adjustment in the amount of the contractor's fixed-fee by reason 
of differences between any estimate of cost for performance of the 
work under this contract and the actual costs for performance of 
that work.
    (c) Allowable costs. The allowable cost of performing the work 
under this contract shall be the costs and expenses that are 
actually incurred by the contractor in the performance of the 
contract work in accordance with its terms, that are necessary or 
incident thereto, and that are determined to be allowable as set 
forth in this paragraph. The determination of allowability of cost 
shall be based on:
    (1) Allowability and reasonableness in accordance with 48 CFR 
31.201-2(d) and 31.201-3;
    (2) Standards promulgated by the Cost Accounting Standards 
Board, if applicable; otherwise, generally accepted accounting 
principles and practices appropriate to the particular 
circumstances; and
    (3) Recognition of all exclusions and limitations set forth in 
this clause or elsewhere in this contract as to types or amounts of 
items of cost. Allowable costs shall not include the cost of any 
item described as unallowable in paragraph (e) of this clause except 
as indicated therein. Failure to mention an item of cost 
specifically in paragraphs (d) or (e) of this clause shall not imply 
either that it is allowable or that it is unallowable.

[[Page 13499]]

    (d) Items of allowable cost. Subject to the other provisions of 
this clause, the following items of cost of work done under this 
contract shall be allowable to the extent indicated:
    (1) Bonds and insurance, including self-insurance, as provided 
in the clause entitled, ``Insurance-Litigation and Claims.''
    (2) Communication costs, including telephone services, local and 
long-distance calls, telegrams, cablegrams, postage, and similar 
items.
    (3) Consulting services (including legal and accounting), and 
related expenses, as approved by the contracting officer, except as 
made unallowable by paragraphs (e)(16) and (e)(26).
    (4) Reasonable litigation and other legal expenses, including 
counsel fees, if incurred in accordance with the clause of the 
contract entitled, ``Insurance-Litigation and Claims'', and the DOE 
approved contractor litigation management procedures (including cost 
guidelines) as such procedures may be revised from time to time, and 
if not otherwise made unallowable in this contract.
    (5) Losses and expenses (including settlements made with the 
consent of the contracting officer) sustained by the contractor in 
the performance of this contract and certified in writing by the 
contracting officer to be reasonable, except the losses and expenses 
expressly made unallowable under other provisions of this contract.
    (6) Materials, supplies, and equipment, including freight 
transportation, material handling, inspection, storage, salvage, and 
other usual expenses incident to the procurement, use and 
disposition thereof, subject to approvals required under other 
provisions of this contract.
    (7) Patents, purchased design, and royalty payments to the 
extent expressly provided for under other provisions in this 
contract or as approved by the contracting officer, and preparation 
of invention disclosures, reports and related documents, and 
searching the art to the extent necessary to make such invention 
disclosures in accordance with any ``Patent Rights'' clause of this 
contract.
    (8) Personnel costs and related expenses incurred in accordance 
with the personnel appendix which is hereby incorporated by 
reference and made a part of this contract. It is specifically 
understood and agreed that said personnel appendix sets forth in 
detail personnel costs and related expenses to be allowable under 
this contract and is intended to document those personnel policies, 
practices and plans which have been found acceptable by the 
contracting officer. It is further understood and agreed that the 
contractor will advise DOE of any proposed changes in any matters 
covered by said policies, practices or plans which relate to this 
item of cost, and that the personnel appendix may be modified from 
time to time in writing by mutual agreement of the contractor and 
DOE without execution of an amendment to this contract for the 
purpose of effectuating any such changes in, or additions to, said 
personnel appendix as may be agreed upon by the parties. Such 
modifications shall be evidenced by execution of written numbered 
approval letters from the contracting officer or the contracting 
officer's representative. Types of personnel costs and related 
expenses to be incorporated into the personnel appendix, or 
amendments thereto, are as follows:
    (i) Salaries and wages; bonuses and incentive compensation; 
overtime, shift differential, holiday, and other premium pay for 
time worked; nonwork time, including vacations, holidays, sick, 
funeral, military, jury, witness, and voting leave; salaries and 
wages to employees in their capacity as union stewards and 
committeemen for time spent in handling grievances, or serving on 
labor management (contractor) committees, provided, however, that 
the contracting officer's approval is required in each instance of 
total compensation to an individual employee at an annual rate of 
$---- (see 48 CFR 970.3102-3-2) or more, when it is proposed that a 
total of 50 percent or more of such compensation be reimbursed under 
DOE cost-type contracts. Total compensation, as used here, includes 
only the employee's base salary, bonus, and incentive compensation 
payments;
    (ii) Legally required contributions to old-age and survivors' 
insurance, unemployment compensation plans, and workers compensation 
plans, (whether or not covered by insurance); voluntary or agree-
upon plans providing benefits for retirement, separation, life 
insurance, hospitalization, medical-surgical and unemployment 
(whether or not such plans are covered by insurance);
    (iii) Travel (except foreign travel, which requires specific 
approval by the contracting officer on a case-by-case basis); 
incidental subsistence and other allowances of contractor employees, 
in connection with performance of work under this contract 
(including new employees reporting for work and transfer of 
employees, the transfer of their household goods and effects and the 
travel and subsistence of their dependents);
    (iv) Employee relations, welfare, morale, etc.; programs 
including incentive or suggestion awards; employee counseling 
services, health or first-aid clinics; house or employee 
publications; and wellness/fitness centers;
    (v) Personnel training (except special education and training 
courses and research assignments calling for attendance at 
educational institutions which require specific approval by the 
contracting officer on a case-by-case basis); including 
apprenticeship training programs designed to improve efficiency and 
productivity of contract operations, to develop needed skills, and 
to develop scientific and technical personnel in specialized fields 
required in the contract work;
    (vi) Recruitment of personnel (including help-wanted 
advertisement), including service of employment agencies at rates 
not in excess of standard commercial rates, employment office, 
travel of prospective employees at the request of the contractor for 
employment interviews; and
    (vii) Net cost of operating plant-site cafeteria, dining rooms, 
and canteens attributable to the performance of the contract.
    (viii) Compensation of a senior executive, provided that such 
compensation does not exceed the benchmark compensation amount 
determined applicable for the contractor fiscal year by the 
Administrator, Office of Federal Procurement Policy. Costs of 
executive compensation shall be determined pursuant to 48 CFR 
31.205-6(p).
    (9) Repairs, maintenance, inspection, replacement, and disposal 
of Government-owned property and the restoration or clean-up of site 
and facilities to the extent approved by the contracting officer and 
as allowable under paragraph (f) of the clause of this contract 
entitled, ``Property.''
    (10) Subcontracts and purchase orders, including procurements 
from contractor-controlled sources, subject to approvals required by 
other provisions of this contract.
    (11) Subscriptions to trade, business, technical, and 
professional periodicals, as approved by the contracting officer.
    (12) Taxes, fees, and charges levied by public agencies which 
the contractor is required by law to pay, except those which are 
expressly made unallowable under other provisions of this contract.
    (13) Utility services, including electricity, gas, water, and 
sewerage.
    (14) Indemnification of the Pension Benefit Guaranty 
Corporation, pursuant to the Employee Retirement Income Security Act 
of 1974, in accordance with 48 CFR 31.205-6(j)(3)(iv).
    (15) Establishment and maintenance of bank accounts in 
connection with the work hereunder, including, but not limited to, 
service charges, the cost of disbursing cash, necessary guards, 
cashiers, and paymasters. If payments are made by check, facilities 
and arrangements for cashing checks may be provided without expense 
to the employees, subject to the approval of the contracting 
officer.
    (e) Items of unallowable costs. The following items of costs are 
unallowable under this contract to the extent indicated:
    (1) Advertising and public relations costs designed to promote 
the contractor or its products, including the costs of promotional 
items and memorabilia such as models, gifts and souvenirs, and the 
cost of memberships in civic and community organizations; except 
those advertising and public relations costs
    (i) Specifically required by the contract,
    (ii) Approved in advance by the contracting officer as clearly 
in furtherance of work performed under the contract,
    (iii) That arise from requirements of the contract and that are 
exclusively for recruiting personnel, acquiring scarce items for 
contract performance, disposing of scrap or surplus materials, the 
transfer of federally owned or originated technology to State and 
local governments and to the private sector, or acquisition of 
contract-required supplies and services, or
    (iv)Where the primary purpose of the activity is to facilitate 
contract performance in support of the DOE mission.
    (2) Bad debts (including expenses of collection) and provisions 
for bad debts arising out of other business of the contractor.
    (3) Proposal expenses and costs of proposals.
    (4) Bonuses and similar compensation under any other name, which 
(i) are not pursuant to an agreement between the

[[Page 13500]]

contractor and employee prior to the rendering of the services or an 
established plan consistently followed by the contract or (ii) are 
in excess of those costs which are allowable by the Internal Revenue 
Code and regulations thereunder, or (iii) provide total compensation 
to an employee in excess of reasonable compensation for the services 
rendered.
    (5) Central and branch office expenses of the contractor, except 
as specifically set forth in the contract.
    (6) Commissions, bonuses, and fees (under whatever name) in 
connection with obtaining or negotiating for a Government contract 
or a modification thereto, except when paid to bona fide employees 
or bona fide established selling organizations maintained by the 
contractor for the purpose of obtaining Government business.
    (7) Contingency reserves, provisions for.
    (8) Contributions and donations, including cash, contractor-
owned property and services, regardless of the recipient.
    (9) Depreciation in excess of that calculated by application of 
methods approved for use by the Internal Revenue Code of 1954, as 
amended, including the straight-line declining balance (using a rate 
not exceeding twice the rate which would have been used had the 
depreciation been computed under the straight line method), or sum-
of-the-years digits method, on the basis of expected useful life, to 
the cost of acquisition of the related fixed assets less estimated 
salvage or residual value at the end of the expected useful life.
    (10) Dividend provisions or payments and, in the case of sole 
proprietors and partners, distributions of profit.
    (11) Entertainment, including costs of amusement, diversion, 
social activities; and directly associated costs such as tickets to 
shows or sports events, meals, lodging, rentals, transportation, and 
gratuities; costs of membership in any social, dining or country 
club or organization.
    (12) Fines and penalties, except, with respect to civil fines 
and penalties only, if the contractor demonstrates to the 
contracting officer that--
    (i) Such a civil fine or penalty was incurred as a result of 
compliance with specific terms and conditions of the contract or 
written instructions from the contracting officer; or
    (ii) Such a civil fine or penalty was imposed without regard to 
fault and could not have been avoided by the exercise of due care.
    (13) Government-furnished property, except to the extent that 
cash payment therefor is required pursuant to procedures of DOE 
applicable to transfers of such property to the contractor from 
others.
    (14) Insurance (including any provisions of a self-insurance 
reserve) on any person where the contractor under the insurance 
policy is the beneficiary, directly or indirectly, and insurance 
against loss of or damage to Government property as defined in 
Clause * * *
    (15) Interest, however represented (except (i) Interest incurred 
in compliance with the contract clause entitled ``State and local 
Taxes'' or, (ii) imputed interest costs relating to leases 
classified and accounted for as capital leases under generally 
accepted accounting principles (GAAP), provided that the decision to 
enter into a capital leasing arrangement has been specifically 
authorized and approved by the DOE in accordance with applicable 
procedures and such interest costs are recorded in an appropriately 
specified DOE account established for such purpose), bond discounts 
and expenses, and costs of financing and refinancing operations.
    (16) Legal, accounting, and consulting services and related 
costs incurred in connection with the preparation and issuance of 
stock, rights, organization or reorganization, prosecution or 
defense of antitrust suits, prosecution of claims against the United 
States, contesting actions of proposed actions of the United States, 
and prosecution or defense of patent infringement litigation (except 
where incurred pursuant to the contractor's performance of the 
Government-funded technology transfer mission and in accordance with 
the ``Insurance--Litigation and Claims'' clause).
    (17) Losses or expenses: (i) On, or arising from the sale, 
exchange, or abandonment of capital assets, including investments;
    (ii) On other contracts, including the contractor's contributed 
portion under cost-sharing contracts;
    (iii) In connection with price reductions to and discount 
purchases by employees and others from any source;
    (iv) That are compensated for by insurance or otherwise or which 
would have been compensated for by insurance required by law or by 
written direction of the contracting officer but which the 
contractor failed to procure or maintain through its own fault or 
negligence;
    (v) That result from willful misconduct or lack of good faith on 
the part of any of the contractor's managerial personnel (as that 
term is defined in the clause of this contract entitled, 
``Property'');
    (vi) That represent liabilities to third persons that are not 
allowable under the clause of this contract entitled, ``Insurance--
Litigation and Claims''; or
    (vii) That represent liabilities to third persons for which the 
contractor has expressly accepted responsibility under other terms 
of this contract.
    (18) Maintenance, depreciation, and other costs incidental to 
the contractor's idle or excess facilities (including machinery and 
equipment), other than reasonable standby facilities.
    (19) Membership in trade, business, and professional 
organizations, except as approved by the contracting officer.
    (20) Precontract costs, except as expressly made allowable under 
other provisions in this contract.
    (21) Research and development costs, unless specifically 
provided for elsewhere in this contract.
    (22) Selling cost, except to the extent they are determined to 
be reasonable and to be allocable to the contract. Allocability of 
selling costs to the contract will be determined in the light of 
reasonable benefit to the agency program arising from such 
activities as technical, consulting, demonstration, and other 
services performed for such purposes as applying or adapting the 
contractor's product for agency use.
    (23) Storage of records pertaining to this contract after 
completion of operations under this contract, irrespective of 
contractual or statutory requirement for the preservation of 
records.
    (24) Taxes, fees, and charges in connection with financing, 
refinancing, or refunding operations, including listing of 
securities on exchanges, taxes which are paid contrary to the clause 
entitled ``State and Local Taxes,'' federal taxes on net income and 
excess profits, special assessments on land which represent capital 
improvement and taxes on accumulated funding deficiencies of, or 
prohibited transactions involving, employee deferred compensation 
plans pursuant to section 4971 or section 4975 of the Internal 
Revenue Code of 1954, as amended, respectively.
    (25) Travel expenses of the officers, proprietors, executives, 
administrative heads and other employees of the contractor's central 
office or branch office organizations concerned with the general 
management, supervision, and conduct of the contractor's business as 
a whole, except to the extent that particular travel is in 
connection with the contract and approved by the contracting 
officer.
    (26) Salary or other compensation (and expenses related thereto) 
of any individual employed under this contract as a consultant or in 
another comparable employment capacity who is an employee of another 
organizational and concurrently performing work on a full-time 
annual basis for that organization under a cost-type contract with 
DOE, except to the extent that cash payment therefor is required 
pursuant to the provisions of this contract or procedure of DOE 
applicable to the borrowing of such an individual from another cost-
type contractor.
    (27) Travel by commercial aircraft or travel by other than 
common carrier that is not necessary for the performance of this 
contract or the cost of which exceeds the lesser of the lowest 
available commercial discount airfare, Government contract airfare, 
or customary standard (coach or equivalent) commercial airfare. 
Airfare costs in excess of the lowest such airfare are unallowable, 
except when such accommodations: Require circuitous routing; require 
travel during unreasonable hours; excessively prolong travel; result 
in increased cost that would offset transportation savings; would 
offer accommodations not reasonably adequate for the physical or 
medical needs of the traveler; or are not reasonably available to 
meet necessary mission requirements. Individual contractor 
determinations of nonavailability of commercial discount airfare or 
Government contract airfare will not be contested by DOE when the 
contractor can reasonably demonstrate such nonavailability or, on an 
overall basis, that established policies and procedures result in 
the routine use of the lowest available airfare. However, in order 
for air travel costs in excess of customary standard airfare to be 
allowable, the contractor must justify and document the applicable 
condition(s) set forth above.
    (28) Special construction industry ``funds'' financed by 
employer contributions for such purposes as methods and materials 
research, public and industry relations, market

[[Page 13501]]

development, and disaster relief, except as specifically provided 
elsewhere in this contract.
    (29) Late premium payment charges related to employee deferred 
compensation plan insurance.
    (30) Facilities capital cost of money. (CAS 414 and CAS 417).
    (31) Contractor costs incurred to influence either directly or 
indirectly--
    (i) Legislative action on any matter pending before Congress, a 
State legislature, or a legislative body of a political subdivision 
of a State; or
    (ii) Federal, State, or executive body of a political 
subdivision of a State action on regulatory and contract matters as 
described in the ``Political Activity Cost Prohibition'' clause of 
this contract.
    (32) Commercial automobile rental expenses unless approved by 
the contracting officer.
    (33) Costs incurred in connection with any criminal, civil or 
administrative proceeding commenced by the Federal Government or a 
State, local or foreign government, as provided in the clause titled 
``Cost prohibitions related to legal and other proceedings'' 
incorporated elsewhere in this contract.
    (34) Costs of alcoholic beverages.
    (35) Contractor employee travel costs incurred for lodging, 
meals and incidental expenses which exceed on a daily basis the 
applicable maximum per diem rates in effect for Federal civilian 
employees at the time of travel. When the applicable maximum per 
diem rate is inadequate due to special or unusual situations, the 
contractor may pay employees for actual expenses in excess of such 
per diem rate limitation. To be allowable, however, such payments 
must be properly authorized by an officer or appropriate official of 
the contractor and shall not exceed the higher amounts that may be 
authorized for Federal civilian employees in a similar situation.
    Alternate I (Month and Year TBE). As prescribed in 48 CFR 
970.3170(a)(1), paragraph (b) of the basic clause may be 
appropriately modified to address situations where the fee is for a 
period of time or different fees are allowed for various phases of 
the work.
    Alternate II (Month and Year TBE). As prescribed in 48 CFR 
970.3170(a)(2), the lead sentence in subparagraph (d)(8) of the 
basic clause may be modified, in appropriate circumstances, to read 
as follows:
    ``Personnel costs and related expenses incurred in accordance 
with established policies, programs, and schedules, and any changes 
thereto during the contract term, applicable to the contractor's 
private operations and consistently followed throughout its 
organization, as approved by the contracting officer, such as''.
    Alternate III (Month and Year TBE). As prescribed in 48 CFR 
970.3170(a)(3), if the contractor will perform construction, add the 
following to paragraph (d) of the basic clause:
    (16) Camp operations, to the extent approved by the contracting 
officer.
    (17) Maintenance, inspection, repair, replacement, and 
transportation of construction plant and equipment to the extent not 
covered by rentals or insurance and as provided in rental agreements 
approved by the contracting officer.
    (18) Rental for (i) construction plant and equipment rented by 
the contractor from others at rates and under written agreements 
approved by the contracting officer, and (ii) construction plant and 
equipment owned and furnished by the contractor under this contract.
    Alternate IV (Month and Year TBE). As prescribed in 48 CFR 
970.3170(a)(4), if no contractor-owned equipment is being utilized 
in the performance of the contract, paragraph (e)(18) of the basic 
clause may be omitted and the remaining subparagraphs renumbered 
accordingly.
    Alternate V (Month and Year TBE). As prescribed in 48 CFR 
970.3170(a)(5), in contracts with for-profit contractors, add the 
following to paragraph (e):
    (36) Notwithstanding any other provision of this contract, the 
costs of bonds and insurance are unallowable to the extent they are 
incurred to protect and indemnify the contractor and/or 
subcontractor against otherwise unallowable costs, unless such 
insurance or bond is required by law, the express terms of this 
contract, or is authorized in writing by the contracting officer. 
The cost of commercial insurance to protect the contractor against 
the costs of correcting its own defects in materials or workmanship 
is an unallowable cost.
    (37) Costs of gifts; however, gifts do not include awards for 
performance or awards made in recognition of employee achievements 
pursuant to an established contractor plan or policy.
    (38) The costs of recreation, registration fees of employees 
participating in competitive fitness promotions, team activities, 
and sporting events except for the costs of employees' participation 
in company sponsored intramural sports teams or employee 
organizations designed to improve company loyalty, team work, or 
physical fitness.

(End of Clause)


970.5231-2  Political activity cost prohibition.

    As prescribed in 48 CFR 970.3170(b), insert the following clause:

Political Activity Cost Prohibition (Month and Year TBE)

    (a) Pursuant to the allowable cost provisions established 
elsewhere under the contract, costs associated with the following 
activities are not reimbursable under the contract:
    (1) Attempts to influence the outcome of any Federal, State, or 
local election, referendum, initiative, or similar procedure, 
through in-kind or cash contributions, endorsements, publicity, or 
similar activities;
    (2) Establishing, administering, contributing to, or paying the 
expenses of a political party, campaign, political action committee, 
or other organization established for the purpose of influencing the 
outcomes of elections;
    (3) Any attempt to influence (i) the introduction of Federal or 
State legislation, or (ii) the enactment or modification of any 
pending Federal or State legislation through communication with any 
member or employee of the Congress or State legislature (including 
efforts to influence state or local officials to engage in similar 
lobbying activity), or with any government official or employee in 
connection with a decision to sign or veto enrolled legislation;
    (4) Any attempt to influence (i) the introduction of Federal or 
State legislation, or (ii) the enactment or modification of any 
pending Federal or State legislation by preparing, distributing or 
using publicity or propaganda, or by urging members of the general 
public or any segment thereof to contribute to or participate in any 
mass demonstration, march, rally, fund raising drive, lobbying 
campaign or letter writing or telephone campaign; or
    (5) Legislative liaison activities, including attendance at 
legislative sessions or committee hearings, gathering information 
regarding legislation, and analyzing the effect of legislation, when 
such activities are carried on in support of or in knowing 
preparation for an effort to engage in unallowable activities.
    (6) Contractor costs incurred to influence (directly or 
indirectly) Federal, State, or local executive branch action on 
regulatory and contract matters.
    (b) Costs of the following activities are excepted from the 
coverage of paragraph (a) of this clause; provided that the 
resultant contract costs are reasonable and otherwise comply with 
the allowable cost provisions of the contract:
    (1) Providing Members of Congress, their staff members or staff 
of cognizant legislative committees, in response to a request 
(written or oral, prior or contemporaneous) from Members of 
Congress, their staff members or staff of cognizant legislative 
committees, or as otherwise directed by the contracting officer, 
information or expert advice of a factual technical, or scientific 
nature, with respect to topics directly related to the performance 
of the contract proposed legislation. In providing this information 
or expert advice, the contractor shall indicate to the recipient 
that it is not presenting the views of DOE. Reasonable costs for 
transportation, lodging or meals incurred by contractor employees 
for the purpose of providing such information or expert advice shall 
also be reimbursable, provided the request for such information or 
expert advice is a prior written request signed by a Member of 
Congress, and provided such costs also comply with the allowable 
cost provisions of the contract.
    (2) Providing State legislatures or subdivisions thereof, their 
staff members, or staff of cognizant legislative committees, in 
response to a prior written request from a State legislator, or as 
otherwise directed by the contracting officer, information or expert 
advice of factual, technical, or scientific nature, with respect to 
topics directly related to the performance of the contract or 
proposed legislation. In providing this information or expert 
advice, the contractor shall indicate to the recipient that it is 
not presenting the views of DOE. Reasonable costs for 
transportation, lodging, or meals incurred by contractor employees 
shall be

[[Page 13502]]

reimbursable, provided such costs also comply with the allowable 
costs provision of the contract.
    (3) Any lobbying made unallowable under subparagraph (a)(3) 
above to influence State legislation in order to directly reduce 
contract cost, or to avoid material impairment of the contractor's 
authority to perform the contract if authorized by the contracting 
officer.
    (4) Any activity specifically authorized by statute to be 
undertaken with funds from the contract.
    (c) Unallowable lobbying costs incurred, if any, shall not be 
charged to DOE, paid for with DOE funds or recorded as allowable 
cost in DOE's system of accounts.
    (d) The contractor's annual certification, submitted as part of 
its annual claim (i.e., Voucher Accounting for Net Expenditures 
Accrued required under the clause titled ``Payments and Advances'') 
or cost incurred statement, that the costs claimed are allowable 
under the contract, shall also serve as the contractor's 
certification that the requirements and standards of this clause 
have been complied with.
    (e) The contractor shall maintain adequate records to 
demonstrate that the annual certifications of claimed costs as being 
allowable comply with the requirements of this clause.
    (f) Time logs, calendars, or similar records shall not be 
created for purposes of complying with this clause during any 
particular calendar month when: (1) An employee engages in 
legislative liaison activities (as delineated in paragraphs (a) and 
(b) of this clause) 25 percent or less of the employees's 
compensated hours of employment during that calendar month, and (2) 
within the preceding five-year period, the contractor has not 
materially misstated allowable or unallowable costs of any nature, 
including legislative liaison costs. When conditions (f)(1) and (2) 
of this clause are met, the contractor is not required to establish 
records to support the allowability of claimed costs in addition to 
records already required or maintained. Also, when conditions (f) 
(1) and (2) of this clause are met, the absence of time logs, 
calendars, or similar records will not serve as a basis for 
disallowing costs by contesting estimates of legislative liaison 
activity time spent by employees during any calendar month.
    (g) During contract performance, the contractor should resolve, 
in advance, any significant questions or disagreements between the 
contractor and DOE concerning compliance with this clause.
    (h) In providing information or expert advice under paragraph 
(b)(1) and (b)(2) of this clause, the contractor shall advise the 
contracting officer in advance or as soon as practicable.

(End of Clause)


970.5231-3  Cost Prohibitions Related to Legal and Other Proceedings.

    As prescribed in 48 CFR 970.3170(c), insert the following clause:

Cost Prohibitions Related to Legal and Other Proceedings (Month and 
Year TBE)

    (a) Definitions. Conviction, as used in this section, means a 
judgment or conviction of a criminal offense by any court of 
competent jurisdiction, whether entered upon a verdict or a plea, 
including a conviction due to a plea of nolo contendere.
    Costs include, but are not limited to, administrative and 
clerical expenses; the cost of legal services, whether performed by 
in-house or private counsel; the costs of the services of 
accountants, consultants, or others retained by the contractor to 
assist it; all elements of compensation, related costs, and expenses 
of employees, officers and directors; and any similar costs incurred 
before, during, and after commencement of a proceeding which bears a 
direct relationship to the proceeding.
    Fraud, as used herein, means: (i) Acts of fraud or corruption or 
attempts to defraud the Government or to corrupt its agents,
    (ii) Acts which constitute a cause for debarment or suspension 
under 48 CFR 9.406-(2)(a) and 48 CFR 9.407-(2)(a), and
    (iii) Acts which violate the False Claims Act, 31 U.S.C. 3729-
3731, or the Anti-kickback Act, 41 U.S.C. 51 and 54.
    Penalty does not include restitution, reimbursement, or 
compensatory damages.
    Proceeding includes an investigation.
    (b) Except as otherwise described in this section, costs 
incurred in connection with any proceeding brought by a third party 
in the name of the United States under the False Claims Act, 31 
U.S.C. 3730, or costs incurred in connection with any criminal, 
civil or administrative proceeding by the Federal Government, or a 
State, local or foreign government, are not allowable if the 
proceeding relates to a violation of, or failure to comply with a 
Federal, State, local or foreign statute or regulation by the 
contractor, and results in any of the following dispositions:
    (1) In a criminal proceeding, conviction.
    (2) In a civil or administrative proceeding involving an 
allegation of fraud or similar misconduct, a determination of 
contractor liability.
    (3) In the case of any civil or administrative proceeding, the 
imposition of a monetary penalty.
    (4) A final decision by an appropriate Federal official to debar 
or suspend the contractor, to rescind or void a contract, or to 
terminate a contract for default by reason of a violation of or 
failure to comply with a law or regulation.
    (5) A disposition by consent or compromise, if the action could 
have resulted in any of the dispositions described in paragraphs (b) 
(1), (2), (3) or (4) of this section.
    (6) Not covered by paragraphs (b)(1) through (5) of this 
section, but where the underlying alleged contractor misconduct was 
the same as that which led to a different proceeding whose costs are 
unallowable by reason of paragraphs (b)(1) through (5) of this 
section.
    (c)(1) If a proceeding referred to in paragraph (b) of this 
clause is commenced by the Federal Government and is resolved by 
consent or compromise pursuant to an agreement entered into by the 
contractor and the Federal Government, then the costs incurred by 
the contractor in connection with such proceeding that are otherwise 
unallowable under paragraph (b) of this clause may be allowed to the 
extent specifically provided in such agreement.
    (2) In the event of a settlement of any proceeding brought by a 
third party under the False Claims Act in which the United States 
did not intervene, reasonable costs incurred by the contractor in 
connection with such a proceeding that are not otherwise unallowable 
by regulation or by separate agreement with the United States, may 
be allowed if the contracting officer, in consultation with legal 
counsel, determines that there was very little likelihood that the 
third party would have been successful on the merits.
    (d) If a proceeding referred to in paragraph (b) of this clause 
is commenced by a State, local or foreign government, the 
contracting officer may allow the costs incurred in such proceeding, 
provided the Senior Procurement Executive determines that the costs 
were incurred as a result of compliance with a specific term or 
condition of the contract, or specific written direction of the 
contracting officer.
    (e) Costs incurred in connection with a proceeding described in 
paragraph (b) of this section, but which are not made unallowable by 
that paragraph, may be allowed by the contracting officer only to 
the extent that:
    (1) The total costs incurred are reasonable in relation to the 
activities required to deal with the proceeding and the underlying 
cause of action;
    (2) Payment of the costs incurred, as allowable and allocable 
contract costs, is not prohibited by any other provision(s) of this 
contract;
    (3) The costs are not otherwise recovered from the Federal 
Government or a third party, either directly as a result of the 
proceeding or otherwise; and
    (4) The amount of costs allowed does not exceed 80 percent of 
the total costs incurred and otherwise allowable under the contract. 
Such amount that may be allowed (up to the 80 percent limit) shall 
not exceed the percentage determined by the contracting officer to 
be appropriate, considering the complexity of procurement 
litigation, generally accepted principles governing the award of 
legal fees in civil actions involving the United States as a party, 
and such other factors as may be appropriate. The amount of 
reimbursement allowed for legal costs in connection with any 
proceeding described in subparagraph (c)(2) shall be the amount 
determined to be reasonable by the contracting officer but shall not 
exceed 80 percent of otherwise allowable costs incurred. Agreements 
reached under paragraph (c) of this subsection shall be subject to 
this limitation. If, however, an agreement explicitly states the 
amount of otherwise allowable incurred legal fees and limits the 
allowable recovery to 80 percent or less of the stated legal fees, 
no additional limitation need be applied.
    (f) Contractor costs incurred in connection with the defense of 
suits brought by employees or ex-employees of the contractor under 
section 2 of the Major Fraud Act of 1988, including the cost of all 
relief necessary to make such employee whole, where the contractor 
was found liable or settled, are unallowable.

[[Page 13503]]

    (g) Costs which may be unallowable under this clause, including 
directly associated costs, shall be differentiated and accounted for 
by the contractor so as to be separately identifiable. During the 
pendency of any proceeding covered by paragraphs (b) and (f) of this 
section, the contracting officer shall generally withhold payment 
and not authorize the use of funds advanced under the contract for 
the payment of such costs. However, the contracting officer may, in 
appropriate circumstances, provide for conditional payment upon 
provision of adequate security, or other adequate assurance, and 
agreements by the contractor to repay all unallowable costs, plus 
interest, if the costs are subsequently determined to be 
unallowable.


970.5231-4  Preexisting Conditions.

    As prescribed in 48 CFR 970.3170(d), insert the following clause:

Preexisting Conditions (Month and Year TBE)

    (a) The Department of Energy agrees to reimburse the contractor, 
and the contractor shall not be held responsible, for any liability 
(including without limitation, a claim involving strict or absolute 
liability and any civil fine or penalty), expense, or remediation 
cost, but limited to those of a civil nature, which may be incurred 
by, imposed on, or asserted against the contractor arising out of 
any condition, act, or failure to act which occurred before the 
contractor assumed responsibility on [Insert date contract began]. 
To the extent the acts or omissions of the contractor cause or add 
to any liability, expense or remediation cost resulting from 
conditions in existence prior to [Insert date contract began], the 
contractor shall be responsible in accordance with the terms and 
conditions of this contract.
    (b) The obligations of the Department of Energy under this 
clause are subject to the availability of appropriated funds.

(End of Clause)

    Alternate I (Month and Year TBE). As prescribed in 48 CFR 
970.3170(d)(1), in contracts with incumbent management and operating 
contractors, substitute the following for paragraph (a) of the basic 
clause:
    (a) Any liability, obligation, loss, damage, claim (including 
without limitation, a claim involving strict or absolute liability), 
action, suit, civil fine or penalty, cost, expense or disbursement, 
which may be incurred or imposed, or asserted by any party and 
arising out of any condition, act or failure to act which occurred 
before [Insert date this clause was included in contract], in 
conjunction with the management and operation of [Insert name of 
facility], shall be deemed incurred under Contract No. [Insert 
number of prior contract].
    Alternate II (Month and Year TBE). As prescribed in 48 CFR 
970.3170(d)(2), add the following paragraph (c) to the basic clause 
in contracts with management and operating contractors not 
previously working at that particular site or facility:
    (c) The contractor has the duty to inspect the facilities and 
sites and timely identify to the contracting officer those 
conditions which it believes could give rise to a liability, 
obligation, loss, damage, penalty, fine, claim, action, suit, cost, 
expense, or disbursement or areas of actual or potential 
noncompliance with the terms and conditions of this contract or 
applicable law or regulation. The contractor has the responsibility 
to take corrective action, as directed by the contracting officer 
and as required elsewhere in this contract.

(End of Clause)

970.5232-1  Reduction or suspension of advance, partial, or progress 
payments upon finding of substantial evidence of fraud.

As prescribed in 48 CFR 970.3200-1-1, insert the following clause:
    Reduction or Suspension of Advance, Partial, or Progress 
Payments (Month and Year TBE)
    (a) The contracting officer may reduce or suspend further 
advance, partial, or progress payments to the contractor upon a 
written determination by the Senior Procurement Executive that 
substantial evidence exists that the contractor's request for 
advance, partial, or progress payment is based on fraud.
    (b) The contractor shall be afforded a reasonable opportunity to 
respond in writing.

(End of Clause)

970.5232-2  Payments and Advances.

    As prescribed in 48 CFR 970.3204-3, insert the following clause:

Payments And Advances (Month and Year TBE)

    (a) Installments of fixed-fee. Ninety percent (90%) of the 
fixed-fee shall become due and payable in periodic installments in 
amounts based on the proportion of the work then completed, as 
determined by the contracting officer, and the balance upon 
completion and acceptance of all work under this contract. Fixed-fee 
payments shall be made by direct payment or withdrawn from funds 
advanced or available under this contract, as determined by the 
contracting officer. The contracting officer may offset against any 
such fee payment, the amounts owed to the Government by the 
contractor, including any amounts owed for disallowed costs under 
this contract. No fixed-fee payment may be withdrawn against the 
letter-of-credit without prior written approval of the contracting 
officer.
    (b) Payments on Account of Allowable Costs. The contracting 
officer and the contractor shall agree as to the extent to which 
payment for allowable costs or payments for other items specifically 
approved in writing by the contracting officer (for example, 
negotiated fixed amounts) shall be made from advances of Government 
funds. When pension contributions are paid by the contractor to the 
retirement fund less frequently than quarterly, accrued costs 
therefor shall be excluded from costs for payment purposes until 
such costs are paid. If pension contribution are paid on a quarterly 
or more frequent basis, accrual therefor may be included in costs 
for payment purposes, provided that they are paid to the fund within 
30 days after the close of the period covered. If payments are not 
made to the fund within such 30-day period, pension contribution 
costs shall be excluded from cost for payment purposes until payment 
has been made.
    (c) Special bank account-- use. All advances of Government funds 
shall be withdrawn pursuant to a letter of credit in favor of the 
bank or, in the option of the Government, shall be made by check 
payable to the contractor, and shall be deposited only in the 
Special Bank Account referred to in the Agreement for Special Bank 
Account, which is attached hereto and incorporated into this 
contract as an appendix. The contractor shall likewise deposit in 
the Special Bank Account any other revenues received by the 
contractor in connection with the work under this contract. No part 
of the funds in the Special Bank Account shall be (1) mingled with 
any funds of the contractor or (2) used for a purpose other than 
that of making payments for costs allowable under this contract or 
payments for other items specifically approved in writing by the 
contracting officer. If the contracting officer shall at any time 
determine that the balance on such bank account exceeds the 
contractor's current needs, the contractor shall promptly make such 
disposition of the excess as the contracting officer may direct.
    (d) Title to funds advanced. Title to the unexpended balance of 
any funds advanced and of any bank account established pursuant to 
this clause shall remain in the Government and be superior to any 
claim or lien of the bank of deposit or others. It is understood 
that an advance to the contractor hereunder is not a loan to the 
contractor, and will not require the payment of interest by the 
contractor, and that the contractor acquires no right, title or 
interest in or to such advance other than the right to make 
expenditures therefrom, as provided in this clause.
    (e) Financial settlement. The Government shall promptly pay to 
the contractor the unpaid balance of allowable costs (or other items 
specifically approved in writing by the contracting officer) and 
fixed fee upon termination of the work, expiration of the term of 
the contract, or completion of the work and its acceptance by the 
Government after (1) compliance by the contractor with DOE's patent 
clearance requirements, and (2) the furnishing by the contractor of:
    (i) An assignment of the contractor's rights to any refunds, 
rebates, allowances, accounts receivable, or other credits 
applicable to allowable costs under the contract;
    (ii) A closing financial statement;
    (iii) The accounting for Government-owned property required by 
the clause entitled ``Property;'' and
    (iv) A release discharging the Government, its officers, agents, 
and employees from all liabilities, obligations, and claims arising 
out of or under this contract subject only to the following 
exceptions:
    (A) Specified claims in stated amounts or in estimated amounts 
where the amounts are not susceptible to exact statement by the 
contractor;
    (B) Claims, together with reasonable expenses incidental 
thereto, based upon

[[Page 13504]]

liabilities of the contractor to third parties arising out of the 
performance of this contract; provided that such claims are not 
known to the contractor on the date of the execution of the release; 
and provided further that the contractor gives notice of such claims 
in writing to the contracting officer promptly, but not more than 
one (1) year after the contractor's right of action first accrues. 
In addition, the contractor should provide prompt notice to the 
contracting officer of all potential claims under this clause, 
whether in litigation or not (see also 48 CFR 970.5228-1, 
Insurance--Litigation and Claims); and
    (C) Claims for reimbursement of costs (other than expenses of 
the contractor by reason of any indemnification of the Government 
against patent liability), including reasonable expenses incidental 
thereto, incurred by the contractor under the provisions of this 
contract relating to patents.
    In arriving at the amount due the contractor under this clause, 
there shall be deducted, any claim which the Government may have 
against the contractor in connection with this contract, and 
deductions due under the terms of this contract, and not otherwise 
recovered by or credited to the Government. The unliquidated balance 
of the Special Bank Account may be applied to the amount due and any 
balance shall be returned to the Government forthwith.
    (f) Claims. Claims for credit against funds advanced for payment 
shall be accompanied by such supporting documents and justification 
as the contracting officer shall prescribe.
    (g) Discounts. The contractor shall take and afford the 
Government the advantage of all known and available cash and trade 
discounts, rebates, allowances, credits, salvage, and commissions 
unless the contracting officer finds that action is not in the best 
interest of the Government.
    (h) Revenues. All revenues other than the contractor's fixed fee 
or fees, if any, accruing to the contractor in connection with the 
work under this contract shall be Government property and shall be 
deposited in the Special Bank Account to be available for payment of 
allowable cost under this contract.
    (i) Direct payment of charges. The Government reserves the 
right, upon ten days written notice from the contracting officer to 
the contractor, to pay directly to the persons concerned, all 
amounts due which otherwise would be allowable under this contract. 
Any payment so made shall discharge the Government of all liability 
to the contractor therefor.
    Alternate I (Month and Year TBE). As prescribed in 48 CFR 
970.3204-3(a), if a separate fixed-fee is provided for a separate 
item of work, paragraph (a) of the basic clause should be modified 
to permit payment of the entire fixed-fee upon completion of that 
item.
    Alternate II (Month and Year TBE). As prescribed in 48 CFR 
970.3204-3(b), when total available fee provisions are used, replace 
paragraph (a) of the basic clause with the following paragraph (a):
    (a) Payment of Base Fee and Award Fee. The base fee amount, if 
any, is payable in equal monthly installments. Total available fee 
amount earned is payable following the FDO's issuing a Determination 
of Total Available Fee Amount Earned in accordance with the clause 
of this contract entitled ``Total Available Fee: Base Fee Amount and 
Performance Fee Amount.'' Base fee amount and total available fee 
amount earned payments shall be made by direct payment or withdrawn 
from funds advanced or available under this contract, as determined 
by the contracting officer. The contracting officer may offset 
against any such fee payment the amounts owed to the Government by 
the contractor, including any amounts owed for disallowed costs 
under this contract. No base fee amount or total available fee 
amount earned payment may be withdrawn against the payments cleared 
financing arrangement with the prior written approval of the 
contracting officer.
    Alternate III (Month and Year TBE). As prescribed in 48 CFR 
970.3204-3(c), the following paragraph (j) shall be included in 
management and operating contracts with integrated contractors:
    (j) Review and approval of costs incurred. The contractor shall 
prepare and submit annually as of September 30, a voucher for the 
total of net expenditures accrued (i.e., net costs incurred) for the 
period covered by the voucher, and DOE, after audit and appropriate 
adjustment, will approve such voucher. This approval by DOE will 
constitute an acknowledgment by DOE that the net costs incurred are 
allowable under the contract and that they have been recorded in the 
accounts maintained by the contractor in accordance with DOE 
accounting policies, but will not relieve the contractor of 
responsibility for DOE's assets in its care, for appropriate 
subsequent adjustments, or for errors later becoming known to DOE.

970.5232-3  Accounts, Records, and Inspection.

    As prescribed in 48 CFR 970.3270(a), insert the following clause:

Accounts, Records, and Inspection (Month and Year TBE)

    (a) Accounts. The contractor shall maintain a separate and 
distinct set of accounts, records, documents, and other evidence 
showing and supporting all allowable costs incurred, revenues or 
other applicable credits, negotiated fixed amounts, fixed-fee 
accruals, and the receipt, use, and disposition of all Government 
property coming into the possession of the contractor under this 
contract. The system of accounts employed by the contractor shall be 
satisfactory to DOE and in accordance with generally accepted 
accounting principles consistently applied.
    (b) Inspection and audit of accounts and records. All books of 
account and records relating to this contract shall be subject to 
inspection and audit by DOE at all reasonable times, before and 
during the period of retention provided for in (d) below, and the 
contractor shall afford DOE proper facilities for such inspection 
and audit.
    (c) Audit of subcontractors' records. The contractor also 
agrees, with respect to any subcontracts (including fixed-price or 
unit-price subcontracts or purchase orders) where, under the terms 
of the subcontract, costs incurred are a factor in determining the 
amount payable to the subcontractor of any tier, to either conduct 
an audit of the subcontractor's costs or arrange for such an audit 
to be performed by the cognizant government audit agency through the 
contracting officer.
    (d) Disposition of records. Except as agreed upon by the 
Government and the contractor, all financial and cost reports, books 
of account and supporting documents, and other data evidencing costs 
allowable, revenues, and other applicable credits under this 
contract, shall be the property of the Government, and shall be 
delivered to the Government or otherwise disposed of by the 
contractor either as the contracting officer may from time to time 
direct during the progress of the work or, in any event, as the 
contracting officer shall direct upon completion or termination of 
this contract and final audit of accounts hereunder. Except as 
provided in this contract, all other records in the possession of 
the contractor relating to this contract shall be preserved by the 
contractor for a period of three years after final payment under 
this contract or otherwise disposed of in such manner as may be 
agreed upon by the Government and the contractor.
    (e) Reports. The contractor shall furnish such progress reports 
and schedules, financial and cost reports, and other reports 
concerning the work under this contract as the contracting officer 
may from time to time require.
    (f) Inspections. The DOE shall have the right to inspect the 
work and activities of the contractor under this contract at such 
time in such manner as it shall deem appropriate.
    (g) Subcontracts. The contractor further agrees to require the 
inclusion of provisions similar to those in paragraphs (a) through 
(g) and paragraph (i) of this clause in all subcontracts (including 
fixed-price or unit-price subcontracts or purchase orders) of any 
tier entered into hereunder where, under the terms of the 
subcontract, costs incurred are a factor in determining the amount 
payable to the subcontractor.
    (h) Comptroller General. (1) The Comptroller General of the 
United States, or an authorized representative, shall have access to 
and the right to examine any of the contractor's directly pertinent 
records involving transactions related to this contract or a 
subcontract hereunder.
    (2) This paragraph may not be construed to require the 
contractor or subcontractor to create or maintain any record that 
the contractor or subcontractor does not maintain in the ordinary 
course of business or pursuant to a provision of law.
    (3) Nothing in this contract shall be deemed to preclude an 
audit by the General Accounting Office of any transaction under this 
contract.

(End of Clause)

    Alternate I (Month and Year TBE). As prescribed in 48 CFR 
970.3270(a)(1), if the contract includes the clause at 48 CFR 
52.215-22, Price Reduction for Defective Cost or Pricing Data, the 
basic clause shall be modified as follows:

[[Page 13505]]

    (a) Paragraph (a) of the basic clause shall be modified by 
adding the words ``or anticipated to be incurred'' after the words 
``allowable costs incurred.''
    (b) Paragraph (g) of the basic clause shall be modified by 
adding the following:
    The contractor further agrees to include an ``Audit'' clause, 
the substance of which is the ``Audit'' clause set forth at 48 CFR 
52.215-2, in each subcontract which does not include provisions 
similar to those in paragraph (a) through paragraph (g) and 
paragraph (h) of this clause, but which contains a ``defective cost 
or pricing data'' clause.
    Alternate II (Month and Year TBE). As prescribed in 48 CFR 
970.3270(a)(2), in cost-reimbursement contracts involving an 
estimated cost exceeding $5 million and expected to run for more 
than 2 years, and any other cost-reimbursement contract determined 
by the Head of the Contracting Activity in which the contractor has 
an established internal audit organization, add the following 
paragraph (i) to the basic clause:
    (i) Internal audit. The contractor agrees to conduct an internal 
audit and examination satisfactory to DOE of the records, 
operations, expenses, and the transactions with respect to costs 
claimed to be allowable under this contract annually and at such 
other times as may be mutually agreed upon. The results of such 
audit, including the working papers, shall be submitted or made 
available to the contracting officer. The contractor shall include 
this paragraph (i) in all cost-reimbursement subcontracts with an 
estimated cost exceeding $5 million and expected to run for more 
than 2 years, and any other cost-reimbursement subcontract 
determined by the Head of the Contracting Activity.


970.5232-4  Obligation of funds.

    As prescribed in 48 CFR 970.3270(b), insert the following clause:

Obligation of Funds (Month and Year TBE)

    (a) Obligation of funds. The amount presently obligated by the 
Government with respect to this contract is ____ dollars ($)____. 
Such amount may be increased unilaterally by DOE by written notice 
to the contractor and may be increased or decreased by written 
agreement of the parties (whether or not by formal modification of 
this contract). Estimated collections from others for work and 
services to be performed under this contract are not included in the 
amount presently obligated. Such collections, to the extent actually 
received by the contractor, shall be processed and accounted for in 
accordance with applicable requirements imposed by the contracting 
officer pursuant to the Laws, regulations, and DOE directives clause 
of this contract. Nothing in this paragraph (a) is to be construed 
as authorizing the contractor to exceed limitations stated in 
financial plans established by DOE and furnished to the contractor 
from time to time under this contract.
    (b) Limitation on payment by the Government. Except as otherwise 
provided in this contract and except for costs which may be incurred 
by the contractor pursuant to the termination clause of the 
contract, or costs of claims allowable under the contract occurring 
after completion or termination and not released by the contractor 
at the time of financial settlement of the contract in accordance 
with the clause entitled ``Payments and Advances,'' payment by the 
Government under this contract on account of allowable costs shall 
not, in the aggregate, exceed the amount obligated with respect to 
this contract, less the contractor's fee. Unless expressly negated 
in this contract, payment on account of those costs excepted in the 
preceding sentence which are in excess of the amount obligated with 
respect to this contract shall be subject to the availability of:
    (1) Collections accruing to the contractor in connection with 
the work under this contract and processed and accounted for in 
accordance with applicable requirements imposed by the contracting 
officer pursuant to the Laws, regulations, and DOE directives clause 
of this contract, and
    (2) Other funds which DOE may legally use for such purpose, 
provided DOE will use its best efforts to obtain the appropriation 
of funds for this purpose if not otherwise available.
    (c) Notices--Contractor excused from further performance. The 
contractor shall notify DOE in writing whenever the unexpended 
balance of available funds (including collections available under 
paragraph (a) of this clause, plus the contractor's best estimate of 
collections to be received and available during the ____ day period 
hereinafter specified, is in the contractor's best judgment 
sufficient to continue contract operations at the programmed rate 
for only ____ days and to cover the contractor's unpaid fee, and 
outstanding encumbrances and liabilities on account of costs 
allowable under the contract at the end of such period. Whenever the 
unexpended balance of available funds (including collections 
available under paragraph (a) of this clause, less the amount of the 
contractor's fee then earned but not paid, is in the contractor's 
best judgment sufficient only to liquidate outstanding encumbrances 
and liabilities on account of costs allowable under this contract, 
the contractor shall immediately notify DOE and shall make no 
further encumbrances or expenditures (except to liquidate existing 
encumbrances and liabilities), and, unless the parties otherwise 
agree, the contractor shall be excused from further performance 
(except such performance as may become necessary in connection with 
termination by the Government) and the performance of all work 
hereunder will be deemed to have been terminated for the convenience 
of the Government in accordance with the provisions of the 
termination clause of the contract.
    (d) Financial plans; cost and encumbrance limitations. In 
addition to the limitations provided for elsewhere in this contract, 
DOE may, through financial plans, such as Approved Funding Programs, 
or other directives issued to the contractor, establish controls on 
the costs to be incurred and encumbrances to be made in the 
performance of the contract work. Such plans and directives may be 
amended or supplemented from time to time by DOE. The contractor 
hereby agrees.
    (1) To comply with the specific limitations (ceilings) on costs 
and encumbrances set forth in such plans and directives,
    (2) To comply with other requirements of such plans and 
directives, and
    (3) To notify DOE promptly, in writing, whenever it has reason 
to believe that any limitation on costs and encumbrances will be 
exceeded or substantially underrun.
    (e) Government's right to terminate not affected. The giving of 
any notice under this clause shall not be construed to waive or 
impair any right of the Government to terminate the contract under 
the provisions of the termination clause of the contract.

(End of Clause)

    Alternate I (Month and Year TBE). As prescribed in 48 CFR 
970.3270(b), paragraph (d) of the clause may be omitted in contracts 
which, expressly or otherwise, provide a contractual basis for 
equivalent controls in a separate clause.


970.5235-1  Federally Funded Research and Development Center Sponsoring 
Agreement.

    As prescribed in 48 CFR 970.3501-4, the contracting officer shall 
insert the following clause:

Federally Funded Research and Development Center Sponsoring Agreement 
(Month and Year TBE)

    (a) Pursuant to 48 CFR 35.017-1, this contract constitutes the 
sponsoring agreement between the Department of Energy and the 
contractor, which establishes the relationship for the operation of 
a Department of Energy sponsored Federally Funded Research and 
Development Center (FFRDC).
    (b) In the operation of this FFRDC, the contractor may be 
provided access beyond that which is common to the normal 
contractual relationship, to Government and supplier data, including 
sensitive and proprietary data, and to Government employees and 
facilities needed to discharge its responsibilities efficiently and 
effectively. Because of this special relationship, it is essential 
that the FFRDC be operated in the public interest with objectivity 
and independence, be free from organizational conflicts of interest, 
and have full disclosure of its affairs to the Department of Energy.
    (c) Unless otherwise provided by the contract, the contractor 
may accept work from a nonsponsor (as defined in 48 CFR 35.017) in 
accordance with the requirements and limitations of DOE Order 481.1, 
Work for Others (Non-Department of Energy Funded Work) (see current 
version).
    (d) As an FFRDC, the contractor shall not use its privileged 
information or access to government facilities to compete with the 
private sector. Specific guidance on restricted activities is 
contained in DOE Order 481.1.

(End of Clause)


970.5236-1  Government Facility Subcontract Approval.

    As prescribed in 48 CFR 970.3605-2, insert the following clause:

[[Page 13506]]

Government Facility Subcontract Approval (Month and Year TBE)

    Upon request of the contracting officer and acceptance thereof 
by the contractor, the contractor shall procure, by subcontract, the 
construction of new facilities or the alteration or repair of 
Government-owned facilities at the plant. Any subcontract entered 
into under this paragraph shall be subject to the written approval 
of the contracting officer and shall contain the provisions relative 
to labor and wages required by law to be included in contracts for 
the construction, alteration, and/or repair, including painting and 
decorating, of a public building or public work.

(End of Clause)

970.5237-1  Waiver of Limitations on Severance Payments to Foreign 
Nationals.

    As prescribed in 48 CFR 970.3701-1-2, the contracting officer shall 
insert the following solicitation provision:

Waiver of Limitations on Severance Payments to Foreign Nationals (Month 
and Year TBE)

    Pursuant to 48 CFR 970.3701-1, Severance Payments to Foreign 
Nationals, the cost allowability limitations in 48 CFR 970.3102-3-
2(i)(iv) and (v) are waived for this contract.

(End of Clause)


    Alternate I (Month and Year TBE). As prescribed in 48 CFR 
970.3701-1-2(b), substitute the following paragraph for the 
foregoing solicitation provision when the waiver of limitations to 
severance payments for foreign nationals has not been predetermined 
by the Department.
    Pursuant to 48 CFR 970.3701-1, Severance Payments to Foreign 
Nationals, the Department will consider waiving the cost 
allowability limitations in 48 CFR 970.3102-3-2(i)(iv) and (v) for 
this contract.


970.5237-2  Facilities management.

    As prescribed in 48 CFR 970.3770-2, insert the following clause:

Facilities Management (Month and Year TBE)

    Copies of DOE Directives referenced herein are available from 
the contracting officer.
    (a) Site development planning. The Government shall provide to 
the contractor site development guidance for the facilities and 
lands for which the contractor is responsible under the terms and 
conditions of this contract. Based upon this guidance, the 
contractor shall prepare, and maintain through annual updates, a 
Long-Range Site Development Plan (Plan) to reflect those actions 
necessary to keep the development of these facilities current with 
the needs of the Government and allow the contractor to successfully 
accomplish the work required under this contract. In developing this 
Plan, the contractor shall follow the procedural guidance set forth 
in the applicable DOE Directives in the Life Cycle Facility 
Operations Series listed elsewhere in this contract. The contractor 
shall use the Plan to manage and control the development of 
facilities and lands. All plans and revisions shall be approved by 
the Government.
    (b) General design criteria. The general design criteria which 
shall be utilized by the contractor in managing the site for which 
it is responsible under this contract are those specified in the 
applicable DOE Directives in the 6430, Design Criteria, series 
listed elsewhere in this contract. The contractor shall comply with 
these mandatory, minimally acceptable requirements for all facility 
designs with regard to any building acquisition, new facility, 
facility addition or alteration or facility lease undertaken as part 
of the site development activities of paragraph (a) above. This 
includes on-site constructed buildings, pre-engineered buildings, 
plan-fabricated modular buildings, and temporary facilities. For 
existing facilities, original design criteria apply to the structure 
in general; however, additions or modifications shall comply with 
this directive and the associated latest editions of the references 
therein. An exception may be granted for off-site office space being 
leased by the contractor on a temporary basis.
    (c) Energy management. The contractor shall manage the 
facilities for which it is responsible under the terms and 
conditions of this contract in an energy efficient manner in 
accordance with the applicable DOE Directives in the Life Cycle 
Facility Operations Series listed elsewhere in this contract. The 
contractor shall develop a 10-year energy management plan for each 
site with annual reviews and revisions. The contractor shall submit 
an annual report on progress toward achieving the goals of the 10-
year plan for each individual site, and an energy conservation 
analysis report for each new building or building addition project. 
Any acquisition of utility services by the contractor shall be 
conducted in accordance with 48 CFR 970.41.
    (d) Subcontract Requirements. To the extent the contractor 
subcontracts performance of any of the responsibilities discussed in 
this clause, the subcontract shall contain the requirements of this 
clause relative to the subcontracted responsibilities.

(End of Clause)


970.5243-1  Changes.

    As prescribed in 48 CFR 970.4302-1, the contracting officer shall 
insert the following clause in all management and operating contracts:

Changes (Month and Year TBE)

    (a) Changes and adjustment of fee. The contracting officer may 
at any time and without notice to the sureties, if any, issue 
written directions within the general scope of this contract 
requiring additional work or directing the omission of, or variation 
in, work covered by this contract. If any such direction results in 
a material change in the amount or character of the work described 
in the ``Statement of Work,'' an equitable adjustment of the fee, if 
any, shall be made in accordance with the agreement of the parties 
and the contract shall be modified in writing accordingly. Any claim 
by the contractor for an adjustment under this clause must be 
asserted in writing within 30 days from the date of receipt by the 
contractor of the notification of change; provided, however, that 
the contracting officer, if it is determined that the facts justify 
such action, may receive and act upon any such claim asserted at any 
time prior to final payment under this contract. A failure to agree 
on an equitable adjustment under this clause shall be deemed to be a 
dispute within the meaning of the clause entitled ``Disputes.''
    (b) Work to continue. Nothing contained in this clause shall 
excuse the contractor from proceeding with the prosecution of the 
work in accordance with the requirements of any direction hereunder.

(End of Clause)


970.5244-1  Contractor Purchasing System.

    As prescribed in 48 CFR 970.4402-5, insert the following clause:

Contractor Purchasing System (Month and Year TBE)

    (a) General. The contractor shall develop, implement, and 
maintain formal policies, practices, and procedures to be used in 
the award of subcontracts consistent with this clause and 48 CFR 
970.44. The contractor's purchasing system and methods shall be 
fully documented, consistently applied, and acceptable to DOE in 
accordance with 48 CFR 970.4401-1. The contractor shall maintain 
file documentation which is appropriate to the value of the purchase 
and is adequate to establish the propriety of the transaction and 
the price paid. The contractor's purchasing performance will be 
evaluated against such performance criteria and measures as may be 
set forth elsewhere in this contract. DOE reserves the right at any 
time to require that the contractor submit for approval any or all 
purchases under this contract. The contractor shall not purchase any 
item or service the purchase of which is expressly prohibited by the 
written direction of DOE and shall use such special and directed 
sources as may be expressly required by the DOE contracting officer. 
DOE will conduct periodic appraisals of the contractor's management 
of all facets of the purchasing function, including the contractor's 
compliance with its approved system and methods. Such appraisals 
will be performed through the conduct of Contractor Purchasing 
System Reviews in accordance with 48 CFR subpart 44.3, or, when 
approved by the contracting officer, through the contractor's 
participation in the conduct of the Balanced Scorecard performance 
measurement and performance management system. The contractor's 
approved purchasing system and methods shall include the 
requirements set forth in paragraphs (b) through (x) of this clause.
    (b) Acquisition of utility services. Utility services shall be 
acquired in accordance with the requirements of 48 CFR 970.41.
    (c) Acquisition of Real Property. Real property shall be 
acquired in accordance with 48 CFR Subpart 917.74.
    (d) Advance Notice of Proposed Subcontract Awards. Advance 
notice shall be provided in accordance with 48 CFR 970.4401-3.
    (e) Audit of Subcontractors. (1) The contractor shall provide 
for:

[[Page 13507]]

    (i) periodic post-award audit of cost-reimbursement 
subcontractors at all tiers, and
    (ii) audits, where necessary, to provide a valid basis for pre-
award or cost or price analysis.
    (2) Responsibility for determining the costs allowable under 
each cost-reimbursement subcontract remains with the contractor or 
next higher-tier subcontractor. The contractor shall provide, in 
appropriate cases, for the timely involvement of the contractor and 
the DOE contracting officer in resolution of subcontract cost 
allowability.
    (3) Where audits of subcontractors at any tier are required, 
arrangements may be made to have the cognizant Federal agency 
perform the audit of the subcontract. These arrangements shall be 
made administratively between DOE and the other agency involved and 
shall provide for the cognizant agency to audit in an appropriate 
manner in light of the magnitude and nature of the subcontract. In 
no case, however, shall these arrangements preclude determination by 
the DOE contracting officer of the allowability or unallowability of 
subcontractor costs claimed for reimbursement by the contractor.
    (4) Allowable costs for cost reimbursable subcontracts are to be 
determined in accordance with the cost principles of 48 CFR Part 31, 
appropriate for the type of organization to which the subcontract is 
to be awarded, as supplemented by 48 CFR Part 931. Allowable costs 
in the purchase or transfer from contractor-affiliated sources shall 
be determined in accordance with 48 CFR 970.4402-3 and 48 CFR 
970.3102-3-21(b).
    (f) Bonds and Insurance. (1) The contractor shall require 
performance bonds in penal amounts as set forth in 48 CFR 28.102-
2(a) for all fixed priced and unit-priced construction subcontracts 
in excess of $100,000. The contractor shall consider the use of 
performance bonds in fixed price nonconstruction subcontracts, where 
appropriate.
    (2) For fixed-price, unit-priced and cost reimbursement 
construction subcontracts in excess of $100,000 a payment bond shall 
be obtained on Standard Form 25A modified to name the contractor as 
well as the United States of America as obligees. The penal amounts 
shall be determined in accordance with 48 CFR 28.102-2(b).
    (3) For fixed-price, unit-priced and cost-reimbursement 
construction subcontracts, greater than $25,000, but not greater 
than $100,000, the contractor shall select two or more of the 
payment protections at 48 CFR 28.102-1(b), giving particular 
consideration to the inclusion of an irrevocable letter of credit as 
one of the selected alternatives.
    (4) A subcontractor may have more than one acceptable surety in 
both construction and other subcontracts, provided that in no case 
will the liability of any one surety exceed the maximum penal sum 
for which it is qualified for any one obligation. For subcontracts 
other than construction, a co-surety (two or more sureties together) 
may reinsure amounts in excess of their individual capacity, with 
each surety having the required underwriting capacity that appears 
on the list of acceptable corporate sureties.
    (g) Buy American. The contractor shall comply with the 
provisions of the Buy American Act as reflected in 48 CFR 52.225-3 
and 48 CFR 52.225-5. The contractor shall forward determinations of 
nonavailability of individual items to the DOE contracting officer 
for approval. Items in excess of $100,000 require the prior 
concurrence of the Head of Contracting Activity. If, however, the 
contractor has an approved purchasing system, the Head of the 
Contracting Activity may authorize the contractor to make 
determinations of nonavailability for individual items valued at 
$100,000 or less.
    (h) Construction and Architect-Engineer Subcontracts. (1) 
Independent Estimates. A detailed, independent estimate of costs 
shall be prepared for all construction work to be subcontracted.
    (2) Specifications. Specifications for construction shall be 
prepared in accordance with the DOE publication entitled ``General 
Design Criteria Manual.''
    (3) Prevention of Conflict of Interest. (i) The contractor shall 
not award a subcontract for construction to the architect-engineer 
firm or an affiliate that prepared the design. This prohibition does 
not preclude the award of a ``turnkey'' subcontract so long as the 
subcontractor assumes all liability for defects in design and 
construction and consequential damages.
    (ii) The contractor shall not award both a cost-reimbursement 
subcontract and a fixed-price subcontract for construction or 
architect-engineer services or any combination thereof to the same 
firm where those subcontracts will be performed at the same site.
    (iii) The contractor shall not employ the construction 
subcontractor or an affiliate to inspect the firm's work. The 
contractor shall assure that the working relationships of the 
construction subcontractor and the subcontractor inspecting its work 
and the authority of the inspector are clearly defined.
    (i) Contractor-Affiliated Sources. Equipment, materials, 
supplies, or services from a contractor-affiliated source shall be 
purchased or transferred in accordance with 48 CFR 970.4402-3.
    (j) Contractor-Subcontractor Relationship. The obligations of 
the contractor under paragraph (a) of this clause, including the 
development of the purchasing system and methods, and purchases made 
pursuant thereto, shall not relieve the contractor of any obligation 
under this contract (including, among other things, the obligation 
to properly supervise, administer, and coordinate the work of 
subcontractors). Subcontracts shall be in the name of the 
contractor, and shall not bind or purport to bind the Government.
    (k) Government Property. Identification, inspection, 
maintenance, protection, and disposition of Government property 
shall conform with the policies and principles of 48 CFR part 45, 48 
CFR part 945, the Federal Property Management Regulations 41 CFR 
chapter 101, the DOE Property Management Regulations 41 CFR chapter 
109, and their contracts.
    (l) Indemnification. Except for Price-Anderson Nuclear Hazards 
Indemnity, no subcontractor may be indemnified except with the prior 
approval of the Senior Procurement Executive.
    (m) Leasing of Motor Vehicles. Contractors shall comply with 48 
CFR 8.11 and 48 CFR 908.11.
    (n) Make-or-Buy Plans. Acquisition of property and services 
shall be obtained on a least-cost basis, consistent with the 
requirements of the ``Make-or-Buy Plan'' clause of this contract and 
the contractor's approved make-or-buy plan.
    (o) Management, Acquisition and Use of Information Resources. 
Requirements for automatic data processing resources and 
telecommunications facilities, services, and equipment, shall be 
reviewed and approved in accordance with applicable DOE Orders and 
regulations regarding information resources.
    (p) Priorities, Allocations and Allotments. Priorities, 
allocations and allotments shall be extended to appropriate 
subcontracts in accordance with the clause or clauses of this 
contract dealing with priorities and allocations.
    (q) Purchase of Special Items. Purchase of the following items 
shall be in accordance with the following provisions of 48 CFR 
908.71 and the Federal Property Management Regulations, 41 CFR 
chapter 101:

(1) Motor vehicles--48 CFR 908.7101
(2) Aircraft--48 CFR 908.7102
(3) Security Cabinets--48 CFR 908.7106
(4) Alcohol--48 CFR 908.7107
(5) Helium--48 CFR 908.7108
(6) Fuels and packaged petroleum products--48 CFR 908.7109
(7) Coal--48 CFR 908.7110
(8) Arms and Ammunition--48 CFR 908.7111
(9) Heavy Water--48 CFR 908.7121(a)
(10) Precious Metals--48 CFR 908.7121(b)
(11) Lithium--48 CFR 908.7121(c)
(12) Products and services of the blind and severely handicapped--41 
CFR 101-26.701
(13) Products made in Federal penal and correctional institutions--
41 CFR 101-26.702

    (r) Purchase vs. Lease Determinations. Contractors shall 
determine whether required equipment and property should be 
purchased or leased, and establish appropriate thresholds for 
application of lease vs. purchase determinations. Such 
determinations shall be made:
    (1) At time of original acquisition;
    (2) When lease renewals are being considered; and
    (3) At other times as circumstances warrant.
    (s) Quality Assurance. Contractors shall provide no less 
protection for the Government in its subcontracts than is provided 
in the prime contract.
    (t) Setoff of Assigned Subcontractor Proceeds. Where a 
subcontractor has been permitted to assign payments to a financial 
institution, the assignment shall treat any right of setoff in 
accordance with 48 CFR 932.803.
    (u) Strategic and Critical Materials. The contractor may use 
strategic and critical materials in the National Defense Stockpile.
    (v) Termination. When subcontracts are terminated as a result of 
the termination of all or a portion of this contract, the contractor

[[Page 13508]]

shall settle with subcontractors in conformity with the policies and 
principles relating to settlement of prime contracts in 48 CFR 
Subparts 49.1, 49.2 and 49.3. When subcontracts are terminated for 
reasons other than termination of this contract, the contractor 
shall settle such subcontracts in general conformity with the 
policies and principles in 48 CFR Subparts 49.1, 49.2, 49.3 and 
49.4. Each such termination shall be documented and consistent with 
the terms of this contract. Terminations which require approval by 
the Government shall be supported by accounting data and other 
information as may be directed by the contracting officer.
    (w) Unclassified Controlled Nuclear Information. Subcontracts 
involving unclassified uncontrolled nuclear information shall be 
treated in accordance with 10 CFR part 1017.
    (x) Subcontract Flowdown Requirements. In addition to terms and 
conditions that are included in the prime contract which direct 
application of such terms and conditions in appropriate 
subcontracts, the contractor shall include the following clauses in 
subcontracts, as applicable:

(1) Davis-Bacon clauses prescribed in 48 CFR 22.407.
(2) Foreign Travel clause prescribed in 48 CFR 952.247-70.
(3) Counterintelligence clause prescribed in 48 CFR 970.0404-4(a).
(4) Service Contract Act clauses prescribed in 48 CFR 22.1006.
(5) State and local taxes clause prescribed in 48 CFR 970.2904-1.
(6) Cost or pricing data clauses prescribed in 48 CFR 970.1504-3-
1(b).
(End of Clause)


970.5245-1  Property.

    As prescribed in 48 CFR 970.4501-1(a), insert the following clause:

Property (Month and Year TBE)

    (a) Furnishing of Government property. The Government reserves 
the right to furnish any property or services required for the 
performance of the work under this contract.
    (b) Title to property. Except as otherwise provided by the 
contracting officer, title to all materials, equipment, supplies, 
and tangible personal property of every kind and description 
purchased by the contractor, for the cost of which the contractor is 
entitled to be reimbursed as a direct item of cost under this 
contract, shall pass directly from the vendor to the Government. The 
Government reserves the right to inspect, and to accept or reject, 
any item of such property. The contractor shall make such 
disposition of rejected items as the contracting officer shall 
direct. Title to other property, the cost of which is reimbursable 
to the contractor under this contract, shall pass to and vest in the 
Government upon (1) issuance for use of such property in the 
performance of this contract, or (2) commencement of processing or 
use of such property in the performance of this contract, or (3) 
reimbursement of the cost thereof by the Government, whichever first 
occurs. Property furnished by the Government and property purchased 
or furnished by the contractor, title to which vests in the 
Government, under this paragraph are hereinafter referred to as 
Government property. Title to Government property shall not be 
affected by the incorporation of the property into or the attachment 
of it to any property not owned by the Government, nor shall such 
Government property or any part thereof, be or become a fixture or 
lose its identity as personalty by reason of affixation to any 
realty.
    (c) Identification. To the extent directed by the contracting 
officer, the contractor shall identify Government property coming 
into the contractor's possession or custody, by marking and 
segregating in such a way, satisfactory to the contracting officer, 
as shall indicate its ownership by the Government.
    (d) Disposition. The contractor shall make such disposition of 
Government property which has come into the possession or custody of 
the contractor under this contract as the contracting officer may 
direct during the progress of the work or upon completion or 
termination of this contract. The contractor may, upon such terms 
and conditions as the contracting officer may approve, sell, or 
exchange such property, or acquire such property at a price agreed 
upon by the contracting officer and the contractor as the fair value 
thereof. The amount received by the contractor as the result of any 
disposition, or the agreed fair value of any such property acquired 
by the contractor, shall be applied in reduction of costs allowable 
under this contract or shall be otherwise credited to account to the 
Government, as the contracting officer may direct. Upon completion 
of the work or the termination of this contract, the contractor 
shall render an accounting, as prescribed by the contracting 
officer, of all government property which had come into the 
possession or custody of the contractor under this contract.
    (e) Protection of government property--management of high-risk 
property and classified materials.
    (1) The contractor shall take all reasonable precautions, and 
such other actions as may be directed by the contracting officer, or 
in the absence of such direction, in accordance with sound business 
practice, to safeguard and protect government property in the 
contractor's possession or custody.
    (2) In addition, the contractor shall ensure that adequate 
safeguards are in place, and adhered to, for the handling, control 
and disposition of high-risk property and classified materials 
throughout the life cycle of the property and materials consistent 
with the policies, practices and procedures for property management 
contained in the Federal Property Management regulations (41 CFR 
chapter 101), the Department of Energy Property Management 
regulations (41 CFR chapter 109), and other applicable regulations.
    (3) High-risk property is property, the loss, destruction, 
damage to, or the unintended or premature transfer of which could 
pose risks to the public, the environment, or the national security 
interests of the United States. High-risk property includes 
proliferation sensitive, nuclear related dual use, export 
controlled, chemically or radioactively contaminated, hazardous, and 
specially designed and prepared property, including property on the 
militarily critical technologies list.
    (f) Risk of loss of Government property. (1)(i) The contractor 
shall not be liable for the loss or destruction of, or damage to, 
Government property unless such loss, destruction, or damage was 
caused by any of the following:
    (A) Willful misconduct or lack of good faith on the part of the 
contractor's managerial personnel;
    (B) Failure of the contractor's managerial personnel to take all 
reasonable steps to comply with any appropriate written direction of 
the contracting officer to safeguard such property under paragraph 
(e) of this clause; or
    (C) Failure of contractor managerial personnel to establish, 
administer, or properly maintain an approved property management 
system in accordance with paragraph (i)(1) of this clause.
    (ii) If, after an initial review of the facts, the contracting 
officer informs the contractor that there is reason to believe that 
the loss, destruction of, or damage to the government property 
results from conduct falling within one of the categories set forth 
above, the burden of proof shall be upon the contractor to show that 
the contractor should not be required to compensate the government 
for the loss, destruction, or damage.
    (2) In the event that the contractor is determined liable for 
the loss, destruction or damage to Government property in accordance 
with (f)(1) of this clause, the contractor's compensation to the 
Government shall be determined as follows:
    (i) For damaged property, the compensation shall be the cost of 
repairing such damaged property, plus any costs incurred for 
temporary replacement of the damaged property. However, the value of 
repair costs shall not exceed the fair market value of the damaged 
property. If a fair market value of the property does not exist, the 
contracting officer shall determine the value of such property, 
consistent with all relevant facts and circumstances.
    (ii) For destroyed or lost property, the compensation shall be 
the fair market value of such property at the time of such loss or 
destruction, plus any costs incurred for temporary replacement and 
costs associated with the disposition of destroyed property. If a 
fair market value of the property does not exist, the contracting 
officer shall determine the value of such property, consistent with 
all relevant facts and circumstances.
    (3) The portion of the cost of insurance obtained by the 
contractor that is allocable to coverage of risks of loss referred 
to in paragraph (f)(1) of this clause is not allowable.
    (g) Steps to be taken in event of loss. In the event of any 
damage, destruction, or loss to Government property in the 
possession or custody of the contractor with a value above the 
threshold set out in the contractor's approved property management 
system, the contractor:
    (1) Shall immediately inform the contracting officer of the 
occasion and extent thereof,

[[Page 13509]]

    (2) Shall take all reasonable steps to protect the property 
remaining, and
    (3) Shall repair or replace the damaged, destroyed, or lost 
property in accordance with the written direction of the contracting 
officer. The contractor shall take no action prejudicial to the 
right of the Government to recover therefore, and shall furnish to 
the Government, on request, all reasonable assistance in obtaining 
recovery.
    (h) Government property for Government use only. Government 
property shall be used only for the performance of this contract.
    (i) Property Management. (1) Property Management System. (i) The 
contractor shall establish, administer, and properly maintain an 
approved property management system of accounting for and control, 
utilization, maintenance, repair, protection, preservation, and 
disposition of Government property in its possession under the 
contract. The contractor's property management system shall be 
submitted to the contracting officer for approval and shall be 
maintained and administered in accordance with sound business 
practice, applicable Federal Property Management regulations and 
Department of Energy Property Management regulations, and such 
directives or instructions which the contracting officer may from 
time to time prescribe.
    (ii) In order for a property management system to be approved, 
it must provide for:
    (A) Comprehensive coverage of property from the requirement 
identification, through its life cycle, to final disposition;
    (B) Employee personal responsibility and accountability for 
Government-owned property;
    (C) Full integration with the contractor's other administrative 
and financial systems; and
    (D) A method for continuously improving property management 
practices through the identification of best practices established 
by ``best in class'' performers.
    (iii) Approval of the contractor's property management system 
shall be contingent upon the completion of the baseline inventory as 
provided in subparagraph (i)(2) of this clause.
    (2) Property Inventory. (i) Unless otherwise directed by the 
contracting officer, the contractor shall within six months after 
execution of the contract provide a baseline inventory covering all 
items of Government property.
    (ii) If the contractor is succeeding another contractor in the 
performance of this contract, the contractor shall conduct a joint 
reconciliation of the property inventory with the predecessor 
contractor. The contractor agrees to participate in a joint 
reconciliation of the property inventory at the completion of this 
contract. This information will be used to provide a baseline for 
the succeeding contract as well as information for closeout of the 
predecessor contract.
    (j) The term ``contractor's managerial personnel'' as used in 
this clause means the contractor's directors, officers and any of 
its managers, superintendents, or other equivalent representatives 
who have supervision or direction of:
    (1) All or substantially all of the contractor's business; or
    (2) All or substantially all of the contractor's operations at 
any one facility or separate location to which this contract is 
being performed; or
    (3) A separate and complete major industrial operation in 
connection with the performance of this contract; or
    (4) A separate and complete major construction, alteration, or 
repair operation in connection with performance of this contract; or
    (5) A separate and discrete major task or operation in 
connection with the performance of this contract.
    (k) The contractor shall include this clause in all cost 
reimbursable subcontracts.

(End of Clause)

    Alternate I (Month and Year TBE). As prescribed in 48 CFR 
970.4501-1(b), when the award is to a nonprofit contractor, replace 
paragraph (j) of the basic clause with the following paragraph (j):
    (j) The term ``contractor's managerial personnel'' as used in 
this clause means the contractor's directors, officers and any of 
its managers, superintendents, or other equivalent representatives 
who have supervision or direction of all or substantially all of:
    (1) The contractor's business; or
    (2) The contractor's operations at any one facility or separate 
location at which this contract is being performed; or
    (3) The contractor's Government property system and/or a Major 
System Acquisition or Major Project as defined in DOE Order 4700.1 
(Version in effect on effective date of contract).

[FR Doc. 00-4880 Filed 3-10-00; 8:45 am]
BILLING CODE 6450-01-U