[Federal Register Volume 65, Number 247 (Friday, December 22, 2000)]
[Rules and Regulations]
[Pages 80994-81079]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-31542]



[[Page 80993]]

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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; Final Rule

  Federal Register / Vol. 65, No. 247 / Friday, December 22, 2000 / 
Rules and Regulations  

[[Page 80994]]


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DEPARTMENT OF ENERGY

48 CFR Chapter 9

RIN 1991-AB46; RIN 1991-AB49


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

AGENCY: Department of Energy.

ACTION: Final rule.

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SUMMARY: The Department of Energy (DOE) amends its Acquisition 
Regulation to streamline the policies, procedures, provisions and 
clauses that are applicable to its management and operating contracts. 
This rulemaking eliminates coverage that is obsolete or that duplicates 
the Federal Acquisition Regulation (FAR), and retains only coverage 
that either implements or supplements the FAR for the award and 
administration of the Department's management and operating contracts. 
The rule also adds five new clauses and amends several existing clauses 
to promote uniform application of the Department's award and 
administration policies for management and operating contracts. Also, 
this final rule amends the Department's Acquisition Regulation 
regarding management and operating contract cost principles by adopting 
the Federal Acquisition Regulation cost principles, with some 
supplemental material. Finally, the Department is making technical and 
administrative changes.

EFFECTIVE DATE: This final rule is effective January 22, 2001.

FOR FURTHER INFORMATION CONTACT: Michael L. Righi, Office of Policy 
(MA-51), Department of Energy, 1000 Independence Avenue, SW., 
Washington, D.C. 20585; 202-586-8175 (phone); 202-586-0545 (facsimile); 
or [email protected] (Internet).

SUPPLEMENTARY INFORMATION:
I. Background
II. Discussion of Public Comments
III. Procedural Requirements
    A. Review of 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 Executive Order 13132
    F. Review Under the National Environmental Policy Act
    G. Unfunded Mandates Reform Act of 1995
    H. Review Under Small Business Regulatory Enforcement Fairness 
Act of 1996

I. Background

    On March 13, 2000, the Department of Energy (DOE or Department) 
published in the Federal Register (65 FR 13418) a Notice of Proposed 
Rulemaking to amend the Department of Energy Acquisition Regulation 
(DEAR) to streamline the policies, procedures, provisions and clauses 
that are applicable to its management and operating contracts. This 
Rulemaking was titled ``Rewrite of Regulations Governing Management and 
Operating Contracts.'' On June 14, 2000, DOE published in the Federal 
Register (65 FR 37335) a related Notice of Proposed Rulemaking to amend 
the DEAR to delete those cost principles and related provisions of the 
DEAR that are applicable to its management and operating contracts that 
are adequately covered by the Federal Acquisition Regulation (FAR). 
This Rulemaking was titled ``Changes to Department of Energy Cost 
Principles and Various Clauses.'' Today, DOE publishes a final rule 
based on these Notices of Proposed Rulemaking.
    This rule rewrites DEAR Part 970, in its entirety, to streamline 
the policies, procedures, provisions and clauses that are applicable to 
the Department's management and operating (M&O) contracts. The rule 
eliminates coverage that is obsolete or that unnecessarily duplicates 
coverage contained in the FAR. The rule also updates and revises 
prescriptions and text of certain clauses to 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. Five new clauses are 
included in the DEAR. The new clauses 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) collaboration to identify, evaluate, and 
institutionalize processes that will improve the effectiveness or 
efficiency of any aspect of contract performance, and collaboration 
regarding such improvements between 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.
    Additionally, Part 970 is 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 made. Among the 
renumbered provisions are the Financial Management clauses for 
management and operating contracts, which were published as a final 
rulemaking in the Federal Register (65 FR 21371) on April 21, 2000.
    In preparing this Notice of Final Rulemaking, the Department has 
made a variety of technical changes, which, with one exception, do not 
warrant extended discussion. That exception is the coverage for 
Contractor Employee Travel Discounts, found at 48 CFR 951.7002 and 48 
CFR 952.251-70, which has been updated to conform to mandatory GSA 
travel policy.
    Contracting officers must apply these DEAR changes to solicitations 
issued on or after the effective date of this rule.
    Contracting officers may, at their discretion, include these DEAR 
changes in solicitations issued before the effective date of this rule, 
provided award of the resulting contract(s) occurs on or after the 
effective date.
    Contracting officers must apply these DEAR changes: to contracts 
extended in accordance with the Department's extend/compete policies 
and procedures (48 CFR 917.6, 48 CFR 970.1702-1(a), and internal 
guidance); and to options exercised under competitively awarded 
management and operating contracts (48 CFR 970.1702-1(b)).
    Contracting officers may, after consulting with the Department of 
Energy Office of Procurement and Assistance Policy of the Office of 
Procurement and Assistance Management, apply these DEAR changes, with 
the exception of the changes to the cost principles and related 
clauses, to existing contracts.
    Contracting officers should modify existing contracts to 
incorporate the following clauses within one year of the effective date 
of this rule: 952.204-75, Public Affairs; 952.215-70, Key Personnel; 
970.5203-2, Performance Improvement and Collaboration; 970.5203-3, 
Contractor's Organization; 970.5226-3, Community Commitment; and 
970.5235-1, Federally funded Research and Development Center Sponsoring 
Agreement.

II. Discussion of Public Comments

    The major issues emerging from the public comments on the two 
proposed rules that led to this final rule (the ``Rewrite of 
Regulations Governing Management and Operating Contracts'' and the 
``Changes to Department of Energy Cost Principles and Various

[[Page 80995]]

Clauses'') are discussed separately below. DOE received other comments 
that were out of scope, speculative, or otherwise irrelevant. 
Consistent with applicable law, DOE is not responding to those 
comments.

Rewrite of Regulations Governing Management and Operating Contracts

    Fourteen respondents submitted 43 comments covering 22 separate 
topics. However, some of these comments raised issues not listed as 
open for comment in the proposed rule. The Department is separately 
evaluating these comments for potential rulemaking actions in the 
future.

952.204-75  Public Affairs

    Comment: Four respondents expressed dissatisfaction with proposed 
Public Affairs clause asserting its requirements were, among other 
things, unproductive, burdensome, ambiguous, and unworkable.
    Response: To permit appropriate procedures at each activity that 
will maximize the effectiveness of the clause and minimize the burden 
on the Departments' contractors, the Department has added the following 
language to paragraphs (a), (e), and (f) of the clause: ``in accordance 
with procedures defined by the Contracting Officer.''

952.215-70  Key Personnel

    Comment: Two respondents recommended DOE not require the contractor 
to obtain DOE's approval before moving key personnel.
    Response: While the Department deems it essential that it retain 
the right to approve movements of key personnel in most cases, it has 
amended paragraph (a) of the clause by adding language to permit a 
contractor to move key personnel if the contractor deems immediate 
removal or suspension of any member of its management team necessary to 
fulfill its obligation to maintain satisfactory standards of employee 
competency, conduct, and integrity under the clause at 48 CFR 970.5203-
3, Contractor's Organization. The Contractor must notify the 
contracting officer prior to or concurrently with such action.

952.242-70  Technical Direction

    Comment: Two respondents expressed dissatisfaction with the 
clause's asserted lack of congruence with contracts for basic research.
    Response: The use of the clause is discretionary. Nevertheless, the 
Department has added to the clause prescription at 48 CFR 942.270-2 
authorization to use a clause ``substantially the same as'' the 
standard clause. Additionally, the Department has added to the clause 
at 48 CFR 952.242-70 a new paragraph (e)(3) that gives the contracting 
officer another option in responding to the contractor's assertion of 
changed conditions. This option permits the contracting officer to 
advise the contractor in writing within a reasonable time not to 
proceed with the instruction or direction of the contracting officer's 
representative.

970.0370/970.5203-2  Performance Improvement and Collaboration

    Comment: One respondent recommended: (1) deleting the first and 
sixth sentences in paragraph (d) of 48 CFR 970.0370-1 because they were 
redundant with other coverage; and, (2) in performance-based management 
contracts, replacing the requirement in the first sentence of 48 CFR 
970.5203-2(d) that the contractor obtain the contracting officer's 
approval where necessary with a statement that the contract would 
define the requirement for the clause per DOE policy. Another 
respondent, while not objecting to the clause, urged that its use ``* * 
* not lead to unnecessary implementation or oversight expenses for DOE 
or its contractors.''
    Response: Regarding the first respondent's recommendation, the 
Department does not agree that the first and sixth sentences in 
paragraph (d) of 48 CFR 970.0370-1 are redundant. They state the 
Department's policy and expectations clearly. Nor does the Department 
agree that the suggested replacement in 48 CFR 970.5203-2(d) adds 
clarity; it would remove clear-cut direction regarding the contractor's 
obligation to seek approval with a vague statement that requirements 
would be defined later. Regarding the second respondent's 
recommendation, the Department shares the respondent's hope that the 
clause will be implemented prudently.

970.2673-2/970.5226-3  Community Commitment

    Comment: Seven respondents submitted comments on the proposed 
community commitment clause. The gist of the comments was that DOE was 
inappropriately changing existing policy for economic development 
initiatives for its major site and facility contracts. Some comments 
were supportive of the proposed clause and suggested additional 
language to expand or clarify the proposed language.
    Response: The Department has decided not to adopt any of the 
respondents' proposed changes, not because the Department disagrees in 
principle with the changes, but because they are unnecessary. Some 
elaboration is appropriate.
    In the past, a number of DOE's competitive solicitations for major 
site and facility contracts included requirements that competitors 
propose specific economic development initiatives as a consideration in 
source selection. This type of selection factor was primarily used in 
association with sites and facilities that were undergoing major 
changes, such as downsizing or closure, and where the Department 
envisioned the contractor to have a major role in the change-over. In 
certain cases the contractor's performance against the proposed 
economic development initiatives became a contract requirement subject 
to assessment in making fee determinations.
    The use of economic development source selection factors was, 
however, neither a requirement of law, such as Section 3161 of the 
National Defense Authorization Act for Fiscal Year 1993, nor a part of 
DOE's implementation of worker and community transition policies. The 
use of economic development contractor selection factors was, in short, 
not a Departmental policy, but rather an occasional practice related to 
specific considerations at the site or facility. Although DOE included 
source selection factors related to economic development in past 
competitive solicitations, DOE does not currently have appropriate 
applications for this practice. For the most part, our sites and 
facilities are stable in the sense that we do not envision radical 
mission changes or downsizing.
    This does not mean that the Department has lost sight of the fact 
that the Department and its contractors need to be good neighbors. To 
reflect the Department's policy, we are issuing a contract clause that 
will require each major site and facility contractor to conduct its 
business activities at the DOE facility in a manner that: (1) 
recognizes the diverse interests of the region and its stakeholders; 
(2) engages regional stakeholders in issues and concerns of mutual 
interest; and (3) recognizes that giving back to the community is a 
worthwhile business practice. This requirement has also been included 
in our most recent competitive contract awards. The use of such a 
contractual requirement provides a viable mechanism to ensure that DOE 
contractors are responsive to local interests.
    The new clause does not preclude the Department from incorporating 
specific requirements in its contracts where such requirements fulfill 
or support DOE's

[[Page 80996]]

mission at the site or facility. For example, DOE's major site and 
facility contracts will continue to require compliance with the 
Department's Section 3161 program to minimize the impact of mission 
changes on the contractor workforce and the affected community. 
Additionally, DOE may pursue economic development activities directly 
rather than through a contract mechanism. DOE will continue to assess 
the need for these activities on a case-by-case basis where such 
activities are in connection with the mission of the site or facility 
and can be accomplished consistent with the provisions of various 
appropriations laws and other regulations. However, DOE does not intend 
to use economic development requirements in solicitations and contracts 
where such requirements are unrelated to the specific mission at the 
site or facility.
    DOE has a long-standing commitment to the regions and local 
communities in which it conducts business. The Department continues to 
recognize that its success in meeting critical mission needs is 
dependent on active support from state, regional and local governments, 
communities, and other organizations. DOE has demonstrated that 
commitment through outreach and partnering initiatives in a number of 
ways including: hiring preferences and preservation of benefits to 
employees of successor contractors; programs for ensuring worker safety 
and health; aggressive subcontracting programs for small businesses, 
small disadvantaged businesses, women-owned businesses, and HUB Zone 
businesses; small business mentoring programs; release of assets no 
longer needed by the Department to community reuse organizations; 
support to local educational institutions; and technology transfer 
programs.
    The Department's commitment remains strong today, and it will 
continue pursuing opportunities to ensure that the Department is a 
productive and conscientious partner in the areas in which it conducts 
business. The Department recognizes and accepts its obligation to the 
people and communities surrounding DOE sites and facilities.

970.4501-1/970.5245-1  Government Property

    Comment: One respondent suggested that DOE remove the definition of 
``managerial personnel'' from the property clause, implying the 
definition should be in the ``Definitions'' clause of the contract.
    Response: The Department does not agree that the suggested change 
would be an improvement. The current property clause defines managerial 
personnel and other clauses use the definition by referencing it rather 
than repeating it. This has been a Department-wide practice since the 
implementation of contract reform. There would be no obvious benefit to 
changing this successful practice.

970.5203-3  Contractor's Organization

    Comment: Seven respondents provided comments whose gist was an 
objection to the ``new'' right DOE is asserting to direct the removal 
of contractor employees for specified causes. The respondents raised 
numerous issues, such as legal complexities, recruiting difficulties, 
labor-management concerns, and employer-employee relationship concerns.
    Response: The Department does not agree that this proposed clause 
is essentially a new right DOE is asserting. This right has always been 
standard language in the DEAR. DOE is simply removing the alternate 
language, which did permit contracting officers to not assert this 
right. Additionally, the FAR (at 48 CFR 52.236-5, Material and 
Workmanship) and case law have supported the Government's use of this 
contractual authority. The unique nature of a management and operating 
contracts makes it appropriate that the Government retain this right in 
this type of contract.
    Notwithstanding the above, the Department recognizes that 
exercising this right is an action not to be taken lightly. 
Consequently, the Department has amended the proposed language by 
raising the approval authority for exercising this right to the 
Secretary of Energy. Further, the Department plans to provide guidance 
to its personnel to emphasize that they should only consider exercising 
this right if the contractor fails to fulfill its obligation under this 
clause to implement a process for maintaining satisfactory standards of 
employee competency, conduct, and integrity.
    In addition to the change above, the Department also added an 
optional phrase to the clause's prescription (48 CFR 970.0371-9) that 
the chart discussed in paragraph (a) of the clause also include 
managerial personnel.

970.5235-1  Federally Funded Research and Development Center Sponsoring 
Agreement

    Comment: Two respondents suggested editorial changes and questioned 
DOE's implementation of the FAR policy regarding Federally Funded 
Research and Development Center (FFRDCs), alleging, for example, that 
the FAR mandates ``long term relationships'' while DOE's proposed 
language does not.
    Response: The Department does not agree that its proposed language 
is in any way inconsistent with the FAR policy on FFRDCs. The comments 
infer meanings from the FAR language that are not warranted. Language 
in the FAR does not mandate ``long term relationships'' between 
agencies and FFRDCs, it simply encourages them. Current DOE policy 
provides for a potential 10-year relationship.

970.5244-1  Contractor Purchasing System

    Comment: Two respondents commented on DOE's alternatives of using 
either the Contractor Purchasing System Review or the Balanced Score 
Card methodology for periodic appraisals of the Contractor's management 
of the purchasing function. One suggested choosing the alternative 
prior to the evaluation period. The other questioned the reintroduction 
of the formal Contractor Purchasing System Review as an alternative to 
the Balanced Score Card methodology.
    Response: The Department disagrees that the alternative must be 
established prior to the evaluation period. The proposed clause 
requires the Contractor Purchasing System Review unless the contractor 
can obtain the contracting officer's approval to participate in the 
Balanced Score Card methodology. The Department also disagrees that it 
is ``reintroducing'' the formal Contractor Purchasing System Review. 
The current DEAR clause states DOE reserves the right to review/approve 
the contractor's purchasing system per FAR Subpart 44.3--the Contractor 
Purchasing System Review.

52.211-5  Workmanship and Materials/Material Requirements

    Comment: One respondent questioned DOE's intent in replacing the 
DEAR Workmanship and Materials clause at 48 CFR 970.5204-25 with the 
FAR Material Requirements clause at 48 CFR 52.211-5. The respondent 
asserted that the clauses were dissimilar.
    Response: In its review of DEAR Part 970, the Department determined 
the requirements of the DEAR Workmanship and Materials clause were 
mostly subjective. The requirements, to the extent necessary, are more 
suitably enforced by other, less subjective parts of the contract such 
as work authorization directives. The clause requirement that only new 
materials be used is provided for in 48 CFR 52.211-5. The Department 
had

[[Page 80997]]

added a clause prescription at 48 CFR 970.1103-4. Additionally, the 
Department has added language to 48 CFR 970.0100 and 48 CFR 970.5200 to 
emphasize that management and operating contracts, as specialized 
government contracts, include both FAR and DEAR clauses.

52.236-8  Other Contracts

    Comment: One respondent objected to DOE's adopting the standard FAR 
clause (48 CFR 52.236-8), Other Contracts, because it conflicts with 
DOE's current practice of holding a facility management contractor 
accountable regardless of who performs the work. The respondent 
recommended authorizing tailoring of the clause.
    Response: The Department does not agree that there is a conflict or 
that the clause should permit tailoring. It appears the respondent is 
confusing two separate contractor responsibilities: one is managing its 
subcontractors; the other is cooperating with other prime contractors 
on site. DOE's current practice regarding a prime contractor managing 
its subcontractors (specified in the clause at 48 CFR 970.5223-1, 
Integration of Environment, Safety, and Health into Work Planning and 
Execution) is to hold the contractor accountable regardless of who 
performs the work. DOE's current practice regarding cooperation among 
prime contractors is that the prime contractor must cooperate fully 
with other prime contractors (which is no different than the proposed 
practice required by the standard FAR clause). These two requirements 
are independent of each other.

Changes to Department of Energy Cost Principles and Various Clauses

    Five respondents submitted 34 comments covering 24 separate topics.
    The ``Changes to Department of Energy Cost Principles and Various 
Clauses'' proposed rule did not use the organization and numbering 
system that this final rule institutes. This new organization and 
numbering system, which was introduced in the ``Rewrite of Regulations 
Governing Management and Operating Contracts'' proposed rule, is 
reflected in the comprehensive conversion table for DEAR Part 970 that 
follows this section. That conversion table compares new citations, 
which appear in the final rule, to current citations.
    To aid the reader in tracing from the ``Changes to Department of 
Energy Cost Principles and Various Clauses'' proposed rule to this 
final rule, the headings within the discussion of public comments 
section that follows are listed both with the current citation, which 
appeared in the proposed rule, and with the new (if there is one) 
citation, which appears in this final rule. The new citation appears in 
parentheses.
    As an additional aid to the reader, the following mini-conversion 
table compares current citations, which appeared in the proposed rule, 
to new citations, which appear in this final rule, for the citations 
that meet the following criteria: (1) They were affected by the 
``Changes to Department of Energy Cost Principles and Various Clauses'' 
proposed rule and they appear in this final rule; or (2) they are new 
citations and they appear in this final rule.
    By using the following mini-conversion table and the comprehensive 
conversion table for DEAR Part 970 that follows this section, the 
reader should be able to follow the transition (from the current 
citations to the new citations) easily.

------------------------------------------------------------------------
       Current citation            New citation            Title
------------------------------------------------------------------------
970.3100-1....................  970.3101-00-70...  Scope of subpart.
970.3101-3....................  970.3102-3-70....  Home Office Expenses.
970.3101-9....................  970.3101-9.......  Advance Agreements.
970.3101-10...................  970.3101-10......  Cost Certification.
970.3102......................  970.3102-05......  Application of Cost
                                                    Principles.
970.3102-4....................  970.3102-05-4....  Bonding Costs.
970.3102-6....................  970.3102-05-6....  Compensation for
                                                    Personal Services.
970.3102-18...................  970.3102-05-18...  Independent research
                                                    and development and
                                                    bid and proposal
                                                    costs.
970.3102-19...................  970.3102-05-19...  Insurance and
                                                    indemnification.
970.3102-22...................  970.3102-05-22...  Lobbying and
                                                    political activity
                                                    costs.
970.3102-28...................  970.3102-05-28...  Other business
                                                    expenses.
970.3102-30...................  970-3102-05-30...  Patent costs and
                                                    technology transfer
                                                    costs.
970.3102-46...................  970-3102-05-46...  Travel Costs.
N/A...........................  970.3102-05-47...  Costs Related to
                                                    Legal and Other
                                                    Proceedings.
970.3102-53...................  970.3102-05-53...  Prexisiting
                                                    Conditions.
N/A...........................  970.3170.........  Contract Clause.
970.42........................  970.42...........  Contract
                                                    Administration.
970.4207-1....................  970.4207-05-01...  Contracting officer
                                                    determination
                                                    procedure.
N/A...........................  970.4207-03-70...  Contract clause.
970.4207-2....................  970.4207-03-02...  Certificate of Costs.
970.5204-16...................  970.5232-2.......  Payments and
                                                    advances.
970.5204-31...................  970.5228-1.......  Insurance-litigation
                                                    and claims.
970.5204-XX...................  970.5242-1.......  970.3102-53
------------------------------------------------------------------------

970.3101-1  (No New Citation) Objectives

    Comment: One respondent commented that the proposed 48 CFR 
970.3101-1 Objectives unnecessarily addresses deviations to the cost 
principles, since deviations are addressed at 48 CFR 970.5202 and in 
written Departmental procedures.
    Response: The Department concurs and has deleted the coverage from 
the final rule.

970.3101-3 (970.3102-3-70)  Home Office Expenses

    Comment: Two respondents commented that the proposed coverage at 48 
CFR 970.3101-3, Home Office Expenses, appeared at odds with the policy 
articulated at 48 CFR 970.15404-4-2(b)(1), Special Considerations: 
Laboratory Management and Operation, which states in part that costs 
incurred in the operation of a laboratory that are allowable and 
allocable under the cost principles should be classified as direct or 
indirect charges to the contract and not included as proposed fee.

[[Page 80998]]

    Response: The proposed coverage and the policy are not at odds. The 
proposed coverage requires the laboratory management contractor to 
classify allowable costs under the cost principles and other 
regulations as charges to the contract and not fee. This means that 
when the laboratory management contractor requests, per the regulation 
at 48 CFR 970.3101-3, that the contracting officer consider some home 
office expense allowable under the contract, the contractor must 
propose the expense as a charge to the contract and not fee. 
Nevertheless, to diminish the possibility of confusion, DOE has added 
the language ``(but see 48 CFR 970.15404-1-3(b)(1) if the contract is 
for the management and operation of a laboratory)'' to 48 CFR 970.3101-
3(a)(3)(i). Additionally, we have added ``(including 48 CFR 970.31)'' 
after ``regulations'' to 48 CFR 970.15404-1-3(b)(1) to emphasize that 
the FAR cost principles, including home office expense, are 
supplemented by 48 CFR 970.31 in all M&O contracts.
    Comment: One respondent asserted that conventional allocation bases 
are not always appropriate, since they presume significant investment 
in the operations. This respondent suggests that 48 CFR 970.3101-3 be 
revised to state that the nature of the M&O contracting environment 
creates a unique environment and conventional home office cost 
allocation bases may be inappropriate. Contracting officers should 
evaluate the contractor's specific circumstances and pursue an advance 
agreement covering the allowability of home office expenses.
    Response: DOE fails to see where the policy at 48 CFR 970.3101-3 
does not provide everything that the respondent seeks. The policy 
clearly recognizes that ``the nature of the M&O contracting environment 
creates a unique environment.'' And it clearly states that 
``conventional home office cost allocation bases may be 
inappropriate.'' It also requires the HCA's approval for any contractor 
request to make some home office expense allowable under the contract. 
It is clear that under the policy at 48 CFR 970.3101-3, contracting 
officers will evaluate the contractor's specific circumstances.
    Comment: One commenter claimed that proposed 48 CFR 970.3101-3(a) 
eliminates contracting officer discretion to make home office expenses 
fully allowable when circumstances warrant.
    Response: While DOE agrees that the policy at 48 CFR 970.3101-3 
precludes contracting officers from making home office expenses fully 
allowable, DOE disagrees that this ``eliminates'' any discretion that 
contracting officers formerly held. The Department's policy as stated 
in the DEAR for many years has been that the contractor's fee generally 
provides adequate compensation for home office expense. Under the 
Department's policy, exceptions were allowed, but it included a 
requirement to recognize that some home office expense had been 
accounted for in the management and operating contractor's fee. The 
policy at 48 CFR 970.3101-3 simply continues the Department's 
traditional policy.

970.3101-9 (970.3101-9)  Advance Agreements

    Comment: Two respondents commented that they believed the intent of 
48 CFR 970.3101-9, Advance Agreements, is to emphasize the non-
inclusive nature of the list of potential advance agreement candidates. 
A respondent recommended replacing the language in the proposed rule 
with:
    ``At any time, in accordance with the contract terms and 
conditions, the contracting officer may pursue an advance agreement in 
connection with any cost item under the contract.''
    Response: The Department concurs and has made the change as 
suggested.

970.3102-6 (970.3102-05-6) Compensation for Personal Services

    Comment: Two respondents commented on the proposed coverage at 48 
CFR 970.3102-6, Compensation. One stated that significant effort has 
been invested in streamlining personnel matters to reduce cost and 
administrative burden and a manageable personnel appendix was the 
result. The respondent recommended against a requirement that would 
revert to the burdensome personnel appendices of the past.
    Response: There is no new language, and there are no new 
requirements. DOE sites and facilities should continue to use those 
policies and practices that have been jointly developed over the life 
of the contract.

970.3102-18 (970.3102-05-18) Independent Research and Development and 
Bid and Proposal Costs

    Comment: Two responders commented that the proposed coverage at 48 
CFR 970.3102-18, Independent Research and Development and Bid and 
Proposal Costs, should be clarified to distinguish between bid and 
proposal costs a contractor incurs to obtain new business in its non-
FFRDC operations and preparation of proposal costs incurred by FFRDCs 
to perform work authorized by the sponsoring agency for others. 
Additionally, the respondents recommended that contracting officer-
approved Laboratory Directed Research and Development costs be 
specified as allowable costs notwithstanding any other treatment of 
IR&D.
    Response: DOE concurs. The coverage has been rewritten to identify 
and distinguish between approved Laboratory Directed Research and 
Development costs and bid and proposal costs and those costs incurred 
under the rubric of the Department's various ``reimbursable programs.''

970.3102-20  (no new citation) Interest and Other Financial Costs

    Comment: One commenter pointed out that proposed 48 CFR 970.3102-
20, Interest and other financial costs, is not necessary. The cost 
principles at 48 CFR 31.205-10 and 48 CFR 31.205-20 provide adequate 
coverage.
    Response: DOE concurs and has deleted the proposed coverage.

970.3102-21  (no new citation) Fines and Penalties

    Comment: The proposed rulemaking adopts the FAR coverage on fines 
and penalties. Both FAR and DEAR provide exceptions to fines or 
penalties when they are the result of (1) the terms and conditions of 
the contract, or (2) written direction of the contracting officer. 
However, the DEAR provides another exception not contained in the FAR 
coverage; when such a civil fine or penalty was imposed without regard 
to fault and could not have been avoided by the exercise of due care. 
The respondent recommended DOE retain this exception.
    Response: The language applicable to the Department's contractors 
should be the same as that applied to other Federal contractors since 
this type of issue is not unique to the Department's contractors. There 
is already sufficient flexibility within the FAR cost principle to 
authorize reimbursement of this cost category when conditions warrant.

970.3102-46 (970.3102-05-46)  Travel Costs

    Comment: Though Congress has mandated separate travel requirements 
for DOE contractors (P.L. 106-60), one respondent stated that this 
should not be a barrier to the use of FAR language. FAR language could 
be incorporated into each contract and supplemented if the regulatory 
climate (reasonableness standard) and the statutory climate change.
    Response: Although the respondent's proposed solution is one way of 
addressing the issue, the Department believes that the statutory 
direction should be implemented in the

[[Page 80999]]

regulation rather than on a contract-by-contract basis.
    Comment: One commenter contended that the detailed description 
constrains the contractor from pursuing other travel reimbursement 
policies that may be more economical overall to the Government and 
still meet the intent of P.L. 106-60, Section 309.
    Response: DOE disagrees. The deviation provisions contained in the 
DEAR permit the consideration of modifications to a cost principle 
where economies or efficiencies can be demonstrated (except for those 
cost principles statutorily mandated).
    Comment: Two respondents commented that the cost principle should 
not be adopted, since the source of this requirement is appropriations 
law, not substantive law. The respondents recommended developing a 
clause that commits the contractor to abide by any applicable 
restrictions communicated by the contracting officer in providing 
appropriated funds to the contractor.
    Response: DOE disagrees. The Department believes that the 
establishment of consistent, comprehensive policy direction is the 
appropriate course of action.

970.5204-13  (no new citation) Allowable Costs and Fixed-Fee

    Comment: One commenter disagreed with the proposed deletion of this 
clause, arguing that contracting officers should be authorized to 
develop a local allowable cost clause that adapts the relevant portions 
of 48 CFR Part 31.
    Response: DOE disagrees. The intent of this rulemaking is to 
eliminate redundancy in the DEAR and bring the Department's cost 
reimbursement practices in alignment with the rest of the federal 
government, except when a different practice is specifically warranted 
by the nature of the Department's activities. Local clauses are 
designed to address local issues, not those that are common throughout 
the Department.

970.5204-16 (970.5232-2)  Payments and Advances

    Comment: One respondent asserted that the proposed reference should 
be to 48 CFR part 31, not to 48 CFR subpart 31.2.
    Response: DOE disagrees. The activities carried out under the 
Department's management and operating contracts have always been 
subject to the same cost principles, regardless of whether the entity 
performing the contract was a for-profit entity, a non-profit entity, 
or an educational institution. Now the cost principles will be those 
provided at 48 CFR Subpart 31.2.

970.5204-XX (970.5242-1)  Penalties for Unallowable Costs

    Comment: Paragraph (b) of the clause states ``* * * the contracting 
officer shall assess a penalty * * *'' but paragraph (e) states ``The 
contracting officer may waive the penalty provision * * *'' A 
respondent recommended changing the ``shall'' to ``may.''
    Response: The language contained in the coverage is identical to 
that contained in statute, Section 2151(b) of Pub. L. 103-355.

31.205-30 (970.3102-05-30)  Patent Costs

    Comment: One commenter argued that use of only the FAR cost 
principle would adversely affect the Laboratories' ability to carry out 
DOE's and the Laboratories' technology transfer mission. The deletion 
of the entire 48 CFR 970.5204-13(d)(7) without a compensating fix to 
allow patent related costs is not acceptable.
    Response: While DOE does not necessarily agree that the FAR cost 
principle is insufficient because of the importance of the technology 
transfer mission, DOE has added coverage at 48 CFR 970.3102-05-30 for 
Patent costs and technology transfer costs. The coverage distinguishes 
between contracts that include and contracts that do not include the 
clause at 48 CFR 970.5227-3, Technology Transfer Mission.

Part 970 Rewrite Conversion Table

    The following conversion table shows how this rule reorganizes and 
renumbers Part 970. (The table's ``Current Citation'' column reflects 
the DEAR as it was prior to: the ``Financial Management Clauses for 
Management and Operating Contracts'' final rule, 65 FR 21371, April 21, 
2000; the Costs Associated with ``Whistleblower Actions'' final rule, 
65 FR 62299, October 18, 2000; and the ``Revision of Patent Regulations 
Relating to DOE Management and Operating Contracts'' interim final 
rule, 65 FR 68932, November 15, 2000.)

------------------------------------------------------------------------
         New citation            Current citation          Title
------------------------------------------------------------------------
970.01........................  N/A..............  Management and
                                                    Operating Contract
                                                    Regulatory System.
970.0100......................  970.0000.........  Scope of Part.
N/A...........................  970.0001.........  [Reserved].
970.0103......................  N/A..............  Publication and
                                                    Codification.
970.03........................  970.03 [Note:      Improper Business
                                 Current 970.03     Practices and
                                 is reserved]..     Personal Conflicts
                                                    of Interest.
970.0309......................  970.2274.........  Whistleblower
                                                    Protection of
                                                    Contractor
                                                    Employees.
970.0309-1....................  970.2274-1(a)....  Applicability.
970.0370......................  970.0901 (Title).  Management Controls
                                                    and Improvements.
970.0370-1....................  970.0901(a), (b),  Policy.
                                 and (c).
970.0370-2....................  N/A..............  Contract Clause.
970.0371......................  970.2272 (Title).  Conduct of Employees
                                                    of DOE Management
                                                    and Operating
                                                    Contractors.
970.0371-1....................  970.2272(a)......  Scope of Section.
970.0371-2....................  970.2272(b)(1)...  Applicability.
970.0371-3....................  N/A..............  Definition.
970.0371-4....................  970.2272(c)......  Gratuities.
970.0371-5....................  970.2272(d)......  Use of Privileged
                                                    Information.
970.0371-6....................  970.2272(g)......  Incompatibility
                                                    Between Regular
                                                    Duties and Private
                                                    Interests.
970.0371-7....................  970.2272(e)......  Outside Employment of
                                                    Contractor
                                                    Employees.
970.0371-8....................  970.2272(f)......  Employee Disclosure
                                                    Concerning Other
                                                    Employment Services.
970.0371-9....................  970.2272(b)(2)     Contract Clause.
                                 and (3).
970.04........................  970.04...........  Administrative
                                                    Matters.
970.0404......................  970.0404.........  Safeguarding
                                                    Classified
                                                    Information.
970.0404-1....................  970.0404-1.......  Definitions.
970.0404-2....................  970.0404-2.......  General.

[[Page 81000]]

 
970.0404-3....................  970.0404-3 (a)     Responsibilities of
                                 and (b).           Contracting
                                970.0404-4 (d)...   Officers.
970.0404-4....................  970.0404-4 (a),    Solicitation
                                 (b) and (c).       Provision and
                                                    Contract Clauses.
N/A...........................  970.0406.........  [Reserved].
970.0407......................  N/A..............  Contractor Records
                                                    Retention.
970.0407-1....................  970.0407.........  Applicability.
970.0407-1-1..................  970.0407-1.......  Alternate Retention
                                                    Schedules.
970.0407-1-2..................  970.0407-2.......  Access to and
                                                    Ownership of
                                                    Records.
970.0407-1-3..................  970.0407-3.......  Contract Clause.
970.0470......................  970.0470.........  Department of Energy
                                                    Directives.
970.0470-1....................  970.0470-1.......  General.
970.0470-2....................  970.0470-2.......  Contract Clause.
970.08........................  970.08...........  Required Sources of
                                                    Supplies and
                                                    Services.
970.0801......................  970.0801 (Title).  Excess Personal
                                                    Property.
970.0801-1....................  970.0801 (Text)..  Policy.
970.0808......................  N/A..............  Acquisition of
                                                    Printing.
970.0808-1....................  N/A..............  Scope of Section.
970.0808-2....................  N/A..............  Policy.
970.0808-3....................  N/A..............  Contract Clause.
970.09........................  970.09...........  Contractor
                                                    Qualifications.
970.0905......................  970.0905.........  Organizational
                                                    Conflicts of
                                                    Interest.
970.0970......................  N/A..............  Performance
                                                    Guarantees.
970.0970-1....................  970.0902(a), (b)   Determination of
                                 and (c).           Responsibility.
970.0970-2....................  970.0902(d)......  Solicitation
                                                    Provision.
970.11........................  970.10...........  Describing Agency
                                                    Needs
970.1100......................  N/A..............  Policy.
970.1100-1....................  970.1001.........  Performance-based
                                                    Contracting.
970.1100-2....................  970.1002.........  Additional
                                                    Considerations
970.1103-4....................  N/A..............  Contract Clause
970.15........................  970.15...........  Contracting by
                                                    Negotiation.
970.1504......................  N/A..............  Contract Pricing.
970.1504-1....................  N/A..............  Price Analysis.
970.1504-1-1..................  970.15404-4......  Fees for Management
                                                    and Operating
                                                    Contracts.
970.1504-1-2..................  970.15404-4-1....  Fee Policy.
970.1504-1-3..................  970.15404-4-2....  Special
                                                    Considerations:
                                                    Laboratory
                                                    Management and
                                                    Operation.
970.1504-1-4..................  970.15404-4-3....  Types of Contracts
                                                    and Fee
                                                    Arrangements.
970.1504-1-5..................  970.15404-4-4....  General
                                                    Considerations and
                                                    Techniques for
                                                    Determining Fixed
                                                    Fees.
970.1504-1-6..................  970.15404-4-5....  Calculating Fixed
                                                    Fee.
970.1504-1-7..................  970.15404-4-6....  Fee Base.
970.1504-1-8..................  970.15404-4-7....  Special Equipment
                                                    Purchases.
970.1504-1-9..................  970.15404-4-8....  Special
                                                    Considerations: Cost-
                                                    plus-award-fee.
970.1504-1-10.................  970.15404-4-9....  Special
                                                    Considerations: Fee
                                                    Limitations.
970.1504-1-11.................  970.15404-4-10...  Documentation.
970.1504-2....................  970.15405........  Price Negotiation.
970.1504-3....................  N/A..............  Documentation.
970.1504-3-1..................  970.15406-2......  Cost or Pricing Data.
970.1504-4....................  N/A..............  Special Cost or
                                                    Pricing Areas.
970.1504-4-1..................  970.15407-2......  Make-Or-Buy Plans.
970.1504-4-2..................  970.15407-2-1....  Policy.
970.1504-4-3..................  970.15407-2-2....  Requirements.
970.1504-5....................  970.15404-4-11...  Solicitation
                                                    Provision and
                                                    Contract Clauses
970.15407-2-3.................  970.15407-2-3
970.17........................  970.17...........  Special Contracting
                                                    Methods
970.1706......................  N/A..............  Management and
                                                    Operating Contracts.
970.1706-1....................  970.1702-1.......  Award, Renewal, and
                                                    Extension.
970.1706-2....................  970.1702-2.......  Contract Clause.
970.19........................  970.19...........  Small, Small
                                                    Disadvantaged and
                                                    Women-owned Small
                                                    Business Concerns
970.1907......................  N/A..............  Subcontracting with
                                                    Small Business,
                                                    Small Disadvantaged
                                                    Business and Woman-
                                                    owned Small Business
                                                    Concerns.
970.1907-1....................  970.1901.........  Subcontracting Plan
                                                    Requirements.
N/A...........................  970.20...........  [Reserved]
970.22........................  970.22...........  Application of Labor
                                                    Policies
970.2200......................  N/A..............  Scope of Subpart
970.2201......................  970.2201.........  Basic Labor Policies.
970.2201-1....................  N/A..............  Labor Relations.
970.2201-1-1..................  970.2201(a)......  General.
970.2201-1-2..................  970.2201(b)......  Policies.
970.2201-1-3..................  970.2201(b)(5)(ii  Contract Clause.
                                 ).
970.2201-2....................  970.2275.........  Overtime Management
970.2201-2-1..................  970.2275-1.......  Policy.
970.2201-2-2..................  970.2275-2.......  Contract Clause.
N/A...........................  970.2206.........  Walsh-Healey Public
                                                    Contracts Act.

[[Page 81001]]

 
970.2204......................  N/A..............  Labor Standards for
                                                    Contracts Involving
                                                    Construction.
970.2204-1....................  N/A..............  Statutory and
                                                    Regulatory
                                                    Requirements.
970.2204-1-1..................  970.2273.........  Administrative
                                                    Controls and
                                                    Criteria for
                                                    Application of the
                                                    Davis-Bacon Act in
                                                    Operational or
                                                    Maintenance
                                                    Activities.
970.2208......................  970.2208.........  Equal Employment
                                                    Opportunity.
970.2210......................  970.2210.........  Service Contract Act.
970.2270......................  970.2270.........  Unemployment
                                                    Compensation.
970.23........................  970.23...........  Environmental,
                                                    Conservation, and
                                                    Occupational Safety
                                                    Programs
970.2303......................  970.2303.........  Hazardous Materials
                                                    Identification and
                                                    Material Safety.
970.2303-1....................  970.2303-1.......  General.
970.2303-2....................  970.2303-2.......  Clauses.
970.2304......................  970.2304.........  Use of Recovered/
                                                    Recycled Materials.
970.2304-1....................  970.2304-1.......  General.
970.2304-2....................  970.2304-2.......  Contract Clause.
970.2305......................  970.2305.........  Workplace Substance
                                                    Abuse Programs-
                                                    Management and
                                                    Operating Contracts.
970.2305-1....................  970.2305-1.......  General.
970.2305-2....................  970.2305-2.......  Applicability.
970.2305-3....................  970.2305-3.......  Definitions.
970.2305-4....................  970.2305-4.......  Solicitation
                                                    Provision and
                                                    Contract Clause.
970.2306......................  970.2305-5.......  Suspension of
                                                    Payments,
                                                    Termination of
                                                    Contract, and
                                                    Debarment and
                                                    Suspension Actions.
N/A...........................  970.25...........  Foreign Acquisition.
970.26........................  970.26...........  Other Socioeconomic
                                                    Programs.
970.2670......................  970.2601 (Title).  Implementation of
                                                    Section 3021 of the
                                                    Energy Policy Act of
                                                    1992.
970.2670-1....................  970.2601(a)......  Requirements.
970.2671......................  N/A..............  Diversity.
970.2671-1....................  970.2601(b)......  Policy.
970.2671-2....................  970.2602-2(b)....  Contract Clause.
970.2672......................  970.2602-1.......  Implementation of
                                                    Section 3161 of the
                                                    National Defense
                                                    Authorization Act
                                                    for Fiscal Year
                                                    1993.
970.2672-1....................  970.2602-1(a)....  Policy.
970.2672-2....................  970.2602-1(b)....  Requirements.
970.2672-3....................  970.2602-2(a)....  Contract Clause.
970.2673......................  N/A..............  Regional
                                                    Partnerships.
970.2673-1....................  N/A..............  Policy.
970.2673-2....................  N/A..............  Contract Clause.
970.27........................  970.27...........  Patents, Data, and
                                                    Copyrights.
970.2701......................  970.2701 (Title).  General.
970.2701-1....................  970.2701 (Text)..  Applicability.
970.2702......................  N/A..............  Patent related
                                                    clauses.
970.2702-1....................  N/A..............  Authorization and
                                                    consent.
970.2702-2....................  N/A..............  Notice and assistance
                                                    regarding patent and
                                                    copyright
                                                    infringement.
970.2702-3....................  N/A..............  Patent indemnity.
970.2702-4....................  N/A..............  Royalties.
970.2702-5....................  N/A..............  Rights to proposal
                                                    data.
970.2702-6....................  N/A..............  Notice of right to
                                                    request patent
                                                    waiver.
970.2703......................  970.2702 (Title).  Patent Rights.
970.2703-1....................  970.2702 (Text)..  Purposes of patent
                                                    rights clauses.
970.2703-2....................  970.2704.........  Patent rights clause
                                                    provisions for
                                                    management and
                                                    operating
                                                    contractors.
970.2704......................  N/A..............  Rights in Data.
970.2704-1....................  970.2705.........  General.
970.2704-2....................  970.2706.........  Procedures.
970.2704-3....................  970.2707.........  Contract Clauses.
970.2770......................  970.73...........  Technology Transfer.
970.2770-1....................  970.7310.........  General.
970.2770-2....................  970.7320.........  Policy.
970.2770-3....................  970.2703.........  Technology Transfer
                                                    and Patent Rights.
970.2770-4....................  970.7330.........  Contract Clause.
970.28........................  970.28...........  Bonds and Insurance.
970.2803......................  N/A..............  Insurance.
970.2803-1....................  970.2271.........  Workers' Compensation
                                                    Insurance.
970.2803-2....................  970.2830.........  Contract Clause.
970.29........................  970.29...........  Taxes.
970.2902......................  N/A..............  Federal Excise Taxes.
970.2902-1....................  970.2901.........  Exemptions from
                                                    Federal Excise
                                                    Taxes.
970.2903......................  N/A..............  State and Local
                                                    Taxes.
970.2903-1....................  970.2902.........  Applicability of
                                                    State and Local
                                                    Taxes to the
                                                    Government.
970.2904......................  N/A..............  Contract Clauses.
970.2904-1....................  970.2903.........  Management and
                                                    Operating Contracts.
970.30........................  970.30...........  Cost Accounting
                                                    Standards.
970.3002......................  970.3001.........  CAS Program
                                                    Requirements.
970.3002-1....................  970.3001-1.......  Applicability.

[[Page 81002]]

 
N/A...........................  970.3001-2.......  Limitations.
970.31........................  970.31...........  Contract Cost
                                                    Principles and
                                                    Procedures.
970.3101-00-70................  970.3100.........  Scope of Subpart.
N/A...........................  970.3100-1.......  Definitions.
N/A...........................  970.3100-2.......  Responsibilities.
N/A...........................  970.3100-3.......  Objectives.
970.3101-9....................  970.3101-6.......  Advance Agreements.
970.3101-10...................  N/A..............  Cost certification.
970.3102-3-70.................  N/A..............  Home Office Expenses.
N/A...........................  970.3101-7.......  Cost Certification
                                                    and Penalties on
                                                    Unallowable Costs.
N/A...........................  970.3101.........  General.
N/A...........................  970.3101-1.......  Actual Cost Basis.
970.3102-05...................  970.3102.........  Application of Cost
                                                    Principles.
N/A...........................  970.3101-3.......  General Basis for
                                                    Reimbursement of
                                                    Costs.
N/A...........................  970.3101-4.......  Cost Determination
                                                    Based on Audit.
N/A...........................  970.3101-5.......  Contractor's System
                                                    of Accounting.
N/A...........................  970.3101-2.......  Direct and Indirect
                                                    Costs.
N/A...........................  N/A..............  Selected Costs.
N/A...........................   970.3102-19.....  Public Relations and
                                                    Advertising.
970.3102-05-4.................  N/A..............  Bonding costs.
970.3102-05-6.................  970.3102-2.......  Compensation for
                                                    Personal Services.
970.3102-05-18................  N/A..............  Independent research
                                                    and development and
                                                    bid and proposal
                                                    costs.
970.3102-05-19................  N/A..............  Insurance and
                                                    indemnification.
N/A...........................  970.3102-3.......  Cost of Money.
N/A...........................  970.3102-4.......  Depreciation.
N/A...........................  970.3102-5.......  Employee Morale,
                                                    Health, Welfare,
                                                    Food Service, and
                                                    Dormitory Costs.
N/A...........................  970.3102-21......  Fines, Penalties.,
                                                    and Mischarging
                                                    Costs.
970.3102-05-22................  970.3102-7.......  Lobbying and
                                                    Political Activity
                                                    Costs.
970.3102-05-28................  N/A..............  Other business
                                                    expenses.
970.3102-05-30................  N/A..............  Patent costs and
                                                    technology transfer
                                                    costs.
N/A...........................  970.3102-1.......  General and
                                                    Administrative
                                                    Expenses.
N/A...........................  970.3102-12......  Plant Reconversion
                                                    Costs.
N/A...........................  970.3102-13......  Precontract Costs.
N/A...........................  970.3102-9.......  Professional and
                                                    Consultant Service
                                                    Costs.
N/A...........................  970.3102-16......  Relocation Costs.
N/A...........................  970.3102-8.......  Trade, Business and
                                                    Professional
                                                    Activity Costs.
970.3102-05-46................  970.3102-17......  Travel Costs.
970.3102-05-47................  970.3102-20......  Cost Related to Legal
                                                    and Other
                                                    Proceedings.
970.3102-05-53................  N/A..............  Preexisting
                                                    conditions.
N/A...........................  970.3102-10......  Overtime, Shift, and
                                                    Holiday Premiums.
N/A...........................  970.3102-11......  Page Charges in
                                                    Scientific Journals.
N/A...........................  970.3102-14......  Preparatory and Make-
                                                    Ready Costs.
N/A...........................  970.3102-6.......  Facilities (Plant and
                                                    Equipment).
N/A...........................  970.3102-18......  Special Funds in the
                                                    Construction
                                                    Industry.
N/A...........................  970.3102-15......  Procurement:
                                                    Subcontracts,
                                                    Contractor-
                                                    Affiliated Sources,
                                                    and Leases.
970.3170......................  970.3103.........  Contract Clause.
970.32........................  970.32...........  Contract Financing
970.3200......................  970.3201.........  Policy.
970.3200-1....................  970.3272(a) and b  Reduction or
                                                    Suspension of
                                                    Advance, Partial, or
                                                    Progress Payments.
970.3200-1-1..................  970.3272 (d).....  Contract Clause.
970.3204......................  970.3202 (Title).  Advance Payments.
970.3204-1....................  970.3202 (Text)..  Applicability.
N/A...........................  970.3271.........  Special Bank Account
                                                    Agreement.
970.3270......................  970.3270.........  Standard Financial
                                                    Management Clauses.
970.34........................  970.70...........  Major System
                                                    Acquisition.
970.3400......................  N/A..............  General Requirements.
970.3400-1....................  970.7000.........  Mission-oriented
                                                    Solicitation.
970.35........................  N/A..............  Research and
                                                    Development
                                                    Contracting
970.3500......................  N/A..............  Scope of Subpart.
970.3501......................  N/A..............  Federally Funded
                                                    Research and
                                                    Development Centers.
970.3501-1....................  N/A..............  Sponsoring
                                                    Agreements.
970.3501-2....................  N/A..............  Using an FFRDC.
970.3501-3....................  N/A..............  Reviewing FFRDC's.
970.3501-4....................  N/A..............  Contract Clause.
970.36........................  970.36...........  Construction and
                                                    Architect-Engineer
                                                    Contracts.
970.3605......................  N/A..............  Contract Clauses.
970.3605-1....................  970.5204-43......  Other Contracts.
970.3605-2....................  970.3601.........  Special Construction
                                                    Clause for Operating
                                                    Contracts.
970.37........................  N/A..............  Facilities Management
                                                    Contracting.
970.3770......................  970.72...........  Facilities
                                                    Management.
970.3770-1....................  970.7201.........  Policy.
970.3770-2....................  970.7201.........  Contract Clause.

[[Page 81003]]

 
970.41........................  970.41...........  Acquisition of
                                                    Utility Services.
970.4102......................  N/A..............  Acquiring Utility
                                                    Services.
970.4102-1....................  970.4100.........  Policy.
970.42........................  N/A..............  Contract
                                                    Administration.
970.4207-03-02................  N/A..............  Certificate of costs.
970.4207-03-70................  N/A..............  Contract clause.
970.4207-05-01................  N/A..............  Contracting officer
                                                    determination
                                                    procedure.
970.43........................  N/A..............  Contract
                                                    Modifications.
970.4302......................  N/A..............  Changes.
970.4302-1....................  N/A..............  Contract Clause.
970.44........................  970.71...........  Management and
                                                    Operating Contractor
                                                    Purchasing.
970.4400......................  N/A..............  Scope.
970.4401......................  N/A..............  Responsibilities.
970.4401-1....................  970.7102.........  General.
970.4401-2....................  970.7108.........  Review and Approval.
970.4401-3....................  970.7109.........  Advance Notification.
970.4402......................  N/A..............  Contractor Purchasing
                                                    System.
970.4402-1....................  970.7101.........  Policy.
970.4402-2....................  970.7103.........  General Requirements.
970.4402-3....................  970.7105.........  Purchasing From
                                                    Contractor-
                                                    Affiliated Sources.
970.4402-4....................  970.7110.........  Nuclear Material
                                                    Transfers.
970.4403......................  N/A..............  Contract Clause.
970.45........................  970.45...........  Government Property.
970.4501......................  N/A..............  General.
970.4501-1....................  970.4501.........  Contract Clause.
970.49........................  970.49...........  Termination of
                                                    Contracts.
970.4905......................  N/A..............  Contract Termination
                                                    Clause.
970.4905-1....................  970.4901 and       Termination for
                                 970.4902.          Convenience of the
                                                    Government and
                                                    Default.
970.50........................  N/A..............  Extraordinary
                                                    Contractual Actions.
970.5004......................  N/A..............  Residual Powers.
970.5004-1....................  N/A..............  Contract Clause.
970.5070......................  970.2870 (Title).  Indemnification.
970.5070-1....................  970.2870(a) and    Scope and
                                 (b).               Applicability.
970.5070-2....................  970.2870(e)......  General.
970.5070-3....................  970.2870(c) and    Contract Clauses.
                                 (d).
N/A...........................  970.51...........  Use of Government
                                                    Sources by
                                                    Contractors.
970.52........................  970.52...........  Solicitation
                                                    Provisions and
                                                    Contract Clauses for
                                                    Management and
                                                    Operating Contracts.
970.5200......................  970.5201.........  Scope of Subpart.
N/A...........................  970.5203.........  Modifications and
                                                    Notes to Far
                                                    Clauses.
970.5201......................  970.5204.........  Text of Provisions
                                                    and Clauses.
970.5203-1....................  970.5204-20......  Management Controls.
970.5203-2....................  N/A..............  Performance
                                                    Improvement and
                                                    Collaboration.
970.5203-3....................  970.5204-12......  Contractor's
                                                    Organization.
970.5204-1....................  970.5204-1.......  Counterintelligence.
970.5204-2....................  970.5204-78......  Laws, Regulations,
                                                    and DOE Directives.
970.5204-3....................  970.5204-79......  Access to and
                                                    Ownership of
                                                    Records.
970.5208-1....................  970.5204-19......  Printing.
970.5209-1....................  970.5204-89......  Requirement for
                                                    Guarantee of
                                                    Performance.
970.5215-1....................  970.5204-54......  Total Available Fee:
                                                    Base Fee Amount and
                                                    Performance Fee
                                                    Amount.
970.5215-2....................  970.5204-76......  Make-or-Buy Plan.
970.5215-3....................  970.5204-86......  Conditional Payment
                                                    of Fee, Profit, or
                                                    Incentives.
970.5215-4....................  970.5204-87......  Cost Reduction.
970.5215-5....................  970.5204-88......  Limitation on Fee.
970.5222-1....................  970.5204-63......  Collective Bargaining
                                                    Agreements--Manageme
                                                    nt and Operating
                                                    Contracts.
970.5222-2....................  970.5204-80......  Overtime Management.
970.5223-1....................  970.5204-2.......  Integration of
                                                    Environment, Safety
                                                    and Health into Work
                                                    Planning and
                                                    Execution.
970.5223-2....................  970.5204-39......  Acquisition and Use
                                                    of Environmentally
                                                    Preferable Products
                                                    and Services.
970.5223-3....................  970.5204-57......  Agreement Regarding
                                                    Workplace Substance
                                                    Abuse Programs at
                                                    DOE Facilities.
970.5223-4....................  970.5204-58......  Workplace Substance
                                                    Abuse Programs at
                                                    DOE Sites.
970.5226-1....................  970.5204-81......  Diversity Plan.
970.5226-2....................  970.5204-77......  Workforce
                                                    Restructuring under
                                                    Section 3161 of the
                                                    National Defense
                                                    Authorization Act
                                                    for Fiscal Year
                                                    1993.
970.5226-3....................  N/A..............  Community Commitment.
970.5227-1....................  970.5204-82......  Rights in Data-
                                                    Facilities.
970.5227-2....................  970.5204-83......  Rights in Data-
                                                    Technology Transfer
970.5227-3....................  970.5204-40......  Technology Transfer
                                                    Mission.
970.5227-4....................  N/A..............  Authorization and
                                                    consent.
970.5227-5....................  N/A..............  Notice and assistance
                                                    regarding patent and
                                                    copyright
                                                    infringement.

[[Page 81004]]

 
970.5227-6....................  N/A..............  Patent indemnity--
                                                    subcontracts.
970.5227-7....................  N/A..............  Royalty information.
970.5227-8....................  N/A..............  Refund of royalties.
970.5227-9....................  N/A..............  Notice of right to
                                                    request patent
                                                    waiver.
970.5227-10...................  970.5204-71......  Patent rights--
                                                    management and
                                                    operating contracts,
                                                    nonprofit
                                                    organization or
                                                    small business firm
                                                    contractor.
970.5227-11...................  970.5204-72......  Patent rights--
                                                    management and
                                                    operating contracts,
                                                    for-profit
                                                    contractor, non-
                                                    technology transfer.
970.5227-12...................  N/A..............  Patent rights--
                                                    management and
                                                    operating contracts,
                                                    for-profit
                                                    contractor, advance
                                                    class waiver.
970.5228-1....................  970.5204-31......  Insurance--Litigation
                                                    and Claims.
970.5229-1....................  970.5204-23......  State and Local
                                                    Taxes.
N/A...........................  970.5204-13......  Allowable Costs and
                                                    Fee (Management and
                                                    Operating
                                                    Contracts).
970.5231-4....................  970.5204-75......  Preexisting
                                                    Conditions.
970.5232-1....................  970.5204-85......  Reduction or
                                                    Suspension of
                                                    Advance, Partial, or
                                                    Progress Payments
                                                    upon Finding of
                                                    Substantial Evidence
                                                    of Fraud.
970.5232-2....................  970.5204-16......  Payments and
                                                    Advances.
970.5232-3....................  970.5204-9.......  Accounts, Records,
                                                    and Inspection.
970.5232-4....................  970.5204-15......  Obligation of Funds.
970.5232-5....................  N/A..............  Liability with
                                                    respect to cost
                                                    accounting
                                                    standards.
970.5232-6....................  N/A..............  Work for others
                                                    funding
                                                    authorization.
970.5232-7....................  N/A..............  Financial management
                                                    system.
970.5232-8....................  N/A..............  Integrated
                                                    accounting.
970.5235-1....................  N/A..............  Federally Funded
                                                    Research and
                                                    Development Center
                                                    Sponsoring
                                                    Agreement.
970.5236-1....................  970.5204-38......  Government Facility
                                                    Subcontract
                                                    Approval.
N/A...........................  970.5204-84......  Waiver of Limitations
                                                    on Severance
                                                    Payments to Foreign
                                                    Nationals.
970.5237-2....................  970.5204-60......  Facilities
                                                    Management.
970.5242-1....................  N/A..............  Penalties for
                                                    unallowable costs.
970.5243-1....................  970.5204-11......  Changes.
970.5244-1....................  970.5204-22......  Contractor Purchasing
                                                    System.
970.5245-1....................  970.5204-21......  Property.
N/A...........................  970.5204-3.......  Buy American Act''
                                                    Construction
                                                    Materials.
N/A...........................  970.5204-4.......  New Mexico Gross
                                                    Receipts and
                                                    Compensating Tax.
N/A...........................  970.5204-5.......  Disclosure of
                                                    Information.
N/A...........................  970.5204-6.......  Nuclear Hazards
                                                    Indemnity.
N/A...........................  970.5204-7.......  Protecting the
                                                    Government's
                                                    Interest When
                                                    Subcontracting with
                                                    Contractors
                                                    Debarred, Suspended,
                                                    or Proposed for
                                                    Debarment.
N/A...........................  970.5204-8.......  Indemnity Assurance
                                                    to Architect-
                                                    Engineer or Supplier
                                                    Prior to Operation
                                                    of a Nuclear
                                                    Facility.
N/A...........................  970.5204-10......  Foreign Ownership,
                                                    Control, or
                                                    Influence over
                                                    Contractors (FOCI).
N/A...........................  970.5204-14......  Allowable Costs and
                                                    Fixed-fee (Support
                                                    Contracts).
N/A...........................  970.5204-25......  Workmanship and
                                                    Materials.
N/A...........................  970.5204-27......  Consultant or Other
                                                    Comparable
                                                    Employment Services
                                                    of Contractor
                                                    Employees.
N/A...........................  970.5204-28......  Assignment.
N/A...........................  970.5204-29......  Permits or Licenses.
N/A...........................  970.5204-30......  Notice of Labor
                                                    Disputes.
N/A...........................  970.5204-33......  Priorities and
                                                    Allocations.
N/A...........................  970.5204-35......  Controls in the
                                                    National Interest
                                                    (Unclassified
                                                    Contracts with
                                                    Educational
                                                    Institutions).
N/A...........................  970.5204-36......  Preventing Conflicts
                                                    of Interest in
                                                    University Research.
N/A...........................  970.5204-37......  Statement of Work
                                                    (Management and
                                                    Operating
                                                    Contracts).
N/A...........................  970.5204-42......  Key Personnel.
N/A...........................  970.5204-43......  Other Government
                                                    Contractors.
N/A...........................  970.5204-44......  Flowdown of Contract
                                                    Requirements to
                                                    Subcontracts.
N/A...........................  970.5204-45......  Termination.
N/A...........................  970.5204-52......  Foreign Travel.
N/A...........................  970.5204-53......  Contractor Employee
                                                    Travel Discounts.
952.203-70....................  970.5204-59......  Whistleblower
                                                    Protection for
                                                    Contractor
                                                    Employees.
N/A...........................  970.5204-71......  Patent Rights-
                                                    nonprofit Management
                                                    and Operating
                                                    Contractors.
N/A...........................  970.5204-72......  Patent Rights-profit-
                                                    making Management
                                                    and Operating
                                                    Contractors.
N/A...........................  970.5204-73......  Notice Regarding
                                                    Options.
N/A...........................  970.5204-74......  Option to Extend the
                                                    Term of the
                                                    Contract.
------------------------------------------------------------------------

III. 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, today's action was not subject to review under the 
Executive Order by the Office of Information and Regulatory Affairs of 
the Office of Management and Budget.

B. Review Under Executive Order 12988

    With respect to the review of existing regulations and the 
promulgation of

[[Page 81005]]

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. DOE has completed the required review and determined 
that, to the extent permitted by law, the proposed regulations meet the 
relevant standards of Executive Order 12988.

C. Review Under the Regulatory Flexibility Act

    This rule was reviewed under the Regulatory Flexibility Act of 
1980, Pub. L. 96-354, which requires preparation of a regulatory 
flexibility analysis for any rule which is likely to have a significant 
economic impact on a substantial number of small entities. This rule 
would only apply to M&O contractors, which are all large entities. DOE 
certified that the rules that are formalized today will not have a 
significant economic impact on a substantial number of small entities 
and, therefore, no regulatory flexibility analysis has been prepared. 
DOE did not receive any comments on its certifications.

D. Review Under the Paperwork Reduction Act

    No new information collection requirements subject to the Paperwork 
Reduction Act, 44 U.S.C. 3501 et seq., are imposed by today's 
regulatory action.

E. Review Under Executive Order 13132

    Executive Order 13132 (64 FR 43255, August 4, 1999) imposes certain 
requirements on agencies formulating and implementing policies or 
regulations that preempt State law or that have federalism 
implications. Agencies are required to examine the constitutional and 
statutory authority supporting any action that would limit the 
policymaking discretion of the States and carefully assess the 
necessity for such actions. DOE has examined today's rule and has 
determined that it does not preempt State law and does not have a 
substantial direct effect on the States, on the relationship between 
the national government and the States, or on the distribution of power 
and responsibilities among the various levels of government. No further 
action is required by Executive Order 13132.

F. Review Under the National Environmental Policy Act

    Pursuant to the Council on Environmental Quality Regulations (40 
CFR Parts 1500-1508), the Department of Energy has established 
guidelines for its compliance with the provisions of the National 
Environmental Policy Act (NEPA) of 1969 (42 U.S.C. 4321 et seq.). 
Pursuant to appendix A of subpart D of 10 CFR part 1021, National 
Environmental Policy Act Implementing Procedures (57 FR 15122, 15152, 
April 24, 1992) (Categorical Exclusion A6), the Department of Energy 
has determined that this rule is categorically excluded from the need 
to prepare an environmental impact statement or environmental 
assessment.

G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 requires each 
Agency to assess the effects of Federal regulatory action on State, 
local, and tribal governments and the private sector. The Department 
has determined that today's regulatory action does not impose a Federal 
mandate on State, local, or tribal governments or on the private 
sector.

H. Review Under Small Business Regulatory Enforcement Fairness Act of 
1996

    As required by 5 U.S.C. 801, the Department of Energy will report 
to Congress promulgation of the rule prior to its effective date. The 
report will state that it has been determined that the rule is not a 
``major rule'' as defined by 5 U.S.C. 804(3).

List of Subjects in 48 CFR Parts 901, 902, 903, 904, 909, 911, 915, 
917, 922, 923, 927, 941, 942, 947, 951, 952, and 970.

    Government procurement.

    Issued in Washington, D.C. on November 30, 2000.
T.J. Glauthier,
Deputy Secretary, Department of Energy.
    For the reasons set out in the preamble, Chapter 9 of Title 48 of 
the Code of Federal Regulations is amended as set forth below.

    1. The authority citations for parts 901, 902, 903, 904, 909, 911, 
915, 917, 922, 923, 941, 942, 947, 951, and 952 continue to read as 
follows:

    Authority: 42 U.S.C. 7254; 40 U.S.C. 486(c); 50 U.S.C. 2401 et 
seq.

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 by 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

[[Page 81006]]

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 subpart; 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 subpart, has the meaning contained in 
10 CFR 708.2.


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 contracts that 
involve work to be done on behalf of DOE directly related to activities 
at DOE-owned or leased sites.

PART 904--ADMINISTRATIVE MATTERS

    5. Subpart 904.72 is added to read as follows:

Subpart 904.72--Public Affairs

Sec.
904.7200  Purpose.
904.7201  Contract clause.

Subpart 904.72--Public Affairs


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


909.104-1  [Amended]

    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 solicitations for 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 (after deleting ``under the clause at 48 
CFR 970.5203-3, Contractor's Organization'' from paragraph (a) if not a 
management and operating contract) 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:

[[Page 81007]]

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.''


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: Atomic Energy Act of 1954, as amended (42 U.S.C. 
2168, 2182, 2201); Federal Nonnuclear Energy Research and 
Development Act of 1974 (42 U.S.C. 5908); Department of Energy 
National Security and Military Applications of Nuclear Energy 
Authorization Act of 1987 (42 U.S.C. 7261a.); Department of Energy 
Organization Act (42 U.S.C. 7101 et seq.); National Nuclear Security 
Administration Act (50 U.S.C. 4201 et seq.)


927.303  [Amended]

    17. Paragraph (a)(3) of section 927.303 is amended by revising 
``970.5204-71 or 970.5204-72'' to read ``970.5227-10, 970.5227-11, or 
970.5227-12.''


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.''


927.409  [Amended]

    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

Sec.
942.270-1  Contracting Officer's Representatives
942.270-2  Contract Clause

Subpart 942.2--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, or a clause substantially the same, 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  [Reserved]
947.7001  Policy.
947.7002  Contract clause.

Subpart 947.70--Foreign Travel


947.7000  [Reserved]


947.7001  Policy.

    Contractor foreign travel shall be conducted pursuant to the 
requirements contained in DOE Order 551.1, Official Foreign Travel, or 
any subsequent version of the order in effect at the time of award.


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 951--USE OF GOVERNMENT SOURCES BY CONTRACTORS

    25. Subpart 951.70 is revised to read as follows:

Subpart 951.70--Contractor Employee Travel Discounts


951.7002  Responsibilities.

    The contracting officer shall insert the clause at 952.251-70, 
Contractor employee travel discounts, in all cost-reimbursable 
solicitations and contracts when significant costs for rail travel, car 
rental, or lodging will be required to perform the contract. The 
contracting officer may furnish the contractor with appropriate 
identification letters.

[[Page 81008]]

PART 952--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

    26. 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 (DEC 2000)

    (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)

    27. 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 (DEC 2000)

    (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 to its 
effort under the contract. The responsibilities under this clause 
must be accomplished through coordination with the Contracting 
Officer and appropriate DOE public affairs personnel in accordance 
with procedures defined by the Contracting Officer.
    (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 DOE procedures for obtaining 
advance clearances on oral, written, and audio/visual informational 
material prepared for public dissemination or use.
    (e) Unless prohibited by law, and in accordance with procedures 
defined by the Contracting Officer, the Contractor must notify the 
Contracting Officer and appropriate DOE public affairs personnel of 
communications or contacts with Members of Congress relating to the 
effort performed under the contract.
    (f) In accordance with procedures defined by the Contracting 
Officer, the Contractor must notify the Contracting Officer and 
appropriate DOE public affairs personnel of 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.

(End of Clause)

    28. Section 952.215-70 is added as follows:


952.215-70  Key Personnel.

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

Key Personnel (DEC 2000)

    (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. Notwithstanding the foregoing, if the Contractor 
deems immediate removal or suspension of any member of its 
management team is necessary to fulfill its obligation to maintain 
satisfactory standards of employee competency, conduct, and 
integrity under the clause at 48 CFR 970.5203-3, Contractor's 
Organization, the Contractor may remove or suspend such person at 
once, although the Contractor must notify Contracting Officer prior 
to or concurrently with such action.
    (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]

    29. Section 952.222-70 is removed.


952.223-71  [Amended]

    30. Section 952.223-71 is amended by revising ``970.5204-2'' to 
read ``48 CFR 970.5223-1.''

    31. 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 (DEC 2000)

    (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;
    (2) Advise the contractor in writing within a reasonable time 
that the Government will issue a written change order; or
    (3) Advise the contractor in writing within a reasonable time 
not to proceed with the instruction or direction of the COR.

[[Page 81009]]

    (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)


    32. Section 952.247-70 is revised to read as follows:


952.247-70  Foreign travel.

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

Foreign Travel (DEC 2000)

    Contractor foreign travel shall be conducted pursuant to the 
requirements contained in DOE Order 551.1, Official Foreign Travel, 
or any subsequent version of the order in effect at the time of 
award.

(End of Clause)

952.250-70  [Amended]

    33. Section 952.250-70 is amended in paragraph (h) by revising 
``Audit and records--negotiation'', to read ``Accounts, records, and 
inspection.''

    34. Section 952.251-70 is revised to read as follows:


952.251-70  Contractor employee travel discounts.

    As prescribed in 48 CFR 951.70, insert the following clause.

Contractor Employee Travel Discounts (DEC 2000)

    (a) The contractor shall take advantage of travel discounts 
offered to Federal contractor employee travelers by AMTRAK, hotels, 
motels, or car rental companies, when use of such discounts would 
result in lower overall trip costs and the discounted services are 
reasonably available. Vendors providing these services may require 
the contractor employee to furnish them a letter of identification 
signed by the authorized contracting officer.
    (b) Contracted airlines. Contractors are not eligible for GSA 
contract city pair fares.
    (c) Discount rail service. AMTRAK voluntarily offers discounts 
to Federal travelers on official business and sometimes extends 
those discounts to Federal contractor employees.
    (d) Hotels/motels. Many lodging providers extend their discount 
rates for Federal employees to Federal contractor employees.
    (e) Car rentals. The Military Traffic Management Command (MTMC) 
of the Department of Defense negotiates rate agreements with car 
rental companies that are available to Federal travelers on official 
business. Some car rental companies extend those discounts to 
Federal contractor employees.
    (f) Obtaining travel discounts.
    (1) To determine which vendors offer discounts to Government 
contractors, the contractor may review commercial publications such 
as the Official Airline guides Official Traveler, Innovata, or 
National Telecommunications. The contractor may also obtain this 
information from GSA contract Travel Management Centers or the 
Department of Defense's Commercial Travel Offices.
    (2) The vendor providing the service may require the Government 
contractor to furnish a letter signed by the contracting officer. 
The following illustrates a standard letter of identification.

OFFICIAL AGENCY LETTERHEAD

TO: Participating Vendor
SUBJECT: OFFICIAL TRAVEL OF GOVERNMENT CONTRACTOR

(FULL NAME OF TRAVELER), the bearer of this letter is an employee of 
(COMPANY NAME) which has a contract with this agency under 
Government contract (CONTRACT NUMBER). During the period of the 
contract (GIVE DATES), AND WITH THE APPROVAL OF THE CONTRACT VENDOR, 
the employee is eligible and authorized to use available travel 
discount rates in accordance with Government contracts and/or 
agreements. Government Contract City Pair fares are not available to 
Contractors.

SIGNATURE, Title and telephone number of Contracting Officer


    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 (42 
U.S.C. 7101, et seq.), National Nuclear Security Agency (50 U.S.C. 
2401 et seq.)

    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.
970.1103-4   Contract clause.
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 81010]]

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.
970.2702   Patent related clauses.
970.2702-1   Authorization and consent.
970.2702-2   Notice and assistance regarding patent and copyright 
infringement.
970.2702-3   Patent indemnity.
970.2702-4   Royalties.
970.2702-5   Rights to proposal data.
970.2702-6   Notice of right to request patent waiver.
970.2703   Patent rights.
970.2703-1   Purposes of patent rights clauses.
970.2703-2   Patent rights clause provisions for management and 
operating contractors.
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.
Subpart 970.31--Contract Cost Principles and Procedures
970.3101-00-70   Scope of subpart.
970.3101-9   Advance agreements.
970.3101-10   Cost certification.
970.3102-3-70   Home office expenses
970.3102-05   Application of cost principles.
970.3102-05-4   Bonding costs.
970.3102-05-6   Compensation for personal services.
970.3102-05-18   Independent research and development and bid and 
proposal costs.
970.3102-05-19   Insurance and indemnification.
970.3102-05-22   Lobbying and political activity costs.
970.3102-05-28   Other business expenses.
970.3102-05-30   Patent costs and technology transfer costs.
970.3102-05-46   Travel costs.
970.3102-05-47   Costs related to legal and other proceedings.
970.3102-05-53   Preexisting conditions.
970.3170   Contract clause.
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.
970.3270   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
970.3770  Facilities management.
970.3770-1  Policy.
970.3770-2  Contract clause.
Subpart 970.41--Acquisition of Utility Services
970.4102  Acquiring utility services.
970.4102-1  Policy.
Subpart 970.42--Contract Administration
970.4207-03-02  Certificate of costs.
970.4207-03-70  Contract clause.
970.4207-05-01  Contracting officer determination procedure.
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.

[[Page 81011]]

Subpart 970.50--Extraordinary Contractual Actions
970.5004   Residual powers.
970.5004-1   Contract clause.
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.
970.5227-4   Authorization and consent.
970.5227-5   Notice and assistance regarding patent and copyright 
infringement.
970.5227-6   Patent indemnity--subcontracts.
970.5227-7   Royalty information.
970.5227-8   Refund of royalties.
970.5227-9   Notice of right to request patent waiver.
970.5227-10   Patent rights--management and operating contracts, 
nonprofit organization or small business firm contractor.
970.5227-11   Patent rights--management and operating contracts, 
for-profit contractor, non-technology transfer.
970.5227-12   Patent rights--management and operating contracts, 
for-profit contractor, advance class waiver.
970.5228-1   Insurance--Litigation and claims.
970.5229-1   State and local taxes.
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.
970.5232-5   Liability with respect to cost accounting standards.
970.5232-6   Work for others funding authorization.
970.5232-7   Financial management system.
970.5232-8   Integrated accounting.
970.5235-1   Federally funded research and development center 
sponsoring agreement.
970.5236-1   Government facility subcontract approval.
970.5237-2   Facilities management.
970.5242-1   Penalties for unallowable costs.
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. The FAR and other parts of the DEAR apply to management 
and operating contracts. See 48 CFR 970.5200 for guidance regarding 
which provisions and clauses (from FAR, DEAR Part 970, or other parts 
of the DEAR) to include in management and operating contracts.


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 of 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;
    (5) Promote efficient and effective operations;
    (6) Ensure that all obligations and costs incurred are in 
compliance with

[[Page 81012]]

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; internal DOE decisions; policy 
development; and knowledge of selections of contractors or 
subcontractors in advance of official announcement.


970.0371-6  Incompatibility between regular duties and private 
interests.

    (a) 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.
    (b) 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

[[Page 81013]]

concerning outside employment 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. As 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. 
The approval authority of the Secretary of Energy required in paragraph 
(c) may not be delegated. In paragraph (a) the words ``and managerial 
personnel (see 48 CFR 970.5245-1(j))'' may be inserted after ``(see 48 
CFR 952.215-70)''.

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 of April 2, 1982 (3 CFR, 1982 Comp., p. 166), 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.

[[Page 81014]]

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 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. The contracting officer may modify the clause to indicate 
the location in the contract of List A, List B, or both.

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 restraints 
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.

[[Page 81015]]

    (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 
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.


970.1103-4  Contract clause.

    Insert the clause at 48 CFR 52.211-5, Material Requirements, in 
solicitations and contracts.

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

[[Page 81016]]

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
    (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 (including 48 CFR 
970.31), 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

[[Page 81017]]

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 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

[[Page 81018]]

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 (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            0.58
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

[[Page 81019]]

 
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
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.

[[Page 81020]]

    (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 
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

[[Page 81021]]

other relevant provision of this subsection.


970.1504-2  Price negotiation.

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

[[Page 81022]]

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 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 in this subpart 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

[[Page 81023]]

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 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 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

[[Page 81024]]

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 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.
    (b) 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,

[[Page 81025]]

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 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 the annual programming of 
work; the contractor's work orders; and 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

[[Page 81026]]

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, 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 
in this paragraph 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, but it is applicable to 
subcontracts under such contracts (see 48 CFR 970.5244-1).


970.2270  Unemployment compensation.

    (a) Each state has its own unemployment compensation system to 
provide payments to workers who

[[Page 81027]]

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 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.

[[Page 81028]]

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.
    (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:
    (a) Recognizing the diverse interests of the region and its 
stakeholders,
    (b) Engaging regional stakeholders in issues and concerns of mutual 
interest, and
    (c) 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, rights in 
technical data provisions and other related provisions for the 
Department of Energy contracts for the management and operation of 
DOE's major sites or facilities, including the conduct of research and 
development and nuclear weapons production, and contracts which involve 
major, long-term or continuing activities conducted at a DOE site.


970.2702  Patent related clauses.


970.2702-1  Authorization and consent.

    Contracting officers must use the clause at 970.5227-4, 
Authorization and Consent, instead of the clause at 48 CFR 52.227-1.

[[Page 81029]]

970.2702-2  Notice and assistance regarding patent and copyright 
infringement.

    Contracting officers must use the clause at 970.5227-5, Notice and 
Assistance Regarding Patent and Copyright Infringement, instead of the 
clause at 48 CFR 52.227-2.


970.2702-3  Patent indemnity.

    (a) Contracting officers must use the clause at 970.5227-6, Patent 
Indemnity--Subcontracts to assure that subcontracts appropriately 
address patent indemnity.
    (b) Normally, the clause at 48 CFR 52.227-3 would not be 
appropriate for an M&O contract; however, if there is a question, such 
as when the mission of the contractor involves production, the 
contracting officer must consult with local patent counsel and use the 
clause where appropriate.


970.2702-4  Royalties.

    Contracting officers must use the solicitation provision at 
970.5227-7, Royalty Information, and the clause at 970.5227-8, Refund 
of Royalties instead of the provision at 48 CFR 52.227-8 and the clause 
at 48 CFR 52.227-9, respectively.


970.2702-5  Rights to proposal data.

    Contracting officers must include the clause at 48 CFR 52.227-23, 
Rights to Proposal Data, in all solicitations and contracts for the 
management and operation of DOE sites and facilities.


970.2702-6  Notice of right to request patent waiver.

    Contracting officers must include the provision at 970.5227-9 in 
all solicitations for contracts for the management and operation of DOE 
sites or facilities.


970.2703  Patent rights.


970.2703-1  Purposes of patent rights clauses.

    (a) DOE sites and facilities are managed and operated on behalf of 
the Department of Energy by a contractor, pursuant to management and 
operating contracts that are generally awarded for a five (5) year 
term, with the possibility for renewal. Special provisions relating to 
patent rights are appropriately incorporated into an M&O contract 
because of the unique circumstances and responsibilities of managing 
and operating a Government-owned facility, as compared to other 
federally funded research and development contracts.
    (b)(1) Technology transfer mission clause. In accordance with 
Public Law 101-189, section 3133(d), DOE may grant technology transfer 
authority to M&O contractors operating a DOE facility. Generally, M&O 
contractors have the right to elect to retain title to inventions made 
under the contract, whether a nonprofit or educational organizations, 
as a result of 35 U.S.C. 200 et seq. (Bayh-Dole Act), or a large 
business, as a result of a class patent waiver issued pursuant to 10 
CFR part 784. Under such contracts, the M&O contractor assumes 
responsibilities for commercializing retained inventions, in accordance 
with the Technology Transfer Mission clause provided at 970.5227-3. 
That clause also governs such activities as the distribution of 
royalties earned from inventions made under the contract and the 
transfer of patent rights in inventions made under the contract to 
successor contractors.
    (2) If the M&O contractor is a nonprofit organization or small 
business firm having technology transfer authority, the following 
clauses are inserted into the M&O contract: 970.5227-3 and 970.5227-10.
    (3) If the M&O contract has technology transfer as a mission and is 
to be performed by a for-profit, large business firm that has been 
granted an advance class waiver, the following clauses are inserted 
into the M&O contract: 970.5227-3 and 970.5227-12. The terms of the 
clause at 970.5227-12 are subject to modification to conform to the 
terms of the class waiver.
    (4) If the M&O contract does not have a technology transfer mission 
and is to be performed by a for-profit, large business firm and does 
not have advance class waiver under 10 CFR part 784, the patent rights 
clause at 970.5227-11 is inserted into the M&O contract, and the 
Technology Transfer Mission clause is inapplicable.
    (5) If the contractor is an educational institution, a non-profit 
organization or a small business firm and is conducting privately 
funded technology transfer activities, involving the use of private 
funds to conduct licensing and marketing activities related to 
inventions made under the contract in accordance with the Bayh-Dole 
Act, DOE may modify the patent rights clause (970.5227-10) to address 
issues such as the disposition of royalties earned under the privately 
funded technology transfer program, the transfer of patent rights to a 
successor contractor, allowable cost restrictions concerning privately 
funded technology transfer activities, and the Government's freedom 
from any liability related to licensing under the contractor's 
privately funded technology transfer program.
    (c) Contracting officers must consult with DOE patent counsel 
assisting the contracting activity or the Assistant General Counsel for 
Technology Transfer and Intellectual Property for assistance in 
selecting for use in the solicitation, negotiating, or approving 
appropriate patent rights clauses for a M&O contract. It may be 
appropriate to include more than one patent rights clause in a 
solicitation if the successful contractor could, for instance, be 
either an educational or a large business. If a large business may be 
selected for performance of a contract that will include a technology 
transfer clause, the solicitation must include the clause at 970.5227-
12 to reflect the waiver that will likely be granted. If the 
solicitation includes more than one patent clause, it must include an 
explanation of the circumstances under which the appropriate clause 
will be used. The final award must contain only one patent rights 
clause.


970.2703-2  Patent rights clause provisions for management and 
operating contractors.

    (a) Allocation of Principal Rights: Bayh-Dole provisions. If the 
management and operating contractor is an educational institution or 
nonprofit organization, the patent rights clause provided at 970.5227-
10 must be inserted into the M&O contract. Such entities are 
beneficiaries of Bayh-Dole Act, including the paramount right of the 
contractor to elect to retain title to inventions conceived or first 
actually reduced to practice in performance of work under the contract, 
except in DOE-exempted areas of technology or in operation of DOE 
facilities primarily dedicated to naval nuclear propulsion or weapons 
related programs.
    (b) Allocation of Principal Rights: Government title. (1) The 
patent rights clause provided at 970.5227-11 must be incorporated into 
the M&O contract if the contractor is a for-profit, large business firm 
and the contract does not have a technology transfer mission or if, 
without regard to the type of contractor, the contract is for the 
operation of a DOE facility primarily dedicated to naval nuclear 
propulsion or weapons related programs. That clause provides for DOE's 
statutory obligation to take title to inventions conceived or first 
actually reduced to practice in the course of or under an M&O contract, 
and does not contemplate an advance class waiver of Government rights 
in inventions, or participation by the contractor in technology 
transfer activities.
    (2) While only in rare circumstances does a for-profit large 
business contractor whose contract contains no technology transfer 
mission receive

[[Page 81030]]

rights in or title to inventions made under the contract, the 
contractor does have the right to request a license or foreign patent 
rights in inventions made under the contract, and may petition for a 
waiver of Government rights in identified inventions. The patent rights 
clause 970.5227-11 does not include many of the provisions of patent 
rights clauses 970.5227-10 and 970.5227-12, related to the filing of 
patent applications by the contractor, the granting of rights in 
inventions by the contractor to third parties (preference for United 
States industry), and conditions allowing the Government to grant 
licenses to third parties in inventions retained by the contractor 
(march-in rights). Any instrument granting rights in inventions made 
under a contract governed by patent rights clause 970.5227-11 must 
include these additional provisions within its terms and conditions.
    (c) Allocation of Principal Rights: Contractor right to elect title 
under an advance class waiver. If the M&O contractor is a for-profit, 
large business firm and the Government has granted an advance class 
waiver of Government rights in inventions made in the course of or 
under the M&O contract, under the authority of the Atomic Energy Act of 
1954 (42 U.S.C. 2182) and the Federal Nonnuclear Energy Act of 1974 (42 
U.S.C. 5908(c)), the patent rights clause provided at 970.5227-12 must 
be inserted into the M&O contract, unless the terms and conditions of 
such an approved waiver alter or replace the patent rights clause 
provisions pursuant to 10 CFR part 784.
    (d) Extensions of time--DOE discretion. The patent rights clauses 
for M&O contracts require the contractor to take certain actions within 
prescribed time periods to comply with the contract and preserve its 
rights in inventions. The M&O contractor may request extensions of time 
in which to take such actions by submitting written justification to 
DOE, and DOE may grant the contractor's requests, on a case-by-case 
basis. If the time period expired due to negligence by the contractor, 
DOE may grant a request for an extension of time upon a showing by the 
contractor that corrective procedures are in place to avoid such 
negligence in the future. If a contractor is requesting an extension of 
time in which to elect to retain title to an invention, DOE may grant 
the request if the extension allows the contractor to conduct further 
experimentation, market research, or other analysis helpful to 
determine contractor interest in electing title to the invention, among 
other considerations. Generally, the extensions of time are for periods 
of between six (6) months to one (1) year.
    (e) Facilities license. These include the rights 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 practice under or in the course of such a contract. The 
patent rights clauses, 970.5227-10, 970.5227-11, 970.5227-12, each 
contain a provision granting the Government this facilities license.
    (f) Deletion of classified inventions provision. If DOE determines 
that the research, development, demonstration or production work to be 
performed during the course of a management and operating contract most 
probably will not involve classified subject matter or result in any 
inventions that require security classification, DOE patent counsel may 
advise the contracting officer to delete the patent rights clause 
provision entitled, ``Classified Inventions'' from the M&O contract.
    (g) Alternate 1--Weapons Related Research or Production. If DOE 
grants technology transfer authority to a DOE facility, pursuant to 
Public Law 101-189, section 3133(d), and the DOE owned facility is 
involved in weapons related research and development, or production, 
then Alternate 1 of the patent rights clauses must be inserted into the 
M&O contract. Alternate 1 defines weapons related subject inventions 
and restricts the contractor's rights with respect to such inventions.


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

[[Page 81031]]

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 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. 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

[[Page 81032]]

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.


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) of that clause 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 taxes cited in this section, the Head of the Contracting 
Activity will supply standard Government forms (SF 1094,

[[Page 81033]]

U.S. Tax Exemption Certificate) on request.


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 immunities or exemptions cited in this subpart 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 management and operating contracts that meet the three conditions 
stated. The contracting officer shall modify paragraph (b) of the 
clause to replace the phrase ``Allowable Cost and Payment clause'' with 
the phrase ``Payments and advances.''
    (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 chapter 99 (FAR 
Appendix) shall be followed for management and operating contracts.

Subpart 970.31--Contract Cost Principles and Procedures


970.3101-00-70  Scope of subpart.

    (a) The 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 
coordination 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 in this 
subpart in establishing the compensation and reimbursement provisions 
of contracts and subcontracts and for submission of deviations for 
Headquarters consideration and approval.


970.3101-9  Advance agreements (DOE coverage-paragraph (i)).

    (i) At any time, in accordance with the contract terms and 
conditions, the contracting officer may pursue an advance agreement in 
connection with any cost item under a contract.


970.3101-10  Cost certification.

    (a) Certain contracts require certification of the costs proposed 
for final payment purposes. Section 48 CFR 970.4207-03-02 states the 
administrative procedures for the certification provisions and the 
related contract clause prescription.
    (b) If unallowable costs are included in final cost settlement 
proposals, penalties may be assessed. Section 48 CFR 970.4207-03-02 
states the administrative procedures for penalty assessment provisions 
and the related clause prescription.


970.3102-3-70  Home office expenses.

    (a) For on-site work, DOE's fee for management and operating 
contracts, determined under the policy of and calculated per the 
procedures in 48 CFR 970.1504-1-3, generally provides adequate 
compensation for home or corporate office general and administrative 
expenses incurred in the general management of the contractor's 
business as a whole.
    (1) DOE recognizes that some Home Office Expenses are incurred for 
the benefit of a management and operating contract. DOE has elected to 
recognize that benefit through fee due to the difficulty of determining 
the dollar value applicable to any management and operating contract. 
The difficulty arises because:
    (i) The general construct of a management and operating contract 
results in minimal Home Office involvement in the contract work, and
    (ii) Conventional Home Office Expense allocation techniques that 
use bases such as total operating costs, labor dollars, hours etc., are 
not appropriate because they inherently assume significant contractor 
investment (in terms of its own resources, such as, labor, material, 
overhead, etc.). Contractor investments are minimal under DOE's 
operating and management contracts. The contracts are totally financed 
by DOE advance payments, and DOE provides government-owned facilities, 
property, and other needed resources.
    (2) From time to time, the fee for a management and operating 
contract may not be adequate compensation for Home Office Expenses 
incurred for the benefit of the contract. An indication that such a 
case exists is the need for significant home office support to deal 
with issues at the site that occur without the fault or negligence of 
the contractor, for example, the need for home office legal support to 
deal with third party, environmental, safety, or health issues.
    (3) In such a case, the contracting officer, after obtaining the 
HCA's approval, may consider a contractor request for additional 
compensation. The contractor may request:
    (i) Fee in addition to its normal fee (but see 48 CFR 970.1504-1-
3(b)(1) if the contract is for the management and operation of a 
laboratory); or
    (ii) Compensation on the basis of actual cost.
    (4) Because the contract's fee provides some compensation for Home 
Office Expenses, the contractor's request for additional compensation 
must always be for an amount less than the Home Office Expenses that 
are incurred for the benefit of the management and operating contract.
    (b) For off-site work, the DOE allows Home Office Expenses under 
architect-engineer, supply and research contracts with commercial 
contractors performing the work in their own facilities. Home Office 
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 determined, after careful examination, to be 
allowable, reasonable, and 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 Home Office Expenses.

[[Page 81034]]

970.3102-05  Application of cost principles.


970.3102-05-4  Bonding costs. (DOE coverage-paragraph (d))

    (d) The allowability of bonding costs shall be determined pursuant 
to 48 CFR 970.5228-1, Insurance-litigation and claims.


970.3102-05-6  Compensation for personal services. (DOE coverage-
paragraphs (a) and (p))

    (a)(6) 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, the contracting officer shall designate a compensation 
threshold appropriate for the particular situation. The contract shall 
specifically provide that contracting officer approval is required for 
compensating an individual contractor employee above the threshold if a 
total of 50 percent or more of such compensation is reimbursed under 
DOE cost-type contracts. For purposes of designating the threshold, 
total compensation includes only the employee's salary and cash bonus 
or incentive compensation.
    (7)(i) Reimbursable costs for compensation for personal services 
are to be set forth in a personnel appendix which is a part of the 
contract. This personnel appendix shall be negotiated using the 
principles and policies of 48 CFR 31.205-6, Compensation, as 
supplemented by this section, 970.3102-05-6, and other pertinent parts 
of the DEAR. Costs that are unallowable under other contract terms 
shall not be allowable as compensation for personnel services.
    (ii) The personnel appendix sets forth in detail personnel costs 
and related expenses allowable under the contract and documents 
personnel policies, practices and plans which have been found 
acceptable by the contracting officer. The contractor will advise DOE 
of any proposed changes in any matters covered by these policies, 
practices or plans which relate to personnel costs. 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 the contract. Such modifications shall be evidenced by execution of 
written numbered approval letters from the contracting officer or his 
representative. Types of personnel costs and related expenses addressed 
in the personnel appendix, or amendments thereto, are as follows: 
Salaries and wages; bonuses and incentive compensation; overtime, shift 
differential, holiday, and other premium pay for time worked; welfare 
benefits and retirement programs; paid time off, and 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 above an annual rate as specified in the 
personnel appendix.
    (p)(1) Notwithstanding the costs cited in this subsection, 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).


970.3102-05-18  Independent research and development and bid and 
proposal costs. (DOE coverage-paragraphs (c)).

    (c) Independent Research and Development and Bid and Proposal costs 
are unallowable. However, contracting officer approved Laboratory 
Directed Research and Development costs and those costs incurred in 
support of the Department's various reimbursable programs are 
allowable.


970.3102-05-19  Insurance and indemnification.

    The supplemental material on the costs of insurance and 
indemnification is found in 48 CFR 970.5228-1, Insurance-Litigation and 
Claims.


970.3102-05-22  Lobbying and political activity costs. (DOE coverage-
paragraph(b)).

    (b) Costs of the following activities are excepted from 48 CFR 
31.205-22, Lobbying and political activity costs, coverage, provided 
that the resultant costs are reasonable and otherwise fall into the 
following exceptions:
    (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 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 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.
    (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 a 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 reimbursable.


970.3102-05-28  Other business expenses. (DOE coverage-paragraph (i)).

    (i) Reasonable costs associated with the establishment and 
maintenance of financial institution accounts in connection with the 
work hereunder are allowable, including, but not limited to, service 
charges, the cost of disbursing cash, necessary guards, cashiers, and 
paymasters. If payments to employees 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.


970.3102-05-30  Patent costs and technology transfer costs.

    (a) For management and operating contracts that do not include the 
clause at 970.5227-3, Technology Transfer Mission, the cost principle 
at 48 CFR 31.205-30 applies.
    (b) For management and operating contracts that do include the 
clause at 970.5227-3, Technology Transfer Mission, the following patent 
and technology transfer costs are allowable:
    (1) Costs of preparing invention disclosures, reports, and other 
patent related documents required by the contract;

[[Page 81035]]

    (2) Costs of searching the art relating to invention disclosures;
    (3) Costs incurred in connection with the filing and prosecution of 
patent applications for subject inventions, except where those costs 
are incurred as part of a privately funded technology transfer program 
recognized under the contract; and
    (4) Other costs incurred in accordance with the patent rights 
clause and the Technology Transfer Mission clause included in the 
contract.


970.3102-05-46  Travel costs.

    (a) Costs for transportation, lodging, meals, and incidental 
expenses.
    (1) Costs incurred by contractor personnel on official company 
business are allowable, subject to the limitations contained in this 
subsection. Costs for transportation may be based on mileage rates, 
actual costs incurred, or on a combination thereof, provided the method 
used results in a reasonable charge. Costs 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 
charge.
    (2) Except as provided in paragraph (a)(3) of this subsection, 
costs incurred for lodging, meals, and incidental expenses (as defined 
in the regulations cited in paragraphs (a)(2)(i) through (iii) of this 
subsection) shall be considered to be reasonable and allowable 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, prescribed by the General Services 
Administration (41 CFR chapters 300 through 304), for travel in the 
conterminous 48 United States, available on a subscription basis from 
the Superintendent of Documents, U.S. Government Printing Office, 
Washington, DC 20402, Stock No. 922-002-00000-2;
    (ii) Joint Travel Regulations, 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, available on a subscription basis from the 
Superintendent of Documents, U.S. Government Printing Office, 
Washington, DC 20402, Stock No. 908-010-00000-1; 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 (a)(2)(i) and (ii) of this subsection, available 
on a subscription basis from the Superintendent of Documents, U.S. 
Government Printing Office, Washington, DC 20402, Stock No. 744-008-
00000-0.
    (3) In special or unusual situations, actual costs in excess of the 
maximum per diem rates are allowable provided that such amounts do not 
exceed the higher amounts authorized for Federal civilian employees as 
permitted in the regulations referenced in paragraphs (a)(2)(i), (ii), 
or (iii) of this subsection. For such higher amounts to be allowable, 
all of the following conditions must be met:
    (i) One of the conditions warranting approval of the actual expense 
method, as set forth in the regulations referred to in paragraphs 
(a)(2)(i), (ii), or (iii) of this subsection, must exist.
    (ii) A written justification for use of the higher amounts must be 
approved by an officer of the contractor's organization or designee to 
ensure that the authority is properly administered and controlled to 
prevent abuse.
    (iii) If it becomes necessary to exercise the authority to use the 
higher actual expense method repetitively or on a continuing basis in a 
particular area, the contractor must obtain advance approval from the 
contracting officer.
    (iv) Documentation to support actual costs incurred shall be in 
accordance with the contractor's established practices, subject to 
paragraph (a)(7) of this subsection, and provided that a receipt is 
required for each expenditure of $75.00 or more. The approved 
justification required by paragraph (a)(3)(ii) and, if applicable, 
paragraph (a)(3)(iii) of this subsection must be retained.
    (4) Paragraphs (a)(2) and (a)(3) of this subsection do not 
incorporate the regulations cited in paragraphs (a)(2)(i), (ii), and 
(iii) of this subsection in their entirety. Only the maximum per diem 
rates, the definitions of lodging, meals, and incidental expenses, and 
the regulatory coverage dealing with special or unusual situations are 
incorporated in this subsection.
    (5) An advance agreement (see 48 CFR 31.109 and 48 CFR 970.3101-9) 
with respect to compliance with paragraphs (a)(2) and (a)(3) of this 
subsection may be useful and desirable.
    (6)(i) The maximum per diem rates referenced in paragraph (a)(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., 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 in accordance with the Federal 
Travel Regulation or Joint Travel Regulations, they must result in a 
reasonable charge.
    (7) Costs shall be allowable only if the following information is 
documented:
    (i) Date and place (city, town, or other similar designation) of 
the expenses;
    (ii) Purpose of the trip; and
    (iii) Name of person on trip and that person's title or 
relationship to the contractor.
    (b) Travel costs incurred in the normal course of overall 
administration of the business are allowable and shall be treated as 
indirect costs.
    (c) Travel costs directly attributable to specific contract 
performance are allowable and may be charged to the contract under 48 
CFR 31.202.
    (d) Airfare costs in excess of the lowest customary standard, 
coach, or equivalent airfare offered during normal business hours 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, are 
not reasonably adequate for the physical or medical needs of the 
traveler, or are not reasonably available to meet mission requirements. 
However, in order for airfare costs in excess of the standard airfare 
to be allowable, the applicable condition(s) must be documented and 
justified.
    (e)(1) ``Cost of travel by contractor-owned, -leased, or -chartered 
aircraft,'' as used in this paragraph, includes the cost of lease, 
charter, operation (including personnel), maintenance, depreciation, 
insurance, and other related costs.
    (2) The costs of travel by contractor-owned, -leased, or -chartered 
aircraft are limited to the standard airfare described in paragraph (d) 
of this subsection for the flight destination unless travel by such 
aircraft is specifically required by contract specification, term, or 
condition, or a higher amount is approved by the contracting officer. A 
higher amount may be agreed to when one or more of the circumstances 
for justifying higher than standard airfare listed in paragraph (d) of 
this subsection are applicable, or when an advance agreement under 
paragraph (e)(3) of this subsection has been executed. In all cases, 
travel by contractor-owned, -leased, or -chartered aircraft must be 
fully documented and justified. For each contractor-owned, -leased, or 
-chartered aircraft used for any business

[[Page 81036]]

purpose which is charged or allocated, directly or indirectly, to a 
Government contract, the contractor must maintain and make available 
manifest/logs for all flights on such company aircraft. As a minimum, 
the manifest/log shall indicate--
    (i) Date, time, and points of departure;
    (ii) Destination, date, and time of arrival;
    (iii) Name of each passenger and relationship to the contractor;
    (iv) Authorization for trip; and
    (v) Purpose of trip.
    (3) Where an advance agreement is proposed (see 31.109), 
consideration may be given to the following:
    (i) Whether scheduled commercial airlines or other suitable, less 
costly, travel facilities are available at reasonable times, with 
reasonable frequency, and serve the required destinations conveniently;
    (ii) Whether increased flexibility in scheduling results in time 
savings and more effective use of personnel that would outweigh 
additional travel costs.
    (f) Costs of contractor-owned or -leased automobiles, as used in 
this paragraph, include the costs of lease, operation (including 
personnel), maintenance, depreciation, insurance, etc. These costs are 
allowable, if reasonable, to the extent that the automobiles are used 
for company business. That portion of the cost of company-furnished 
automobiles that relates to personal use by employees (including 
transportation to and from work) is compensation for personal services 
and is unallowable as stated in 48 CFR 31.205-6(m)(2).


970.3102-05-47  Costs related to legal and other proceedings. (DOE 
coverage-paragraph (h)).

    (h) Costs Associated with Whistleblower Actions.
    Section 931.205-47(h) of this chapter is applicable to management 
and operating contracts under this part and must be included in the 
contract's cost reimbursement subcontracts.


970.3102-05-53  Preexisting conditions.

    Clause 48 CFR 970.5231-4, Preexisting conditions, provides guidance 
on situations where this category of costs may be allowable.


970.3170  Contract clause.

    The contracting officer shall insert the clause at 48 CFR 970.5231-
4, Preexisting Conditions, in all management and operating contracts.
    (a) The contracting officer shall include the clause with its 
Alternate I in contracts with incumbent management and operating 
contractors.
    (b) 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 financial 
institution accounts.


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 payments cleared 
financing arrangement for deposit in a special financial institution 
account or, at the option of the Government, by direct payment or other 
payment mechanism to the contractor.
    (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 financial institution account 
where the advanced funds will be deposited by the Government. Such 
agreement shall:
    (1) Provide that DOE shall retain title to the unexpended balance 
of funds in the special financial institution account including 
collections, if any, deposited by the contractor;
    (2) Provide that the title in paragraph (c)(1) of this subsection 
shall be superior to any claim or lien of the financial institution of 
deposit or others; and
    (3) Incorporate all applicable requirements, as determined by the 
Office of Chief Financial Officer.
    (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.


970.3270  Standard financial management clauses.

    (a) The following DEAR and FAR clauses are standard financial 
management clauses. The contracting officer shall insert them in all 
management and operating contracts:
    (1) 48 CFR 970.5232-2, Payments and Advances.
    (i) 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.
    (ii) The contracting officer shall insert the basic clause with its 
Alternate II when total available fee provisions in the basic clause 
are used.
    (iii) The contracting officer shall insert the basic clause with 
its Alternate III in management and operating contracts with integrated 
accounting systems.
    (iv) The contracting officer shall insert the basic clause with its 
Alternate IV in management and operating contracts without integrated 
accounting systems.
    (2) 48 CFR 970.5232-3, Accounts, records, and inspection.
    (i) If the contract includes the clause at 48 CFR 52.215-11, Price 
Reduction for Defective Cost or Pricing Data, the contracting officer 
shall use the clause with its Alternate I.
    (ii) 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.
    (3) 48 CFR 970.5232-4, Obligation of funds. 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.
    (4) 48 CFR 970.5203-1, Management controls.
    (5) 48 CFR 970.5232-5, Liability with respect to Cost Accounting 
Standards.

[[Page 81037]]

    (6) 48 CFR 970.5232-6, Work for others funding authorization.
    (7) 48 CFR 52.230-2, Cost Accounting Standards.
    (8) 48 CFR 52.230-6, Administration of Cost Accounting Standards.
    (b) The following DEAR clauses are standard financial management 
clauses. The contracting officer shall insert them in all management 
and operating contracts with integrated accounting systems:
    (1) 48 CFR 970.5232-7, Financial management system.
    (2) 48 CFR 970.5232-8, Integrated accounting.
    (c) Any deviations from the standard financial management clauses 
specified in paragraphs (a) and (b) of this section require the 
approval of the Head of the Contracting Activity and the written 
concurrence of the Department's Chief Financial Officer.

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


970.3770  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

[[Page 81038]]

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 970.42--Contract Administration


970.4207-03-02  Certificate of costs.

    (a) The contracting officer shall require that management and 
operating contractors provide a submission, pursuant to 48 CFR 
970.5232-2-(j), 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 pursuant to 48 CFR 970.5242-1 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 
the 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 Public Law 92-41 (85 Stat. 97).
    (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 the 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--
    (1) It determines that it would be in the best interest of the 
United States to waive such certification; and
    (2) It states in writing the reasons for that determination and 
makes such determination available to the public.


970.4207-03-70  Contract clause.

    The contracting officer shall insert the clause at 48 CFR 970.5242-
1, Penalties for unallowable costs, in all management and operating 
solicitations and contracts.


970.4207-05-01  Contracting officer determination procedure. (DOE 
coverage-paragraph (b))

    (b)(4) A contracting officer shall not resolve any questioned costs 
until the contracting officer has obtained:
    (i) Adequate documentation with respect to such costs; and
    (ii) The opinion of the Department of Energy's auditor on the 
allowability of such costs.
    (5) 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.
    (6) 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.

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

[[Page 81039]]

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 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

[[Page 81040]]

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 
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)(i)(c) 
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.

[[Page 81041]]

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


970.5004  Residual powers.


970.5004-1  Contract clause.

    When use of the clause at 48 CFR 52.250-1, Indemnification Under 
Public Law 85-804, is appropriate, the contracting officer may 
substitute the words ``Obligation of funds'' for the words ``Limitation 
of Cost or Limitation of Funds.''


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 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 some of the 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 (48 CFR 901 through 48 CFR 952), and, pursuant to the individual 
provision or clause prescription, are to be used in addition to or in 
place of such clauses. Management and operating contracts are hybrid 
contracts, in some cases including aspects of several FAR contract 
types, for example, supplies and construction. For some FAR 
solicitation provisions and contract clauses, this subpart prescribes 
their use despite the hybrid nature of the work required. 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) and 48 CFR 970.3270(a)(4), 
insert the following clause:

Management Controls (DEC 2000)

    (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 waste, loss, mismanagement, 
unauthorized use, or misappropriation; all encumbrances and costs 
that are incurred under the contract and fees that are earned are in 
compliance with applicable clauses and other current terms, 
conditions, and intended purposes; all collections accruing to the 
contractor in connection with the work under this contract, 
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.
    (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 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 controls employed in programs and 
administrative areas to ensure that they are adequate to provide 
reasonable assurance that the objectives of the systems 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 (DEC 2000)

    (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

[[Page 81042]]

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 (DEC 2000)

    (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 supplemental 
information to reflect any changes as they occur.
    (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 inimical to the Department's mission, the contracting 
officer may require, with the approval of the Secretary of Energy, 
the contractor to remove the employee from work under the contract. 
This includes the right to direct the contractor to remove its most 
senior key person from work under the contract for serious contract 
performance deficiencies.
    (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)


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 (DEC 2000)

    (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 (DEC 2000)

    (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

[[Page 81043]]

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 (DEC 2000)

    (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 progress 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 
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 (DEC 2000)

    (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 (DEC 2000)

    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

[[Page 81044]]

contract's actual inclusion of base fee amount and performance fee 
amount.

Total Available Fee: Base Fee Amount and Performance Fee Amount (DEC 
2000)

    (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 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); or as otherwise set 
forth in this contract . 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, or a 
longer period if the Contractor and contracting officer agree. 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 (DEC 2000). 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 (DEC 2000). 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 (DEC 2000). 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

[[Page 81045]]

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 (DEC 2000). 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 (DEC 2000)

    (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 the 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 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 (DEC 2000)

    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 minimum 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

[[Page 81046]]

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 (DEC 2000). 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 (DEC 2000)

    (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 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;

[[Page 81047]]

    (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 (DEC 2000)

    (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 
(DEC 2000)

    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)


970.5222-2  Overtime management.

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

Overtime Management (DEC 2000)

    (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 (DEC 2000)

    (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.

[[Page 81048]]

    (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 choose not to 
require the subcontractor to submit a Safety Management System for 
the contractor's review and approval.

(End of Clause)


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 
(DEC 2000)

    (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 
(DEC 2000)

    (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 (DEC 2000)

    (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

[[Page 81049]]

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 (DEC 2000)

    The Contractor shall submit a Diversity Plan to the contracting 
officer for approval within 90 days after the effective date of this 
contract (or contract modification, if appropriate). The contractor 
shall submit an update to its Plan annually or 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, (5) economic 
development (including technology transfer), and (6) the prevention 
of profiling based on race or national origin.
(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 (DEC 2000)

    (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 (DEC 2000)

    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 (DEC 2000)

    (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 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 right 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

[[Page 81050]]

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, 
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

[[Page 81051]]

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 (DEC 2000). 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 (DEC 2000)

    (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 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

[[Page 81052]]

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 
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.

[[Page 81053]]

    (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 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

[[Page 81054]]

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 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 (DEC 2000). 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 (DEC 2000)

    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.

[[Page 81055]]

    (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. 
L. 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 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.

[[Page 81056]]

    (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 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

[[Page 81057]]

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 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

[[Page 81058]]

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 (DEC 2000). 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 (DEC 2000). 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.


970.5227-4  Authorization and consent.

    Insert the following clause in solicitations and contracts in 
accordance with 970.2702-1:

Authorization and Consent (DEC 2000)

    (a) The Government authorizes and consents to all use and 
manufacture of any invention described in and covered by a United 
States patent in the performance of this contract or any subcontract 
at any tier.
    (b) If the Contractor is sued for copyright infringement or 
anticipates the filing of such a lawsuit, the Contractor may request 
authorization and consent to copy a copyrighted work from the 
contracting officer. Programmatic necessity is a major consideration 
for DOE in determining whether to grant such request.
    (c) The Contractor agrees to include, and require inclusion of, 
the Authorization and Consent clause at 52.227-1, without Alternate 
1, but suitably modified to identify the parties, in all 
subcontracts at any tier for supplies or services (including 
construction, architect-engineer services, and materials, supplies, 
models, samples, and design or testing services expected to exceed 
$25,000).
    (d) The Contractor agrees to include, and require inclusion of, 
paragraph (a) of this Authorization and Consent clause, suitably 
modified to identify the parties, in all subcontracts at any tier 
for research and development activities. Omission of an 
authorization and consent clause from any subcontract, including 
those valued less than $25,000 does not affect this authorization 
and consent.

(End of clause)


970.5227-5  Notice and assistance regarding patent and copyright 
infringement.

    Insert the following clause in solicitations and contracts in 
accordance with 970.2702-2:

Notice and Assistance Regarding Patent and Copyright Infringement (DEC 
2000)

    (a) The Contractor shall report to the Contracting Officer 
promptly and in reasonable written detail, each notice or claim of 
patent or copyright infringement based on the performance of this 
contract of which the Contractor has knowledge.
    (b) If any person files a claim or suit against the Government 
on account of any alleged patent or copyright infringement arising 
out of the performance of this contract or out of the use of any 
supplies furnished or work or services performed hereunder, the 
Contractor shall furnish to the Government, when requested by the 
Contracting Officer, all evidence and information in possession of 
the Contractor pertaining to such suit or claim. Except where the 
Contractor has agreed to indemnify the Government, the Contractor 
shall furnish such evidence and information at the expense of the 
Government.
    (c) The Contractor agrees to include, and require inclusion of, 
this clause suitably modified to identify the parties, in all 
subcontracts at any tier expected to exceed $25,000.

(End of clause)


970.5227-6  Patent indemnity--subcontracts.

    Insert the following clause in solicitations and contracts in 
accordance with 970.2702-3:

Patent Indemnity--Subcontracts (DEC 2000)

    Except as otherwise authorized by the Contracting Officer, the 
Contractor shall obtain indemnification of the Government and its 
officers, agents, and employees against liability, including costs, 
for infringement of any United States patent (except a patent issued 
upon an application that is now or may hereafter be withheld from 
issue pursuant to a secrecy order by the Government) from 
Contractor's subcontractors for any contract work subcontracted in 
accordance with FAR 48 CFR 52.227-3.

(End of clause)


970.5227-7  Royalty information.

    Insert the following provision in solicitations in accordance with 
970.2702-4:

Royalty Information (DEC 2000)

    (a) Cost or charges for royalties. If the response to this 
solicitation contains costs or charges for royalties totaling more 
than $250, the following information shall be included in the 
response relating to each separate item of royalty or license fee:
    (1) Name and address of licensor;
    (2) Date of license agreement;
    (3) Patent numbers, patent application serial numbers, or other 
basis on which the royalty is payable;
    (4) Brief description, including any part or model numbers of 
each contract item or component on which the royalty is payable;
    (5) Percentage or dollar rate of royalty per unit;
    (6) Unit price of contract item;
    (7) Number of units; and
    (8) Total dollar amount of royalties.
    (b) Copies of current licenses. In addition, if specifically 
requested by the Contracting Officer before execution of the 
contract, the offeror shall furnish a copy of the current license 
agreement and an identification of applicable claims of specific 
patents or other basis upon which the royalty may be payable.

(End of provision)


970.5227-8  Refund of royalties.

    Insert the following clause in solicitations and contracts in 
accordance with 970.2702-4:

Refund of Royalties (DEC 2000)

    (a) The contract price includes certain amounts for royalties, 
payable by the Contractor or subcontractors or both, reported to the 
Contracting Officer in accordance with the Royalty Information 
provision of the solicitation.
    (b) During performance of this contract, if any additional 
royalty payments are proposed to be charged to the Government as 
costs under the contract that were not included in the original 
contract price, the Contractor agrees to submit for approval of the 
Contracting Officer prior to the execution of any licensing 
agreement the following information relating to each separate item 
of royalty or license fee:
    (1) Name and address of licensor;
    (2) Date of license agreement;
    (3) Patent numbers, patent application serial numbers, or other 
basis on which the royalty is payable;
    (4) Brief description, including any part or model numbers of 
each contract item or component on which the royalty is payable;
    (5) Percentage or dollar rate of royalty per unit;
    (6) Unit price of contract item;
    (7) Number of units; and
    (8) Total dollar amount of royalties.
    (9) In addition, if specifically requested by the Contracting 
Officer, the contractor shall furnish a copy of the current license 
agreement and an identification of applicable claims of specific 
patents.
    (c) The term ``royalties'' as used in this clause refers to any 
costs or charges in the nature of royalties, license fees, patent or 
license amortization costs, or the like, for the use of or for 
rights in patents and patent applications in connection with 
performing this contract or any subcontract hereunder.

[[Page 81059]]

The term also includes any costs or charges associated with the 
access to, use of, or other right pertaining to data that is 
represented to be proprietary and is related to the performance of 
this contract or subcontracts, or the copying of such data or data 
that is copyrighted.
    (d) The Contractor shall furnish to the Contracting Officer, 
before final payment under this contract, a statement of royalties 
paid or required to be paid in connection with performing this 
contract and subcontracts hereunder.
    (e) The Contractor is compensated for any royalties reported 
under paragraph (b) of this clause only to the extent that such 
royalties were included in the contract price and are determined by 
the Contracting Officer to be properly chargeable to the Government 
and allocable to the contract.
    (f) The Contracting Officer shall reduce the contract price to 
the extent any royalties that are included in the contract price are 
not, in fact, paid by the Contractor or are determined by the 
Contracting Officer not to be properly chargeable to the Government 
and allocable to the contract. The Contractor agrees to repay or 
credit the Government accordingly, as the Contracting Officer 
directs. Regardless of prior DOE approval of any individual payments 
or royalties, DOE may contest at any time the enforceability, 
validity, scope of, or title to, a patent or the proprietary nature 
of data pursuant to which DOE makes a royalty or other payment.
    (g) If at any time within 3 years after final payment under this 
contract, the Contractor for any reason is relieved in whole or in 
part from the payment of the royalties included in the final 
contract price as adjusted pursuant to paragraph (f) of this clause, 
the Contractor shall promptly notify the Contracting Office of that 
fact and shall promptly reimburse the Government in a corresponding 
amount.
    (h) The Contractor agrees to include, and require inclusion of, 
this clause, including this paragraph (h), suitably modified to 
identify the parties in any subcontract at any tier in which the 
amount of royalties reported during negotiation of the subcontract 
exceeds $250.

(End of clause)


970.5227-9  Notice of right to request patent waiver.

    Insert the following provision in solicitations in accordance with 
970.2704-6:

Notice of Right to Request Patent Waiver (DEC 2000)

    Offerors have the right to request a waiver of all or any part 
of the rights of the United States in inventions conceived or first 
actually reduced to practice in performance of the contract, in 
advance of or within 30 days after the effective date of 
contracting. If such advance waiver is not requested or the request 
is denied, the Contractor has a continuing right under the contract 
to request a waiver of the rights of the Government in identified 
inventions, i.e., individual inventions conceived or first actually 
reduced to practice in performance of the contract. Contractors that 
are domestic small businesses and domestic nonprofit organizations 
may not need a waiver and will have included in their contracts a 
patent clause reflecting their right to elect title to subject 
inventions pursuant to the Bayh-Dole Act (35 U.S.C. 200 et seq.).

(End of provision)


970.5227-10  Patent rights--management and operating contracts, 
nonprofit organization or small business firm contractor.

    As prescribed in 970.2703-1(b)(2), insert the following clause:

Patent Rights-Management and Operating Contracts, Nonprofit 
Organization or Small Business Firm Contractor (DEC 2000)

    (a) Definitions.
    (1) DOE licensing regulations means the Department of Energy 
patent licensing regulations at 10 CFR Part 781.
    (2) Exceptional circumstance subject invention means any subject 
invention in a technical field or related to a task determined by 
the Department of Energy to be subject to an exceptional 
circumstance under 35 U.S.C. 202(a)(ii) and in accordance with 37 
CFR 401.3(e).
    (3) Invention means any invention or discovery which is or may 
be patentable or otherwise protectable under Title 35 of the United 
States Code, or any novel variety of plant which is or may be 
protected under the Plant Variety Protection Act (7 U.S.C. 2321 et 
seq.).
    (4) Made when used in relation to any invention means the 
conception or first actual reduction to practice of such invention.
    (5) Nonprofit organization means a university or other 
institution of higher education or an organization of the type 
described in section 501(c)(3) of the Internal Revenue Code of 1954 
(26 U.S.C. 501(c)) and exempt from taxation under section 501(a) of 
the Internal Revenue Code (26 U.S.C. 501(a)) or any nonprofit 
scientific or educational organization qualified under a state 
nonprofit organization statute.
    (6) Patent Counsel means the Department of Energy (DOE) Patent 
Counsel assisting the DOE contracting activity.
    (7) Practical application means to manufacture, in the case of a 
composition or product; to practice, in the case of a process or 
method; or to operate, in the case of a machine or system; and, in 
each case, under such conditions as to establish that the invention 
is being utilized and that its benefits are, to the extent permitted 
by law or Government regulations, available to the public on 
reasonable terms.
    (8) Small business firm means a small business concern as 
defined at section 2 of Pub. L. 85-536 (15 U.S.C. 632) and 
implementing regulations of the Administrator of the Small Business 
Administration. For the purpose of this clause, the size standards 
for small business concerns involved in Government procurement and 
subcontracting at 13 CFR 121.3-8 and 13 CFR 121.3-12, respectively, 
are used.
    (9) Subject Invention means any invention of the contractor 
conceived or first actually reduced to practice in the performance 
of work under this contract, provided that in the case of a variety 
of plant, the date of determination (as defined in section 41(d) of 
the Plant Variety Protection Act, 7 U.S.C. 2401(d)) shall also occur 
during the period of contract performance.
    (b) Allocation of Principal Rights.
    (1) Retention of title by the Contractor. Except for exceptional 
circumstance subject inventions, the contractor may retain the 
entire right, title, and interest throughout the world to each 
subject invention subject to the provisions of this clause and 35 
U.S.C. 203. With respect to any subject invention in which the 
Contractor retains title, the Federal government shall have a 
nonexclusive, nontransferable, irrevocable, paid-up license to 
practice or have practiced for or on behalf of the United States the 
subject invention throughout the world.
    (2) Exceptional circumstance subject inventions. Except to the 
extent that rights are retained by the Contractor in a determination 
of exceptional circumstances or granted to a contractor through a 
determination of greater rights in accordance with subparagraph 
(b)(4) of this clause, the Contractor does not have a right to 
retain title to any exceptional circumstance subject inventions and 
agrees to assign to the Government the entire right, title, and 
interest, throughout the world, in and to any exceptional 
circumstance subject inventions.
    (i) Inventions within or relating to the following fields of 
technology are exceptional circumstance subject inventions:
    (A) uranium enrichment technology;
    (B) storage and disposal of civilian high-level nuclear waste 
and spent fuel technology; and
    (C) national security technologies classified or sensitive under 
Section 148 of the Atomic Energy Act (42 U.S.C. 2168).
    (ii) Inventions made under any agreement, contract or 
subcontract related to the following are exceptional circumstance 
subject inventions:
    (A) DOE Steel Initiative and Metals Initiative;
    (B) U.S. Advanced Battery Consortium; and
    (C) any funding agreement which is funded in part by the 
Electric Power Research Institute (EPRI) or the Gas Research 
Institute (GRI).
    (iii) DOE reserves the right to unilaterally amend this contract 
to modify, by deletion or insertion, technical fields, tasks, or 
other classifications for the purpose of determining DOE exceptional 
circumstance subject inventions.
    (3) Treaties and international agreements. Any rights acquired 
by the Contractor in subject inventions are subject to any 
disposition of right, title, or interest in or to subject inventions 
provided for in treaties or international agreements identified at 
Appendix [Insert Reference] to this contract. DOE reserves the right 
to unilaterally amend this contract to identify specific treaties or 
international agreements entered into or to be entered into by the 
Government after the effective date of this contract and to 
effectuate those license or other rights which are necessary for the 
Government to meet its obligations to foreign governments, their 
nationals and international organizations

[[Page 81060]]

under such treaties or international agreements with respect to 
subject inventions made after the date of the amendment.
    (4) Contractor request for greater rights in exceptional 
circumstance subject inventions. The Contractor may request rights 
greater than allowed by the exceptional circumstance determination 
in an exceptional circumstance subject invention by submitting such 
a request in writing to Patent Counsel at the time the exceptional 
circumstance subject invention is disclosed to DOE or within eight 
(8) months after conception or first actual reduction to practice of 
the exceptional circumstance subject invention, whichever occurs 
first, unless a longer period is authorized in writing by the Patent 
Counsel for good cause shown in writing by the Contractor. DOE may, 
in its discretion, grant or refuse to grant such a request by the 
Contractor.
    (5) Contractor employee-inventor rights. If the Contractor does 
not elect to retain title to a subject invention or does not request 
greater rights in an exceptional circumstance subject invention, a 
Contractor employee-inventor, after consultation with the Contractor 
and with written authorization from the Contractor in accordance 
with 10 CFR 784.9(b)(4), may request greater rights, including 
title, in the subject invention or the exceptional circumstance 
invention from DOE, and DOE may, in its discretion, grant or refuse 
to grant such a request by the Contractor employee-inventor.
    (6) Government assignment of rights in Government employees' 
subject inventions. If a Government employee is a joint inventor of 
a subject invention or of an exceptional circumstance subject 
invention to which the Contractor has rights, the Government may 
assign or refuse to assign to the Contractor any rights in the 
subject invention or exceptional circumstance subject invention 
acquired by the Government from the Government employee, in 
accordance with 48 CFR 27.304-1(d). The rights assigned to the 
Contractor are subject to any provision of this clause that is 
applicable to subject inventions in which the Contractor retains 
title, including reservation by the Government of a nonexclusive, 
nontransferable, irrevocable, paid-up license, except that the 
Contractor shall file its initial patent application claiming the 
subject invention or exceptional circumstance invention within one 
(1) year after the assignment of such rights. The Contractor shall 
share royalties collected for the manufacture, use or sale of the 
subject invention with the Government employee, as DOE deems 
appropriate.
    (c) Subject Invention Disclosure, Election of Title and Filing 
of Patent Application by Contractor.
    (1) Subject invention disclosure. The contractor will disclose 
each subject invention to the Patent Counsel within two months after 
the inventor discloses it in writing to contractor personnel 
responsible for patent matters. The disclosure to the agency shall 
be in the form of a written report and shall identify the contract 
under which the invention was made and the inventor(s) and all 
sources of funding by B&R code for the invention. It shall be 
sufficiently complete in technical detail to convey a clear 
understanding to the extent known at the time of the disclosure, of 
the nature, purpose, operation, and the physical, chemical, 
biological or electrical characteristics of the invention. The 
disclosure shall also identify any publication, on sale or public 
use of the invention and whether a manuscript describing the 
invention has been submitted for publication and, if so, whether it 
has been accepted for publication at the time of disclosure. The 
disclosure shall include a written statement as to whether the 
invention falls within an exceptional circumstance field. DOE will 
make a determination and advise the Contractor within 30 days of 
receipt of an invention disclosure as to whether the invention is an 
exceptional circumstance subject invention. In addition, after 
disclosure to the Patent Counsel, the Contractor will promptly 
notify the agency of the acceptance of any manuscript describing the 
invention for publication or of any on sale or public use planned by 
the contractor. The Contractor shall obtain approval from Patent 
Counsel prior to any release or publication of information 
concerning any nonelectable subject invention such as an exceptional 
circumstance subject invention or any subject invention related to a 
treaty or international agreement.
    (2) Election by the Contractor. Except as provided in paragraph 
(b)(2) of this clause, the Contractor will elect in writing whether 
or not to retain title to any such invention by notifying the 
Federal agency within two years of disclosure to the Federal agency. 
However, in any case where publication, on sale or public use has 
initiated the one year statutory period wherein valid patent 
protection can still be obtained in the United States, the period 
for election of title may be shortened by the agency to a date that 
is no more than 60 days prior to the end of the statutory period.
    (3) Filing of patent applications by the Contractor. The 
Contractor will file its initial patent application on a subject 
invention to which it elects to retain title within one year after 
election of title or, if earlier, or prior to the end of any 1-year 
statutory period wherein valid patent protection can be obtained in 
the United States after a publication, on sale, or public use. The 
Contractor will file patent applications in additional countries or 
international patent offices within either ten months of the 
corresponding initial patent application or six months from the date 
permission is granted by the Commissioner of Patents and Trademarks 
to file foreign patent applications where such filing has been 
prohibited by a Secrecy Order.
    (4) Contractor's request for an extension of time. Requests for 
an extension of the time for disclosure, election, and filing under 
subparagraphs (c)(1), (2) and (3) may, at the discretion of Patent 
Counsel, be granted.
    (5) Publication Approval. During the course of the work under 
this contract, the Contractor or its employees may desire to release 
or publish information regarding scientific or technical 
developments conceived or first actually reduced to practice in the 
course of or under this contract. In order that public disclosure of 
such information will not adversely affect the patent interest of 
DOE or the Contractor, approval for release or publication shall be 
secured from the Contractor personnel responsible for patent matters 
prior to any such release or publication. Where DOE's approval of 
publication is requested, DOE's response to such requests for 
approval shall normally be provided within 90 days except in 
circumstances in which a domestic patent application must be filed 
in order to protect foreign rights. In the case involving foreign 
patent rights, DOE shall be granted an additional 180 days with 
which to respond to the request for approval, unless extended by 
mutual agreement.
    (d) Conditions When the Government May Obtain Title.
    The Contractor will convey to the DOE, upon written request, 
title to any subject invention--
    (1) If the Contractor fails to disclose or elect title to the 
subject invention within the times specified in paragraph (c) of 
this clause, or elects not to retain title; provided, that DOE may 
only request title within sixty (60) days after learning of the 
failure of the Contractor to disclose or to elect within the 
specified times.
    (2) In those countries in which the Contractor fails to file a 
patent application within the times specified in subparagraph (c) of 
this clause; provided, however, that if the Contractor has filed a 
patent application in a country after the times specified in 
subparagraph (c) above, but prior to its receipt of the written 
request of the DOE, the Contractor shall continue to retain title in 
that country.
    (3) In any country in which the Contractor decides not to 
continue the prosecution of any application for, to pay the 
maintenance fees on, or defend in a reexamination or opposition 
proceeding on, a patent on a subject invention.
    (4) If the Contractor requests that DOE acquire title or rights 
from the Contractor in a subject invention to which the Contractor 
had initially retained title or rights, or in an exceptional 
circumstance subject invention to which the Contractor was granted 
greater rights, DOE may acquire such title or rights from the 
Contractor, or DOE may decide against acquiring such title or rights 
from the Contractor, at DOE's sole discretion.
    (e) Minimum Rights of the Contractor and Protection of the 
Contractor's Right to File.
    (1) Request for a Contractor license. 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. DOE may grant or refuse to grant such a request by the 
Contractor. When DOE approves such reservation, the Contractor's 
license will normally 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,

[[Page 81061]]

except when transferred to the successor of that part of the 
contractor's business to which the invention pertains.
    (2) Revocation or modification of a Contractor license. The 
Contractor's domestic license may be revoked or modified by DOE to 
the extent necessary to achieve expeditious practical application of 
the subject invention pursuant to an application for an exclusive 
license submitted in accordance with applicable provisions at 37 CFR 
Part 404 and DOE licensing regulations at 10 CFR Part 781. This 
license will not be revoked in the field of use or the geographical 
areas in which the Contractor has achieved practical application and 
continues to make the benefits of the subject invention reasonably 
accessible to the public. The license in any foreign country may be 
revoked or modified at the discretion of DOE to the extent the 
Contractor, its licensees, or the domestic subsidiaries or 
affiliates have failed to achieve practical application of the 
subject invention in that foreign country.
    (3) Notice of revocation of modification of a Contractor 
license. Before revocation or modification of the license, DOE will 
furnish the Contractor a written notice of its intention to revoke 
or modify the license, and the Contractor will be allowed thirty 
days (or such other time as may be authorized by DOE for good cause 
shown by the Contractor) after the notice to show cause why the 
license should not be revoked or modified. The Contractor has the 
right to appeal, in accordance with applicable regulations in 37 CFR 
part 404 and DOE licensing regulations at 10 CFR part 781 concerning 
the licensing of Government owned inventions, any decision 
concerning the revocation or modification of the license.
    (f) Contractor Action to Protect the Government's Interest.
    (1) Execution of delivery of title or license instruments. The 
Contractor agrees to execute or to have executed, and promptly 
deliver to the Patent Counsel all instruments necessary to 
accomplish the following actions:
    (i) establish or confirm the rights the Government has 
throughout the world in those subject inventions to which the 
Contractor elects to retain title, and
    (ii) convey title to DOE when requested under subparagraphs (b) 
or paragraph (d) of this clause and to enable the Government to 
obtain patent protection throughout the world in that subject 
invention.
    (2) Contractor employee agreements. The Contractor agrees to 
require, by written agreement, its employees, other than clerical 
and nontechnical employees, to disclose promptly in writing to 
Contractor personnel identified as responsible for the 
administration of patent matters and in a format suggested by the 
Contractor, each subject invention made under this contract in order 
that the Contractor can comply with the disclosure provisions of 
paragraph (c) of this clause, and to execute all papers necessary to 
file patent applications on subject inventions and to establish the 
Government's rights in the subject inventions. This disclosure 
format should require, as a minimum, the information required by 
subparagraph (c)(1) of this clause. The Contractor shall instruct 
such employees, through employee agreements or other suitable 
educational programs, on the importance of reporting inventions in 
sufficient time to permit the filing of patent applications prior to 
U.S. or foreign statutory bars.
    (3) Notification of discontinuation of patent protection. The 
contractor will notify the Patent Counsel of any decision not to 
continue the prosecution of a patent application, pay maintenance 
fees, or defend in a reexamination or opposition proceeding on a 
patent, in any country, not less than thirty days before the 
expiration of the response period required by the relevant patent 
office.
    (4) Notification of Government rights. The contractor agrees to 
include, within the specification of any United States patent 
applications and any patent issuing thereon covering a subject 
invention, the following statement, ``This invention was made with 
government support under (identify the contract) awarded by 
(identify the Federal agency). The government has certain rights in 
the invention.''
    (5) Invention Identification Procedures. The Contractor shall 
establish and maintain active and effective procedures to ensure 
that subject inventions are promptly identified and timely disclosed 
and shall submit a written description of such procedures to the 
Contracting Officer so that the Contracting Officer may evaluate and 
determine their effectiveness.
    (6) Invention Filing Documentation. If the Contractor files a 
domestic or foreign patent application claiming a subject invention, 
the Contractor shall promptly submit to Patent Counsel, upon 
request, the following information and documents:
    (i) the filing date, serial number, title, and a copy of the 
patent application (including an English-language version if filed 
in a language other than English);
    (ii) an executed and approved instrument fully confirmatory of 
all Government rights in the subject invention; and
    (iii) the patent number, issue date, and a copy of any issued 
patent claiming the subject invention.
    (7) Duplication and disclosure of documents. The Government may 
duplicate and disclose subject invention disclosures and all other 
reports and papers furnished or required to be furnished pursuant to 
this clause; provided, however, that any such duplication or 
disclosure by the Government is subject to the confidentiality 
provision at 35 U.S.C. 205 and 37 CFR Part 40.
    (g) Subcontracts.
    (1) Subcontractor subject inventions. The Contractor shall not 
obtain rights in the subcontractor's subject inventions as part of 
the consideration for awarding a subcontract.
    (2) Inclusion of patent rights clause--non-profit organization 
or small business firm subcontractors. Unless otherwise authorized 
or directed by the Contracting Officer, the Contractor shall include 
the patent rights clause at 48 CFR 952.227-11, suitably modified to 
identify the parties, in all subcontracts, at any tier, for 
experimental, developmental, demonstration or research work to be 
performed by a small business firm or domestic nonprofit 
organization, except subcontracts which are subject to exceptional 
circumstances in accordance with 35 U.S.C. 202 and subparagraph 
(b)(2) of this clause. The subcontractor retains all rights provided 
for the contractor in the patent rights clause at 48 CFR 952.227-11.
    (3) Inclusion of patent rights clause--subcontractors other than 
non-profit organizations and small business firms. Except for the 
subcontracts described in subparagraph (g)(2) of this clause, the 
Contractor shall include the patent rights clause at 48 CFR 952.227-
13, suitably modified to identify the parties, in any contract for 
experimental, developmental, demonstration or research work. For 
subcontracts subject to exceptional circumstances, the contractor 
must consult with DOE patent counsel with respect to the appropriate 
patent clause.
    (4) DOE and subcontractor contract. With respect to subcontracts 
at any tier, DOE, the subcontractor, and the Contractor agree that 
the mutual obligations of the parties created by this clause 
constitute a contract between the subcontractor and DOE with respect 
to the matters covered by the clause; provided, however, that 
nothing in this paragraph is intended to confer any jurisdiction 
under the Contract Disputes Act in connection with proceedings under 
paragraph (j) of this clause.
    (5) Subcontractor refusal to accept terms of patent clause. If a 
prospective subcontractor refuses to accept the terms of a patent 
rights clause, the Contractor shall promptly submit a written notice 
to the Contracting Officer stating the subcontractor's reasons for 
such a refusal, including any relevant information for expediting 
disposition of the matter, and the Contractor shall not proceed with 
the subcontract without the written authorization of the Contracting 
Officer.
    (6) Notification of award of subcontract. Upon the award of any 
subcontract at any tier containing a patent rights clause, the 
Contractor shall promptly notify the Contracting Officer in writing 
and identify the subcontractor, the applicable patent rights clause, 
the work to be performed under the subcontract, and the dates of 
award and estimated completion. Upon request of the Contracting 
Officer, the Contractor shall furnish a copy of a subcontract.
    (7) Identification of subcontractor subject inventions. If the 
Contractor in the performance of this contract becomes aware of a 
subject invention made under a subcontract, the Contractor shall 
promptly notify Patent Counsel and identify the subject invention.
    (h) Reporting on Utilization of Subject Inventions. The 
Contractor agrees to submit to DOE on request, periodic reports, no 
more frequently than annually, on the utilization of a subject 
invention or on efforts at obtaining such utilization that are being 
made by the Contractor or its licensees or assignees. Such reports 
shall include information regarding the status of development, date 
of first commercial sale or use, gross royalties received by the 
Contractor, and such other data and information as DOE may 
reasonably specify. The Contractor also agrees to provide additional 
reports as may be requested by

[[Page 81062]]

DOE in connection with any march-in proceeding undertaken by DOE in 
accordance with paragraph (j) of this clause. As required by 35 
U.S.C. 202(c)(5), DOE agrees it will not disclose such information 
to persons outside the Government without permission of the 
Contractor.
    (i) Preference for United States Industry. Notwithstanding any 
other provision of this clause, the Contractor agrees that neither 
it nor any assignee will grant to any person the exclusive right to 
use or sell any subject invention in the United States unless such 
person agrees that any product embodying the subject invention or 
produced through the use of the subject invention will be 
manufactured substantially in the United States. However, in 
individual cases, the requirement for such an agreement may be 
waived by DOE upon a showing by the Contractor or its assignee that 
reasonable but unsuccessful efforts have been made to grant licenses 
on similar terms to potential licensees that would be likely to 
manufacture substantially in the United States or that under the 
circumstances domestic manufacture is not commercially feasible.
    (j) March-in Rights. The Contractor agrees that, with respect to 
any subject invention in which it has acquired title, DOE has the 
right in accordance with the procedures in 37 CFR 401.6 and any DOE 
supplemental regulations to require the Contractor, an assignee or 
exclusive licensee of a subject invention to grant a nonexclusive, 
partially exclusive, or exclusive license in any field of use to a 
responsible applicant or applicants, upon terms that are reasonable 
under the circumstances, and, if the Contractor, assignee or 
exclusive licensee refuses such a request, DOE has the right to 
grant such a license itself if DOE determines that--
    (1) Such action is necessary because the Contractor or assignee 
has not taken, or is not expected to take within a reasonable time, 
effective steps to achieve practical application of the subject 
invention in such field of use;
    (2) Such action is necessary to alleviate health or safety needs 
which are not reasonably satisfied by the Contractor, assignee, or 
their licensees;
    (3) Such action is necessary to meet requirements for public use 
specified by Federal regulations and such requirements are not 
reasonably satisfied by the Contractor, assignee, or licensees; or
    (4) Such action is necessary because the agreement required by 
paragraph (i) of this clause has not been obtained or waived, or 
because a licensee of the exclusive right to use or sell any subject 
invention in the United States is in breach of such agreement.
    (k) Special Provisions for Contracts With Nonprofit 
Organizations. If the Contractor is a nonprofit organization, it 
agrees that--
    (1) DOE approval of assignment of rights. Rights to a subject 
invention in the United States may not be assigned by the Contractor 
without the approval of DOE, except where such assignment is made to 
an organization which has as one of its primary functions the 
management of inventions; provided, that such assignee will be 
subject to the same provisions of this clause as the Contractor.
    (2) Small business firm licensees. It will make efforts that are 
reasonable under the circumstances to attract licensees of subject 
inventions that are small business firms, and that it will give a 
preference to a small business firm when licensing a subject 
invention if the Contractor determines that the small business firm 
has a plan or proposal for marketing the invention which, if 
executed, is equally as likely to bring the invention to practical 
application as any plans or proposals from applicants that are not 
small business firms; provided, that the Contractor is also 
satisfied that the small business firm has the capability and 
resources to carry out its plan or proposal. The decision whether to 
give a preference in any specific case will be at the discretion of 
the Contractor. However, the Contractor agrees that the Secretary of 
Commerce may review the Contractor's licensing program and decisions 
regarding small business firm applicants, and the Contractor will 
negotiate changes to its licensing policies, procedures, or 
practices with the Secretary of Commerce when that Secretary's 
review discloses that the Contractor could take reasonable steps to 
more effectively implement the requirements of this subparagraph 
(k)(2).
    (3) Contractor licensing of subject inventions. To the extent 
that it provides the most effective technology transfer, licensing 
of subject inventions shall be administered by Contractor employees 
on location at the facility.
    (l) Communications. The Contractor shall direct any 
notification, disclosure or request provided for in this clause to 
the Patent Counsel assisting the DOE contracting activity.
    (m) Reports.
    (1) Interim reports. Upon DOE's request, the Contractor shall 
submit to DOE, no more frequently than annually, a list of subject 
inventions disclosed to DOE during a specified period, or a 
statement that no subject inventions were made during the specified 
period; and a list of subcontracts containing a patent clause and 
awarded by the Contractor during a specified period, or a statement 
that no such subcontracts were awarded during the specified period.
    (2) Final reports. Upon DOE's request, the Contractor shall 
submit to DOE, prior to closeout of the contract, a list of all 
subject inventions disclosed during the performance period of the 
contract, or a statement that no subject inventions were made during 
the contract performance period; and a list of all subcontracts 
containing a patent clause and awarded by the Contractor during the 
contract performance period, or a statement that no such 
subcontracts were awarded during the contract performance period.
    (n) Examination of Records Relating to Subject Inventions. (1) 
Contractor compliance. Until the expiration of three (3) years after 
final payment under this contract, the Contracting Officer or any 
authorized representative may examine any books (including 
laboratory notebooks), records, documents, and other supporting data 
of the Contractor, which the Contracting Officer or authorized 
representative deems reasonably pertinent to the discovery or 
identification of subject inventions, including exceptional 
circumstance subject inventions, or to determine Contractor 
compliance with any requirement of this clause.
    (2) Unreported inventions. If the Contracting Officer is aware 
of an invention that is not disclosed by the Contractor to DOE, and 
the Contracting Officer believes the unreported invention may be a 
subject invention, including exceptional circumstance subject 
inventions, DOE may require the Contractor to submit to DOE a 
disclosure of the invention for a determination of ownership rights.
    (3) Confidentiality. Any examination of records under this 
paragraph is subject to appropriate conditions to protect the 
confidentiality of the information involved.
    (4) Power of inspection. With respect to a subject invention for 
which the Contractor has responsibility for patent prosecution, the 
Contractor shall furnish the Government, upon request by DOE, an 
irrevocable power to inspect and make copies of a prosecution file 
for any patent application claiming the subject invention.
    (o) 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 product 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. 
Notwithstanding the acceptance or exercise by the Government of 
these rights, the Government may contest at any time the 
enforceability, validity or scope of, or title to, any rights or 
patents herein licensed.
    (p) Atomic Energy.
    (1) Pecuniary awards. No claim for pecuniary award of 
compensation under the provisions of the Atomic Energy Act of 1954, 
as amended, may be asserted with respect to any invention or 
discovery made or conceived in the course of or under this contract.
    (2) Patent agreements. Except as otherwise authorized in writing 
by the Contracting Officer, the Contractor shall obtain patent 
agreements to effectuate the provisions of subparagraph (p)(1) of 
this clause from all persons who perform any part of the work under 
this contract, except nontechnical personnel, such as clerical 
employees and manual laborers.
    (q) Classified Inventions. (1) Approval for filing a foreign 
patent application. The Contractor shall not file or cause to be 
filed an application or registration for a patent disclosing a 
subject invention related to classified subject matter in any 
country other than the United States without first obtaining the 
written approval of the Contracting Officer.
    (2) Transmission of classified subject matter. If in accordance 
with this clause the Contractor files a patent application in the 
United States disclosing a subject invention

[[Page 81063]]

that is classified for reasons of security, the Contractor shall 
observe all applicable security regulations covering the 
transmission of classified subject matter. If the Contractor 
transmits a patent application disclosing a classified subject 
invention to the United States Patent and Trademark Office (USPTO), 
the Contractor shall submit a separate letter to the USPTO 
identifying the contract or contracts by agency and agreement number 
that require security classification markings to be placed on the 
patent application.
    (3) Inclusion of clause in subcontracts. The Contractor agrees 
to include the substance of this clause in subcontracts at any tier 
that cover or are likely to cover subject matter classified for 
reasons of security.
    (r) Patent Functions. Upon the written request of the 
Contracting Officer or Patent Counsel, the Contractor agrees to make 
reasonable efforts to support DOE in accomplishing patent-related 
functions for work arising out of the contract, including, but not 
limited to, the prosecution of patent applications, and the 
determination of questions of novelty, patentability, and 
inventorship.
    (s) Educational Awards Subject to 35 U.S.C. 212. The Contractor 
shall notify the Contracting Officer prior to the placement of any 
person subject to 35 U.S.C. 212 in an area of technology or task (1) 
related to exceptional circumstance technology or (2) which is 
subject to treaties or international agreements as set forth in 
paragraph (b)(3) of this clause or agreements other than funding 
agreements. The Contracting Officer may disapprove of any such 
placement.
    (t) Annual Appraisal by Patent Counsel. Patent Counsel may 
conduct an annual appraisal to evaluate the Contractor's 
effectiveness in identifying and protecting subject inventions in 
accordance with DOE policy.

(End of clause)

    Alternate 1 Weapons Related Subject Inventions. As prescribed at 
970.2703-2(g), insert the following as subparagraphs (a)(10) and 
(b)(7), respectively:
    (a) Definitions. (10) Weapons Related Subject Invention means 
any subject invention conceived or first actually reduced to 
practice in the course of or under work funded by or through defense 
programs , including Department of Defense and intelligence 
reimbursable work, or the Naval Nuclear Propulsion Program of the 
Department of Energy.
    (b) Allocation of Principal Rights. (7) Weapons related subject 
inventions. Except to the extent that DOE is solely satisfied that 
the Contractor meets certain procedural requirements and DOE grants 
rights to the Contractor in weapons related subject inventions, the 
Contractor does not have the right to retain title to any weapons 
related subject inventions.

(End of Alternate)


970.5227-11  Patent rights--management and operating contracts, for-
profit contractor, non-technology transfer.

    Insert the following clause in solicitations and contracts in 
accordance with 970.2703-1(b)(4):

Patent Rights--Management and Operating Contracts, for-Profit 
Contractor, Non-Technology Transfer (DEC 2000)

    (a) Definitions. (1) DOE licensing regulations means the 
Department of Energy patent licensing regulations at 10 CFR Part 
781.
    (2) DOE patent waiver regulations means the Department of Energy 
patent waiver regulations at 10 CFR Part 784.
    (3) Invention means any invention or discovery which is or may 
be patentable or otherwise protectable under title 35 of the United 
States Code, or any novel variety of plant which is or may be 
protected under the Plant Variety Protection Act (7 U.S.C. 2321, et 
seq.).
    (4) Made when used in relation to any invention means the 
conception or first actual reduction to practice of such invention.
    (5) Patent Counsel means DOE Patent Counsel assisting the 
contracting activity.
    (6) Practical application means to manufacture, in the case of a 
composition or product; to practice, in the case of a process or 
method; or to operate, in the case of a machine or system; and, in 
each case, under such conditions as to establish that the invention 
is being utilized and that its benefits are, to the extent permitted 
by law or Government regulations, available to the public on 
reasonable terms.
    (7) Subject Invention means any invention of the contractor 
conceived or first actually reduced to practice in the course of or 
under this contract, provided that in the case of a variety of 
plant, the date of determination (as defined in section 41(d) of the 
Plant Variety Protection Act, 7 U.S.C. 2401(d)) shall also occur 
during the period of contract performance.
    (b) Allocation of Principal Rights. (1) Assignment to the 
Government. Except to the extent that rights are retained by the 
Contractor by a determination of greater rights in accordance with 
subparagraph (b)(2) of this clause or by a request for foreign 
patent rights in accordance with subparagraph (d)(2) of this clause, 
the Contractor agrees to assign to the Government the entire right, 
title, and interest throughout the world in and to each subject 
invention.
    (2) Greater rights determinations. The Contractor, or an 
Contractor employee-inventor after consultation with the Contractor 
and with the written authorization of the Contractor in accordance 
with DOE patent waiver regulations, may request greater rights, 
including title, in an identified subject invention than the 
nonexclusive license and the foreign patent rights provided for in 
paragraph (d) of this clause, in accordance with the DOE patent 
waiver regulations. Such a request shall be submitted in writing to 
Patent Counsel with a copy to the Contracting Officer at the time 
the subject invention is first disclosed to DOE in accordance with 
subparagraph (c)(2) of this clause, or not later than eight (8) 
months after such disclosure, unless a longer period is authorized 
in writing by the Contracting Officer for good cause shown in 
writing by the Contractor. DOE may grant or refuse to grant such a 
request by the Contractor or Contractor employee-inventor. Unless 
otherwise provided in the greater rights determination, any rights 
in a subject invention obtained by the Contractor pursuant to a 
determination of greater rights are subject to a nonexclusive, 
nontransferable, irrevocable, paid-up license to the Government to 
practice or have practiced the subject invention throughout the 
world by or on behalf of the Government of the United States 
(including any Government agency), and to any reservations and 
conditions deemed appropriate by the Secretary of Energy or 
designee.
    (c) Subject Invention Disclosures. (1) Contractor procedures for 
reporting subject inventions to Contractor personnel. Subject 
inventions shall be reported to Contractor personnel responsible for 
patent matters within six (6) months of conception and/or first 
actual reduction to practice, whichever occurs first in the 
performance of work under this contract. Accordingly, the Contractor 
shall establish and maintain effective procedures for ensuring such 
prompt identification and timely disclosure of subject inventions to 
Contractor personnel responsible for patent matters, and the 
procedures shall include the maintenance of laboratory notebooks, or 
equivalent records, and other records that are reasonably necessary 
to document the conception and/or the first actual reduction to 
practice of subject inventions, and the maintenance of records 
demonstrating compliance with such procedures. The Contractor shall 
submit a written description of such procedures to the Contracting 
Officer, upon request, for evaluation of the effectiveness of such 
procedures by the Contracting Officer.
    (2) Subject invention disclosure. The Contractor shall disclose 
each subject invention to Patent Counsel with a copy to the 
Contracting Officer within two (2) months after the subject 
invention is reported to Contractor personnel responsible for patent 
matters, in accordance with subparagraph (c)(1) of this clause, or, 
if earlier, within six (6) months after the Contractor has knowledge 
of the subject invention, but in any event before any on sale, 
public use, or publication of the subject invention. The disclosure 
to DOE shall be in the form of a written report and shall include:
    (i) the contract number under which the subject invention was 
made;
    (ii) the inventor(s) of the subject invention;
    (iii) a description of the subject invention in sufficient 
technical detail to convey a clear understanding of the nature, 
purpose and operation of the subject invention, and of the physical, 
chemical, biological or electrical characteristics of the subject 
invention, to the extent known by the Contractor at the time of the 
disclosure;
    (iv) the date and identification of any publication, on sale or 
public use of the invention;
    (v) the date and identification of any submissions for 
publication of any manuscripts describing the invention, and a 
statement of whether the manuscript is accepted for publication, to 
the extent known by the Contractor at the time of the disclosure;

[[Page 81064]]

    (vi) a statement indicating whether the subject invention 
concerns exceptional circumstances pursuant to 35 U.S.C. 202(ii), 
related to national security, or subject to a treaty or an 
international agreement, to the extent known or believed by 
Contractor at the time of the disclosure;
    (vii) all sources of funding by Budget and Resources (B&R) code; 
and
    (viii) the identification of any agreement relating to the 
subject invention, including Cooperative Research and Development 
Agreements and Work-for-Others agreements. Unless the Contractor 
contends otherwise in writing at the time the invention is 
disclosed, inventions disclosed to DOE under this paragraph are 
deemed made in the manner specified in Sections (a)(1) and (a)(2) of 
42 U.S.C. 5908.
    (3) Publication after disclosure. After disclosure of the 
subject invention to the DOE, the Contractor shall promptly notify 
Patent Counsel of the acceptance for publication of any manuscript 
describing the subject invention or of any expected or on sale or 
public use of the subject invention, known by the Contractor.
    (4) Contractor employee agreements. The Contractor agrees to 
require, by written agreement, its employees, other than clerical 
and nontechnical employees, to disclose promptly in writing to 
Contractor personnel identified as responsible for the 
administration of patent matters and in a format suggested by the 
Contractor, each subject invention made under this contract, and to 
execute all papers necessary to file patent applications claiming 
subject inventions or to establish the Government's rights in the 
subject inventions. This disclosure format shall at a minimum 
include the information required by subparagraph (c)(2) of this 
clause. The Contractor shall instruct such employees, through 
employee agreements or other suitable educational programs, on the 
importance of reporting inventions in sufficient time to permit the 
filing of patent applications prior to U.S. or foreign statutory 
bars.
    (5) Contractor procedures for reporting subject inventions to 
DOE. The Contractor agrees to establish and maintain effective 
procedures for ensuring the prompt identification and timely 
disclosure of subject inventions to DOE. The Contractor shall submit 
a written description of such procedures to the Contracting Officer, 
upon request, for evaluation of the effectiveness of such procedures 
by the Contracting Officer.
    (6) Duplication and disclosure of documents. The Government may 
duplicate and disclose subject invention disclosures and all other 
reports and papers furnished or required to be furnished pursuant to 
this clause; provided, however, that any such duplication or 
disclosure by the Government is subject to 35 U.S.C. 205 and 37 CFR 
401.13.
    (d) Minimum Rights of the Contractor. (1) Contractor License. 
(i) Request for a Contractor license. Except for subject inventions 
that the Contractor fails to disclose within the time periods 
specified at subparagraph (c)(2) of this clause, the Contractor may 
request a revocable, nonexclusive, royalty-free license in each 
patent application filed in any country claiming a subject invention 
and any resulting patent in which the Government obtains title, and 
DOE may grant or refuse to grant such a request by the Contractor. 
If DOE grants the Contractor's request for a license, the 
Contractor's license extends 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.
    (ii) Transfer of a Contractor license. DOE shall approve any 
transfer of the Contractor's license in a subject invention, and DOE 
may determine the Contractor's license is non-transferrable, on a 
case-by-case basis.
    (iii) Revocation or modification of a Contractor license. DOE 
may revoke or modify the Contractor's domestic license to the extent 
necessary to achieve expeditious practical application of the 
subject invention pursuant to an application for an exclusive 
license submitted in accordance with applicable provisions in 37 CFR 
Part 404 and DOE licensing regulations. DOE may not revoke the 
Contractor's domestic license in that field of use or the 
geographical areas in which the Contractor, its licensee, or its 
domestic subsidiaries or affiliates achieved practical applications 
and continues to make the benefits of the invention reasonably 
accessible to the public. DOE may revoke or modify the Contractor's 
license in any foreign country to the extent the Contractor, its 
licensees, or its domestic subsidiaries or affiliates failed to 
achieve practical application in that foreign country.
    (iv) Notice of revocation or modification of a Contractor 
license. Before revocation or modification of the license, DOE shall 
furnish the Contractor a written notice of its intention to revoke 
or modify the license, and the Contractor shall be allowed thirty 
(30) days from the date of the notice (or such other time as may be 
authorized by DOE for good cause shown by the Contractor) to show 
cause why the license should not be revoked or modified. The 
Contractor has the right to appeal any decision concerning the 
revocation or modification of its license, in accordance with 
applicable regulations in 37 CFR Part 404 and DOE licensing 
regulations.
    (2) Contractor's right to request foreign patent rights. If the 
Government has title to a subject invention and the Government 
decides against securing patent rights in a foreign country for the 
subject invention, the Contractor may request such foreign patent 
rights from DOE, and DOE may grant the Contractor's request, subject 
to a nonexclusive, nontransferable, irrevocable, paid-up license to 
the Government to practice or have practiced the subject invention 
in the foreign country, and any reservations and conditions deemed 
appropriate by the Secretary of Energy or designee. Such a request 
shall be submitted in writing to the Patent Counsel as part of the 
disclosure required by subparagraph (c)(2) of this clause, with a 
copy to the DOE Contracting Officer, unless a longer period is 
authorized in writing by the Contracting Officer for good cause 
shown in writing by the Contractor. DOE may grant or refuse to grant 
such a request, and may consider whether granting the Contractor's 
request best serves the interests of the United States.
    (e) Examination of Records Relating to Inventions. (1) 
Contractor compliance. Until the expiration of three (3) years after 
final payment under this contract, the Contracting Officer or any 
authorized representative may examine any books (including 
laboratory notebooks), records, and documents and other supporting 
data of the Contractor, which the Contracting Officer or authorized 
representative deems reasonably pertinent to the discovery or 
identification of subject inventions, or to determine Contractor 
(and inventor) compliance with the requirements of this clause, 
including proper identification and disclosure of subject 
inventions, and establishment and maintenance of invention 
disclosure procedures.
    (2) Unreported inventions. If the Contracting Officer is aware 
of an invention that is not disclosed by the Contractor to DOE, and 
the Contracting Officer believes the unreported invention may be a 
subject invention, DOE may require the Contractor to submit to DOE a 
disclosure of the invention for a determination of ownership rights.
    (3) Confidentiality. Any examination of records under this 
paragraph is subject to appropriate conditions to protect the 
confidentiality of the information involved.
    (f) Subcontracts. (1) Subcontractor subject inventions. The 
Contractor shall not obtain rights in the subcontractor's subject 
inventions as part of the consideration for awarding a subcontract.
    (2) Inclusion of patent rights clause--non-profit organization 
or small business firm subcontractors. Unless otherwise authorized 
or directed by the Contracting Officer, the Contractor shall include 
the patent rights clause at 48 CFR 952.227-11, suitably modified to 
identify the parties in all subcontracts, at any tier, for 
experimental, developmental, demonstration or research work to be 
performed by a small business firm or domestic nonprofit 
organization, except subcontracts which are subject to exceptional 
circumstances in accordance with 35 U.S.C. 202(a)(ii).
    (3) Inclusion of patent rights clause--subcontractors other than 
non-profit organizations and small business firms. Except for the 
subcontracts described in subparagraph (f)(2) of this clause, the 
Contractor shall include the patent rights clause at 48 CFR 952.227-
13, suitably modified to identify the parties, in any contract for 
experimental, developmental, demonstration or research work.
    (4) DOE and subcontractor contract. With respect to subcontracts 
at any tier, DOE, the subcontractor, and the Contractor agree that 
the mutual obligations of the parties created by this clause 
constitute a contract between the subcontractor and DOE with respect 
to those matters covered by this clause.
    (5) Subcontractor refusal to accept terms of patent rights 
clause. If a prospective subcontractor refuses to accept the terms 
of a patent rights clause, the Contractor shall promptly submit a 
written notice to the Contracting Officer stating the 
subcontractor's reasons for such a refusal, including any relevant 
information for

[[Page 81065]]

expediting disposition of the matter, and the Contractor shall not 
proceed with the subcontract without the written authorization of 
the Contracting Officer.
    (6) Notification of award of subcontract. Upon the award of any 
subcontract at any tier containing a patent rights clause, the 
Contractor shall promptly notify the Contracting Officer in writing 
and identify the subcontractor, the applicable patent rights clause, 
the work to be performed under the subcontract, and the dates of 
award and estimated completion. Upon request of the Contracting 
Officer, the Contractor shall furnish a copy of a subcontract.
    (7) Identification of subcontractor subject inventions. If the 
Contractor in the performance of this contract becomes aware of a 
subject invention made under a subcontract, the Contractor shall 
promptly notify Patent Counsel and identify the subject invention, 
with a copy of the notification and identification to the 
Contracting Officer.
    (g) Atomic Energy. (1) Pecuniary awards. No claim for pecuniary 
award of compensation under the provisions of the Atomic Energy Act 
of 1954, as amended, may be asserted with respect to any invention 
or discovery made or conceived in the course of or under this 
contract.
    (2) Patent Agreements. Except as otherwise authorized in writing 
by the Contracting Officer, the Contractor shall obtain patent 
agreements to effectuate the provisions of subparagraph (g)(1) of 
this clause from all persons who perform any part of the work under 
this contract, except nontechnical personnel, such as clerical 
employees and manual laborers.
    (h) Publication. The Contractor shall receive approval from 
Patent Counsel prior to releasing or publishing information 
regarding scientific or technical developments conceived or first 
actually reduced to practice in the course of or under this 
contract, to ensure such release or publication does not adversely 
affect the patent interests of DOE or the Contractor.
    (i) Communications. The Contractor shall direct any 
notification, disclosure, or request provided for in this clause to 
the Patent Counsel assisting the DOE contracting activity, with a 
copy of the communication to the Contracting Officer.
    (j) Reports. (1) Interim reports. Upon DOE's request, the 
Contractor shall submit to DOE, no more frequently than annually, a 
list of subject inventions disclosed to DOE during a specified 
period, or a statement that no subject inventions were made during 
the specified period; and/or a list of subcontracts containing a 
patent clause and awarded by the Contractor during a specified 
period, or a statement that no such subcontracts were awarded during 
the specified period. The interim report shall state whether the 
Contractor's invention disclosures were submitted to DOE in 
accordance with the requirements of subparagraphs (c)(1) and (c)(5) 
of this clause.
    (2) Final reports. Upon DOE's request, the Contractor shall 
submit to DOE, prior to closeout of the contract or within three (3) 
months of the date of completion of the contracted work, a list of 
all subject inventions disclosed during the performance period of 
the contract, or a statement that no subject inventions were made 
during the contract performance period; and/or a list of all 
subcontracts containing a patent clause and awarded by the 
Contractor during the contract performance period, or a statement 
that no such subcontracts were awarded during the contract 
performance period.
    (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 Government at the facility, and (2) 
to transfer such license with the transfer of that facility. 
Notwithstanding the acceptance or exercise by the Government of 
these rights, the Government may contest at any time the 
enforceability, validity or scope of, or title to, any rights or 
patents herein licensed.
    (l) Classified Inventions. (1) Approval for filing a foreign 
patent application. The Contractor shall not file or cause to be 
filed an application or registration for a patent disclosing a 
subject invention related to classified subject matter in any 
country other than the United States without first obtaining the 
written approval of the Contracting Officer.
    (2) Transmission of classified subject matter. If in accordance 
with this clause the Contractor files a patent application in the 
United States disclosing a subject invention that is classified for 
reasons of security, the Contractor shall observe all applicable 
security regulations covering the transmission of classified subject 
matter. If the Contractor transmits a patent application disclosing 
a classified subject invention to the United States Patent and 
Trademark Office (USPTO), the Contractor shall submit a separate 
letter to the USPTO identifying the contract or contracts by agency 
and agreement number that require security classification markings 
to be placed on the patent application.
    (3) Inclusion of clause in subcontracts. The Contractor agrees 
to include the substance of this clause in subcontracts at any tier 
that cover or are likely to cover subject matter classified for 
reasons of security.
    (m) Patent Functions. Upon the written request of the 
Contracting Officer or Patent Counsel, the Contractor agrees to make 
reasonable efforts to support DOE in accomplishing patent-related 
functions for work arising out of the contract, including, but not 
limited to, the prosecution of patent applications, and the 
determination of questions of novelty, patentability, and 
inventorship.
    (n) Annual Appraisal by Patent Counsel. Patent Counsel may 
conduct an annual appraisal to evaluate the Contractor's 
effectiveness in identifying and protecting subject inventions in 
accordance with DOE policy.

(End of Clause)


970.5227-12  Patent rights--management and operating contracts, for-
profit contractor, advance class waiver.

    Insert the following clause in solicitations and contracts in 
accordance with 970.2703-1(b)(3):

Patent Rights--Management and Operating Contracts, For-Profit 
Contractor, Advance Class Waiver (DEC 2000)

    (a) Definitions. (1) DOE licensing regulations means the 
Department of Energy patent licensing regulations at 10 CFR Part 
781.
    (2) DOE patent waiver regulations means the Department of Energy 
patent waiver regulations at 10 CFR Part 784.
    (3) Exceptional Circumstance Subject Invention means any subject 
invention in a technical field or related to a task determined by 
the Department of Energy to be subject to an exceptional 
circumstance under 35 U.S.C. 202(a)(ii), and in accordance with 37 
CFR 401.3(e).
    (4) Invention means any invention or discovery which is or may 
be patentable or otherwise protectable under title 35 of the United 
States Code, or any novel variety of plant which is or may be 
protected under the Plant Variety Protection Act (7 U.S.C. 2321, et 
seq.).
    (5) Made when used in relation to any invention means the 
conception or first actual reduction to practice of such invention.
    (6) Patent Counsel means DOE Patent Counsel assisting the 
contracting activity.
    (7) Practical application means to manufacture, in the case of a 
composition or product; to practice, in the case of a process or 
method; or to operate, in the case of a machine or system; and, in 
each case, under such conditions as to establish that the invention 
is being utilized and that its benefits are, to the extent permitted 
by law or Government regulations, available to the public on 
reasonable terms.
    (8) Subject Invention means any invention of the contractor 
conceived or first actually reduced to practice in the course of or 
under this contract, provided that in the case of a variety of 
plant, the date of determination (as defined in section 41(d) of the 
Plant Variety Protection Act, 7 U.S.C. 2401(d)) shall also occur 
during the period of contract performance.
    (b) Allocation of Principal Rights. (1) Assignment to the 
Government. Except to the extent that rights are retained by

[[Page 81066]]

the Contractor by the granting of an advance class waiver pursuant 
to subparagraph (b)(2) of this clause or a determination of greater 
rights pursuant to subparagraph (b)(7) of this clause, the 
Contractor agrees to assign to the Government the entire right, 
title, and interest throughout the world in and to each subject 
invention.
    (2) Advance class waiver of Government rights to the Contractor. 
DOE may grant to the Contractor an advance class waiver of 
Government rights in any or all subject inventions, at the time of 
execution of the contract, such that the Contractor may elect to 
retain the entire right, title and interest throughout the world to 
such waived subject inventions, in accordance with the terms and 
conditions of the advance class waiver. Unless otherwise provided by 
the terms of the advance class waiver, any rights in a subject 
invention retained by the Contractor under an advance class waiver 
are subject to 35 U.S.C. 203 and the provisions of this clause, 
including the Government license provided for in subparagraph (b)(3) 
of this clause, and any reservations and conditions deemed 
appropriate by the Secretary of Energy or designee.
    (3) Government license. With respect to any subject invention to 
which the Contractor retains title, either under an advance class 
waiver pursuant to subparagraph (b)(2) or a determination of greater 
rights pursuant to subparagraph (b)(7) of this clause, the 
Government has a nonexclusive, nontransferable, irrevocable, paid-up 
license to practice or have practiced for or on behalf of the United 
States the subject invention throughout the world.
    (4) Foreign patent rights. If the Government has title to a 
subject invention and the Government decides against securing patent 
rights in a foreign country for the subject invention, the 
Contractor may request such foreign patent rights from DOE, and DOE 
may grant the Contractor's request, subject to 35 U.S.C. 203 and the 
provisions of this clause, including the Government license provided 
for in subparagraph (b)(3) of this clause, and any reservations and 
conditions deemed appropriate by the Secretary of Energy or 
designee.
    (5) Exceptional circumstance subject inventions. Except to the 
extent that rights are retained by the Contractor by a determination 
of greater rights in accordance with subparagraph (b)(7) of this 
clause, the Contractor does not have the right to retain title to 
any exceptional circumstance subject inventions and agrees to assign 
to the Government the entire right, title, and interest, throughout 
the world, in and to any exceptional circumstance subject 
inventions.
    (i) Inventions within or relating to the following fields of 
technology are exceptional circumstance subject inventions:
    (A) uranium enrichment technology;
    (B) storage and disposal of civilian high-level nuclear waste 
and spent fuel technology; and
    (C) national security technologies classified or sensitive under 
Section 148 of the Atomic Energy Act (42 U.S.C. 2168).
    (ii) Inventions made under any agreement, contract or 
subcontract related to the following initiatives or programs are 
exceptional circumstance subject inventions:
    (A) DOE Steel Initiative and Metals Initiative;
    (B) U.S. Advanced Battery Consortium; and
    (C) any funding agreement which is funded in part by the 
Electric Power Research Institute (EPRI) or the Gas Research 
Institute (GRI).
    (iii) DOE reserves the right to unilaterally amend this contract 
to modify, by deletion or insertion, technical fields, programs, 
initiatives, and/or other classifications for the purpose of 
defining DOE exceptional circumstance subject inventions.
    (6) Treaties and international agreements. Any rights acquired 
by the Contractor in subject inventions are subject to any 
disposition of right, title, or interest in or to subject inventions 
provided for in treaties or international agreements identified at 
Appendix [Insert Reference], to this contract. DOE reserves the 
right to unilaterally amend this contract to identify specific 
treaties or international agreements entered into or to be entered 
into by the Government after the effective date of this contract and 
to effectuate those license or other rights which are necessary for 
the Government to meet its obligations to foreign governments, their 
nationals and international organizations under such treaties or 
international agreements with respect to subject inventions made 
after the date of the amendment.
    (7) Contractor request for greater rights. The Contractor may 
request greater rights in an identified subject invention, including 
an exceptional circumstance subject invention, to which the 
Contractor does not have the right to elect to retain title, in 
accordance with the DOE patent waiver regulations, by submitting 
such a request in writing to Patent Counsel with a copy to the 
Contracting Officer at the time the subject invention is first 
disclosed to DOE pursuant to subparagraph (c)(1) of this clause, or 
not later than eight (8) months after such disclosure, unless a 
longer period is authorized in writing by the Contracting Officer 
for good cause shown in writing by the Contractor. DOE may grant or 
refuse to grant such a request by the Contractor. Unless otherwise 
provided in the greater rights determination, any rights in a 
subject invention obtained by the Contractor under a determination 
of greater rights is subject to 35 U.S.C. 203 and the provisions of 
this clause, including the Government license provided for in 
subparagraph (b)(3) of this clause, and to any reservations and 
conditions deemed appropriate by the Secretary of Energy or 
designee.
    (8) Contractor employee-inventor rights. If the Contractor does 
not elect to retain title to a subject invention or does not request 
greater rights in a subject invention, including an exceptional 
circumstance subject invention, to which the Contractor does not 
have the right to elect to retain title, a Contractor employee-
inventor, after consultation with the Contractor and with written 
authorization from the Contractor in accordance with 10 CFR 
784.9(b)(4), may request greater rights, including title, in the 
subject invention or the exceptional circumstance invention from 
DOE, and DOE may grant or refuse to grant such a request by the 
Contractor employee-inventor.
    (9) Government assignment of rights in Government employees' 
subject inventions. If a DOE employee is a joint inventor of a 
subject invention to which the Contractor has rights, DOE may assign 
or refuse to assign any rights in the subject invention acquired by 
the Government from the DOE employee to the Contractor, consistent 
with 48 CFR 27.304-1(d). Unless otherwise provided in the 
assignment, the rights assigned to the Contractor are subject to the 
Government license provided for in subparagraph (b)(3) of this 
clause, and to any provision of this clause applicable to subject 
inventions in which rights are retained by the Contractor, and to 
any reservations and conditions deemed appropriate by the Secretary 
of Energy or designee. The Contractor shall share royalties 
collected for the manufacture, use or sale of the subject invention 
with the DOE employee, as DOE deems appropriate.
    (c) Subject Invention Disclosure, Election of Title, and Filing 
of Patent Application by Contractor. (1) Subject invention 
disclosure. The Contractor shall disclose each subject invention to 
Patent Counsel with a copy to the Contracting Officer within two (2) 
months after an inventor discloses it in

[[Page 81067]]

writing to Contractor personnel responsible for patent matters or, 
if earlier, within six (6) months after the Contractor has knowledge 
of the subject invention, but in any event before any on sale, 
public use, or publication of the subject invention. The disclosure 
to DOE shall be in the form of a written report and shall include:
    (i) the contract number under which the subject invention was 
made;
    (ii) the inventor(s) of the subject invention;
    (iii) a description of the subject invention in sufficient 
technical detail to convey a clear understanding of the nature, 
purpose and operation of the subject invention, and of the physical, 
chemical, biological or electrical characteristics of the subject 
invention, to the extent known by the Contractor at the time of the 
disclosure;
    (iv) the date and identification of any publication, on sale or 
public use of the invention;
    (v) the date and identification of any submissions for 
publication of any manuscripts describing the invention, and a 
statement of whether the manuscript is accepted for publication, to 
the extent known by the Contractor at the time of the disclosure;
    (vi) a statement indicating whether the subject invention is an 
exceptional circumstance subject invention, related to national 
security, or subject to a treaty or an international agreement, to 
the extent known or believed by Contractor at the time of the 
disclosure;
    (vii) all sources of funding by Budget and Resources (B&R) code; 
and
    (viii) the identification of any agreement relating to the 
subject invention, including Cooperative Research and Development 
Agreements and Work-for-Others agreements.
    Unless the Contractor contends otherwise in writing at the time 
the invention is disclosed, inventions disclosed to DOE under this 
paragraph are deemed made in the manner specified in Sections (a)(1) 
and (a)(2) of 42 U.S.C. 5908.
    (2) Publication after disclosure. After disclosure of the 
subject invention to the DOE, the Contractor shall promptly notify 
Patent Counsel of the acceptance for publication of any manuscript 
describing the subject invention or of any expected or on sale or 
public use of the subject invention, known by the Contractor. The 
Contractor shall obtain approval from Patent Counsel prior to any 
release or publication of information concerning an exceptional 
circumstance subject invention or any subject invention related to a 
treaty or international agreement.
    (3) Election by the Contractor under an advance class waiver. If 
the Contractor has the right to elect to retain title to subject 
inventions under an advance class waiver granted in accordance with 
subparagraph (b)(2) of this clause, and unless otherwise provided 
for by the terms of the advance class waiver, the Contractor shall 
elect in writing whether or not to retain title to any subject 
invention by notifying DOE within two (2) years of the date of the 
disclosure of the subject invention to DOE, in accordance with 
subparagraph (c)(1) of this clause. The notification shall identify 
the advance class waiver, state the countries, including the United 
States, in which rights are retained, and certify that the subject 
invention is not an exceptional circumstance subject invention or 
subject to a treaty or international agreement. If a publication, on 
sale or public use of the subject invention has initiated the 1-year 
statutory period under 35 U.S.C. 102(b), the period for election may 
be shortened by DOE to a date that is no more than sixty (60) days 
prior to the end of the 1-year statutory period.
    (4) Filing of patent applications by the Contractor under an 
advance class waiver. If the Contractor has the right to retain 
title to a subject invention in accordance with an advance class 
waiver pursuant to subparagraph (b)(2) of this clause or a 
determination of greater rights pursuant to paragraph (b)(7) of this 
clause, and unless otherwise provided for by the terms of the 
advance class waiver or greater rights determination, the Contractor 
shall file an initial patent application claiming the subject 
invention to which it retains title either within one (1) year after 
the Contractor's election to retain or grant of title to the subject 
invention or prior to the end of any 1-year statutory period under 
35 U.S.C. 102(b), whichever occurs first. Any patent applications 
filed by the Contractor in foreign countries or international patent 
offices shall be filed within either ten (10) months of the 
corresponding initial patent application or, if such filing has been 
prohibited by a Secrecy Order, within six (6) months from the date 
permission is granted by the Commissioner of Patents and Trademarks 
to file foreign patent applications.
    (5) Submission of patent information and documents. If the 
Contractor files a domestic or foreign patent application claiming a 
subject invention, the Contractor shall promptly submit to Patent 
Counsel the following information and documents:
    (i) The filing date, serial number, title, and a copy of the 
patent application (including an English-language version if filed 
in a language other than English);
    (ii) An executed and approved instrument fully confirmatory of 
all Government rights in the subject invention; and
    (iii) The patent number, issue date, and a copy of any issued 
patent claiming the subject invention.
    (6) Contractor's request for an extension of time. Requests for 
an extension of the time to disclose a subject invention, to elect 
to retain title to a subject invention, or to file a patent 
application under subparagraphs (c)(1), (3), and (4) of this clause 
may be granted at the discretion of Patent Counsel or DOE.
    (7) Duplication and disclosure of documents. The Government may 
duplicate and disclose subject invention disclosures and all other 
reports and papers furnished or required to be furnished pursuant to 
this clause; provided, however, that any such duplication or 
disclosure by the Government is subject to 35 U.S.C. 205 and 37 CFR 
Part 40.
    (d) Conditions When the Government May Obtain Title 
Notwithstanding an Advance Class Waiver. (1) Return of title to a 
subject invention. If the Contractor requests that DOE acquire title 
or rights from the Contractor in a subject invention, including an 
exceptional circumstance subject invention, to which the Contractor 
retained title or rights under subparagraph (b)(2) or subparagraph 
(b)(7) of this clause, DOE may acquire such title or rights from the 
Contractor, or DOE may decide against acquiring such title or rights 
from the Contractor, at DOE's sole discretion.
    (2) Failure to disclose or elect to retain title. Title vests in 
DOE and DOE may request, in writing, a formal assignment of title to 
a subject invention from the Contractor, and the Contractor shall 
convey title to the subject invention to DOE, if the Contractor 
elects not to retain title to the subject invention under an advance 
class waiver, or the Contractor fails to disclose or fails to elect 
to retain title to the subject invention within the times specified 
in subparagraphs (c)(1) and (c)(3) of this clause.
    (3) Failure to file domestic or foreign patent applications. In 
those countries in which the Contractor fails to file a patent 
application within the times specified in subparagraph (c)(4) of 
this clause, DOE may request, in writing, title to the subject 
invention from the Contractor, and the Contractor shall convey title 
to the subject invention to

[[Page 81068]]

DOE; provided, however, that if the Contractor has filed a patent 
application in any country after the times specified in subparagraph 
(c)(4) of this clause, but prior to its receipt of DOE's written 
request for title, the Contractor continues to retain title in that 
country.
    (4) Discontinuation of patent protection by the Contractor. If 
the Contractor decides to discontinue the prosecution of a patent 
application, the payment of maintenance fees, or the defense of a 
subject invention in a reexamination or opposition proceeding, in 
any country, DOE may request, in writing, title to the subject 
invention from the Contractor, and the Contractor shall convey title 
to the subject invention to DOE.
    (5) Termination of advance class waiver. DOE may request, in 
writing, title to any subject inventions from the Contractor, and 
the Contractor shall convey title to the subject inventions to DOE, 
if the advance class waiver granted under subparagraph (b)(2) of 
this clause is terminated under paragraph (u) of this clause.
    (e) Minimum Rights of the Contractor. (1) Request for a 
Contractor license. Except for subject inventions that the 
Contractor fails to disclose within the time periods specified at 
subparagraph (c)(1) of this clause, the Contractor may request a 
revocable, nonexclusive, royalty-free license in each patent 
application filed in any country claiming a subject invention and 
any resulting patent in which the Government obtains title, and DOE 
may grant or refuse to grant such a request by the Contractor. If 
DOE grants the Contractor's request for a license, the Contractor's 
license extends 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.
    (2) Transfer of a Contractor license. DOE shall approve any 
transfer of the Contractor's license in a subject invention, and DOE 
may determine that the Contractor's license is non-transferrable, on 
a case-by-case basis.
    (3) Revocation or modification of a Contractor license. DOE may 
revoke or modify the Contractor's domestic license to the extent 
necessary to achieve expeditious practical application of the 
subject invention pursuant to an application for an exclusive 
license submitted in accordance with applicable provisions in 37 CFR 
Part 404 and DOE licensing regulations. DOE may not revoke the 
Contractor's domestic license in that field of use or the 
geographical areas in which the Contractor, its licensees or its 
domestic subsidiaries or affiliates have achieved practical 
applications and continues to make the benefits of the invention 
reasonably accessible to the public. DOE may revoke or modify the 
Contractor's license in any foreign country to the extent the 
Contractor, its licensees, or its domestic subsidiaries or 
affiliates failed to achieve practical application in that foreign 
country.
    (4) Notice of revocation or modification of a Contractor 
license. Before revocation or modification of the license, DOE shall 
furnish the Contractor a written notice of its intention to revoke 
or modify the license, and the Contractor shall be allowed thirty 
(30) days from the date of the notice (or such other time as may be 
authorized by DOE for good cause shown by the Contractor) to show 
cause why the license should not be revoked or modified. The 
Contractor has the right to appeal any decision concerning the 
revocation or modification of its license, in accordance with 
applicable regulations in 37 CFR Part 404 and DOE licensing 
regulations.
    (f) Contractor Action to Protect the Government's Interest. (1) 
Execution and delivery of title or license instruments. The 
Contractor agrees to execute or have executed, and to deliver 
promptly to DOE all instruments necessary to accomplish the 
following actions:
    (i) establish or confirm the Government's rights throughout the 
world in subject inventions to which the Contractor elects to retain 
title;
    (ii) convey title in a subject invention to DOE pursuant to 
subparagraph (b)(5) and paragraph (d) of this clause; or
    (iii) enable the Government to obtain patent protection 
throughout the world in a subject invention to which the Government 
has title.
    (2) Contractor employee agreements. The Contractor agrees to 
require, by written agreement, its employees, other than clerical 
and nontechnical employees, to disclose promptly in writing to 
Contractor personnel identified as responsible for the 
administration of patent matters and in a format suggested by the 
Contractor, each subject invention made under this contract, and to 
execute all papers necessary to file patent applications claiming 
subject inventions or to establish the Government's rights in the 
subject inventions. This disclosure format shall at a minimum 
include the information required by subparagraph (c)(1) of this 
clause. The Contractor shall instruct such employees, through 
employee agreements or other suitable educational programs, on the 
importance of reporting inventions in sufficient time to permit the 
filing of patent applications prior to U.S. or foreign statutory 
bars.
    (3) Contractor procedures for reporting subject inventions to 
DOE. The Contractor agrees to establish and maintain effective 
procedures for ensuring the prompt identification and timely 
disclosure of subject inventions to DOE. The Contractor shall submit 
a written description of such procedures to the Contracting Officer, 
upon request, for evaluation and approval of the effectiveness of 
such procedures by the Contracting Officer.
    (4) Notification of discontinuation of patent protection. With 
respect to any subject invention for which the Contractor has 
responsibility for patent prosecution, the Contractor shall notify 
Patent Counsel of any decision to discontinue the prosecution of a 
patent application, payment of maintenance fees, or defense of a 
subject invention in a reexamination or opposition proceeding, in 
any country, not less than thirty (30) days before the expiration of 
the response period for any action required by the corresponding 
patent office.
    (5) Notification of Government rights. With respect to any 
subject invention to which the Contractor has title, the Contractor 
agrees to include, within the specification of any United States 
patent application and within any patent issuing thereon claiming a 
subject invention, the following statement, ``This invention was 
made with Government support under (identify the contract) awarded 
by the United States Department of Energy. The Government has 
certain rights in the invention.''
    (6) Avoidance of Royalty Charges. If the Contractor licenses a 
subject invention, the Contractor agrees to avoid royalty charges on 
acquisitions involving Government funds, including funds derived 
through a Military Assistance Program of the Government or otherwise 
derived through the Government, to refund any amounts received as 
royalty charges on a subject invention in acquisitions for, or on 
behalf of, the Government, and to provide for such refund in any 
instrument transferring rights in the subject invention to any 
party.
    (7) DOE approval of assignment of rights. Rights in a subject 
invention in the United States may not be assigned by the Contractor 
without the approval of DOE.
    (8) Small business firm licensees. The Contractor shall make 
efforts that are reasonable under the circumstances to attract 
licensees of subject inventions

[[Page 81069]]

that are small business firms, and may give a preference to a small 
business firm when licensing a subject invention if the Contractor 
determines that the small business firm has a plan or proposal for 
marketing the invention which, if executed, is equally as likely to 
bring the invention to practical application as any plans or 
proposals from applicants that are not small business firms; 
provided, the Contractor is also satisfied that the small business 
firm has the capability and resources to carry out its plan or 
proposal. The decision as to whether to give a preference in any 
specific case is at the discretion of the Contractor.
    (9) Contractor licensing of subject inventions. To the extent 
that it provides the most effective technology transfer, licensing 
of subject inventions shall be administered by Contractor employees 
on location at the facility.
    (g) Subcontracts. (1) Subcontractor subject inventions. The 
Contractor shall not obtain rights in the subcontractor's subject 
inventions as part of the consideration for awarding a subcontract.
    (2) Inclusion of patent rights clause--non-profit organization 
or small business firm subcontractors. Unless otherwise authorized 
or directed by the Contracting Officer, the Contractor shall include 
the patent rights clause at 48 CFR 952.227-11, suitably modified to 
identify the parties, in all subcontracts, at any tier, for 
experimental, developmental, demonstration or research work to be 
performed by a small business firm or domestic nonprofit 
organization, except subcontracts which are subject to exceptional 
circumstances in accordance with 35 U.S.C. 202 and subparagraph 
(b)(5) of this clause.
    (3) Inclusion of patent rights clause--subcontractors other than 
non-profit organizations or small business firms. Except for the 
subcontracts described in subparagraph (g)(2) of this clause, the 
Contractor shall include the patent rights clause at 48 CFR 952.227-
13, suitably modified to identify the parties and any applicable 
exceptional circumstance, in any contract for experimental, 
developmental, demonstration or research work.
    (4) DOE and subcontractor contract. With respect to subcontracts 
at any tier, DOE, the subcontractor and Contractor agree that the 
mutual obligations of the parties created by this clause constitute 
a contract between the subcontractor and DOE with respect to those 
matters covered by this clause; provided, however, that nothing in 
this paragraph is intended to confer any jurisdiction under the 
Contract Disputes Act in connection with proceedings under paragraph 
(j) of this clause.
    (5) Subcontractor refusal to accept terms of patent rights 
clause. If a prospective subcontractor refuses to accept the terms 
of a patent rights clause, the Contractor shall promptly submit a 
written notice to the Contracting Officer stating the 
subcontractor's reasons for such refusal and including relevant 
information for expediting disposition of the matter; and the 
Contractor shall not proceed with the subcontract without the 
written authorization of the Contracting Officer.
    (6) Notification of award of subcontract. Upon the award of any 
subcontract at any tier containing a patent rights clause, the 
Contractor shall promptly notify the Contracting Officer in writing 
and identify the subcontractor, the applicable patent rights clause, 
the work to be performed under the subcontract, and the dates of 
award and estimated completion. Upon request of the Contracting 
Officer, the Contractor shall furnish a copy of a subcontract.
    (7) Identification of subcontractor subject inventions. If the 
Contractor in the performance of this contract becomes aware of a 
subject invention made under a subcontract, the Contractor shall 
promptly notify Patent Counsel and identify the subject invention, 
with a copy of the notification and identification to the 
Contracting Officer.
    (h) Reporting on Utilization of Subject Inventions. Upon request 
by DOE, the Contractor agrees to submit periodic reports, no more 
frequently than annually, describing the utilization of a subject 
invention or efforts made by the Contractor or its licensees or 
assignees to obtain utilization of the subject invention. The 
reports shall include information regarding the status of 
development, date of first commercial sale or use, gross royalties 
received by the Contractor, and other data and information 
reasonably specified by DOE. Upon request by DOE, the Contractor 
also agrees to provide reports in connection with any march-in 
proceedings undertaken by DOE, in accordance with paragraph (j) of 
this clause. If any data or information reported by the Contractor 
in accordance with this provision is considered privileged and 
confidential by the Contractor, its licensee, or assignee and the 
Contractor properly marks the data or information privileged or 
confidential, DOE agrees not to disclose such information to persons 
outside the Government, to the extent permitted by law.
    (i) Preference for United States Industry. Notwithstanding any 
other provision of this clause the Contractor agrees that with 
respect to any subject invention in which it retains title, neither 
it nor any assignee may grant to any person the exclusive right to 
use or sell any subject invention in the United States unless such 
person agrees that any products embodying the subject invention or 
produced through the use of the subject invention will be 
manufactured substantially in the United States. However, in 
individual cases, DOE may waive the requirement for such an 
agreement upon a showing by the Contractor or its assignee that 
reasonable but unsuccessful efforts have been made to grant licenses 
on similar terms to potential licensees that would be likely to 
manufacture substantially in the United States or that under the 
circumstances domestic manufacture is not commercially feasible.
    (j) March-In Rights. With respect to any subject invention to 
which the Contractor has elected to retain or is granted title, DOE 
may, in accordance with the procedures in the DOE patent waiver 
regulations, require the Contractor, an assignee or exclusive 
licensee of a subject invention to grant a nonexclusive, partially 
exclusive or exclusive license in any field of use to a responsible 
applicant or applicants, upon terms that are reasonable under the 
circumstances. If the Contractor, assignee or exclusive licensee 
refuses such a request, DOE has the right to grant such a license 
itself if DOE determines that--
    (1) Such action is necessary because the Contractor or assignee 
has not taken, or is not expected to take within a reasonable time, 
effective steps to achieve practical application of the subject 
invention in such field of use;
    (2) Such action is necessary to alleviate health or safety needs 
that are not reasonably satisfied by the Contractor, assignee, or 
their licensees;
    (3) Such action is necessary to meet requirements for public use 
specified by government regulations and such requirements are not 
reasonably satisfied by the Contractor, assignee, or licensees; or
    (4) Such action is necessary because the agreement to 
substantially manufacture in the United States and required by 
paragraph (i) of this clause has neither been obtained nor waived or 
because a licensee of the exclusive right to use or sell any subject 
invention in the United States is in breach of such agreement.
    (k) Communications. The Contractor shall direct any 
notification, disclosure, or request provided for in this clause to

[[Page 81070]]

the Patent Counsel identified in the contract.
    (l) Reports. (1) Interim reports. Upon DOE's request, the 
Contractor shall submit to DOE, no more frequently than annually, a 
list of subject inventions disclosed to DOE during a specified 
period, or a statement that no subject inventions were made during 
the specified period; and/or a list of subcontracts containing a 
patent clause and awarded by the Contractor during a specified 
period, or a statement that no such subcontracts were awarded during 
the specified period. The interim report shall state whether the 
Contractor's invention disclosures were submitted to DOE in 
accordance with the requirements of subparagraphs (f)(3) and (f)(4) 
of this clause.
    (2) Final reports. Upon DOE's request, the Contractor shall 
submit to DOE, prior to closeout of the contract or within three (3) 
months of the date of completion of the contracted work, a list of 
all subject inventions disclosed during the performance period of 
the contract, or a statement that no subject inventions were made 
during the contract performance period; and/or a list of all 
subcontracts containing a patent clause and awarded by the 
Contractor during the contract performance period, or a statement 
that no such subcontracts were awarded during the contract 
performance period.
    (m) 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. 
Notwithstanding the acceptance or exercise by the Government of 
these rights, the Government may contest at any time the 
enforceability, validity or scope of, or title to, any rights or 
patents herein licensed.
    (n) Atomic Energy. (1) Pecuniary awards. No claim for pecuniary 
award of compensation under the provisions of the Atomic Energy Act 
of 1954, as amended, may be asserted with respect to any invention 
or discovery made or conceived in the course of or under this 
contract.
    (2) Patent Agreements. Except as otherwise authorized in writing 
by the Contracting Officer, the Contractor shall obtain patent 
agreements to effectuate the provisions of subparagraph (o)(1) of 
this clause from all persons who perform any part of the work under 
this contract, except nontechnical personnel, such as clerical 
employees and manual laborers.
    (o) Classified Inventions. (1) Approval for filing a foreign 
patent application. The Contractor shall not file or cause to be 
filed an application or registration for a patent disclosing a 
subject invention related to classified subject matter in any 
country other than the United States without first obtaining the 
written approval of the Contracting Officer.
    (2) Transmission of classified subject matter. If in accordance 
with this clause the Contractor files a patent application in the 
United States disclosing a subject invention that is classified for 
reasons of security, the Contractor shall observe all applicable 
security regulations covering the transmission of classified subject 
matter. If the Contractor transmits a patent application disclosing 
a classified subject invention to the United States Patent and 
Trademark Office (USPTO), the Contractor shall submit a separate 
letter to the USPTO identifying the contract or contracts by agency 
and agreement number that require security classification markings 
to be placed on the patent application.
    (3) Inclusion of clause in subcontracts. The Contractor agrees 
to include the substance of this clause in subcontracts at any tier 
that cover or are likely to cover subject matter classified for 
reasons of security.
    (p) Examination of Records Relating to Inventions. (1) 
Contractor compliance. Until the expiration of three (3) years after 
final payment under this contract, the Contracting Officer or any 
authorized representative may examine any books (including 
laboratory notebooks), records, and documents and other supporting 
data of the Contractor, which the Contracting Officer or authorized 
representative deems reasonably pertinent to the discovery or 
identification of subject inventions, including exceptional 
circumstance subject inventions, or to determine Contractor (and 
inventor) compliance with the requirements of this clause, including 
proper identification and disclosure of subject inventions, and 
establishment and maintenance of invention disclosure procedures.
    (2) Unreported inventions. If the Contracting Officer is aware 
of an invention that is not disclosed by the Contractor to DOE, and 
the Contracting Officer believes the unreported invention may be a 
subject invention, DOE may require the Contractor to submit to DOE a 
disclosure of the invention for a determination of ownership rights.
    (3) Confidentiality. Any examination of records under this 
paragraph is subject to appropriate conditions to protect the 
confidentiality of the information involved.
    (4) Power of inspection. With respect to a subject invention for 
which the Contractor has responsibility for patent prosecution, the 
Contractor shall furnish the Government, upon request by DOE, an 
irrevocable power to inspect and make copies of a prosecution file 
for any patent application claiming the subject invention.
    (q) Patent Functions. Upon the written request of the 
Contracting Officer or Patent Counsel, the Contractor agrees to make 
reasonable efforts to support DOE in accomplishing patent-related 
functions for work arising out of the contract, including, but not 
limited to, the prosecution of patent applications, and the 
determination of questions of novelty, patentability, and 
inventorship.
    (r) Educational Awards Subject to 35 U.S.C. 212. The Contractor 
shall notify the Contracting Officer prior to the placement of any 
person subject to 35 U.S.C. 212 in an area of technology or task (1) 
related to exceptional circumstance technology or (2) any person who 
is subject to treaties or international agreements as set forth in 
paragraph (b)(6) of this clause or to agreements other than funding 
agreements. The Contracting Officer may disapprove of any such 
placement.
    (s) Annual Appraisal by Patent Counsel. Patent Counsel may 
conduct an annual appraisal to evaluate the Contractor's 
effectiveness in identifying and protecting subject inventions in 
accordance with DOE policy.
    (t) Publication. The Contractor shall receive approval from 
Patent Counsel prior to releasing or publishing information 
regarding scientific or technical developments conceived or first 
actually reduced to practice in the course of or under this 
contract, to ensure such release or publication does not adversely 
affect the patent rights of DOE or the Contractor.
    (u) Termination of Contractor's Advance Class Waiver. If a 
request by the Contractor for an advance class waiver pursuant to 
subparagraph (b)(2) of this clause or a determination of

[[Page 81071]]

greater rights pursuant to paragraph (c) of this clause contains 
false material statements or fails to disclose material facts, and 
DOE relies on the false statements or omissions in granting the 
Contractor's request, the waiver or grant of any Government rights 
(in whole or in part) to the subject invention(s) may be terminated 
at the discretion of the Secretary of Energy or designee. Prior to 
termination, DOE shall provide the Contractor with written 
notification of the termination, including a statement of facts in 
support of the termination, and the Contractor shall be allowed 
thirty (30) days, or a longer period authorized by the Secretary of 
Energy or designee for good cause shown in writing by the 
Contractor, to show cause for not terminating the waiver or grant. 
Any termination of an advance class waiver or a determination of 
greater rights is subject to the Contractor's license as provided 
for in paragraph (f) of this clause.

(End of Clause)

    Alternate 1 Weapons Related Subject Inventions. As prescribed at 
970.2703-2(g), insert the following as subparagraphs (a)(9)and 
(b)(10), respectively:
    (a) Definitions. (9) Weapons Related Subject Invention means any 
subject invention conceived or first actually reduced to practice in 
the course of or under work funded by or through defense programs, 
including Department of Defense and intelligence reimbursable work, 
or the Naval Nuclear Propulsion Program of the Department of Energy.
    (b) Allocation of Principal Rights. (10) Weapons related subject 
inventions. Except to the extent that DOE is solely satisfied that 
the Contractor meets certain procedural requirements and DOE grants 
rights to the Contractor in weapons related subject inventions, the 
Contractor does not have a right to retain title to any weapons 
related subject inventions.

(End of Alternate)


970.5228-1  Insurance-litigation and claims.

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

Insurance--Litigation and Claims (DEC 2000)

    (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.
    (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 48 CFR Part 31, as supplemented by 48 CFR 970.31, and 
notwithstanding any other provision of this contract, the 
contractor's liabilities to third persons, including employees but 
excluding costs incidental to worker's compensation actions, (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;

[[Page 81072]]

    (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.
    (m) Reasonable litigation and other legal expenses are allowable 
when incurred in accordance with the DOE approved contractor legal 
management procedures (including cost guidelines) as such procedures 
may be revised from time to time, and if not otherwise made 
unallowable by law or the provisions of this contract.

(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 (DEC 2000)

    (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 clause, 
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)


970.5231-4  Preexisting conditions.

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

Preexisting Conditions (DEC 2000)

    (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 (DEC 2000). As prescribed in 48 CFR 970.3170 (a), 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 (DEC 2000). As prescribed in 48 CFR 970.3170 (b), 
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 (DEC 
2000)

    (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 970.3270(a)(1), insert the following 
clause:

Payments and Advances (DEC 2000)

    (a) Installments of fixed-fee. The fixed-fee payable under this 
contract shall become due and payable in periodic installments in 
accordance with a schedule determined by the contracting officer. 
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 
payments cleared financing arrangement 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

[[Page 81073]]

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 financial institution account--use. All advances of 
Government funds shall be withdrawn pursuant to a payments cleared 
financing arrangement prescribed by DOE in favor of the financial 
institution or, at the option of the Government, shall be made by 
direct payment or other payment mechanism to the contractor, and 
shall be deposited only in the special financial institution account 
referred to in the Special Financial Institution Account Agreement, 
which is incorporated into this contract as Appendix--. No part of 
the funds in the special financial institution account shall be 
commingled with any funds of the contractor or used for a purpose 
other than that of making payments for costs allowable and, if 
applicable, fees earned under this contract, negotiated fixed 
amounts, or payments for other items specifically approved in 
writing by the contracting officer. If the contracting officer 
determines that the balance of such special financial institution 
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 special financial institution account 
established pursuant to this clause shall remain in the Government 
and be superior to any claim or lien of the financial institution 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 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, collections accruing to 
the contractor in connection with the work under this contract, 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 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 shall 
provide prompt notice to the contracting officer of all potential 
claims under this clause, whether in litigation or not (see also 
Contract Clause____, DEAR 970.5228-1, ``Insurance--Litigation and 
Claims'');
    (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; and
    (D) Claims recognizable under the clause entitled, Nuclear 
Hazards Indemnity Agreement.
    (3) In arriving at the amount due the contractor under this 
clause, there shall be deducted,
    (i) Any claim which the Government may have against the 
contractor in connection with this contract, and
    (ii) Deductions due under the terms of this contract, and not 
otherwise recovered by or credited to the Government. The 
unliquidated balance of the special financial institution 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) Collections. All collections accruing to the contractor in 
connection with the work under this contract, except for the 
contractor's fee and royalties or other income accruing to the 
contractor from technology transfer activities in accordance with 
this contract, shall be Government property and 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 and, to the extent consistent 
with those requirements, shall be deposited in the special financial 
institution account or otherwise made available for payment of 
allowable costs under this contract, unless otherwise directed by 
the contracting officer.
    (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.
    (j) Determining allowable costs. The contracting officer shall 
determine allowable costs in accordance with the Federal Acquisition 
Regulation subpart 31.2 and the Department of Energy Acquisition 
Regulation subpart 48 CFR 970.31 in effect on the date of this 
contract and other provisions of this contract.
    Alternate I (DEC 2000). As prescribed in 48 CFR 
970.3270(a)(1)(i), 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 (DEC 2000). As prescribed in 48 CFR 
970.3270(a)(1)(ii), when total available fee provisions are used, 
replace paragraph (a) of the basic clause with the following 
paragraph (a):
    (a) Payment of Total available fee: Base Fee and Performance 
Fee. The base fee amount, if any, is payable in equal monthly 
installments. Total available fee amount earned is payable following 
the Government's 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 without the prior 
written approval of the contracting officer.
    Alternate III (DEC 2000). As prescribed in 48 CFR 
970.3270(a)(1)(iii), the following paragraph (k) shall be included 
in management and operating contracts with integrated accounting 
systems:
    (k) Review and approval of costs incurred. The contractor shall 
prepare and submit annually as of September 30, a ``Statement of 
Costs Incurred and Claimed'' (Cost Statement) for the total of net 
expenditures accrued (i.e., net costs incurred) for the period 
covered by the Cost Statement. The contractor shall certify the Cost 
Statement subject to the penalty provisions for unallowable costs as 
stated in sections 306(b) and (i) of the Federal Property and 
Administrative Services Act of 1949 (41 U.S.C. 256), as amended. 
DOE, after audit and appropriate adjustment, will approve such Cost 
Statement. This approval by DOE will constitute an acknowledgment by 
DOE that the net costs incurred are allowable

[[Page 81074]]

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.
    Alternate IV (DEC 2000). As prescribed in 48 CFR 
970.3270(a)(1)(iv), the following paragraph (k) shall be included in 
management and operating contracts without integrated accounting 
systems:
    (k) Certification and penalties. The contractor shall prepare 
and submit a ``Statement of Costs Incurred and Claimed'' (Cost 
Statement) for the total of net expenditures incurred for the period 
covered by the Cost Statement. It is anticipated that this will be 
an annual submission unless otherwise agreed to by the contracting 
officer. The contractor shall certify the Cost Statement subject to 
the penalty provisions for unallowable costs as stated in sections 
306(b) and (i) of the Federal Property and Administrative Services 
Act of 1949 (41 U.S.C. 256), as amended.


970.5232-3  Accounts, records, and inspection.

    As prescribed in 48 CFR 970.3270(a)(2), insert the following 
clause:

Accounts, Records, and Inspection (DEC 2000)

    (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; collections 
accruing to the contractor in connection with the work under this 
contract, other applicable credits, negotiated fixed amounts, and 
fee accruals under this contract; 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 or its designees in accordance with the 
provisions of Clause ____, Access to and ownership of records, at 
all reasonable times, before and during the period of retention 
provided for in paragraph (d) of this clause, 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, system files, data bases, and 
other data evidencing costs allowable, collections accruing to the 
contractor in connection with the work under this contract, other 
applicable credits, and fee accruals 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 otherwise provided in this 
contract, including provisions of Clause____, Access to and 
ownership of records, 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 and 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 (h) 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 (DEC 2000). As prescribed in 48 CFR 
970.3270(a)(2)(i), if the contract includes the clause at 48 CFR 
52.215-11, Price Reduction for Defective Cost or Pricing Data, the 
basic clause shall be modified as follows:
    (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 (DEC 2000). As prescribed in 48 CFR 
970.3270(a)(2)(ii), 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(a)(3), insert the following 
clause:

Obligation of Funds (DEC 2000)

    (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 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 this 
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

[[Page 81075]]

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 
and any negotiated fixed amount. 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 any 
negotiated fixed amounts, 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 and any negotiated fixed amounts, 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 this 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 
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 this contract.

(End of Clause)

    Alternate I (DEC 2000). As prescribed in 48 CFR 
970.3270(a)(3)(i), 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.


970.5232-5  Liability with respect to cost accounting standards.

    As prescribed in 48 CFR 970.3270(a)(5), insert the following 
clause:

Liability With Respect to Cost Accounting Standards (DEC 2000)

    (a) The contractor is not liable to the Government for increased 
costs or interest resulting from its failure to comply with the 
clauses of this contract entitled, ``Cost Accounting Standards,'' 
and ``Administration of Cost Accounting Standards,'' if its failure 
to comply with the clauses is caused by the contractor's compliance 
with published DOE financial management policies and procedures or 
other requirements established by the Department's Chief Financial 
Officer or Procurement Executive.
    (b) The contractor is not liable to the Government for increased 
costs or interest resulting from its subcontractors' failure to 
comply with the clauses at FAR 52.230-2, ``Cost Accounting 
Standards,'' and FAR 52.230-6, ``Administration of Cost Accounting 
Standards,'' if the contractor includes in each covered subcontract 
a clause making the subcontractor liable to the Government for 
increased costs or interest resulting from the subcontractor's 
failure to comply with the clauses; and the contractor seeks the 
subcontract price adjustment and cooperates with the Government in 
the Government's attempts to recover from the subcontractor.


970.5232-6  Work for others funding authorization.

    As prescribed in 48 CFR 970.3270(a)(6), insert the following 
clause:

Work for Others Funding Authorization (DEC 2000)

    Any uncollectible receivables resulting from the contractor 
utilizing contractor corporate funding for reimbursable work shall 
be the responsibility of the contractor, and the United States 
Government shall have no liability to the contractor for the 
contractor's uncollected receivables. The contractor is permitted to 
provide advance payment utilizing contractor corporate funds for 
reimbursable work to be performed by the contractor for a non-
Federal entity in instances where advance payment from that entity 
is required under the Laws, regulations, and DOE directives clause 
of this contract and such advance cannot be obtained. The contractor 
is also permitted to provide advance payment utilizing contractor 
corporate funds to continue reimbursable work to be performed by the 
contractor for a Federal entity when the term or the funds on a 
Federal interagency agreement required under the Laws, regulations, 
and DOE directives clause of this contract have elapsed. The 
contractor's utilization of contractor corporate funds does not 
relieve the contractor of its responsibility to comply with all 
requirements for Work for Others applicable to this contract.


970.5232-7  Financial management system.

    As prescribed in 48 CFR 970.3270(b)(1), insert the following 
clause:

Financial Management System (DEC 2000)

    The contractor shall maintain and administer a financial 
management system that is suitable to provide proper accounting in 
accordance with DOE requirements for assets, liabilities, 
collections accruing to the contractor in connection with the work 
under this contract, expenditures, costs, and encumbrances; permits 
the preparation of accounts and accurate, reliable financial and 
statistical reports; and assures that accountability for the assets 
can be maintained. The contractor shall submit to DOE for written 
approval an annual plan for new financial management systems and/or 
subsystems and major enhancements and/or upgrades to the currently 
existing financial systems and/or subsystems. The contractor shall 
notify DOE thirty (30) days in advance of any planned implementation 
of any substantial deviation from this plan and, as requested by the 
contracting officer, shall submit any such deviation to DOE for 
written approval before implementation.


970.5232-8  Integrated accounting.

    As prescribed in 48 CFR 970.3270(b)(2), insert the following 
clause:

Integrated Accounting (DEC 2000)

    Integrated accounting procedures are required for use under this 
contract. The contractor's financial management system shall include 
an integrated accounting system that is linked to DOE's accounts 
through the use of reciprocal accounts and that has electronic 
capability to transmit monthly and year-end self-balancing trial 
balances to the Department's Primary Accounting System for reporting 
financial activity under this contract in accordance with 
requirements imposed by the contracting officer pursuant to the 
Laws, regulations, and DOE directives clause of this contract.

[[Page 81076]]

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 
(DEC 2000)

    (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:

Government Facility Subcontract Approval (DEC 2000)

    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)


970.5237-2  Facilities management.

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

Facilities Management (DEC 2000)

    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) of this clause. 
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)


970.5242-1  Penalties for unallowable costs.

    As prescribed in 48 CFR 970.4207-03-70, insert the following 
clause:

Penalties for Unallowable Costs (DEC 2000)

    (a) Contractors which include unallowable cost in a submission 
for settlement for cost incurred, may be subject to penalties.
    (b) If, during the review of a submission for settlement of cost 
incurred, 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) 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.
    (d) If the contracting officer determines that a cost submitted 
by the contractor in its submission for settlement of cost incurred 
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 Pub. L. 92-41 (85 Stat. 97); or
    (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.
    (e) 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.

(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 (DEC 2000)

    (a) Changes and adjustment of fee. The contracting officer may 
at any time and

[[Page 81077]]

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 (DEC 2000)

    (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:
    (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

[[Page 81078]]

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 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 
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 (DEC 2000)

    (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 personality 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

[[Page 81079]]

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,
    (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 (DEC 2000). 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. 00-31542 Filed 12-21-00; 8:45 am]
BILLING CODE 6450-01-P