18, 1995 (Volume 60, Number 180)]

[Rules and Regulations]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

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Part II

Department of Defense

General Services Administration

National Aeronautics and Space Administration

________________________________________________________

48 CFR Chapter 1 and Parts 1, et al.

Federal Acquisition Regulation (FAR); Final Rules

DEPARTMENT OF DEFENSE

GENERAL SERVICES ADMINISTRATION

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION

48 CFR Chapter 1

[Federal Acquisition Circular 90-32]

Federal Acquisition Regulation; Introduction of Miscellaneous

Amendments

AGENCIES: Department of Defense (DOD), General Services Administration

(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Summary presentation of final rules.

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SUMMARY: This document serves to introduce the final rules which follow

and which comprise Federal Acquisition Circular (FAC) 90-32. The

Federal Acquisition Regulatory Council has agreed to issue FAC 90-32 to

amend the Federal Acquisition Regulation (FAR).

DATES: For effective dates, see individual documents following this

one.

FOR FURTHER INFORMATION CONTACT: The team leader or FAR Staff Analyst

whose name appears in relation to each FAR case or subject area. For

general information, contact the FAR Secretariat, Room 4037, GS

Building, Washington, DC, 20405 (202) 501-4755. Please cite FAC 90-32

and FAR case number(s).

SUPPLEMENTARY INFORMATION: Federal Acquisition Circular 90-32 amends

the Federal Acquisition Regulation (FAR) as specified below:

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Item Subject FAR case Team leader

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I....... Truth in 94-720 & 94-721..... Al Winston (703)

Negotiations Act 602-2119.

and Related

Changes.

II...... Protests, Disputes 94-730.............. Craig Hodge (703)

and Appeals. 274-8940.

III..... Acquisition of 94-790.............. Lawrence Trowel

Commercial Items. (703) 695-3858.

IV...... Whistleblower 94-803.............. Jules Rothlein

Protections for (703) 697-4349.

Contractor

Employees (Ethics).

V....... Small Business..... 94-780.............. Victoria Moss (202)

501-4764.

VI...... Publicizing 95-606.............. Ralph DeStefano

Contract Actions. (202) 501-1758.

VII..... Subcontractor 94-762.............. John Galbraith

Payments. (703) 697-6710.

VIII.... Reimbursement of 94-731.............. Craig Hodge (703)

Protest Costs. 274-8940.

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Case Summaries

For the actual revisions and/or amendments to these FAR cases,

refer to the specific item number and subject set forth in the

documents following these item summaries.

Item I--Truth in Negotiations Act and Related Changes (FAR Cases 94-720

and 94-721)

This final rule is issued pursuant to the Federal Acquisition

Streamlining Act of 1994 (FASA), Pub. L. 103-355 to implement those

portions of FASA that make specific changes to the Truth in

Negotiations Act (TINA) or that impact other areas of the FAR that

affect contract pricing.

This rule implements Sections 1201 through 1210 and Sections 1251

and 1252 of the FASA. A new exception is added to the requirement for

the submission of ``cost or pricing data'' for commercial items; the

approval level for waivers is changed, and prohibitions are placed on

acquiring ``cost or pricing data'' when an exception applies. The

coverage includes a clear explanation of adequate price competition as

required by the FASA.

Coverage has been included that addresses (1) ``information other

than cost or pricing data,'' (2) exceptions based on established

catalog or market price, (3) interorganizational transfers of

commercial items at price, and (4) price competition when only one

offer has been received.

The new policy also expands the exception based on adequate price

competition and provides for a special exception for commercial items.

A new section addressing ``information other than cost or pricing

data'' is created and a Standard Form 1448 is provided for use by

contractors.

The new policy at FAR 15.804-1(b)(1)(ii) recognizes circumstances

when it can be determined that adequate price competition exists even

though only one offeror has responded to the Government``s requirement.

In addition, this rule finalizes, with changes, the interim rule in

FAC 90-22 that made TINA requirements for civilian agencies

substantially the same as those for the Department of Defense

(increasing the threshold for submission of ``cost or pricing data'' to

$500,000 and adding penalties for defective pricing). Provisions were

also included that increase the threshold for cost or pricing data

submission every 5 years beginning October 1, 1995.

Although the instruction to amend contracts without consideration

to update the cost or pricing data threshold has been removed from the

FAR, the statutory authority and requirement to update the threshold

remain in effect. Accordingly, contracting officers shall, if requested

by a prime contractor, modify contracts to change the threshold in the

contract to the cost or pricing data threshold in paragraph 15.804-

2(a)(1), without requiring consideration. The contract modification

shall be accomplished by inserting into the contract the current

version of the clauses 52.215-23, Price Reduction for Defective Cost or

Pricing Data--Modifications, and 52.215-25, Subcontractor Cost or

Pricing Data-Modifications, or 52.215-24, Subcontractor Cost or Pricing

Data, as applicable. These new contract clauses shall apply only to

contract modifications and subcontracts for which agreement on price

occurs after the contracting officer has inserted the new clauses.

Item II--Protests, Disputes, and Appeals (FAR Case 94-730)

This final rule implements requirements of the Federal Acquisition

Streamlining Act of 1994 pertaining to protests, disputes, and appeals.

The primary changes included in this rule are new definitions of

``day,'' ``filed,'' and ``protest.'' Most of the adjustments merely

reflect current practice, except for the definition of ``day,'' which

changes from a presumed ``working day'' to a presumed ``calendar day.''

Agencies are now clearly allowed to take corrective action to include

payment of costs to the protester and are allowed to stay contract

performance in the face of a likely protest. Both agency and GAO

protests must now be filed within fourteen calendar days of discovery

of protest grounds, instead of the former ten working days. There is

also an explicit warning that, in the event of a conflict between the

FAR and GAO protest procedure regulations, the GAO regulations govern.

The period of time for submission of the agency administrative report

has been adjusted from the former 25 working days to 35 calendar days.

Agencies are required to prepare a protest file for prospective, non

intervening offerors to review, and to suspend performance of the

contract if the protest is filed within ten days of award or five days

of debriefing, where the debriefing is required. GAO decisions are

normally due out within 125 days, and attorney fees are generally

capped at $150 an hour, except for small businesses.

There is also an explicit statement that, in case of conflict with

the FAR, GSBCA rules govern questions of GSBCA protest procedure. The

GSBCA now has more GAO-like suspension standards and time periods.

Agencies are required to reimburse the judgment fund for costs awarded

the protester. Protest costs are limited at the GSBCA as they are with

GAO protests, such as with the attorney fee cap. Settlements are now

generally to be made public information.

In the disputes area, the claims certification threshold begins at

$100,000. Claims must be filed within six years of accrual, except for

Government claims involving fraud. Small claims now reach disputes of

$50,000, and accelerated claims have a threshold of $100,000.

Item III--Acquisition of Commercial Items (FAR Case 94-790)

This final rule implements Title VIII of the Federal Acquisition

Streamlining Act of 1994. The rule encourages the acquisition of

commercial end items and components by Federal Government agencies as

well as contractors and subcontractors at all levels. The most

significant revisions are in the following FAR parts:

Part 2 has been amended to incorporate the definitions of

``commercial item,'' ``component,'' ``commercial component'' and ``non

developmental item.''

Part 10 has been completely revised by establishing the requirement

for market research as the first step in the acquisition process.

Market research is an essential element in the later steps of

describing the agency's need, developing the overall acquisition

strategy and identifying terms and conditions unique to the item being

acquired.

Part 11 has been completely revised to address the process of

describing agency needs. It contains some of the language on

specifications and standards formerly found in FAR Part 10, but takes a

more streamlined approach. In addition, the revised Part 11 establishes

the Government's order of precedence for requirements documents and

addresses the concept of market acceptance. Part 11 also contains

coverage on Delivery or Performance Schedules, Liquidated Damages,

Priorities and Allocations, and Variations in Quantity taken from the

current Part 12 with only minor editorial revisions. The current Part

12 coverage on Suspension of Work, Stop Work Orders, and Government

Delay of Work has been moved to Subpart 42.13 with only minor editorial

revisions.

Part 12 has been completely revised to address the acquisition of

commercial items.

--Subpart 12.1 states that the policies in the revised Part 12 are

applicable to all acquisitions of commercial items above the micro-

purchase threshold. The requirements of other parts of the FAR apply to

commercial items to the extent they are not inconsistent with Part 12.

--Subpart 12.2 identifies special requirements for the acquisition of

commercial items.

--Subpart 12.3 establishes standard provisions and clauses for use in

the acquisition of commercial items. It is essential that contracting

officers be allowed to tailor solicitations and contracts to meet the

needs of the particular acquisition and the marketplace for that item.

Subpart 12.3 gives contracting officers broad authority to tailor

solicitations and contracts, a practice itself that is consistent with

commercial practices.

--A new form, the Standard Form (SF) 1449, Solicitation/Contract/Order

for Commercial Items, is established. The most significant element is

the addition of acceptance blocks at the bottom of the form that will

allow suppliers of commercial items to utilize the SF 1449 to document

receipt of the supplies or services by the Government, avoiding the

need for preparation of separate receipt/acceptance forms.

--Subpart 12.5 identifies the applicability of certain laws to the

acquisition of commercial items. It contains the list of laws

determined to be inapplicable to executive agency prime contracts for

acquisition of commercial items. This list has been expanded to also

include those laws that have been revised in some manner to modify

their applicability to commercial items. Agency unique laws determined

to be inapplicable to prime contracts are not addressed in this rule

and may be addressed separately by the respective agencies. This

subpart also contains the list of laws determined to be inapplicable to

subcontracts for commercial items. This list has been expanded to also

include those laws that have been revised in some manner to modify

their applicability to subcontracts for commercial items.

--Subpart 12.6 identifies two streamlined procedures for the evaluation

and solicitation of contracts for commercial items. These procedures

may be used at the discretion of the contracting officer.

Part 52 has been amended to include several new provisions and

clauses to be used in all solicitations and contracts for the

acquisition of commercial items:

--Section 52.212-1, Instructions to Offerors--Commercial Items,

contains solicitation instructions for the acquisition of commercial

items.

--Section 52.212-2, Evaluation--Commercial Items, contains evaluation

information that has been simplified and tailored to meet the

requirements of commercial items.

--Section 52.212-3, Offeror Representations and Certifications--

Commercial Items, includes, in one provision, the certifications and

representations required to comply with laws or Executive orders.

--Section 52.212-4, Contract Terms and Conditions--Commercial Items,

contains the terms and conditions believed to be consistent with

customary commercial practice.

--Section 52.212-5, Contract Terms and Conditions Required to Implement

Statutes or Executive Orders--Commercial Items, implements provisions

of law or Executive Orders applicable to Government acquisitions of

commercial items or commercial components. The clause at 52.212-5

represents the minimum number of clauses required to implement statutes

and Executive orders. Certain clauses may apply depending upon the

circumstances; the contracting officer will indicate which of these

clauses apply for the specific acquisition.

--Section 52.244-6, Subcontracts for Commercial Items and Commercial

Components, implements the preference for the acquisition of commercial

items or nondevelopmental items as components of items to be supplied

under Federal contracts. This clause will be used in all solicitations

and contracts for supplies and services other than commercial items.

Item IV--Whistleblower Protections for Contractor Employees (Ethics)

(FAR Case 94-803)

The final rule published as Item III of FAC 90-30 added FAR Subpart

3.9, Whistleblower Protections for Contractor Employees, to implement

Sections 6005 and 6006 of the Federal Acquisition Streamlining Act of

1994.

The rule contained an effective date of September 19, 1995, but did

not discuss the subject of applicability. The rule applies to all

contracts in existence as of September 19, 1995, for reprisals to

Government contractor employees occurring on or after that date.

Some existing Department of Defense contracts contain a clause

addressing whistleblower protections based on a prior statute, 10

U.S.C. 2409a. The remedies provided by FAR Subpart 3.9 do not apply to

contracts otherwise covered by the provisions of 10 U.S.C. 2409a.

Item V--Small Business (FAR Case 94-780)

This final rule implements Sections 7101(a) 7106, and 10004 of the

Federal Acquisition Streamlining Act (FASA) of 1994. Section 7101(a) of

FASA deletes Sections 15(e) and (f) of the Small Business Act (15

U.S.C. 631, et seq.). Those sections established the priority for award

of set-asides and provided the statutory basis for a procurement

preference for concerns located in Labor Surplus Areas (LSA). Based on

this deletion, this rule removes the LSA set-aside program and LSA

subcontracting program from the FAR.

Section 7106 of FASA revises Sections 8 and 15 of the Small

Business Act to accommodate a Governmentwide goal of 5 percent for

women-owned small businesses. This rule deletes existing, separate

coverage relating to women-owned businesses and revises existing

coverage to place women-owned small businesses on an equal footing with

small disadvantaged businesses. In connection with this revision, the

Standard Forms 294 and 295 are revised and streamlined.

Section 10004 of FASA, which requires the collection of specified

data through the Federal Procurement Data System, is being implemented

by FAR case 94-701. This rule augments that coverage by providing a

solicitation provision to collect the information on women-owned

businesses as required by that FAR case.

Item VI--Publicizing Contract Actions (FAR Case 95-606)

This final rule amends FAR sections 5.207(b)(4) and (b)(6). The

amendment deletes the requirement for the Federal Information

Processing Standard (FIPS) Number in Commerce Business Daily synopses

and, in lieu thereof, requests Government Printing Office (GPO) Billing

Account Code Information.

Item VII--Subcontractor Payments (FAR Case 94-762)

This final rule implements Sections 2091 and 8105 of the Federal

Acquisition Streamlining Act of 1994. The rule amends FAR Parts 28, 32,

and 52 to reflect: statutory requirements related to providing

information to subcontractors and prospective subcontractors concerning

bonds under the Miller Act; that while the Government does not have

privity with subcontractors, and does not serve as a collection agent

for them, the Government properly has an interest in the financial

capability, managerial competence, and business ethics of companies

doing business with the Government; that the contracting officer should

be informed about both sides of the argument in a dispute between the

prime contractor and its subcontractor in order to exercise good

business judgment; and finally, when an assertion raises a creditable

question concerning the accuracy of a contractor certification, the

contracting officer must decide whether the certification is inaccurate

in any material respect, and, if so, bring the matter to the attention

of the appropriate authorities, in accordance with agency regulations.

Item VIII--Reimbursement of Protest Costs (FAR Case 94-731)

This final rule implements Sections 1016, 1403, and 1435 of the

Federal Acquisition Streamlining Act of 1994. The primary effect of

this rule is to allow the Government to seek reimbursement for protest

costs it has paid a protester, such as the protester's attorney fees,

where that protest has been sustained based upon the awardee's

misrepresentation. In addition to any other remedies available, the

Government may collect this debt by offsetting the amount against any

payment due the awardee under any Government contract the awardee might

have.

Dated: September 7, 1995.

Edward C. Loeb,

Deputy Project Manager for the Implementation of the Federal

Acquisition Streamlining Act of 1994.

Federal Acquisition Circular

[Number 90-32]

Federal Acquisition Circular (FAC) 90-32 is issued under the

authority of the Secretary of Defense, the Administrator of General

Services, and the Administrator for the National Aeronautics and Space

Administration.

Unless otherwise specified below, all Federal Acquisition

Regulation (FAR) and other directive material contained in FAC 90-32 is

effective October 1, 1995. FAC Items I, and V through VIII, are

applicable for solicitations issued on or after October 1, 1995.

Item II--Where this rule repeats a GSBCA rule that went into effect

earlier, the date of the GSBCA rule and its applicability provision

prevail; otherwise, this rule is applicable to protests or claims filed

on or after October 1, 1995.

Item III--For solicitations issued on or after October 1, 1995: Use

of the new policies, provisions and clauses is optional for

solicitations issued before December 1, 1995, and mandatory for

solicitations issued on or after December 1, 1995.

Item IV--Effective September 19, 1995.

Dated: September 7, 1995.

Roland A. Hassebrock,

Col, USAF Director, Defense Procurement (Acting).

Dated: September 6, 1995.

Ida M. Ustad,

Associate Administrator for Acquisition Policy, General Services

Administration.

Dated: September 7, 1995.

Tom Luedtke,

Deputy Associate Administrator for Procurement, National Aeronautics

and Space Administration.

[Federal Register: September 18, 1995 (Volume 60, Number 180)]

[Rules and Regulations]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

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DEPARTMENT OF DEFENSE

48 CFR Parts 1, 4, 14, 15, 16, 31, 33, 36, 45, 46, 49, 52, and 53

[94-721; Item I FAC 90-32; FAR Cases 94-720 and 94-721]

RIN 9000-AG19; 9000-AG30

Federal Acquisition Regulation; Truth in Negotiations Act and

Related Changes

AGENCIES: Department of Defense (DOD), General Services Administration

(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rules.

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SUMMARY: These final rules are issued pursuant to the Federal

Acquisition Streamlining Act of 1994 to implement those portions of

Pub. L. 103-355 that make specific changes to the Truth in Negotiations

Act (TINA) or that impact other areas of the FAR that affect contract

pricing. These regulatory actions were subject to Office of Management

and Budget review under Executive Order 12866, dated September 30,

1993.

EFFECTIVE DATE: October 1, 1995.

FOR FURTHER INFORMATION CONTACT: Mr. Al Winston, Truth in Negotiations

Act (TINA) Team Leader, at (703) 602-2119 in reference to this FAR

case. For general information, contact the FAR Secretariat, Room 4037,

GSA Building, Washington, DC 20405, (202) 501-4755. Please cite FAR

case 94-721.

SUPPLEMENTARY INFORMATION:

A. Background

The Federal Acquisition Streamlining Act of 1994 (Pub. L. 103-355)

(the Act) provides authorities that streamline the acquisition process

and minimize burdensome government-unique requirements.

FAR case 94-721 implements Sections 1201 through 1210 and Sections

1251 and 1252 of the Act. Highlights include making TINA requirements

for civilian agencies substantially the same as those for the

Department of Defense (increasing the threshold for submission of

``cost or pricing data'' to $500,000 and adding penalties for defective

pricing). Provisions are also included that increase the threshold for

cost or pricing data submission every 5 years beginning October 1,

1995. A new exception is added to the requirement for the submission of

``cost or pricing data'' for commercial items; the approval level for

waivers is changed, and prohibitions are placed on acquiring ``cost or

pricing data'' when an exception applies. The coverage includes a clear

explanation of adequate price competition as required by the Act.

Also, FAR coverage has been included that addresses (1)

``information other than cost or pricing data'', (2) exceptions based

on established catalog or market price, (3) inter-divisional transfers

of commercial items at price, and (4) price competition when only one

offer has been received.

The FAR language primarily modifies Part 15, together with

associated Part 52 clauses and Part 53 forms. However, changes are also

made to clauses where threshold changes are made in Part 14 pertaining

to sealed bid contracting, and in Part 31 where the cost principle on

material costs has been amended to address inter-divisional transfers

of commercial items at price. Additional miscellaneous changes in Parts

1, 4, 16, 33, 36, 45, 46, and 49 have also been included.

The interim rule published at 59 FR 62498, December 5, 1994 (FAR

case 94-720, FAC 90-22) is adopted as final, as amended by this FAR

case 94-721. FAR case 94-720 provided for an immediate increase to the

threshold for ``cost or pricing data'' submission by contractors to

civilian agencies to $500,000. FAC 90-22 (FAR case 94-720) also removed

the certification requirement of commercial pricing for parts or

components for contractors doing business with civilian agencies.

Policy for Determining Reasonableness of Price

Two major changes are found in the new coverage. The first change

shifts the policy of FAR Part 15 with respect to determining price

reasonableness. A hierarchical policy preference for the types of

information to be used in assessing reasonableness of price is

established. The policy states that no additional information should be

obtained from the contractor if there is adequate price competition.

This is followed by allowing progressively more intrusive types of data

requirements. Obtaining ``cost or pricing data'' is designated as the

last choice. Use of ``cost or pricing data'' is coupled with a reminder

that unnecessarily requiring that type of data is not desirable and can

lead to additional costs to both the Government and the contractor.

New FAR coverage, based on the Act, is presented that expands the

exception based on adequate price competition and provides for a

special exception for commercial items. A new section addressing

``information other than cost or pricing data'' is created and a

Standard Form 1448 is provided for use by contractors.

The new policy at FAR 15.804-1(b)(1)(ii) recognizes circumstances

when it can be determined that adequate price competition exists even

though only one offeror has responded to the Government's requirement.

Defining ``Cost or Pricing Data''

The second major change accomplished by the coverage is the

clarification of the meaning of the term ``cost or pricing data.''

Currently, the FAR uses the term inconsistently. In some places,

``certified cost or pricing data'' is used and in other locations, it

states ``cost or pricing data.'' In the new coverage, the term has been

clarified in the definition to mean that, among other things, ``cost or

pricing data'' is required to be certified in accordance with TINA and

FAR 15.804-4, and means all facts that as of the date of agreement on

price (or other mutually agreeable date) prudent buyers and sellers

would reasonably expect to affect the price negotiations significantly.

Information Other Than Cost or Pricing Data

Since a bright-line test for ``cost or pricing data'' has now been

established, it is also possible to craft a second category of data--

''information other than cost or pricing data''--that may be required

by the contracting officer in order to establish cost realism or price

reasonableness. This information can include limited cost information,

sales data or pricing information. The intent is also clear with

respect to this category of information. Because it is not ``cost or

pricing data,'' certification shall not be required and approval to

obtain this information is vested in the contracting officer. The new

FAR coverage gives a detailed discussion of ``information other than

cost or pricing data'' at 15.804-5.

B. Regulatory Flexibility Act

The proposed rule was not expected to have a significant impact on

a substantial number of small entities within the meaning of the

Regulatory Flexibility Act, 5 U.S.C. 601, et seq. Accordingly, an

initial regulatory flexibility analysis was not prepared. Although

there were no public comments on this rule that indicated that this

line of reasoning was incorrect nor that treatment of small entities in

the proposed rule was inappropriate, the final rule may have a

significant economic impact on a substantial number of small entities

because the final rule will substantially affect the price negotiations

of non-competitive commercial item contracts. Small businesses may

receive a substantial portion of these awards. The rule is expected to

decrease the administrative expense of negotiating these awards by

reducing the amount of cost or pricing data that must be submitted,

reducing the amount of information necessary to qualify for an

exception from cost or pricing data requirements, and streamlining the

requirements for information supporting price proposals. Accordingly, a

Final Regulatory Flexibility Analysis (FRFA) has been prepared and

provided to the Chief Counsel for Advocacy for the Small Business

Administration. A copy of the FRFA may be obtained from the FAR

Secretariat.

C. Paperwork Reduction Act

The Paperwork Reduction Act, Pub. L. 96-511, is deemed to apply

because this final rule contains information collection requirements.

Approval was obtained from the Office of Management and Budget (OMB) on

March 24, 1995, under OMB Control No. 9000-0013. A request for a three-

year extension was submitted to OMB on July 11, 1995. Public comments

concerning this request were invited through a Federal Register notice

at 60 FR 36406, July 17, 1995.

D. Public Comments

On January 6, 1995, a proposed rule was published in the Federal

Register (60 FR 2282). The proposed rule afforded the public a 60-day

comment period. During that time, 40 organizations submitted more than

213 comments. A public meeting was also held on this rule on February

13, 1995. Based upon comments received, the TINA drafting team refined

the coverage.

On June 19, 1995, at 60 FR 31935, a notification of additional

changes was published that revised the original January 6, 1995

proposed rule. Interested parties were advised that the original rule

had been modified as a result of earlier comments and that a copy of

the revised proposed rule could be obtained from the FAR Secretariat.

Those who had commented on the original rule were provided with the

updated document. A 30-day written comment period was provided for, and

another public hearing was conducted on July 7, 1995. As a result of

the second public comment period, the Team received 148 pages of

written comments from 18 commenters and one telephonic comment. Based

upon comments received, the TINA drafting team further refined the

coverage.

The following are highlights of changes that were made to the

proposed rule as a result of both rounds of public comments and both

public meetings:

The Rule was edited to improve readability.

The hierarchical policy at FAR 15.802 was clarified to

ensure that it is consistent with TINA and FASA.

Regulatory guidance implementing the catalog or market

price exception to TINA was replaced with more flexible procedures (See

52.215-41 & -42).

--The Standard Form (SF) 1412, ``Request for Exemption from Submission

of Cost or Pricing Data,'' was eliminated.

--Relational tests were eliminated.

--Disclosure of lowest prices is no longer mandated.

--TINA based postaward audit access is no longer required.

--Expanded guidance was provided on what constitutes substantial sales.

--Requirement for offerors to account for ``government end use'' when

addressing sales to the general public was eliminated.

--Reference to GSA certifications was removed.

Flexibility in requesting an exception to TINA was

improved via generic provisions at FAR 52.215-41 & 52.215-42 that

provide broad guidelines on the type of data that would be needed to

qualify for a TINA exception.

The barriers in the proposed rule that prevented easier

access to the new commercial item exception have been substantially

decreased, to the maximum extent permitted by FASA.

A Commercial Item definition cross-reference was given.

A definition of cost realism was added.

Additional data requirements were removed for

qualification under the commercial item exception created by FASA

(rebates, credits, warranties, sales to resellers).

Expanded guidance was provided on effective dates for

certification of cost or pricing data.

The new SF 1448 has been substantially revised to remove

reference to cost related information that may not be appropriate for

all users of the form.

Disposition of Public Comments

Commercial Exception

Several commenters expressed concern that the proposed coverage

continued to subordinate the new commercial item exception to TINA to

the traditional TINA exceptions of adequate price competition, catalog

or market price, or price set by law or regulation.

The Team has carefully considered this issue. The Team concludes

that making the new commercial item exception (Section 1204(d)(2),

1251(d)(2)) co-equal with the original TINA exceptions is consistent

with the philosophy of FASA which is intended to make it easier for

commercial companies to do business with the Government. However, the

Team also concludes that the language at (d)(2), ``and the procurement

is not covered by an exception in subsection (b),'' is clear on its

face and prevents an absolute co-equal relationship. Nevertheless, upon

further consideration of the issue, the Team has decided that there is

sufficient statutory flexibility to provide for a more liberal

regulatory implementation of the commercial item exception. Therefore,

the Team has modified its proposed FAR language to make regulatory use

of the commercial item exception more readily available while still

providing for a consistent interpretation of statutory requirements.

This is accomplished by replacing the words, ``if an exception does not

apply'' with the words ``if the contracting officer does not have

sufficient information to support an exception'' at 15.804-1(a)(2) and

15.804-1(b)(4).

The Team has also reduced the contractor's risk of doing business

with the Government by including a statement in the solicitation

provision at 52.215-41 that indicates that providing information on one

TINA exception is not a representation that only one TINA exception may

apply.

Most Favored Customer

Other commenters were pleased to see that the SF 1412, ``Request

for Exemption from Submission of Cost or Pricing Data,'' had been

eliminated from the coverage. However, the treatment of ``most favored

customer'' pricing remains a major concern. The commenters continue to

press for a FAR prohibition on asking for this type of information.

The Team believes that establishing a FAR prohibition on any

specific contracting practice is contrary to the philosophy of FASA to

empower the contracting officer and to provide for regulatory

flexibility. Furthermore, it is bad policy guidance to construct an

absolute prohibition because it is not possible to foresee all

circumstances and an absolute prohibition could preclude a reasonable

course of action under circumstances that could not be foreseen.

With respect to the specific issue, just as the Team believes

having requirements that always mandate obtaining ``most favored

customer'' pricing is flawed, so would a policy that prohibits

obtaining this kind of information also be flawed. The Team is

convinced that both policy and procedural rules need to be constructed

in a flexible manner so they may be adapted to specific sets of

circumstances. As a result of earlier comments, the Team removed the

Standard Form 1412 and its associated requirement to disclose this type

of information as a condition of applying for a catalog or market price

exception to TINA.

The Team has also included policy guidance at 15.802 that indicates

a strong preference for pricing contracts with the minimum amount of

data needed to accomplish the task.

Specifically, when adequate price competition is present, the

contracting officer is strongly admonished not to obtain any additional

information from the offeror. As the situation moves away from that of

adequate price competition, the negotiation position between the

parties moves more in favor of the contractor and the contracting

officer is allowed to use more pricing tools. Nevertheless, the policy

is to price the contract in the least intrusive manner.

SF 1448, ``Proposal Cover Sheet/Cost or Pricing Data Not Required''

Concern was also expressed that with the elimination of the SF

1412, contracting officers might request submission of catalog or

market price exception data on the new SF 1448. The commenters believed

that the SF 1448 was not properly designed for that purpose.

Although the SF 1448 is not intended as a substitute for the SF

1412, the Team modified the SF 1448 to eliminate reference to cost

related information. This preserves the bright line between ``cost or

pricing data'' that can only be submitted on an SF 1411 and all other

``information other than cost or pricing data'' that may be submitted

using the SF 1448.

Cost Accounting Standards

Several commenters stated that the Cost Accounting Standards (CAS)

needed to be revised to narrow the definition of what constitutes

``cost or pricing data'' for purposes of CAS covered contracts. The

commenters believe that until CAS is modified the coverage in the TINA

rule would not completely address the issue of commercial contractors

being required to expose cost data to the Government and to be

accountable for such data.

The Team believes the commenters have identified a valid concern.

However, the matter rests with the CAS Board as the problem is that the

CAS definition of ``cost data'' is more broadly based than the ``cost

or pricing data'' definition in the FAR coverage.

Market Price Exception

Commenters also stated that for the market price exception to be

useful to industry it should not be tied to independent verification.

The Team does not agree with the commenters. It believes that it

makes sense to maintain this requirement as FASA requires clear FAR

standards as to what is required to qualify for a TINA exception. The

Team believes independent verification is an essential element of a

market price. Furthermore, with the creation of the new FASA commercial

item exception to TINA, it is useful to differentiate a price

reasonableness determination based on market price from information

provided directly by an offeror under the authority of the new FASA

commercial item exception.

List of Subjects in 48 CFR Parts 1, 4, 14, 15, 16, 31, 33, 36, 45, 46,

49, 52, and 53

Government procurement.

Dated: September 7, 1995.

Edward C. Loeb,

Deputy Project Manager for the Implementation of the Federal

Acquisition Streamlining Act of 1994.

The interim rule published at 59 FR 62498, December 5, 1994, FAC

90-22, FAR case 94-720, is adopted as final, as amended by this FAR

case 94-721. Therefore, 48 CFR Parts 1, 4, 14, 15, 16, 31, 33, 36, 45,

46, 49, 52, and 53 are amended as set forth below:

1. The authority citation for 48 CFR Parts 1, 4, 14, 15, 16, 31,

33, 36, 45, 46, 49, 52, and 53 continues to read as follows:

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

U.S.C. 2473(c).

PART 1--FEDERAL ACQUISITION REGULATIONS SYSTEM

2. The table in section 1.106 is amended under the ``FAR Segment''

and ``OMB Control Number'' columns by removing ``52.215-32'' and

``9000-0105'', and ``SF 1412'' and ``9000-0013''; and adding entries,

in numerical order, to read as follows:

1.106 OMB approval under the Paperwork Reduction Act.

* * * * *

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

OMB control

FAR segment No.

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

* * * * *

52.215-41.................................................. 9000-0013

52.215-42.................................................. 9000-0013

* * * * *

SF 1448.................................................... 9000-0013

SF 1449.................................................... 9000-0136

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

PART 4--ADMINISTRATIVE MATTERS

3. Section 4.702 is amended by adding paragraph (a)(3) to read as

follows:

4.702 Applicability.

* * * * *

(a)(3) Audit--Commercial Items (52.215-43).

* * * * *

4. Section 4.803 is amended by revising paragraphs (a)(17) and

(b)(4) to read as follows:

4.803 Contents of contract files.

* * * * *

(a) * * *

(17) Cost or pricing data and Certificates of Current Cost or

Pricing Data or a required justification for waiver, or information

other than cost or pricing data.

* * * * *

(b) * * *

(4) Cost or pricing data, Certificates of Current Cost or Pricing

Data, or information other than cost or pricing data; cost or price

analysis; and other documentation supporting contractual actions

executed by the contract administration office.

* * * * *

PART 14--SEALED BIDDING

14.201-7 [Amended]

5. Section 14.201-7 is amended by removing paragraph (d) and

redesignating paragraph ``(e)'' as paragraph ``(d).''

PART 15--CONTRACTING BY NEGOTIATION

6. Section 15.106-2 is added to read as follows:

15.106-2 Audit--Commercial items.

(a) This subsection implements 10 U.S.C. 2306a(d)(2) and (3) and 41

U.S.C. 254b(d)(2) and (3).

(b) The contracting officer shall, when contracting by negotiation,

insert clause 52.215-43, Audit--Commercial Items, in solicitations and

contracts when submission of cost or pricing data is expected to be

excepted under 15.804-1(a)(2) (i.e., a commercial item where price is

otherwise fair and reasonable). The clause shall also be included in

solicitations and contracts when cost or pricing data are required, for

incorporation into subcontracts that may be excepted under 15.804-

1(a)(2).

15.406-5 [Amended]

7. Section 15.406-5(b) is amended by inserting at the end of the

paragraph the parenthetical ``(see 15.804-6 and 15.804-8).''.

8. Section 15.703(a)(2) is revised to read as follows:

15.703 Acquisitions requiring make-or-buy programs.

(a) * * *

(2) Qualifies for an exception from the requirement to submit cost

or pricing data under 15.804-1; or

* * * * *

9. Section 15.801 is amended by revising the definitions of ``Cost

analysis'' and ``Cost or pricing data'', and adding in alphabetical

order ``Information other than cost or pricing data'', ``Subcontract'',

``Commercial item'', and ``Cost realism'' to read as follows:

15.801 Definitions.

Commercial item is defined in 2.101.

Cost analysis means the review and evaluation of the separate cost

elements and proposed profit of (a) an offeror's or contractor's cost

or pricing data or information other than cost or pricing data and (b)

the judgmental factors applied in projecting from the data to the

estimated costs in order to form an opinion on the degree to which the

proposed costs represent what the cost of the contract should be,

assuming reasonable economy and efficiency.

Cost or pricing data means all facts that, as of the date of price

agreement or, if applicable, another date agreed upon between the

parties that is as close as practicable to the date of agreement on

price, prudent buyers and sellers would reasonably expect to affect

price negotiations significantly. Cost or pricing data are data

requiring certification in accordance with 15.804-4. Cost or pricing

data are factual, not judgmental, and are therefore verifiable. While

they do not indicate the accuracy of the prospective contractor's

judgment about estimated future costs or projections, they do include

the data forming the basis for that judgment. Cost or pricing data are

more than historical accounting data; they are all the facts that can

be reasonably expected to contribute to the soundness of estimates of

future costs and to the validity of determinations of costs already

incurred. They also include such factors as--

(a) Vendor quotations;

(b) Nonrecurring costs;

(c) Information on changes in production methods and in production

or purchasing volume;

(d) Data supporting projections of business prospects and

objectives and related operations costs;

(e) Unit-cost trends such as those associated with labor

efficiency;

(f) Make-or-buy decisions;

(g) Estimated resources to attain business goals; and

(h) Information on management decisions that could have a

significant bearing on costs.

Cost realism means the costs in an offeror's proposal are (a)

realistic for the work to be performed; (b) reflect a clear

understanding of the requirements; and (c) are consistent with the

various elements of the offeror's technical proposal.

* * * * *

Information other than cost or pricing data means any type of

information that is not required to be certified, in accordance with

15.804-4, that is necessary to determine price reasonableness or cost

realism. For example, such information may include pricing, sales, or

cost information, and includes cost or pricing data for which

certification is determined inapplicable after submission.

* * * * *

Subcontract, as used in this subpart, includes a transfer of

commercial items between divisions, subsidiaries, or affiliates of a

contractor or a subcontractor.

* * * * *

10. Section 15.802 is revised to read as follows:

15.802 Policy.

Contracting officers shall--

(a) Purchase supplies and services from responsible sources at fair

and reasonable prices. In establishing the reasonableness of the

offered prices, the contracting officer shall not obtain more

information than is necessary. To the extent that the Truth in

Negotiations Act, as implemented in 15.804-2 and 15.804-5(b) permits,

the contracting officer shall generally use the following order of

preference in determining the type of information required:

(1) No further information from the offeror if the price is based

on adequate price competition, except as provided by 15.804-5(a)(3).

(2) Information other than cost or pricing data:

(i) Information related to prices (e.g., established catalog or

market prices), relying first on information available within the

Government; second, on information obtained from sources other than the

offeror; and, if necessary, on information obtained from the offeror.

(ii) Cost information, which does not meet the definition of cost

or pricing data at 15.801.

(3) Cost or pricing data. The contracting officer should use every

means available to ascertain a fair and reasonable price prior to

requesting cost or pricing data. Contracting officers shall not

unnecessarily require the submission of cost or pricing data, because

it leads to increased proposal preparation costs, generally extends

acquisition lead-time, and wastes both contractor and Government

resources.

(b) Price each contract separately and independently and not--

(1) Use proposed price reductions under other contracts as an

evaluation factor, or

(2) Consider losses or profits realized or anticipated under other

contracts.

(c) Not include in a contract price any amount for a specified

contingency to the extent that the contract provides for a price

adjustment based upon the occurrence of that contingency.

11. Section 15.803 is amended in paragraph (a) by revising the last

sentence to read as follows:

15.803 General.

(a) * * * This prohibition does not preclude disclosing

discrepancies or mistakes of fact (such as duplications, omissions, and

errors in computation) contained in the cost or pricing data or

information other than cost or pricing data supporting the proposal.

15.804 Cost or pricing data and information other than cost or pricing

data.

12. Section 15.804, heading, is revised to read as set forth above.

13. Section 15.804-1 is revised to read as follows:

15.804-1 Prohibition on obtaining cost or pricing data.

(a) Exceptions to cost or pricing data requirements. The

contracting officer shall not, pursuant to 10 U.S.C. 2306a and 41

U.S.C. 254b, require submission of cost or pricing data (but may

require information other than cost or pricing data to support a

determination of price reasonableness or cost realism)--

(1) If the contracting officer determines that prices agreed upon

are based on--

(i) Adequate price competition (see exception standards at

paragraph (b)(1) of this subsection);

(ii) Established catalog or market prices of commercial items sold

in substantial quantities to the general public (see exception

standards at paragraph (b)(2) of this section); or

(iii) Prices set by law or regulation (see exception standards at

paragraph (b)(3) of this subsection).

(2) For acquisition of a commercial item, if the contracting

officer does not have sufficient information to support an exception

under paragraph (a)(1) of this section, but the contracting officer can

determine the price is fair and reasonable (see exception standards at

paragraph (b)(4) of this section and pricing requirements at 15.804-

5(b));

(3) For exceptional cases where a waiver has been granted (see

exception standards at paragraph (b)(5) of this section); or

(4) For modifications to contracts or subcontracts for commercial

items, if the basic contract or subcontract was awarded without the submission of

cost or pricing data because the action was granted an exception from

cost or pricing data requirements under paragraph (a)(1) of this

section and the modification does not change the contract or

subcontract to a contract or subcontract for the acquisition of other

than a commercial item (see exception standards at paragraph (b)(6) of

this subsection).

(b) Standards for exceptions from cost or pricing data

requirements--

(1) Adequate price competition. A price is based on

adequate price competition if--

(i) Two or more responsible offerors, competing independently,

submit priced offers responsive to the Government's expressed

requirement and if--

(A) Award will be made to a responsible offeror whose proposal

offers either--

(1) The greatest value (see 15.605(c)) to the Government and price

is a substantial factor in source selection; or

(2) The lowest evaluated price; and

(B) There is no finding that the price of the otherwise successful

offeror is unreasonable. Any such finding must be supported by a

statement of the facts and approved at a level above the contracting

officer;

(ii) There was a reasonable expectation, based on market research

or other assessment, that two or more responsible offerors, competing

independently, would submit priced offers responsive to the

solicitation's expressed requirement, even though only one offer is

received from a responsible, responsive offeror and if--

(A) Based on the offer received, the contracting officer can

reasonably conclude that the offer was submitted with the expectation

of competition, e.g., circumstances indicate that--

(1) The offeror believed that at least one other offeror was

capable of submitting a meaningful, responsive offer; and

(2) The offeror had no reason to believe that other potential

offerors did not intend to submit an offer; and

(B) The determination that the proposed price is based on adequate

price competition and is reasonable is approved at a level above the

contracting officer; or

(iii) Price analysis clearly demonstrates that the proposed price

is reasonable in comparison with current or recent prices for the same

or similar items purchased in comparable quantities, under comparable

terms and conditions under contracts that resulted from adequate price

competition.

(2) Established catalog or market prices--(i) Established catalog

price. Established catalog prices are prices (including discount

prices) recorded in a catalog, price list, schedule, or other

verifiable and established record that (A) are regularly maintained by

the manufacturer or vendor; and (B) are published or otherwise

available for customer inspection.

(ii) Established market price. An established market price is a

price that is established in the course of ordinary and usual trade

between buyers and sellers free to bargain and that can be

substantiated by data from sources independent of the offeror.

(iii) Based on. A price may also be based on an established catalog

or market price if the item or class of items being purchased is not

itself a catalog or market priced commercial item but is sufficiently

similar to the catalog or market priced commercial item to ensure that

any difference in prices can be identified and justified without

resorting to cost analysis.

(iv) Sold in substantial quantities. An item is sold in substantial

quantities if there are sales of more than a nominal quantity based on

the norm of the industry segment. In determining what constitutes a

substantial quantity, the contracting officer should consider such

things as the size of the market; and how recently the item was

introduced into the market. Models, samples, prototypes, and

experimental units are not substantial quantities. For services to be

sold in substantial quantities, they must also be customarily provided

by the offeror, using personnel regularly employed and equipment (if

any is necessary) regularly maintained principally to provide the

services.

(A) The method used to establish sales may be sales order,

contract, shipment, invoice, actual recorded sales, or other records,

so long as the method used is consistent, provides an accurate

indication of sales activity, and is verifiable. If the item would not

otherwise qualify for an exception, sales of the item by affiliates may

be considered. In addition, sales of essentially the same commercial

item by other manufacturers or vendors may be considered in determining

whether sales are substantial, provided that the price of those sales

is also considered. Data to support sales quantities may also come from

other manufacturers, industry associations or marketing groups, annual

financial reports, etc.

(B) An exception may apply for an item based on the market price of

the item regardless of the quantity of sales of the item previously

made by the offeror or the types of customers for these sales, provided

that sales of the same or similar items by other sellers meet the

exception criteria.

(v) General public. The general public ordinarily consists of

buyers other than the U.S. Government or its instrumentalities, e.g.,

U.S. Government corporations. Sales to the general public do not

include sales to affiliates of the offerors or purchases by the U.S.

Government on behalf of foreign governments, such as for Foreign

Military Sales. If the contracting officer can determine without

requiring information from the offeror that sales are for Government

end use, these sales need not be considered sales to the general

public.

(3) Prices set by law or regulation. Pronouncements in the form of

periodic rulings, reviews, or similar actions of a governmental body,

or embodied in the laws are sufficient to set a price.

(4) Commercial items. For acquisition of a commercial item, if the

contracting officer does not have sufficient information to support an

exception under 15.804-1(a)(1) or (a)(4), the contracting officer shall

grant an exception for a contract, subcontract, or modification of a

contract or subcontract if the contracting officer obtains the pricing

information described in 15.804-5(b). Cost or pricing data may be

obtained for such a commercial item only if the contracting officer

makes a written determination that the pricing information is

inadequate for performing a price analysis and determining price

reasonableness.

(5) Exceptional cases. The head of the contracting activity may,

without power of delegation, waive the requirement for submission of

cost or pricing data. The authorization for the waiver and the reasons

for granting it shall be in writing. A waiver may be considered if

another exception does not apply but the price can be determined to be

fair and reasonable without submission of cost or pricing data. For

example, if cost or pricing data were furnished on previous production

buys and the contracting officer determines such data are sufficient,

when combined with updated information, a waiver may be granted. If the

head of the contracting activity has waived the requirement for

submission of cost or pricing data, the contractor or higher-tier

subcontractor to whom the waiver relates shall be considered as having

been required to make available cost or pricing data. Consequently,

award of any lower-tier subcontract expected to exceed the cost or

pricing data threshold requires the submission of cost or pricing data

unless an exception otherwise applies to the subcontract.

(6) Modifications. This exception only applies when the original

contract or subcontract was exempt from cost or pricing data based on

adequate price competition, catalog or market price, or price set by

law or regulation (15.804-1(a)(1)). For modifications of contracts or

subcontracts for commercial items, the exception at 15.804-1(a)(4)

applies if the modification does not change the item from a commercial

item to a noncommercial item. However, if the modification to a

contract or a subcontract changes the nature of the work under the

contract or subcontract either by a change to the commercial item or by

the addition of other noncommercial work, the contracting officer is

not prohibited from obtaining cost or pricing data for the added work.

(c) Special circumstances when purchasing commercial items.

(1) It is not necessary to obtain information supporting an exception for each

line item. Sampling techniques may be used.

(2) If the U.S. Government has acted favorably on an exception

request for the same or similar items, the contracting officer may

consider the prior submissions as support for the current exception

request. Relief from the submission of new information does not relieve

the contracting officer from the requirement to determine

reasonableness of price on the current acquisition.

(3) When acquiring by separate contract an item included on an

active Federal Supply Service or Information Technology Service

Multiple Award Schedule contract, the contracting officer should grant

an exception and not require documentation if the offeror has provided

proof that an exception has been granted for the schedule item. Price

analysis shall be performed in accordance with 15.805-2 to determine

reasonableness of price.

(4) The contracting officer and offeror may make special

arrangements for the submission of exception requests for repetitive

acquisitions. These arrangements can take any form as long as they set

forth an effective period and the exception criteria at 15.804-1 are

satisfied. Such arrangements may be extended to other Government

offices with their concurrence.

(d) Requesting an exception. In order to qualify for an exception,

other than an exception for adequate price competition, from the

requirements to submit cost or pricing data, the offeror must submit a

written request. The solicitation provision at 52.215-41 or other

methods may be used. It is the responsibility of the contracting

officer to determine, based on the information submitted, and any other

information available to the contracting officer, which exception, if

any, applies.

14. Section 15.804-2 is revised to read as follows:

15.804-2 Requiring cost or pricing data.

(a) (1) Pursuant to 10 U.S.C. 2306a and 41 U.S.C. 254b, cost or

pricing data shall be obtained only if the contracting officer

concludes that none of the exceptions in 15.804-1 applies. However, if

the contracting officer has sufficient information available to

determine price reasonableness, then a waiver under the exception at

15.804-1(b)(5) should be considered. The threshold for obtaining cost

or pricing data is $500,000. This amount will be subject to adjustment,

effective October 1, 1995, and every five years thereafter. Unless an

exception applies, cost or pricing data are required before

accomplishing any of the following actions expected to exceed the

threshold in effect on the date of agreement on price, or the date of

award, whichever is later; or, in the case of existing contracts, the

threshold specified in the contract:

(i) The award of any negotiated contract (except for undefinitized

actions such as letter contracts).

(ii) The award of a subcontract at any tier, if the contractor and

each higher-tier subcontractor have been required to furnish cost or

pricing data (but see exceptional cases at 15.804-1(b)(5)).

(iii) The modification of any sealed bid or negotiated contract

(whether or not cost or pricing data were initially required) or

subcontract covered by paragraph (a)(1)(ii) of this subsection. Price

adjustment amounts shall consider both increases and decreases. (For

example, a $150,000 modification resulting from a reduction of $350,000

and an increase of $200,000 is a pricing adjustment exceeding

$500,000.) This requirement does not apply when unrelated and

separately priced changes for which cost or pricing data would not

otherwise be required are included for administrative convenience in

the same modification.

(2) Unless prohibited because an exception at 15.804-1(a)(1)

applies, the head of the contracting activity, without power of

delegation, may authorize the contracting officer to obtain cost or

pricing data for pricing actions below the pertinent threshold in

paragraph (a)(1) of this subsection provided the action exceeds the

simplified acquisition threshold. The head of the contracting activity

shall justify the requirement for cost or pricing data. The

documentation shall include a written finding that cost or pricing data

are necessary to determine whether the price is fair and reasonable and

the facts supporting that finding.

(b) When cost or pricing data are required, the contracting officer

shall require the contractor or prospective contractor to submit to the

contracting officer (and to have any subcontractor or prospective

subcontractor submit to the prime contractor or appropriate

subcontractor tier) the following in support of any proposal:

(1) The cost or pricing data.

(2) A certificate of current cost or pricing data, in the format

specified in 15.804-4, certifying that to the best of its knowledge and

belief, the cost or pricing data were accurate, complete, and current

as of the date of agreement on price or, if applicable, another date

agreed upon between the parties that is as close as practicable to the

date of agreement on price.

(c) If cost or pricing data are requested and submitted by an

offeror, but an exception is later found to apply, the data shall not

be considered cost or pricing data as defined in 15.801 and shall not

be certified in accordance with 15.804-4.

(d) The requirements of this section also apply to contracts

entered into by the head of an agency on behalf of a foreign

government.

15.804-3 [Reserved]

15. Section 15.804-3 is removed and reserved.

16. Section 15.804-4 is amended by revising paragraph (a), the

double asterisk footnote to the certification statement following

paragraph (a), paragraph (c), and paragraph (e); and in paragraphs (f)

and (h) by removing the word ``certified''. The revised text reads as

follows:

15.804-4 Certificate of Current Cost or Pricing Data.

(a) When cost or pricing data are required, the contracting officer

shall require the contractor to execute a Certificate of Current Cost

or Pricing Data, shown following this paragraph (a), and shall include

the executed certificate in the contract file.

Certificate of Current Cost or Pricing Data

* * * * *

* * * Insert the day, month, and year when price negotiations were

concluded and price agreement was reached or, if applicable, another

date agreed upon between the parties that is as close as practicable

to the date of agreement on price.

* * * * *

(c) The contracting officer and contractor are encouraged to reach

a prior agreement on criteria for establishing closing or cutoff dates

when appropriate in order to minimize

delays associated with proposal updates. Closing or cutoff dates should

be included as part of the data submitted with the proposal and, before

agreement on price, data should be updated by the contractor to the

latest closing or cutoff dates for which the data are available. Use of

cutoff dates coinciding with reports is acceptable, as certain data may

not be reasonably available before normal periodic closing dates (e.g.,

actual indirect costs). Data within the contractor's or a

subcontractor's organization on matters significant to contractor

management and to the Government will be treated as reasonably

available. What is significant depends upon the circumstances of each

acquisition.

* * * * *

(e) If cost or pricing data are requested and submitted by an

offeror, but an exception is later found to apply, the data shall not

be considered cost or pricing data and shall not be certified in

accordance with this subsection.

* * * * *

17. Section 15.804-5 is added to read as follows:

15.804-5 Requiring information other than cost or pricing data.

(a)(1) If cost or pricing data are not required because an

exception applies, or an action is at or below the cost or pricing data

threshold, the contracting officer shall make a price analysis to

determine the reasonableness of the price and any need for further

negotiation.

(2) The contracting officer may require submission of information

other than cost or pricing data only to the extent necessary to

determine reasonableness of the price or cost realism. The contractor's

format for submitting such information shall be used unless the

contracting officer determines that use of a specific format is

essential. The contracting officer shall ensure that information used

to support price negotiations is sufficiently current to permit

negotiation of a fair and reasonable price. Requests for updated

offeror information should be limited to information that affects the

adequacy of the proposal for negotiations, such as changes in price

lists. Such data shall not be certified in accordance with 15.804-4.

(3) When an acquisition is based on adequate price competition,

generally no additional information is necessary to determine the

reasonableness of price. However, if it is determined that additional

information is necessary to determine the reasonableness of the price,

the contracting officer shall, to the maximum extent practicable,

obtain the additional information from sources other than the offeror.

In addition, the contracting officer may request information to

determine the cost realism of competing offers or to evaluate competing

approaches.

(4) When cost or pricing data are not required because an action is

at or below the cost or pricing data threshold, information requested

shall include, as a minimum, appropriate information on the prices and

quantities at which the same or similar items have previously been

sold, that is adequate for evaluating the reasonableness of the

proposed price. Cost information may also be required. For example,

cost information might be necessary to support an analysis of material

costs.

(b)(1) When acquiring commercial items for which an exception under

15.804-1(a)(2) may apply, the contracting officer shall seek to obtain

from the offeror or contractor information on prices at which the same

or similar items have been sold in the commercial market, that is

adequate for evaluating, through price analysis, the reasonableness of

the price of the action.

(2) If such information is not available from the offeror or

contractor, the contracting officer shall seek to obtain such

information from another source or sources.

(3) Requests for sales data relating to commercial items shall be

limited to data for the same or similar items during a relevant time

period.

(4) In requesting information from an offeror under this paragraph

(b), the contracting officer shall, to the maximum extent practicable,

limit the scope of the request to include only information that is in

the form regularly maintained by the offeror in commercial operations.

(5) Any information obtained pursuant to this paragraph (b) that is

exempt from disclosure under the Freedom of Information Act (5 U.S.C.

552(b)) shall not be disclosed by the Government.

(c) If, after receipt of offers, the contracting officer concludes

there is insufficient information available to determine price

reasonableness and none of the exceptions applies, then cost or pricing

data shall be obtained.

18. Section 15.804-6 is amended by revising the heading and

paragraphs (a) and (b);

Amending Table 15-2 by:

(a) Revising the heading;

(b) Adding introductory text;

(c) Revising the first paragraph of item 1, and the fourth

paragraph of Item 1 entitled ``Established Catalog or Market Prices/

Prices Set by Law or Regulation'';

(d) Revising item 4; and

(e) Amending 8B by revising the paragraph ``Under Column (2)''

instruction under the table;

Adding Table 15-3 following Table 15-2;

And revising paragraph (c) of 15.804-6; and revising the first

sentence of paragraph (d).

The revised and added text reads as follows:

15.804-6 Instructions for submission of cost or pricing data or

information other than cost or pricing data.

(a) Taking into consideration the hierarchy at 15.802, the

contracting officer shall specify in the solicitation (see 15.804-8 (h)

and (i))--

(1) Whether cost or pricing data are required;

(2) That, in lieu of submitting cost or pricing data, the offeror

may submit a request for exception from the requirement to submit cost

or pricing data;

(3) Whether information other than cost or pricing data is

required, if cost or pricing data are not necessary;

(4) The format (see paragraph (b) of this subsection) in which the

cost or pricing data or information other than cost or pricing data

shall be submitted; and

(5) Necessary preaward or postaward access to offeror's records if

not provided by the use of a standard form or clause.

(b)(1) Cost or pricing data shall be submitted on a SF 1411 unless

required to be submitted on one of the termination forms specified in

subpart 49.6. The SF 1411 shall not be used unless cost or pricing data

are required to be submitted. Contract pricing proposals submitted on a

SF 1411 with supporting attachments shall be prepared in accordance

with Table 15-2 or as specified by the contracting officer. Data

supporting forward pricing rate agreements or final indirect cost

proposals shall be submitted in a format acceptable to the contracting

officer.

(2) If information other than cost or pricing data is required to

support price reasonableness or cost realism, the contracting officer

may require such information to be submitted using a SF 1448. Requests

for information should be tailored so that only necessary data are

requested. The information is not considered cost or pricing data and

shall not be certified in accordance with 15.804-4. Information

submitted on a SF 1448 shall be prepared following the instructions

provided in Table 15-3.

Table 15-2 Instructions for Submission of a Contract Pricing Proposal

When Cost or Pricing Data are Required

The SF 1411 provides a cover sheet for use by offerors to submit

to the Government a pricing proposal of estimated and/or actual

costs only when cost or pricing data are required.

1. The pricing proposal shall be segregated by contract line

item with sufficient detail to permit cost analysis. Attach cost-

element breakdowns, using the applicable formats prescribed in Item

8A, B, or C of this section, for each proposed line item. These

breakdowns must conform to the instructions in the solicitation and

any specific requirements established by the contracting officer.

Furnish supporting breakdowns for each cost element, consistent with

the offeror's cost accounting system.

* * * * *

Established Catalog or Market Prices or Prices Set by Law or

Regulation or Commercial Item Not Covered By Another Exception--When

an exception from the requirement to submit cost or pricing data is

requested, whether the item was produced by others or by the

offeror, provide justification for the exception as required by

15.804-1(d).

* * * * *

4. There is a clear distinction between submitting cost or

pricing data and merely making available books, records, and other

documents without identification. The requirement for submission of

cost or pricing data is met when all accurate cost or pricing data

reasonably available to the offeror have been submitted, either

actually or by specific identification, to the contracting officer

or an authorized representative. As later information comes into the

offeror's possession, it should be promptly submitted to the

contracting officer in a manner that clearly shows how the

information relates to the offeror's price proposal. The requirement

for submission of cost or pricing data continues up to the time of

agreement on price, or another date agreed upon between the parties

if applicable.

* * * * *

8. Headings for Submission of Line-Item Summaries:

* * * * *

B. Change Orders, Modifications, and Claims.

* * * * *

Under Column (2)--Include the current estimates of what the cost

would have been to complete the deleted work not yet performed (not

the original proposal estimates), and the cost of deleted work

already performed.

* * * * *

Table 15-3 Instructions for Submission of Information Other Than Cost

or Pricing Data

SF 1448 is a cover sheet for use by offerors to submit

information to the Government when cost or pricing data are not

required but the contracting officer has requested information to

help establish price reasonableness or cost realism. Such

information is not considered cost or pricing data, and shall not be

certified in accordance with 15.804-4.

1. The information submitted shall be at the level of detail

described in the solicitation or specified by the contracting

officer. The offeror's own format is acceptable unless the

contracting officer determines that use of a specific format is

essential.

A. If adequate price competition is expected, the information

may include cost or technical information necessary to determine the

cost realism and adequacy of the offeror's proposal, e.g.,

information adequate to validate that the proposed costs are

consistent with the technical proposal, or cost breakdowns to help

identify unrealistically priced proposals.

B. If the offer is expected to be at or below the cost or

pricing data threshold, and adequate price competition is not

expected, the information may consist of data to permit the

contracting officer and authorized representatives to determine

price reasonableness, e.g., information to support an analysis of

material costs (when sufficient information on labor and overhead

rates is already available), or information on prices and quantities

at which the offeror has previously sold the same or similar items.

2. Any information submitted must support the price proposed.

Include sufficient detail or cross references to clearly establish

the relationship of the information provided to the price proposed.

Support any information provided by explanations or supporting

rationale as needed to permit the contracting officer and authorized

representatives to evaluate the documentation.

* * * * *

(c) Closing or cutoff dates should be included as part of the data

submitted with the proposal (see 15.804-4(c)).

(d) The requirement for submission of cost or pricing data is met

if all cost or pricing data reasonably available to the offeror are

either submitted or specifically identified in writing by the time of

agreement on price or another time agreed upon by the parties. * * *

* * * * *

19. Section 15.804-7 is amended by revising paragraphs (b)(7)(i),

(ii)(B), and (iii) to read as follows:

15.804-7 Defective cost or pricing data.

* * * * *

(b) * * *

(7)(i) In addition to the price adjustment amount, the Government

is entitled to interest on any overpayments. The Government is also

entitled to penalty amounts on certain of these overpayments.

Overpayment occurs only when payment is made for supplies or services

accepted by the Government. Overpayments would not result from amounts

paid for contract financing as defined in 32.902.

(ii) * * *

(B) Consider the date of each overpayment (the date of overpayment

for this interest calculation shall be (1) the date payment was made

for the related completed and accepted contract items, or (2) for

subcontract defective pricing, the date payment was made to the prime

contractor, based on prime contract progress billings or deliveries,

which included payments for a completed and accepted subcontract item);

and

* * * * *

(iii) In arriving at the amount due for penalties on contracts

where the submission of defective cost or pricing data was a knowing

submission, the contracting officer shall obtain an amount equal to the

amount of overpayment made. Before taking any contractual actions

concerning penalties, the contracting officer shall obtain the advice

of counsel.

* * * * *

20. Section 15.804-8 is amended by revising the heading and adding

paragraphs (h) and (i) to read as follows:

15.804-8 Contract clauses and solicitation provisions.

* * * * *

(h) Requirements for cost or pricing data or information other than

cost or pricing data. Considering the hierarchy at 15.802, the

contracting officer may insert the provision at 52.215-41, Requirements

for Cost or Pricing Data or Information Other Than Cost or Pricing

Data, in solicitations if it is reasonably certain that cost or pricing

data or information other than cost or pricing data will be required.

This provision also provides instructions to offerors on how to request

an exception. Use the provision with Alternate I to specify a format

for cost or pricing data other than the format required by Table 15-2

of 15.804-6(b). Use the provision with Alternate II when copies of the

proposal are to be sent to the administrative contracting officer and

contract auditor. Use the provision with Alternate III when submission

via electronic media is required. Replace the basic provision with

Alternate IV when a SF 1411 will not be required because an exception

may apply, but information other than cost or pricing data is required

as described in 15.804-5.

(i) Requirements for cost or pricing data or information other than

cost or pricing data--modifications. Considering the hierarchy at

15.802, the contracting officer may insert the clause at 52.215-42,

Requirements for Cost or Pricing Data or Information Other Than Cost or

Pricing Data--Modifications, in solicitations and contracts if it is

reasonably certain that cost or pricing data or information other than

cost or pricing data will be required for modifications. This clause

also provides instructions to contractors on how to request an exception. Use the

clause with Alternate I to specify a format for cost or pricing data

other than the format required by Table 15-2 of 15.804-6(b). Use the

clause with Alternate II if copies of the proposal are to be sent to

the administrative contracting officer and contract auditor. Use the

clause with Alternate III if submission via electronic media is

required. Replace the basic clause with Alternate IV if a SF 1411 is

not required because an exception may apply, but information other than

cost or pricing data is required as described in 15.804-5.

21. Section 15.805-1 is amended in the first sentence of paragraph

(a) by inserting a comma after the word ``engineering''; and by adding

paragraph (d) to read as follows:

15.805-1 General.

* * * * *

(d) The Armed Services Pricing Manual (ASPM Volume I, ``Contract

Pricing,'' and Volume 2, ``Price Analysis'') was issued by the

Department of Defense to guide pricing and negotiating personnel. The

ASPM provides detailed discussion and examples applying pricing

policies to pricing problems. The ASPM is available for use for

instruction and professional guidance. However, it is not directive and

its references to Department of Defense forms and regulations should be

considered informational only. Copies of ASPM Vol. 1 (Stock No. 008-

000-00457-9) and Vol. 2 (Stock No. 008-000-00467-6) may be purchased

from the Superintendent of Documents, U.S. Government Printing Office,

by telephone (202) 512-1800 or facsimile (202) 512-2250, or by mail

order from the Superintendent of Documents, P. O. Box 371954,

Pittsburgh, PA 15250-7954.

22. Section 15.805-2 is amended by adding paragraph (f) to read as

follows:

15.805-2 Price analysis.

* * * * *

(f) Comparison of proposed prices with prices for the same or

similar items obtained through market research.

23. Section 15.806-1 is amended in the first sentence of paragraph

(a)(2) by removing the phrase ``claims for exemption'' and inserting

``requests for exception'' in its place, and revising (b) to read as

follows:

15.806-1 General.

* * * * *

(b) Unless the subcontract qualifies for an exception under 15.804-

1, any contractor required to submit cost or pricing data also shall

obtain cost or pricing data before awarding any subcontract or purchase

order expected to exceed the cost or pricing data threshold, or issuing

any modification involving a price adjustment expected to exceed the

cost or pricing data threshold.

* * * * *

24. Section 15.806-2 is amended by revising paragraph (a), the

first sentence of (c), and (d) to read as follows:

15.806-2 Prospective subcontractor cost or pricing data.

(a) The contracting officer shall require a contractor that is

required to submit cost or pricing data also to submit to the

Government (or cause submission of) accurate, complete, and current

cost or pricing data from prospective subcontractors in support of each

subcontract cost estimate that is

(1) $1,000,000 or more,

(2) Both more than the cost or pricing data threshold and more than

10 percent of the prime contractor's proposed price, or

(3) Considered to be necessary for adequately pricing the prime

contract. These subcontract cost or pricing data may be submitted using

a Standard Form (SF) 1411, Contract Pricing Proposal Cover Sheet (Cost

or Pricing Data Required).

* * * * *

(c) If the prospective contractor satisfies the contracting officer

that a subcontract will be priced on the basis of one of the

exceptions, the contracting officer shall not require submission of

cost or pricing data to the Government in that case. * * *

(d) Subcontractor cost or pricing data shall be accurate, complete,

and current as of the date of price agreement or, if applicable,

another date agreed upon between the parties, given on the contractor's

Certificate of Current Cost or Pricing Data. The prospective contractor

shall be responsible for updating a prospective subcontractor's data.

* * * * *

25. Section 15.808 is amended in paragraph (a)(5) introductory text

by removing the word ``certified''; by revising paragraph (a)(6); by

removing paragraph (a)(7) and redesignating paragraphs (a)(8) through

(a)(10) as (a)(7) through (a)(9) to read as follows:

15.808 Price negotiation memorandum.

(a) * * *

(6) If cost or pricing data were not required in the case of any

price negotiation exceeding the cost or pricing data threshold, the

exception used and the basis for it.

* * * * *

26. Section 15.812-1 is amended by revising paragraph (b) and the

second sentence of paragraph (c) to read as follows:

15.812-1 General.

* * * * *

(b) However, the policy in paragraph (a) of this subsection does

not apply to any contract or subcontract item of supply for which the

price is, or is based on, an established catalog or market price of a

commercial item sold in substantial quantities to the general public

under 15.804-1(b)(2) or a commercial item exception under 15.804-

1(b)(4).

(c) * * * The contracting officer shall require similar information

when contracting by negotiation with full and open competition if

adequate price competition is not expected (see 15.804-1(b)(1)). * * *

PART 16--TYPES OF CONTRACTS

16.203-4 [Amended]

27. Section 16.203-4 is amended in paragraphs (a)(1)(ii) and

(b)(1)(ii) by removing ``15.804-3'' and inserting ``15.804-1'' in its

place.

28. Section 16.501(c) is amended by revising the first sentence to

read as follows:

16.501 General.

* * * * *

(c) Indefinite-delivery contracts may provide for firm-fixed-prices

(see 16.202), fixed prices with economic price adjustment (see 16.203),

fixed prices with prospective redetermination (see 16.205), or prices

based on catalog or market prices (see 15.804-1(b)(2)). * * *

28a. Section 16.603-4 is amended after the first sentence in

paragraph (b)(3) by adding a sentence to read as follows:

16.603-4 Contract clauses.

* * * * *

(b)(3) * * * If, at the time of entering into the letter contract,

the contracting officer knows that the definitive contract will be

based on adequate price competition or will otherwise meet the criteria

of 15.804-1 for not requiring submission of cost or pricing data, the

words ``and cost or pricing data supporting its proposal'' may be

deleted from paragraph (a) of the clause. * * *

* * * * *

PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES

29. Section 31.205-26 is amended by revising paragraphs (e) and (f)

to read as follows:

31.205-26 Material costs.

* * * * *

(e) Allowance for all materials, supplies, and services that are

sold or transferred between any divisions, subdivisions, subsidiaries,

or affiliates of the contractor under a common control shall be on the

basis of cost incurred in accordance with this subpart. However,

allowance may be at price when it is the established practice of the

transferring organization to price interorganizational transfers at

other than cost for commercial work of the contractor or any division,

subsidiary, or affiliate of the contractor under a common control, and

when the item being transferred qualifies for an exception under

15.804-1 and the contracting officer has not determined the price to be

unreasonable.

(f) When a catalog or market price exception under 15.804-

1(a)(1)(ii) applies under paragraph (e) of this subsection, the price

should be adjusted to reflect the quantities being acquired and may be

adjusted to reflect the actual cost of any modifications necessary

because of contract requirements.

PART 33--PROTESTS, DISPUTES, AND APPEALS

30. Section 33.207(d) is revised to read as follows:

33.207 Contractor certification.

* * * * *

(d) The aggregate amount of both increased and decreased costs

shall be used in determining when the dollar thresholds requiring

certification are met (see example in 15.804-2(a)(1)(iii) regarding

cost or pricing data).

* * * * *

PART 36--CONSTRUCTION AND ARCHITECT ENGINEERING CONTRACTS

31. Section 36.402 is amended by revising the introductory text of

paragraph (b) and (b)(1) to read as follows:

36.402 Price negotiation.

* * * * *

(b) The contracting officer shall evaluate proposals and associated

cost or pricing data or information other than cost or pricing data and

shall compare them to the Government estimate.

(1) When submission of cost or pricing data is not required (see

15.804-1 and 15.804-2), and any element of proposed cost differs

significantly from the Government estimate, the contracting officer

should request the offeror to submit cost information concerning that

element (e.g., wage rates or fringe benefits, significant materials,

equipment allowances, and subcontractor costs).

* * * * *

PART 45--GOVERNMENT PROPERTY

32. Section 45.103(b)(1) is revised to read as follows:

45.103 Responsibility and liability for Government property.

* * * * *

(b) * * *

(1) Negotiated fixed-price contracts for which the contract price

is not based upon an exception at 15.804-1;

* * * * *

33. Section 45.106(b)(2) is revised to read as follows:

45.106 Government property clauses.

* * * * *

(b) * * *

(2) If the contract is--

(i) A negotiated fixed-price contract for which prices are not

based on an exception at 15.804-1; or

(ii) A fixed-price service contract which is performed primarily on

a Government installation, provided the contracting officer determines

it to be in the best interest of the Government (see 45.103(b)(4)), the

contracting officer shall use the clause with its Alternate I.

* * * * *

PART 46--QUALITY ASSURANCE

46.804 [Amended]

34. Section 46.804 is amended by removing the parenthetical ``(see

15.804-3(c))'' and inserting ``(see 15.804-1(b)(2))''.

PART 49--TERMINATION OF CONTRACTS

35. Section 49.208 is amended in the introductory paragraph by

revising the last sentence to read as follows:

49.208 Equitable adjustment after partial termination.

* * * The contractor shall submit the proposal on SF 1411, Contract

Pricing Proposal Cover Sheet (Cost or Pricing Data Required).

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

35a. Part 52 is amended by removing the derivation lines following

all ``(End of provision)'' or ``(End of clause)'' parentheticals and

Alternates.

36. Section 52.214-27 is amended by revising the date of the clause

and paragraphs (a) and (e)(2) to read as follows:

52.214-27 Price Reduction for Defective Cost or Pricing Data--

Modifications--Sealed Bidding.

* * * * *

Price Reduction for Defective Cost or Pricing Data--Modifications--

Sealed Bidding (Oct. 1995)

(a) This clause shall become operative only for any modification

to this contract involving aggregate increases and/or decreases in

costs, plus applicable profits, expected to exceed the threshold for

the submission of cost or pricing data at FAR 15.804-2(a)(1), except

that this clause does not apply to a modification if an exception

under FAR 15.804-1 applies.

* * * * *

(e) * * *

(2) A penalty equal to the amount of the overpayment, if the

Contractor or subcontractor knowingly submitted cost or pricing data

which were incomplete, inaccurate, or noncurrent.

(End of clause.)

37. Section 52.214-28 is amended by revising the date of the clause

and paragraphs (b) and (d) to read as follows:

52.214-28 Subcontractor Cost or Pricing Data--Modifications--Sealed

Bidding.

* * * * *

Subcontractor Cost or Pricing Data--Modifications--Sealed Bidding (Oct.

1995)

* * * * *

(b) Before awarding any subcontract expected to exceed the

threshold for submission of cost or pricing data at FAR 15.804-

2(a)(1), on the date of agreement on price or the date of award,

whichever is later; or before pricing any subcontract modifications

involving aggregate increases and/or decreases in costs, plus

applicable profits, expected to exceed the threshold for submission

of cost or pricing data at FAR 15.804-2(a)(1), the Contractor shall

require the subcontractor to submit cost or pricing data (actually

or by specific identification in writing), unless an exception under

FAR 15.804-1 applies.

* * * * *

(d) The Contractor shall insert the substance of this clause,

including this paragraph (d), in each subcontract that, when entered

into, exceeds the threshold for submission of cost or pricing data

at FAR 15.804-2(a)(1).

(End of clause.)

52.214-29 [Amended]

37a. Section 52.214-29 is amended in the introductory text by

removing the citation ``14.201-7(e)'' and inserting ``14.201-7(d)'' in

its place.

38. Section 52.215-22 is amended by revising the date of the

clause, and paragraph (d)(2) to read as follows:

52.215-22 Price Reduction for Defective Cost or Pricing Data.

* * * * *

Price Reduction for Defective Cost or Pricing Data (Oct. 1995)

* * * * *

(d) * * *

(2) A penalty equal to the amount of the overpayment, if the

Contractor or subcontractor knowingly submitted cost or pricing data

which were incomplete, inaccurate, or noncurrent.

(End of clause.)

39. Section 52.215-23 is amended by revising the clause date and

paragraphs (a) and (e)(2) to read as follows:

52.215-23 Price Reduction for Defective Cost or Pricing Data--

Modifications

* * * * *

Price Reduction for Defective Cost or Pricing Data--Modifications (Oct.

1995)

(a) This clause shall become operative only for any modification

to this contract involving a pricing adjustment expected to exceed

the threshold for submission of cost or pricing data at FAR 15.804-

2(a)(1), except that this clause does not apply to any modification

f an exception under FAR 15.804-1 applies.

* * * * *

(e) * * *

(2) A penalty equal to the amount of the overpayment, if the

Contractor or subcontractor knowingly submitted cost or pricing data

which were incomplete, inaccurate, or noncurrent.

(End of clause)

40. Section 52.215-24 is amended by revising the date of the

clause, and paragraph (a) to read as follows:

52.215-24 Subcontractor Cost or Pricing Data.

* * * * *

Subcontractor Cost or Pricing Data (Oct 1995)

(a) Before awarding any subcontract expected to exceed the

threshold for submission of cost or pricing data at FAR 15.804-

2(a)(1), on the date of agreement on price or the date of award,

whichever is later; or before pricing any subcontract modification

involving a pricing adjustment expected to exceed the threshold for

submission of cost or pricing data at FAR 15.804-2(a)(1), the

Contractor shall require the subcontractor to submit cost or pricing

data (actually or by specific identification in writing), unless an

exception under FAR 15.804-1 applies.

* * * * *

41. Section 52.215-25 is amended by revising the date of the clause

and paragraphs (b) and (d) to read as follows:

52.215-25 Subcontractor Cost or Pricing Data--Modifications.

* * * * *

Subcontractor Cost or Pricing Data--Modifications (Oct 1995)

(b) Before awarding any subcontract expected to exceed the

threshold for submission of cost or pricing data at FAR 15.804-

2(a)(1), on the date of agreement on price or the date of award,

whichever is later; or before pricing any subcontract modification

involving a pricing adjustment expected to exceed the threshold for

submission of cost or pricing data at FAR 15.804-2(a)(1), the

Contractor shall require the subcontractor to submit cost or pricing

data (actually or by specific identification in writing), unless an

exception under FAR 15.804-1 applies.

* * * * *

(d) The Contractor shall insert the substance of this clause,

including this paragraph (d), in each subcontract that exceeds the

threshold for submission of cost or pricing data at FAR 15.804-

2(a)(1) on the date of agreement on price or the date of award,

whichever is later.

(End of clause)

42. Section 52.215-26 is amended by revising the clause date and

paragraph (b) to read as follows:

52.215-26 Integrity of Unit Prices.

* * * * *

Integrity of Unit Prices (Oct 1995)

* * * * *

(b) The requirement in paragraph (a) of this clause does not apply

to any contract or subcontract item of supply for which the unit price

is, or is based on, an established catalog or market price for a

commercial item sold in substantial quantities to the general public or

to an item qualifying for a commercial item exception to cost or

pricing data. A price is based on an established catalog or market

price only if the item being purchased is sufficiently similar to the

catalog or market priced commercial item to ensure that any difference

in prices can be identified and justified without resort to cost

analysis.

* * * * *

43. Sections 52.215-41 through 52.215-43 are added to read as

follows:

52.215-41 Requirements for Cost or Pricing Data or Information Other

Than Cost or Pricing Data.

As prescribed in 15.804-8(h), insert the following provision:

Requirements for Cost or Pricing Data or Information Other Than Cost or

Pricing Data (Oct 1995)

(a) Exceptions from cost or pricing data. (1) In lieu of

submitting cost or pricing data, offerors may submit a written

request for exception by submitting the information described in the

following subparagraphs. The Contracting Officer may require

additional supporting information, but only to the extent necessary

to determine whether an exception should be granted, and whether the

price is fair and reasonable.

(i) Information relative to an exception granted for prior or

repetitive acquisitions.

(ii) Catalog price information as follows:

(A) Attach a copy of or identify the catalog and its date, or

the appropriate pages for the offered items, or a statement that the

catalog is on file in the buying office to which this proposal is

being made.

(B) Provide a copy or describe current discount policies and

price lists (published or unpublished), e.g., wholesale, original

equipment manufacturer, and reseller.

(C) Additionally, for each catalog item that exceeds ______ *

(extended value not unit price), provide evidence of substantial

sales to the general public. This may include sales order, contract,

shipment, invoice, actual recorded sales or other records that are

verifiable. In addition, if the basis of the price proposal is sales

of essentially the same commercial item by affiliates, other

manufacturers or vendors, those sales may be included. The offeror

shall explain the basis of each offered price and its relationship

to the established catalog price. When substantial general public

sales have also been made at prices other than catalog or price list

prices, the offeror shall indicate how the proposed price relates to

the price of such recent sales in quantities similar to the proposed

quantities.

*Insert dollar amount for sampling (see 15.804-1(c)(1))

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

(iii) Market price information. Include the source and date or

period of the market quotation or other basis for market price, the

base amount, and applicable discounts. The nature of the market

should be described. The supply or service being purchased should be

the same as or similar to the market price supply or service. Data

supporting substantial sales to the general public is also required.

(iv) Identification of the law or regulation establishing the

price offered. If the price is controlled under law by periodic

rulings, reviews, or similar actions of a governmental body, attach

a copy of the controlling document, unless it was previously

submitted to the contracting office.

(v) For a commercial item exception, information on prices at

which the same item or similar items have been sold in the

commercial market.

(2) The offeror grants the Contracting Officer or an authorized

representative the right to examine, at any time before award,

books, records, documents, or other directly pertinent records to

verify any request for an exception under this provision, and the

reasonableness of price. Access does not extend to cost or profit

information or other data relevant solely to the offeror's

determination of the prices to be offered in the catalog or

marketplace.

(b) Requirements for cost or pricing data. If the offeror is not

granted an exception from the requirement to submit cost or pricing

data, the following applies:

(1) The offeror shall submit cost or pricing data on Standard

Form (SF) 1411, Contract Pricing Proposal Cover Sheet (Cost or

Pricing Data Required), with supporting attachments prepared in

accordance with Table 15-2 of FAR 15.804-6(b)(2).

(2) As soon as practicable after agreement on price, but before

contract award (except for unpriced actions such as letter

contracts), the offeror shall submit a Certificate of Current Cost

or Pricing Data, as prescribed by FAR 15.804-4.

(c) By submitting information to qualify for an exception, an

offeror is not representing that this is the only exception that may

apply.

(End of provision)

Alternate I (Oct 1995). As prescribed in 15.804-8(h), substitute

the following paragraph (b)(1) for paragraph (b)(1) of the basic

provision:

(b)(1) The offeror shall submit cost or pricing data on Standard

Form (SF) 1411, Contract Pricing Proposal Cover Sheet (Cost or

Pricing Data Required), with supporting attachments prepared in the

following format:

Alternate II (Oct 1995). As prescribed in 15.804-8(h), add the

following paragraph (d) to the basic provision:

(c) When the proposal is submitted, also submit one copy each,

including the SF 1411 and supporting attachments, to: (1) the

Administrative Contracting Officer, and (2) the Contract Auditor.

Alternate III (Oct. 1995). As prescribed in 15.804-8(h), add the

following paragraph (d) to the basic provision (if Alternate II is

also used, redesignate as paragraph (e)):

(d) Submit the cost portion of the proposal via the following

electronic media: (Insert media format, e.g., electronic spreadsheet

format, electronic mail, etc.).

Alternate IV (Oct. 1995). As prescribed in 15.804-8(h), replace

the text of the basic provision with the following:

(a) Submission of cost or pricing data is not required.

(b) Provide information described below: (Insert description of

the information and the format that are required, including access

to records necessary to permit an adequate evaluation of the

proposed price in accordance with 15.804-6(a)(5). Standard Form

1448, Proposal Cover Sheet (Cost or Pricing Data Not Required), may

be used for information other than cost or pricing data).

52.215-42 Requirements for Cost or Pricing Data or Information Other

Than Cost or Pricing Data--Modifications.

As prescribed in 15.804-8(i), insert the following clause:

Requirements for Cost or Pricing Data or Information Other Than Cost or

Pricing Data--Modifications (Oct. 1995)

(a) Exceptions from cost or pricing data. (1) In lieu of

submitting cost or pricing data for modifications under this

contract, for price adjustments expected to exceed the threshold set

forth at FAR 15.804-2(a)(1) on the date of the agreement on price or

the date of the award, whichever is later, the Contractor may submit

a written request for exception by submitting the information

described in the following subparagraphs. The Contracting Officer

may require additional supporting information, but only to the

extent necessary to determine whether an exception should be

granted, and whether the price is fair and reasonable--

(i) Information relative to an exception granted for prior or

repetitive acquisitions.

(ii) Catalog price information as follows:

(A) Attach a copy of or identify the catalog and its date, or

the appropriate pages for the offered items, or a statement that the

catalog is on file in the buying office to which this proposal is

being made.

(B) Provide a copy or describe current discount policies and

price lists (published or unpublished), e.g., wholesale, original

equipment manufacturer, and reseller.

(C) Additionally, for each catalog item that exceeds ______*

(extended value not unit price), provide evidence of substantial

sales to the general public. This may include sales order, contract,

shipment, invoice, actual recorded sales or other records that are

verifiable. In addition, if the basis of the price proposal is sales

of essentially the same commercial item by affiliates, other

manufacturers or vendors, those sales may be included. The offeror

shall explain the basis of each offered price and its relationship

to the established catalog price. When substantial general public

sales have also been made at prices other than catalog or price list

prices, the offeror shall indicate how the proposed price relates to

the price of such recent sales in quantities similar to the proposed

quantities.

*Insert dollar amount for sampling (see 15.804-1(c)(1)).

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

(iii) Market price information. Include the source and date or

period of the market quotation or other basis for market price, the

base amount, and applicable discounts. The nature of the market

should be described. The supply or service being purchased should be

the same as or similar to the market price supply or service. Data

supporting substantial sales to the general public is also required.

(iv) Identification of the law or regulation establishing the

price offered. If the price is controlled under law by periodic

rulings, reviews, or similar actions of a governmental body, attach

a copy of the controlling document, unless it was previously

submitted to the contracting office.

(v) Information on modifications of contracts or subcontracts

for commercial items.

(A) If (1) The original contract or subcontract was granted an

exception from cost or pricing data requirements because the price

agreed upon was based on adequate price competition, catalog or

market prices of commercial items, or prices set by law or

regulation; and (2) the modification (to the contract or

subcontract) is not exempted based on one of these exceptions, then

the Contractor may provide information to establish that the

modification would not change the contract or subcontract from a

contract or subcontract for the acquisition of a commercial item to

a contract or subcontract for the acquisition of an item other than

a commercial item.

(B) For a commercial item exception, the Contractor may provide

information on prices at which the same item or similar items have

been sold in the commercial market.

(2) The Contractor grants the Contracting Officer or an

authorized representative the right to examine, at any time before

books, records, documents, or other directly pertinent

records to verify any request for an exception under this clause,

and the reasonableness of price. Access does not extend to cost or

profit information or other data relevant solely to the Contractor's

determination of the prices to be offered in the catalog or

marketplace.

(3) By submitting information to qualify for an exception, an

offeror is not representing that this is the only exception that may

apply.

(b) Requirements for cost or pricing data. If the Contractor is

not granted an exception from the requirement to submit cost or

pricing data, the following applies:

(1) The Contractor shall submit cost or pricing data on Standard

Form (SF) 1411, Contract Pricing Proposal Cover Sheet (Cost or

Pricing Data Required), with supporting attachments prepared in

accordance with Table 15-2 of FAR 15.804-6(b)(2).

(2) As soon as practicable after agreement on price, but before

award (except for unpriced actions), the Contractor shall submit a

Certificate of Current Cost or Pricing Data, as prescribed by FAR 15.804-4.

Alternate I (Oct. 1995). As prescribed in 15.804-8(i),

substitute the following paragraph (b)(1) for paragraph (b)(1) of

the basic clause.

(b)(1) The Contractor shall submit cost or pricing data on

Standard Form (SF) 1411, Contract Pricing Proposal Cover Sheet (Cost

or Pricing Data Required), with supporting attachments prepared in

the following format:

Alternate II (Oct. 1995). As prescribed in 15.804-8(i), add the

following paragraph (c) to the basic clause:

(c) When the proposal is submitted, also submit one copy each,

including the SF 1411 and supporting attachments, to: (1) The

administrative Contracting Officer, and (2) the Contract Auditor.

Alternate III (Oct. 1995). As prescribed in 15.804-8(i), add the

following paragraph (c) to the basic clause (if Alternate II is also

used, redesignate as paragraph (d)):

(c) Submit the cost portion of the proposal via the following

electronic media: (Insert media format).

Alternate IV (Oct. 1995). As prescribed in 15.804-8(i), replace

the text of the basic clause with the following:

(a) Submission of cost or pricing data is not required.

(b) Provide information described below: (Insert description of

the information and the format that are required, including access

to records necessary to permit an adequate evaluation of the

proposed price in accordance with 15.804-6(a)(5). Standard Form

1448, Proposal Cover Sheet (Cost or Pricing Data Not Required), may

be used for information other than cost or pricing data.)

52.215-43 Audit--Commercial Items.

As prescribed at 15.106-2, insert the following clause:

Audit--Commercial Items (Oct. 1995)

(a) As used in this clause, records include books, documents,

accounting procedures and practices, and other data, regardless of

type and regardless of whether such items are in written form, in

the form of computer data, or any other form.

(b) This paragraph applies to solicitations and contracts or

subcontracts for commercial items that may be or have been granted

an exception from submittal of cost or pricing data only under FAR

15.804-1(a)(2). In order to determine the accuracy of the

information on prices at which the same or similar items have been

sold in the commercial market, the Contracting Officer and

authorized representatives have a right to examine such information

provided by the offeror, Contractor, or subcontractor, and all

records that directly relate to such information. Access does not

extend to cost or profit information or other data relevant solely

to the offeror's determination of the prices to be offered in the

marketplace. This right shall expire two years after the date of

award of the contract, or two years after the date of any

modification to the contract, with respect to which this information

is provided.

(c) If the prime Contractor and each higher-tier subcontractor

were required to submit cost or pricing data, the Contractor and

each subcontractor shall insert the substance of this clause,

including this paragraph (c), in each subcontract for which

submission of cost or pricing data was required or for which an

exception was granted under FAR 15.804-1(a)(2).

(End of clause.)

52.216-2 [Amended]

44. Section 52.216-2 is amended in the clause heading by revising

the date to read ``(Oct. 1995)''; in paragraph (a)(2) by removing

``15.804-3'' and inserting ``15.804-1'' in its place; and removing the

parenthetical following ``(End of clause)''.

52.216-3 [Amended]

45. Section 52.216-3 is amended in the clause heading by removing

``(APR 1984)'' and inserting ``(Oct. 1995)''; in paragraph (a)(2) by

removing the reference ``15.804-3'' and inserting ``15.804-1''; and by

removing the parenthetical following ``(End of clause)''.

46. Section 52.216-5 is amended by revising the clause date and

paragraph (d)(1)(i)(A); and by removing the parenthetical following

``(End of clause)'' to read as follows:

52.216-5 Price Redetermination--Prospective.

* * * * *

Price Redetermination--Prospective (Oct. 1995)

* * * * *

(d) * * *

(1) * * *

(i) * * *

(A) An estimate and breakdown of the costs of these supplies or

services on Standard Form 1411, Contract Pricing Proposal Cover

Sheet (Cost or Pricing Data Required), or in any other form on which

the parties may agree;

* * * * *

47. Section 52.216-6 is amended by revising the introductory text,

the clause date, and paragraph (c)(1)(ii) to read as follows:

52.216-6 Price Redetermination--Retroactive.

As prescribed in 16.206-4, insert the following clause:

Price Redetermination--Retroactive (Oct. 1995)

* * * * *

(c) * * *

(1) * * *

(ii) A statement on Standard Form 1411, Contract Pricing

Proposal Cover Sheet (Cost or Pricing Data Required), or in any

other form on which the parties may agree, of all costs incurred in

performing the contract; and

* * * * *

48. Section 52.216-25 is amended by revising the introductory

paragraph; and the parentheticals following the end of the main clause

and the end of Alternate I are removed to read as follows:

52.216-25 Contract Definitization.

As prescribed in 16.603-4(b)(3), insert the following clause:

* * * * *

49. Section 52.222-48 is amended by revising the clause date,

redesignating paragraphs (a) (i), (ii), and (iii) as (a) (1), (2), and

(3), and revising newly redesignated paragraph (a)(2) to read as

follows:

52.222-48 Exemption from Application of Service Contract Act

Provisions for Contracts for Maintenance, Calibration, and/or Repair of

Certain ADP, Scientific and Medical and/or Office and Business

Equipment--Contractor Certification.

* * * * *

Exemption From Application of Service Contract Act Provisions for

Contracts for Maintenance, Calibration, and/or Repair of Certain ADP,

Scientific and Medical and/or Office and Business Equipment--Contractor

Certification (Oct. 1995)

(a) * * * (2) The contract services are furnished at prices

which are, or are based on, established catalog or market prices for

the maintenance, calibration, and/or repair of certain ADP,

scientific and medical and/or office and business equipment. An

``established catalog price'' is a price (including discount price)

recorded in a catalog, price list, schedule, or other verifiable and

established record that is regularly maintained by the manufacturer

or the Contractor and is either published or otherwise available for

inspection by customers. An ``established market price'' is a

current price, established in the course of ordinary and usual trade

between buyers and sellers free to bargain, which can be

substantiated by data from sources independent of the manufacturer

or Contractor; and * * *

* * * * *

PART 53--FORMS

50. Section 53.215-2 is revised to read as follows:

53.215-2 Price negotiation (SF's 1411 and 1448).

The following standard forms are prescribed for use in connection

with requirements for obtaining cost or pricing data or information

other than cost or pricing data from offerors or contractors, as

specified in 15.804:

(a) SF 1411 (REV. OCT./95), Contract Pricing Proposal Cover Sheet

(Cost or Pricing Data Required). (See 15.804-6(b)(1).) SF 1411 is

authorized for local reproduction and a copy is furnished for this

purpose in Part 53 of the loose-leaf edition of the FAR.

(b) SF 1448 (OCT/95), Proposal Cover Sheet (Cost or Pricing Data

Not Required). (See 15.804-6(b)(2).) SF 1448 is authorized for local

reproduction and a copy is furnished for this purpose in Part 53 of the

loose-leaf edition of the FAR.

51. Section 53.301-1411 is revised and 53.301-1448 is added to read

as follows:

BILLING CODE 6820-EP-P

53.301-1411 Contract Pricing Proposal Cover Sheet.

TR18SE95.000

BILLING CODE 6820-EP-C

53.301 Proposal Cover Sheet

BILLING CODE 6820-EP-P

TR18SE95.001

[Federal Register: September 18, 1995 (Volume 60, Number 180)]

[Rules and Regulations]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

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

DEPARTMENT OF DEFENSE

48 CFR Parts 1, 33, 42, 50, and 52

[FAC 90-32; FAR Case 94-730; Item II]

RIN 9000-AG28

Federal Acquisition Regulation; Protests, Disputes, and Appeals

AGENCIES: Department of Defense (DOD), General Services Administration

(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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

SUMMARY: This final rule is issued pursuant to the Federal Acquisition

Streamlining Act of 1994 (Pub. L. 103-355) (the Act) dated October 13,

1994, to implement the Act's requirements with respect to disputes and

protests to the General Accounting Office and General Services

Administration Board of Contract Appeals. This regulatory action was

subject to Office of Management and Budget review under Executive Order

12866, dated September 30, 1993.

DATES: Effective date: October 1, 1995.

Applicability date: Where this rule repeats a GSBCA rule that went

into effect earlier, the date of the GSBCA rule and its applicability

provision prevails; otherwise, this rule is applicable to protests or

claims filed on or after the effective date of this rule.

FOR FURTHER INFORMATION CONTACT: Mr. Craig E. Hodge, Protests/Disputes

Team Leader, at (703) 274-8940 in reference to this FAR case. For

general information, contact the FAR Secretariat, Room 4037, GS

Building, Washington, DC 20405 (202) 501-4755. Please cite FAC 90-32,

FAR case 94-730, Protests, Disputes and Appeals.

SUPPLEMENTARY INFORMATION:

A. Background

The Federal Acquisition Streamlining Act of 1994, Pub. L. 103-355,

(the Act) provides authorities that streamline the acquisition process

and minimize burdensome Government-unique requirements.

This notice announces FAR revisions developed under FAR Case 94-

730, Protests, Disputes, and Appeals. The Act changed the General

Accounting Office (GAO) protest procedures, the General Services Board

of Contract Appeals (GSBCA) protest procedures, and the alternative

dispute resolution (ADR) procedures. This rule reflects those changes

to GAO, GSBCA, and ADR procedures that require revisions to the FAR.

B. Regulatory Flexibility Act

The Department of Defense, the General Services Administration and

the National Aeronautics and Space Administration certify that this

final rule will not have a significant economic impact on a substantial

number of small entities within the meaning of the Regulatory

Flexibility Act, 5 U.S.C. 601, et seq., because a relatively small

number of firms file protests or claims. In addition, this rule is

generally derivative of GAO and GSBCA rules which implement the

statute. Neither the GAO nor the GSBCA concluded that the rules they

were promulgating, which form the basis for this rule, had a

significant economic impact on a substantial number of small entities.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the change to

the FAR does not impose recordkeeping or information collection

requirements, or collections of information from offerors, contractors,

or members of the public which require the approval of the Office of

Management and Budget under 44 U.S.C. 3501, et seq.

D. Public Comments

On January 10, 1995, a proposed rule was published in the Federal

Register (60 FR 2630). In response to the notice of proposed

rulemaking, 19 public comments were received.

The largest number of public comments concerned the definition of

``accrual''. Some commenters felt that contractor and Government claims

were to be treated differently because ``accrual'' was defined only in

terms of the contractor claim. To resolve that problem, a general

definition of ``accrual'' has been added. Several commenters requested

retroactive language be added. Therefore, the six-year limitation was

specifically applied only to contracts awarded after the end of the

current fiscal year. There were also a number of alternate definitions

of ``accrual'' proposed. In addition to the discovery of the events, a

discovery of some damage has been added to cover the unusual case where

the party is aware of the events giving rise to the claim, but not of

any resulting damage.

In the protest area, commenters exhibited the most interest in the

GAO bid protest file, and requested guidance on GAO and GSBCA witness

fee limitations. The protest file requirement has been clarified.

Although the GAO rule was concerned with providing protest files to the

intervenors, Congress mandated protest files be made available by the

contracting officer even to parties which failed to intervene. The

extent to which the discussion of protest files differs between the

proposed GAO regulation and this regulation reflects that difference.

In any event, the GAO final regulation dropped the requirement for a

protest file. Further specific guidance concerning witness fee

limitations has now been incorporated in the regulation.

List of Subjects in 48 CFR Parts 1, 33, 42, 50 and 52

Government procurement.

Dated: September 7, 1995.

Edward C. Loeb,

Deputy Project Manager for the Implementation of the Federal

Acquisition Streamlining Act of 1994.

Therefore, 48 CFR Parts 1, 33, 42, 50, and 52 are amended as set

forth below:

1. The authority citation for 48 CFR Parts 1, 33, 42, 50, and 52

continues to read as follows:

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

U.S.C. 2473(c).

PART 1--FEDERAL ACQUISITION REGULATION SYSTEM

2. Section 1.602-3 is amended by revising paragraph (c)(2) to read

as follows:

1.602-3 Ratification of unauthorized commitments.

* * * * *

(c) * * *

(2) The ratifying official has the authority to enter into a

contractual commitment;

* * * * *

PART 33--PROTESTS, DISPUTES, AND APPEALS

3. Section 33.101 is amended by adding in alphabetical order the

definitions ``Day'' and ``Filed'', and revising the definition

``Protest'' to read as follows:

33.101 Definitions.

Day, as used in this subpart, means a calendar day, unless

otherwise specified. In the computation of any period--

(a) The day of the act, event, or default from which the designated

period of time begins to run is not included; and

(b) The last day after the act, event, or default is included

unless--

(1) The last day is a Saturday, Sunday, or legal holiday; or

(2) In the case of a filing of a paper at any appropriate

administrative forum, the last day is a day on which weather or other

conditions cause the closing of the forum for all or part of the day,

in which event the next day on which the appropriate administrative

forum is open is included.

(c) In the case of the 5-day period after a debriefing date and the

10-day period after contract award for filing a protest resulting in a

suspension (as described at 33.104(c)), Saturdays, Sundays, and legal

holidays shall be counted.

Filed, as used in this subpart, means the complete receipt of any

document by an agency before its close of business. Documents received

after close of business are considered filed as of the next day. Unless

otherwise stated, the agency close of business is presumed to be 4:30

p.m., local time.

* * * * *

Protest, as used in this subpart, means a written objection by an

interested party to any of the following:

(a) A solicitation or other request by an agency for offers for a

contract for the procurement of property or services.

(b) The cancellation of the solicitation or other request.

(c) An award or proposed award of the contract.

(d) A termination or cancellation of an award of the contract, if

the written objection contains an allegation that the termination or

cancellation is based in whole or in part on improprieties concerning

the award of the contract.

4. Section 33.102 is amended by revising paragraph (a);

redesignating paragraphs (b) and (c) as (c) and (e), respectively, and

adding new paragraphs (b) and (d); and revising newly designated

paragraphs (e)(2) and (e)(3) to read as follows:

33.102 General.

(a) Contracting officers shall consider all protests and seek legal

advice, whether protests are submitted before or after award and

whether filed directly with the agency, the General Accounting Office

(GAO), or for automatic data processing acquisitions under 40 U.S.C.

759 (ADP contracts), the General Services Board of Contract Appeals

(GSBCA or the Board). (See 19.302 for protests of small business status

and 22.608-3 for protests involving eligibility under the Walsh-Healey

Public Contracts Act.)

(b) If, in connection with a protest, the head of an agency

determines that a solicitation, proposed award, or award does not

comply with the requirements of law or regulation, the head of the

agency may--

(1) Take any action that could have been recommended by the

Comptroller General had the protest been filed with the General

Accounting Office; and

(2) Pay appropriate costs as stated in 33.104(h).

* * * * *

(d) Protest likely after award. The contracting officer may stay

performance of a contract within the time period contained in

33.104(c)(1) if the contracting officer makes a written determination

that--

(1) A protest is likely to be filed; and

(2) Delay of performance is, under the circumstances, in the best

interests of the United States.

(e) * * *

(2) May protest to the GAO in accordance with GAO regulations (4

CFR Part 21). An interested party who has filed a protest regarding an

ADP procurement with the GAO may not file a protest with the GSBCA with

respect to that procurement.

(3) May protest to the GSBCA regarding an award of an ADP contract

in accordance with GSBCA Rules of Procedure (48 CFR Chapter 61). An

interested party who has filed a protest regarding an ADP procurement

with GSBCA (40 U.S.C. 759(f)) may not file a protest with the GAO with

respect to that procurement.

5. Section 33.103 is amended in the first sentence of (b)(1) by

removing ``or'' and inserting ``and'' in its place; revising the second

and third sentences of (b)(2) and the second sentence in (b)(4); and

adding (b)(5) to read as follows:

33.103 Protests to the agency.

* * * * *

(b) * * *

(2) * * * In all other cases, protests shall be filed not later

than 14 days after the basis of protest is known or should have been

known, whichever is earlier. The agency, for good cause shown, or where

it determines that a protest raises issues significant to the agency's

acquisition system, may consider the merits of any protest which is not

timely filed.

* * * * *

(4) * * * Failure to substantially comply with any of the

requirements of this paragraph (b) may be grounds for dismissal of the

protest.

(5) The agency should furnish a copy of the written protest ruling

to the protester by certified mail, return receipt requested, or by any

other method that provides evidence of receipt.

6. Section 33.104 is amended--

a. By revising the introductory text, paragraphs (a)(1), (a)(3),

the first sentence of (a)(4)(i) introductory text, (a)(4)(ii) (A) and

(B), (a)(5) introductory text, (a)(5) (i), (ii), and (iii), (a)(6),

(c)(1), (c)(5), (e), (f), (g), and (h);

b. By removing from the first sentence of (a)(2) the words

``substantial and'';

c. By adding a sentence to the end of paragraph (a)(2)(ii); and

d. By removing from (b)(1)(ii) the word ``calendar''; and by

removing the word ``protestor'' and inserting ``protester'' in

(a)(4)(i) introductory text, (a)(4)(ii)(C), and (d), and by removing

the word ``Protestor's'' in paragraph (a)(4)(i)(B) and adding

``Protester's'' in its place.

The revised and added text reads as follows:

33.104 Protests to GAO.

Procedures for protests to GAO are found at 4 CFR Part 21 (GAO Bid

Protest Regulations). In the event guidance concerning GAO procedure in

this section conflicts with 4 CFR Part 21, 4 CFR Part 21 governs.

(a) General procedures. (1) A protester is required to furnish a

copy of its complete protest to the official and location designated in

the solicitation or, in the absence of such a designation, to the

contracting officer, so it is received no later than 1 day after the

protest is filed with the GAO. The GAO may dismiss the protest if the

protester fails to furnish a complete copy of the protest within 1 day.

(2) * * *

(ii) * * * However, if the protester has identified sensitive information and requests a protective order, then the contracting officer shall obtain a redacted version from the protester to furnish to other interested parties, if one has not already been provided.

(3)(i) Upon notice that a protest has been filed with the GAO, the contracting officer shall immediately begin compiling the information

necessary for a report to the GAO. The agency shall submit a complete

report to the GAO within 35 days after the GAO notifies the agency by

telephone that a protest has been filed, or within 20 days after

receipt from the GAO of a determination to use the express option,

unless the GAO--

(A) Advises the agency that the protest has been dismissed; or

(B) Authorizes a longer period in response to an agency's request for an extension. Any new date is documented in the agency's file.

(ii) When a protest is filed with the GAO, and an actual or prospective offeror so requests, the procuring agency

shall, in accordance with any applicable protective orders, provide

actual or prospective offerors reasonable access to the protest file.

However, if the GAO dismisses the protest before the documents are

submitted to the GAO, then no protest file need be made available.

Information exempt from disclosure under 5 U.S.C. 552 may be redacted

from the protest file. The protest file shall be made available to non-

intervening actual or prospective offerors within a reasonable time

after submittal of an agency report to the GAO. The protest file shall

include an index and as appropriate--

(A) The protest;

(B) The offer submitted by the protester;

(C) The offer being considered for award or being protested;

(D) All relevant evaluation documents;

(E) The solicitation, including the specifications or portions

relevant to the protest;

(F) The abstract of offers or relevant portions; and

(G) Any other documents that the agency determines are relevant to

the protest, including documents specifically requested by the

protester.

(iii) The agency report to the GAO shall include--

(A) A copy of the documents described in 33.104(a)(3)(ii);

(B) The contracting officer's signed statement of relevant facts

and a memorandum of law. The contracting officer's statement shall set

forth findings, actions, and recommendations, and any additional

evidence or information not provided in the protest file that may be

necessary to determine the merits of the protest;

(C) A list of the documents withheld from the protester, or

intervenors, and the reasons for withholding them. The list identifies

any documents specifically requested by, and withheld from, the

protester; and

(D) A list of parties being provided the documents.

(4)(i) At the same time the agency submits its report to the GAO,

the agency shall furnish copies of its report to the protestor and any

intervenors. * * *

* * * * *

(ii)(A) If the protester requests additional documents within 2

days after the protester knew the existence or relevance of additional

documents, or should have known, the agency shall provide the requested

documents to the GAO within 5 days of receipt of the request.

(B) The additional documents shall also be provided to the

protester and other interested parties within this 5-day period unless

the agency has decided to withhold them for any reason (see subdivision

(a)(4)(i) of this section). This includes any documents covered by a

protective order issued by the GAO. Documents covered by a protective

order shall be provided only in accordance with the terms of the order.

* * * * *

(5) The GAO may issue protective orders which establish terms,

conditions, and restrictions for the provision of any document to an

interested party. Protective orders prohibit or restrict the disclosure

by the party of procurement sensitive information, trade secrets or

other proprietary or confidential research, development or commercial

information that is contained in such document. Protective orders do

not authorize withholding any documents or information from the United

States Congress or an executive agency.

(i) Requests for protective orders. Any party seeking issuance of a protective order shall file its request with the GAO as soon as practicable after the protest is filed, with copies furnished

simultaneously to all parties.

(ii) Exclusions and rebuttals. Within 2 days after receipt of a copy of the protective order request, any party may file with the GAO a request that particular documents be excluded from the coverage of the protective order, or that particular parties or individuals be included in or excluded from the protective order. Copies of the request shall be furnished simultaneously to all parties.

(iii) Additional documents. If the existence or relevance of

additional documents first becomes evident after a protective order has

been issued, any party may request that these additional documents be

covered by the protective order. Any party to the protective order also

may request that individuals not already covered by the protective

order be included in the order. Requests shall be filed with the GAO,

with copies furnished simultaneously to all parties.

* * * * *

(6) The protester and other interested parties are required to

furnish a copy of any comments on the agency report directly to the GAO

within 14 days, or 7 days if express option is used, after receipt of

the report, with copies provided to the contracting officer and to

other participating interested parties. If a hearing is held, these

comments are due within 7 days after the hearing.

* * * * *

(c) Protests after award. (1) When the agency receives notice of a

protest from the GAO within 10 days after contract award or within 5

days after a debriefing date offered to the protester for any

debriefing that is required by 15.1004, whichever is later, the

contracting officer shall immediately suspend performance or terminate

the awarded contract, except as provided in paragraphs (c) (2) and (3)

of this section.

* * * * *

(5) When the agency receives notice of a protest filed with the GAO

after the dates contained in subparagraph (c)(1), the contracting

officer need not suspend contract performance or terminate the awarded

contract unless the contracting officer believes that an award may be

invalidated and a delay in receiving the supplies or services is not

prejudicial to the Government's interest.

* * * * *

(e) Hearings. The GAO may hold a hearing at the request of the

agency, a protester, or other interested party who has responded to the

notice in paragraph (a)(2) of this section. A recording or

transcription of the hearing will normally be made, and copies may be

obtained from the GAO. All parties may file comments on the hearing and

report within 7 days of the hearing.

(f) GAO decision time. GAO issues its recommendation on a protest

within 125 days from the date of filing of the protest with the GAO, or

within 65 days under the express option. The GAO attempts to issue its

recommendation on an amended protest that adds a new ground of protest

within the time limit of the initial protest. If an amended protest

cannot be resolved within the initial time limit, the GAO may resolve

the amended protest through an express option.

(g) Notice to GAO. If the agency has not fully implemented the GAO

recommendations with respect to a solicitation for a contract or an

award or a proposed award of a contract within 60 days of receiving the

GAO recommendations, the head of the contracting activity responsible

for that contract shall report the failure to the GAO not later than 5

days after the expiration of the 60-day period. The report shall

explain the reasons why the GAO's recommendation, exclusive of costs,

has not been followed by the agency.

(h) Award of costs. (1) If the GAO determines that a solicitation

for a contract, a proposed award, or an award of a contract does not

comply with a statute or regulation, the GAO may recommend that the

agency pay to an appropriate protester the cost, exclusive

of profit, of filing and pursuing the protest, including reasonable

attorney, consultant and expert witness fees, and bid and proposal

preparation costs. The agency shall use funds available for the

procurement to pay the costs awarded.

(2) If the GAO recommends the award of costs to an interested

party, the agency shall attempt to reach an agreement on the amount of

the cost to be paid. If the agency and the interested party are unable

to agree on the amount to be paid, GAO may, upon request of the

interested party, recommend to the agency the amount of cost that the

agency should pay.

(3) No agency shall pay a party, other than a small business

concern within the meaning of section 3(a) of the Small Business Act

(see 19.001, ``Small business concern''), costs under paragraph (h)(2)

of this section--

(i) For consultant and expert witness fees that exceed the highest

rate of compensation for expert witnesses paid by the Government

pursuant to 5 U.S.C. 3109 and Expert and Consultant Appointments, 60 FR

45649, September 1, 1995 (5 CFR 304.105); or

(ii) For attorneys' fees that exceed $150 per hour, unless the

agency determines, based on the recommendation of the Comptroller

General on a case-by-case basis, that an increase in the cost of living

or a special factor, such as the limited availability of qualified

attorneys for the proceedings involved, justifies a higher fee. The cap

placed on attorneys' fees for businesses, other than small businesses,

constitutes a benchmark as to a ``reasonable'' level for attorneys'

fees for small businesses.

(4) A recommended award of costs may be paid by the agency from

funds available to or for the use of the agency for the acquisition of

supplies or services. Before paying a recommended award of costs,

agency personnel should consult legal counsel. Section 33.104(h)

applies to all recommended awards of costs which have not yet been

paid.

(5) If the GAO recommends that the agency pay costs (as defined in

paragraph (h)(1) of this section) and the agency does not promptly pay

the costs, the agency shall promptly report to GAO the reasons for the

failure to follow the GAO recommendation.

(6) Any costs the contractor receives under this section shall not

be the subject of subsequent proposals, billings, or claims against the

Government and those exclusions should be reflected in the cost

agreement.

7. Section 33.105 is amended--

a. By adding an introductory paragraph;

b. By revising (a)(1) and the introductory text of (d)(1);

c. By removing from (a)(2)(i) ``working day'' and inserting ``work

day'' in its place, from (a)(2)(ii) ``five working days'' and inserting

``3 work days''; from (b)(6) ``protestors'' and inserting

``protesters''; from (c) ``15'' and inserting ``10'', from (d)(1)(i)

the word ``calendar'', and from (e) ``25 work days'' and ``45 work

days'' and inserting ``35 days'' and ``65 days'', respectively;

d. By redesignating paragraphs (f) and (g) as (g) and (h),

respectively, and revising the newly redesignated (g) and (h), and

f. By adding new paragraphs (d)(4) and (f).

The revised and added text reads as follows:

33.105 Protests to GSBCA.

Procedures for protests to the GSBCA, are found at 48 CFR Chapter

61 (GSBCA Rules). In the event guidance concerning GSBCA procedures in

this subpart conflicts with 48 CFR Chapter 61, 48 CFR Chapter 61

governs.

(a)(1) Upon request of an interested party in connection with any

procurement that is subject to Section 111 of the Federal Property and

administrative Services Act (40 U.S.C. 759), the GSBCA reviews any

decision by the contracting officer that is alleged to violate a

statute, a regulation, or the conditions of a delegation of procurement

authority. ADP acquisition protests not covered under this section may

not be heard by the GSBCA, but may be heard by the agency, the courts,

or GAO. A protester shall furnish a copy of its complete protest to the

official and location designated in the solicitation, or in the absence

of such a designation, to the contracting officer on the same day the

protest is filed with the GSBCA. Any request for a hearing on either a

suspension of procurement authority or on the merits shall be in the

protest.

* * * * *

(d)(1) If a protest contains a timely request for a suspension of

procurement authority, the Board will hold a hearing, unless the agency

does not contest an order suspending its procurement authority. A

timely request for suspension of procurement authority is one that is

filed before award, within 10 days of award, or within five days of the

offered debriefing, when the debriefing is required by 15.1004,

whichever applies. The Board suspends the procurement authority unless

the agency establishes that--

* * * * *

(4) A suspension shall not preclude the agency concerned from

continuing the procurement process up to, but not including, the award

of the contract unless the Board determines the action is not in the

best interests of the United States.

* * * * *

(f) Any agreement that provides for the dismissal of a protest and

involves a direct or indirect expenditure of appropriated funds shall

be made part of the public record (subject to any protective order

considered appropriate by the Board) before dismissal of the protest.

If an agency is party to a settlement agreement, the submission of the

agreement to the Board shall include a memorandum, signed by the

contracting officer concerned, that describes in detail the

procurement, the grounds for protest, the Government's position

regarding the grounds for protest, the terms of the settlement, and the

agency's position regarding the propriety of the award or proposed

award of the contract at issue in the protest.

(g)(1) The GSBCA may declare an appropriate prevailing party to be

entitled to the cost, exclusive of profit, of--

(i) Filing and pursuing the protest, including reasonable attorney,

consultant and expert witness fees; and

(ii) Bid and proposal preparation.

(2) Costs awarded under subparagraph (g)(1) of this section, or

payments of amounts due under settlement agreements, shall be paid out

in accordance with the procedures provided in 31 U.S.C. 1304 (the

Permanent Indefinite Judgment Fund). The agency concerned shall

reimburse that fund out of funds available for the procurement.

(3) No agency shall pay a party, other than a small business

concern within the meaning of section 3(a) of the Small Business Act

(see 19.001, ``Small business concern''), costs under paragraph (g)(1)

of this section for--

(i) Consultant and expert witness fees that exceed the highest rate

of compensation for expert witnesses paid by the Government pursuant to

5 U.S.C. 3109 and Expert and Consultant Appointments, 60 FR 45649,

September 1, 1995 (5 CFR 304.105); or

(ii) Attorneys' fees that exceed $150 per hour, unless the Board

determines, on a case-by-case basis, that an increase in the cost of

living or a special factor, such as the limited availability of

qualified attorneys for the proceedings involved, justifies a higher

fee. The cap placed on attorneys' fees for businesses, other than small

businesses, constitutes a benchmark as to a ``reasonable'' level for

attorneys' fees for small businesses.

(4) Within 30 days after receipt by the agency of an application

for costs, the agency may file an answer.

(h) The GSBCA's final decision may be appealed by the agency or by

any interested party, including any intervening interested parties, as

set forth in the Contract Disputes Act of 1978 (41 U.S.C. 601-613).

8. Section 33.201 is amended by adding in alphabetical order

definitions for ``Accrual of a claim'' and ``Alternative dispute

resolution (ADR)'' removing the definition ``Alternative means of

dispute resolution (ADR)''; and in the definition ``Claim'' by removing

the amount ``$50,000'' and inserting ``$100,000'' in its place.

33.201 Definitions.

Accrual of a claim occurs on the date when all events, which fix

the alleged liability of either the Government or the contractor and

permit assertion of the claim, were known or should have been known.

For liability to be fixed, some injury must have occurred. However,

monetary damages need not have been incurred.

Alternative dispute resolution (ADR) means any procedure or

combination of procedures voluntarily used to resolve issues in

controversy without the need to resort to litigation. These procedures

may include, but are not limited to, assisted settlement negotiations,

conciliation, facilitation, mediation, fact-finding, minitrials, and

arbitration.

* * * * *

9. Section 33.206 is revised to read as follows:

33.206 Initiation of a claim.

(a) Contractor claims shall be submitted, in writing, to the

contracting officer for a decision within 6 years after accrual of a

claim, unless the contracting parties agreed to a shorter time period.

This 6-year time period does not apply to contracts awarded prior to

October 1, 1995. The contracting officer shall document the contract

file with evidence of the date of receipt of any submission from the

contractor deemed to be a claim by the contracting officer.

(b) The contracting officer shall issue a written decision on any

Government claim initiated against a contractor within 6 years after

accrual of the claim, unless the contracting parties agreed to a

shorter time period. The 6-year period shall not apply to contracts

awarded prior to October 1, 1995, or to a Government claim based on a

contractor claim involving fraud.

33.207 [Amended]

10. Section 33.207 is amended in paragraph (a)(1) by removing

``$50,000'' and inserting ``$100,000'' in its place.

33.208 [Amended]

11. Section 33.208 is amended in paragraph (c) by removing ``as

defined in 33.201,''.

12. Section 33.211 is amended in paragraph (a)(4)(v) by removing

``$10,000'' and ``$50,000'' and inserting ``$50,000'' and ``$100,000'',

respectively; in (c)(1), (c)(2) and (e) by removing ``$50,000'' and

inserting ``$100,000'' in its place; and by revising paragraph (f) to

read as follows:

33.211 Contracting officer's decision.

* * * * *

(f) In the event of undue delay by the contracting officer in

rendering a decision on a claim, the contractor may request the

tribunal concerned to direct the contracting officer to issue a

decision in a specified time period determined by the tribunal.

* * * * *

13. Section 33.214 is amended by redesignating paragraphs (b)

through (d) as (c) through (e) and adding a new paragraph (b) to read

as follows:

33.214 Alternative dispute resolution (ADR).

* * * * *

(b) If the contracting officer rejects a request for ADR from a

small business contractor, the contracting officer shall provide the

contractor written explanation citing one or more of the conditions in

5 U.S.C. 572(b) or such other specific reasons that ADR procedures are

inappropriate for the resolution of the dispute. In any case where a

contractor rejects a request of an agency for ADR proceedings, the

contractor shall inform the agency in writing of the contractor's

specific reasons for rejecting the request.

* * * * *

14. Subpart 42.16 is added to read as follows:

Subpart 42.16--Small Business Contract Administration

42.1601 General.

The contracting officer shall make every reasonable effort to

respond in writing within 30 days to any written request to the

contracting officer from a small business concern with respect to a

contract administration matter. In the event the contracting officer

cannot respond to the request within the 30-day period, the contracting

officer shall, within the period, transmit to the contractor a written

notification of the specific date the contracting officer expects to

respond. This provision shall not apply to a request for a contracting

officer decision under the Contract Disputes Act of 1978 (41 U.S.C.

601-613).

PART 50--EXTRAORDINARY CONTRACTUAL ACTIONS

15. Section 50.303 is redesignated as 50.303-1 and a new 50.303

heading is added to read as follows:

50.303 Contract adjustment.

* * * * *

16. Section 50.303-2 is added to read as follows:

50.303-2 Contractor certification.

A contractor seeking a contract adjustment that exceeds the

simplified acquisition threshold shall, at the time the request is

submitted, submit a certification by a person authorized to certify the

request on behalf of the contractor that (a) the request is made in

good faith and (b) the supporting data are accurate and complete to the

best of that person's knowledge and belief.

50.304, 50.305 & 50.306 [Amended]

17. Sections 50.304(a) introductory text, 50.305(a) and 50.306

introductory text are amended by removing the reference ``50.303'' and

inserting ``50.303-1'' in its place.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

18. Section 52.233-1 is amended by revising the date of the clause,

the third sentence in paragraph (c), and paragraphs (d)(1) and (g); in

(d)(2)(i)(A) and twice in (e) by removing ``$50,000'' and inserting

``$100,000'' to read as follows:

52.233-1 Disputes.

* * * * *

Disputes (Oct 1995)

* * * * *

(c) * * * However, a written demand or written assertion by the

Contractor seeking the payment of money exceeding $100,000 is not a

claim under the Act until certified as required by subparagraph

(d)(2) of this clause. * * *

(d)(1) A claim by the Contractor shall be made in writing and,

unless otherwise stated in this contract, submitted within 6 years

after accrual of the claim to the Contracting Officer for a written

decision. A claim by the Government against the Contractor shall be

subject to a written decision by the Contracting Officer.

* * * * *

(g) If the claim by the Contractor is submitted to the

Contracting Officer or a claim by the Government is presented to the

Contractor, the parties, by mutual consent, may agree to use ADR. If the Contractor refuses an offer for

alternative disputes resolution, the Contractor shall inform the

Contracting Officer, in writing, of the Contractor's specific

reasons for rejecting the request. When using arbitration conducted

pursuant to 5 U.S.C. 575-580, or when using any other ADR technique

that the agency elects to handle in accordance with the ADRA, any

claim, regardless of amount, shall be accompanied by the

certification described in subparagraph (d)(2)(iii) of this clause,

and executed in accordance with subparagraph (d)(3) of this clause.

* * * * *

19. Section 52.233-2 is amended by revising the date of the clause

and adding paragraph (c) to read as follows:

52.233-2 Service of Protest.

* * * * *

Service of Protest (Oct 1995)

* * * * *

(c) In this procurement, you may not protest to the GSBCA

because of the nature of the supplies or services being procured.

(Contracting Officer shall strike the word ``not'' where the GSBCA

is a correct forum.)

(End of provision)

20. Section 52.233-3 is amended by revising the date of the clause

and the first sentence of (a) to read as follows:

52.233-3 Protest after Award.

* * * * *

Protest After Award (Oct 1995)

* * * * *

(a) Upon receipt of a notice of protest (as defined in FAR

33.101) or a determination that a protest is likely (see FAR

33.102(d)), the Contracting Officer may, by written order to the

Contractor, direct the Contractor to stop performance of the work

called for by this contract. * * *

*****

[Federal Register: September 18, 1995 (Volume 60, Number 180)]

[Rules and Regulations]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

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

DEPARTMENT OF DEFENSE

48 CFR Parts 2, 3, 5, 6, 7, 8, 9, 10, 11, 12, 14, 15, 16, 22, 23,

31, 36, 42, 44, 46, 47, 49, 52, and 53

[FAC 90-32; FAR Case 94-790; Item III]

RIN 9000-AG38

Federal Acquisition Regulation; Acquisition of Commercial Items

AGENCIES: Department of Defense (DOD), General Services Administration

(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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

SUMMARY: This final rule is issued pursuant to the Federal Acquisition

Streamlining Act of 1994 to implement the revised statutory authorities

in Title VIII of the Act for the acquisition of commercial items and

components by Federal Government agencies as well as contractors and

subcontractors at all levels. This regulatory action was subject to

Office of Management and Budget review under Executive Order 12866,

dated September 30, 1993.

EFFECTIVE DATE: October 1, 1995.

Applicability date: For solicitations issued on or after October 1,

1995; use of the new policies, provisions and clauses is optional for

solicitations issued before December 1, 1995, and mandatory for

solicitations issued after December 1, 1995.

FOR FURTHER INFORMATION CONTACT: Colonel Laurence M. Trowel, Commercial

Item Team Leader, at (703) 695-3858 in reference to this FAR case. For

general information, contact the FAR Secretariat, Room 4037, GS

Building, Washington, DC 20405 (202) 501-4755. Please cite FAC 90-32,

FAR case 94-790.

SUPPLEMENTARY INFORMATION:

A. Background

The Federal Acquisition Streamlining Act of 1994, Pub. L. 103-355,

provides authorities that streamline the acquisition process and

minimize burdensome Government-unique requirements. This notice

announces revisions developed under FAR case 94-790, Acquisition of

Commercial Items, which encourage the acquisition of commercial end

items and components by Federal Government agencies as well as

contractors and subcontractors at all levels. The most significant

revisions are in the following FAR parts:

Part 2 has been amended to incorporated the definitions of

``commercial item,'' ``component,'' ``commercial component'' and

``nondevelopmental item'' from the Act with only minor revisions for

clarification. The clause at 52.202-1, Definitions, has been similarly

revised to make the definitions available to prime and subcontractors.

Part 10 has been completely revised to address market research. It

contains some language taken from the current FAR Part 11. This new

part establishes the requirement for market research as the first step

in the acquisition process. Market research is an essential element in

the later steps of describing the agency's need, developing the overall

acquisition strategy and identifying terms and conditions unique to the

item being acquired.

Part 11 has been completely revised to address the process of

describing agency needs. It contains some of the language on

specifications and standards formerly found in FAR Part 10, but takes a

more streamlined approach. In addition, the revised Part 11 establishes

the Government's order of precedence for requirements documents and

addresses the concept of market acceptance contained in the Act. The

revised Part 11 also contains coverage on Delivery or Performance

Schedules, Liquidated Damages, Priorities and Allocations, and

Variations in Quantity taken from the current Part 12 with only minor

editorial revisions. The current Part 12 coverage on Suspension of

Work, Stop Work Orders, and Government Delay of Work has been moved to

Subpart 42.13 with only minor editorial revisions.

Part 12 has been completely revised to address the acquisition of

commercial items. The Team created this entirely new coverage to

address in one FAR part the policies for the acquisition of commercial

items.

--Subpart 12.1 states that the policies in the revised Part 12 are

applicable to all acquisitions of commercial items above the micro-

purchase threshold. The requirements of other parts of the FAR apply to

commercial items to the extent they are not inconsistent with Part 12;

--Subpart 12.2 identifies special requirements for the acquisition of

commercial items. These requirements generally reflect the requirements

of Title VIII.

--Subpart 12.3 establishes standard provisions and clauses for use in

the acquisition of commercial items. This approach is essential to meet

the requirements of the statute and provide contracting officers and

industry with an easy to use, simplified method for acquiring

commercial items. However, it is essential that contracting officers be

allowed to tailor solicitations and contracts to meet the needs of the

particular acquisition and the marketplace for that item. Subpart 12.3

gives contracting officers broad authority to tailor solicitations and

contracts, a practice itself that is consistent with commercial

practices. The Act requires that some limitations be placed on this

authority to tailor, and that has also been accommodated in this

subpart.

--A new form, the Standard Form 1449, Solicitation/Contract/Order for

Commercial Items, was established.

The SF 1449 combines features of the SF 33, Solicitation, Offer and

Award; the SF 1447, Solicitation/Contract; and the DD 1155, Order for

Supplies and Services. The most significant element is the addition of

acceptance blocks at the bottom of the form (patterned after the DD

Form 1155). This will allow suppliers of commercial items to utilize

the SF 1449 to document receipt of the supplies or services by the

government avoiding the need for preparation of separate receipt/

acceptance forms.

--Subpart 12.5 identifies the applicability of certain laws to the

acquisition of commercial items. This subpart is intended to meet the

requirements of Section 8003(a) of the Act which requires that the FAR

contain a list of laws determined to be inapplicable to prime contracts

for commercial items.

--Section 12.503 contains the list of laws determined to be not

applicable to executive agency prime contracts for acquisition of

commercial items. This list has been expanded to also include those

laws that have been revised in some manner to modify their

applicability to commercial items. In each instance, the specific

prescriptive language elsewhere in the FAR has been revised to reflect

this modified applicability. FAR 12.503 only includes those laws that

apply to prime contracts awarded by both DOD and civilian agencies.

Agency unique laws determined to be not applicable to prime contracts

are not addressed in this rule and may be addressed separately by the

respective agencies.

--Section 12.504 contains the list of laws determined to be not

applicable to subcontracts for commercial items. This list has been

expanded to also include those laws that have been revised in some

manner to modify their applicability to subcontracts for commercial

items.

--Subpart 12.6 identifies two streamlined procedures for the evaluation

and solicitation of contracts for commercial items. These procedures

may be used at the discretion of the contracting officer.

Part 52 has been amended to include several new provisions and

clauses to be inserted in all solicitations and contracts for the

acquisition of commercial items:

--Section 52.212-1, Instructions to Offerors--Commercial Items,

contains solicitation instructions unique to Government procurement and

is based upon existing FAR language. The information has been

simplified and tailored to meet the requirements of commercial items.

For the most part, the simplified paragraphs in the new provision do

not contain new concepts.

--Section 52.212-2, Evaluation--Commercial Items, contains evaluation

information that has been simplified and tailored to meet the

requirements of commercial items. Again, this provision does not

contain new concepts and is generally based upon provisions prescribed

in Parts 14 and 15. This provision may be used at the discretion of the

contracting officer. It requires the contracting officer to establish

specific evaluation factors and the relative order of importance for

each acquisition.

--Section 52.212-3, Offeror Representations and Certifications--

Commercial Items, includes the certifications and representations

required to comply with laws or Executive orders. Instead of using the

numerous certifications contained in the FAR, the Team drafted a single

provision containing all the requirements that may apply to the

acquisition of commercial items.

--Section 52.212-4, Contract Terms and Conditions--Commercial Items,

contains the terms and conditions the Team believes are consistent with

customary commercial practice by addressing general areas that previous

studies have identified as the ``core'' areas covered by commercial

contracts. Several concepts included in the clause at 52.212-4

represent significant changes from standard Government practices to

commercial-like practices.

--Section 52.212-5, Contract Terms and Conditions Required to Implement

Statutes or Executive orders--Commercial Items, implements provisions

of law or executive orders applicable to Government acquisitions of

commercial items or commercial components. The Team believes the clause at 52.212-5 represents the minimum number of clauses required to

implement statutes and Executive orders. Certain clauses may apply

depending upon the circumstances; the contracting officer will indicate

which of these clauses apply for the specific acquisition. In addition,

this clause provides that the contractor is not required to include any

FAR provision or clause in its subcontracts other than those listed in

the clause as applying to subcontracts for commercial items.

--Section 52.244-6, Subcontracts for Commercial Items and Commercial

Components, implements the preference for the acquisition of commercial

items or nondevelopmental items as components of items to be supplied

under Federal contracts. This clause will be inserted in all

solicitations and contracts for supplies and services other than

commercial items. It provides that the contractor is not required to

include in its subcontracts for commercial items any FAR provision or

clause, other than those listed in the clause.

B. Regulatory Flexibility Act

This final rule will have a significant economic impact on a

substantial number of small entities within the meaning of the

Regulatory Flexibility Act, 5 U.S.C. 601, et seq. This rule will have

this impact as a result of the following:

(1) It establishes a much broader definition of ``commercial

items'' compared to the language of Part 11, it includes certain

modifications to existing items, and includes certain commercial

services. In all these cases, small business is very likely to benefit

from this expanded definition;

(2) It establishes a requirement for conducting market research in

certain circumstances before issuing solicitations which should benefit

small business by ensuring the contracting activity has conducted

sufficient research to be aware of the availability of commercial items

and the practices used in the commercial marketplace to acquire them.

The rule also cautions contracting officers not to request potential

sources to submit more than the minimum information necessary as a part of market research.

(3) It establishes a preference for the acquisition of commercial

items thereby enabling more small businesses that offer commercial

items to participate in Government acquisition;

(4) It establishes a preference for stating Government requirements

in terms of functions to be performed, performance required, or

essential physical characteristics rather than detailed, Government-

unique design specifications thereby allowing a broader range of

products of small businesses to satisfy the Government need;

(5) It establishes the Government order of precedence for

requirements documents emphasizing performance-oriented documents and

nongovernment standards rather than Federal/Military-unique standards

thereby allowing a broader range of small businesses to participate in

Government acquisitions;

(6) It allows contracting officers the flexibility to use either

the streamlined solicitation procedure in the revised Subpart 12.6 for

acquiring commercial items, or the existing procedures in Parts 13, 14

or 15, as applicable, if they are more streamlined and beneficial,

thereby allowing maximum flexibility for contracting with small

businesses;

(7) It allows the use of the streamlined terms and conditions for

acquiring commercial items for every acquisition above the

micropurchase threshold thereby allowing the maximum number of small

businesses to benefit from these procedures;

(8) It requires, except in unique circumstances, that the

Government rely on the contractor's quality assurance system thereby

allowing small businesses to utilize their own quality system when

selling commercial items rather than a Government-specified system;

(9) It requires that, when acquiring commercial items, the

contracting officer use the solicitation provisions and contract

clauses specifically established for acquiring commercial items. The

contracting officer may tailor those provisions and clauses when the

customary practices in the market dictate the use of other terms and

conditions or when a waiver is approved; and

(10) By significantly limiting the flow down of Government-unique

terms and conditions to subcontractors at all levels thereby minimizing

the burden on a significant number of small businesses.

A Final Regulatory Flexibility Analysis (FRFA) has been prepared

and will be provided to the Chief Counsel for Advocacy for the Small

Business Administration. A copy of the FRFA may be obtained from the

FAR Secretariat.

C. Paperwork Reduction Act

The Paperwork Reduction Act (Pub. L. 96-511) is deemed to apply

because the final rule contains information collection requirements.

Accordingly, a request for approval of a new information collection

requirement concerning Acquisition of Commercial Items was submitted to

the Office of Management and Budget and approved through OMB Control No. 9000-0136. Public comments concerning this request were invited in a Federal Register notice at 60 FR 11219, March 1, 1995.

D. Public Comments

Title VIII of the Act makes significant statutory revisions to

facilitate the acquisition of commercial items and components by

Federal Government agencies, as well as contractors and subcontractors

at all levels. This final rule incorporates revisions to two proposed

rules resulting from a public meeting held on April 3, 1995, and

written comments received in response to publication of the two

proposed rules in the Federal Register. The first proposed rule was

published in the Federal Register on March 1, 1995 (60 FR 11198), under

FAR case 94-790. That proposed rule made changes throughout the FAR to incorporate provisions of Title VIII. The second proposed rule was

published in the Federal Register on March 22, 1995 (60 FR 15220),

under FAR case 94-791. That case contained the list of laws required by

Section 8003(a) of the Act that were determined to be inapplicable to

Executive agency contracts and subcontracts for commercial items. FAR

case 94-791 also contained the list of contract clauses determined to

be applicable to subcontracts for the acquisition of commercial items.

On April 4, 1995, a correction to the proposed rule under FAR case 94-

791 was published in the Federal Register (60 FR 17184), to correct

section 52.212-5 to include access to contractor records by the

Comptroller General of the United States for contracts awarded using

other than sealed bidding in excess of the simplified acquisition

threshold.

A total of 559 written comments were received on the proposed rule

from 60 commentors. Each comment was analyzed by the Commercial Items Drafting Team and, where appropriate, changes were made in the proposed FAR language as reflected in this final rule. The comments largely fell in the following general areas:

1. Definitions of Commercial Items and Nondevelopmental Item

The language describing a ``minor'' modification was revised to

clarify the intent. The revised language was drawn from a related

Congressional report. The definition of nondevelopmental items was also

clarified to alleviate confusion regarding what commentors identified

as the ``circular logic'' of commercial items being a subset of

nondevelopmental items, and certain nondevelopmental items being a

subset of commercial items. The revision clarifies the distinction

between commercial items and nondevelopmental items. Several commentors asked that specific examples of items that would be considered ``commercial'' be included in the definition. The Team rejected this suggestion citing the impossibility of developing examples that would adequately describe the range of commercial items the government might buy while not unnecessarily limiting the breadth of the definition.

2. Decision to Utilize Commercial Items Authority

Several commentors expressed confusion over how the Government

would decide when the commercial items authorities in Part 12 could be

used. FAR 10.002 was revised to include language explaining the

decision process that would follow the completion of market research.

3. Market Acceptance

Several commentors were concerned with the lack of sufficient

guidance on market acceptance. Several changes were made in an effort

to balance the concerns expressed by the public and those expressed by

Government agencies. The final rule clarifies the circumstances where

market acceptance may be appropriate, cautions that it is not

appropriate when new or evolving commercial items may meet the agency's needs, and contains guidance on developing criteria for demonstrating market acceptance.

4. Relationship of Part 12 to Other FAR Parts

Several commentors expressed confusion over the relationship of

Part 12 to other Parts, especially Part 13, Simplified Acquisition

Procedures; Part 14, Sealed Bidding; and Part 15, Contracting By

Negotiation. FAR 12.203 was revised to clarify that Part 12 contains

unique policies for the acquisition of commercial items. These unique

policies are intended to be used in conjunction with the existing

procedures contained in Parts 13, 14, and 15 for the solicitation,

evaluation, and award of contracts, purchase orders and other

instruments. Part 12 will take precedence over other FAR parts only

where the policies in those parts are inconsistent.

5. Use of the Standard Form (SF) 1449

Several commentors questioned the rationale for requiring the use

of the new SF 1449 for all acquisitions of commercial items. The SF

1449 was specifically developed in conjunction with the provisions and

clauses developed for the acquisition of commercial items. The SF 1449

and the prescribed provisions and clauses are designed to complement

each other in several respects. Forms currently prescribed in the FAR

contain references to FAR provisions and clauses that are not used for

commercial items, and references to the Uniform

Contract Format, also not used for acquiring commercial items. Finally,

the use of a single form throughout the Federal Government for all

acquisitions of commercial items will aid those offerors that will, as

a result of the publication of this rule, seek to do business with the

Federal Government.

6. Quality Assurance

Several commentors questioned the intent of the language regarding

the reliance on contractors' existing quality assurance systems. The

rule has been revised to clarify that where buyer in-process inspection

is a customary practice, any Government inprocess inspection shall be

conducted in a manner consistent with commercial practice.

7. Commercial Item Pricing

Commentors suggested that Part 12 should discuss the techniques for

pricing commercial items. The policies and procedures for determining

the price reasonableness of commercial items are contained in Subpart

15.8 and the Team did not want to conflict with those policies.

However, a brief summary of pricing considerations used when

contracting by negotiation under Part 15 has been included in Part 12.

8. Technical Data and Computer Software

In response to numerous comments on technical data and computer

software, the final rule has been revised. The subpart on technical

data has been revised to cover the general principle that the

Government will acquire only technical data customarily provided to the

public, except as provided by agency-specific statutes. The technical

data subpart references FAR Part 27 and agency supplements, where

detailed rules implementing the technical data statutes can be found. A

new section on computer software was added to require that commercial

computer software be acquired under licenses customarily provided to

the public to the extent those licenses are consistent with Federal

procurement law.

9. Discretionary Use of FAR Provisions and Clauses

Several commentors asked if existing FAR provisions and clauses

could be used if needed. Guidance concerning the discretionary use of

other FAR clauses, consistent with market research and customary

commercial practice, has been provided in the final rule. Specific

examples of FAR clauses that may be appropriate for use include clauses

for ordering procedures for indefinite delivery contracts and option

exercise.

10. Tailoring of Provisions and Clauses

Additional guidance concerning contracting officer authority to

tailor Part 12 clauses, consistent with customary commercial market

practices, has also been provided. Specific paragraphs of the clause at

52.212-4, Contract Terms and Conditions--Commercial Items, that are

based in statute and may not be tailored, have been identified.

11. Unique Requirements Regarding Terms and Conditions for Commercial

Items.

Many commentors from both industry and Government noted that the

new terms and conditions prescribed for commercial items are

significantly different than the existing FAR provisions and clauses.

In response to the numerous questions and concerns, the Team expanded

the discussion in the proposed rule describing the key features of

these unique provisions and clauses.

12. Laws Inapplicable to Contractors and Subcontractors

The language describing the laws determined inapplicable to prime

and subcontractors has been revised to clarify several areas of

confusion. In addition, the Service Contract Act (SCA) was added to the

list of laws inapplicable to subcontractors. The proposed rule clearly

did not call out the SCA for flow down to subcontractors in paragraph

(e) of the clause at 52.212-5, but inadvertently omitted the law from

the list of laws inapplicable to subcontractors. Finally, as indicated

in the March 22, 1995, Federal Register notice, the DOD-unique laws

identified in the proposed rule have been removed from the FAR rule and

will appear in the DOD FAR Supplement (DFARS) coverage.

13. Certification Regarding Debarment and Suspension

A certification regarding an offeror's debarment, suspension or

ineligibility for award was added to the provision at 52.212-3 to

implement the requirements of Executive Order 12549.

14. Acceptance and Warranties

The language concerning acceptance and warranties in the clause at

52.212-4 was revised to incorporate the acceptance principles found in

the Uniform Commercial Code. It was also revised to establish the

implied warranties of merchantability and fitness for a particular

purpose as the Government's minimum warranties. Corresponding guidance

is provided in Part 12 on evaluating and incorporating express

warranties, which may overcome the implied warranties, and ensuring any

express warranty and the acceptance terms of the contract are

consistent with the concepts contained in the rule.

15. Terminations

Guidance on procedures for contract terminations, reflecting the

language in the clause at 52.212-4, has been provided in FAR Part 12.

In addition, language has been included to clarify that negotiation of

termination charges in terminations for the Government's convenience

does not require government unique record keeping, compliance with the

cost accounting standards or the contract cost principles.

16. Limitation of Liability

The limitation of contractor liability language, which appeared in

the proposed rule in the ``Warranty'' paragraph of the clause at

52.212-4, has been moved to a separate paragraph to clarify that the

limitation does not apply solely to liability relating to any warranty.

17. Subcontracting Plans

The requirement for Small, Small Disadvantaged and Women Owned

Small Business Subcontracting Plans was included in the clause at

52.212-5 after it was determined that there was no exemption from this

requirement for commercial items. However, in this regard, the Office

of Procurement Policy (OFPP) is preparing to issue Policy Letter 95-1,

Subcontracting Plans for Companies Supplying Commercial Items. This

Policy Letter states that when a subcontracting plan is required,

annual commercial subcontracting plans that relate to the company's

commercial and noncommercial production are authorized and preferred

for (1) prime contracts for commercial items; or (2) subcontractors

that provide commercial items under a prime contract, whether or not

the prime contractor is supplying a commercial item. The policy

revisions contained in Policy Letter 95-1 will be incorporated into the

FAR by a separate FAR case.

18. Other Revisions to the Proposed Rule

Numerous other revisions were made to the proposed rule to correct

inconsistencies, clarify intent, improve editorial clarity and to bring

the language of the case up to the latest FAR baseline through FAC 90-

31.

List of Subjects in 48 CFR Parts 2, 3, 5, 6, 7, 8, 9, 10, 11, 12, 14,

15, 16, 22, 23, 31, 36, 42, 44, 46, 47, 49, 52 and 53

Government procurement.

Dated: September 7, 1995.

Edward C. Loeb,

Deputy Project Manager for the Implementation of the Federal

Acquisition Streamlining Act of 1994.

Therefore, 48 CFR Parts 2, 3, 5, 6, 7, 8, 9, 10, 11, 12, 14, 15,

16, 22, 23, 31, 36, 42, 44, 46, 47, 49, 52, and 53 are amended as set

forth below:

1. The authority citation for 48 CFR Parts 2, 3, 5, 6, 7, 8, 9, 10,

11, 12, 14, 15, 16, 22, 23, 31, 36, 42, 44, 46, 47, 49, 52, and 53

continues to read as follows:

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

U.S.C. 2473(c).

PART 2--DEFINITIONS OF WORDS AND TERMS

2. Section 2.101 is amended by adding in alphabetical order the

definitions ``Commercial component'', ``Commercial item'',

``Component'', ``Market research'', and ``Nondevelopmental item'' to

read as follows:

2.101 Definitions.

* * * * *

Commercial component means any component that is a commercial item.

Commercial item means--

(a) Any item, other than real property, that is of a type

customarily used for nongovernmental purposes and that--

(1) Has been sold, leased, or licensed to the general public; or,

(2) Has been offered for sale, lease, or license to the general

public;

(b) Any item that evolved from an item described in paragraph (a)

of this definition through advances in technology or performance and

that is not yet available in the commercial marketplace, but will be

available in the commercial marketplace in time to satisfy the delivery

requirements under a Government solicitation;

(c) Any item that would satisfy a criterion expressed in paragraphs

(a) or (b) of this definition, but for--

(1) Modifications of a type customarily available in the commercial

marketplace; or

(2) Minor modifications of a type not customarily available in the commercial marketplace made to meet Federal Government requirements.

``Minor'' modifications means modifications that do not significantly

alter the nongovernmental function or essential physical

characteristics of an item or component, or change the purpose of a

process. Factors to be considered in determining whether a modification

is minor include the value and size of the modification and the

comparative value and size of the final product. Dollar values and

percentages may be used as guideposts, but are not conclusive evidence

that a modification is minor;

(d) Any combination of items meeting the requirements of paragraphs

(a), (b), (c), or (e) of this definition that are of a type customarily

combined and sold in combination to the general public;

(e) Installation services, maintenance services, repair services,

training services, and other services if such services are procured for

support of an item referred to in paragraphs (a), (b), (c), or (d) of

this definition, and if the source of such services--

(1) Offers such services to the general public and the Federal

Government contemporaneously and under similar terms and conditions;

and

(2) Offers to use the same work force for providing the Federal Government with such services as the source uses for providing such services to the general public;

(f) Services of a type offered and sold competitively in

substantial quantities in the commercial marketplace based on

established catalog or market prices for specific tasks performed under

standard commercial terms and conditions. This does not include

services that are sold based on hourly rates without an established

catalog or market price for a specific service performed;

(g) Any item, combination of items, or service referred to in

paragraphs (a) through (f), notwithstanding the fact that the item,

combination of items, or service is transferred between or among

separate divisions, subsidiaries, or affiliates of a contractor; or

(h) A nondevelopmental item, if the procuring agency determines the

item was developed exclusively at private expense and sold in

substantial quantities, on a competitive basis, to multiple State and

local governments.

Component means any item supplied to the Federal Government as part of an end item or of another component.

* * * * *

Market research means collecting and analyzing information about

capabilities within the market to satisfy agency needs.

* * * * *

Nondevelopmental item means--

(a) Any previously developed item of supply used exclusively for

governmental purposes by a Federal agency, a State or local government,

or a foreign government with which the United States has a mutual

defense cooperation agreement;

(b) Any item described in paragraph (a) of this definition that

requires only minor modification or modifications of a type customarily

available in the commercial marketplace in order to meet the

requirements of the procuring department or agency; or

(c) Any item of supply being produced that does not meet the

requirements of paragraph (a) or (b) solely because the item is not yet

in use.

* * * * *

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

3. Section 3.404 is amended by removing ``or'' from the end of

paragraph (b)(4); by redesignating paragraph (b)(5) as (b)(6) and

adding a new paragraph (b)(5); and by revising paragraph (c) to read as

follows:

3.404 Solicitation provision and contract clause.

* * * * *

(b) * * *

(5) The solicitation is for a commercial item (see parts 2 and 12);

or

* * * * *

(c) The contracting officer shall insert the clause at 52.203-5,

Covenant Against Contingent Fees, in solicitations and contracts

exceeding the simplified acquisition threshold in part 13 other than

those for commercial items (see Parts 2 and 12).

4. Section 3.502-2 is amended by revising the introductory text of

paragraph (i) to read as follows:

3.502-2 General.

* * * * *

(i) Requires each contracting agency to include in each prime

contract, except contracts for commercial items (see part 12), a

requirement that the prime contractor shall--

* * * * *

5. Section 3.502-3 is revised to read as follows:

3.502-3 Contract clause.

The contracting officer shall insert the clause at 52.203-7, Anti-

Kickback Procedures, in solicitations and contracts exceeding the

simplified acquisition threshold in part 13, other than those for

commercial items (see part 12).

6. Section 3.503-2 is revised to read as follows:

3.503-2 Contract clause.

The contracting officer shall insert the clause at 52.203-6,

Restrictions on Subcontractor Sales to the Government, in solicitations

and contracts exceeding the simplified acquisition threshold in

part 13. For the acquisition of commercial items, the contracting

officer shall use the clause with its Alternate I.

PART 5--PUBLICIZING CONTRACT ACTIONS

7. Section 5.203 is amended by revising paragraphs (a), (b), and

(c) to read as follows:

5.203 Publicizing and response time.

* * * * *

(a) A notice of contract action shall be published in the CBD at

least 15 days before issuance of a solicitation except when the

combined CBD synopsis/solicitation procedure for acquisition of

commercial items is used (see 12.603).

(b) The contracting officer shall establish a solicitation response

time which will afford potential offerors a reasonable opportunity to

respond for (1) each contract action, including actions via FACNET, in

an amount estimated to be greater than $25,000, but not greater than

the simplified acquisition threshold; or (2) each contract action for

the acquisition of commercial items in an amount estimated to be

greater than $25,000 (see part 12). The contracting officer should

consider the circumstances of the individual acquisition, such as the

complexity, commerciality, availability, and urgency, when establishing

the solicitation response time.

(c) Except for the acquisition of commercial items (see 5.203(b)),

agencies shall allow at least a 30-day response time for receipt of

bids or proposals from the date of issuance of a solicitation, if the

contract action is expected to exceed the simplified acquisition

threshold.

* * * * *

8. Section 5.207 is amended by adding paragraph (e)(4) to read as

follows:

5.207 Preparation and transmittal of synopses.

* * * * *

(e) * * *

(4) If, under the proposed acquisition, the Government does not

intend to acquire a commercial item using part 12, the synopsis shall

refer to Numbered Note 26.

* * * * *

PART 6--COMPETITION REQUIREMENTS

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

as follows:

6.303-2 Content.

(a) * * *

(8) A description of the market research conducted (see part 10) and the results or a statement of the reason market research was not conducted.

* * * * *

10. Section 6.502 is revised to read as follows:

6.502 Duties and responsibilities.

(a) Agency and procuring activity competition advocates are

responsible for promoting the acquisition of commercial items,

promoting full and open competition, challenging requirements that are

not stated in terms of functions to be performed, performance required

or essential physical characteristics, and challenging barriers to the

acquisition of commercial items and full and open competition such as

unnecessarily restrictive statements of work, unnecessarily detailed

specifications, and unnecessarily burdensome contract clauses.

(b) Agency competition advocates shall--

(1) Review the contracting operations of the agency and identify and report to the agency senior procurement executive--

(i) Opportunities and actions taken to acquire commercial items to meet the needs of the agency;

(ii) Opportunities and actions taken to achieve full and open

competition in the contracting operations of the agency;

(iii) Actions taken to challenge requirements that are not stated in terms of functions to be performed, performance required or

essential physical characteristics;

(iv) Any condition or action that has the effect of unnecessarily restricting the acquisition of commercial items or competition in the contracting actions of the agency;

(2) Prepare and submit an annual report to the agency senior

procurement executive, in accordance with agency procedures,

describing--

(i) Such advocate's activities under this subpart;

(ii) New initiatives required to increase the acquisition of

commercial items;

(iii) New initiatives required to increase competition;

(iv) New initiatives to ensure requirements are stated in terms of

functions to be performed, performance required or essential physical

characteristics;

(v) Any barriers to the acquisition of commercial items or

competition that remain; and

(vi) Other ways in which the agency has emphasized the acquisition of commercial items and competition in areas such as acquisition training and research;

(3) Recommend to the senior procurement executive of the agency goals and plans for increasing competition on a fiscal year basis; and

(4) Recommend to the senior procurement executive of the agency a system of personal and organizational accountability for competition, which may include the use of recognition and awards to motivate program managers, contracting officers, and others in authority to promote competition in acquisition.

PART 7--ACQUISITION PLANNING

7.101 [Amended]

11. Section 7.101 is amended by removing the definition ``Market

survey''.

12. Section 7.102 is revised to read as follows:

7.102 Policy.

(a) Agencies shall perform acquisition planning and conduct market

research (see part 10) for all acquisitions in order to promote and

provide for--

(1) Acquisition of commercial items or, to the extent that

commercial items suitable to meet the agency's needs are not available,

nondevelopmental items, to the maximum extent practicable (10 U.S.C.

2377 and 41 U.S.C. 251, et seq.); and

(2) Full and open competition (see part 6) or, when full and open

competition is not required in accordance with part 6, to obtain

competition to the maximum extent practicable, with due regard to the

nature of the supplies or services to be acquired (10 U.S.C. 2301(a)(5)

and 41 U.S.C. 253a(a)(1)).

(b) This planning shall integrate the efforts of all personnel

responsible for significant aspects of the acquisition. The purpose of

this planning is to ensure that the Government meets its needs in the

most effective, economical, and timely manner. Agencies that have a

detailed acquisition planning system in place that generally meets the

requirements of 7.104 and 7.105 need not revise their system to

specifically meet all of these requirements.

13. Section 7.103 is amended by revising paragraph (b); and in

paragraph (m) by removing ``10.002(c)'' and inserting ``11.001(b)'' to

read as follows:

7.103 Agency-head responsibilities.

* * * * *

(b) Encouraging offerors to supply commercial items, or to the

extent that commercial items suitable to meet the agency needs are not

available, nondevelopmental items in response to agency solicitations (10 U.S.C.

2377 and 41 U.S.C. 251, et seq.); and

* * * * *

14. Section 7.105 is amended in paragraph (a)(5) by removing

``subpart 12.1'' and inserting ``subpart 11.4'' in its place; in

paragraph (a)(8)(iii) by removing the parenthetical ``(see

10.002(c))''; by revising paragraph (b)(1); in paragraph (b)(6) by

removing ``part 10'' and inserting ``part 11'' in its place; in

paragraph (b)(7) by removing ``subpart 12.3'' and inserting ``subpart

11.6'' in its place; and by revising paragraph (b)(12)(i) to read as

follows:

7.105 Contents of written acquisition plans.

* * * * *

(b) Plan of action--(1) Sources. Indicate the prospective sources

of supplies and/or services that can meet the need. Consider required

sources of supplies or services (see part 8). Include consideration of

small business, small disadvantaged business, and women-owned small

business concerns (see part 19). Address the extent and results of the

market research and indicate their impact on the various elements of

the plan (see part 10).

* * * * *

(12) * * *

(i) The assumptions determining contractor or agency support, both

initially and over the life of the acquisition, including consideration

of contractor or agency maintenance and servicing (see subpart 7.3) and

distribution of commercial items;

* * * * *

PART 8--REQUIRED SOURCES OF SUPPLIES AND SERVICES

8.1104 [Amended]

15. Section 8.1104 is amended in paragraph (e)(1) by removing

``52.212-9'' and inserting ``52.211-16'' in its place.

PART 9--CONTRACTOR QUALIFICATIONS

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

follows:

9.106-1 Conditions for preaward surveys.

(a) A preaward survey is normally required when the information on

hand or readily available to the contracting officer is not sufficient

to make a determination regarding responsibility. However, if the

contemplated contract will have a fixed price at or below the

simplified acquisition threshold or will involve the acquisition of

commercial items (see part 12), the contracting officer should not

request a preaward survey unless circumstances justify its cost.

* * * * *

17. Section 9.306 is amended in the introductory text of paragraph

(f) by revising the parenthetical to read ``(see 11.404)''.

18. Section 9.405-2 is amended by revising the second sentence of

paragraph (b) introductory text to read as follows:

9.405-2 Restrictions on subcontracting.

* * * * *

(b) * * * By operation of the clause at 52.209-6, Protecting the

Government's Interests When Subcontracting with Contractors Debarred,

Suspended or Proposed for Debarment, contractors shall not enter into

any subcontract in excess of $25,000 with a contractor that has been

debarred, suspended, or proposed for debarment unless there is a

compelling reason to do so. * * *

* * * * *

19. Part 10 is revised to read as follows:

PART 10--MARKET RESEARCH

Sec.

10.000 Scope of part.

10.001 Policy.

10.002 Procedures.

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

U.S.C. 2473(c).

10.000 Scope of part.

This part prescribes policies and procedures for conducting market

research to arrive at the most suitable approach to acquiring,

distributing, and supporting supplies and services. This part

implements requirements of 41 U.S.C. 253a(a)(1), 41 U.S.C 264b, and 10

U.S.C. 2377.

10.001 Policy.

(a) Agencies shall--

(1) Ensure that legitimate needs are identified and trade-offs

evaluated to acquire items which meet those needs;

(2) Conduct market research appropriate to the circumstances--

(i) Before developing new requirements documents for an acquisition by that agency;

(ii) Before soliciting offers for acquisitions with an estimated value in excess of the simplified acquisition threshold; and

(iii) Before soliciting offers for acquisitions with an estimated value less than the simplified acquisition threshold when adequate information is not available and the circumstances justify its cost; and

(3) Use the results of market research to--

(i) Determine if sources capable of satisfying the agency's

requirements exist;

(ii) Determine if commercial items or, to the extent commercial items suitable to meet the agency's needs are not available,

nondevelopmental items are available that--

(A) Meet the agency's requirements;

(B) Could be modified to meet the agency's requirements; or

(C) Could meet the agency's requirements if those requirements were modified to a reasonable extent;

(iii) Determine the extent to which commercial items or

nondevelopmental items could be incorporated at the component level;

(iv) Determine the practices of firms engaged in producing, distributing, and supporting commercial items, such as terms for warranties, buyer financing, maintenance and packaging, and marking;

and

(v) Ensure maximum practicable use of recovered materials (see subpart 23.4) and promote energy conservation and efficiency.

(b) When conducting market research, agencies should not request

potential sources to submit more than the minimum information

necessary.

10.002 Procedures.

(a) Acquisitions begin with a description of the Government's needs

stated in terms sufficient to allow conduct of market research.

(b) Market research is then conducted to determine if commercial

items or nondevelopmental items are available to meet the Government's

needs or could be modified to meet the Government's needs.

(1) The extent of market research will vary, depending on such

factors as urgency, estimated dollar value, complexity, and past

experience. Market research involves obtaining information specific to

the item being acquired and should include--

(i) Whether the Government's needs can be met by--

(A) Items of a type customarily available in the commercial marketplace;

(B) Items of a type customarily available in the commercial marketplace with modifications; or

(C) Items used exclusively for governmental purposes;

(ii) Customary practices regarding customizing, modifying or tailoring of items to meet customer needs and associated costs;

(iii) Customary practices, including warranty, buyer financing, discounts, etc., under which commercial sales of the products are made;

(iv) The requirements of any laws and regulations unique to the item being acquired;

(v) The availability of items that contain recovered materials and items that are energy efficient;

(vi) The distribution and support capabilities of potential

suppliers, including alternative arrangements and cost estimates; and

(vii) Size and status of potential sources (see part 19).

(2) Techniques for conducting market research may include any or all of the following:

(i) Contacting knowledgeable individuals in Government and industry regarding market capabilities to meet requirements.

(ii) Reviewing the results of recent market research undertaken to meet similar or identical requirements.

(iii) Publishing formal requests for information in appropriate technical or scientific journals or business publications.

(iv) Querying Government data bases that provide information relevant to agency acquisitions.

(v) Participating in interactive, on-line communication among industry, acquisition personnel, and customers.

(vi) Obtaining source lists of similar items from other contracting activities or agencies, trade associations or other sources.

(vii) Reviewing catalogs and other generally available product literature published by manufacturers, distributors, and dealers or available on-line.

(viii) Conducting interchange meetings or holding presolicitation conferences to involve potential offerors early in the acquisition process.

(c) If market research indicates commercial or nondevelopmental

items might not be available to satisfy agency needs, agencies shall

reevaluate the need in accordance with 10.001(a)(3)(ii) and determine

whether the need can be restated to permit commercial or

nondevelopmental items to satisfy the agency's needs.

(d)(1) If market research establishes that the Government's need

may be met by a type of item or service customarily available in the

commercial marketplace that would meet the definition of a commercial

item at subpart 2.1, the contracting officer shall solicit and award

any resultant contract using the policies and procedures in part 12.

(2) If market research establishes that the Government's need

cannot be met by a type of item or service customarily available in the

marketplace, part 12 shall not be used. When publication of the notice

at 5.201 is required, the contracting officer shall include a notice to

prospective offerors that the Government does not intend to use part 12

for the acquisition (see 5.207(e)(4)).

(e) Agencies should document the results of market research in a

manner appropriate to the size and complexity of the acquisition.

20. Part 11 is revised to read as follows:

PART 11--DESCRIBING AGENCY NEEDS

Sec.

11.000 Scope of part.

11.001 Definitions.

11.002 Policy.

Subpart 11.1--Selecting and Developing Requirements Documents

11.101 Order of precedence for requirements documents.

11.102 Standardization program.

11.103 Market acceptance.

11.104 Items peculiar to one manufacturer.

Subpart 11.2--Using and Maintaining Requirements Documents

11.201 Identification and availability of specifications.

11.202 Maintenance of standardization documents.

11.203 Customer satisfaction.

11.204 Solicitation provisions and contract clauses.

Subpart 11.3--Acquiring Other Than New Material, Former Government

Surplus Property and Residual Inventory

11.301 Policy.

11.302 Solicitation provisions and contract clauses.

Subpart 11.4--Delivery or Performance Schedules

11.401 General.

11.402 Factors to consider in establishing schedules.

11.403 Supplies or services.

11.404 Contract clauses.

Subpart 11.5--Liquidated Damages

11.501 General.

11.502 Policy.

11.503 Procedures.

11.504 Contract clauses.

Subpart 11.6--Priorities and Allocations

11.600 Scope of part.

11.601 Definitions.

11.602 General.

11.603 Procedures.

11.604 Solicitation provisions and contract clauses.

Subpart 11.7--Variation in Quantity

11.701 Supply contracts.

11.702 Construction contracts.

11.703 Contract clauses.


11.000 Scope of part.

This part prescribes policies and procedures for describing agency

needs.

11.001 Definitions.

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

raw material, parts, items, components, and end products.

New, as used in this part, means previously unused or composed of

previously unused materials and may include unused residual inventory

or unused former Government surplus property.

Other than new, as used in this part, includes, but is not limited

to, recycled, recovered, remanufactured, used, and reconditioned.

Reconditioned, as used in this part, means restored to an earlier

normal operating condition by readjustments and replacement of parts.

Remanufactured, as used in this part, means factory rebuilt to new

equipment performance specification and unused subsequent to

rebuilding.

11.002 Policy.

(a) In fulfilling requirements of 10 U.S.C. 2305(a)(1), 10 U.S.C.

2377, 41 U.S.C. 253a(a), and 41 U.S.C. 264b, agencies shall--

(1) Specify needs using market research in a manner designed to--

(i) Promote full and open competition (see part 6), with due regard to the nature of the supplies or services to be acquired; and

(ii) Only include restrictive provisions or conditions to the

extent necessary to satisfy the minimum needs of the agency or as

authorized by law.

(2) To the maximum extent practicable, ensure that acquisition

officials--

(i) State requirements with respect to an acquisition of supplies or services in terms of--

(A) Functions to be performed;

(B) Performance required; or

(C) Essential physical characteristics;

(ii) Define requirements in terms that enable and encourage

offerors to supply commercial items, or, to the extent that commercial

items suitable to meet the agency's needs are not available,

nondevelopmental items, in response to the agency solicitations;

(iii) Provide offerors of commercial items and nondevelopmental

items an opportunity to compete in any acquisition to fill such

requirements;

(iv) Require prime contractors and subcontractors at all tiers

under the agency contracts to incorporate commercial items or

nondevelopmental items as components of items supplied to the agency;

and

(v) Modify requirements in appropriate cases to ensure that the requirements can be met by commercial items or, to the extent that commercial items suitable to meet the agency's needs are not available, nondevelopmental items.

(b) The Metric Conversion Act of 1975, as amended by the Omnibus

Trade and Competitiveness Act of 1988 (15 U.S.C. 205a, et seq.),

designates the metric system of measurement as the preferred system of

weights and measures for United States trade and commerce, and it

requires that each agency use the metric system of measurement in its

acquisitions, except to the extent that such use is impracticable or is

likely to cause significant inefficiencies or loss of markets to United

States firms. Requiring activities are responsible for establishing

guidance implementing this policy in formulating their requirements for

acquisitions.

(c) To the extent practicable and consistent with subpart 9.5,

potential offerors should be given an opportunity to comment on agency

requirements or to recommend application and tailoring of requirements

documents and alternative approaches. Requiring agencies should apply

specifications, standards, and related documents initially for guidance

only, making final decisions on the application and tailoring of these

documents as a product of the design and development process. Requiring

agencies should not dictate detailed design solutions prematurely (see

7.101 and 7.105(a)(8)).

(d) The Resource Conservation and Recovery Act of 1976 (42 U.S.C.

6901, et seq.), as amended, and Executive Order 12873, dated October

20, 1993, establish requirements for the procurement of products

containing recovered materials, and environmentally preferable and

energy-efficient products and services. Requiring activities shall

prepare plans, drawings, specifications, standards (including voluntary

standards), and purchase descriptions that consider the requirements

set forth in part 23.

Subpart 11.1--Selecting and Developing Requirements Documents

11.101 Order of precedence for requirements documents.

(a) Agencies may select from existing requirements documents,

modify or combine existing requirements documents, or create new

requirements documents to meet agency needs, consistent with the

following order of precedence:

(1) Documents mandated for use by law.

(2) Performance-oriented documents.

(3) Detailed design-oriented documents.

(4) Standards, specifications and related publications issued by

the Government outside the Defense or Federal series for the non-

repetitive acquisition of items.

(b) Agencies should prepare product descriptions to achieve maximum

practicable use of recovered material and other materials that are

environmentally preferable (see subparts 23.4 and 23.7).

11.102 Standardization program.

Agencies shall select existing requirements documents or develop

new requirements documents that meet the needs of the agency in

accordance with the guidance contained in the Federal Standardization

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

11.103 Market acceptance.

(a) Section 8002(c) of Pub. L. 103-355 provides that, in accordance

with agency procedures, the head of an agency may, under appropriate

circumstances, require offerors to demonstrate that the items offered--

(1) Have either--

(i) Achieved commercial market acceptance; or

(ii) Been satisfactorily supplied to an agency under current or recent contracts for the same or similar requirements; and

(2) Otherwise meet the item description, specifications, or other

criteria prescribed in the public notice and solicitation.

(b) Appropriate circumstances may, for example, include situations

where the agency's minimum need is for an item that has a demonstrated

reliability, performance or product support record in a specified

environment. Use of market acceptance is inappropriate when new or

evolving items may meet the agency's needs.

(c) In developing criteria for demonstrating that an item has

achieved commercial market acceptance, the contracting officer shall

ensure the criteria in the solicitation--

(1) Reflect the minimum need of the agency and are reasonably

related to the demonstration of an item's acceptability to meet the

agency's minimum need;

(2) Relate to an item's performance and intended use, not an

offeror's capability;

(3) Are supported by market research;

(4) Include consideration of items supplied satisfactorily under

recent or current Government contracts, for the same or similar items;

and

(5) Consider the entire relevant commercial market, including small business concerns.

(d) Commercial market acceptance shall not be used as a sole

criterion to evaluate whether an item meets the Government's

requirements.

(e) When commercial market acceptance is used, the contracting

officer shall document the file to--

(1) Describe the circumstances justifying the use of commercial

market acceptance criteria; and

(2) Support the specific criteria being used.

11.104 Items peculiar to one manufacturer.

Agency requirements shall not be written so as to require a

particular brand-name, product, or a feature of a product, peculiar to

one manufacturer, thereby precluding consideration of a product

manufactured by another company, unless--

(a) The particular brand-name, product, or feature is essential to

the Government's requirements, and market research indicates other

companies' similar products, or products lacking the particular

feature, do not meet, or can not be modified to meet, the agency's

minimum needs; and

(b) The authority to contract without providing for full and open

competition is supported by the required justifications and approvals

(see 6.302-1).

Subpart 11.2--Using and Maintaining Requirements Documents

11.201 Identification and availability of specifications.

(a) Solicitations citing requirements documents listed in the

General Services Administration (GSA) Index of Federal Specifications,

Standards and Commercial Item Descriptions, the DoD Index of

Specifications and Standards (DoDISS), or other agency index shall

identify each document's approval date and the dates of any applicable

amendments and revisions. Do not use general identification references,

such as ``the issue in effect on the date of the solicitation.''

Contracting offices will not normally furnish these cited documents

with the solicitation, except when--

(1) The requirements document must be furnished with the

solicitation to enable prospective contractors to make a competent evaluation of the solicitation;

(2) In the judgment of the contracting officer, it would be

impracticable for prospective contractors to obtain the documents in

reasonable time to respond to the solicitation; or

(3) A prospective contractor requests a copy of a Government

promulgated requirements document.

(b) Contracting offices shall clearly identify in the solicitation

any pertinent documents not listed in the GSA Index of Federal

Specifications, Standards and Commercial Item Descriptions or DoDISS.

Such documents shall be furnished with the solicitation or specific

instructions shall be furnished for obtaining or examining such

documents.

(c) When documents refer to other documents, such references shall

(1) Be restricted to documents, or appropriate portions of

documents, that apply in the acquisition;

(2) Cite the extent of their applicability;

(3) Not conflict with other documents and provisions of the

solicitation; and

(4) Identify all applicable first tier references.

(d) The GSA Index of Federal Specifications, Standards and

Commercial Item Descriptions may be purchased from the General Services Administration, Federal Supply Service Bureau, Specification Section, Suite 8100, 470 L'Enfant Plaza, SW, Washington, DC 20407, telephone (202) 755-0325/0326. The DoDISS may be purchased from the

Standardization Documents Desk, Building 4D, 700 Robbins Avenue,

Philadelphia, PA 19111-5094, telephone (215) 697-2569.

(e) Agencies may generally obtain from the GSA Specification

Section or the DOD Standardization Documents Desk those nongovernment (voluntary) standards adopted for use by Federal or Defense activities. Standards not available from these sources may be obtained from Government libraries, activities subscribing to document handling services or the organization responsible for the preparation,

publication or maintenance of the standard.

11.202 Maintenance of standardization documents.

(a) Recommendations for changes to standardization documents listed

in the GSA Index of Federal Specifications, Standards and Commercial

Item Descriptions should be submitted to the General Services

Administration, Federal Supply Service, Office of Acquisition,

Washington, DC 20406. Agencies shall submit recommendations for changes to standardization documents listed in the DoDISS to the cognizant preparing activity.

(b) When an agency cites an existing standardization document but

modifies it to meet its needs, the agency shall follow the guidance in

Federal Standardization Manual and, for Defense components, DoD 4120.3-M, Defense Standardization Program Policies and Procedures.

11.203 Customer satisfaction.

Acquisition organizations shall communicate with customers to

determine how well the requirements document reflects the customer's

needs and to obtain suggestions for corrective actions. Whenever

practicable, the agency may provide affected industry an opportunity to

comment on the requirements documents.

11.204 Solicitation provisions and contract clauses.

(a) The contracting officer shall insert the provision at 52.211-1,

Availability of Specifications Listed in the GSA Index of Federal

Specifications, Standards and Commercial Item Descriptions, in

solicitations that

(1) Are issued by civilian agency contracting offices and

(2) Cite specifications listed in the Index that are not furnished with the solicitation.

(b) The contracting officer shall insert the provision at 52.211-2,

Availability of Specifications Listed in the DoD Index of

Specifications and Standards (DoDISS), in solicitations that

(1) Are issued by DoD contracting offices and

(2) Cite specifications listed in the DoDISS that are not furnished with the solicitation.

(c) The contracting officer shall insert a provision substantially

the same as the provision at 52.211-3, Availability of Specifications

Not Listed in the GSA Index of Federal Specifications, Standards and

Commercial Item Descriptions, in solicitations that cite specifications

that are not listed in the Index and are not furnished with the

solicitation, but may be obtained from a designated source.

(d) The contracting officer shall insert a provision substantially

the same as the provision at 52.211-4, Availability for Examination of

Specifications Not Listed in the GSA Index of Federal Specifications,

Standards and Commercial Item Descriptions, in solicitations that cite

specifications that are not listed in the Index and are available for

examination at a specified location.

Subpart 11.3--Acquiring Other Than New Material, Former Government

Surplus Property, and Residual Inventory

11.301 Policy.

(a) Agencies shall allow offers of other than new material, former

Government surplus property, or residual inventory unless it is

determined that such materials are unacceptable. When acquiring

commercial items, the contracting officer should consider the customary

practice in the industry for the item being acquired. When only new

material is acceptable, the solicitation shall clearly identify the

material that must be new. Offerors providing other than new material

shall be required to comply with the clause at 52.211-5, New Material,

the provision at 52.211-6, Listing of Other Than New Material, Residual

Inventory, and Former Government Surplus Property, and the clause at

52.211-7, Other Than New Material, Residual Inventory, and Former

Government Surplus Property, as appropriate.

(b) Agencies shall specify products, including packaging, that

contain the highest practicable percentage of recovered and

environmentally preferable materials, and where applicable, post-

consumer material, consistent with performance requirements,

availability, price reasonableness, and cost-effectiveness.

(c) Contracting officers shall consider the following when

determining whether other than new materials, former Government surplus property, or residual inventory are acceptable:

(1) Safety of persons or property.

(2) Specification and performance requirements.

(3) Price reasonableness.

(4) Total cost to the Government (including maintenance,

inspection, testing, and useful life).

(d) When a contract calls for material to be furnished at cost, the

allowable charge for former Government surplus property shall not

exceed the cost at which the contractor acquired the property.

11.302 Solicitation provisions and contract clauses.

(a) The contracting officer may insert the clause at 52.211-5, New

Material, in solicitations and contracts for supplies. The clause shall

not be used if it would be contrary to customary commercial practices

for the item being acquired.

(b) The contracting officer shall insert the provision at 52.211-6,

Listing of Other Than New Material, Residual Inventory, and Former

Government Surplus Property, in solicitations containing the clause at 52.211-5.

(c) The contracting officer shall insert the clause at 52.211-7,

Other Than New Material, Residual Inventory, and Former Government

Surplus Property, in contracts containing the clause at 52.211-5.

Subpart 11.4--[Redesignated from 12.1]

21. and 22. Subpart 11.4 is redesignated from Subpart 12.1 and

sections 12.101 through 12.104 are redesignated as sections 11.401

through 11.404, respectively.

23. Newly redesignated section 11.401 is amended in paragraph (a)

by revising the last sentence; and in the parenthetical of paragraph

(c) by removing ``Subpart 12.2'' and inserting ``Subpart 11.5''. The

revised text reads as follows:

11.401 General.

(a) * * * Schedules that are unnecessarily short or difficult to

attain

(1) Tend to restrict competition,

(2) Are inconsistent with small business policies, and

(3) May result in higher contract prices.

* * * * *

24. Newly redesignated section 11.402 is amended by revising

paragraphs (a) (2) and (5) to read as follows:

11.402 Factors to consider in establishing schedules.

(a) * * *

(2) Industry practices;

* * * * *

(5) Production time;

* * * * *

11.404 [Amended]

25. Newly redesignated section 11.404 is amended in paragraph

(a)(2) by removing ``52.212-1'' and inserting ``52.211-8''; in

paragraph (a)(3) by removing ``52.212-2'' and inserting ``52.211-9'';

and in paragraph (b) by removing ``52.212-3'' and inserting ``52.211-

10''.

Subpart 11.5--[Redesignated From Subpart 12.2]

26. Subpart 11.5 is redesignated from Subpart 12.2 and sections

11.501 through 11.504 are redesignated from sections 12.201 through

12.204, respectively.

11.504 [Amended]

27. Newly designated 11.504 is amended in paragraph (a) by removing

``52.212-4'' and inserting ``52.211-11''; in paragraph (b) by removing

``52.212-5'' and inserting ``52.211-12''; and in paragraph (c) by

removing ``52.212-6'' and ``52.212-5'' and inserting ``52.211-13'' and

``52.211-12'', respectively.

Subpart 11.6 [Redesignated From 12.3]

28. Subpart 11.6 is redesignated from Subpart 12.3 and sections

11.600 through 11.604 are redesignated from sections 12.300 through

12.304, respectively.

11.604 [Amended]

29. Newly redesignated section 11.604 is amended in paragraph (a)

by removing ``52.212-7'' and inserting ``52.211-14''; and in paragraph

(b) by removing ``52.212-8'' and inserting ``52.211-15''.

Subpart 11.7--[Redesignated From 12.4]

30. Subpart 11.7 is redesignated from Subpart 12.4 and sections

11.701 through 11.703 are redesignated from 12.401 through 12.403,

respectively.

11.703 [Amended]

31. Newly redesignated section 11.703 is amended in paragraph (a)

by removing ``52.212-9'' and inserting ``52.211-16''; in paragraph (b)

by removing ``52.212-10'' and inserting ``52.211-17''; and in paragraph

(c) by removing ``52.212-11'' and inserting ``52.211-18''.

32. Subpart 12.5 is redesignated as Subpart 42.13 and sections

12.501 through 12.505 are redesignated as sections 42.1301 through

42.1305, respectively.

33. Part 12 is revised to read as follows:

PART 12--ACQUISITION OF COMMERCIAL ITEMS

Sec.

12.000 Scope of part.

12.001 Definition.

Subpart 12.1--Acquisition of Commercial Items--General

12.101 Policy.

12.102 Applicability.

Subpart 12.2--Special Requirements for the Acquisition of Commercial

Items

12.201 General.

12.202 Market research and description of agency need.

12.203 Procedures for solicitation, evaluation, and award.

12.204 Solicitation/contract form.

12.205 Offers.

12.206 Use of past performance.

12.207 Contract type.

12.208 Contract quality assurance.

12.209 Pricing of commercial items when contracting by negotiation.

12.210 Contract financing.

12.211 Technical data.

12.212 Computer software.

12.213 Other customary commercial practices.

Subpart 12.3--Solicitation Provisions and Contract Clauses for the

Acquisition of Commercial Items

12.300 Scope of subpart.

12.301 Solicitation provisions and contract clauses for the

acquisition of commercial items.

12.302 Tailoring of provisions and clauses for the acquisition of

commercial items.

12.303 Contract format.

Subpart 12.4--Unique Requirements Regarding Terms and Conditions for

Commercial Items

12.401 General.

12.402 Acceptance.

12.403 Termination.

12.404 Warranties.

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

Commercial Items

12.500 Scope of subpart.

12.501 Applicability.

12.502 Procedures.

12.503 Applicability of certain laws to Executive agency contracts

for the acquisition of commercial items.

12.504 Applicability of certain laws to subcontracts for the

acquisition of commercial items.

Subpart 12.6--Streamlined Procedures for Evaluation and Solicitation

for Commercial Items

12.601 General.

12.602 Streamlined evaluation of offers.

12.603 Streamlined solicitation for commercial items.

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

U.S.C. 2473(c).

12.000 Scope of part.

This part prescribes policies and procedures unique to the

acquisition of commercial items. It implements the Federal Government's

preference for the acquisition of commercial items contained in Title

VIII of the Federal Acquisition Streamlining Act of 1994 (Public Law

103-355) by establishing acquisition policies more closely resembling

those of the commercial marketplace and encouraging the acquisition of

commercial items and components.

12.001 Definition.

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

a transfer of commercial items between divisions, subsidiaries, or

affiliates of a contractor or subcontractor.

Subpart 12.1--Acquisition of Commercial Items-- General

12.101 Policy.

Agencies shall--

(a) Conduct market research to determine whether commercial items

or nondevelopmental items are available that could meet the agency's

requirements;

(b) Acquire commercial items or nondevelopmental items when they

are available to meet the needs of the agency; and

(c) Require prime contractors and subcontractors at all tiers to

incorporate, to the maximum extent practicable, commercial items or

nondevelopmental items as components of items supplied to the agency.

12.102 Applicability.

(a) This part shall be used for the acquisition of supplies or

services that meet the definition of commercial items at section 2.101.

(b) Contracting officers shall use the policies in this part in

conjunction with the policies and procedures for solicitation,

evaluation and award prescribed in part 13, Simplified Acquisition

Procedures; part 14, Sealed Bidding; or part 15, Contracting by

Negotiation, as appropriate for the particular acquisition.

(c) Contracts for the acquisition of commercial items are subject

to the policies in other parts of this chapter. When a policy in

another part of this chapter is inconsistent with a policy in this

part, this part 12 shall take precedence for the acquisition of

commercial items.

(d) This part shall not apply to the acquisition of commercial

items--

(1) At or below the micro-purchase threshold (see subpart 13.6);

(2) Using the SF 44 (see section 13.505-3);

(3) Using the imprest fund (see subpart 13.4); or

(4) Using the Governmentwide commercial purchase card (see subpart 13.6).

Subpart 12.2--Special Requirements for the Acquisition of

Commercial Items.

12.201 General.

Public Law 103-355 establishes special requirements for the

acquisition of commercial items intended to more closely resemble those

customarily used in the commercial marketplace. This subpart identifies

those special requirements as well as other considerations necessary

for proper planning, solicitation, evaluation and award of contracts

for commercial items.

12.202 Market research and description of agency need.

(a) Market research (see 10.001) is an essential element of

building an effective strategy for the acquisition of commercial items

and establishes the foundation for the agency description of need (see

part 11), the solicitation, and resulting contract.

(b) The description of agency need must contain sufficient detail

for potential offerors of commercial items to know which commercial

products or services to offer. Generally, for acquisitions in excess of

the simplified acquisition threshold, an agency's statement of need for

a commercial item will describe the product or service to be acquired

and explain how the agency intends to use the product or service in

terms of function to be performed, performance requirement or essential

physical characteristics. Describing the agency's need in these terms

allows offerors to propose methods that will best meet the needs of the

Government.

(c) Follow the procedures in subpart 11.2 regarding the

identification and availability of specifications, standards and

commercial item descriptions.

12.203 Procedures for solicitation, evaluation, and award.

Contracting officers shall use the policies unique to the

acquisition of commercial items prescribed in this part in conjunction

with the policies and procedures for solicitation, evaluation and award

prescribed in part 13, Simplified Acquisition Procedures; part 14,

Sealed Bidding; or part 15, Contracting by Negotiation, as appropriate

for the particular acquisition. The contracting officer may use the

streamlined procedure for soliciting offers for commercial items

prescribed in 12.603.

12.204 Solicitation/contract form.

The Standard Form 1449, Solicitation/Contract/Order for Commercial

Items, shall be used by the contracting officer when issuing written

solicitations and awarding contracts and placing orders for commercial

items. This form contains the information necessary for solicitations

and contracts. The form may also be used for documenting receipt,

inspection and acceptance of commercial items. Other forms shall not be

used for solicitation or award of contracts or orders for the

acquisition of commercial items.

12.205 Offers.

(a) Where technical information is necessary for evaluation of

offers, agencies should, as part of market research, review existing

product literature generally available in the industry to determine its

adequacy for purposes of evaluation. If adequate, contracting officers

shall request existing product literature from offerors of commercial

items in lieu of unique technical proposals.

(b) Contracting officers should allow offerors to propose more than

one product that will meet a Government need in response to

solicitations for commercial items. The contracting officer shall

evaluate each product as a separate offer.

(c) Contracting officers may, considering the circumstances

described in 5.203(b), allow fewer than 30 days response time for

receipt of offers for commercial items.

12.206 Use of past performance.

Past performance should be an important element of every evaluation

and contract award for commercial items. Contracting officers should

consider past performance data from a wide variety of sources both

inside and outside the Federal Government in accordance with the

policies and procedures contained in subpart 9.1, section 13.106-1, or

subpart 15.6, as applicable.

12.207 Contract type.

Agencies shall use firm-fixed-price contracts or fixed-price

contracts with economic price adjustment for the acquisition of

commercial items. Indefinite-delivery contracts (see subpart 16.5) may

be used where the prices are established based on a firm-fixed-price or

fixed-price with economic price adjustment. Use of any other contract

type to acquire commercial items is prohibited.

12.208 Contract quality assurance.

Contracts for commercial items shall rely on contractors' existing

quality assurance systems as a substitute for Government inspection and

testing before tender for acceptance unless customary market practices

for the commercial item being acquired include in-process inspection.

Any in-process inspection by the Government shall be conducted in a

manner consistent with commercial practice.

12.209 Pricing of commercial items when contracting by negotiation.

(a) When contracting by negotiation for commercial items, the

policies and procedures in part 15 shall be used to establish the

reasonableness of prices.

(b) The provisions and clauses prescribed in this part for the

acquisition of commercial items do not include the provisions and

clauses prescribed in part 15 because they assume prices for commercial

items will either

(1) Not be subject to the Truth in Negotiations Act because the contract price is below the dollar threshold for application of the Act; or

(2) Be based upon one of the exceptions to cost or pricing data

requirements contained in 15.804-1(a)(1).

(c) If the contracting officer determines it is appropriate to use

the commercial item exception to cost or pricing data requirements (see

15.804-1(a)(2)), the provisions and clauses prescribed in 15.804-8 and

15.106 for this purpose shall be inserted in an addendum to the

solicitation and contract.

(d) If the contracting officer is required to obtain cost or

pricing data (see 15.804-1(b)(4) and 15.804-2), the provisions and

clauses prescribed in 15.804-8 and 15.106 for this purpose shall be

inserted in an addendum to the solicitation and contract.

(e) When a contract is priced using the exceptions at 15.804-

1(a)(1), no cost or pricing data may be obtained for modifications

unless the proposed modification would change the contract from a

contract for a commercial item to a contract for other than a

commercial item (see 15.804-1(b)(6)). If the exceptions at 15.804-

1(a)(1) are not used, the contracting officer may be required to obtain

cost or pricing data to determine the reasonableness of prices for

subsequent modifications (see 15.804-2(a)(1)) and the contracting

officer shall insert the provisions and clauses prescribed for this

purpose in an addendum to the solicitation and contract.

12.210 Contract financing.

Customary market practice for some commercial items may include

buyer contract financing. The contracting officer may offer Government

financing in accordance with the policies and procedures in part 32.

12.211 Technical data.

Except as provided by agency-specific statutes, the Government

shall acquire only the technical data and the rights in that data

customarily provided to the public with a commercial item or process.

The contracting officer shall presume that data delivered under a

contract for commercial items was developed exclusively at private

expense. When a contract for commercial items requires the delivery of

technical data, the contracting officer shall include appropriate

provisions and clauses delineating the rights in the technical data in

addenda to the solicitation and contract (see part 27 or agency FAR

supplements).

12.212 Computer software.

(a) Commercial computer software or commercial computer software

documentation shall be acquired under licenses customarily provided to

the public to the extent such licenses are consistent with Federal law

and otherwise satisfy the Government's needs. Generally, offerors and

contractors shall not be required to--

(1) Furnish technical information related to commercial computer software or commercial computer software documentation that is not customarily provided to the public; or

(2) Relinquish to, or otherwise provide, the Government rights to use, modify, reproduce, release, perform, display, or disclose

commercial computer software or commercial computer software

documentation except as mutually agreed to by the parties.

(b) With regard to commercial computer software and commercial

computer software documentation, the Government shall have only those

rights specified in the license contained in any addendum to the

contract.

12.213 Other customary commercial practices.

It is customary practice in the commercial marketplace for both the

buyer and seller to propose terms and conditions for a given

transaction, each written from their particular perspectives. The terms

and conditions prescribed in this part 12 seek to balance the interests

of both the buyer and seller. These terms and conditions are generally

appropriate for use in a wide range of acquisitions. However, market

research may indicate other customary commercial practices that are

appropriate for the acquisition of the particular item. These practices

should be considered for incorporation into the solicitation and

contract if the contracting officer determines them appropriate in

concluding a business arrangement satisfactory to both parties and not

otherwise precluded by law or executive order.

Subpart 12.3--Solicitation Provisions and Contract Clauses for the

Acquisition of Commercial Items

12.300 Scope of subpart.

This subpart establishes provisions and clauses to be used when

acquiring commercial items.

12.301 Solicitation provisions and contract clauses for the

acquisition of commercial items.

(a) In accordance with Section 8002 of Public Law 103-355 (41 U.S.C

264, note), contracts for the acquisition of commercial items shall, to

the maximum extent practicable, include only those clauses--

(1) Required to implement provisions of law or executive orders

applicable to the acquisition of commercial items; or

(2) Determined to be consistent with customary commercial practice.

(b) To implement this Act, the contracting officer shall insert the

following provisions in solicitations for the acquisition of commercial

items, and clauses in solicitations and contracts for the acquisition

of commercial items:

(1) The provision at 52.212-1, Instructions to Offerors--Commercial Items. This provision provides a single, streamlined set of

instructions to be used when soliciting offers for commercial items and

is incorporated in the solicitation by reference (see Block 26, SF

1449). The contracting officer may tailor these instructions or provide

additional instructions tailored to the specific acquisition in

accordance with 12.302;

(2) The provision at 52.212-3, Offeror Representations and

Certifications--Commercial Items. This provision provides a single,

consolidated list of certifications and representations for the

acquisition of commercial items and is attached to the solicitation for

offerors to complete and return with their offer. This provision may

not be tailored except in accordance with Subpart 1.4;

(3) The clause at 52.212-4, Contract Terms and Conditions--

Commercial Items. This clause includes terms and conditions which are,

to the maximum extent practicable, consistent with customary commercial

practices and is incorporated in the solicitation and contract by

reference (see Block 26, SF 1449). The contracting officer may tailor

this clause in accordance with 12.302; and

(4) The clause at 52.212-5, Contract Terms and Conditions Required to Implement Statutes or Executive Orders--Commercial Items. This clause incorporates by reference only those clauses required to

implement provisions of law or executive orders applicable to the

acquisition of commercial items. The contracting officer shall attach

this clause to the solicitation and contract and, using the appropriate

clause prescriptions, indicate which, if any, of the additional clauses

cited in 52.2125(b) or (c) are applicable to the specific acquisition.

When cost information is obtained pursuant to part 15 to establish the

reasonableness of prices for commercial items, the contracting officer

shall insert the clauses prescribed for this purpose in an addendum to

the solicitation and contract. This clause may not be tailored.

(c) When the use of evaluation factors is appropriate, the

contracting officer may--

(1) Insert the provision at 52.212-2, Evaluation-- Commercial

Items, in solicitations for commercial items (see 12.602); or

(2) Include a similar provision containing all evaluation factors

required by section 13.106-1, Subpart 14.2 or subpart 15.6, as an

addendum (see 12.302(d)).

(d) Use of required provisions and clauses. Notwithstanding

prescriptions contained elsewhere in the FAR, when acquiring commercial

items, contracting officers shall be required to use only those

provisions and clauses prescribed in this part. The provisions and

clauses prescribed in this part shall be revised, as necessary, to

reflect the applicability of statutes and executive orders to the

acquisition of commercial items.

(e) Discretionary use of FAR provisions and clauses. The

contracting officer may include in solicitations and contracts by

addendum other FAR provisions and clauses when their use is consistent

with the limitations contained in 12.302. For example:

(1) The contracting officer may include appropriate clauses when an indefinite-delivery type of contract will be used. The clauses

prescribed at 16.505 may be used for this purpose.

(2) The contracting officer may include appropriate provisions and clauses when the use of options is in the Government's interest. The

provisions and clauses prescribed in 17.208 may be used for this

purpose. If the provision at 52.212-2 is used, paragraph (b) provides

for the evaluation of options.

(3) The contracting officer may use the provisions and clauses

contained in part 23 regarding the use of recovered material when

appropriate for the item being acquired.

(f) Agencies may supplement the provisions and clauses prescribed

in this part (to require use of additional provisions and clauses) only

as necessary to reflect agency unique statutes applicable to the

acquisition of commercial items or as may be approved by the agency

senior procurement executive, or the individual responsible for

representing the agency on the FAR Council, without power of

delegation.

12.302 Tailoring of provisions and clauses for the acquisition of

commercial items.

(a) General. The provisions and clauses established in this subpart

are intended to address, to the maximum extent practicable, customary

commercial market practices for a wide range of potential Government

acquisitions of commercial items. However, because of the broad range

of commercial items acquired by the Government, variations in customary

commercial practices across markets and the relative volume of the

Government's acquisitions in the specific market, contracting officers

may, within the limitations of this subpart, and after conducting

appropriate market research, tailor the provision at 52.212-1,

Instructions to Offerors--Commercial Items, and the clause at 52.212-4,

Contract Terms and Conditions--Commercial Items, to adapt to the market conditions for each acquisition.

(b) Tailoring 52.212-4, Contract Terms and Conditions--Commercial

Items. The following paragraphs of the clause at 52.212-4, Contract

Terms and Conditions--Commercial Items, implement statutory

requirements and shall not be tailored--

(1) Assignments;

(2) Disputes;

(3) Payment;

(4) Invoice;

(5) Other compliances; and

(6) Compliance with laws unique to Government contracts.

(c) Tailoring inconsistent with customary commercial practice. The

contracting officer shall not tailor any clause or otherwise include

any additional terms or conditions in a solicitation or contract for

commercial items in a manner that is inconsistent with customary

commercial practice for the item being acquired unless a waiver is

approved in accordance with agency procedures. The request for waiver

must describe the customary commercial practice found in the

marketplace, support the need to include a term or condition that is

inconsistent with that practice and include a determination that use of

the customary commercial practice is inconsistent with the needs of the

Government. A waiver may be requested for an individual or class of

contracts for that specific item.

(d) Tailoring shall be by addenda to the solicitation and contract.

The contracting officer shall indicate in Block 26 of the SF 1449 if

addenda are attached. These addenda may include, for example, a

continuation of the schedule of supplies/services to be acquired from

blocks 18 through 21 of the SF 1449; a continuation of the description

of the supplies/services being acquired; further elaboration of any

other item(s) on the SF 1449; any other terms or conditions necessary

for the performance of the proposed contract (such as options, ordering

procedures for indefinite-delivery type contracts, warranties, contract

financing arrangements, etc.).

12.303 Contract format.

Solicitations and contracts for the acquisition of commercial items

prepared using this part 12 shall be assembled, to the maximum extent

practicable, using the following format:

(a) Standard Form (SF) 1449;

(b) Continuation of any block from SF 1449, such as--

(1) Block 10 if set-aside for emerging small businesses;

(2) Block 16B for remittance address;

(3) Block 18 for contract line item numbers;

(4) Block 19 for schedule of supplies/services; or

(5) Block 24 for accounting data;

(c) Contract clauses--

(1) 52.212-4, Contract Terms and Conditions--Commercial Items, by reference (see SF 1449, Block 26);

(2) Any addendum to 52.212-4; and

(3) 52.212-5, Contract Terms and Conditions Required to Implement Statutes and Executive Orders;

(d) Any contract documents, exhibits or attachments; and

(e) Solicitation provisions--

(1) 52.212-1, Instructions to Offerors--Commercial Items, by

reference (see SF 1449, Block 26);

(2) Any addendum to 52.212-1;

(3) 52.212-2, Evaluation--Commercial Items, or other description of evaluation factors for award, if used; and

(4) 52.212-3, Offeror Representations and Certifications--

Commercial Items.

Subpart 12.4--Unique Requirements Regarding Terms and Conditions

for Commercial Items

12.401 General.

This subpart provides--

(a) Guidance regarding tailoring of the paragraphs in the clause at

52.212-4, Contract Terms and Conditions--Commercial Items, when the

paragraphs do not reflect the customary practice for a particular

market; and

(b) Guidance on the administration of contracts for commercial

items in those areas where the terms and conditions in 52.212-4 differ

substantially from those contained elsewhere in the FAR.

12.402 Acceptance.

(a) The acceptance paragraph in 52.212-4 is based upon the

assumption that the Government will rely on the contractor's assurances

that the commercial item tendered for acceptance conforms to the

contract requirements. The Government inspection of commercial items

will not prejudice its other rights under the acceptance paragraph.

Additionally, although the paragraph does not address the issue of

rejection, the Government always has the right to refuse acceptance of

nonconforming items. This paragraph is generally appropriate when the

Government is acquiring noncomplex commercial items.

(b) Other acceptance procedures may be more appropriate for the

acquisition of complex commercial items or commercial items used in

critical applications. In such cases, the contracting officer shall

include alternative inspection procedure(s) in an addendum and ensure

these procedures and the postaward remedies adequately protect the

interests of the Government. The contracting officer must carefully

examine the terms and conditions of any express warranty with regard to the effect it may have on the Government's available postaward remedies (see 12.404).

(c) The acquisition of commercial items under other circumstances

such as on an ``as is'' basis may also require acceptance procedures

different from those contained in 52.212-4. The contracting officer

should consider the effect the specific circumstances will have on the

acceptance paragraph as well as other paragraphs of the clause.

12.403 Termination.

(a) General. The clause at 52.212-4 permits the Government to

terminate a contract for commercial items either for the convenience of

the Government or for cause. However, the paragraphs in 52.212-4

entitled ``Termination for the Government's Convenience'' and

``Termination for Cause'' contain concepts which differ from those

contained in the termination clauses prescribed in part 49.

Consequently, the requirements of part 49 do not apply when terminating

contracts for commercial items and contracting officers shall follow

the procedures in this section. Contracting officers may continue to

use part 49 as guidance to the extent that part 49 does not conflict

with this section and the language of the termination paragraphs in

12.212-4.

(b) Policy. The contracting officer should exercise the

Government's right to terminate a contract for commercial items either

for convenience or for cause only when such a termination would be in

the best interests of the Government. The contracting officer should

consult with counsel prior to terminating for cause.

(c) Termination for cause.

(1) The paragraph in 52.2124 entitled

``Excusable Delay'' requires contractors notify the contracting officer

as soon as possible after commencement of any excusable delay. In most

situations, this requirement should eliminate the need for a show cause

notice prior to terminating a contract. The contracting officer shall

send a cure notice prior to terminating a contract for a reason other

than late delivery.

(2) The Government's rights after a termination for cause shall

include all the remedies available to any buyer in the marketplace. The

Government's preferred remedy will be to acquire similar items from

another contractor and to charge the defaulted contractor with any

excess reprocurement costs together with any incidental or

consequential damages incurred because of the termination.

(3) When a termination for cause is appropriate, the contracting officer shall send the contractor a written notification regarding the termination. At a minimum, this notification shall--

(i) Indicate the contract is terminated for cause;

(ii) Specify the reasons for the termination;

(iii) Indicate which remedies the Government intends to seek or provide a date by which the Government will inform the contractor of the remedy; and

(iv) State that the notice constitutes a final decision of the contracting officer and that the contractor has the right to appeal

under the Disputes clause (see 33.211).

(d) Termination for the Government's convenience.

(1) When the contracting officer terminates a contract for commercial items for the Government's convenience, the contractor shall be paid--

(i) The percentage of the contract price reflecting the percentage of the work performed prior to the notice of the termination, and

(ii) Any charges the contractor can demonstrate directly resulted from the termination. The contractor may demonstrate such charges using its standard record keeping system and is not required to comply with the cost accounting standards or the contract cost principles in part 31. The Government does not have any right to audit the contractor's records solely because of the termination for convenience.

(2) Generally, the parties should mutually agree upon the

requirements of the termination proposal. The parties must balance the

Government's need to obtain sufficient documentation to support payment

to the contractor against the goal of having a simple and expeditious

settlement.

12.404 Warranties.

(a) Implied warranties. The Government's post award rights

contained in 52.212-4 are the implied warranty of merchantability, the

implied warranty of fitness for particular purpose and the remedies

contained in the acceptance paragraph.

(1) The implied warranty of merchantability provides that an item is reasonably fit for the ordinary purposes for which such items are

used. The items must be of at least average, fair or medium-grade

quality and must be comparable in quality to those that will pass

without objection in the trade or market for items of the same

description.

(2) The implied warranty of fitness for a particular purpose

provides that an item is fit for use for the particular purpose for

an implied warranty of fitness for particular purpose when--

(i) The seller knows the particular purpose for which the

Government intends to use the item; and

(ii) The Government relied upon the contractor's skill and judgment that the item would be appropriate for that particular purpose.

(3) Contracting officers should consult with legal counsel prior to asserting any claim for a breach of an implied warranty.

(b) Express warranties. The Federal Acquisition Streamlining Act of

1994 (41 U.S.C. 264 note) requires contracting officers to take

advantage of commercial warranties. To the maximum extent practicable,

solicitations for commercial items shall require offerors to offer the

Government at least the same warranty terms, including offers of

extended warranties, offered to the general public in customary

commercial practice. Solicitations may specify minimum warranty terms,

such as minimum duration, appropriate for the Government's intended use

of the item.

(1) Any express warranty the Government intends to rely upon must meet the needs of the Government. The contracting officer should

analyze any commercial warranty to determine if--

(i) The warranty is adequate to protect the needs of the

Government, e.g., items covered by the warranty and length of warranty;

(ii) The terms allow the Government effective postaward

administration of the warranty to include the identification of

warranted items, procedures for the return of warranted items to the

contractor for repair or replacement, and collection of product

performance information; and

(iii) The warranty is cost-effective.

(2) In some markets, it may be customary commercial practice for contractors to exclude or limit the implied warranties contained in

52.212-4 in the provisions of an express warranty. In such cases, the

contracting officer shall ensure that the express warranty provides for

the repair or replacement of defective items discovered within a

reasonable period of time after acceptance.

(3) Express warranties shall be included in the contract by

addendum (see 12.302).

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

Commercial Items

12.500 Scope of subpart.

As required by Section 34 of the Office of Federal Procurement

Policy Act (41 U.S.C. 430), this subpart lists provisions of laws that

are not applicable to contracts for the acquisition of commercial

items, or are not applicable to subcontracts, at any tier, for the

acquisition of a commercial item. This subpart also lists provisions of

law that have been amended to eliminate or modify their applicability

to either contracts or subcontracts for the acquisition of commercial

items.

12.501 Applicability.

(a) This subpart applies to any contract or subcontract at any tier

for the acquisition of commercial items.

(b) Nothing in this subpart shall be construed to authorize the

waiver of any provision of law with respect to any subcontract if the

prime contractor is reselling or distributing commercial items of

another contractor without adding value. This limitation is intended to

preclude establishment of unusual contractual arrangements solely for

the purpose of Government sales.

(c) For purposes of this subpart, contractors awarded subcontracts

under subpart 19.8, Contracting with the Small Business Administration

(the 8(a) Program), shall be considered prime contractors.

12.502 Procedures.

(a) The FAR prescription for the provision or clause for each of

the laws listed in 12.503 has been revised in the appropriate part to

reflect its proper application to prime contracts for the acquisition

of commercial items.

(b) For subcontracts for the acquisition of commercial items or

commercial components, the clauses at 52.212-5, Contract Terms and

Conditions Required to Implement Statutes or Executive Orders--

Commercial Items, and 52.244-6, Subcontracts for Commercial Items and

Commercial Components, reflect the applicability of the laws listed in

12.504 by identifying the only provisions and clauses that are required

to be included in a subcontract at any tier for the acquisition of

commercial items or commercial components.

12.503 Applicability of certain laws to executive agency contracts for

the acquisition of commercial items.

(a) The following laws are not applicable to executive agency

contracts for the acquisition of commercial items:

(1) 41 U.S.C. 43, Walsh-Healey Act (see subpart 22.6).

(2) 41 U.S.C. 254(a) and 10 U.S.C. 2306(b), Contingent Fees (see

3.404).

(3) 41 U.S.C. 416(a)(6), Minimum Response Time for Offers under Office of Federal Procurement Policy Act (see 5.203).

(4) 41 U.S.C. 701, et seq., Drug-Free Workplace Act of 1988 (see 23.501).

(b) Certain requirements of the following laws have been eliminated

for executive agency contracts for the acquisition of commercial items:

(1) 33 U.S.C. 1368, Requirement for a certificate and clause under the Federal Water Pollution Control Act (see 23.105).

(2) 40 U.S.C. 327 et seq., Requirement for a certificate and clause under the Contract Work Hours and Safety Standards Act (see 22.305).

(3) 41 U.S.C. 57(a) and (b), and 58, Requirement for a clause and certain other requirements related to the Anti-Kickback Act of 1986

(see 3.502).

(4) 41 U.S.C. 423(e)(1)(B), Requirement for a certain certification under the Procurement Integrity Act (see 3.104-9).

(5) 42 U.S.C. 7606, Requirements for a certificate and clause under the Clean Air Act (see 23.105).

(6) 49 U.S.C. 40118, Requirement for a certificate and clause under the Fly American provisions (see 47.405).

(c) The applicability of the following laws have been modified in

regards to Executive agency contracts for the acquisition of commercial

items:

(1) 41 U.S.C. 253g and 10 U.S.C. 2402, Prohibition on Limiting

Subcontractor Direct Sales to the United States (see 3.503).

(2) 41 U.S.C. 254(d) and 10 U.S.C. 2306a, Truth in Negotiations Act (see 15.804).

(3) 41 U.S.C. 422, Cost Accounting Standards (see 48 CFR chapter 99).

12.504 Applicability of certain laws to subcontracts for the

acquisition of commercial items.

(a) The following laws are not applicable to subcontracts at any

tier for the acquisition of commercial items or commercial components

at any tier:

(1) 15 U.S.C. 644(d), Requirements relative to labor surplus areas under the Small Business Act (see subpart 19.2).

(2) 19 U.S.C. 1202, Tariff Act of 1930 (see subpart 25.6).

(3) 19 U.S.C. 1309, Supplies for Certain Vessels and Aircraft (see subpart 25.6).

(4) 19 U.S.C. 2701, et seq., Authority to Grant Duty Free Treatment (see subpart 25.6).

(5) 31 U.S.C. 1352, Limitation on Payments to Influence Certain

Federal Transactions (see subpart 3.8).

(6) 41 U.S.C. 43, Walsh-Healey Act (see subpart 22.6).

(7) 41 U.S.C. 253d, Validation of Proprietary Data Restrictions

(see subpart 27.4).

(8) 41 U.S.C. 254(a) and 10 U.S.C. 2306(b), Contingent Fees (see

subpart 3.4).

(9) 41 U.S.C. 254d(c) and 10 U.S.C. 2313(c), Examination of Records of Contractor, when a subcontractor is not required to provide cost or pricing data (see subpart 15.1).

(10) 41 U.S.C. 351, Service Contract Act of 1965, as amended (see subpart 22.10).

(11) 41 U.S.C. 416(a)(6), Minimum Response Time for Offers under Office of Federal Procurement Policy Act (see subpart 5.2).

(12) 41 U.S.C. 418a, Rights in Technical Data (see subpart 27.4).

(13) 41 U.S.C. 701, et seq., Drug-Free Workplace Act of 1988 (see subpart 23.5).

(14) 46 U.S.C. 1241(b), Transportation in American Vessels of

Government Personnel and Certain Cargo (see subpart 47.5)

(inapplicability effective May 1, 1996).

(15) 49 U.S.C. 40118, Fly American provisions (see subpart 47.4).

(16) Public Law 90-469, William Langer Jewel Bearing Plant Special Act (see subpart 8.2).

(b) Certain requirements of the following laws have been eliminated

for subcontracts at any tier for the acquisition of commercial items or

commercial components:

(1) 33 U.S.C. 1368, Requirement for a certificate and clause under the Federal Water Pollution Control Act (see subpart 23.1).

(2) 40 U.S.C. 327, et seq., Requirement for a certificate and

clause under the Contract Work Hours and Safety Standards Act (see

subpart 22.3).

(3) 41 U.S.C. 423(e)(1)(B), Requirement for certain certifications

under the Procurement Integrity Act (see subpart 3.1).

(4) 42 U.S.C. 7606, Requirements for a certificate and clause under the Clean Air Act (see subpart 23.1).

(c) The applicability of the following laws have been modified in

regards to subcontracts at any tier for the acquisition of commercial

items or commercial components:

(1) 41 U.S.C. 253g and 10 U.S.C. 2402, Prohibition on Limiting

Subcontractor Direct Sales to the United States (see subpart 3.5).

(2) 41 U.S.C. 254(d) and 10 U.S.C. 2306a, Truth in Negotiations Act (see subpart 15.8).

(3) 41 U.S.C. 422, Cost Accounting Standards (see 48 CFR chapter 99).

Subpart 12.6--Streamlined Procedures for Evaluation and

Solicitation for Commercial Items

12.601 General.

This subpart provides optional procedures for--

(a) Streamlined evaluation of offers for commercial items; and

(b) Streamlined solicitation of offers for commercial items for use

where appropriate.

These procedures are intended to simplify the process of preparing

and issuing solicitations, and evaluating offers for commercial items

consistent with customary commercial practices.

12.602 Streamlined evaluation of offers.

(a) When evaluation factors are used, the contracting officer may

insert a provision substantially the same as the provision at 52.212-2,

Evaluation--Commercial Items, in solicitations for commercial items or

comply with the procedures in 13.106-1 if the acquisition is being made

using the procedures in part 13. When the provision at 52.212-2 is

used, paragraph (a) of the provision shall be tailored to the specific

acquisition to describe the evaluation factors and relative importance

of those factors. This provision contemplates an approach designed to

select the source whose offer will provide the Government with the

greatest value in terms of performance and other factors. Other methods

of evaluation and basis for award may be more appropriate for a given

acquisition.

(b) Offers shall be evaluated in accordance with the criteria

contained in the solicitation. For many commercial items, the criteria

need not be more detailed than technical (capability of the item

offered to meet the agency need), price and past performance. Technical

capability may be evaluated by how well the proposed products meet the

Government requirement instead of predetermined subfactors.

Solicitations for commercial items do not have to contain subfactors

for technical capability when the solicitation adequately describes the

item's intended use. A technical evaluation would normally include

examination of such things as product literature, product samples (if

requested), technical features and warranty provisions. Past

performance shall be evaluated in accordance with the procedures in

section 13.106-1 or subpart 15.6, as applicable. The contracting

officer shall ensure the instructions provided in the provision at

52.212-1, Instructions to Offerors--Commercial Items, and the

evaluation criteria provided in the provision at 52.212-2, Evaluation--

Commercial Items, are in agreement.

(c) Select the offer that is most advantageous to the Government

based on the factors contained in the solicitation. Fully document the

rationale for selection of the successful offeror including discussion

of any tradeoffs considered.

12.603 Streamlined solicitation for commercial items.

(a) When a written solicitation will be issued, the contracting

officer may use the following procedure to reduce the time required to

solicit and award contracts for the acquisition of commercial items.

This procedure combines the Commerce Business Daily (CBD) synopsis

required by 5.203 and the issuance of the solicitation into a single

document with the following limitations:

(1) Section 5.207 limits submissions to the CBD to 12,000 textual characters (approximately 3 \1/2\ single-spaced pages).

(2) This combined CBD synopsis/solicitation is only appropriate

where the solicitation is relatively simple and is not recommended for

use when lengthy addenda to the solicitation are necessary.

(b) When using the combined synopsis/solicitation procedure, the SF

1449 is not used for issuing the solicitation.

(c) To use these procedures, the contracting officer shall--

(1) Prepare the synopsis as described at 5.207 for items 1-16.

(2) In item 17, Description, include the following additional

information:

(i) The following statement:

This is a combined synopsis/solicitation for commercial items

prepared in accordance with the format in FAR Subpart 12.6, as

supplemented with additional information included in this notice.

This announcement constitutes the only solicitation; proposals are

being requested and a written solicitation will not be issued.

(ii) The solicitation number and a statement that the solicitation is issued as an invitation to bid (IFB), request for quotation (RFQ) or request for proposal (RFP).

(iii) A statement that the solicitation document and incorporated provisions and clauses are those in effect through Federal Acquisition Circular ______.

(iv) A notice regarding any set-aside and the associated standard industrial classification code and small business size standard. Also include a statement regarding the Small Business Competitiveness

Demonstration Program, if applicable.

(v) A list of contract line item number(s) and items, quantities and units of measure, (including option(s), if applicable).

(vi) Description of requirements for the items to be acquired.

(vii) Date(s) and place(s) of delivery and acceptance and FOB point.

(viii) A statement that the provision at 52.212-1, Instructions to Offerors--Commercial, applies to this acquisition and a statement regarding any addenda to the provision.

(ix) A statement regarding the applicability of the provision at 52.212-2, Evaluation--Commercial Items, if used, and the specific evaluation criteria to be included in paragraph (a) of that provision. If this provision is not used, describe the evaluation procedures to be used.

(x) A statement advising offerors to include a completed copy of the provision at 52.212-3, Offeror Representations and Certifications--Commercial Items, with its offer.

(xi) A statement that the clause at 52.212-4, Contract Terms and Conditions--Commercial Items, applies to this acquisition and a statement regarding any addenda to the clause.

(xii) A statement that the clause at 52.212-5, Contract Terms and Conditions Required To Implement Statutes Or Executive Orders--Commercial Items, applies to this acquisition and a statement regarding which, if any, of the additional FAR clauses cited in the clause are applicable to the acquisition.

(xiii) A statement regarding any additional contract requirement(s)

or terms and conditions (such as contract financing arrangements,

warranty requirements or GSA Delegation of Procurement Authority (DPA)

case number (see 48 CFR 201-39.106-4)) determined by the contracting

officer to be necessary for this acquisition and consistent with

customary commercial practices.

(xiv) A statement regarding the Defense Priorities and Allocations System (DPAS) and assigned rating, if applicable.

(xv) A statement regarding any applicable Commerce Business Daily numbered notes.

(xvi) The date, time and place offers are due.

(xvii) The name and telephone number of the individual to contact for information regarding the solicitation.

(3) Allow response time for receipt of offers as follows:

(i) Because the CBD synopsis and solicitation are contained in a single document, it is not necessary to publish a separate CBD synopsis 15 days before the issuance of the solicitation.

(ii) When using the combined CBD synopsis/solicitation, contracting officers shall establish a response time in accordance with 5.203(b), but shall allow at least 15 days response time from the date the notice is published in the CBD.

(4) Publish amendments to solicitations in the same manner as the initial synopsis/solicitation.

PART 14--SEALED BIDDING

14.201-2 [Amended]

34. Section 14.201-2 is amended in the parenthetical of paragraphs

(b) and (c) by removing ``part 10, Specifications, Standards, and Other

Product Descriptions'' and inserting ``part 11'' in its place; in

paragraph (d) by removing ``(see 10.004(e))''; and in the parenthetical

of paragraph (f) by revising the parenthetical to read ``(see subpart

11.4, Delivery or Performance Schedules).''

14.404-1 [Amended]

35. Section 14.404-1 is amended in paragraph (b) by removing

``10.008'' and inserting ``11.201''.

PART 15--CONTRACTING BY NEGOTIATION

15.406-2 [Amended]

36. Section 15.406-2 is amended in the parenthetical of paragraph

(c) by removing ``part 10, Specifications, Standards, and Other Product

Descriptions'' and inserting ``part 11''; in paragraph (d) by removing

``(see 10.004(e))''; and in paragraph (f) by revising the parenthetical

to read ``(subpart 11.4, Delivery or Performance Schedules, and 47.301-

1).''

37. Section 15.501 is amended by revising the definition

``Commercial product offer'' to read as follows:

15.501 Definitions.

* * * * *

Commercial item offer means an offer of a commercial item the

vendor wishes to see introduced in the Government's supply system as an alternate or replacement for an existing supply item.

* * * * *

15.503 [Amended]

38. Section 15.503 is amended in paragraph (b) by removing the word

``product'' and inserting ``item''.

39. Section 15.704 is amended by revising the second sentence to

read as follows:

15.704 Items and work included.

* * * Raw materials, commercial items (see 2.101), and off-the-

shelf items (see 46.101) shall not be included, unless their potential

impact on contract cost or schedule is critical. * * *

PART 16--TYPES OF CONTRACTS

40. Section 16.201 is amended by adding a sentence at the end of

the paragraph to read as follows:

16.201 General.

* * * The contracting officer shall use firm-fixed-price or fixed-

price with economic price adjustment contracts when acquiring

commercial items.

41. Section 16.202-2 is amended by revising the introductory

paragraph to read as follows:

16.202-2 Application.

A firm-fixed-price contract is suitable for acquiring commercial

items (see parts 2 and 12) or for acquiring other supplies or services

on the basis of reasonably definite functional or detailed

specifications (see part 11) when the contracting officer can establish

fair and reasonable prices at the outset, such as when--

* * * * *

42. Section 16.301-3 is amended by redesignating paragraphs (a)

through (c) as paragraph (a)(1) through (a)(3), respectively;

designating the introductory text as paragraph (a) introductory text

and adding new (b) to read as follows:

16.301-3 Limitations.

* * * * *

(b) The use of cost-reimbursement contracts is prohibited for the

acquisition of commercial items (see parts 2 and 12).

16.603-2 [Amended]

43. Section 16.603-2 is amended in paragraph (e) by removing

``12.304'' and inserting ``11.604''.

PART 22--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS

44. Section 22.305 is amended by redesignating paragraph (g) as (h)

and adding a new paragraph (g) to read as follows:

22.305 Contract clause.

* * * * *

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

* * * * *

45. Section 22.604-1 is amended by revising paragraph (a) to read

as follows:

22.604-1 Statutory exemptions.

* * * * *

(a) Any item in those situations where the contracting officer is

authorized by the express language of a statute to purchase ``in the

open market'' generally (such as commercial items, see part 12); or

where a specific purchase is made under the conditions described in

6.302-2 in circumstances where immediate delivery is required by the

public exigency.

* * * * *

PART 23--ENVIRONMENTAL, CONSERVATION, OCCUPATIONAL SAFETY, AND

DRUG-FREE WORKPLACE

46. Section 23.104 is amended in paragraph (a)(1) by removing the

word ``or'' the second time it is used; in paragraph (a)(2) by removing

the period and inserting ``; or'' and adding paragraph (a)(3) to read

as follows:

23.104 Exemptions.

(a) * * * (3) for commercial items.

* * * * *

47. Section 23.501 is amended by redesignating paragraphs (b)

through (d) as (c) through (e) and adding a new paragraph (b) to read

as follows:

23.501 Applicability.

* * * * *

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

* * * * *

PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES

31.106-3 [Amended]

48. Section 31.106-3 is amended in the section heading and the

first sentence of the undesignated paragraph by removing the word

``products'' and inserting ``items'' in their place.

PART 36--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS

36.202 [Amended]

49. Section 36.202 is amended in paragraph (a) by removing ``part

10'' and inserting ``part 11'' in its place.

36.206 [Amended]

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

``11.502''.

36.303 [Amended]

51. Section 36.303 is amended in paragraph (c)(4) by removing

``12.1'' and inserting ``11.4''.

PART 42--CONTRACT ADMINISTRATION

42.1105 [Amended]

53. Section 42.1105 is amended by removing the reference ``subpart

12.3'' and inserting ``subpart 11.6''.

Subpart 42.13--[Redesignated from Subpart 12.5]

42.1304 [Amended]

54. and 55. Newly redesignated section 42.1304 (redesignated from

12.504) is amended in paragraph (a) by removing ``52.212-15'' and

inserting ``52.242-17''; and at the end of paragraph (d) by removing

the period and inserting ``, or information other than cost or pricing

data.'' in its place.

42.1305 [Amended]

56. Newly redesignated section 42.1305 (redesignated from 12.505)

is amended in paragraph (a) by removing ``52.212-12'' and inserting

``52.24214''; in paragraph (b)(1) by removing ``52.212-13'' and

inserting ``52.242-15''; in paragraph (c) by removing ``52.21214'' and

inserting ``52.242-16''; and in paragraph (d) by removing ``52.212-15''

and inserting ``52.242-17''.

PART 44--SUBCONTRACTING POLICIES AND PROCEDURES

57. Subpart 44.4, consisting of sections 44.400 through 44.403, is

added to read as follows:

Subpart 44.4--Subcontracts for Commercial Items and Commercial

Components

Sec.

44.400 Scope of subpart.

44.401 Applicability.

44.402 Policy requirements.

44.403 Contract clause.

Subpart 44.4--Subcontracts for Commercial Items and Commercial

Components

44.400 Scope of subpart.

This subpart prescribes the policies limiting the contract clauses

a prime contractor may be required to apply to any subcontractors that

are furnishing commercial items or commercial components in accordance

with Section 8002(b)(2) (Public Law 103-355).

44.401 Applicability.

This subpart applies to all contracts and subcontracts. For the

purpose of this subpart, the term ``subcontract'' has the same meaning

as defined in part 12.

44.402 Policy requirements.

(a) Contractors and subcontractors at all tiers shall, to the

maximum extent practicable:

(1) Be required to incorporate commercial items or nondevelopmental items as components of items delivered to the Government; and

(2) Not be required to apply to any of its divisions, subsidiaries, affiliates, subcontractors or suppliers that are furnishing commercial items or commercial components any clause, except those--

(i) Required to implement provisions of law or executive orders applicable to subcontractors furnishing commercial items or commercial components; or

(ii) Determined to be consistent with customary commercial practice for the item being acquired.

(b) The clause at 52.244-6, Subcontracts for Commercial Items and

Commercial Components, implements the policy in paragraph (a) of this

section. Notwithstanding any other clause in the prime contract, only

those clauses identified in the clause at 52.244-6 are required to be

in subcontracts for commercial items or commercial components.

(c) Agencies may supplement the clause at 52.244-6 only as

necessary to reflect agency unique statutes applicable to the

acquisition of commercial items.

44.403 Contract clause.

The contracting officer shall insert the clause at 52.244-6,

Subcontracts for Commercial Items and Commercial Components, in

solicitations and contracts for supplies or services other than

commercial items.

PART 46--QUALITY ASSURANCE

58. Section 46.101 is amended by adding in alphabetical order the

definition ``Commercial item'' to read as follows:

46.101 Definitions.

* * * * *

Commercial item (see 2.101).

* * * * *

59. Section 46.102 is amended in paragraph (e) by removing ``and'';

by redesignating paragraph (f) as (g) and adding a new paragraph (f) to

read as follows:

46.102 Policy.

* * * * *

(f) Contracts for commercial items shall rely on a contractor's

existing quality assurance system as a substitute for compliance with

Government inspection and testing before tender for acceptance unless

customary market practices for the commercial item being acquired

permit in-process inspection (Section 8002 of Public Law 103-355). Any

in-process inspection by the Government shall be conducted in a manner

consistent with commercial practice; and

* * * * *

46.202 [Amended]

60. Section 46.202 is amended by removing ``three'' and inserting

``four''.

61. Sections 46.202-1 through 46.202-3 are redesignated as 46.202-2

through 46.202-4 and a new 46.202-1 is added to read as follows:

46.202-1 Contracts for commercial items.

When acquiring commercial items (see part 12), the Government shall

rely on contractors' existing quality assurance systems as a substitute

for Government inspection and testing before tender for acceptance

unless customary market practices for the commercial item being

acquired include in-process inspection. Any in-process inspection by

the Government shall be conducted in a manner consistent with

commercial practice.

46.202-2 [Amended]

62. Newly redesignated section 46.202-2 is amended in paragraph

(b)(1) by removing ``(see 46.204 and Table 46-1)''.

46.202-4 [Amended]

63. Newly redesignated section 46.202-4 is amended in paragraph

(a)(1) by removing ``(see 46.204 and Table 46-1)''.

64. Section 46.203 is amended by revising paragraph (a)(1); at the

end of paragraph (a)(2) by removing ``;or'' and inserting a period; and

by removing paragraph (a)(3). The revised text reads as follows:

46.203 Criteria for use of contract quality requirements.

* * * * *

(a) * * *

(1) Commercial (described in commercial catalogs, drawings, or

industrial standards; see part 2); or

* * * * *

46.204 [Removed and reserved]

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

46.301 [Amended]

66. Section 46.301 is amended by removing ``46.202-1(b)'' and

inserting ``46.202-2(b)'' in its place.

46.311 and 46.402 [Amended]

67. Sections 46.311 and 46.402(e) are amended by removing ``46.202-

3'' and inserting ``46.202-4'' in their place.

46.404 [Amended]

68. Section 46.404 is amended at the end of paragraph (a) by

removing ``46.202-1'' and inserting ``46.202-2'' in its place; in

paragraph (b) introductory text by removing ``46.202-1(b)'' and

inserting ``46.202-2(b)'' in its place; and in paragraph (b)(2) by

removing the last sentence.

69. Section 46.709 is revised to read as follows:

46.709 Warranties of commercial items.

The contracting officer should take advantage of commercial

warranties, including extended warranties, where appropriate and in the

Government's best interests, offered by the contractor for the repair

and replacement of commercial items (see part 12).

70. Section 46.710 is amended by revising the first sentence of the

introductory paragraph; by removing paragraphs (a)(2) and (b)(2) and

redesignating paragraphs (a)(3) through (a)(6) as (a)(2) through

(a)(5), and paragraphs (b)(3) through (b)(5) as (b)(2) through (b)(4),

respectively. The revised text reads as follows:

46.710 Contract clauses.

The clauses and alternates prescribed in this section may be used

in solicitations and contracts in which inclusion of a warranty is

appropriate (see 46.709 for warranties for commercial items). * * *

* * * * *

PART 47--TRANSPORTATION

71. Section 47.405 is amended by revising the last sentence to read

as follows:

47.405 Contract clause.

* * * This clause does not apply to contracts awarded using the

simplified acquisition procedures in part 13 or contracts for

commercial items (see part 12).

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

follows:

47.504 Exceptions.

* * * * *

(e) Beginning May 1, 1996, subcontracts for the acquisition of

commercial items or commercial components (see 12.504(a)(13)). This

exception does not apply to grants-in-aid shipments, such as

agricultural and food-aid shipments, to shipments covered under Export-

Import Bank loans or guarantees, and to subcontracts under Government

contracts or agreements for ocean transportation services.

PART 49--TERMINATION OF CONTRACTS

49.402-7 [Amended]

73. Section 49.402-7 is amended in the last sentence of paragraph

(a) by removing ``52.212-4'' and inserting ``52.211-11'' in its place.

74. Section 49.501 is revised to read as follows:

49.501 General.

This subpart prescribes the principal contract termination clauses.

For contracts for the acquisition of commercial items, this part

provides administrative guidance which may be followed when it is

consistent with the requirements and procedures in the clause at

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

appropriate cases, agencies may authorize the use of special purpose

clauses, if consistent with this chapter.

49.607 [Amended]

75. Section 49.607 is amended by removing from the introductory

text ``12.5'' and inserting ``42.13''.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

76. Section 52.202-1 is amended by revising the date of the clause;

by redesignating paragraphs (b) and (c) as (f) and (g), and adding new

paragraphs (b), (c), (d), and (e) to read as follows:

52.202-1 Definitions.

* * * * *

Definitions (Oct. 1995)

* * * * *

(b) Commercial component means any component that is a

commercial item.

(c) Commercial item means--

(1) Any item, other than real property, that is of a type

customarily used for nongovernmental purposes and that--

(i) Has been sold, leased, or licensed to the general public; or

(ii) Has been offered for sale, lease, or license to the general public;

(2) Any item that evolved from an item described in paragraph

(c)(1) of this clause through advances in technology or performance

and that is not yet available in the commercial marketplace, but

will be available in the commercial marketplace in time to satisfy

the delivery requirements under a Government solicitation;

(3) Any item that would satisfy a criterion expressed in

paragraphs (c)(1) or (c)(2) of this clause, but for--

(i) Modifications of a type customarily available in the

commercial marketplace; or

(ii) Minor modifications of a type not customarily available in the commercial marketplace made to meet Federal Government requirements. ``Minor'' modifications means modifications that do not significantly alter the nongovernmental function or essential physical characteristics of an item or component, or change the

purpose of a process. Factors to be considered in determining

whether a modification is minor include the value and size of the

modification and the comparative value and size of the final

product. Dollar values and percentages may be used as guideposts,

but are not conclusive evidence that a modification is minor;

(4) Any combination of items meeting the requirements of

paragraphs (c)(1), (2), (3), or (5) of this clause that are of a

type customarily combined and sold in combination to the general

public;

(5) Installation services, maintenance services, repair

services, training services, and other services if such services are

procured for support of an item referred to in paragraphs (c)(1),

(2), (3), or (4) of this clause, and if the source of such

services--

(i) Offers such services to the general public and the Federal

Government contemporaneously and under similar terms and conditions;

and

(ii) Offers to use the same work force for providing the Federal Government with such services as the source uses for providing such services to the general public;

(6) Services of a type offered and sold competitively in

substantial quantities in the commercial marketplace based on

established catalog or market prices for specific tasks performed

under standard commercial terms and conditions. This does not

include services that are sold based on hourly rates without an

established catalog or market price for a specific service

performed;

(7) Any item, combination of items, or service referred to in

subparagraphs (c)(1) through (c)(6), notwithstanding the fact that

the item, combination of items, or service is transferred between or

among separate divisions, subsidiaries, or affiliates of a

Contractor; or

(8) A nondevelopmental item, if the procuring agency determines the item was developed exclusively at private expense and sold in substantial quantities, on a competitive basis, to multiple State

and local Governments.

(d) Component means any item supplied to the Federal Government

as part of an end item or of another component.

(e) Nondevelopmental item means--

(1) Any previously developed item of supply used exclusively for governmental purposes by a Federal agency, a State or local government, or a foreign government with which the United States has a mutual defense cooperation agreement;

(2) Any item described in paragraph (e)(1) of this definition

that requires only minor modification or modifications of a type

customarily available in the commercial marketplace in order to meet

the requirements of the procuring department or agency; or

(3) Any item of supply being produced that does not meet the

requirements of paragraph (e)(1) or (e)(2) solely because the item

is not yet in use.

* * * * *

(End of clause)

52.203-4 [Amended]

77. Section 52.203-4 is amended in the first sentence of the

introductory text by removing ``(b)(5)'' and inserting ``(b)(6)'' in

its place.

78. Section 52.203-6 is amended by revising the date of the clause

and adding an Alternate I following paragraph (c) to read as follows:

52.203-6 Restrictions on Subcontractor Sales to the Government.

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

* * * * *

Alternate I (OCT. 1995). As prescribed in 3.503-2, substitute

the following paragraph in place of paragraph (b) of the basic

clause:

(b) The prohibition in paragraph (a) of this clause does not

preclude the Contractor from asserting rights that are otherwise

authorized by law or regulation. For acquisitions of commercial

items, the prohibition in paragraph (a) applies only to the extent

that any agreement restricting sales by subcontractors results in

the Federal Government being treated differently from any other

prospective purchaser for the sale of the commercial item(s).

52.210-1 through 52.210-7 [Redesignated]

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

through 52.211-7.

52.212-1 through 52.212-11 [Redesignated]

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

8 through 52.211-18.

52.212-12 through 52.212-15 [Redesignated]

81. Sections 52.212-12 through 52.212-15 are redesignated as

52.242-14 through 52.242-17, respectively.

52.212-1 through 52.212-5 [Added]

82. Part 52 is amended by adding new sections 52.212-1 through

52.212-5 to read as follows:

Sec.

52.212-1 Instructions to Offerors-Commercial Items.

52.212-2 Evaluation-Commercial Items.

52.212-3 Offeror Representations and Certifications-Commercial

Items.

52.212-4 Contract Terms and Conditions-Commercial Items.

52.212-5 Contract Terms and Conditions Required to Implement

Statutes or Executive Orders-Commercial Items.

52.212-1 Instructions to Offerors--Commercial Items.

As prescribed in 12.301(b)(1), insert the following provision:

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

(a) Standard industrial classification (SIC) code and small

business size standard. The SIC code and small business size

standard for this acquisition appear in Block 10 of the solicitation

cover sheet (SF 1449). However, the small business size standard for

a concern which submits an offer in its own name, but which proposes

to furnish an item which it did not itself manufacture, is 500

employees.

(b) Submission of offers. Submit signed and dated offers to the

office specified in this solicitation at or before the exact time

specified in this solicitation. Offers may be submitted on the SF

1449, letterhead stationery, or as otherwise specified in the

solicitation. As a minimum, offers must show----

(1) The solicitation number;

(2) The time specified in the solicitation for receipt of

offers;

(3) The name, address, and telephone number of the offeror;

(4) A technical description of the items being offered in

sufficient detail to evaluate compliance with the requirements in

the solicitation. This may include product literature, or other

documents, if necessary;

(5) Terms of any express warranty;

(6) Price and any discount terms;

(7) ``Remit to'' address, if different than mailing address;

(8) A completed copy of the representations and certifications

at FAR 52.212-3;

(9) Acknowledgment of Solicitation Amendments;

(10) Past performance information, when included as an

evaluation factor, to include recent and relevant contracts for the

same or similar items and other references (including contract

numbers, points of contact with telephone numbers and other relevant

information); and

(11) If the offer is not submitted on the SF 1449, include a

statement specifying the extent of agreement with all terms,

conditions, and provisions included in the solicitation. Offers that

fail to furnish required representations or information, or reject

the terms and conditions of the solicitation may be excluded from

consideration.

(c) Period for acceptance of offers. The offeror agrees to hold

the prices in its offer firm for 30 calendar days from the date

specified for receipt of offers, unless another time period is

specified in an addendum to the solicitation.

(d) Product samples. When required by the solicitation, product

samples shall be submitted at or prior to the time specified for

receipt of offers. Unless otherwise specified in this solicitation,

these samples shall be submitted at no expense to the Government,

and returned at the sender's request and expense, unless they are

destroyed during preaward testing.

(e) Multiple offers. Offerors are encouraged to submit multiple

offers presenting alternative terms and conditions or commercial

items for satisfying the requirements of this solicitation. Each

offer submitted will be evaluated separately.

(f) Late offers. Offers or modifications of offers received at

the address specified for the receipt of offers after the exact time

specified for receipt of offers will not be considered.

(g) Contract award (not applicable to Invitation for Bids). The

Government intends to evaluate offers and award a contract without

discussions with offerors. Therefore, the offeror's initial offer

should contain the offeror's best terms from a price and technical

standpoint. However, the Government reserves the right to conduct

discussions if later determined by the Contracting Officer to be

necessary. The Government may reject any or all offers if such

action is in the public interest; accept other than the lowest

offer; and waive informalities and minor irregularities in offers

received.

(h) Multiple awards. The Government may accept any item or group

of items of an offer, unless the offeror qualifies the offer by

specific limitations. Unless otherwise provided in the Schedule,

offers may not be submitted for quantities less than those

specified. The Government reserves the right to make an award on any

item for a quantity less than the quantity offered, at the unit

prices offered, unless the offeror specifies otherwise in the offer.

(i) Availability of requirements documents cited in the

solicitation.

(1) The Index of Federal Specifications, Standards and

Commercial Item Descriptions and the documents listed in it may be

obtained from the General Services Administration, Federal Supply

Service Bureau, Specifications Section, Suite 8100, 470 L'Enfant

Plaza, SW., Washington, DC 20407 ((202) 755-0325/0326).

(2) The DOD Index of Specifications and Standards (DODISS) and documents listed in it may be obtained from the Standardization

Documents Desk, Building 4D, 700 Robbins Avenue, Philadelphia, PA

19111-5094 (telephone (215) 697-2569).

(i) Automatic distribution may be obtained on a subscription basis.

(ii) Individual documents may be ordered from the Telespecs ordering system by touch-tone telephone. A customer number is required to use this service and can be obtained from the

Standardization Documents Order Desk or the Special Assistance Desk

(telephone (610) 607-2667/2179).

(3) Nongovernment (voluntary) standards must be obtained from

the organization responsible for their preparation, publication or

maintenance.

(End of provision)

52.212-2 Evaluation--Commercial Items.

As prescribed in 12.301(c), the Contracting Officer may insert a

provision substantially as follows:

Evaluation--Commercial Items (Oct. 1995)

(a) The Government will award a contract resulting from this

solicitation to the responsible offeror whose offer conforming to

the solicitation will be most advantageous to the Government, price

and other factors considered. The following factors shall be used to

evaluate offers:

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

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

(Contracting Officer shall insert the significant evaluation

factors, such as (i) technical capability of the item offered to

meet the Government requirement; (ii) price; (iii) past performance

(see FAR 15.605) and include them in the relative order of

importance of the evaluation factors, such as in descending order of

importance.)

Technical and past performance, when combined, are ------------

-------- (Contracting Officer state, in accordance with FAR 15.605,

the relative importance of all other evaluation factors, when

combined, when compared to price.)

(b) Options. The Government will evaluate offers for award

purposes by adding the total price for all options to the total

price for the basic requirement. The Government may determine that

an offer is unacceptable if the option prices are significantly

unbalanced. Evaluation of options shall not obligate the Government

to exercise the option(s).

(c) A written notice of award or acceptance of an offer, mailed

or otherwise furnished to the successful offeror within the time for

acceptance specified in the offer, shall result in a binding

contract without further action by either party. Before the offer's

specified expiration time, the Government may accept an offer (or

part of an offer), whether or not there are negotiations after its

receipt, unless a written notice of withdrawal is received before

award.

(End of Provision)

52.212-3 Offeror Representations and Certifications Commercial Items.

As prescribed in 12.301(b)(2), insert the following provision:

Offeror Representations and Certifications--Commercial Items (Oct.

1995)

(a) Definitions. As used in this provision:

Emerging small business means a small business concern whose

size is no greater than 50 percent of the numerical size standard

for the standard industrial classification code designated.

Small business concern means a concern, including its

affiliates, that is independently owned and operated, not dominant

in the field of operation in which it is bidding on Government

contracts, and qualified as a small business under the criteria in

13 CFR Part 121 and size standards in this solicitation.

Small disadvantaged business concern means a small business

concern that--

(1) Is at least 51 percent unconditionally owned by one or more

individuals who are both socially and economically disadvantaged, or

a publicly owned business, having at least 51 percent of its stock

unconditionally owned by one or more socially and economically

disadvantaged individuals, and

(2) Has its management and daily business controlled by one or

more such individuals. This term also means a small business concern

that is at least 51 percent unconditionally owned by an economically

disadvantaged Indian tribe or Native Hawaiian organization, or a

publicly owned business having at least 51 percent of its stock

unconditionally owned by one or more of these entities, which has

its management and daily business controlled by members of an

economically disadvantaged Indian tribe or Native Hawaiian

organization and which meets the requirements of 13 CFR Part 124.

Women-owned small business concern means a small business

concern--

(a) Which is at least 51 percent owned by one or more women or,

in the case of any publicly owned business, at least 51 percent of

the stock of which is owned by one or more women; and

(b) Whose management and daily business operations are

controlled by one or more women.

Women-owned business concern means a concern which is at least

51 percent owned by one or more women; or in the case of any

publicly owned business, at least 51 percent of the stock of which

is owned by one or more women; and whose management and daily

business operations are controlled by one or more women.

(b) Taxpayer identification number (TIN) (26 U.S.C. 6050M). (1)

Taxpayer Identification Number (TIN).

{time} TIN: ________________.

{time} TIN has been applied for.

{time} TIN is not required because:

{time} Offeror is a nonresident alien, foreign corporation, or

foreign partnership that does not have income effectively connected

with the conduct of a trade or business in the U.S. and does not

have an office or place of business or a fiscal paying agent in the

U.S.;

{time} Offeror is an agency or instrumentality of a foreign

government;

{time} Offeror is an agency or instrumentality of a Federal,

state, or local government;

{time} Other. State basis. ________________

(2) Corporate Status.

{time} Corporation providing medical and health care services,

or engaged in the billing and collecting of payments for such

services;

{time} Other corporate entity;

{time} Not a corporate entity:

{time} Sole proprietorship

{time} Partnership

{time} Hospital or extended care facility described in 26 CFR

501(c)(3) that is exempt from taxation under 26 CFR 501(a).

(3) Common Parent.

{time} Offeror is not owned or controlled by a common parent.

Name and TIN of common parent:

Name-------------------------------------------------------------------

TIN--------------------------------------------------------------------

(c) Offerors must complete the following representations when

the resulting contract is to be performed inside the United States,

its territories or possessions, Puerto Rico, the Trust Territory of

the Pacific Islands, or the District of Columbia. Check all that

apply.

(1) Small business concern. The offeror represents as part of

its offer that it {time} is, {time} is not a small business

concern.

(2) Small disadvantaged business concern. The offeror represents and certifies that it {time} is, {time} is not a small

disadvantaged business concern.

(3) Women-owned small business concern. The offeror represents that it {time} is, {time} is not a women-owned small business

concern.

Note: Complete paragraphs (c)(4) and (c)(5) only if this

solicitation is expected to exceed the simplified acquisition

threshold.

(4) Women-owned business concern. The offeror represents that it {time} is, {time} is not, a women-owned business concern.

(5) Tie bid priority for labor surplus area concerns. If this is

an invitation for bid, small business offerors may identify the

labor surplus areas in which costs to be incurred on account of

manufacturing or production (by offeror or first-tier subcontractors) amount to more than 50 percent of the contract price:

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

(6) Small Business Size for the Small Business Competitiveness

Demonstration Program and for the Targeted Industry Categories under

the Small Business Competitiveness Demonstration Program. [Complete

only if the offeror has certified itself to be a small business

concern under the size standards for this solicitation.]

(i) (Complete only for solicitations indicated in an addendum as being set-aside for emerging small businesses in one of the four designated industry groups (DIGs).) The offeror represents as part

of its offer that it {time} is, {time} is not an emerging small

business.

(ii) (Complete only for solicitations indicated in an addendum as being for one of the targeted industry categories (TICs) or four designated industry groups (DIGs).) Offeror represents and certifies

as follows:

(A) Offeror's number of employees for the past 12 months (check the Employees column if size standard stated in the solicitation is expressed in terms of number of employees); or

(B) Offeror's average annual gross revenue for the last 3 fiscal years (check the Average Annual Gross Number of Revenues column if size standard stated in the solicitation is expressed in terms of annual receipts)

(Check one of the following):

Average Annual Gross

Number of Employees Revenues

____ 50 or fewer ____ $1 million or less

____ 51-100 ____ $1,000,001-$2 million

____ 101-250 ____ $2,000,001-$3.5 million

____ 251-500 ____ $3,500,001-$5 million

____ 501-750 ____ $5,000,001-$10 million

____ 751-1,000 ____ $10,000,001-$17 million

____ Over 1,000 ____ Over $17 million

(d) Certifications and representations required to implement

provisions of Executive Order 11246--

(1) Certification of non-segregated facilities. (Applies only if

the contract amount is expected to exceed $10,000)--

By submission of this offer, the offeror certifies that it does

not and will not maintain or provide for its employees, any

facilities that are segregated on the basis of race, color,

religion, or national origin because of habit, local custom, or

otherwise and that it does not and will not permit its employees to

perform their services at any location where segregated facilities

are maintained. The offeror agrees that a breach of this

certification is a violation of the Equal Opportunity clause in the

contract.

(2) Previous Contracts and Compliance. The offeror represents

that--

(i) It {time} has, {time} has not, participated in a previous contract or subcontract subject either to the Equal Opportunity

clause of this solicitation, the clause originally contained in

Section 310 of Executive Order 10925, or the clause contained in

Section 201 of Executive Order 11114; and

(ii) It {time} has, {time} has not, filed all required

compliance reports.

(3) Affirmative Action Compliance. The offeror represents that--

(i) It {time} has developed and has on file, {time} has not developed and does not have on file, at each establishment,

affirmative action programs required by rules and regulations of the

Secretary of Labor (41 CFR Subparts 60-1 and 60-2), or

(ii) It {time} has not previously had contracts subject to the written affirmative action programs requirement of the rules and

regulations of the Secretary of Labor.

(e) Certification Regarding Payments to Influence Federal

Transactions (31 U.S.C. 1352). (Applies only if the contract is

expected to exceed $100,000.) By submission of its offer, the

offeror certifies to the best of its knowledge and belief that no

Federal appropriated funds have been paid or will be paid to any

person for influencing or attempting to influence an officer or

employee of any agency, a Member of Congress, an officer or employee

of Congress or an employee of a Member of Congress on his or her

behalf in connection with the award of any resultant contract.

(f) Buy American Act--Trade Agreements--Balance of Payments

Program Certificate. (Applies only if FAR clause 52.225-9, Buy

American Act--Trade Agreement--Balance of Payments Program, is

included in this solicitation.)

(1) The offeror hereby certifies that each end product, except

those listed in paragraph (f)(2) of this provision, is a domestic

end product (as defined in the clause entitled ``Buy American Act--

Trade Agreements Balance of Payments Program'') and that components

of unknown origin have been considered to have been mined, produced,

or manufactured outside the United States, a designated country, a

North American Free Trade Agreement (NAFTA) country, or a Caribbean

Basin country, as defined in section 25.401 of the Federal

Acquisition Regulation.

(2) Excluded End Products:

Line item No. Country of origin

__________________________________ __________

__________________________________ __________

(List as necessary)

(3) Offers will be evaluated by giving certain preferences to

domestic end products, designated country end products, NAFTA

country end products, and Caribbean Basin country end products over

other end products. In order to obtain these preferences in the

evaluation of each excluded end product listed in paragraph (f)(2)

of this provision, offerors must identify and certify below those

excluded end products that are designated or NAFTA country end

products, or Caribbean Basin country end products. Products that are

not identified and certified below will not be deemed designated

country end products, NAFTA country end products, or Caribbean Basin

country end products. Offerors must certify by inserting the

applicable line item numbers in the following:

(i) The offeror certifies that the following supplies qualify as ``designated or NAFTA country end products'' as those terms are

defined in the clause entitled ``Buy American Act--Trade Agreements--Balance of Payments Program:''

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

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

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

(Insert line item numbers)

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

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

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

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

(Insert line item numbers)

(4) Offers will be evaluated in accordance with FAR Part 25.

(g) Buy American Act--North American Free Trade Agreement

(NAFTA) Implementation Act--Balance of Payments Program Certificate.

(Applies only if FAR clause 52.22521, Buy American Act--North

American Free Trade Agreement (NAFTA) Implementation Act--Balance of Payments Program, is included in this solicitation.)

(1) The offeror hereby certifies that each end product, except

those listed in paragraph (g)(2) of this provision, is a domestic

end product (as defined in the clause entitled ``Buy American Act--

North American Free Trade Agreement (NAFTA) Implementation Act-

Balance of Payments Program'' and that components of unknown origin

have been considered to have been mined, produced, or manufactured

outside the United States.

(2) Excluded End Products:

Line item No. Country of origin

___________________________________ __________

___________________________________ __________

(List as necessary )

(3) Offers will be evaluated by giving certain preferences to

domestic end products or NAFTA country end products over other end

products. In order to obtain these preferences in the evaluation of

each excluded end product listed in paragraph (g)(2) of this

provision, offerors must identify and certify below those excluded

end products that are NAFTA country end products. Products that are

not identified and certified below will not be deemed NAFTA country

end products. Offerors must certify by inserting the applicable line

item numbers in the following:

The offeror certifies that the following supplies qualify as

``NAFTA country end products'' as that term is defined in the clause

entitled ``Buy American Act--North American Free Trade Agreement

Implementation Act--Balance of Payments Program:''

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

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

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

(Insert line item numbers)

(4) Offers will be evaluated in accordance with FAR Part 25.

(h) Certification Regarding Debarment, Suspension or

Ineligibility for Award (Executive Order 12549). The offeror

certifies, to the best of its knowledge and belief, that--

(1) The offeror and/or any of its principals {time} are,

{time} are not presently debarred, suspended, proposed for

debarment, or declared ineligible for the award of contracts by any

Federal agency, and

(2) {time} Have, {time} have not, within a three-year period

preceding this offer, been convicted of or had a civil judgment

rendered against them for: commission of fraud or a criminal offense

in connection with obtaining, attempting to obtain, or performing a

Federal, state or local government contract or subcontract;

violation of Federal or state antitrust statutes relating to the

submission of offers; or commission of embezzlement, theft, forgery,

bribery, falsification or destruction of records, making false

statements, or receiving stolen property; and {time} are, {time} are not presently indicted for, or otherwise criminally or civilly charged by a Government entity with, commission of any of these offenses.

(i) Procurement Integrity Certification (41 U.S.C. 423).

(Applies only if the contract is expected to exceed $100,000.)

I, the undersigned, am the officer or employee responsible for

the preparation of this offer. I certify, to the best of my

knowledge and belief, that either--

{time} I have no information, or

{time} I have disclosed information to the Contracting Officer

concerning a violation or possible violation of subsection (a), (b),

(d) or (f) of 41 U.S.C. 423, Procurement Integrity, or its

implementing regulations that may have occurred during the conduct

of this procurement.

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

Signature of the officer or employee responsible for the offer and

date.

(End of Provision)

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

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

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

(a) Inspection/Acceptance. The Contractor shall only tender for

acceptance those items that conform to the requirements of this

contract. The Government reserves the right to inspect or test any

supplies or services that have been tendered for acceptance. The

Government may require repair or replacement of nonconforming

supplies or reperformance of nonconforming services at no increase

in contract price. The Government must exercise its postacceptance

rights (1) within a reasonable time after the defect was discovered

or should have been discovered; and (2) before any substantial

change occurs in the condition of the item, unless the change is due

to the defect in the item.

(b) Assignment. The Contractor or its assignee's rights to be

paid amounts due as a result of performance of this contract, may be

assigned to a bank, trust company, or other financing institution,

including any Federal lending agency in accordance with the

Assignment of Claims Act (31 U.S.C. 3727).

(c) Changes. Changes in the terms and conditions of this

contract may be made only by written agreement of the parties.

(d) Disputes. This contract is subject to the Contract Disputes

Act of 1978, as amended (41 U.S.C. 601-613). Failure of the parties

to this contract to reach agreement on any request for equitable

adjustment, claim, appeal or action arising under or relating to

this contract shall be a dispute to be resolved in accordance with

the clause at FAR 52.233-1, Disputes, which is incorporated herein

by reference. The Contractor shall proceed diligently with

performance of this contract, pending final resolution of any

dispute arising under the contract.

(e) Definitions. The clause at FAR 52.202-1, Definitions, is

incorporated herein by reference.

(f) Excusable delays. The Contractor shall be liable for default

unless nonperformance is caused by an occurrence beyond the

reasonable control of the Contractor and without its fault or

negligence such as, acts of God or the public enemy, acts of the

Government in either its sovereign or contractual capacity, fires,

floods, epidemics, quarantine restrictions, strikes, unusually

severe weather, and delays of common carriers. The Contractor shall

notify the Contracting Officer in writing as soon as it is

reasonably possible after the commencement of any excusable delay,

setting forth the full particulars in connection therewith, shall

remedy such occurrence with all reasonable dispatch, and shall

promptly give written notice to the Contracting Officer of the

cessation of such occurrence.

(g) Invoice. The Contractor shall submit an original invoice and

three copies (or electronic invoice, if authorized,) to the address

designated in the contract to receive invoices. An invoice must

include--

(1) Name and address of the Contractor;

(2) Invoice date;

(3) Contract number, contract line item number and, if

applicable, the order number;

(4) Description, quantity, unit of measure, unit price and

extended price of the items delivered;

(5) Shipping number and date of shipment including the bill of

lading number and weight of shipment if shipped on Government bill

of lading;

(6) Terms of any prompt payment discount offered;

(7) Name and address of official to whom payment is to be sent; and

(8) Name, title, and phone number of person to be notified in

event of defective invoice.

Invoices will be handled in accordance with the Prompt Payment

Act (31 U.S.C. 3903) and Office of Management and Budget (OMB)

Circular A-125, Prompt Payment.

(h) Patent indemnity. The Contractor shall indemnify the

Government and its officers, employees and agents against liability,

including costs, for actual or alleged direct or contributory

infringement of, or inducement to infringe, any United States or

foreign patent, trademark or copyright, arising out of the

performance of this contract, provided the Contractor is reasonably

notified of such claims and proceedings.

(i) Payment. Payment shall be made for items accepted by the

Government that have been delivered to the delivery destinations set

forth in this contract. The Government will make payment in

accordance with the Prompt Payment Act (31 U.S.C. 3903) and Office

of Management and Budget (OMB) Circular A-125, Prompt Payment.

Payments under this contract may be made by the Government either by

check, electronic funds transfer, or the Automated Clearing House,

at the option of the Government.

In connection with any discount offered for early payment, time

shall be computed from the date of the invoice. For the purpose of

computing the discount earned, payment shall be considered to have

been made on the date which appears on the payment check or the date

on which an electronic funds transfer was made.

(j) Risk of loss. Unless the contract specifically provides

otherwise, risk of loss or damage to the supplies provided under

this contract shall remain with the Contractor until, and shall pass

to the Government upon:

(1) Delivery of the supplies to a carrier, if transportation is

f.o.b. origin; or

(2) Delivery of the supplies to the Government at the

destination specified in the contract, if transportation is f.o.b.

destination.

(k) Taxes. The contract price includes all applicable Federal,

State, and local taxes and duties.

(l) Termination for the Government's convenience. The Government

reserves the right to terminate this contract, or any part hereof,

for its sole convenience. In the event of such termination, the

Contractor shall immediately stop all work hereunder and shall

immediately cause any and all of its suppliers and subcontractors to

cease work. Subject to the terms of this contract, the Contractor

shall be paid a percentage of the contract price reflecting the

percentage of the work performed prior to the notice of termination,

plus reasonable charges the Contractor can demonstrate to the

satisfaction of the Government using its standard record keeping

system, have resulted from the termination. The Contractor shall not

be required to comply with the cost accounting standards or contract

cost principles for this purpose. This paragraph does not give the

Government any right to audit the Contractor's records. The

Contractor shall not be paid for any work performed or costs

incurred which reasonably could have been avoided.

(m) Termination for cause. The Government may terminate this

contract, or any part hereof, for cause in the event of any default

by the Contractor, or if the Contractor fails to comply with any

contract terms and conditions, or fails to provide the Government,

upon request, with adequate assurances of future performance. In the

event of termination for cause, the Government shall not be liable

to the Contractor for any amount for supplies or services not

accepted, and the Contractor shall be liable to the Government for

any and all rights and remedies provided by law. If it is determined

that the Government improperly terminated this contract for default,

such termination shall be deemed a termination for convenience.

(n) Title. Unless specified elsewhere in this contract, title to

items furnished under this contract shall pass to the Government

upon acceptance, regardless of when or where the Government takes

physical possession.

(o) Warranty. The Contractor warrants and implies that the items

delivered hereunder are merchantable and fit for use for the

particular purpose described in this contract.

(p) Limitation of liability. Except as otherwise provided by an

express or implied warranty, the Contractor will not be liable to

the Government for consequential damages resulting from any defect

or deficiencies in accepted items.

(q) Other compliances. The Contractor shall comply with all

applicable Federal, State and local laws, executive orders, rules

and regulations applicable to its performance under this contract.

(r) Compliance with laws unique to Government contracts. The

Contractor agrees to comply with 31 U.S.C. 1352 relating to

limitations on the use of appropriated funds to influence certain

Federal contracts; 18 U.S.C. 431 relating to officials not to

benefit; 40 U.S.C 327, et seq., Contract Work Hours and Safety

Standards Act; 41 U.S.C. 51-58, Anti-Kickback Act of 1986; 41 U.S.C.

251 related to whistle blower protections; and 49 U.S.C 40118, Fly

American.

(s) Order of precedence. Any inconsistencies in this

solicitation or contract shall be resolved by giving precedence in

the following order: (1) the schedule of supplies/services; (2) the

Assignments, Disputes, Payments, Invoice, Other Compliances, and

Compliance with Laws Unique to Government Contracts paragraphs of

this clause; (3) the clause at 52.212-5; (4) addenda to this

solicitation or contract, including any license agreements for

computer software; (5) solicitation provisions if this is a

solicitation; (6) other paragraphs of this clause; (7) the Standard

Form 1449; (8) other documents, exhibits, and attachments; and (9)

the specification.

52.212-5 Contract Terms and Conditions Required to Implement Statutes

or Executive Orders--Commercial Items.

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

Contract Terms and Conditions Required to Implement Statutes or

Executive Orders--Commercial Items (Oct 1995)

(a) The Contractor agrees to comply with the following FAR

clauses, which are incorporated in this contract by reference, to

implement provisions of law or Executive orders applicable to

acquisitions of commercial items:

(1) 52.222-3, Convict Labor (E.O. 11755); and

(2) 52.233-3, Protest After Award (31 U.S.C 3553 and 40 U.S.C.

759).

(b) The Contractor agrees to comply with the FAR and FIRMR

clauses in this paragraph (b) which the contracting officer has

indicated as being incorporated in this contract by reference to

implement provisions of law or executive orders applicable to

acquisitions of commercial items or components:

(Contracting Officer shall check as appropriate.)

________ (1) 52.203-6, Restrictions on Subcontractor Sales to

the Government, with Alternate I (41 U.S.C. 253g and 10 U.S.C.

2402).

________ (2) 52.203-10, Price or Fee Adjustment for Illegal or

Improper Activity (41 U.S.C. 423).

________ (3) 52.219-8, Utilization of Small Business Concerns

and Small Disadvantaged Business Concerns (15 U.S.C. 637 (d) (2) and

(3));

________ (4) 52.219-9, Small, Small Disadvantaged and Women-

Owned Small Business Subcontracting Plan (15 U.S.C. 637 (d)(4));

________ (5) 52.219-14, Limitation on Subcontracting (15 U.S.C.

637(a)(14)).

________ (6) 52.222-26, Equal Opportunity (E.O. 11246).

________ (7) 52.222-35, Affirmative Action for Special Disabled

and Vietnam Era Veterans (38 U.S.C. 4212).

________ (8) 52.222-36, Affirmative Action for Handicapped

Workers (29 U.S.C. 793).

________ (9) 52.222-37, Employment Reports on Special Disabled

Veterans and Veterans of the Vietnam Era (38 U.S.C. 4212).

________ (10) 52.225-3, Buy American Act--Supplies (41 U.S.C.

10).

________ (11) 52.225-9, Buy American Act--Trade Agreements Act--

Balance of Payments Program (41 U.S.C. 10, 19 U.S.C. 2501-2582).

________ (12) 52.225-17, Buy American Act--Supplies Under

European Community Sanctions for End Products (E.O. 12849).

________ (13) 52.225-18, European Community Sanctions for End

Products (E.O. 12849).

________ (14) 52.225-19, European Community Sanctions for

Services (E.O. 12849).

________ (15) 52.225-21, Buy American Act--North American Free

Trade Agreement Implementation Act--Balance of Payments Program (41

U.S.C 10, Pub. L. 103-187).

________ (16) 52.247-64, Preference for Privately Owned U.S.-

Flag Commercial Vessels (46 U.S.C. 1241).

________ (17) 201-39.5202-3, Procurement Authority (FIRMR).

(This acquisition is being conducted under ______________

delegation of GSA's exclusive procurement authority for FIP

resources. The specific GSA DPA case number is ____________).

(c) The Contractor agrees to comply with the FAR clauses in this

paragraph (c), applicable to commercial services, which the

Contracting Officer has indicated as being incorporated in this

contract by reference to implement provisions of law or executive

orders applicable to acquisitions of commercial items or components:

(Contracting Officer check as appropriate.)

________ (1) 52.222-41, Service Contract Act of 1965, As amended

(41 U.S.C. 351, et seq.).

________ (2) 52.222-42, Statement of Equivalent Rates for

Federal Hires (29 U.S.C. 206 and 41 U.S.C. 351, et seq.).

________ (3) 52.222-43, Fair Labor Standards Act and Service

Contract Act--Price Adjustment (Multiple Year and Option Contracts)

(29 U.S.C. 206 and 41 U.S.C. 351, et seq.).

________ (4) 52.222-44, Fair Labor Standards Act and Service

Contract Act--Price Adjustment (29 U.S.C. 206 and 41 U.S.C. 351, et

seq.).

________ (5) 52.222-47, SCA Minimum Wages and Fringe Benefits

Applicable to Successor Contract Pursuant to Predecessor Contractor

Collective Bargaining Agreement (CBA) (41 U.S.C. 351, et seq.).

(d) Comptroller General Examination of Record. The Contractor

agrees to comply with the provisions of this paragraph (d) if this

contract was awarded using other than sealed bid, is in excess of

the simplified acquisition threshold, and does not contain the

clause at 52.215-2, Audit and Records--Negotiation.

(1) The Comptroller General of the United States, or an

authorized representative of the Comptroller General, shall have

access to and right to examine any of the Contractor's directly

pertinent records involving transactions related to this contract.

(2) The Contractor shall make available at its offices at all

reasonable times the records, materials, and other evidence for

examination, audit, or reproduction, until 3 years after final

payment under this contract or for any shorter period specified in

FAR Subpart 4.7, Contractor Records Retention, of the other clauses

of this contract. If this contract is completely or partially

terminated, the records relating to the work terminated shall be

made available for 3 years after any resulting final termination

settlement. Records relating to appeals under the disputes clause or

to litigation or the settlement of claims arising under or relating

to this contract shall be made available until such appeals,

litigation, or claims are finally resolved.

(3) As used in this clause, records include books, documents,

accounting procedures and practices, and other data, regardless of

type and regardless of form. This does not require the Contractor to

create or maintain any record that the Contractor does not maintain

in the ordinary course of business or pursuant to a provision of

law.

(e) Notwithstanding the requirements of the clauses in

paragraphs (a), (b), (c) or (d) of this clause, the Contractor is

not required to include any FAR clause, other than those listed

below (and as may be required by an addenda to this paragraph to

establish the reasonableness of prices under Part 15), in a

subcontract for commercial items or commercial components--

(1) 52.222-26, Equal Opportunity (E.O. 11246);

(2) 52.222-35, Affirmative Action for Special Disabled and

Vietnam Era Veterans (38 U.S.C. 2012(a)); and

(3) 52.222-36, Affirmative Action for Handicapped Workers (29

U.S.C. 793).

(4) 52.247-64, Preference for Privately Owned U.S.-Flagged

Commercial Vessels (46 U.S.C. 1241) (flow down not required for

subcontracts awarded beginning May 1, 1996).

(End of clause)

83. In the list of newly designated sections below, for each clause

or provision indicated in the left column, remove the reference listed

in the middle column and insert the reference listed in the right

column:

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

Clause/provision Remove Insert

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

52.211-1.................... 10.011(a) 11.204(a)*

52.211-2.................... 10.011(b) 11.204(b)*

52.211-3.................... 10.011(c) 11.204(c)*

52.211-4.................... 10.011(d) 11.204(d)*

52.211-5.................... 10.011(e) 11.302(a)*

52.211-6.................... 10.011(f) 11.302(b)*

52.211-7.................... 10.011(g) 11.302(c)*

52.211-8.................... 12.104(a)(2) 11.404(a)(2)

52.211-9.................... 12.104(a)(3) 11.404(a)(3)

52.211-10................... 12.104(b) 11.404(b)

52.211-11................... 12.204(a) 11.504(a)

52.211-11................... 12.202 11.502(b)(SIC)

52.211-12................... 12.202 11.502(b)(SIC)

52.211-12................... 12.204(b) 11.504(b)

52.211-13................... 12.204(c) 11.504(c)

52.211-14................... 12.304(a) 11.604(a)

52.211-15................... 12.304(b) 11.604(b)

52.211-16................... 12.403(a) 11.703(a)

52.211-17................... 12.403(b) 11.703(b)

52.211-18................... 12.403(c) 11.703(c)

52.242-14................... 12.505(a) 42.1305(a)

52.242-15................... 12.505(b) 42.1305(b)

52.242-16................... 12.505(c) 42.1305(c)

52.242-17................... 12.505(d) 42.1305(d)

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

* Corrected per SAF/AQC

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

52.244-6 Subcontracts for Commercial Items and Commercial Components.

As prescribed in 44.403, insert the following clause:

Subcontracts for Commercial Items and Commercial Components (Oct 1995)

(a) Definition.

Commercial item, as used in this clause, has the meaning

contained in the clause at 52.202-1, Definitions.

Subcontract, as used in this clause, includes a transfer of

commercial items between divisions, subsidiaries, or affiliates of

the Contractor or subcontractor at any tier.

(b) To the maximum extent practicable, the Contractor shall

incorporate, and require its subcontractors at all tiers to

incorporate, commercial items or nondevelopmental items as

components of items to be supplied under this contract.

(c) Notwithstanding any other clause of this contract, the

Contractor is not required to include any FAR provision or clause,

other than those listed below to the extent they are applicable and

as may be required to establish the reasonableness of prices under

Part 15, in a subcontract at any tier for commercial items or

commercial components:

(1) 52.222-26, Equal Opportunity (E.O. 11246);

(2) 52.222-35, Affirmative Action for Special Disabled and

Vietnam Era Veterans (38 U.S.C. 4212(a));

(3) 52.222-36, Affirmative Action for Handicapped Workers (29

U.S.C. 793); and

(4) 52.247-64, Preference for Privately Owned U.S.-Flagged

Commercial Vessels (46 U.S.C. 1241) (flow down not required for

subcontracts awarded beginning May 1, 1996).

(d) The Contractor shall include the terms of this clause,

including this paragraph (d), in subcontracts awarded under this

contract.

(End of clause)

52.246-11 [Amended]

85. & 86. Section 52.246-11 is amended in the introductory text by

removing ``46.202-3'' and inserting ``46.202-4'' in its place.

52.246-17 and 52.246-18 [Amended]

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

reserving Alternate I.

PART 53--FORMS

88. Section 53.212 is added to read as follows:

53.212 Acquisition of commercial items.

SF 1449 (OCT 1995), Solicitation/Contract/Order for Commercial

Items. SF 1449 is prescribed for use in solicitations and contracts for

commercial items. Agencies may prescribe additional detailed

instructions for use of the form.

89. Section 53.301-1449 is added to read as follows:

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

Items

BILLING CODE 6820-EP-P

TR18SE95.002

ral Register: September 18, 1995 (Volume 60, Number 180)]

s and Regulations]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

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

DEPARTMENT OF DEFENSE

48 CFR Part 3

[FAC 90-32; FAR Case 94-803; Item IV]

RIN 9000-AG16

Federal Acquisition Regulation; Whistleblower Protections for

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

ACTION: Technical amendment to final rule.

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

SUMMARY: At 60 FR 37774, July 21, 1995, a final rule was issued

pursuant to the Federal Acquisition Streamlining Act of 1994, Public

Law 103-355 (the Act). The Federal Acquisition Regulatory Council is

now issuing an Applicability Date, in addition to the Effective Date,

of the regulation.

DATES: Effective Date: September 19, 1995.

Applicability Date: This regulation will apply to contracts in

existence as of September 19, 1995, for reprisals to Government

contractor employees occurring on or after that date. The remedy

provided by this regulation does not apply to contracts otherwise

covered by provisions of 10 U.S.C. 2409a.

FOR FURTHER INFORMATION CONTACT: Mr. Julius Rothlein, Ethics Team Leader, at (703) 697-4349 in reference to this FAR case.

SUPPLEMENTARY INFORMATION:

Background:

FAC 90-30, FAR case 94-803, implemented Sections 6005 and 6006 of the Act, Whistleblower Protections for Contractor Employees. These

protections are now virtually identical for contractors employed by

both DOD and civilian agencies.

The rule as originally published did not specifically discuss the

extent of retroactivity. The rule did not require a contract clause. To

clarify this, the FAR Council is establishing the extent of the rule's

retroactivity.

Some existing Department of Defense contracts contain a contractor

employee whistleblower clause, based on prior statute (10 U.S.C.

2409a). That law was narrower in scope and only applied to certain DoD

contracts.

Dated: September 7, 1995.

Edward C. Loeb,

Deputy Project Manager for the Implementation of the Federal

Acquisition Streamlining Act of 1994.

[Federal Register: September 18, 1995 (Volume 60, Number 180)]

[Rules and Regulations]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

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

DEPARTMENT OF DEFENSE

48 CFR Parts 4, 5, 6, 9, 14, 15, 16, 17, 19, 20, 25, 26, 42, 44, 52

and 53

[FAC 90-32; FAR Case 94-780; Item V]

RIN 9000-AG37

Federal Acquisition Regulation; Small Business

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

ACTION: Final rule.

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

SUMMARY: The Federal Acquisition Regulatory Council has agreed on a

final rule to amend the Federal Acquisition Regulation (FAR) to

implement sections 7101(a) and 7106 and to augment regulation

implementation of Section 10004 of the Federal Acquisition Streamlining

Act of 1994 (Pub. L. 103-355), dated October 13, 1994. Section 7101(a)

of FASA deletes sections 15(e) and (f) from the Small Business Act.

Those sections established the priority for award of set-asides and

provided the statutory basis for a procurement preference for concerns

located in Labor Surplus Areas (LSA). Based on this deletion, this rule

removes the LSA set-aside program and LSA subcontracting program from the FAR.

Section 7106 of FASA revises sections 8 and 15 of the Small

Business Act to accommodate a Governmentwide goal of 5 percent for

women-owned small businesses. This rule deletes existing, separate

coverage relating to women-owned businesses and revises existing

coverage to place women-owned small businesses on an equal footing with small disadvantaged businesses. In connection with this revision, the

Standard Forms 294 and 295 are revised and streamlined.

Section 10004 of FASA, which requires the collection of specified

data through the Federal Procurement Data System, is being implemented

by FAR case 94-701. This rule augments that coverage by providing a

solicitation provision to collect the information on women-owned

businesses as required by that FAR case.

This regulatory action was subject to Office of Management and

Budget review under Executive Order 12866, dated September 30, 1993.

EFFECTIVE DATE: October 1, 1995.

FOR FURTHER INFORMATION CONTACT: Ms. Victoria Moss, Small Business Team Leader, at (202) 501-4764 in reference to this FAR case. For general information, contact the FAR Secretariat, Room 4037, GS Building, Washington, DC 20405 (202) 501-4755. Please cite FAC 90-32, FAR case 94-780.

SUPPLEMENTARY INFORMATION:

A. Background

The Federal Acquisition Streamlining Act of 1994 (the Act), Pub. L.

103-355, provides authorities that streamline the acquisition process

and minimize burdensome Government-unique requirements. The following

sections of the Federal Acquisition Streamlining Act are implemented by

this final rule:

Section 7101, Repeal of Certain Requirements, paragraph (a),

deletes sections 15(e) and (f) from the Small Business Act. These

sections established the priority for the award of contracts and

subcontracts in carrying out the set-aside programs.

Section 7106, Procurement Goals for Small Business Concerns Owned

by Women, establishes a Governmentwide goal for participation by women-owned small business concerns in prime and subcontracts and revises sections 8 and 15 of the Small Business Act to accommodate the goal.

Section 10004, Data Collection through the Federal Procurement Data

System, has been implemented in FAR case 94-701. This rule augments

that implementation.

These sections are implemented in this final rule by way of the

following substantial changes:

Elimination of the Labor Surplus Area (LSA) set-aside program;

Development of coverage giving women-owned small businesses equal

standing with small and small disadvantaged business in subcontracting

plans;

Issuance of an abbreviated provision to allow firms to represent

their status as small, small disadvantaged and/or women-owned small

business in one place;

Simplification and streamlining of the Standard Form (SF) 294,

Subcontract for Individual Contracts, and SF 295, Summary Subcontract

Report;

Inclusion of a solicitation provision collecting information on

women-owned businesses.

B. Regulatory Flexibility Act

The changes may have a significant economic impact on a substantial

number of small entities within the meaning of the Regulatory

Flexibility Act, 5 U.S.C. 601, et seq., because the rule requires large

business contractors to submit and negotiate a subcontracting plan

addressing subcontracting with women-owned small businesses. The rule

further provides for imposition of liquidated damages on those firms

which do not make a good faith effort to comply with that

subcontracting plan. A Final Regulatory Flexibility Analysis (FRFA) has

been prepared and will be provided to the Chief Counsel for Advocacy

for the Small Business Administration. A copy of the FRFA may be

obtained from the FAR Secretariat.

C. Paperwork Reduction Act

The Paperwork Reduction Act (Pub. L. 96-511) applies because the

final rule contains information collection requirements. Requests for

approval of the revised information collection requirements concerning

OMB Control Numbers 9000-0006, Subcontracting Plans/Subcontracting

Report for Individual Contracts, and 9000-0007, Summary Subcontract

Report, were submitted to the Office of Management and Budget under 44 U.S.C. 3501, et seq. The information collections were approved through March 31, 1998. Public comments concerning this request were invited through a Federal Register notice published on January 6, 1995. Based on the comments received concerning these information collection

requirements, substantial changes were made to SFs 294 and 295. The

most significant changes include removal of blocks which collect

information not essential to program management, changing the reporting

frequency for the SF 295 from quarterly to semi-annually (DOD only),

removing signature blocks from the SF 294 (to facilitate electronic

submittal) and clarifying the instructions on the reverse.

D. Public Comments

On January 6, 1995, a proposed rule was published in the Federal

Register (60 FR 2302). In response to the notice of proposed

rulemaking, 114 public comments were received. In order to more

effectively implement those sections of the Act addressed in the

proposed rule, the proposed rule has been divided into distinguishable

segments. Section 4004, Small Business Reservation, has been added to

FAR Case 94-770. Section 7102, Contracting Program for Certain Small

Business Concerns, remains under consideration in light of the Supreme

Court's recent decision in Adarand Construction, Inc. v. Pena, 115 S.

Ct. 2097 (1995), which set forth a new standard for evaluating the

constitutionality of race-based affirmative action programs, and the

President's directive of July 19, 1995, that executive agencies review

such programs under that standard. Section 7102 has been assigned FAR

case 94-781. The comments of all respondents were considered in

developing this final rule. As a result, the following changes have

been made:

Requirements for acquisition plans were revised to include

consideration of women-owned small business concerns.

Use of the provision entitled ``Priority for Labor Surplus Area

Concerns'' was limited to sealed bids.

The Standard Forms 294 and 295 were simplified and streamlined.

List of Subjects in 48 CFR Parts 4, 5, 6, 9, 14, 15, 16, 17, 19, 20,

25, 26, 42, 44, 52 and 53

Government procurement.

Dated: September 7, 1995.

Edward C. Loeb,

Deputy Project Manager for the Implementation of the Federal

Acquisition Streamlining Act of 1994.

Therefore, 48 CFR Parts 4, 5, 6, 9, 14, 15, 16, 17, 19, 20, 25, 26,

42, 44, 52 and 53 are amended as set forth below:

1. The authority citation for 48 CFR Parts 4, 5, 6, 9, 14, 15, 16,

17, 19, 20, 25, 26, 42, 44, 52 and 53 continues to read as follows:

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

U.S.C. 2473(c).

PART 4--ADMINISTRATIVE MATTERS

2. Section 4.602 is amended by revising paragraph (a)(2) to read as

follows:

4.602 Federal Procurement Data System.

(a) * * *

(2) A means of measuring and assessing the impact of Federal

contracting on the Nation's economy and the extent to which small,

small disadvantaged and women-owned small business concerns are sharing

in Federal contracts; and

* * * * *

3. Section 4.603 is added to read as follows:

4.603 Solicitation provision.

The contracting officer shall insert the provision at 52.204-5,

Women-Owned Business, in all solicitations that are not set aside for

small business concerns and that exceed the simplified acquisition

threshold in Part 13, when the contract is to be performed inside the

United States, its territories or possessions, Puerto Rico, the Trust

Territory of the Pacific Islands, or the District of Columbia.

PART 5--PUBLICIZING CONTRACT ACTIONS

5.002 [Amended]

4. Section 5.002 is amended in paragraph (c) by removing ``labor

surplus area'' and inserting ``women-owned small business'' in its

place.

5.207 [Amended]

5. Section 5.207 is amended in paragraph (c)(2)(xiii) by removing

``and labor surplus area concerns'', and in paragraph (d) by removing

``or labor surplus area (LSA)''.

5.404-1 [Amended]

6. Section 5.404-1 is amended in paragraph (b)(6)(ii) by removing

``or LSA''.

7. Section 5.503 is amended by revising the second sentence of

paragraph (a) to read as follows:

5.503 Procedures.

(a) * * * Contracting officers shall give small, small

disadvantaged and women-owned small business concerns maximum

opportunity to participate in these acquisitions.

* * * * *

PART 6--COMPETITION REQUIREMENTS

8. Section 6.203 is revised to read as follows:

6.203 Set-asides for small business concerns.

(a) To fulfill the statutory requirements relating to small

business concerns, contracting officers may set aside solicitations to

allow only such business concerns to compete. This includes contract

actions conducted under the Small Business Innovation Research Program

established under Pub. L. 97-219.

(b) No separate justification or determination and findings is

required under this part to set aside a contract action for small

business concerns.

(c) Subpart 19.5 prescribes policies and procedures that shall be

followed with respect to set-asides.

6.501 [Amended]

9. Section 6.501 is amended in paragraph (c) by removing ``and

disadvantaged''.

PART 9--CONTRACTOR QUALIFICATIONS

10. Section 9.104-3 is amended by revising the last sentence of

paragraph (c) to read as follows:

9.104-3 Application of standards.

* * * * *

(c) * * * If the pending contract requires a subcontracting plan

pursuant to Subpart 19.7, Subcontracting with Small, Small

Disadvantaged Business and Women-Owned Small Business Concerns, the

contracting officer shall also consider the prospective contractor's

compliance with subcontracting plans under recent contracts.

* * * * *

PART 14--SEALED BIDDING

14.205-1 [Amended]

11. Section 14.205-1(e) is amended in the last sentence after the

word ``Disadvantaged'' by inserting ``and women-owned''.

14.205-4 [Amended]

12. Section 14.205-4 is amended in the fourth sentence of paragraph

(b) by inserting after the word ``small'' the phrase ``, small

disadvantaged and women-owned small''; and removing ``and labor surplus

areas (see 20.104(e) and (f))''; and in the last sentence of paragraph

(b) by removing ``parts 19 and 20'' and inserting in its place ``part

19''.

13. Section 14.206 is revised to read as follows:

14.206 Small business set-asides.

(See Part 19.)

14.408-6 [Amended]

14. Section 14.408-6 is amended by removing paragraph (a)(3) and

redesignating paragraph (a)(4) as paragraph (a)(3).

14.502 [Amended]

15. Section 14.502(b)(3) is amended by removing the text following

the word ``business'' and inserting in its place ``set-aside (see

19.502-2).''

PART 15--CONTRACTING BY NEGOTIATION

15.705 [Amended]

16. Section 15.705 is amended in paragraph (b) by removing

``business and labor surplus area'' and inserting in its place ``,

small disadvantaged and women-owned small business''.

15.706 [Amended]

17. Section 15.706 is amended at the end of the first sentence of

paragraph (b) by removing ``and disadvantaged business utilization''

and inserting in its place ``business''; and in paragraph (d)(4) by

removing ``labor surplus area'' and inserting in its place ``women-

owned small business''.

15.905-1 [Amended]

18. Section 15.905-1 is amended in the first sentence of paragraph

(c) by inserting after the word ``individuals,'' the phrase ``women-

owned small businesses,''; and removing the phrase ``labor surplus

areas,''.

PART 16--TYPES OF CONTRACTS

16.103 [Amended]

19. Section 16.103 is amended in paragraph (d)(3) by removing the

words ``or labor surplus area concerns''.

16.505 [Amended]

20. Section 16.505 is amended in paragraphs (d)(4) and (d)(5)(ii)

by removing the phrase ``or labor surplus area''.

PART 17--SPECIAL CONTRACTING METHODS

17.104-1 [Amended]

21. Section 17.104-1 is amended--

a. In paragraph (a) by removing the phrase ``or labor surplus

area'',

b. In paragraph (b) by removing the phrase ``or labor surplus

area''; and

c. In paragraph (b)(2) by removing ``(Partial labor surplus area

set-asides are only authorized for DOD activities at this time.)''.

PART 19--SMALL BUSINESS PROGRAMS

22. The heading of Part 19 is revised to read as set forth above.

* * * * *

23. Section 19.001 is amended by adding, in alphabetical order, the

definitions Labor surplus area, Labor surplus area concern, and Women-

owned small business concern to read as follows:

19.001 Definitions.

* * * * *

Labor surplus area means a geographical area identified by the

Department of Labor in accordance with 20 CFR Part 654, Subpart A, as

an area of concentrated unemployment or underemployment or an area of

labor surplus.

Labor surplus area concern means a concern that together with its

first-tier subcontractors will perform substantially in labor surplus

areas. Performance is substantially in labor surplus areas if the costs

incurred under the contract on account of manufacturing, production, or

performance of appropriate services in labor surplus areas exceed 50

percent of the contract price.

* * * * *

Women-owned small business concern means a small business concern--

(a) Which is at least 51 percent owned by one or more women; or, in

the case of any publicly owned business, at least 51 percent of the

stock of which is owned by one or more women; and

(b) Whose management and daily business operations are controlled

by one or more women.

24. Section 19.201 is amended by revising paragraphs (a), (b),

(c)(9), and (d) to read as follows:

19.201 General policy.

(a) It is the policy of the Government to provide maximum

practicable opportunities in its acquisitions to small business

concerns, small disadvantaged business concerns, and women-owned small

business concerns. Such concerns shall also have the maximum

practicable opportunity to participate as subcontractors in the

contracts awarded by any executive agency, consistent with efficient

contract performance. The Small Business Administration (SBA) counsels

and assists small business concerns and assists contracting personnel

to ensure that a fair proportion of contracts for supplies and services

is placed with small business.

(b) Heads of contracting activities are responsible for effectively

implementing the small business programs within their activities,

including achieving program goals. They are to ensure that contracting

and technical personnel maintain knowledge of small, small

disadvantaged and women-owned small business program requirements and

take all reasonable action to increase participation in their

activities' contracting processes by these businesses.

(c) * * *

(9) Make recommendations in accordance with agency regulations as to whether a particular acquisition should be awarded under Subpart

19.5 as a set-aside, or under Subpart 19.8 as a Section 8(a) award.

(d) Small Business Specialists shall be appointed and act in

accordance with agency regulations.

25. Section 19.202 is amended by revising the first sentence to

read as follows:

19.202 Specific policies.

In order to further the policy in 19.201(a), contracting officers

shall comply with the specific policies listed

in this section and shall consider recommendations of the agency

Director of Small and Disadvantaged Business Utilization, or the

Director's designee, as to whether a particular acquisition should be

awarded under Subpart 19.5 or 19.8. * * *

26. Section 19.202-3 is revised to read as follows:

19.202-3 Equal low bids.

In the event of equal low bids (see 14.408-6), awards shall be made

first to small business concerns which are also labor surplus area

concerns, and second to small business concerns which are not also

labor surplus area concerns.

27. Section 19.202-5 is amended by revising paragraphs (a) and (b)

to read as follows:

19.202-5 Data collection and reporting requirements.

* * * * *

(a) Require each prospective contractor to represent whether it is

a small business, small disadvantaged business or women-owned small

business (see the provision at 52.219-1, Small Business Program

Representations).

(b) Accurately measure the extent of participation by small, small

disadvantaged, and women-owned small businesses in Government

acquisitions in terms of the total value of contracts placed during

each fiscal year, and report data to the SBA at the end of each fiscal

year (see Subpart 4.6).

* * * * *

28. Section 19.301 is amended by revising the first sentence of

paragraph (d) to read as follows:

19.301 Representation by the offeror.

(d) If the SBA determines that the status of a concern as a ``small

business,'' a ``small disadvantaged business'' or a ``women-owned small

business'' has been misrepresented in order to obtain a set-aside

contract, an 8(a) subcontract, a subcontract that is to be included as

part or all of a goal contained in a subcontracting plan, or a prime or

subcontract to be awarded as a result, or in furtherance of any other

provision of Federal law that specifically references Section 8(d) of

the Small Business Act for a definition of program eligibility, the SBA

may take action as specified in Section 16(d) of the Act. * * *

* * * * *

29. Section 19.304 is revised to read as follows:

19.304 Solicitation provision and contract clause.

(a) The contracting officer shall insert the provision at 52.219-1,

Small Business Program Representations, in solicitations exceeding the

micro-purchase threshold when the contract is to be performed inside

the United States, its territories or possessions, Puerto Rico, the

Trust Territory of the Pacific Islands, or the District of Columbia.

(b) When contracting by sealed bidding, the contracting officer

shall insert the provision at 52.219-2, Equal Low Bids, in

solicitations and contracts when the contract is to be performed inside

the United States, its territories or possessions, Puerto Rico, the

Trust Territory of the Pacific Islands, or the District of Columbia.

19.401 [Amended]

30. Section 19.401 is amended in paragraph (a) by removing the

phrase ``and small disadvantaged business''.

31. Section 19.402 is amended by revising paragraph (c)(1)(ii) to

read as follows:

19.402 Small Business Administration procurement center

representatives.

* * * * *

(c) * * *

(1) * * *

(ii) New qualified small, small disadvantaged and women-owned small business sources, and

* * * * *

32. Section 19.501 is amended in the third sentence of paragraph

(a) by removing ``or, except for the Department of Defense, restricted

to small businesses located in labor surplus areas''; and by revising

the first sentence of paragraph (h) to read as follows:

19.501 General.

* * * * *

(h) Section 305 of Public Law 103-403 authorizes public and private

organizations for the handicapped to participate for fiscal year 1995

in acquisitions set-aside for small business concerns. * * *

* * * * *

19.504 [Reserved]

33. Section 19.504 is removed and reserved.

34. Section 19.505 is revised to read as follows:

19.505 Rejecting Small Business Administration recommendations.

(a) If the contracting officer rejects a recommendation of the SBA

procurement center representative or breakout procurement center

representative, written notice shall be furnished to the appropriate

SBA center representative within 5 working days of the contracting

officer's receipt of the recommendation.

(b) The SBA procurement center representative may appeal the

contracting officer's rejection to the head of the contracting activity

(or designee) within 2 working days after receiving the notice. The

head of the contracting activity (or designee) shall render a decision

in writing, and provide it to the SBA representative within 7 working

days. Pending issuance of a decision to the SBA procurement center

representative, the contracting officer shall suspend action on the

acquisition.

(c) If the head of the contracting activity agrees that the

contracting officer's rejection was appropriate, the SBA procurement

center representative may--

(1) Within 1 working day, request the contracting officer to

suspend action on the acquisition until the SBA Administrator appeals

to the agency head (see paragraph (f) of this section); and

(2) The SBA shall be allowed 15 working days after making such a written request, within which the Administrator of SBA

(i) May appeal to the Secretary of the Department concerned, and

(ii) Shall notify the contracting officer whether the further

appeal has, in fact, been taken.

If notification is not received by the contracting officer within the

15-day period, it shall be deemed that the SBA request to suspend

contracting action has been withdrawn and that an appeal to the

Secretary was not taken.

(d) When the contracting officer has been notified within the 15-

day period that the SBA has appealed to the agency head, the head of

the contracting activity (or designee) shall forward justification for

its decision to the agency head. The contracting officer shall suspend

contract action until notification is received that the SBA appeal has

been settled.

(e) The agency head shall reply to the SBA within 30 working days

after receiving the appeal. The decision of the agency head shall be

final.

(f) A request to suspend action on an acquisition need not be

honored if the contracting officer determines that proceeding to

contract award and performance is in the public interest. The

contracting officer shall include in the contract file a statement of

the facts justifying the determination, and shall promptly notify the

SBA representative of the determination and provide a copy of the

justification.

35. Section 19.506 is revised to read as follows:

19.506 Withdrawing or modifying set-asides.

(a) If, before award of a contract involving a set-aside, the

contracting officer considers that award would be detrimental to the

public interest, (e.g., payment of more than a fair market price), the

contracting officer may withdraw the set-aside determination whether it

was unilateral or joint. The contracting officer shall initiate a

withdrawal of an individual set-aside by giving written notice to the

agency small business specialist and the SBA procurement center

representative, if one is assigned, stating the reasons. In a similar

manner, the contracting officer may modify a unilateral or joint class

set-aside to withdraw one or more individual acquisitions.

(b) If the agency small business specialist does not agree to a

withdrawal or modification, the case shall be promptly referred to the

SBA representative (if one is assigned) for review. If an SBA

representative is not assigned, disagreements between the agency small

business specialist and the contracting officer shall be resolved using

agency procedures. However, the procedures are not applicable to

automatic dissolutions of set-asides (see 19.507) or dissolution of

set-asides under $100,000.

(c) The contracting officer shall prepare a written statement

supporting any withdrawal or modification of a set-aside and include it

in the contract file.

19.508 [Amended]

36. Section 19.508 is amended by removing and reserving paragraph (b).

Subpart 19.7--Subcontracting With Small Business, Small

Disadvantaged Business and Women-Owned Small Business Concerns

37. The heading of Subpart 19.7 is revised to read as set forth

above.

38. Section 19.702 is amended by revising the introductory text and

paragraph (b)(4) to read as follows:

19.702 Statutory requirements.

Any contractor receiving a contract for more than the simplified

acquisition threshold in Part 13 shall agree in the contract that small

business concerns, small disadvantaged business concerns and women-

owned small business concerns shall have the maximum practicable

opportunity to participate in contract performance consistent with its

efficient performance. It is further the policy of the United States

that its prime contractors establish procedures to ensure the timely

payment of amounts due pursuant to the terms of their subcontracts with small business concerns, small disadvantaged business concerns and

women-owned small business concerns.

* * * * *

(b) * * *

(4) For modifications to contracts that do not contain the clause

at 52.219-8, Utilization of Small, Small Disadvantaged and Women-Owned

Small Business Concerns (or equivalent prior clauses).

* * * * *

39. Section 19.703 is amended by revising paragraph (a)

introductory text, (a)(1), and (b) to read as follows:

19.703 Eligibility requirements for participating in the program.

(a) To be eligible as a subcontractor under the program, a concern

must represent itself as a small business concern, small disadvantaged

business concern or a woman-owned small business concern.

(1) To represent itself as a small business concern or a women-

owned small business concern, a concern must meet the appropriate

definition in 19.001.

* * * * *

(b) A contractor acting in good faith may rely on the written

representation of its subcontractor regarding the subcontractor's

status. The contractor, the contracting officer, or any other

interested party can challenge a subcontractor's size status

representation by filing a protest, in accordance with 13 CFR 121.1601

through 121.1608. Protests challenging a subcontractor's disadvantaged

status representation shall be filed in accordance with 13 CFR 124.601

through 124.610. Protests challenging a subcontractor's status as a

women-owned small business concern shall be filed in accordance with

Small Business Administration procedures.

40. Section 19.704 is amended by revising paragraphs (a)(1),

(a)(3), (a)(4), (a)(6), and (b) to read as follows:

19.704 Subcontracting plan requirements.

(a) * * *

(1) Separate percentage goals for using small business concerns,

small disadvantaged business concerns and women-owned small business

concerns as subcontractors;

* * * * *

(3) A description of the efforts the offeror will make to ensure

that small business concerns, small disadvantaged business concerns and

women-owned small business concerns will have an equitable opportunity

to compete for subcontracts;

(4) Assurances that the offeror will include the clause at 52.219-

8, Utilization of Small, Small Disadvantaged and Women-Owned Small

Business Concerns (see 19.708(b)), in all subcontracts that offer

further subcontracting opportunities, and that the offeror will require

all subcontractors (except small business concerns) that receive

subcontracts in excess of $500,000 ($1,000,000 for construction) to

adopt a plan similar to the plan required by the clause at 52.219-9,

Small, Small Disadvantaged and Women-Owned Small Business

Subcontracting Plan (see 19.708(c));

* * * * *

(6) A recitation of the types of records the offeror will maintain

to demonstrate procedures adopted to comply with the requirements and

goals in the plan, including establishing source lists; and a

description of the offeror's efforts to locate small, small

disadvantaged and women-owned small business concerns and to award

subcontracts to them.

(b) Contractors may establish, on a plant or division-wide basis, a

master subcontracting plan which contains all the elements required by

the clause at 52.219-9, Small, Small Disadvantaged and Women-Owned

Small Business Subcontracting Plan, except goals. Master plans shall be

effective for a 1-year period after approval by the contracting

officer; however, a master plan when incorporated in an individual plan

shall apply to that contract throughout the life of the contract.

* * * * *

19.705-1 [Amended]

41. Section 19.705-1 is amended in the first sentence by removing

the phrase ``for Small and Small Disadvantaged Business Concerns''.

19.705-2 [Amended]

42. Section 19.705-2 is amended in the first sentence of paragraph

(d) introductory text by removing the words ``small business and small

disadvantaged'' and inserting in their place, ``small, small

disadvantaged and women-owned small''.

43. Section 19.705-4 is amended by revising the last sentence of

paragraph (b), the second and last sentences of paragraph (c); the

first sentence of paragraphs (d)(1) and (d)(5); and paragraphs (d)(4)

and (d)(6) to read as follows:

19.705-4 Reviewing the subcontracting plan.

* * * * *

(b) * * * If the plan, although responsive, evidences the bidder's

intention not to comply with its obligations under the clause at

52.219-8, Utilization of Small, Small Disadvantaged and Women-Owned Small Business Concerns, the contracting officer may find the bidder

nonresponsible.

(c) * * * Subcontracting goals should be set at a level that the

parties reasonably expect can result from the offeror expending good

faith efforts to use small, small disadvantaged and women-owned small

business subcontractors to the maximum practicable extent. * * * An

incentive subcontracting clause (see 52.219-10, Incentive

Subcontracting Program), may be used when additional and unique

contract effort, such as providing technical assistance, could

significantly increase subcontract awards to small, small disadvantaged

or women-owned small businesses.

(d) * * *

(1) Evaluate the offeror's past performance in awarding

subcontracts for the same or similar products or services to small,

small disadvantaged and women-owned small business concerns. * * *

* * * * *

(4) Evaluate subcontracting potential, considering the offeror's

make-or-buy policies or programs, the nature of the products or

services to be subcontracted, the known availability of small, small

disadvantaged and women-owned small business concerns in the

geographical area where the work will be performed, and the potential

contractor's long-standing contractual relationship with its suppliers.

(5) Advise the offeror of available sources of information on

potential small, small disadvantaged and women-owned small business

subcontractors, as well as any specific concerns known to be potential

subcontractors. * * *

(6) Obtain advice and recommendations from the SBA procurement

center representative (if any) and the agency small business

specialist.

19.705-7 [Amended]

44. Section 19.705-7 is amended--

a. In the first sentence of paragraph (a) by removing the word

``and'' the first time it appears and inserting a comma in its place;

and adding the phrase ``and women-owned small'' after the word

``disadvantaged'';

b. In the third sentence of paragraph (d) by removing the words

``business and'' and replacing them with a comma; and adding the phrase

``and women-owned small'' after the word ``disadvantaged'';

c. In the fourth sentence of paragraph (d) by removing the phrase

``business or'' and inserting a comma in its place; and adding the

phrase ``or woman-owned small'' after the word ``disadvantaged'';

d. In paragraph (f) by removing the words ``Business and'' and

replacing them with a comma; and adding the phrase ``and Women-Owned

Small'' after the word ``Disadvantaged''.

45. Section 19.706 is amended by revising paragraphs (a)(2) and

(a)(3) to read as follows:

19.706 Responsibilities of the cognizant administrative contracting

officer.

(a) * * *

(2) Information on the extent to which the contractor is meeting the plan's goals for subcontracting with eligible small, small

disadvantaged and women-owned small business concerns;

(3) Information on whether the contractor's efforts to ensure the participation of small, small disadvantaged and women-owned small

business concerns are in accordance with its subcontracting plan;

* * * * *

46. Section 19.708 is amended by revising paragraph (a)

introductory text, (b) and (c) to read as follows:

19.708 Solicitation provisions and contract clauses.

(a) The contracting officer shall insert the clause at 52.219-8,

Utilization of Small, Small Disadvantaged and Women-Owned Small

Business Concerns, in solicitations and contracts when the contract

amount is expected to be over the simplified acquisition threshold in

Part 13 unless--

* * * * *

(b)(1) The contracting officer shall, when contracting by

negotiation, insert the clause at 52.219-9, Small, Small Disadvantaged

and Women-Owned Small Business Subcontracting Plan, in solicitations

and contracts that

(i) Offer subcontracting possibilities,

(ii) Are expected to exceed $500,000 ($1,000,000 for construction of any public facility), and

(iii) Are required to include the clause at 52.219-8, Utilization

of Small, Small Disadvantaged and Women-Owned Small Business Concerns, unless the acquisition has been set aside or is to be accomplished under the 8(a) program. When contracting by sealed bidding rather than by negotiation, the contracting officer shall use the clause with its Alternate I.

(2) The contracting officer shall insert the clause at 52.219-16,

Liquidated Damages--Subcontracting Plan, in all solicitations and

contracts containing the clause at 52.219-9, Small, Small Disadvantaged

and Women-Owned Small Business Subcontracting Plan, or its Alternate I.

(c)(1) The contracting officer may, when contracting by

negotiation, insert in solicitations and contracts a clause

substantially the same as the clause at 52.219-10, Incentive

Subcontracting Program, when a subcontracting plan is required (see

19.702(a)(1)), and inclusion of a monetary incentive is, in the

judgment of the contracting officer, necessary to increase

subcontracting opportunities for small, small disadvantaged and women-

owned small business concerns, and is commensurate with the efficient

and economical performance of the contract; unless the conditions in

paragraph (c)(3) of this section are applicable. The contracting

officer may vary the terms of the clause as specified in paragraph

(c)(2) of this section.

(2) Various approaches may be used in the development of small,

small disadvantaged and women-owned small business concerns'

subcontracting incentives. They can take many forms, from a fully

quantified schedule of payments based on actual subcontract achievement

to an award fee approach employing subjective evaluation criteria (see

paragraph (c)(3) of this section). The incentive should not reward the

contractor for results other than those that are attributable to the

contractor's efforts under the incentive subcontracting program.

(3) As specified in paragraph (c)(2) of this section, the

contracting officer may include small, small disadvantaged and women-

owned small business subcontracting as one of the factors to be

considered in determining the award fee in a cost-plus-award-fee

contract; in such cases, however, the contracting officer shall not use

the clause at 52.219-10, Incentive Subcontracting Program.

19.811-3 [Amended]

47. Section 19.811-3(d)(3) is amended by removing the citation

``19.502-2(b)'' and inserting ``19.502-2(c)'' in its place.

Subpart 19.9 [Remove and Reserved]

48. Subpart 19.9, consisting of sections 19.901 and 19.902, is

removed and reserved.

PART 20 [REMOVED AND RESERVED]

49. Part 20 is removed and reserved.

PART 25--FOREIGN ACQUISITION

25.105 [Amended]

50. Section 25.105 is amended in paragraph (a)(1) by removing the

phrase ``that is not a labor surplus area concern''; and in paragraph

(a)(2) by removing the phrase ``or any labor surplus area concern''.

25.404 [REMOVED AND RESERVED]

51. Section 25.404 is removed and reserved.


PART 26--OTHER SOCIOECONOMIC PROGRAMS

52. The Note to Part 26 is amended by removing ``20,''.

26.104 [Amended]

53. Section 26.104 is amended in paragraphs (a) and (b) by removing

``Business and'' and inserting a comma in its place; and inserting

after the word ``Disadvantaged'' the phrase ``and Women-Owned Small''.

PART 42--CONTRACT ADMINISTRATION

54. Section 42.302 is amended by revising paragraphs (a)(52)

through (a)(55) to read as follows:

42.302 Contract administration functions.

* * * * *

(a) * * *

(52) Review, evaluate, and approve plant or division-wide small,

small disadvantaged and women-owned small business master

subcontracting plans.

(53) Obtain the contractor's currently approved company- or

division-wide plans for small, small disadvantaged and women-owned

small business subcontracting for its commercial products, or, if there

is no currently approved plan, assist the contracting officer in

evaluating the plans for those products.

(54) Assist the contracting officer, upon request, in evaluating an

offeror's proposed small, small disadvantaged and women-owned small

business subcontracting plans, including documentation of compliance

with similar plans under prior contracts.

(55) By periodic surveillance, ensure the contractor's compliance

with small, small disadvantaged and women-owned small business

subcontracting plans and any labor surplus area contractual

requirements; maintain documentation of the contractor's performance

under and compliance with these plans and requirements; and provide

advice and assistance to the firms involved, as appropriate.

* * * * *

42.501 [Amended]

55. Section 42.501 is amended in paragraph (b) by removing the word

``and'' and inserting a comma in its place; and inserting after the

word ``disadvantaged'' the phrase ``and women-owned small''.

56. Section 42.502 is amended by revising paragraphs (i) and (j) to

read as follows:

42.502 Selecting contracts for postaward orientation.

* * * * *

(i) Contractor's status, if any, as a small business, small

disadvantaged or women-owned small business concern;

(j) Contractor's performance history with small, small

disadvantaged and women-owned small business subcontracting programs;

* * * * *

PART 44--SUBCONTRACTING POLICIES AND PROCEDURES

44.202-2 [Amended]

57. Section 44.202-2 is amended in paragraph (a)(4) by removing the

phrase ``labor surplus area or''; removing the phrase ``business

concerns and'' and inserting a comma in its place; and inserting after

the word ``disadvantaged'' the phrase ``and women-owned small''.

44.303 [Amended]

58. Section 44.303 is amended in paragraph (e) by removing the

phrase ``labor surplus area concerns and''; and inserting after the

word ``disadvantaged'' the phrase ``and women-owned small''.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

59. Section 52.204-5 is added to read as follows:

52.204-5 Women-Owned Business.

As prescribed in 4.603, insert the following provision:

Women-Owned Business (Oct 1995)

(a) Representation. The offeror represents that it {time} is,

{time} is not a women-owned business concern.

(b) Definition. ``Women-owned business concern,'' as used in

this provision, means a concern which is at least 51 percent owned

by one or more women; or in the case of any publicly owned business,

at least 51 percent of the stock of which is owned by one or more

women; and whose management and daily business operations are

controlled by one or more women.

(End of provision)

52.216-21 [Amended]

60. Section 52.216-21 is amended by revising the clause date to

read (OCT 1995), in Alternates III and IV by revising the dates to read

``(OCT 1995)'' and by removing the phrase ``or labor surplus area''

from the introductory texts.

61. Section 52.219-1 is revised to read as follows:

52.219-1 Small Business Program Representations.

As prescribed in 19.304(a), insert the following provision:

Small Business Program Representations (Oct 1995)

(a)(1) The standard industrial classification (SIC) code for

this acquisition is __________ (insert SIC code).

(2) The small business size standard is ________ (insert size

standard).

(3) The small business size standard for a concern which submits

an offer in its own name, other than on a construction or service

contract, but which proposes to furnish a product which it did not

itself manufacture, is 500 employees.

(b) Representations. (1) The offeror represents and certifies as

part of its offer that it {time} is, {time} is not a small

business concern.

(2) (Complete only if offeror represented itself as a small

business concern in block (b)(1) of this section.) The offeror

represents as part of its offer that it {time} is, {time} is not a

small disadvantaged business concern.

(3) (Complete only if offeror represented itself as a small

business concern in block (b)(1) of this section.) The offeror

represents as part of its offer that it {time} is, {time} is not a

women-owned small business concern.

(c) Definitions. Small business concern, as used in this

provision, means a concern, including its affiliates, that is

independently owned and operated, not dominant in the field of

operation in which it is bidding on Government contracts, and

qualified as a small business under the criteria in 13 CFR Part 121

and the size standard in paragraph (a) of this provision.

Small disadvantaged business concern, as used in this provision,

means a small business concern that (1) is at least 51 percent

unconditionally owned by one or more individuals who are both

socially and economically disadvantaged, or a publicly owned

business having at least 51 percent of its stock unconditionally

owned by one or more socially and economically disadvantaged

individuals, and (2) has its management and daily business

controlled by one or more such individuals. This term also means a

small business concern that is at least 51 percent unconditionally

owned by an economically disadvantaged Indian tribe or Native

Hawaiian Organization, or a publicly owned business having at least

51 percent of its stock unconditionally owned by one or more of

these entities, which has its management and daily business

controlled by members of an economically disadvantaged Indian tribe

or Native Hawaiian Organization, and which meets the requirements of

13 CFR Part 124.

Women-owned small business concern, as used in this provision,

means a small business concern--

(1) Which is at least 51 percent owned by one or more women or,

in the case of any publicly owned business, at least 51 percent of

the stock of which is owned by one or more women; and

(2) Whose management and daily business operations are

controlled by one or more women.

(d) Notice.

(1) If this solicitation is for supplies and has

been set aside, in whole or

in part, for small business concerns, then the clause in this

solicitation providing notice of the set-aside contains restrictions

on the source of the end items to be furnished.

(2) Under 15 U.S.C. 645(d), any person who misrepresents a

firm's status as a small or small disadvantaged business concern in

order to obtain a contract to be awarded under the preference

programs established pursuant to sections 8(a), 8(d), 9, or 15 of

the Small Business Act or any other provision of Federal law that

specifically references section 8(d) for a definition of program

eligibility, shall--

(i) Be punished by imposition of fine, imprisonment, or both;

(ii) Be subject to administrative remedies, including suspension

and debarment; and

(iii) Be ineligible for participation in programs conducted

under the authority of the Act.

(End of provision)

52.219-2 [Removed]

52.220-1 [Redesignated as 52.219]

62. Section 52.219-2 is removed and 52.220-1 is redesignated in its

place and is revised to read as follows:

52.219-2 Equal Low Bids.

As prescribed in 19.304(b), insert the following provision:

Equal Low Bids (Oct 1995)

(a) This provision applies to small business concerns only.

(b) The bidder's status as a labor surplus area (LSA) concern

may affect entitlement to award in case of tie bids. If the bidder

wishes to be considered for this priority, the bidder must identify,

in the following space, the LSA in which the costs to be incurred on

account of manufacturing or production (by the bidder or the first-

tier subcontractors) amount to more than 50 percent of the contract

price.

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

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

(c) Failure to identify the labor surplus areas as specified in

paragraph (b) of this provision will preclude the bidder from

receiving priority consideration. If the bidder is awarded a

contract as a result of receiving priority consideration under this

provision and would not have otherwise received award, the bidder

shall perform the contract or cause the contract to be performed in

accordance with the obligations of an LSA concern.

(End of provision)

52.219-3 and 52.219-5 [Removed and reserved]

63. Sections 52.219-3 and 52.219-5 are removed and reserved.

64. Section 52.219-6 is amended by revising Alternate I to read as

follows:

52.219-6 Notice of Total Small Business Set-Aside.

* * * * *

Alternate I (OCT 1995). When the acquisition is for a product in

a class for which the Small Business Administration has determined

that there are no small business manufacturers or processors in the

Federal market in accordance with 19.502-2(c), delete paragraph (c).

65. Section 52.219-7 is amended by revising the date of the clause;

in paragraph (a) by removing the definitions Labor surplus area, Labor

surplus area concern, and Perform substantially in labor surplus areas;

and by revising paragraphs (b)(4) and (c) and Alternate I to read as

follows:

52.219-7 Notice of Partial Small Business Set-Aside.

* * * * *

Notice of Partial Small Business Set-Aside (Oct 1995)

* * * * *

(b) * * *

(4) The contractor(s) for the set-aside portion will be selected

from among the small business concerns that submitted responsive

offers on the non-set-aside portion. Negotiations will be conducted

with the concern that submitted the lowest responsive offer on the

non-set-aside portion. If the negotiations are not successful or if

only part of the set-aside portion is awarded to that concern,

negotiations will be conducted with the concern that submitted the

second-lowest responsive offer on the non-set-aside portion. This

process will continue until a contract or contracts are awarded for

the entire set-aside portion.

* * * * *

(c) Agreement. For the set-aside portion of the acquisition, a

manufacturer or regular dealer submitting an offer in its own name

agrees to furnish, in performing the contract, only end items

manufactured or produced by small business concerns inside the

United States, its territories and possessions, the Commonwealth of

Puerto Rico, the Trust Territory of the Pacific Islands, or the

District of Columbia. However, this requirement does not apply in

connection with construction or service contracts.

(End of clause)

Alternate I (OCT 1995). When the acquisition is for a product in

a class for which the Small Business Administration has determined

that there are no small business manufacturers or processors in the

Federal market in accordance with 19.502-2(c), delete paragraph (c).

66. Section 52.219-8 is amended by revising the section heading;

the clause heading and date; paragraph (a); redesignating paragraph (d)

as (e) and revising it; and adding a new paragraph (d) to read as

follows:

52.219-8 Utilization of Small, Small Disadvantaged and Women-Owned

Small Business Concerns.

* * * * *

Utilization of Small, Small Disadvantaged and Women-Owned Small

Business Concerns (Oct 1995)

(a) It is the policy of the United States that small business

concerns, small business concerns owned and controlled by socially

and economically disadvantaged individuals and small business

concerns owned and controlled by women shall have the maximum

practicable opportunity to participate in performing contracts let

by any Federal agency, including contracts and subcontracts for

subsystems, assemblies, components, and related services for major

systems. It is further the policy of the United States that its

prime contractors establish procedures to ensure the timely payment

of amounts due pursuant to the terms of their subcontracts with

small business concerns, small business concerns owned and

controlled by socially and economically disadvantaged individuals

and small business concerns owned and controlled by women.

* * * * *

(d) The term ``small business concern owned and controlled by

women'' shall mean a small business concern (i) which is at least 51

percent owned by one or more women, or, in the case of any publicly

owned business, at least 51 percent of the stock of which is owned

by one or more women, and (ii) whose management and daily business

operations are controlled by one or more women; and

(e) Contractors acting in good faith may rely on written

representations by their subcontractors regarding their status as a

small business concern, a small business concern owned and

controlled by socially and economically disadvantaged individuals or

a small business concern owned and controlled by women.

(End of clause)

67. Section 52.219-9 is amended by revising--

a. The section heading;

b. The clause heading and date;

c. The first two sentences of paragraph (c);

d. Paragraphs (d), (e), (i), and Alternate I to read as follows:

52.219-9 Small, Small Disadvantaged and Women-Owned Small Business

Subcontracting Plan.

* * * * *

Small, Small Disadvantaged and Women-Owned Small Business

Subcontracting Plan (Oct 1995)

* * * * *

(c) The offeror, upon request by the Contracting Officer, shall

submit and negotiate a subcontracting plan, where applicable, which

separately addresses subcontracting with small business concerns,

with small disadvantaged business concerns and with women-owned

small business concerns. If the offeror is submitting an individual

contract plan, the plan must separately address subcontracting with

small business concerns, small disadvantaged business concerns, and

women-owned small

business concerns with a separate part for the basic contract and

separate parts for each option (if any). * * *

(d) The offeror's subcontracting plan shall include the

following:

(1) Goals, expressed in terms of percentages of total planned

subcontracting dollars, for the use of small business concerns,

small disadvantaged business concerns and women-owned small business

concerns as subcontractors. The offeror shall include all

subcontracts that contribute to contract performance, and may

include a proportionate share of products and services that are

normally allocated as indirect costs.

(2) A statement of--

(i) Total dollars planned to be subcontracted;

(ii) Total dollars planned to be subcontracted to small business

concerns;

(iii) Total dollars planned to be subcontracted to small

disadvantaged business concerns; and

(iv) Total dollars planned to be subcontracted to women-owned

small business concerns.

(3) A description of the principal types of supplies and

services to be subcontracted, and an identification of the types

planned for subcontracting to (i) small business concerns, (ii)

small disadvantaged business concerns and (iii) women-owned small

business concerns.

(4) A description of the method used to develop the

subcontracting goals in paragraph (d)(1) of this clause.

(5) A description of the method used to identify potential

sources for solicitation purposes (e.g., existing company source

lists, the Procurement Automated Source System (PASS) of the Small

Business Administration, the National Minority Purchasing Council

Vendor Information Service, the Research and Information Division of

the Minority Business Development Agency in the Department of

Commerce, or small, small disadvantaged and women-owned small

business concerns trade associations). A firm may rely on the

information contained in PASS as an accurate representation of a

concern's size and ownership characteristics for purposes of

maintaining a small business source list. A firm may rely on PASS as

its small business source list. Use of the PASS as its source list

does not relieve a firm of its responsibilities (e.g., outreach,

assistance, counseling, publicizing subcontracting opportunities) in

this clause.

(6) A statement as to whether or not the offeror included

indirect costs in establishing subcontracting goals, and a

description of the method used to determine the proportionate share

of indirect costs to be incurred with (i) small business concerns,

(ii) small disadvantaged business concerns, and (iii) women-owned

small business concerns.

(7) The name of the individual employed by the offeror who will

administer the offeror's subcontracting program, and a description

of the duties of the individual.

(8) A description of the efforts the offeror will make to assure

that small, small disadvantaged and women-owned small business

concerns have an equitable opportunity to compete for subcontracts.

(9) Assurances that the offeror will include the clause in this

contract entitled ``Utilization of Small, Small Disadvantaged and

Women-Owned Small Business Concerns'' in all subcontracts that offer

further subcontracting opportunities, and that the offeror will

require all subcontractors (except small business concerns) who

receive subcontracts in excess of $500,000 ($1,000,000 for

construction of any public facility) to adopt a plan similar to the

plan agreed to by the offeror.

(10) Assurances that the offeror will (i) cooperate in any

studies or surveys as may be required, (ii) submit periodic reports

in order to allow the Government to determine the extent of

compliance by the offeror with the subcontracting plan, (iii) submit

Standard Form (SF) 294, Subcontracting Report for Individual

Contracts, and/or SF 295, Summary Subcontract Report, in accordance

with the instructions on the forms, and (iv) ensure that its

subcontractors agree to submit Standard Forms 294 and 295.

(11) A recitation of the types of records the offeror will

maintain to demonstrate procedures that have been adopted to comply

with the requirements and goals in the plan, including establishing

source lists; and a description of its efforts to locate small,

small disadvantaged and women-owned small business concerns and

award subcontracts to them. The records shall include at least the

following (on a plant-wide or company-wide basis, unless otherwise

indicated):

(i) Source lists (e.g., PASS), guides, and other data that

identify small, small disadvantaged and women-owned small business

concerns.

(ii) Organizations contacted in an attempt to locate sources

that are small, small disadvantaged or women-owned small business

concerns.

(iii) Records on each subcontract solicitation resulting in an

award of more than $100,000, indicating (A) whether small business

concerns were solicited and if not, why not, (B) whether small

disadvantaged business concerns were solicited and if not, why not,

(C) whether women-owned small business concerns were solicited and

if not, why not, and (D) if applicable, the reason award was not

made to a small business concern.

(iv) Records of any outreach efforts to contact (A) trade

associations, (B) business development organizations, and (C)

conferences and trade fairs to locate small, small disadvantaged and

women-owned small business sources.

(v) Records of internal guidance and encouragement provided to

buyers through (A) workshops, seminars, training, etc., and (B)

monitoring performance to evaluate compliance with the program's

requirements.

(vi) On a contract-by-contract basis, records to support award

data submitted by the offeror to the Government, including the name,

address, and business size of each subcontractor. Contractors having

company or division-wide annual plans need not comply with this

requirement.

(e) In order to effectively implement this plan to the extent

consistent with efficient contract performance, the Contractor shall

perform the following functions:

(1) Assist small, small disadvantaged and women-owned small

business concerns by arranging solicitations, time for the

preparation of bids, quantities, specifications, and delivery

schedules so as to facilitate the participation by such concerns.

Where the contractor's lists of potential small, small disadvantaged

and women-owned small business subcontractors are excessively long,

reasonable effort shall be made to give all such small business

concerns an opportunity to compete over a period of time.

(2) Provide adequate and timely consideration of the

potentialities of small, small disadvantaged and women-owned small

business concerns in all ``make-or-buy'' decisions.

(3) Counsel and discuss subcontracting opportunities with

representatives of small, small disadvantaged and women-owned small

business firms.

(4) Provide notice to subcontractors concerning penalties and

remedies for misrepresentations of business status as small, small

disadvantaged or women-owned small business for the purpose of

obtaining a subcontract that is to be included as part or all of a

goal contained in the Contractor's subcontracting plan.

* * * * *

(i) The failure of the Contractor or subcontractor to comply in

good faith with (1) the clause of this contract entitled

``Utilization Of Small, Small Disadvantaged and Women-Owned Small

Business Concerns,'' or (2) an approved plan required by this

clause, shall be a material breach of the contract.

(End of clause)

Alternate I (OCT 1995). When contracting by sealed bidding

rather than by negotiation, substitute the following paragraph (c)

for paragraph (c) of the basic clause:

(c) The apparent low bidder, upon request by the Contracting

officer, shall submit a subcontracting plan, where applicable, which

separately addresses subcontracting with small business concerns,

with small disadvantaged business concerns and with women-owned

small business concerns. If the bidder is submitting an individual

contract plan, the plan must separately address subcontracting with

small business concerns, small disadvantaged business concerns and

women-owned small business concerns, with a separate part for the

basic contract and separate parts for each option (if any). The plan

shall be included in and made a part of the resultant contract. The

subcontracting plan shall be submitted within the time specified by

the Contracting Officer. Failure to submit the subcontracting plan

shall make the bidder ineligible for the award of a contract.

52.219-10 [Amended]

68. Section 52.219-10 is amended in--

(a) The section heading and clause heading by removing ``for Small

and Small Disadvantaged Business Concerns'' and revising the clause

date to read ``Oct. 1995''.

(b) The introductory text by removing the text following

``19.708(c)(1),'' and inserting in its place ``insert the following clause:''; and

(c) Paragraph (a) of the clause by removing ``and'', inserting a

comma, and removing the period at the end of the sentence and inserting

``and a certain percentage to women-owned small business concerns.''

52.219-13 [Removed and reserved]

69. Section 52.219-13 is removed and reserved.

70. Section 52.219-16 is amended by revising the section heading,

clause heading and date; paragraph (a); the first sentence of paragraph

(b); and paragraphs (d) and (f) to read as follows:

52.219-16 Liquidated Damages--Subcontracting Plan.

* * * * *

Liquidated Damages--Subcontracting Plan (Oct 1995)

(a) Failure to make a good faith effort to comply with the

subcontracting plan, as used in this clause, means a willful or

intentional failure to perform in accordance with the requirements

of the subcontracting plan approved under the clause in this

contract entitled ``Small, Small Disadvantaged and Women-Owned Small

Business Subcontracting Plan,'' or willful or intentional action to

frustrate the plan.

(b) If, at contract completion, or in the case of a commercial

product plan, at the close of the fiscal year for which the plan is

applicable, the Contractor has failed to meet its subcontracting

goals and the Contracting Officer decides in accordance with

paragraph (c) of this clause that the Contractor failed to make a

good faith effort to comply with its subcontracting plan,

established in accordance with the clause in this contract entitled

``Small, Small Disadvantaged and Women-Owned Small Business

Subcontracting Plan,'' the Contractor shall pay the Government

liquidated damages in an amount stated. * * *

* * * * *

(d) With respect to commercial product plans; i.e., company-wide

or division-wide subcontracting plans approved under paragraph (g)

of the clause in this contract entitled ``Small, Small Disadvantaged

and Women-Owned Small Business Subcontracting Plan,'' the

Contracting Officer of the agency that originally approved the plan

will exercise the functions of the Contracting Officer under this

clause on behalf of all agencies that awarded contracts covered by

that commercial product plan.

* * * * *

(f) Liquidated damages shall be in addition to any other

remedies that the Government may have.

(End of clause)

71. Section 52.219-18 is amended by revising Alternate III to read

as follows:

52.219-18 Notification of Competition Limited to Eligible 8(a)

Concerns.

* * * * *

Alternate III (OCT 1995). When the acquisition is for a product

in a class for which the Small Business Administration has

determined that there are no small business manufacturers or

processors in the Federal market in accordance with 19.502-2(c),

delete paragraph (d).

52.219-22 [Removed and reserved]

72. Section 52.219-22 is removed and reserved.

52.220-2, 52.220-3, and 52.220-4 [Removed]

73. Sections 52.220-2, 52.220-3, and 52.220-4 are removed.

PART 53--FORMS

74. Section 53.219 is revised to read as follows:

53.219 Small business programs.

The following standard forms are prescribed for use in reporting

small, small disadvantaged and women-owned small business

subcontracting data, as specified in Part 19:

(a) SF 294 (REV OCT 1995), Subcontracting Report for Individual

contracts. (See 19.704(a)(5).)

(b) SF 295 (REV OCT 1995), Summary Subcontract Report. (See

19.704(a)(5).) SF 295 is authorized for local reproduction and a copy

is furnished for this purpose in Part 53 of the loose-leaf edition of

the FAR.

75. Sections 53.301-294 and 53.301-295 are revised to read as

follows:

BILLING CODE 6820-EP-P

53.301-294 Subcontracting Report for Individual Contracts.

TR18SE95.003

TR18SE95.004

BILLING CODE 6820-EP-C

53.301-295 Summary Subcontract Report.

TR18SE95.005

TR18SE95.006

ral Register: September 18, 1995 (Volume 60, Number 180)]

s and Regulations]

[Page 48272]

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DEPARTMENT OF DEFENSE

48 CFR Part 5

[FAC 90-32; FAR Case 95-606; Item VI]

RIN 9000-AG60

Federal Acquisition Regulation; Publicizing Contract Actions

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

ACTION: Final rule.

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

SUMMARY: The Civilian Agency Acquisition Council and the Defense

Acquisition Regulations Council have agreed to a final rule to revise

FAR section 5.207(b)(4), Preparation and transmittal of synopses. The

revision deletes the requirement for the Federal Information Processing

Standard (FIPS) Number in Commerce Business Daily synopses and, in lieu thereof, requests Government Printing Office (GPO) Billing Account Code information.

EFFECTIVE DATE: October 1, 1995.

FOR FURTHER INFORMATION CONTACT: Mr. Ralph De Stefano at (202) 501-1758 in reference to this FAR case. For general information, contact the FAR Secretariat, Room 4037, GS Building, Washington, DC 20405 (202) 501-4755. Please cite FAC 90-32, FAR case 95-606, Publicizing Contract

Actions.

SUPPLEMENTARY INFORMATION:

A. Background

For approximately 45 years, the Commerce Business Daily (CBD) has

provided free printing services to the agencies. During this period,

printing expenses were paid with appropriated funds. Beginning October

1, 1995, the CBD will no longer receive appropriated funds for this

purpose, and the Department of Commerce will be required to charge

agencies a fee for printing services. The cost will be a flat rate of

$18 per notice and bills will be sent to the agency that issues the

notice. The Government Printing Office (GPO) has agreed to provide

billing and collection services and, in order to facilitate this,

agencies will need to include their GPO account number in all CBD

notices. The proposed changes to the FAR will enable GPO to properly

bill and collect from the individual agency that has placed a CBD

notice.

B. Regulatory Flexibility Act

The final rule does not constitute a significant FAR revision

within the meaning of FAR 1.501 and Public Law 98-577 and publication

for public comment is not required. Therefore, the Regulatory

Flexibility Act does not apply. However, comments from small entities

concerning the affected FAR subpart will be considered in accordance

with 5 U.S.C. 610 of the Act. Such comments must be submitted

separately and cite FAR case 95-606 in correspondence.

C. Paperwork Reduction Act

The Paperwork Reduction Act (Pub. L. 96-511) does not apply because this final rule imposes no new reporting requirements or collections of information from offerors, contractors, or members of the public which require the approval of OMB under 44 U.S.C. 3501, et seq.

List of Subjects in 48 CFR Part 5

Government procurement.

Dated: September 7, 1995.

C. Allen Olson,

Director, Office of Federal Acquisition Policy.

Therefore, 48 CFR Part 5 is amended as set forth below:

1. The authority citation for 48 CFR Part 5 continues to read as

follows:

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

U.S.C. 2473(c).

PART 5--PUBLICIZING CONTRACT ACTIONS

2. Section 5.207 is amended by revising paragraph (b)(4), Item 4,

and paragraph (b)(6), Item 4, to read as follows:

5.207 Preparation and transmittal of synopses.

* * * * *

(b)(4) * * *

* * * * *

4. GOVERNMENT PRINTING OFFICE (GPO) BILLING ACCOUNT CODE.

(The originating office's account number used by the GPO for

billing and collection purposes. The field length is nine alpha-numeric

characters. The first three characters entered are ``GPO'' and then the

following six characters are the numeric account number. Agencies

should contact the GPO's Office of Comptroller for additional

information. Enter N/A if an account number has not been assigned.)

* * * * *

(b)(6) * * *

* * * * *

4. GPO123456!!

* * * * *

[Federal Register: September 18, 1995 (Volume 60, Number 180)]

[Rules and Regulations]

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DEPARTMENT OF DEFENSE

48 CFR Parts 28, 32, and 52

[FAC 90-32; FAR Case 94-762; Item VII]

RIN 9000-AG35

Federal Acquisition Regulation; Subcontractor Payments

AGENCIES: Department of Defense (DOD), General Services Administration

(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: This final rule is issued pursuant to the Federal Acquisition

Streamlining Act of 1994, Public Law 103-355 (the Act). The Federal

Acquisition Regulatory Council is amending the Federal Acquisition

Regulation (FAR) to implement Sections 2091 and 8105 of the Act which

address subcontractor payments, requests for information, and bonds.

This regulatory action was subject to Office of Management and Budget

review under Executive Order 12866, dated September 30, 1993.

EFFECTIVE DATE: October 1, 1995.

FOR FURTHER INFORMATION CONTACT: Mr. John S. Galbraith, Finance/Payment Team Leader, at (703) 697-6710, in reference to this FAR case. For general information, contact the FAR Secretariat, Room 4037, GS Building, Washington, DC 20405 (202) 501-4755. Please cite FAC 90-32, FAR case 94-762.

SUPPLEMENTARY INFORMATION:

A. Background

The Federal Acquisition Streamlining Act of 1994, Pub. L. 103-355

(the Act), provides authorities that streamline the acquisition process

and minimize burdensome government-unique requirements.

This notice announces revisions developed under FAR case 94-762.

The following sections of the Federal Acquisition Streamlining Act are

implemented by this final rule:

Section 2091 of the Act changed section 806, subsection (c), of the

Fiscal Years 1992 and 1993 Defense Authorization Act by striking the

existing subsection (c) and inserting a

new subsection (c). The stricken words had permitted the FAR Council to substitute FAR coverage for coverage otherwise required from the

Secretary of Defense. The substituted words require the FAR Council to

place in the FAR, for Government-wide applicability, the coverage

required of the Secretary of Defense.

Additionally, Section 8105 of the Act changed section 806 of the

Fiscal Years 1992 and 1993 Defense Authorization Act by striking the

existing subsection (b) and inserting a new subsection (b). The

stricken words dealt with deadlines for the implementation in

regulations of the statutory requirements, and that coverage is no

longer pertinent. The substituted language creates an exemption from

the requirements of the statute for the acquisition of commercial

items. Therefore, the clause prescription at FAR 28.106-4(b) has been

revised to reflect this exemption.

The final rule is, except for minor adjustments, the same language

which was previously in the Defense Federal Acquisition Regulation

Supplement, at 228.106-4-70, 228.106-6, 232.970, and 252.228-7006 and

proposed in the Federal Register on February 2, 1995.

It should be noted that Section 4104(b) of the Act concerning

subcontractor payments under smaller construction contracts is being

addressed in a separate case. This case, 94-762, addresses only the

changes required by Sections 2091 and 8105. It should also be noted

that the duplication of responsibilities for furnishing copies of bonds

in 28.106-6(d)(3) and the clause in 52.228-12 is intentional. The

statute assigns this responsibility to both the Government and

contractor. Finally, the language in 32.112-1(c) concerning

``administrative and other remedial action'' deliberately does not go

into detail as to what these actions are. The specifics of these areas

and especially the regulations and procedures are peculiar to each

agency. The wording is derived from the underlying statute.

B. Regulatory Flexibility Act

The Department of Defense, the General Services Administration, and

the National Aeronautics and Space Administration certify that this

final rule will not have a significant economic impact on a substantial

number of small entities within the meaning of the Regulatory

Flexibility Act, 5 U.S.C. 601, et seq., because it merely requires the

contracting officer or the contractor to furnish bonding information to

subcontractors upon request, and provides for remedies which only apply

to contractors who fail to make payment to subcontractors.

C. Paperwork Reduction Act

The Paperwork Reduction Act (Pub. L. 96-511) is deemed to apply

because the final rule contains information collection requirements.

Accordingly, a request for approval of a new information collection

requirement concerning Subcontractor Payments was submitted to the

Office of Management and Budget and approved through March 31, 1998,

OMB Control No. 9000-0135. Public comments concerning this request were

invited through a Federal Register notice at 60 FR 6526, February 2,

1995.

D. Public Comments

A proposed rule was published in the Federal Register at 60 FR

6602, February 2, 1995. During the public comment period, six comments

were received. For the most part, these comments raised editorial and

cross-reference points, which have been corrected. One commentor

expressed concern about the use of the term ``non-commercial'', and

suggested, as an alternative, the term ``other-than-commercial.'' While

the suggested term may be logically more accurate, the term ``non-

commercial'' has been used throughout all the new Part 32 coverage, and

appears to be correctly understood. It was concluded that this change

in terminology would not significantly improve the coverage, so the

suggestion was not adopted.

List of Subjects in 48 CFR Parts 28, 32, and 52

Government procurement.

Dated: September 7, 1995.

Edward C. Loeb,

Deputy Project Manager for the Implementation of the Federal

Acquisition Streamlining Act of 1994.

Therefore, 48 CFR Parts 28, 32, and 52 are amended as set forth

below:

1. The authority citation for 48 CFR Parts 28, 32, and 52 continues

to read as follows:

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

U.S.C. 2473(c).

PART 28--BONDS AND INSURANCE

2. Section 28.106-4 is amended by designating the existing text as

paragraph (a) and adding (b) to read as follows:

28.106-4 Contract clause.

* * * * *

(b) In accordance with Section 806(a)(3) of Pub. L. 102-190, as

amended by Sections 2091 and 8105 of Pub. L. 103-355, the contracting

officer shall insert the clause at 52.228-12, Prospective Subcontractor

Requests for Bonds, in solicitations and contracts with respect to

which a payment bond will be furnished pursuant to the Miller Act (see

28.102-1), except for contracts for the acquisition of commercial items

as defined in Subpart 2.1.

3. Section 28.106-6 is amended by adding paragraph (d) to read as

follows:

28.106-6 Furnishing information.

* * * * *

(d) Section 806(a)(2) of Pub. L. 102-190, as amended by Sections

2091 and 8105 of Pub. L. 103-355, requires that the Federal Government

provide information to subcontractors on payment bonds under contracts

for other than commercial items as defined in Subpart 2.1. Upon the

written or oral request of a subcontractor/supplier, or prospective

subcontractor/supplier, under a contract with respect to which a

payment bond has been furnished pursuant to the Miller Act, the

contracting officer shall promptly provide to the requester, either

orally or in writing, as appropriate, any of the following:

(1) Name and address of the surety or sureties on the payment bond.

(2) Penal amount of the payment bond.

(3) Copy of the payment bond. The contracting officer may impose reasonable fees to cover the cost of copying and providing a copy of the payment bond.

PART 32--CONTRACT FINANCING

4. Sections 32.112, 32.112-1 and 32.112-2 are added to read as

follows:

32.112 Payment of subcontractors under contracts for non-commercial

items.

32.112-1 Subcontractor assertions of nonpayment.

(a) In accordance with Section 806(a)(4) of Pub. L. 102-190, as

amended by Sections 2091 and 8105 of Pub. L. 103-355, upon the

assertion by a subcontractor or supplier of a Federal contractor that

the subcontractor or supplier has not been paid in accordance with the

payment terms of the subcontract, purchase order, or other agreement

with the prime contractor, the contracting officer may determine--

(1) For a construction contract, whether the contractor has made--

(i) Progress payments to the subcontractor or supplier in

compliance with Chapter 39 of Title 31, United States Code (Prompt

Payment Act); or

(ii) Final payment to the subcontractor or supplier in compliance with the terms of the subcontract, purchase order, or other agreement with the prime contractor;

(2) For a contract other than construction, whether the contractor has made progress payments, final payments, or other payments to the subcontractor or supplier in compliance with the terms of the subcontract, purchase order, or other agreement with the prime

contractor; or

(3) For any contract, whether the contractor's certification of

payment of a subcontractor or supplier accompanying its payment request

to the Government is accurate.

(b) If, in making the determination in paragraphs (a)(1) and (2) of

this section, the contracting officer finds the prime contractor is not

in compliance, the contracting officer may--

(1) Encourage the contractor to make timely payment to the

subcontractor or supplier; or

(2) If authorized by the applicable payment clauses, reduce or

suspend progress payments to the contractor.

(c) If the contracting officer determines that a certification

referred to in paragraph (a)(3) of this section is inaccurate in any

material respect, the contracting officer shall initiate administrative

or other remedial action.

32.112-2 Subcontractor requests for information.

(a) In accordance with Section 806(a)(1) of Pub. L. 102-190, as

amended by Sections 2091 and 8105 of Pub. L. 103-355, upon the request

of a subcontractor or supplier under a Federal contract for a non-

commercial item, the contracting officer shall promptly advise the

subcontractor or supplier as to--

(1) Whether the prime contractor has submitted requests for

progress payments or other payments to the Federal Government under the contract; and

(2) Whether final payment under the contract has been made by the Federal Government to the prime contractor.

(b) In accordance with 5 U.S.C. 552(b)(1), this subsection does not

apply to matters that are--

(1) Specifically authorized under criteria established by an

Executive order to be kept classified in the interest of national

defense or foreign policy; and

(2) Properly classified pursuant to such Executive order.


PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

6. Section 52.228-12 is added to read as follows:

52.228-12 Prospective Subcontractor Requests for Bonds.

As prescribed in 28.106-4(b), use the following clause:

Prospective Subcontractor Requests For Bonds (Oct 1995)

In accordance with Section 806(a)(3) of Pub. L. 102-190, as

amended by Sections 2091 and 8105 of Pub. L. 103-355, upon the

request of a prospective subcontractor or supplier offering to

furnish labor or material for the performance of this contract for

which a payment bond has been furnished to the Government pursuant

to the Miller Act, the Contractor shall promptly provide a copy of

such payment bond to the requester.

(End of clause)

[Federal Register: September 18, 1995 (Volume 60, Number 180)]

[Rules and Regulations]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

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DEPARTMENT OF DEFENSE

48 CFR Parts 32, 33, and 52

[FAC 90-32; FAR Case 94-731; Item VIII]

RIN 9000-AG52

Federal Acquisition Regulation; Reimbursement of Protest Costs

AGENCIES: Department of Defense (DOD), General Services Administration

(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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

SUMMARY: The Federal Acquisition Regulatory Council is promulgating

this final rule to allow the Government to seek reimbursement for

protest costs it has paid a protester where the protest has been

sustained based upon the awardee's misrepresentation. In addition to

any other remedies available, the Government may collect this debt by

offsetting the amount against any payment due the awardee under any

Government contract the awardee might have. This regulatory action was

subject to Office of Management and Budget review under Executive Order 12866, dated September 30, 1993.

EFFECTIVE DATE: October 1, 1995.

FOR FURTHER INFORMATION CONTACT: Mr. Craig Hodge, Protests/Disputes

Team Leader at (703) 274-8940 in reference to this FAR case. For

general information, contact the FAR Secretariat, Room 4037, GS

Building, Washington, DC 20405 (202) 501-4755. Please cite FAC 90-32,

FAR case 94-731, Reimbursement of Protest Costs.

SUPPLEMENTARY INFORMATION:

A. Background

The Federal Acquisition Streamlining Act of 1994 (the Act), Pub. L.

103-355, provides authorities that streamline the acquisition process

and minimize burdensome Government-unique requirements.

This case presents FAR amendments developed under FAR Case 94-731, Reimbursement of Protest Costs. Sections 1016, 1403, and 1435 of the Act provide that agencies may be required to pay protest and offer

preparation costs to protesters under certain circumstances. Often as

the result of discovery during a protest, misrepresentations may be

detected that could not have been reasonably known to the agency's

evaluators. A protest may be sustained where the award has been induced by a material misrepresentation by the awardee. Such situations often involve proposed ``key personnel.''

The agency is without effective remedy in such cases.

Theoretically, the agency could ask the Department of Justice to file a

lawsuit against the offeror making the misrepresentations. However, due

to the heavy workload of the Justice attorneys, this is not a practical

alternative. This FAR change will not adversely affect any substantive

right of an offeror. Under the language, the Government remedy is to

offset such costs on the same or an unrelated contract. If the offeror

believes that the offset is not justified, it may appeal the action to

the agency, or under the Contract Disputes Act to either a Board of

Contract Appeals or the Court of Federal Claims.

B. Regulatory Flexibility Act

The Department of Defense, the General Services Administration, and

the National Aeronautics and Space Administration certify that this

final rule will not have a significant economic impact on a substantial

number of small entities within the meaning of the Regulatory

Flexibility Act, 5 U.S.C. 601, et seq., because the vast majority of

contracts do not involve protests where misrepresentation is detected

through discovery.

C. Paperwork Reduction Act

The Paperwork Reduction Act does not apply because the proposed

changes to the FAR do not impose recordkeeping or information

collection requirements, or collections of information from offerors,

contractors, or members of the public which require the approval of the

Office of Management and Budget under 44 U.S.C. 3501, et seq.

D. Public Comments

A proposed rule was published in the Federal Register at 60 FR

15450, March 23, 1995. During the public comment period, seven comments were received. Some commenters were concerned that the proposed rule might be in conflict with the Debt Collection Act. However, based on Cecile Ind. v. Department of Defense, 995 F.2d 1052 (Fed. Cir. 1993), we do not believe that the Debt Collection Act applies. If it does, the final rule would comply with the Debt Collection Act. Some commenters felt the clause lacked adequate due process. In response, more procedural guidance has been supplied. In particular, the rule provides for a review by the head of the contracting activity, if requested, before there is any final decision. In addition, actions taken under the clause in this rule may be reviewed by courts or boards under the Contract Disputes Act, like any other contract administration decision.

Several commenters suggested the clause was not necessary because

the Government already has adequate remedies for contractor

misrepresentation. The drafting team agreed that there are additional

remedies. For example, the rule now provides that the contracting

officer should consider referring contractor misrepresentations to the

agency debarring official. However, these remedies do not always prove

adequate in the context of misrepresentations discovered as the result

of bid protests.

One commenter recommended clarification of whether the agency head or the contracting officer is responsible for issuing the demand

letter. The final rule states that this is the responsibility of the

contracting officer.

List of Subjects in 48 CFR Parts 32, 33, and 52

Government procurement.

Dated: September 7, 1995.

Edward C. Loeb,

Deputy Project Manager for the Implementation of the Federal

Acquisition Streamlining Act of 1994.

Therefore, 48 CFR Parts 32, 33, and 52 are amended as set forth

below:

1. The authority citation for 48 CFR Parts 32, 33, and 52 continues

to read as follows:

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

U.S.C. 2473(c).

PART 32--CONTRACT FINANCING

2. Section 32.602 is amended by adding paragraph (h) to read as

follows:

Sec. 32.602 General.

* * * * *

(h) Reimbursement of costs, as provided in 33.102(b), 33.104(h)(1),

and 33.105(g)(1), paid by the Government where a postaward protest is

sustained as a result of an awardee's misstatement, misrepresentation,

or miscertification.

3. Section 32.603 is revised to read as follows:

Sec. 32.603 Applicability.

Except as otherwise specified, this subpart applies to all debts to

the Government arising in connection with contracts and subcontracts

for the acquisition of supplies or services, and debts arising from the

Government's payment of costs, as provided in 33.102(b), 33.104(h)(1),

and 33.105(g)(1), where a postaward protest is sustained as a result of

an awardee's misstatement, misrepresentation, or miscertification.

4. Section 32.605(b) is amended by inserting the phrase ``including

reimbursement of protest costs,'' between the words ``contract debts,''

and ``the contracting officer''.

PART 33--PROTESTS, DISPUTES, AND APPEALS

5. Section 33.102 is amended by adding paragraph (b)(3) to read as

follows:

Sec. 33.102 General.

* * * * *

(b) * * *

(3) Require the awardee to reimburse the Government's costs, as

provided in this paragraph, where a postaward protest is sustained as

the result of an awardee's intentional or negligent misstatement,

misrepresentation, or miscertification. In addition to any other remedy

available, and pursuant to the requirements of Subpart 32.6, the

Government may collect this debt by offsetting the amount against any

payment due the awardee under any contract between the awardee and the Government.

(i) When a protest is sustained by GAO or GSBCA under circumstances that may allow the Government to seek reimbursement for protest costs, the contracting officer will determine whether the protest was sustained based on the awardee's negligent or intentional

misrepresentation. If the protest was sustained on several issues,

protest costs shall be apportioned according to the costs attributable

to the awardee's actions.

(ii) The contracting officer shall review the amount of the debt, degree of the awardee's fault, and costs of collection, to determine

whether a demand for reimbursement ought to be made. If it is in the

best interests of the Government to seek reimbursement, the contracting

officer shall notify the contractor in writing of the nature and amount

of the debt, and the intention to collect by offset if necessary. Prior

to issuing a final decision, the contracting officer shall afford the

contractor an opportunity to inspect and copy agency records pertaining

to the debt to the extent permitted by statute and regulation, and to

request review of the matter by the head of the contracting activity.

(iii) When appropriate, the contracting officer shall also refer

the matter to the agency debarment official for consideration under

Subpart 9.4.

* * * * *

6. Section 33.104 is amended by adding paragraph (h)(7) to read as

follows:

33.104 Protests to GAO.

* * * * *

(h) * * *

(7) If the Government pays costs, as provided in paragraph (h)(1) of this section, where a postaward protest is sustained as the result

of an awardee's intentional or negligent misstatement,

misrepresentation, or miscertification, the Government may require the

awardee to reimburse the Government the amount of such costs. In

addition to any other remedy available, and pursuant to the

requirements of Subpart 32.6, the Government may collect this debt by

offsetting the amount against any payment due the awardee under any

contract between the awardee and the Government.

7. Section 33.105 is amended by adding paragraph (g)(5) to read as

follows:

33.105 Protests to GSBCA.

* * * * *

(g) * * *

(5) If the Government pays costs, as provided in paragraph (g)(1) of this section, where a postaward protest is sustained as the result of an awardee's intentional or negligent misstatement,

misrepresentation, or miscertification, the Government may require the

awardee to reimburse the Government the amount of such costs. In

addition to any other remedy available, and pursuant to the

requirements of Subpart 32.6, the Government may collect this debt by

offsetting the amount against any payment due the awardee under any

contract between the awardee and the Government.

* * * * *

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

8. Section 52.233-3 is amended by adding paragraph (f) to read as

follows:

52.233-3 Protest after Award.

* * * * *

Protest After Award (Oct 1995)

* * * * *

(f) If, as the result of the Contractor's intentional or

negligent misstatement, misrepresentation, or miscertification, a

protest related to this contract is sustained, and the Government

pays costs, as provided in FAR 33.102(b)(2), 33.104(h)(1), or

33.105(g)(1), the Government may require the Contractor to reimburse

the Government the amount of such costs. In addition to any other

remedy available, and pursuant to the requirements of Subpart 32.6,

the Government may collect this debt by offsetting the amount

against any payment due the Contractor under any contract between

the Contractor and the Government.

(End of clause)

(End of FAC 90-32)