JK C 463,593 1673 A34 U. S. GENERAL SERVICES ADMINISTRATION FEDERAL PROCUREMENT REGULATIONS } : PROPERTY OF University of Michigan Libraries 1817 ARTES SCIENTIA VERITAS : 1 FEDERAL PROCUREMENT REGULATIONS MARCH 1959 u. S. GOVERNMENT ГК 1673 A34 D BY GENERAL SERVICES ADMINISTRATION, WASHINGTON 25, D. C. REGULATIONS ARE CONTAINED IN CHAPTER I, TITLE 41, CODE OF FEDERAL REGULATIONS in DEPOSITED BY THE UNITED STATES OF AMERICA FOREWORD This loose-leaf volume contains the Federal Procurement Regula- tions which are applicable to Government procurements of goods and services. These Regulations are part of the Federal Procurement Regulations System which has been established to publish, in readily accessible and codified form, such procurement policies and procedures. The Regulations and the System are designed to minimize needless inconsistencies, complexities, or inequities in Government procurement practices. As the Federal Procurement Regulations System is further implemented, the needs of small business concerns will continue to be given particular consideration with the view of facilitating and extending their participation in Government contract work. It is hoped that the Federal Procurement Regulations System will contribute to the objective stated by the President in September 1956: "Streamlining of procurement and contracting methods can benefit not only the industries which provide goods and services but also can bring about substantial operating economies within the Government.” шкой Le LOETE FRANKLIN FLOETE ete e Administrator of General Services 67 i INTRODUCTION 1. Establishment of Federal Procure- ment Regulations System. The Chapter I of this Title 41 establishes a new Fed- eral Procurement Regulations System. Its application to the Department of Defense is limited to the extent stated in paragraph 5 of this Introduction. The System consists of two major ele- ments: (a) procurement policies and procedures for Government agencies prescribed by the Administrator of General Services in the "Federal Pro- curement Regulations" (FPR), and (b) the publication of agency implementing regulations in succeeding chapters of Title 41, including the gradual transfer to such succeeding chapters of existing agency regulations affecting procure- ment. Ultimately, Government procure- ment regulations will be contained in the same title of the Code of Federal Regula- tions for convenient utilization by both the public and the Government per- sonnel. Greater consistency in agency procurement regulations is anticipated under this System. 2. Background. The System is an out- growth of recommendations of the Presi- dent's Cabinet Committee on Small Business and the work of the interagency Task Force for Review of Government Procurement Policies and Procedures, which was established by the Adminis- trator of General Services pursuant to a Presidential directive of September 26, 1956. The System is intended to promote the objectives of eliminating needless inconsistencies between agency procure- ment regulations, minimizing complex- ities and inequities in procurement policies and procedures, and making agency procurement regulations more readily available to businessmen and others concerned. 3. Other procurement regulations. Procurement agencies are expected to issue, in the FEDERAL REGISTER, Significant agency procurement policies and pro- cedures which implement or supplement the Federal Procurement Regulations, in order that business concerns and others interested may be informed of these policies and procedures. These regula- tions as prepared for the FEDERAL REG- ISTER Will be in conformity with Federal Procurement Regulations style, arrange- ment, and numbering sequence, in order to facilitate their use. Further instruc- tions for agency implementation will be furnished later. 4. Effect on existing GSA regulations. Existing GSA Governmentwide procure- ment regulations will gradually be trans- ferred to FPR (Chapter I) To this end, certain GSA regulations pertaining to procurement contained in Title 44 of the Code of Federal Regulations have been today repealed or superseded, as shown elsewhere in this issue of the FEDERAL REGISTER.¹ 5. Relationship to the Department of Defense. While the Federal Procure- ment Regulations are applicable to all executive agencies, they are not made mandatory on the Department of De- fense, except with respect to matters concerning standard Government forms and clauses, Federal Specifications and Standards, and except as directed by the President, Congress, or other authority Therefore, the extent of implementation of FPR by the Department of Defense and participation in the System will be determined by that Department. How- ever, coordination with that Department in the development and issuance of these regulations is contemplated. 6. Availability of the FPR. The Fed- eral Procurement Regulations will be published in the FEDERAL REGISTER. They will also be published in loose-leaf vol- ume form. The Regulations will be available in both forms from the Super- intendent of Documents, Government Printing Office, Washington 25, D.C., at nominal cost. All agency procurement regulations (as well as FPR) published in Title 41 may be obtained from the Superintendent of Documents through an annual subscription to the FEDERAL REGISTER, and an annual accumulation of these regulations may be obtained from the same source by purchase of the volume containing Title 41 of the Code of Federal Regulations. 7. Publishing technique. A unique feature of the FPR is its publication in the loose-leaf volume in a form which permits its publication in the FEDERAL REGISTER Without necessity for editorial rearrangement. Agencies implementing the FPR may employ the same technique with resultant economies and adminis- trative simplicity. 8. Program for completing FPR. The Federal Procurement Regulations pro- gram contemplates the issuance by the Administrator of General Services of a 'FEDERAL REGISTER for March 17, 1959 (24 F.R. 1907) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 1, MAR, 1959) iii INTRODUCTION as comprehensive set of procurement pol- icies and procedures which will be devel- oped and published in the months to come, and thereafter be revised needed. This issue of the of the FEDERAL REGISTER' Contains a substantial portion of the regulatory material for inclusion in FPR. It is expected that initial pub- lication of the Federal Procurement Regulations will be substantially com- pleted within the next 12 months. 9. Delegation of authority. There is today issued in the Notices Section of the FEDERAL REGISTER a general delegation to executive agencies of authority to use Title III of the Federal Property and Administrative Services Act of 1949. The delegation will enable agencies to utilize fully the policies and procedures set forth in Part 1-3 of the Federal Procurement Regulations. This will assure a greater degree of uniformity in such matters, as contemplated by the recent enactment of Public Law 85-800 which specifically con- templated this delegation. Agencies utilizing Title III of the Act for negoti- ated contracts may do so only subject to the safeguards, limitations, and controls of Part 1-3. The 10. Suggestions solicited. new regulatory material becomes manda- tory approximately six months from the date hereof. This will allow agencies and the public adequate opportunity to ap- praise them and submit recommenda- tions for any needed improvement. IPART II OF FEDERAL REGISTER FOR MARCH 17, 1959 (24 F.R. 1933). 2FEDERAL REGISTER FOR MARCH 17, 1959 (24 F.R. 1921) FEDERAL PROCUREMENT REGULATIONS iv (FPR CIRC. !, MAR, 1959) DEPOSITED BY THE TABLE OF PARTS UNITED STATES OF AMERICA Title 41-PUBLIC CONTRACTS Chapter I-Federal Procurement Regulations Part 1-1 General. 1-2 1-3 1-4 Procurement by formal advertising. Procurement by negotiation. Special types and methods of pro- curement. 1-5 Special and directed sources of supply. 1-6 Foreign purchases. 1-7 Contract clauses. 1-8 1-10 1-11 1-12 Labor. 1-14 1-15 Termination of contracts. Bonds and insurance. Federal, State, and local taxes. Inspection and acceptance. Contract cost principles and pro- cedures. 1-16 Procurement forms. 1-17 Extraordinary contractual actions to facilitate the national defense. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 30, DECEMBER 1962) V CONTENTS OF PART 1-1 GENERAL DEPOSITED BY THE UNIBO STATES OF AMERICA Sec. 1-1.000 PART 1-1-GENERAL Scope of part. Subpart 1-1.0-Regulation System Scope of subpart. Purpose. Authority. Applicability. Exclusions. Issuance. Publication. 1-1.001 1-1.002 1-1.003 1-1.004 1-1.005 1-1.006 1-1.006-1 Code arrangement. 1-1.006-2 1-1.006-3 Copies. 1-1.006-4 1-1.007 1-1.007-1 General plan. 1-1.007-2 1-1.007-3 1-1.008 1-1.009 1-1.009-1 1-1.009-2 Coordination. Arrangement. Numbering. Citation. Agency implementation. Deviation. Description. Procedure. Subpart 1-1.1-[Reserved] Subpart 1-1.2-Definition of Terms Definitions. Sec. 1-1.305-4 Optional use of Interim Federal Specifications. 1-1.305-5 Use of Federal and Interim Fed- eral Specifications in Federal construction contracts. 1-1.305-6 Military and departmental speci- fications. 1-1.306 Standards. 1-1.306-1 Mandatory use and application of 1-1.307 1-1.307-1 1-1.307-2 1-1.307-3 1-1.307-4 1-1.307-5 Federal Standards. Purchase descriptions. Applicability. General requirements. Commercial, and State and local government specifications and standards. Brand name products or equal. Limitations on use of brand name or equal purchase descriptions. 1-1.307-6 Invitation for bids, brand name or equal descriptions. 1-1.307-7 Bid evaluation and award, brand name or equal descriptions. 1-1.307-8 Procedure for negotiated procure- ments and small purchases. 1-1.307-9 Inspection and acceptance. [Reserved.] [Reserved.] Responsible prospective contrac- tor. 1-1.201 1-1.202 Executive agency. 1-1.308 1-1.203 Federal agency. 1-1.309 1-1.204 Head of the agency. 1-1.310 1-1.205 Frocuring activity. 1-1.206 Head of the procuring activity. 1-1.310-1 Scope. 1-1.207 Contracting officer. 1-1.310-2 General. 1-1.208 Contract. 1-1.310-3 Applicability. 1-1.209 Procurement. 1-1.210 [Reserved.] 1-1.211 Manufacturer. 1-1.212 Regular dealer. 1-1.213 Construction contractor. 1-1.214 Service contractor. 1-1.215 1-1.216 United States. 1-1.217 1-1.218 Negotiation. 1-1.219 Contract modification. 1-1.220 Procurement item. Subpart 1-1.3-General Policies 1-1.300 Scope of subpart. 1-1.301 Methods of procurement. 1-1.302 Procurement sources. 1-1.302-1 General. 1-1.302-2 Production and research and de- velopment pools. Government instrumentality. Possessions. 1-1.310-4 General policy. 1-1.310-7 Standards. Determination of responsibility. Information regarding responsi- bility. 1-1.310-8 Capacity and credit of small busi- ness concerns. Pre-award on-site evaluation. 1-1.310-10 Performance records. 1-1.310-11 Subcontractor responsibility. Priorities, allocations, and allot- ments. [Reserved.] Solicitations for informational or planning purposes. Use of liquidated damages pro- visions in procurement con- tracts. General. 1-1.310-5 1-1.310-6 1-1.310-9 1-1.311 1-1.312 1-1.313 Records of contract actions. 1-1.314 1-1.315 1-1.315-1 1-1.303 Approval signatures. 1-1.315-2 Policy. 1-1.304 [Reserved.] 1-1.315-3 1-1.305 Specifications. 1-1.305-1 Mandatory use of Federal Specifi- 1-1.316 cations. 1-1.316-1 1-1.316-2 Contract provisions. Time of delivery or performance. Scope and applicability. 1-1.305-2 Exceptions to mandatory use of Federal Specifications. 1-1.305-3 Deviations from Federal Specifi- cations. General. 1-1.316-3 Factors to be considered. 1-1.316-4 Terms. 1-1.316-5 Time of delivery clauses. 1-1.317 Noncollusive bids and proposals. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 36, AUGUST 1963) vii CONTENTS OF PART 1-1 GENERAL Sec. Subpart 1-1.4-[Reserved] 1-1.700 Subpart 1-1.5-Contingent Fees 1-1.701 1-1.500 Scope of subpart. 1-1.701-1 1-1.501 Applicability. 1-1.502 Improper influence. 1-1.701-2 Affiliates. 1-1.503 Covenant. 1-1.701-3 1-1.504 1-1.504-1 1-1.504-2 1-1.504-3 1-1.504-4 1-1.504-5 General principles and standards applicable to the covenant. Use of principles and standards. Contingent character of the fee. Exceptions to the prohibition. Bona fide employee. 1-1.701-4 Sec. Subpart 1-1.7-Small Business Concerns General. Definitions. Small business concern (for Gov- ernment procurement). Dominance in field of operation. Non-manufacturer. 1-1.701-5 Number of employees. 1-1.701-6 1-1.701-7 1-1.701-8 1-1.701-9 1-1.504-6 1-1.505 1-1.506 1-1.507 1-1.507-1 1-1.507-2 1-1.507-3 1-1.508 Bona fide established commercial or selling agency maintained by the contractor for the pur- pose of securing business. Fees for "information." Representation and agreement re- quired from prospective con- tractors. Interpretation of the representa- tion. Use of Standard Form 119. Form prescribed. Statement in lieu of form. Exceptions. Enforcement. 1-1.508-1 Failure or refusal to furnish rep- 1-1.508-2 resentation and agreement Failure or refusal to furnish Standard Form 119. 1-1.508-3 Misrepresentations or violations of the covenant against con- tingent fees. 1-1.509 Preservation of records. 1-1.702 1-1.703 Industry. Certificate of competency. Set-aside for small business. Small business restricted adver- tising. Small business policies. Determination of status as a small business concern. 1-1.703-1 Representation by bidder or of- feror. 1-1.703-2 Protest regarding small business status. 1-1.704 1-1.705 1-1.705-1 1-1.705-2 1-1.705-3 1-1.705-4 1-1.705-5 1-1.705-6 1-1.705-7 1-1.706 Agency program direction and operation [Reserved] Cooperation with the Small Busi- ness Administration. General. SBA representatives. Screening of procurements. Access to information. Joint small business set-asides. Certificates of competency. Performance of contract by SBA. Procurement set-asides for small business. Subpart 1-1.6-Debarred and Ineligible Bidders 1-1.706-1 General. 1-1.706-2 Review of SBA set-aside proposals. 1-1.706-3 Withdrawal or modification of set-asides. 1-1.706-4 Reporting for Department of Commerce Procurement Synop- sis. 1-1.601 1-1.602 Purpose. Establishment and maintenance of a list of firms or individuals debarred or ineligible. 1-1.706-5 Total set-asides. 1-1.706-6 1-1.603 Bases for debarment and ineligi- ble list entry. 1-1.706-7 Partial set-asides. Automatic asides. dissolution of set- 1-1.706-8 Contract authority. 1-1.604 Treatment to be accorded firms or individuals in debarred or in- eligible status. 1-1.707 [Reserved.] 1-1.708 Certificate of competency pro- 1-1.605 Causes and conditions applicable to determination of debarment by an executive agency. 1-1.708-2 1-1.708-3 1-1.606 Agency procedure. 1-1.607 General Services Administration 1-1.709 Records and reports. responsibility. 1-1.710 1-1.608 Supplemental names included for gram. 1-1.708-1 General. Applicability and procedure. Conclusiveness of certificate of competency. Subcontracting with small busi- ness concerns. other causes. 1-1.710-1 General. FEDERAL PROCUREMENT REGULATIONS viii (FPR CIRC, 32, JUNE 1963) CONTENTS OF PART 1-1 GENERAL Sec. Sec. 1-1.710-2 Small business subcontracting program. 1-1.710-3 Required clauses. 1-1.710-4 Review of subcontracting pro- 1-1.1001 1-1.1002 gram. 1-1.800 1-1.801 Subpart 1-1.8-Labor Surplus Area Concerns Scope of subpart. Definitions. 1-1.801-1 Labor surplus area concern. 1-1.801-2 Labor surplus area. 1-1.801-3 Small business concern. 1-1.802 Labor surplus area policies. 1-1.802-1 General policy. 1-1.802-2 Specific policies. 1-1.802-3 Buy American Act. 1-1.803 1-1.804 1-1.304-1 [Reserved]. Partial set-asides for labor sur- plus area concerns. General. 1-1.804-2 Notice to bidders or offerors. 1-1.804-3 Award procedures. 1-1.804-4 1-1.804-5 1-1.805 1-1.805-1 Withdrawal of set-asides. Contract authority. Subcontracting with labor sur- plus area concerns. General. 1-1.805-2 Labor surplus area subcontract- 1-1.805-3 ing program. Required clauses. 1-1.805-4 Review of subcontracting pro- 1-1.806 gram. Depressed industries. 1-1.806-1 General. 1-1.806-2 Apparel industry (Notification No. 53). 1-1.806-3 Petroleum and petroleum prod- ucts industry (Notification No. 58). 1-1.806-4 Shipbuilding industry (Notifica- Subpart 1-1.10-Publicizing Procurement Actions 1-1.1003 General policy. Availability of invitations for bids and requests for propos- als. Synopses of proposed procure- ments. 1-1.1003-1 Department of Commerce Syn- opsis. 1-1.1003-2 General requirements. 1-1.1003-3 Research and development. 1-1.1003-4 Synopses of subcontract oppor- 1-1.1003-5 1-1.1003-6 1-1.1003-7 1-1.1004 1-1.1004-1 1-1.1005 tunities. Pre-invitation notices. Time of publicizing. Preparation and transmittal. Synopses of contract awards. Preparation and transmittal. Classification codes. 1-1.1005-1 1-1.1005-2 Codes for services. Codes for supplies. Subpart 1-1.11--Qualified Products 1-1.1101 Procurement of qualified products. Subpart 1-1.12 Subpart 1-1.13 [Reserved] [Reserved] Subpart 1-1.14 [Reserved] Subpart 1-1.15 [Reserved] Subpart 1-1.16-Reports of Identical Bids 1-1.1601 General. tion No. 57). 1-1.1602 1-1.806-5 Textile industry (Notification No. 1-1.1603 38). 1-1.1603-1 1-1.807 Report on preference procure- ment in labor surplus areas. 1-1.1603-3 1-1.1604 Subpart 1-1.9-Reporting Possible Antitrust Violations 1-1.1605 1-1.901 1-1.902 1-1.903 General. Documents to be transmitted. 1-1.1605-1 Additional information. 1-1.1603-2 Definitions. Reporting requirements. Cases to be reported. Preparation of reports. Submission of reports. Supplemental requests by At- torney General. Information to be obtained from bidders. Invitation for bids provision. 1-1.1605-2 Failure to provide information. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 35, AUGUST 1963) ix SUBPART 1-1.0 REGULATION SYSTEM 1-1.000 Scope of part. This part sets forth policies and pro- cedures concerning: the Federal Pro- curement Regulations System; definition of terms used throughout this chapter; general policies of procurement; contin- gent fees: debarred and ineligible bid- ders; small business concerns: and re- porting possible antitrust violations. Subpart 1-1.0-Regulation System 1-1.001 Scope of subpart. This subpart sets forth introductory information pertaining to the Federal Procurement Regulations System: its purpose, authority, applicability, issu- ance, arrangement, implementation, and deviation procedure. 1-1.002 Purpose. This subpart establishes the Federal Procurement Regulations System for the codification and publication of uniform policies and procedures applicable to the procurement of personal property and nonpersonal services (including con- struction) by executive agencies, except as limited by the provisions of section 1-1.004 with respect to the Department of Defense. The System includes regu- lations prescribed by the Administrator of General Services, called the Federal Procurement Regulations (FPR), as well as individual agency procurement regu- lations which implement and supple- ment the FPR. 1-1.003 Authority. The Federal Procurement Regulations System is prescribed by the Administra- tor of General Services under the Fed- eral Property and Administrative Serv- ices Act of 1949, and the FPR are developed in cooperation with the pro- curement agencies and are issued by him under the Act or other authority specially cited. 1-1.004 Applicability. Federal Procurement Regulations ap- ply to all Federal agencies to the extent specified in the Federal Property and Administrative Services Act of 1949 or in other law. Except for standard Gov- ernment forms and clauses, Federal Specifications and Standards, and ex- cept as directed by the President, Con- gress, or other authority, these Regula- tions are not mandatory on the Department of Defense. Therefore, the extent of their implementation within the Department of Defense and partici- pation in the System will be determined by that Department. The Regulations apply to procurements made within and outside the United States unless other- wise specified. 1-1.005 Exclusions. 1-1,006- 4 Certain Governmentwide policies and procedures which come within the scope of this chapter neverthless may be ex- cluded from Federal Procurement Regu- lations. These exclusions include the following categories: (a) Subject matter which bears a se- curity classification. (b) Policy or procedure which is ex- pected to be effective for a period of less than six months. (c) Policy or procedure which is be- ing instituted on an experimental basis for a reasonable period. 1-1.006 Issuance. 1-1.006-1 Code arrangement. Federal Procurement Regulations are issued in the Code of Federal Regulations as Chapter I of Title 41, Public Con- tracts. Succeeding chapters of Title 41 are devoted to implementing and sup- plementing material developed and is- sued by particular Federal agencies to govern their procurement activities, as well as regulations of general application to procurement agencies issued by other Federal regulatory agencies, such as the Department of Labor under the Walsh- Healey Public Contracts Act. 1-1.006-2 Publication. Federal Procurement Regulations are published (in Title 41) in the daily issue of the FEDERAL REGISTER, in cumulated form in the Code of Federal Regulations, and in separate loose-leaf volume form. 1-1.006-3 Copies. Copies of Federal Procurement Reg- ulations in Federal Register and Code of Federal Regulations form may be pur- chased by Federal agencies and the pub- lic, at nominal cost, from the Superin- tendent of Documents, Government Printing Office, Washington 25, D.C. Copies of Federal Procurement Regula- tions in loose-leaf volume form may be obtained by Federal agencies from the General Services Administration, in a very limited quantity, and may be pur- chased by the public from the Superin- tendent of Documents. 1-1.006-4 Coordination. In the development of Federal Pro- curement Regulations, there will be solic- ited the views of interested Federal agencies and, where appropriate and feasible, the views of interested business and professional organizations. Regulations will be coordinated with the Small Business Administration to assure adequate consideration of small business interests. FEDERAL PROCUREMENT REGULATIONS The (FPR CIRC, 1, MAR, 1959) 101 PART 1-1 GENERAL 1-1.007 1-1.007 Arrangement. 1-1.007-1 General plan. The general plan, numbering system, and nomenclature used in the Federal Procurement Regulations conform with Federal Register standards approved for the FPR. 1-1.007-2 Numbering. The numbering system permits iden- tification of every unit. The first digit represents the chapter number allocated to each agency, followed by a dash. This is followed by the part number which may be one or more digits fol- lowed by a decimal point. The numbers after the decimal point represent, re- spectively, the subpart, section (in two digits), and, after the dash, subsection, paragraph, subparagraph, and further inferior divisions. For example, this di- vision is called "section 1-1.007-2," in which the first digit denotes the chapter, the second the part, the third the sub- part, the fourth and fifth the section, and the sixth the subsection. 1-1.007-3 Citation. Federal Procurement Regulations will be cited in accordance with Federal Reg- ister standards approved for the FPR. Thus, this section, when referred to in divisions of the Federal Procurement Regulations, should be cited as "section 1-1.007-3 of this chapter." When this section is referred to formally in official documents, such as legal briefs, it should be cited as "41 CFR 1-1.007-3." Any section of Federal Procurement Regulå- tions may be informally identified, for purposes of brevity, as "FPR" followed by the section number, such as "FPR 1-1.007-3." 1-1.008 Agency implementation. As portions of FPR material are pre- scribed, agencies shall publish in the FEDERAL REGISTER implementing regula- tions deemed necessary for business con- cerns, and others properly interested, to understand basic and significant agency procurement policies and procedures which implement, supplement, or deviate from the FPR. Detailed instructions of interest primarily for internal agency guidance need not be published. Imple- menting regulations shall be prepared to conform with FPR style and arrange- ment. 1-1.009 Deviation. 1-1.009-1 Description. As used in these Regulations, the term "deviation" includes any of the following actions: (a) When a prescribed contract clause is set forth verbatim, use of a contract clause covering the same subject matter which varies from that set forth. (b) When a standard or other form is prescribed, use of any other form for the same purpose. (c) Alteration of a prescribed stand- ard or other form, except as may be au- thorized in the Regulations. (d) The imposition of lesser or, where the regulation expressly prohibits, greater limitations than are imposed upon the use of a contract clause, form, procedure, type of contract, or upon any other procurement action, including but not limited to, the making or amendment of a contract, or actions taken in con- nection with the solicitation of bids or proposals, award, administration, or set- tlement of contracts. (e) When a policy or procedure is pre- scribed, use of any inconsistent policy or procedure. 1-1.009-2 Procedure. In the interest of establishing and maintaining uniformity to the greatest extent feasible, deviations from the Fed- eral Procurement Regulations shall be kept to a minimum and controlled as follows: (a) The head of each agency exercis- ing procurement authority shall pre- scribe a formal procedure for the control of deviations within the agency. A copy of the procedure shall be furnished to the General Services Administration. (b) In individual cases, deviations may be authorized by the head of the agency or the officers designated by him for this purpose, in accordance with procedures established by the agency. In each instance the file shall disclose the nature of the deviation and the rea- sons for such special action. (c) Deviations in classes of cases shall be considered on an expedited basis jointly by the agency desiring the devia- tion and the General Services Adminis- tration unless, in the considered judg- ment of the agency and with due regard to the objective of uniformity, circum- stances preclude such joint effort. In such case, GSA will be notified of the deviation. FEDERAL PROCUREMENT REGULATIONS 102 - (FPR CIRC, 1, MAR, 1959) SUBPART 1-1.0 REGULATION SYSTEM (d) Except as otherwise authorized, when any deviation in a contract form provision is authorized, physical change may not be made in the printed form but shall be made by appropriate provision in the schedule, specifications, or con- tinuation sheet, as provided in agency procedures. FEDERAL PROCUREMENT REGULATIONS 1~1.009—2 (d) (NEXT PAGE IS 105) (FPR CIRC, 1, MAR. 1959) 103 Subpart 1-1.1-[Reserved] I (NEXT PAGE IS 107) FEDERAL PROCUREMENT REGULATIONS 105 (FPR CIRC. 1, MAR, 1959) SUBPART 1-1. 2 DEFINITION OF TERMS 1-1.211(a) Subpart 1-1.2-Definition of Terms 1-1.201 Definitions. For the purposes of this chapter, and unless otherwise indicated, the following terms have the meanings set forth in this subpart. 1-1.202 Executive, agency. "Executive agency" means any execu- tive department (including the Depart- ments of the Army, the Navy, and the Air Force) or any independent establish- ment in the executive branch of the Gov- ernment, including any wholly-owned Government corporation. 1-1.203 Federal agency. "Federal agency" means any executive agency or any establishment in the legis- lative or judicial branch of the Govern- ment (except the Senate, the House of Representatives, and the Architect of the Capitol and any activities under his direction). 1-1.204 Head of the agency. "Head of the agency" means the Sec- retary, Attorney General, Postmaster General, Administrator, Governor, Chairman, or other chief official of an executive agency, unless otherwise in- dicated, including any assistant chief official of an executive agency and, for the military departments, the Under Secretary and any Assistant Secretary of the Departments of the Army, Navy, and L. Air Force. 1-1.205 Procuring activity. "Procuring activity" means the or- ganizational element of an executive agency which has responsibility to con- tract for the procurement of personal property and nonpersonal services (in- cluding construction). 1-1.206 tivity. "Head of the procuring activity" means that official, intermediate between the head of the agency and the con- Head of the procuring ac- tracting officer, who has the responsibil- ity for supervision and direction of the procuring activity. 1-1.207 Contracting officer. "Contracting officer" means an official designated to enter into or administer contracts and make related determina- tions and findings. 1-1.208 Contract. "Contract" means establishment of a binding legal relation basically obligat- ing the seller to furnish personal prop- erty or nonpersonal services (including construction) and the buyer to pay therefor. It includes all types of com- mitments which obligate the Govern- ment to an expenditure of funds and which, except as otherwise authorized, are in writing. In addition to a two- signature document, it includes all transactions resulting from acceptance of offers by awards or notices of awards; agreements and job orders or task letters issued thereunder; letter contracts; letters of intent; and orders, such as pur- chase orders, under which the contract becomes effective by written acceptance cr performance. It also includes con- tract modifications. 1-1.209 Procurement. "Procurement" means the acquisition (and directly related matters), from non-Federal sources, of personal prop- erty and nonpersonal services (including construction) by such means as purchas- ing, renting, leasing, contracting, or bartering, but not by seizure, condemna- tion, donation. or requisition. 1-1.210 [Reserved.] 1-1.211 Manufacturer. "Manufacturer" means a person (or firm): (a) Who owns, operates, or maintains a factory or establishment that produces on the premises the materials, articles, or equipment required under the contract and of the general character described by the specifications; or FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 31, MARCH 1963) 107 PART 1-1 GENERAL 1-1.211 (b) (b) Who, if newly entering into a manufacturing activity, has made all necessary prior arrangements for manu- facturing space, equipment, and person- nel, to perform the manufacturing operations required for contract perfor- mance; and (c) Who, before being awarded a con- tract, satisfies the contracting officer that it qualifies under (a) or (b) of this sec- tion. 1-1.212 Regular dealer. (a) "Regular dealer" means a person (or firm): (1) Who owns, operates, or main- tains a store, warehouse, or other estab- lishment in which the materials, articles, or equipment of the general character described by the specifications and re- quired under the contract are bought, kept in stock, and sold to the public in the usual course of business; or (2) In the case of articles of par- ticular kinds (lumber and timber prod- ucts, coal, machine tools, raw cotton, pe- troleum, green coffee, tea, agricultural liming materials, or hay, grain, feed, or straw), who satisfies the requirements of the Regulations of the Secretary of La- bor (41 CFR 201.101(b) and 201.603 (f)) under the Walsh-Healey Public Con- tracts Act; and (3) Who, before being awarded a contract, satisfies the contracting of- ficer that it is engaged in an established regular business meeting all the criteria of (1) or (2) of this paragraph (a). (b) It is not enough in the case of a regular dealer to show only that arrange- ments have been made to set up such a business. Before an award can be made, the dealer must show that it is an estab- lished going business regularly dealing in the particular articles, or articles of the general character, sought by the Government. 1-1.213 Construction contractor. "Construction contractor" means a person (or firm) who, before being awarded a contract, satisfies the con- tracting officer that he qualifies as one: (a) Who owns, operates, or maintains a place of business, regularly engaged in the construction, alteration, or repair of buildings, structures, communication fa- cilities, or other engineering projects, in- cluding the furnishing and installing of necessary equipment; or (b) Who, if newly entering into a con- struction activity, has made all necessary prior arrangements for personnel, con- struction equipment, and required li- censes to perform construction work. 1-1.214 Service contractor. "Service contractor" means a person (or firm) who; before being awarded a contract, satisfies the contracting officer that he qualifies as one: (a) Who owns, operates, or maintains a place of business, regularly engaged in performing nonpersonal services, such as the repair, maintenance, or rebuild- ing of personal property; the packing, crating, or moving of material; the op- eration of equipment or facilities; the rental of equipment or facilities; or the performance of administrative, profes- sional, or technical functions; or (b) Who, if newly entering into a serv- ice activity, has made all necessary prior arrangements for personnel, service equipment, and required licenses to per- form services. 1-1.215 Government instrumentality. "Government instrumentality" means any of the following: (a) An instrumentality of the U.S. Government. (b) An agency or instrumentality of a State or local government thereof, Ha- waii, possession, or Puerto Rico. (c) An agency or instrumentality of a foreign government. 1-1.216 United States. "United States", when used in a geo- graphic sense, means the States and the District of Columbia. FEDERAL PROCUREMENT REGULATIONS 108 (FPR CIRC. 31, MARCH 1963) SUBPART 1-1, 2 DEFINITION OF TERMS 1-1, 220 1-1.217 Possessions. "Possessions" includes the Virgin Is- lands, the Canal Zone, Guam, American Samoa, Wake Island, Midway Island, and the guano islands, but does not in- clude Hawaii or the Commonwealth of Puerto Rico. 1-1.218 Negotiation. "Negotiation" means the procedure for making contracts without formal advertising. 1-1.219 Contract modification. "Contract modification” means any written alteration in the specifications, delivery point, rate of delivery, contract period, price, quantity, or other contract provision of an contract, existing whether accomplished by unilateral ac- tion in accordance with a contract pro- vision or by mutual action of the parties to the contract. It includes (a) bilateral actions, such as supplemental agree- ments and amendments, and (b) uni- lateral actions, such as change orders, notices of termination, and notices of the exercise of an option. 1-1.220 Procurement item. "Procurement item" means any per- sonal property or nonpersonal service, including construction, alteration, repair, or installation, which is the object of procurement. (NEXT PAGE IS 109) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 31, MARCH 1963) 108.1 SUBPART 1-1.3 GENERAL POLICIES Subpart 1-1.3-General Policies 1-1.300 Scope of subpart. This subpart sets forth general policies with respect to (a) methods of procure- ment; (b) procurement sources; (c) types of contracts; (d) use of specifica- tions, standards, and purchase descrip- tions; (e) transportation costs; and (f) priorities, allocations, and allotments. 1-1.301 Methods of procurement. It shall be the objective to use that method of procurement which will be most advantageous to the Government— price, quality, and other factors con- sidered. Procurement shall be made on a competitive basis, whether by formal advertising or by negotiation, to the maximum practicable extent, in accord- ance with the policies and procedures set forth in this chapter. Procurement shall be effected by advertising for bids and thereafter awarding a contract to the lowest responsible bidder, except that when authorized procurement may be effected by negotiation in accordance with Part 1-3 of this chapter. 1-1.302 Procurement sources. 1-1.302-1 General. (a) Before taking procurement ac- tion, in accordance with this chapter, agencies shall have complied with appli- cable laws and regulations relative to obtaining supplies or services from Gov- ernment sources and from contracts of other Government agencies. These in- clude excess and surplus stocks in the hands of any Government agency, Fed- eral Supply Schedules, General Services Administration Stores Stock, Federal Supply Service Consolidated Purchase Programs, Federal Prison Industries, Inc., and National Industries for the Blind. (b) Irrespective of whether the pro- curement of supplies or services from sources outside the Government is to be effected by formal advertising or by negotiation, competitive proposals ("bids" in the case of procurement by formal advertising, "proposals" in the case of procurement by negotiation) shall be solicited from all such qualified sources as are deemed necessary by the contracting officer to assure such full and free competition as is consistent with the procurement of types of sup- plies and services necessary to meet the requirements of the agency concerned. 1-1.302-2 Production and research and development pools. (a) Description. A production or re- search and development pool is a group of concerns (1) which have associated 1-1.302-2 (d) (2) together for the purpose of obtaining and performing jointly, or in conjunction with each other, contracts for supplies or services, or for research and develop- ment for defense use or to effectuate the purposes of the Small Business Act (2) which have entered into a production pool agreement governing their organi- zation, relationship, and procedure, and (3) the agreement has been approved either in accordance with section 708 of the Defense Production Act of 1950, as amended (Defense Production Pool), or in accordance with sections 9(d) or 11 of the Small Business Act (Small Business Pool). Production pool par- ticipants are exempt from the "manu- facturer or regular dealer" requirement of the Walsh-Healey Public Contracts Act and of sections 1-1.211 and 1-1.212. (b) General rule. Except as pro- vided in this section 1-1.302-2, a produc- tion pool shall be treated for purposes of Government procurement on exactly the same basis as any other prospective or actual contractor. (c) Ascertainment of status. The con- tracting officer is responsible for ascer- taining whether a group of firms seeking to do business with the Government is a production pool. In ascertaining the status of a group representing that it is a pool, contracting officers may rely on a copy of the Small Business Administra- tion (SBA) or the Office of Civil and De- fense Mobilization (OCDM) notification of approval of the pool. Each executive agency should expeditiously disseminate to appropriate contracting officers in- formation received from SBA or OCDM concerning the approval of production pools. (d) Contracting with pools. (1) A bid or proposal of a produc- tion pool is not eligible for award to the pool unless submitted either by the pool in its own name or by an individual mem- ber expressly disclosing that it is on be- half of the pool. Except as to contracts to be awarded to incorporated pools, the contracting officer shall prior to award to a pool require to be deposited with him a certified copy of a power of attor- ney from each member of the pool who is to participate in the performance of the contract authorizing an agent to ex- ecute the bid, proposal, or contract on behalf of such member. A copy of each such power of attorney shall be appended to each executed copy of the contract re- tained by the Government. (2) Membership in a pool shall not of itself preclude individual members from submitting bids or proposals as in- dividuals on appropriate procurements. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 1, MAR, 1959) 109 PART 1-1 GENERAL 1 1-1.302-2 (d) (2) Bids or proposals submitted by an indi- vidual member of a pool shall not be considered when the individual member has participated in the bid or proposal submitted by the pool. (e) Responsibility of pool member. Where a member of a production pool has submitted a bid or proposal in its own name the pool agreement shall be con- sidered in determining the pool member's responsibility. 1-1.303 Approval signatures. Approval signatures on contracts or purchase authorizations should be mini- mized to the greatest practical extent and, in the event that multiple approval signatures are required, they should, where possible, be obtained concurrently. 1-1.304 1-1.305 [Reserved.] Specifications.¹ "Specification," as used in this section 1-1.305, is a clear and accurate descrip- tion of the technical requirements for a material, product, or service, including the procedure by which it will be deter- mined that the requirements have been met. Specifications for items or mate- rials contain also preservation, packag- ing, packing, and marking requirements. The identification of categories and in- tended use of such specifications are as follows: (a) Federal. A specification covering those materials, products, or services, used by or for potential use of two or more Federal agencies (at least one of which is a civil agency), or new items of potential general application, promul- gated by the General Services Adminis- tration and mandatory for use by all executive agencies. (b) Interim Federal. A potential Fed- eral specification issued in interim form, for optional use by agencies. Interim amendments to Federal Specifications are included in this definition. (c) Military (MIL). A specification issued by the Department of Defense, used solely or predominantly by and mandatory on military activities. (This definition includes both fully coordinated and limited coordination military specifications.) (d) Departmental. A specification developed and prepared by, and of in- terest primarily to a particular Federal 1 Other instructions concerning the use of specifications that are of interest and ap- plicable to executive agencies, but which are of no interest to the public, are contained in General Services Administration Regulation 1-VI, Part 2. civil agency, but which may be of use in procurement by other Federal agencies. § 1-1.305-1 Mandatory use of Federal Specifications. Federal Specifications shall be used by all executive agencies, including the De- partment of Defense, in the procurement of supplies and services covered by such specifications; except as provided in sec- tions 1-1.305-2 and 1–1.305–3. 1-1.305-2 Exceptions to mandatory use of Federal Specifications. Federal Specifications need not be used under the following circumstances: (a) The purchase is required under a public exigency and a delay would be in- volved in using the applicable specifica- tion to obtain agency requirements. (b) The total amount of the purchase does not exceed $2,500. (Multiple small purchases of the same item shall not be made for the purpose of avoiding the in- tent of this exception.) (c) The purchase involves items of construction for new processes, new in- stallations of equipment, or items for experiment, test, or research and devel- opment, until such time as specifications covering them are issued or it is deter- mined by the General Services Admin- istration, and the procuring agencies notified, that further deviations from the Federal Specifications will not be permitted: Provided, That, in connec- tion with such deviations, existing Fed- eral Specifications shall be used to the extent that they are applicable. (d) The purchase involves spare parts, components, or materials required for repair or maintenance of existing equip- ment, or for similar items required for maintenance or operation of existing fa- cilities or installations: Provided, That existing Federal Specifications shall be used to the extent that they applicable. are. (e) The items are purchased in for- eign markets for use of overseas activ- ities of agencies. (f) An Interim Federal Specification is used by an agency in lieu of the Federal Specification. (g) Where otherwise authorized by law. 1-1.305-3 Deviations from Federal Specifications. When the essential needs of an agency are not adequately covered by an exist- ing Federal Specification, and the pro- posed purchase does not come within the exceptions described described in section 1-1.305-2, the agency may authorize deviations from the Federal Specifica- tion; provided, that: FEDERAL PROCUREMENT REGULATIONS 110 (FPR CIRC, 1, MAR, 1959) DEPOSITED BY THE UNITED STATES OF AMERICA SUBPART 1-1, 3 GENERAL POLICIES 1-1,305-5 (a) Requirements of existing Federal Specifications shall be used to the maxi- mum extent practicable. (b) Each agency taking such devia- tions shall establish procedures whereby a designated official having substantial procurement responsibility shall be re- sponsible for assuring that: (1) Federal Specifications are used, and provisions for exceptions and devia- tions are complied with; exceptions (2) Justifications for and deviations are subject to competent review before authorization, and that such justifications can be fully substan- tiated if post audit is required; (3) Major or repeated deviations are not taken except as prescribed in this section 1-1.305-3; and (4) Notification or recommendation for change in the specification is sent promptly to the General Services Ad- ministration by the designated official or subdivision at the agency level, through established agency channels, when- (i) Deviations taken are of a major nature such as to result in the entrance of a new item into the supply system of the agency as evidenced by the development of a new item identi- fication; or edly. (ii) A deviation is taken repeat- (5) Notification or recommendation for change in the specification shall be submitted, in duplicate, to the General Services Administration, Federal Supply Service, Washington 25, D.C. It shall include a statement of the deviations authorized by the agency, with justifica- tion therefor, and, where applicable, recommendation for revision or amend- ment of the specification. (c) Deviations taken and reported by the agency in accordance with section 1-1.305-3(b) may not be continued except under the following conditions: (1) Upon notification by an agency that major or repeated deviations have been taken and where no recommenda- tion for change in the specification is made by the agency, the General Serv- ices Administration will notify the agency as to whether such deviations may be continued in subsequent procure- ment. In cases where deviations are not approved and where procurement by the agency has progressed to a point where it would be impracticable to amend or cancel the action, such action may be completed, but the deviation shall not be authorized by the agency in subse- quent procurement. (2) Where an agency has recom- mended changing the specification con- sistent with the deviations it has taken and reported, those deviations may be continued until such time as the recom- mended change is coordinated and incorporated in the specification; pro- vided, that where coordination with Federal agencies and industry, as appli- cable, does not result in acceptance of the change, such deviations shall not be authorized by the agency in subsequent procurement. 1-1.305-4 Optional use of Interim Federal Specifications. Interim Federal Specifications are for optional use. All agencies are urged to make maximum use of Interim Federal Specifications and to submit statements of suggested changes to the assigned agency for consideration in further de- velopment of the specifications for promulgation as Federal Specifications. 1-1.305-5 Use of Federal and Interim Federal Specifications in Federal con- struction contracts. When material, equipment, or services for which a Federal or Interim Federal Specification is available are specified in connection with Federal construction, the Federal or Interim Federal Specifica- tion shall be made a part of the specifi- cation for the construction contract, subject to the provisions in section 1-1.305. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 19, SEPTEMBER 1961) 111 PART 1-1 GENERAL 1—1.305-6 1-1.305-6 Military and departmental specifications. If no Federal Specification is available, existing Interim Federal, military, and departmental specifications which are listed in the Index of Federal Specifica- tions and Standards should be consid- ered and, wherever practicable, used by any agency having need therefor, con- sistent with the agency's procedures establishing priority for use of such specifications. 1-1.306 Standards.¹ "Standards," as used in this section 1-1.306, are descriptions which establish engineering or technical limitations and applications for materials, processes, methods, designs, or drafting room and other engineering practices, or any re- lated criteria deemed essential to achieve the highest practical degree of uniform- ity in materials or products, or inter- changeability of parts used in those products; and which may be used in specifications, invitations for bids, pro- posals, and contracts. The identification of the categories and intended use of such standards are as follows: (a) Federal Standard. A standard promulgated by the General Services Ad- ministration, mandatory for use by all executive agencies, including the Depart- ment of Defense. A (b) Interim Federal Standard. standard intended for final processing as a new or revised Federal Standard, issued in interim form for optional use by executive agencies. A (c) Military (MIL) Standard. standard issued by the Department of Defense used solely or predominantly by and mandatory on military activities. This definition includes both fully co- ordinated and limited coordination mili- tary standards. (₫) Departmental Standards. A stand- ard developed and prepared by, and of interest primarily to, a particular execu- tive civilian agency, but which may be used in procurement by other agencies. 1 Other instructions concerning the use of standards that are of interest and applicable to executive agencies, but which are of no interest to the public, are contained in Gen- eral Services Administration Regulation 1-VI, Part 2. 1-1.306–1 Mandatory use and appli- cation of Federal Standards. Federal Standards shall be used by all executive agencies, including the Depart- ment of Defense. Exceptions to this mandatory use requirement are as follows: (a) The exceptions in section 1-1.305 relating to the mandatory use of Federal Specifications are for application to the use of Federal Standards. (b) In a specific case or class of cases an executive agency may be granted an exception by the General Services Ad- ministration on submission of an ade- quate justification therefor. 1-1.307 Purchase descriptions. 1-1.307-1 Applicability. (a) Purchase descriptions may be used in the procurement of supplies or services (excluding construction) only when the use of formal (including in- terim and other temporary) Government specifications and standards to describe such supplies or services is not required under applicable regulations. (See sec- tions 1-1.305 and 1-1.306.) However, where the use of a formal specification or standard is required, use of supple- mentary descriptive information which is consistent with the specification or standard is permissible. in (b) Purchase descriptions used competitive procurements shall not spec- ify a product having features which are peculiar to the product of one manufac- turer, producer, or distributor, and thereby preclude consideration of a prod- uct of another company, unless it has been determined that these particular features are essential to the Govern- ment's requirements, and that similar products of other companies lacking those features would not meet the mini- mum requirements for the item. (c) Purchase descriptions, as well as other forms of specifications, must ac- curately reflect the needs of the Gov- ernment. 1-1.307-2 General requirements. Except as otherwise provided in sec- tions 1-1.307-3 and 1-1 307-4 purchase descriptions shall clearly and accurately describe the technical requirements or FEDERAL PROCUREMENT REGULATIONS 112 (FPR CIRC. 19, SEPTEMBER 1961) SUBPART 1-1.3 GENERAL POLICIES ୮ L desired performance characteristics of the supplies or services to be procured; and, when appropriate, the testing pro- cedures which will be used in determin- ing whether such requirements or char- acteristics are met. When necessary, preservation, packaging, packing, and marking requirements shall be included. Purchase descriptions may contain refer- ences to formal Government specifica- tions and standards which are to form a portion of the purchase description. 1-1.307-3 Commercial, and State and local government specifications and standards. Purchase descriptions may include or consist of references to specifications and standards issued, promulgated, or adopted by technical societies or asso- ciations, or State and local governments, if such specifications and standards (a) are widely recognized and used in com- mercial practice, (b) conform to the re- quirements of section 1-1.307-2, and (c) are readily available to suppliers of the supplies or services to be procured. 1-1.307-4 Brand name products or equal. (a) Purchase descriptions which con- tain references to one or more brand name products followed by the words "or equal” may be used only in accordance with this § 1-1.307-4 and § 1-1.307-5 through 1-1.307-9. The term "brand name product" means a commercial product described by brand name and make or model number or other appro- priate nomenclature by which such product is offered for sale to the public by the particular manufacturer, pro- ducer, or distributor. Where feasible, more than one acceptable brand name product should be referenced. Where a "brand name or equal" purchase de- scription is used, prospective contrac- tors must be given the opportunity to offer products other than those specifi- cally referenced by brand name if such other products will meet the needs of the Government in essentially the same manner as those referenced. 1-1.307-5 (a) (3) (b) "Brand name or equal" purchase descriptions should set forth those sa- lient physical, functional, or other characteristics of the referenced prod- ucts which are essential to the needs of the Government, contain the following information to the extent available, and include such other information as is necessary to describe the item required: (1) Complete common generic iden- tification of the item required. (2) Applicable model, make, or cat- alog number for each brand name prod- uct referenced, and identity of the com- mercial catalog in which it appears. (3) Name of manufacturer, pro- ducer, or distributor of each brand name product referenced (and address if com- pany is not well known). (c) When necessary to describe ade- quately the item required, an applicable commercial catalog description, or per- tinent extracts therefrom, may be used if such description is identified in the invitation for bids or request for pro- posals as being that of the particular named manufacturer, producer, or dis- tributor. 1-1.307-5 Limitations on use of or equal" purchase "brand name descriptions. "Brand name or equal" purchase de- scriptions may be used only under the circumstances in paragraph (a) or (b) of this section 1-1.307-5: (a) When a suitable formal Govern- ment specification or standard or indus- try standardization document approved for agency use is not available, and a purchase description of the type re- ferred to in § 1-1.307-3 is inadequate or unavailable, and a purchase description meeting the general requirements of § 1-1.307-2 cannot be prepared because- (1) Construction or composition of the product to be procured is too techni- cally involved; (2) Public exigency or military ne- cessity precludes timely development; or (3) It is impracticable or uneconom- ical to prepare a purchase description. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 19, SEPTEMBER 1961) 113 PART 1-1 GENERAL ୮ L 1-1.307-5 (b) (b) When purchasing items for au- thorized resale, except military clothing. (c) The product to be referenced must, in any event, be regularly offered for sale to the public. (d) When a "brand name or equal" description is used, a notation shall be made in the case file as to the reasons therefor. 1-1.307-6 Invitation for bids, "brand name or equal" descriptions. (a) Except as provided in paragraph (b) of this section, when a “brand name or equal" purchase description is in- cluded in an invitation for bids: (1) The following shall be inserted after each item so described in the invita- tion, for completion by the bidder- Bidding on: Manufacturer's Name Brand No. (2) In addition, the following clause shall be included in the invitation: BRAND NAME OR EQUAL (As used in this clause, the term "brand name" includes identification of products by make and model.) (a) If items called for by this Invitation for Bids have been identified in the schedule by a "brand name or equal" description, such identification is intended to be descriptive, but not restrictive, and is to indicate the quality and characteristics of products that will be satisfactory. Bids offering "equal" products will be considered for award if such products are clearly identified in the bids and are determined by the Government to be equal in all material respects to the brand name products referenced in the Invitation for Bids. (b) Unless the bidder clearly indicates in his bid that he is offering an "equal" product, his bid shall be considered as offering a brand name product referenced in the Invitation for Bids. (c) (1) If the bidder proposes to furnish an "equal" product, the brand name, if any, of the product to be furnished shall be in- serted in the space provided in the Invitation for Bids, or such product shall be otherwise clearly identified in the bid. The evalua- tion of bids and the determination as to equality of the product offered shall be the BIDDERS. responsibility of the Government and will be based on information furnished by the bid- der or identified in his bid as well as other information reasonably available to the pur- chasing TO activity. CAUTION The purchasing activity is not responsible for locating or securing any information which is not identified in the bid and rea- sonably available to the purchasing activity. Accordingly, to insure that sufficient infor- mation is available, the bidder must furnish as a part of his bid all descriptive material (such as cuts, illustrations, drawings, or other information) necessary for the pur- chasing activity to (i) determine whether the product offered meets the requirements of the Invitation for Bids and (ii) establish exactly what the bidder proposes to furnish and what the Government would be bind- ing itself to purchase by making an award. The information furnished may include spe- cific references to information previously furnished or to information otherwise avail- able to the purchasing activity. (2) If the bidder proposes to modify a product so as to make it conform to the re- quirements of the Invitation for Bids, he shall (i) include in his bid a clear descrip- tion of such proposed modifications and (ii) clearly mark any descriptive material to show the proposed modifications. (3) Modifications proposed after bid open- ing to make a product conform to a brand name product referenced in the Invitation for Bids will not be considered. (b) Where a component part of an end item is described in the invitation for bids by a "brand name or equal" pur- chase description and the contracting of- ficer determines that application of the clause in paragraph (a) (2) of this sec- tion 1-1.307-6 to such component part would be impracticable, the requirements of paragraph (a) (1) and (2) of this sec- tion 1-1.307-6 shall not apply with re- spect to such component part. In such cases, if the clause is included in the in- vitation for bids for other reasons, there also shall be included in the invitation a statement identifying either the com- ponent parts (described by "brand name or equal" descriptions) to which the clause applies or those to which it does not apply. This paragraph (b) also ap- plies to accessories related to an end item (NEXT PAGE IS 114, 1) FEDERAL PROCUREMENT REGULATIONS 114 (fpr Circ, 19, SEPTEMBER 1961) SUBPART 1-1. 3 GENERAL POLICIES 1-1.310-2 ୮ where a "brand name or equal" purchase description of the accessories is a part of the description of an end item. (c) When an invitation for bids con- tains "brand name or equal" purchase descriptions, bidders who offer brand name products referenced in such de- scriptions shall not be required to fur- nish bid samples of the referenced brand name products; however, invitations for bids may require the submission of bid samples in the case of bidders offering "or equal" products. 1-1.307-7 Bid evaluation and award, “brand name or equal” descriptions. (a) Bids offering products which differ from brand name products referenced in a "brand name or equal" purchase de- scription shall be considered for award where the contracting officer determines in accordance with the terms of the clause in § 1-1.307-6(a) (2) that the of- fered products are equal in all material respects to the products referenced. Bids shall not be rejected because of minor differences in design, construction, or features which do not affect the suitabil- ity of the products for their intended use. (b) Award documents shall identify, or incorporate by reference an identifica- tion of, the specific products which the contractor is to furnish. Such identifi- cation shall include any brand name and/or make or model number, descrip- tive material, and any modifications of brand name products specified in the bid. Included in this requirement are those instances where (1) the description of the end item contains "brand name or equal" purchase descriptions of compo- nent parts or of accessories related to the end item and (2) the clause in § 1-1.307-6(a)(2) was applicable to such component parts or accessories (see § 1-1.307-6(b)). 1-1.307-8 Procedure for negotiated procurements and small purchases. (a) The policies and procedures pre- scribed in § 1-1.307-6 and 1-1.307-7 for formally advertised procurements shall be generally applicable to negotiated procurements. L be generally (b) The clause in § 1-1.307-6(a) (2) may be adapted for use in negotiated procurements. If use of the clause is not practicable (as may be the case in exigency purchases), suppliers shall be suitably informed that proposals of- fering products different from the prod- ucts referenced by brand name will be considered if the contracting officer determines that such offered prod- ucts are equal in all significant and material respects to the products referenced. (c) In small purchases within open- market limitations, such policies and procedures shall be applicable to the ex- tent practicable. 1-1.307-9 Inspection and acceptance. Inspection and acceptance of deliveries shall be made on the basis of the item described in the notice of award and/or contract. 1-1.308 1-1.309 [Reserved.] [Reserved.] 1-1.310 Responsible prospective con- tractor. 1-1.310-1 Scope. Section 1-1.310 prescribes policy and procedures governing executive agencies in determining, before award, whether prospective contractors for furnishing the Government supplies or nonpersonal services (including construction) qualify as responsible. 1-1.310-2 General. The award of contracts to bidders who are not responsible is a disservice to the Government, which may, by such awards, be denied acceptable supplies or services within the time required. It frequently is inequitable to the contractors them- selves, who may suffer hardship, some- times even business failure, as a result of defaults, deductions, and rejections because of inability to meet contract re- quirements. Moreover, such awards are unfair to other competing bidders, cap- able of performance, and discourage them from bidding on future procure- (NEXT PAGE IS 114, 2) FEDERAL PROCU PROCUREMENT REMENT REGULATIONS (FPR CIRC, 19, SEPTEMBER 1961) 114.1 PART 1-1 GENERAL 1-1,310-2 ments. It is essential, therefore, that precautions be taken to award contracts only to reliable and capable bidders who can reasonably be expected to comply with contract requirements. 1-1.310-3 Applicability. This section 1-1.310 is applicable to all procurements made by executive agencies in the United States, its possessions. Hawaii, and Puerto Rico and, to the ex- tent practicable, in other places. It is not applicable to orders placed under existing Government contracts, or to procurements from: (a) other govern- ments (foreign, State, or local) or their instrumentalities; (b) other United States Government departments and agencies or their instrumentalities (such as, Federal Prison Industries, Inc.); and (c) National Industries for the Blind. 1-1.310-4 General policy. It is the policy that contracts shall be awarded only to responsible prospective contractors. A "responsible prospective contractor" is one which is found by the contracting officer to meet the minimum standards set forth in section 1-1.310-5 and such additional standards as may be prescribed for specific procurements by the agency concerned. 1-1.310-5 Standards. (a) In order to qualify as responsible, a prospective contractor must, in the opinion of the contracting officer, meet the following standards as they relate to the particular procurement under consideration: (1) Is a manufacturer, regular dealer, service contractor, or construc- tion contractor (as defined in Subpart 1-1.2), or such other person or firm as may be found by the agency concerned to be qualified and responsible as a source of supply; (2) Has adequate financial re- sources for performance, or has the abil- ity to obtain such resources as required during performance;. (3) Has the necessary experience, organization, technical qualifications, skills, and facilities, or has the ability to obtain them (including probable sub- contractor arrangements); (4) Is able to comply with the pro- posed or required time of delivery or performance schedule; (5) Has a satisfactory record of integrity, judgment, and performance (contractors which are seriously delin- quent in current contract performance, considering the number of contracts and the extent of delinquencies of each, shall, in the absence of evidence to the con- trary or compelling circumstances, be presumed to be unable to fulfill this requirement); (NEXT PAGE IS 115) FEDERAL PROCUREMENT REGULATIONS 114.2 (FPR CIRC. 19, SEPTEMBER 1961) SUBPART 1-1. 3 GENERAL POLICIES (6) Has not indicated an unwilling- ness or inability to conform to the requirements of the standard nondis- crimination clause; and (7) Is otherwise qualified and eligi- ble to receive an award under applicable laws and regulations. (b) Acceptable evidence of "ability to obtain" financial resources, experience, organization, technical qualifications, skills, and facilities (see (a) (2) and (3), above), generally shall be a firm commit- ment or arrangement for the rental, purchase, or other acquisition thereof. Determination of responsi- 1-1.310-6 bility. (a) No contract shall be awarded to any person or firm unless the contract- ing officer has first determined that such person or firm is responsible within the meaning of sections 1-1.310-4 and 1- 1.310-5. The signing of a contract shall be deemed to be a certification by the contracting officer that he has deter- mined that the prospective contractor is responsible with respect to that contract. (b) In any case where the procure- ment exceeds $10,000, and the contract- ing officer (or contracting agency) con- siders such a statement advisable for justification or other reasons, the con- tracting officer shall prepare, sign, and place in the contract file a statement of the facts on which the determination of responsibility was based. Relevant fac- tors for consideration in determining whether such a statement is advisable would include the value, importance, or technical aspects of the procurement, or the fact that a pre-award on-site evalua- tion was considered necessary and that it was made. Any supporting documents or reports, including reports of pre- award on-site evaluation and any infor- mation to support determinations of responsibility of subcontractors, should be filed with the statement. 1-1.310-7 Information regarding re- sponsibility. Eefore making a determination of re- sponsibility, the contracting officer shall have sufficient current information to satisfy himself that the prospective con- tractor meets the standards in section 1-1.310-5. Information from the follow- ing sources should be utilized before con- sidering making a pre-award on-site evaluation: (a) Information from the prospective contractor, including representations and other data contained in bids and pro- posals, or other written statements or commitments, such as financial assist- ance and subcontracting arrangements. 1-1.310-10 (b) Other existing information within the agency, including financial data, the list of debarred and ineligible bidders (see Subpart 1-1.6), and records con- cerning contractor performance. (c) Publications, including credit rat- ings, and trade and financial journals. (d) Other sources, including banks, other financial companies, and Govern- ment departments and agencies. 1-1.310-8 Capacity and credit of small business concerns. In the case of a prospective contractor which is a small business concern, if the contracting officer is not satisfied that the prospective contractor meets the standards in section 1-1.310-5 only be- cause of the lack of adequate capacity or credit, he shall, before making a respon- sibility determination, comply with the requirements concerning Certificates of Competency issued by the Small Business Administration (see Subpart 1-1.7). 1-1.310-9 Pre-award on-site evalua- tion. (a) A pre-award on-site evaluation is an inspection of facilities and equipment with which a prospective contractor pro- poses to perform a contract, including in- terviews with contractor personnel. It is made at the direction of the contract- ing officer, generally by Government spe- cialists, to provide needed responsibility information. (b) Pre-award on-site evaluations need normally not be performed when the information sources stated in section 1-1.310-7 yield sufficient data to enable a contracting officer to make a determi- nation regarding the responsibility of a prospective contractor. Generally, pre- award on-site evaluations are not neces- sary in connection with contracts of less than $10,000. (c) Pre-award on-site evaluations shall cover only those standards or por- tions thereof concerning which informa- tion available (from the sources listed in section 1-1.310-7) appears to be not cur- rent, sufficient, or reliable. 1-1.310-10 Performance records. Such records of contractor past per- formance shall be maintained as are considered necessary for the use of con- tracting officers in placing new procure- ments. Records in more complete de- tail should be maintained on contractors which have indicated by past actions that the character of their performance on contracts is questionable, and on new contractors whose reliability has not been established. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 1, MAR, 1959) 115 PART 1-1 GENERAL 1-1,310-11 1-1.310-11 Subcontractor bility. responsi- Generally, the evaluation of the quali- fications of subcontractors is a function of the prime contractor. However, to the extent that a prospective contractor cannot meet the standard in section 1-1.310–5(a) (3) except by means of pro- posed subcontracting, the prospective prime contractor shall not be considered to be responsible unless recent perform- ance history indicates an acceptable pur- chasing and subcontracting system or prospective major subcontractors are determined by the contracting officer to satisfy that standard. 1-1.311 Priorities, allocations, and al- lotments. In the interest of maintaining a mini- mum priorities and allocations system as a mobilization preparedness measure, agencies shall require contractors to use ratings and allotment authority to sup- port defense needs to the extent required by regulations of the Business and De- fense Services Administration, Depart- ment of Commerce. 1-1.312 [Reserved.] 1-1.313 Records of contract actions. Each contract file should contain docu- mentation of actions taken with respect to each contract, including final dispo- sition. To the extent that retained copies of documents do not represent all actions taken, suitable memoranda or a summary statement of such undocu- mented actions should be prepared promptly and be retained in the contract file. 1-1.314 Solicitations for informa- tional or planning purposes. It is the general policy of the Govern- ment to solicit bids, proposals, or quota- tions only where there is a definite in- tention to award a contract. However, in some cases requests for informational or planning purposes may be justified. In such cases the request shall clearly state its purpose, explaining that the Government does not intend to award a contract on the basis of the request, or otherwise pay for the information solicited. 1-1.315 Use of liquidated damages provisions in procurement contracts. 1-1.315-1 General. This section 1-1.315 prescribes (a) policy which shall govern executive agencies in the use of liquidated dam- ages provisions in contracts for supplies and services, including construction, en- tered into by formal advertising or by negotiation, and (b) a provision which shall be inserted in contracts for sup- plies and services, other than construc- tion, when liquidated damages are stipulated. 1-1.315-2 Policy. (a) Liquidated damages provisions may be used only where both: (1) the time of delivery or performance is such an important factor in the award of the contract that the Government may reasonably expect to suffer damage if the delivery or performance is delayed, and (2) the extent or amount of such damage would be difficult or impossible of ascertainment or proof. (b) In making decisions as to whether liquidated damages provisions are to be used, consideration should be given to their probable effect on such matters as pricing, competition, and the costs and difficulties of contract administration, as well as the availability of provision elsewhere in the contract for recovery of excess costs in termination cases. (The rate of liquidated damages stipulated must be reasonable in relation to anticipated damages, considered on a case-by-case basis, since liquidated dam- ages fixed without any reasonable refer- ence to probable damages may be held to be not compensation for anticipated damages caused by delay, but a penalty, and therefore unenforceable. (d) Where a liquidated damages pro- vision is included in a contract and a basis for termination for default exists, appropriate action should be taken ex- peditiously by the Government to obtain performance by the contractor or to ex- ercise its right to terminate as provided in the contract. If delivery or perform- ance is desired after termination for default, efforts must be made to obtain either delivery or performance elsewhere within a reasonable time. Efficient ad- ministration of contracts containing liquidated damages provisions is impera- tive to prevent undue loss to defaulting contractors and to protect the interests of the Government. (e) Whenever any contract includes a provision for liquidated damages for de- lay, the Comptroller General, on the rec- ommendation of the head of the agency concerned, is authorized and empowered, by law, to remit the whole or any part of such damages as in his discretion may be just and equitable. 1-1.315-3 Contract provisions. (a) Supply or service contracts. When a liquidated damages provision is to be used in a supply or service contract FEDERAL PROCUREMENT REGULATIONS 116 (FPR CIRC, 1, MAR. 1959) SUBPART 1-1, 3 GENERAL POLICIES L ୮ L which includes Standard Form 32. Gen- eral Provisions (Supply Contract), the following provision shall be inserted in the invitation for bids and an appro- priate rate(s) of liquidated damages (determined pursuant to section 1-1.315- 2) shall be stipulated: LIQUIDATED DAMAGES Article 11(f) of Standard Form 32, General Provisions (Supply Contract), is redesig- nated as Article 11(g) and the following is inserted as Article 11(f): (f) (i) In the event the Government exer- cises its right of termination as provided in paragraph (a) above, the Contractor shall be liable to the Government for excess costs as provided in paragraph (b) above and, in addition, for liquidated damages, in the amount set forth elsewhere in this contract, as fixed, agreed, and liquidated damages for each calendar day of delay, until such time as the Government may reasonably obtain delivery or performance of similar supplies or services. (ii) If the contract is not so terminated, notwithstanding delay as provided in para- graph (a) above, the Contractor shall con- tinue performance and be liable to the Gov- ernment for such liquidated damages for each calendar day of delay until the supplies are delivered or services performed. (iii) The Contractor shall not be liable for liquidated damages for delays due to causes which would relieve him from liability for excess costs as provided in paragraph (c) of this clause. (b) Construction contracts. Liqui- dated damages provisions for construc- tion contracts are contained in the Ter- mination for Default-Damages for Delay-Time Extensions clauses of both Standard Form 19, Invitation, Bid, and Award (Construction, Alteration or Re- pair), and Standard Form 23A, General Provisions (Construction Contract). make such provisions operative, an ap- propriate rate(s) of liquidated damages (determined pursuant to section 1-1.315- 2) must be stipulated in the invitation for bids. To I-1.316 Time of delivery or perform- ance. 1-1.316-1 Scope and applicability. This section 1-1.316 prescribes policy and procedure regarding requirements as 1~1, 316–3 (f) to time for delivery or performance in contracting for personal property or nonpersonal services. This section does not, however, apply to contracts for construction. 1-1.316-2 General. (a) The time of delivery or of per- formance is an important element of a contract and must be clearly set forth in invitations for bids and requests for proposals. Time schedules for delivery or performance shall be designed to meet the requirements of the particular procurement, all relevant factors con- sidered (see section 1-1.316-3), and must be realistic. Schedules which are un- reasonably tight or difficult of attain- ment tend to restrict competition, are inconsistent with small business policies, and may result in higher contract prices. Therefore, before issuing an invitation for bids or request for proposals, the con- tracting officer shall question any de- livery or performance schedule which appears unrealistic and, if necessary, initiate action to make appropriate ad- justments. (b) Where timely delivery or per- formance is unusually important to the Government, a liquidated damages pro- vision may be used as provided for in section 1-1.315. (c) Invitations for bids and requests for proposals shall, when appropriate, inform bidders or offerors of the basis on which their bids or proposals will be evaluated with respect to time of de- livery or performance. 1-1.316-3 Factors to be considered. Factors to be considered in establish- ing delivery or performance schedules may include one or more of the following: (a) Urgency of need for the property or services. (b) Production time due to quantity, complexity of design, etc. (c) Market conditions. (d) Transportation time. (e) Industry practices. (f) Capabilities of small business concerns. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 34, AUGUST 1963) 117 PART 1-1 GENERAL 1-1.316-3(g) (g) Time for obtaining and evaluat- ing bids or offers, and for awarding contracts. (h) Time for contractors to comply with any conditions precedent to per- formance. (i) Time for the Government to per- form its obligations under the contract (e.g., furnishing of Government prop- erty to the contractor, approval of pre- production samples, and inspection). 1-1.316-4 Terms. (a) Delivery schedules may be ex- pressed in terms of— (1) Specific calendar dates (e.g., on or before July 1, 1960); (2) Specified periods from date of contract (i.e., from date of award or ac- ceptance by the Government, or from date shown on contract document as ef- fective date of contract); or (3) Specified periods from date of receipt. by contractor of notice of award or acceptance by the Government (in- cluding notice by receipt of contract document executed by the Government). The full period which the Government holds out as being available for contract performance should not be curtailed to the prejudice of the contractor by delay in giving notice of award. Accordingly, one of the provisions in paragraph (b) or (c) of this section shall be used in advertised procurements and may be suitably modified and used as appropri- ate in negotiated procurements. (b) Where the delivery schedule is expressed in terms of specific calendar dates (see paragraph (a) (1) of this sec- tion), invitations for bids shall include one of the following provisions: (1) The foregoing delivery requirements are based on the assumption that the Gov- ernment will make award by (procuring ac- tivity insert calendar date). Each delivery date in the delivery schedule set forth herein will be extended by the number of calendar days after the above date that the contract is in fact awarded. Attention is directed to paragraph 8(d) of the Terms and Conditions of the Invitation for Bids, which provides that a written award mailed or otherwise furnished to the successful bidder results in a binding contract. Therefore, in com- puting the available time for performance, the bidder should take into consideration the time required for notice of award to ar- rive through the ordinary mails. (2) The foregoing delivery requirements are based on the assumption that the suc- cessful bidder will receive the notice of award by (procuring activity insert calendar date). The Government will extend each delivery date in the delivery schedule set forth herein by the number of calendar days after the above date that the contractor re- ceives notice of award, if the contractor promptly acknowledges such receipt. (c) Where the delivery schedule is based on the date of contract (see para- graph (a) (2) of this section), the invita- tions for bids shall include the following provision: Attention is directed to paragraph 8(d) of the Terms and Conditions of the Invitation for Bids, which provides that a written award mailed or otherwise furnished to the suc- cessful bidder results in a binding contract. Any award hereunder, or a preliminary notice thereof, will be mailed or otherwise fur- nished to the bidder the day the award is dated. Therefore, in computing the time available for performance, the bidder should take into consideration the time required for the notice of award to arrive through the ordinary mails. However, a bid offering de- livery based on date of receipt by the con- tractor of the contract or notice of award (rather than contract date) will be evalu- ated by adding the maximum number of days normally required for delivery of the award through the ordinary mails. If, as so computed, the delivery, date offered is later than the delivery date required in the invi- tation, the bid will be considered nonre- sponsive and rejected. (d) Where the delivery schedule is based on the date of the contract (see paragraphs (a) (2) and (c) of this sec- tion), the contract, notice of award, ac- ceptance of proposal, or other contract document executed by the Government shall be mailed or otherwise furnished the contractor on the date shown thereon. (e) Where the delivery schedule is based on date of receipt by the contrac- tor of notice of award (see paragraph FEDERAL PROC CUREMENT REGULATIONS 118 (FPR CIRC. 34, AUGUST 1963) SUBPART 1-1.3 GENERAL POLICIES (a)(3) of this section), or where it is ex- pressed in terms of specific calendar dates on the assumption that notice of award will be received by a specified date (see paragraph (b)(2) of this section), the notice of award, acceptance of pro- posal, or other contract document exe- cuted by the Government shall be sent by certified mail, return receipt re- quested, or by any other appropriate method which will provide evidence of the date of receipt. (f) When the required delivery sched- ule in the invitation for bids is based on date of the contract (see paragraph (a) (2) of this section), a bid which offers delivery based on date of receipt by the contractor of the contract or notice of award (see paragraph (a)(3) of this section) — (1) Shall be evaluated by adding the maximum number of days normally re- quired for delivery of the notice of award through the ordinary mails; and (2) If the delivery date offered by the bid (computed in accordance with subparagraph (1) of this paragraph) is later than the delivery date required in the invitation for bids, the bid shall be considered nonresponsive and rejected; but (3) If award is made under sub- paragraph (1) of this paragraph, under the terms of the contract the delivery date will be computed on the basis of the number of days after actual receipt by the contractor of the notice of award as specified in the bid. 1-1.316-5 Time of delivery clauses. (a) Examples of time of delivery clauses for invitations for bids are set forth below. They may be modified, or other clauses may be used, to state par- ticular delivery requirements or any spe- cial procedures to be used in the evalua- tion, rejection, or award process as re- gards time of delivery. These clauses also may be suitably modified and used as appropriate in negotiated procure- ments. 1-1.316-5(c) (b) The following clause may be used where delivery by a particular time is necessary to meet the Government's requirements: TIME OF DELIVERY Delivery is required to be made in accord- ance with the following schedule: Item No. Quantity Time [* ] Bids offering delivery of each quantity within the applicable delivery period speci- fied above will be evaluated equally as regards time of delivery. Bids offering delivery of a quantity under such terms or conditions that delivery will not clearly fall within the appli- cable delivery period specified above will be considered nonresponsive and will be re- jected. Where a bidder offers an earlier de- livery schedule than that called for above, the Government reserves the right to award either in accordance with the required sched- ule or in accordance with the schedule offered by the bidder. If the bidder offers no other delivery schedule, the delivery schedule stated above shall apply. Bidder's Proposed Delivery Schedule Item No. 1 (To Be Completed by Bidder) Quantity Time [* *Contracting officer shall insert the appro- priate one of the following phrases, in both of the indicated spaces: (1) “On (on or before) the date(s) spec- ified below." (2) "Within the number of days stated below after date of contract." (3) "Within the number of days stated below after the date of receipt of a written notice of award." " (4) "Within the periods specified below." (NOTE: When this phrase is inserted, the wording "during the month(s) of or "not sooner than than the periods.) and not later "should be used to specify (c) The following clause may be used where delivery by a certain time is de- sired although not essential, but delivery (NEXT PAGE IS 118.2) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 34, AUGUST 1963) 118.1 PART 1-1 GENERAL F 1-1.316-5 (c) by a specified later time is necessary to meet the Government's requirements: TIME OF DELIVERY Delivery is desired by the Government in accordance with the following schedule: Item No. Quantity 1 Time [ * ] If the bidder is unable to meet the above delivery schedule, he may, without prejudice to the evaluation of his bid, set forth his Proposed Delivery Schedule below; but such delivery schedule must not extend the de- livery period beyond the time for delivery called for in the following required delivery schedule: REQUIRED DELIVERY SCHEDULE Item No. Quantity Time [* ] Bids offering delivery of a quantity under such terms or conditions that delivery will not clearly fall within the applicable required delivery period specified above will be con- sidered nonresponsive and will be rejected. If the bidder does not propose a different delivery schedule, the Government's desired delivery schedule shall apply. Bidder's Proposed Delivery Schedule Item No. (To Be Completed by Bidder) Quantity Time [ * 1 * Contracting officer shall insert the appro- priate one of the following phrases, in each of the three indicated spaces: (1) "On (on or before) the date(s) spe- cified below." (2) "Within the number of days stated below after date of contract." (3) "Within the number of days stated below after the date of receipt of a written notice of award." 99 (4) "Within the periods specified below." (NOTE: When this phrase is inserted, the wording "during the month(s) of or "not sooner than than the periods.) "" and not later should be used to specify § 1-1.317 Noncollusive bids and pro- posals. (a) In order to promote full and free competition for Government contracts, the following certification shall be in- cluded in all (1) invitations for bids, and (2) requests for proposals or quotations, other than for small purchases made in accordance with Subpart 1-3.6 and other than requests for technical pro- posals in connection connection with with two-step formal advertising, involving firm fixed- price contracts and fixed-price contracts with escalation: CERTIFICATION OF NONCOLLUSION (a) By submission of this bid or proposal, the bidder or offeror certifies in connection with this procurement that: (1) The price in this bid or proposal nas been independently arrived at without collusion with any other bidder or offeror or with any competitor; (2) Unless otherwise required by law, the price in this bid or proposal has not been knowingly disclosed and will not be know- ingly disclosed prior to opening, in the case of a bid, or prior to award, in the case of a proposal, directly or indirectly to any other bidder or offeror or to any competitor; and (3) No attempt has been or will be made to induce any other person or firin to submit or not to submit a bid or proposal. (b) The person signing this bid or pro- posal certifies that he has fully informed himself regarding the accuracy of the state- ments contained in this certification. (c) This certification is not applicable to a foreign bidder or offeror submitting a bid or proposal for a contract which requires per- formance or delivery outside the United States, its possessions, and Puerto Rico. (d) A bid or proposal will not be con- sidered for award where (a)(1), (a)(3), or (b) above has been deleted or modified. Where (a) (2) above has been deleted or modified, the bid or proposal will not be considered for award unless the bidder or of- feror furnishes with the bid or proposal a signed statement which sets forth in detail the circumstances of the disclosure and the head of the agency, or his designee, deter- mines that the disclosure was not made with collusive intent. (b) The authority to make the deter- mination described in paragraph (d) of the above certification shall not be dele- (NEXT PAGE IS 118,3) FEDERAL PROCUREMENT REGULATIONS 118,2 (FPR CIRC. 36, AUGUST 1963) SUBPART 1–1.3 GENERAL POLICIES A gated to an official below the level of the pared to an procuring activity of the agency. (c) Where a certification is suspected of being false or there is indication of collusion, the matter shall be processed in 1-1.317 (c) accordance with Subpart 1-1.9 and ap- propriate agency procedures. For rejec- tion of bids which are suspected of being collusive and for the negotiation of pro- curements subsequent to such rejection, see sections 1-2.404-1(b) (6) and 1-3.214. (NEXT PAGE IS 119) r FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 36, AUGUST 1963) 118.3 Subpart 1-1.4-[Reserved] FEDERAL PROCUREMENT REGULATIONS (NEXT PAGE IS 121) 119 (FPR CIRC. 1, MAR, 1959) } SUBPART 1-1.5 CONTINGENT FEES 1-1.504-3 7 7 Subpart 1-1.5-Contingent Fees 1-1.500 Scope of subpart. This subpart prescribes the use by ex- ecutive agencies of the "covenant against contingent fees" and sets forth the policies, forms, methods, procedure, prin- ciples, and standards related thereto. The requirements of this subpart have as their objective the prevention of im- proper influence in connection with the obtaining of Government contracts, the elimination of arrangements which en- courage the payment of inequitable and exorbitant fees bearing no reasonable relationship to the services actually per- formed, and the prevention of unwar- ranted expenditure of public funds which inevitably results therefrom. The meth- ods used to achieve these objectives are the requirement for disclosure of the de- tails of arrangements under which agents represent concerns in obtaining Govern- ment contracts, and the prohibiting, by use of the covenant against contingent fees, of certain types of contractor-agent arrangements. 1-1.501 Applicability. The provisions of this subpart apply to all contracts for the procurement of personal property and nonpersonal serv- ices, including the procurement of con- struction. The Criminal Code will apply in any case involving actual criminal conduct. 1-1.502 Improper influence. The term "improper influence" means influence, direct or indirect, which in- duces or tends to induce consideration or action by any employee or officer of the United States with respect to any Government contract on any basis other than the merits of the matter. 1-1.503 Covenant. Executive agencies shall include in every negotiated or advertised contract (except as provided in section 1-16.406) a "covenant against contingent fees" → substantially as follows (set forth as article 20 of Standard Form 32, Gen- eral Provisions (Supply Contract), and Clause 17 of Standard of Standard Form 23A, General Provisions (Construction Con- tract)): The Covenant against contingent fees. Contractor warrants that no person or selling agency has been employed or retained to solicit or secure this contract upon an agree- ment or understanding for a commission, percentage, brokerage, or contingent fee, excepting bona fide employees or bona fide established commercial or selling agencies maintained by the Contractor for the pur- pose of securing business. For breach or vio- lation of this warranty the Government shall have the right to annul this contract with- out liability or in its discretion to deduct from the contract price or consideration, or otherwise recover, the full amount of such commission, percentage, brokerage, or con- tingent fee. 1-1.504 General principles and stand- ards applicable to the covenant. 1-1.504-1 Use Use of principles principles and standards. The principles and standards set forth in this subpart are intended to be used as a guide in the negotiation, awarding, administration, and enforcement of Government contracts. 1-1.504-2 Contingent character of the fee. Any fee whether called commission, percentage, brokerage, or contingent fee, or otherwise denominated, is within the purview of the covenant if, in fact, any portion thereof is dependent upon suc- cess in obtaining or securing the Gov- ernment contract or contracts involved. The fact, however, that a fee of a con- tingent nature is involved does not pre- clude a relationship which qualifies under the exceptions to the prohibition of the covenant. 1-1.504-3 Exceptions to the prohibi- tion. There are excepted from the prohibi- tion of the covenant "bona fide em- ployees" and "bona fide established FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 15, APRIL 1961) 121 PART 1-1 GENERAL 1-1.504-3 commercial or selling agencies main- tained by the contractor for the purpose of securing business." 1-1.504-4 Bona fide employee. (a) The term "bona fide employee,” for the purpose of the exception to the prohibition of the covenant, means an individual (including a corporate officer) employed by a concern in good faith to devote his full time to such concern and no other concern and over whom the concern has the right to exercise super- vision and control as to time, place, and manner of performance of work. It is recognized that a concern, especially a small business concern, may employ an individual who represents other con- cerns. The factors set forth in section 1-1.504-5(b) except subparagraph (4) thereof, shall be applied to determine whether such an individual comes within the exception to the prohibition of the covenant. (b) The hiring must contemplate some continuity and it may not be related only to the obtaining of one or more specific Government contracts. (c) An employee is not "bona fide" who seeks to obtain any 'Government contract or contracts for his employer through the use of improper influence or who holds himself out as being able to obtain any Government contract or contracts through improper influence. (d) A person may be a bona fide em- ployee whether his compensation is on a fixed salary basis or, when customary in the trade, on a percentage, commis- sion or other contingent basis, or a combination of the foregoing. 1-1.504-5 Bona fide established com- mercial or selling agency maintained by the contractor for the purpose of securing business. (a) An agency or agent is not "bona fide" which seeks to obtain any Govern- ment contract or contracts for its prin- cipals through the use of improper in- fluence or which holds itself out as being able to obtain any Government contract or contracts through improper influence. (b) In determining whether an agency is a "bona fide established commercial or selling agency maintained by the con- tractor for the purpose of securing busi- ness," the factors set forth below shall be considered. They are necessarily in- capable of exact measurement or precise definition and it is neither possible nor desirable to prescribe the relative weight to be given any single factor as against any other factor or as against all other factors. The conclusions to be reached in a given case will necessarily depend upon a careful evaluation of the agree- ment and other attendant facts and circumstances. (1) The fees charged should not be inequitable and exhorbitant in relation to the services actually rendered. That is, the compensation should be commen- surate with the nature and extent of the services and should not be excessive as compared with the fees customarily allowed in the trade concerned for simi- lar services related to commercial (non- Government) business. In evaluating reasonableness of the fee, there should be considered services of the agent other than actual solicitation, as for example, technical, consultant or managerial serv- ices, and assistance in the procurement of essential personnel, facilities, equip- ment, materials, or subcontractors for performance of the contract. (2) The selling agency should have adequate knowledge of the products and the business of the concern represented, as well as other qualifications necessary to sell the products or services on their merits. (3) There should ordinarily be a continuity of relationship between the contractor and the agency. The fact that the agency has represented the con- tractor over a considerable period of time is a factor for favorable consider- ation. It is not intended, however, to disqualify newly established contractor- agent relationships where a continuing relationship is contemplated by the parties. FEDERAL PROCUREMENT REGULATIONS 122 (FPR CIRC, 15, APRIL 1961) SUBPART 1-1.5 CONTINGENT FEES 1-1.505 (4) It should appear that the agency is an established concern. The agency may be either one which has been in business for a considerable period of time or a new agency which is a pres- ently going concern and which is likely to continue in business as a commercial or selling agency in the future. The business of the agency should be con- ducted in the agency name and charac- terized by the customary indicia of the conduct of a regular business. (5) The fact that a selling agency confines its selling activities to the field of Government contracts does not, in and of itself, disqualify it under the cove- nant. The fact, however, that the selling agency is employed to secure business generally, that is, to represent the con- cern in connection with sales to the Gov- ernment as well as regular commercial sales to non-Government activities is a factor entitled to favorable consideration in evaluating the case as one coming within the authorized exception. Ar- rangements confined, however, to obtain- ing Government contracts, particularly those involving a selling agency organ- ized immediately prior to or during periods of expanded procurement re- sulting from conditions of national emergency, must be closely scrutinized. 1-1.504-6 Fees for "information.” Contingent fees paid for "informa- tion" leading to obtaining a Government contract or contracts are included in the prohibition and, accordingly, are in breach of the covenant unless the agent qualifies under the exception as a bona fide employee or a bona fide established commercial or selling agency maintained by the contractor for the purpose of securing business. 1-1.505 Representation and agree- ment required from prospective con- tractors. Except as provided in section 1-1.507-3, each executive agency shall inquire of and secure a written representation from prospective contractors as to whether they have employed or retained any com- pany or person (other than a full-time employee working solely for the prospec- tive contractor) to solicit or secure the contract, and shall secure a written agreement to furnish information relat- ing thereto as required by the contract- ing officer. Where an invitation for bids is issued, this inquiry shall be made (and written representation and agreement secured) by requiring the bidder (or contractor) to check the appropriate box (NEXT PAGE IS 123) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 15, APRIL 1961) 122.1 > SUBPART 1-1.5 CONTINGENT FEES in the following statement (which ap- pears on Standard Form 21, Bid Form (Construction Contract), Standard Form 30, Invitation and Bid (Supply Con- tract), and Standard Form 33, Invita- tion, Bid and Award (Supply Contract)) to be included in the invitation or bid form: The bidder represents: (a) that he has, has not, employed or retained any company or person (other than a full-time bona fide employee working solely for the bidder) to solicit or secure this contract, and (b) that he has, has not, paid or agreed to pay any company or person (other than a full-time bona fide employee working solely for the bidder) any fee, commission, percentage or brokerage fee, contingent upon or resulting from the award of this contract; and agrees to furnish information relating to (a) and (b) above as requested by the Contracting Officer. (Note: For interpreta- tion of the representation, including the term "bona fide employee," see Code of Federal Regulations, Title 41, Chapter I, Subpart 1-1.5.) 1-1.506 Interpretation of the repre- sentation. (a) For the purpose of the represen- tation and agreement required from the prospective contractor, as described in section 1-1.505, the definition of "bona fide employee" is as specified in section 1-1.504-4. (b) The fact that the prospective con- tractor retains a person who does not devote his full time solely to the prospec- tive contractor does not necessarily mean that the relationship involved is in violation of the covenant against con- tingent fees or that there is any stigma attached to the contractor-agent rela- tionship. It does mean, however, that the prospective contractor must fill out the representation in the affirmative and, as required, furnish information with respect to such employment or retention. (c) If the representation would other- wise be answered in the affirmative the fact that the person employed or retained by the bidder or contractor is an attor- ney, or a public relations consultant, or has any other special or professional title, does not permit answer in the negative. 1-1.507 Use of Standard Form 119. 1-1.507-1 Form prescribed. Pursuant to the Act and in further- ance of the objectives stated in section 1-1.500, Standard Form 119 (December 1952), Contractor's Statement of Con- tingent or Other Fees for Soliciting or Securing or Resulting from Award of Contract, is hereby prescribed and shall be used in accordance with the provi- sions of this subpart. Except as pro- 1-1.507-3(g) vided in section 1-1.507-3, this form shall be used without deviation by execu- tive agencies whenever either part of the inquiry provided for in section 1-1.505 is answered in the affirmative. The form shall be used also without deviation in any other case where an executive agency desires to obtain such information. When, after use of the form, further information is required, it may be obtained in any appropriate manner. Submission of the form shall be required, normally, only of successful bidders and contractors. 1-1.507-2 Statement in lieu of form. Any bidder or proposed contractor who has previously furnished a Standard Form 119 to the office issuing the in- vitation or negotiating the contract may be permitted to accompany his bid, or submit in connection with the proposed contract, a signed statement (a) indicat- ing when such completed form was previously furnished, (b) identifying by number the previous invitation or con- tract in connection with which such form was submitted, and (c) represent- ing that the statements in such previ- ously furnished form are applicable to such subsequent bid or contract. In such case, submission of an additional completed Standard Form 119 need not be required. 1-1.507-3 Exceptions. The inquiry and agreement specified in section 1-1.505 need not be made and submission of Standard Form 119 need not be requested in connection with the following: (a) Any advertised contract in which the aggregate amount involved does not exceed $25,000. (b) Any negotiated contract in which the aggregate amount involved does not exceed, in the case of the Department of Defense, $5,000; in all other cases, $2,500. (c) Any negotiated contract for per- ishable subsistence supplies in which the aggregate amount involved does not exceed $25,000. (d) Any contract for services which are required to be performed by an indi- vidual contractor in person under Gov- ernment supervision and paid for on a time basis. (e) Any contract for public utility services furnished by a public utility company where the utility company's rates for the services furnished are sub- ject to regulation by Federal, State, or other regulatory body and the public util- ity company is the sole source of supply. (f) Contracts to be made in foreign countries. (g) Any other contracts, individually or by class, of the Department of De- FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 1, MAR. 1959) 123 PART 1-1 GENERAL 1—1,507—3(g) fense, designated by the Secretary, Un- der Secretary, or Assistant Secretary of a military department. Reports of any such exceptions shall be filed promptly with the Administrator of General Serv- ices. 1-1.508 Enforcement. 1-1.508-1 Failure or refusal to fur- nish representation and agreement. Each executive agency shall take the necessary steps to assure that the indi- cated successful bidder or proposed con- tractor has furnished a representation (negative or affirmative) and agreement as described in section 1-1.505. (a) If the indicated successful bidder or proposed contractor makes such rep- resentation in the negative, such repre- sentation may be accepted and award made or offer accepted in accordance with established procedure. (b) If the indicated successful bidder or proposed contractor makes such rep- resentation in the affirmative, a com- pleted Standard Form 119 shall be requested from the bidder or proposed contractor. In the case of formal adver- tising, the making of an award in accord- ance with established procedure need not be delayed pending receipt of the form. In the case of negotiation, if the proposed contractor makes such representation in the affirmative, he shall be required to file a completed Standard Form 119, prior to acceptance of the offer or execution of the contract unless the head of the executive agency (including, for this purpose, any military department) con- cerned, or his authorized representative, considers that the interest of the Gov- ernment will be prejudiced by the sus- pension of negotiations pending receipt and consideration of an executed Stand- ard Form 119. (c) If the indicated successful bidder or proposed contractor fails to furnish the representation and agreement as de- scribed in section 1-1.505, such failure shall be considered a minor informality and, prior to award, such bidder or pro- posed contractor shall be afforded a fur- ther opportunity to furnish such repre- sentation and agreement. A refusal or failure to furnish such representation and agreement, after such opportunity has been afforded, shall require rejec- tion of the bid or offer. 1-1.508-2 Failure or refusal to fur- nish Standard Form 119. If the successful bidder or contractor, upon request, refuses or fails to furnish a completed Standard Form 119, or a statement in lieu thereof as provided in section 1-1.507-2, the executive agency concerned shall take one or more of the following actions, or other action, as may be appropriate: (a) If an award has not been made or offer accepted, determine whether the bid or offer should be rejected. (b) If the contract has been awarded or offer accepted, determine what action shall be taken, such as making an inde- pendent investigation or considering the eligibility of the contractor as a future contractor in accordance with estab- lished procedure. 1-1.508-3 Misrepresentations or vio- lations of the covenant against con- tingent fees. In case of misrepresentation, or viola- tion or breach of the covenant against contingent fees, or some other relevant impropriety, the executive agency con- cerned shall take one or more of the fol- lowing actions, or other action, as may be appropriate: (a) If an award has not been made, or offer has not been accepted, determine whether the bid or offer should be rejected. (b) If an award has been made or of- fer has been accepted, take action to en- force the covenant in accordance with its terms; that is, as the best interests of the Government may appear, annul the contract without liability or recover the amount of the fee involved. case (c) Consider the future eligibility as a contractor of the bidder or contractor in accordance with established procedure. (d) Determine the whether should be referred to the Department of Justice in accordance with established procedure with respect to determining matters of fraud or criminal conduct. 1-1.509 Preservation of records. Executive agencies shall preserve, for enforcement or report purposes, at least one executed copy of any representation and completed Standard Form 119 (or statement in lieu of form), together with a record of any other pertinent data, including data as to action taken. FEDERAL PROCUREMENT REGULATIONS 124 (FPR CIRC. 1, MAR, 1959) SUBPART 1-1.6 DEBARRED AND INELIGIBLE BIDDERS Subpart 1-1.6-Debarred and Ineligible Bidders 1-1.601 Purpose. This subpart prescribes policies and procedures relating to the debarment of bidders for any cause and ineligibility of bidders under section 1 of the Walsh- Healey Public Contracts Act (41 U.S.C. 35). It is directly applicable to execu- tive agencies in negotiated or advertised purchasing and in contracting for the construction, repair, alteration, destruc- tion, or dismantlement of public works or buildings. Other Federal agencies are requested to comply therewith in con- ducting their purchasing and contracting operations. 1-1.602 Establishment and mainte- nance of a list of firms or individuals debarred or ineligible. (a) Each executive agency shall estab- lish and maintain, on the bases contained in section 1-1.603, a consolidated list of firms and individuals to whom contracts will not be awarded and from whom bids or proposals will not be solicited as pro- vided in section 1-1.604. (b) The list shall show as a minimum the following information: (1) The names of those firms or in- dividuals debarred or ineligible (in al- phabetical order) with appropriate cross reference where more than one name is involved in a single action; (2) The basis of authority for each action; (3) The extent of restrictions im- posed; and (4) The termination date for each debarred listing. (c) Each executive agency shall deter- mine, in its discretion, as the interests of the national security may require, the necessity for and degree of classification of its list and correspondence relating thereto. If the agency determines that its list shall not be classified, the list should be marked "For Official Use Only" or with a word or phrase of equivalent meaning. (d) The list shall be kept current by issuance of notices of additions and de- letions. 1-1.603 1-1.603 (c)(11) Bases for debarment and in- eligible list entry. Entry shall be made on the debarment and ineligible list of firms or individuals on the following bases: (a) Those listed by the Comptroller General in accordance with the pro- visions of section 3 of the Walsh-Healey Public Contracts Act (41 U.S.C. 37), which have been found by the Secre- tary of Labor to have violated any of the agreements or representations re- quired by that Act. (b) Those listed by the Comptroller General in accordance with the provi- sions of section 3 of the Davis-Bacon Act (40 U.S.C. 276a-2(a)), as found by the Comptroller General to have violated said Act. (c) Those listed by the Comptroller General in accordance with the provi- sions of Part 5, section 5.6(b) of the Regulations of the Secretary of Labor issued pursuant to authority granted un- der Reorganization Plan 14 of 1950, as found by the Secretary of Labor to be in aggravated or willful violation of the prevailing wage or overtime pay provi- sions of any of the following statutes- Act (1) Davis-Bacon (40 U.S.C. 276a). (2) Anti-Kickback Act (18 U.S C. 874, 40 U.S.C. 276b, c). (3) Eight-Hour Law (40 U.S.C. 321). (4) National Housing Act (12 U.S.C. 1703). (5) Hospital Survey and Construc- tion Act (42 U.S.C. 291). (6) Federal Airport Act (49 U.S.C. 1101). (7) Housing Act of 1949 (42 U S.C. 1401). (8) School Survey and Construction Act of 1950 (20 U.S.C. 251). (9) Defense Housing and Commu- nity Facilities and Services Act of 1951 (42 U.S.C. 1591). (10) Federal Civil Defense Act of 1950 (50 App. U.S.C. 2281 (i)). (11) Area Redevelopment Act of 1961 (42 U.S.C. 2518). FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 24, JULY 1962) 125 PART 1-1 GENERAL 1-1.603 (d) (d) Those the executive agency de- termines to debar administratively for any of the causes and under all of the appropriate conditions listed in section 1-1.605. (e) Those determined by an executive agency in accordance with section 3(b) of the Buy American Act (41 U.S.C. 10b(b)) to have failed to comply with the provisions of section 3(a) of that Act under any contract containing the specific provision required by said section 3(a) and made by the agency for con- struction, alteration, or repair of any public building or public work. (f) Those found by the Secretary of Labor ineligible to be awarded contracts for the reason that they do not qualify as "manufacturers" or "regular dealers" within the meaning of section 1(a) of the Walsh-Healey Public Contracts Act (41 U.S.C. 35(a)). 1-1.604 Treatment to be accorded firms or individuals in debarred or ineligible status. Firms or individuals listed by the agency as debarred or ineligible shall be treated as follows: (a) Total restrictions. Contracts shall not be awarded to firms or individuals that are listed on the basis of section 1-1.603 (a), (b), or (d), or to any firm, corporation, partnership, or association in which such firm or individual has a controlling interest, nor shall bids or proposals be solicited therefrom. How- ever, when it is determined essential in the public interest by the head of an agency or his designee, an exception may be made with respect to a particular pro- curement action even when a firm or individual is listed as debarred on the basis of section 1-1.603(d). (b) Restrictions under statutes desig- nated in the regulations of the Secretary of Labor. A contractor listed on the basis of section 1–1.603(c), or any firm, cor- poration, partnership, or association in which such contractor has a controlling interest, shall be ineligible for a period of three years (from the date of publi- cation by the Comptroller General) to receive any contracts subject to any of the statutes listed in section 1-1.603(c). (c) Buy American Act restrictions. As specified in the Buy American Act (41 U.S.C. 10b(b)), contracts shall not be awarded for construction, alteration, or repair of public buildings or public works in the continental United States or else- where to firms or individuals listed on the basis of section 1-1.603, nor shall bids or proposals therefor be solicited there- from. However, firms or individuals listed on this basis may be awarded con- tracts and may be solicited for bids or proposals for other than construction, alteration, or repair of public buildings or public works in the continental United States or elsewhere. (d) Ineligibility restrictions of the Walsh-Healey Act. Contracts shall not be awarded to firms or individuals in any amount exceeding $10,000 for those ma- terials, supplies, articles, or equipment with respect to which the firm or indi- vidual has been found to be ineligible to be awarded a contract by the Secretary of Labor, as provided in section 1-1.603(f). However, firms or individ- uals listed on this basis may, in the dis- cretion of each executive agency, be awarded contracts and may be solicited by bids or proposals, for (1) such ma- terials, supplies, articles, or equipment when the amount does not exceed (2) $10,000; services regardless of amount; and (3) commodities in which not declared ineligible regardless of amount. 1-1.605 Causes and conditions appli- cable to determination of debarment by an executive agency. Each executive agency is authorized to debar in the public interest a firm or in- dividual for any of the causes and under all appropriate conditions listed: (a) Causes. (1) Conviction for commisison of a criminal offense as an incident to obtain- ing a contract or in an attempt to obtain a contract or in the performance thereof. (2) Conviction under the Federal Antitrust Statutes arising out of the sub- mission of bids or proposals. (3) Violation of contract provisions, as set forth below, of a character which is regarded by the agency involved to 7 FEDERAL PROCUREMENT REGULATIONS 126 (FPR CIRC, 24, JULY 1962) SUBPART 1-1.6 DEBARRED AND INELIGIBLE BIDDERS be so serious as to justify debarment action- (i) Willful failure to perform in accordance with the specifications or within the time limit provided in the contract. (ii) A history of unsatisfactory performance of one or more Government contracts. (iii) Violation of the contractual provision against contingent fees. (iv) Acceptance of a contingent fee, which is paid in violation of con- tractual provision against contingent fees. (4) Debarment by some other exec- utive agency. (b) Conditions. (1) Debarment for any of the causes of (a) shall be made only upon approval of the head of the executive agency or his duly authorized representative. (2) Causes (a) (1) and (2) shall have been established by criminal con- viction by a court of competent jurisdic- tion. In the event appeal taken from such conviction results in reversal of conviction, the debarment shall be re- moved if the bidder so requests. Crim- inal conviction for the above mentioned offenses does not necessarily require that the firm or individual be debarred, since the decision to debar is still within the discretion of the executive agency con- cerned. The seriousness of the offense, the civil satisfaction received by the Gov- ernment or available to the Government, and all mitigating factors should be con- sidered in making the determination to debar. (3) Cause (a) (3) shall be estab- lished by evidence which the executive agency determines to be clear and convincing. (4) Debarment for cause (a) (4) shall be made on the same bases as pro- vided for whichever of causes (a) (1) to (3) is appropriate, and may be based entirely upon the record of facts obtained by the original debarring agency, or upon a combination of additional facts with the record of facts of the original debarring agency. 1—1.606 (f) (5) The debarment shall be for a reasonable, definitely stated period of time commensurate with the serious- ness of the offense. (6) The firm or individual shall be given written notice of the debarment or of the intent to debar, except in the case of cause (a) (4). The notice shall state, as a minimum, the period of the proposed debarment, including effective dates; the reasons for debarment, including a state- ment of the specific instances of dere- liction; and shall provide reasonable opportunity for the contractor to present information for consideration upon his behalf. When the contractor does pre- sent such information he shall be given written notice of the final decision, and, if the decision provides for debarment, the period and effective dates thereof. 1-1.606 Agency procedure. Each executive agency shall: (a) Establish internal procedures and methods for giving effect to this Sub- part 1-1.6. (b) Notify the General Services Ad- ministration (GSA) of the name and address of its central office where de- barment information should be sent. (c) Furnish to GSA at time of issuance a copy of the notice of debarment on those debarments made under provisions of section 1-1.605(a), or the Buy Amer- ican Act, and of any removals from such debarments. (d) Check the list of debarred bidders furnished by GSA, and consider firms or individuals listed thereon for inclusion upon its own list, in accordance with the provisions of this Subpart 1–1.6. (e) As needed, request from GSA a copy of the notice on any debarment case appearing on the list herein provided to be compiled and distributed by GSA. If desired, direct inquiry concerning any debarment case may be made of the agency which originated the action. (f) Make its list available to all con- tracting officers within the agency. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 24, JULY 1962) 127 PART 1-1 GENERAL 1-1.607 1-1.607 General Services Administra- tion responsibility. In addition to the agency procedure provided in section 1-1.606, GSA will: (a) Compile and distribute to the des- ignated central office address of each agency a listing of the administrative debarments and debarments under the Buy American Act taken by the agencies, including the basis of action, in order that each executive agency may be in- formed of actions taken by each other agency. In general application, this list- ing will be for information purposes only and it is not intended to take the place of, or be an addition to, the lists maintained by the various agencies. (b) Furnish to any agency, on specific request, a copy of the notice reflecting the basis for debarment action taken by another agency for causes contained in section 1-1.605 (a) or under the Buy American Act. 1-1.608 Supplemental names included for other causes. Nothing in this Subpart 1-1.6 shall prevent any agency from supplementing the consolidated list with names of firms or individuals administratively deter- mined to be included, in accordance with procedures established by such agency, for causes other than those specifically set forth herein, or from establishing such other lists as any agency, in its discretion, may elect to use. FEDERAL PROCUREMENT REGULATIONS 128 (FPR CIRC, 24, JULY 1962) SUBPART 1-1.7 SMALL BUSINESS CONCERNS Subpart 1-1.7-Small Business Concerns § 1-1.700 General. (a) This subpart, which implements programs developed cooperatively with the Small Business Administration and the Government agencies having pro- curement responsibility, sets forth (1) procurement policy with reference to small business concerns; (2) policy gov- erning relationship of procurement agencies with SBA; (3) SBA certificate of competency program; (4) small busi- ness set-aside procedures; (5) small business subcontracting policies; and (6) information concerning SBA's size standards. (b) This subpart applies only in the United States, its possessions, and Puerto Rico. § 1-1.701 Definitions. The definitions in this section apply throughout this Subpart 1-1.7. Those definitions relating to SBA size stand- ards for procurement purposes are based on the governing regulations of SBA on the subject (13 CFR Part 121). § 1-1.701-1 Small business concern (for Government procurement). (a) General. A small business con- cern for the purpose of Government pro- curement is a concern, including its affiliates, which is independently owned and operated, is not dominant in the field of operation in which it is bidding on Government contracts, and can further qualify under the criteria set forth in this section. ("Concern" means any business entity organized for profit with a place of business located in the United States, its possessions, and Puerto Rico, including but not limited to, an individual, partnership, corporation, joint venture, association, or cooperative. "Annual receipts" means the annual re- ceipts less returns and allowances of a coneern and its affiliates.) For the pur- pose of a procurement of a product clas- sified into two or more industries with 1-1.701-1(c)(3) different size standards, the smallest of such size standards shall be used in de- termining a bidder's size status. (b) Construction. Any concern bid- ding on a contract for construction, alteration, or repair (including painting and decorating) of buildings, bridges, roads, or other real property is classi- fied: (1) As small if its average annual receipts for its preceding three fiscal years do not exceed $7,500,000 (except that if the concern is located in Alaska, such receipts do not exceed $9,375,000). (2) As small if it is bidding on a contract for dredging and its average annual receipts for its preceding three fiscal years do not exceed $5,000,000 (ex- cept that if the concern is located in Alaska, such receipts do not exceed $6,250,000). (c) Manufacturing. Any concern bidding on a contract for a product it manufactured is classified: (1) As small if it is bidding on a contract for food canning and preserv- ing and its number of employees does not exceed 500 persons, exclusive of agricul- tural labor as defined in the Federal Unemployment Tax Act, 26 U.S.C. 3306 (k). (2) As small if it is bidding on a contract for petroleum, other than lu- bricants and miscellaneous petroleum products, and its number of employees does not exceed 1,000 persons and it does not have more than 30,000 barrels per day crude oil capacity from owned or leased facilities. ("Crude-oil ca- pacity" means the minimum daily aver- age crude throughput of a refinery in complete operation, with allowance for necessary shutdown time for routine maintenance, repairs, etc. It approxi- mates the maximum daily average crude runs to stills that can be maintained for an extended period.) (3) As small if it is bidding on a contract for a product classified within an industry set forth in paragraph (h) of this section and its number of em- ployees does not exceed the size standard established for that industry. هم L FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 32, JUNE 1963) 129 PART 1-1 GENERAL L ୮ L 1-1.701-1 (c) (4) (4) As small if it is bidding on a contract for a product classified within an industry not set forth in paragraph (h) of this section and its number of employees does not exceed 500 persons. (d) Small business non-manufacturer. Any concern which submits a bid or offer in its own name, other than for a construction or service contract, but which proposed to furnish a product not manufactured by itself, is deemed to be a small business concern when: (1) It is a small business concern within the meaning of § 1-1.701-1(a); (2) Its number of employees does not exceed 500 persons; and (3) In the case of Government pro- curement reserved for or involving the preferential treatment of small business concerns (including equal low bids), such non-manufacturer shall furnish in the performance of the contract prod- ucts (i) of a small business manufac- turer or producer, and (ii) which are manufactured or produced in the United States, its possessions, or Puerto Rico. However, if the goods to be furnished are wool, worsted, knitwear, duck, web- bing, and thread (spinning and finish- ing), non-manufacturers (dealers and converters) shall furnish such products which have been manufactured or pro- duced by a small weaver (small knitter for knitwear) and, if finishing is re- quired, by a small finisher. (e) Services. Any concern bidding on a contract for services, not elsewhere defined in this section, is classified as small if its average annual sales or re- ceipts for its preceding three fiscal years do not exceed $1,000,000 (except that if the concern is located in Alaska, such receipts do not exceed $1,250,000). (f) Transportation. Any concern bidding on a contract for passenger or freight transportation, not elsewhere de- fined in this section, is classified: (1) As small if its number of em- ployees does not exceed 500 persons. (2) As small if it is bidding on a contract for air transportation and its number of employees does not exceed 1,000 persons. (3) As small if it is bidding on a contract for trucking and/or warehous- ing and its annual receipts do not ex- ceed $3,000,000 (except that if the con- cern is located in Alaska, such receipts do not exceed $3,750,000). No concern will be denied small business status for the purpose of Government procure- ment solely because of its contractual relationship with a large interstate van line, provided that its annual receipts have not exceeded $3,000,000 during the concern's most recently completed fiscal year and provided further no more than 50 percent of such annual receipts are directly attributable to the applicant's relationship with an interstate van line. (g) Small business Government sub- contractors. (1) Any concern, in connection with subcontracts of $2,500 or less which re- late to Government procurement, will be considered a small business concern if, including its affiliates, its number of em- ployees does not exceed 500 persons. (2) Any concern, in connection with subcontracts exceeding $2,500 which re- late to Government procurement, will be considered a small business concern if it qualifies as such under this § 1-1.701-1. (NEXT PAGE IS 130, 1) FEDERAL PROCUREMENT REGULATIONS 130 (FPR CIRC, 32, JUNE 1963) SUBPART 1-1,7 SMALL BUSINESS CONCERNS (h) Table of specific industry em- ployment size standards for the purpose of Government procurement. notes at end of table.) MANUFACTURING Census (See foot- classi- fication code Industry 1-1.701-1 (h) Employ- ment size standard (number of employees) 1 MAJOR GROUP 28-CHEMICALS AND ALLIED PRODUCTS Census classi- fication code Industry Employ- ment size standard (number of employees) 1 2812 2813 Industrial gases. Alkalies and chlorine- 2815 | Dyes, dye (cyclic) intermedi- 1,000 1,000 ates, and organic pigments (lakes and toners). 750 2816 Inorganic pigments. 1,000 2818 Industrial organic chemicals, MAJOR GROUP 19-ORDNANCE AND ACCESSORIES not elsewhere classified….. 1,000 2819 Industrial inorganic chemicals, 1925 Guided missiles and space ve- hicles, completely assembled. 1931 Tanks and tank conponents 1951 Small arms. 1961 Small arms ammunition... not elsewhere classified………. 750 1,000 2821 Plastics materials, synthetic 1,000 resins, and non vulcanizable 1,000 elastomers.. 750 1,000 2822 Synthetic rubber (vulcanizable elastomers). 1.000 2823 Cellulose man-made fibers. 1.000 2824 MAJOR GROUP 20-FOOD AND KINDRED PRODUCTS Synthetic organic fibers, except cellulosic 1.000 2833 Medicinal chemicals and 2032 Canned specialties- 1,000 botanical products- 750 2043 Cereal preparations. 1,000 2834 Pharmaceutical preparations... 750 2046 Wet corn milling.. 2841 -750 Soap and other detergents, 2052 Biscuit, crackers, and pretzels.. 750 2062 Cane sugar refining.. 750 2892 except specialty cleaners.. Explosives- 750 750 2063 Beet sugar- 750 2085 Distilled, rectified, and blended liquors. 750 2093 Vegetable oil mills, except cot- MAJOR GROUP 29-PETROLEUM REFINING AND ALLIED PRODUCTS tonseed and soybean. 1,000 2096 Shortening, table oils, marga- rine and other edible fats and oils, not elsewhere classified__ 2911 Petroleum refining 2, 750 2952 Asphalt felts and coatings. 1,000 750 MAJOR GROUP 21-TOBACCO MANUFACTURES 2111 Cigarettes.. MAJOR GROUP 22-TEXTILE MILL PRODUCTS MAJOR GROUP 30—RUBBER AND MISCELLANEOUS PLASTICS PRODUCTS 1,000 3011 Tires and inner tubes- 3021 Rubber footwear 3031 Reclaimed rubber. 1,000 1,000 750 MAJOR GROUP 32-STONE, CLAY, AND GLASS PRODUCTS 2211 Broad woven fabric mills, 1,000 cotton. 2271 Woven carpets and rugs. 750 2296 Tire cord and fabric.. 1,000 3211 Flat glass.. 1,000 3221 Glass containers. 750 3229 Pressed and blown glass and glassware, not elsewhere clas- MAJOR GROUP 26-PAPER AND ALLIED PRODUCTS sified.. 750 3241 Cement, hydraulic 750 2611 Pulp mills. 750 3261 Vitreous china plumbing fix- 2621 Paper mills, except building tures and china, and earthen- paper mills, 750 ware fittings and bathroom 2631 Paperboard mills. 750 accessories. 2646 Pressed and molded pulp goods. 750 3275 Gypsum products. 2654 Sanitary food containers. 750 3292 Asbestos products. 2661 Building paper and building board mills.. 3296 Mineral wool_ 750 3297 Nonclay refractories. 750 1,000 750 750 750 FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 37, SEPTEMBER 1963) 130.1 PART 1-1 GENERAL L 1—1.701~1 (h) Census classi- fication code Industry Employ- ment size standard (number of employees) 1 MAJOR GROUP 33—PRIMARY METAL INDUSTRIES Census classi- fication code Industry Employ- ment size standard (number of employees) 1 MAJOR GROUP 36-ELECTRICAL MACHINERY, EQUIPMENT AND SUPPLIES 3312 Blast furnaces (including coke ovens), steel works, and roll- ing-mills. 1.000 3612 3313 Electrometallurgical products.. 750 Power, distribution, and spe- cialty transformers.. 750 3315 Steel wire drawing and steel 3613 Switchgear and switchboard nails and spikes. 1.000 apparatus... 750 3316 Cold rolled sheet, strip and bars. 1,000 3621 Motors and generators. 1.000 3317 Steel pipe and tubes.. 1,000 3622 Industrial controls. 750 3331 Primary smelting and refining 3624 of copper- 1,000 3631 3332 Primary smelting and refining 3632 of lead 1,000 3333 Primary smelting and refining 3633 of zinc 750 3634 3334 Primary production of alumi- 3635 Carbon and graphite products.. Household cooking equipment.. Household refrigerators and home and farm freezers.. Household laundry equipment. Electric housewares and fans___ Household vacuum cleaners. 750 750 1,000 1.000 750 750 num. 1,000 3636 Sewing machines.. 750 3339 Primary smelting and refining 3641 Electric lamps.. 1.000 of nonferrous metals, not else- where classified_ 3651 Radio and television receiving 750 sets, except communication 3351 Rolling, drawing, and extrud- types... 750 ing of copper. 750 3652 3352 Rolling, drawing, and extrud- Phonograph records. 750 3661 ing of aluminum. Telephone and telegraph ap- 750 paratus 1.000 3356 Rolling, drawing, and extrud- 3662 Radio and 3357 ing of nonferrous metals, ex- cept copper and aluminum... Drawing and insulating of non- ferrous wire. television trans- mitting, signaling, and detec- 750 tion equipment and appa- ratus... 750 1,000 3671 3399 Primary metal industries, not elsewhere classified. 750 3672 3673 MAJOR GROUP 34—FABRICATED METAL PRODUCTS, EXCEPT ORDNANCE, MACHINERY, AND TRANSPORTATION EQUIP- MENT 3692 3694 Radio and television receiving type electron tubes, except cathode ray-- Cathode ray picture tubes. Transmitting, industrial, and special purpose electron tubes. Primary batteries, dry and wet. Electrical equipment for in- ternal combustion engines. --- 1.000 750 750 1,000 750 L 3411 Metal cans.. 1.000 3431 Enameled iron and metal sani- tary ware. 750 MAJOR GROUP 37-TRANSPORTATION EQUIPMENT MAJOR GROUP 35-MACHINERY, EXCEPT ELECTRICAL 3717 Motor vehicles and parts 3 1,000 3721 Aircraft 1,000 3511 Steam engines, steam, gas and 3722 Aircraft engines and engine hydraulic turbines; and parts 4 1.000 steam gas, and hydraulic tur- bine generator set units. - 3723 Aircraft propellers and prope!- 1,000 ler parts 1.000 擎 ​3519 Internal combustion engines, 3729 Aircraft parts and auxiliary not elsewhere classified.. 1,000 3531 Construction machinery and equipment, not elsewhere classified 5 1.000 equipment.. 3731 750 Shipbuilding and repairing.. 1.000 3562 Ball and roller bearings. 3741 750 Locomotives and parts. 1,000 3571 Computing and accounting 3742 Railroad and street cars. 750 machines, including cash registers.. 1,000 3572 Typewriters. 1,000 3585 Refrigerators, refrigeration ma- chinery, except household; and complete air condition- ing units. 750 (NEXT PAGE IS 130,3) FEDERAL PROCUREMENT REGULATIONS 130.2 (FPR CIRC. 32, JUNE 1963) SUBPART 1-1.7 SMALL BUSINESS CONCERNS 1-1,701-4 Census classi- fication code Industry MAJOR 3982 GROUP 39-MISCELLANEOUS INDUSTRIES Employ- ment size standard (number of employees) 1 MANUFACTURING Linoleum, asphalted-felt-base, and other hard surface floor coverings, not elsewhere classified. 750 1 The "number of employees" means the average em- ployment of any concern and its affiliates based on the number of persons employed during the pay period ending nearest the last day of the 3d month in each calendar quarter for the preceding 4 quarters. 2 Together with its affiliates does not employ more than 1,000 persons and does not have more than 30,000 barrels-per-day capacity from owned and leased facilities. 3 The three Standard Industrial Classification indus- tries (3711, 3712, and 3714) have been combined because of a major problem of defining the reporting unit in terms of these industries. This difficulty arises from the fact that many large establishments have integrated opera- tions which include the production of parts or bodies and the assembly of complete vehicles at the same location. 4 Includes maintenance as defined in the Federal Avia- tion Regulations (14 CFR 1.1) but excludes contracts solely for preventive maintenance as defined in 14 CFR 1.1. As defined in the Federal Aviation Regulations: "Maintenance' means inspection, overhaul, repair, preservation, and the replacement of parts, but excludes preventive maintenance." "Preventive maintenance' means simple or minor preservation operations and the replacement of small standard parts not involving complex assembly opera- tions." 5 Guided missile engines and engine parts are classified in SIC 3722. Missile control systems are classified in SIC 3662. (i) Research, development, and test- ing. Any concern bidding on a contract for research, development, and/or test- ing is classified: (1) As small if it is bidding on a con- tract for research and/or development which requires delivery of a manufac- tured product and (i) it qualifies as a small business manufacturer within the meaning of § 1-1.701-1(c) for the indus- try into which the product is classified, or (ii) it qualifies as a small business nonmanufacturer within the meaning of § 1-1.701-1(d). (2) As small if it is bidding on a con- tract for research and/or development which does not require delivery of a manufactured product or on a contract for testing and its number of employees does not exceed 500 persons. § 1-1.701-2 Affiliates. Business concerns are affiliates of each other when either directly or indirectly (a) one concern controls or has the power to control the other, or (b) a third party controls or has the power to control both. In determining whether concerns are independently owned and operated and whether or not affiliation exists, con- sideration shall be given to all appro- priate factors including common owner- ship, common management, and con- tractual relationships. § 1-1.701-3 Dominance in field of operation. A concern is "not dominant in its field of operation" when it does not exercise a controlling or major influence in a kind of business activity in which a number of business concerns are pri- marily engaged. In determining whether dominance exists, consideration shall be given to all appropriate factors, including volume of business, number of employees, financial resources, competitive status or position, ownership or control of mate- rials, processes, patents and license agreements, facilities, sales territory, and nature of business activity. § 1-1.701-4 Non-manufacturer. "Non-manufacturer" means any con- cern which in connection with a specific Government procurement contract, other than a construction or service contract, does not manufacture, pro- duce, or furnish the products or services required to be furnished by such pro- curement. Non-manufacturer includes a concern which can furnish the prod- ucts or services referred to in the spe- cific procurement but does not manu- facture, produce, or furnish such products or services in connection with that procurement. (NEXT PAGE IS 131) J L Lo FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 37, SEPTEMBER 1963) 130.3 SUBPART 1-1.7 SMALL BUSINESS CONCERNS § 1-1.701-5 Number of employees. In connection with the determination of small business status, "number of em- ployees" means the average employment of any concern, including the employees of its domestic and foreign affiliates, based on the number of persons em- ployed on a full time, part time, tempo- rary, or other basis during the pay period ending nearest the last day of the third month in each calendar quarter for the preceding four quarters. If a concern has not been in existence for four full cal- endar quarters, "number of employees” means the average employment of such concern and its affiliates during the pe- riod such concern has been in existence based on the number of persons employ- ed during the pay period ending nearest the last day of each month. § 1-1.701-6 Industry. "Industry" means a grouping of es- tablishments primarily engaged in sim- ilar lines of activity as listed and de- scribed in the Standard Industrial Classification Manual prepared and pub- lished by the Bureau of the Budget, Executive Office of the President. § 1-1.701-7 Certificate of competency. A "certificate of competency" means a certificate issued by SBA pursuant to the authority contained in the Small Business Act (15 U.S.C. 637(b)(7)) stating that the holder of the certificate is competent as to capacity and credit to perform a specific Government pro- curement contract. (Also see § 1-1.708.) § 1-1.701–8 Set-aside for small business. A set-aside for small business is the act of reserving the entire amount (total set-aside) or a portion (partial set- aside) of a procurement for the exclu- sive participation of small business concerns. Set-asides may be made for individual items or for classes of items (class set-asides). 1-1.702(b) (4) § 1-1.701-9 Small business restricted advertising. Small business restricted advertising is a special method of negotiated pro- curement conducted in the same manner as for formal advertising, except that competition and awards are restricted to small business concerns. § 1-1.702 Small business policies. (a) General policy. It is the policy of the Government to aid, counsel, as- sist, and protect, insofar as possible, the interests of small business concerns in order to preserve free competitive enter- prise; and to place with small business concerns a fair proportion of the total Government purchases and contracts for property and services (including con- tracts for maintenance, repair, construc- tion, and research and development). (b) Specific policies. The following specific small business policies shall be followed by procurement agencies in or- der to further the general policy stated in (a) of this § 1-1.702: (1) Small business concerns shall be afforded an equitable opportunity to compete for prime contracts and sub- contracts. (2) Bidders mailing lists (see § 1– 2.205) shall include all established and potential small business suppliers who have made acceptable application for inclusion or who appear from other in- formation (including recommendations by the SBA representative) to be qual- ified for inclusion therein. (3) Where invitations for bids or requests for proposals are sent to less than the complete mailing list pursuant to § 1-2.205-4, all small business concerns shall be solicited, except that only a pro rata number of small business concerns need be solicited when the bidders list is composed predominantly of small busi- ness concerns and the estimated award is not expected to be more than $25,000. (4) Proposed procurements and contract awards shall be publicized in the Department of Commerce "Synopsis FEDERAL PROCUREMENT REGULATIONS 1 (FPR CIRC. 37, SEPTEMBER 1963) 131 DEPOSITED BY THE UNITED STATES OF AMERICA PART 1-1 GENERAL : 1-1.702 (b) (4) of U.S. Government Procurement, Sales, and Contract Awards" in accordance with Subpart 1–1.10. (5) Procurement of property and services shall be divided into reasonably small lots (not less than economic pro- duction runs) in order to permit bidding on quantities less than the total require- ments. (6) The maximum amount of time practicable (see § 1-2.202-1) shall be al- lowed for preparation and submission of bids and proposals. (7) Delivery schedules shall be established on a realistic basis which will encourage small business participa- tion to the extent consistent with the actual requirements of the Government. (8) Applicable specifications, plans, and drawings either shall be furnished with invitations for bids and requests for proposals or, when not so furnished, in- formation as to locations where they may be obtained or examined shall be fur- nished. (9) Procurements shall be set aside for exclusive participation by small business concerns in accordance with § 1-1.706. (10) In the event of equal low bids, preference shall be given to small busi- ness concerns in accordance with § 1-2.407-6. (11) Subcontracting to small busi- ness concerns shall be encouraged in accordance with § 1-1.710. (12) Procurement agencies and SBA are responsible for consulting and co- operating in carrying out the purposes of the Small Business Act, as amended (15 U.S.C. 631-647), in accordance with § 1-1.705. (13) Placement of small purchases with small business concerns shall be en- couraged (see § 1-3.602). § 1-1.703 Determination of status as a small business concern. § 1-1.703-1 Representation by bidder or offeror. In the absence of a written protest or question, the contracting officer shall accept as conclusive for the purpose of a specific procurement a representation by the bidder or offeror that it is a small business concern as defined by SBA. § 1-1.703-2 Protest regarding small business status. (a) Any responsive bidder or offeror may, before award, question the small business status of any apparently low bidder or offeror by sending a written protest, as defined in (b) of this § 1-1.703-2, to the contracting officer re- sponsible for the particular procurement. Any contracting officer who receives such protest, or who wishes to question the small business status of a bidder or of- feror, shall forward such protest record (or submit his protest) to the SBA re- gional office serving the area in which the protested concern is located. (b) As used in this section, "protest" means a statement in writing which contains the basis for the protest to- gether with specific detailed evidence supporting the protestant's claim that such bidder is not a small business con- A complaint received after award of a contract or a complaint received that a concern is not a small business concern, but which does not meet the requirements of this paragraph, will not be considered a "protest" and will not be acted upon. cern. (c) Upon receipt of a protest, the SBA Regional Director or his delegate will promptly notify the contracting of- ficer of the date it was received, and will inform the affected bidder or offeror that its size status is under review. (d) SBA will, within 10 working days, if possible, after receipt of a protest, investigate and determine the small business status of the protested bidder or offeror and notify the contracting of- ficer, the protestant, and the protested bidder or offeror of its decision. (NEXT PAGE IS 132,1) FEDERAL PROCUREMENT REGULATIONS 132 (FPR CIRC. 37, SEPTEMBER 1963) ! SUBPART 1-1.7 SMALL BUSINESS CONCERNS 1-1,705-4 (e) Procurement action shall be sus- pended pending SBA's determination or expiration of the 10-day period, which- ever is earlier, unless unusual conditions make it necessary that an award be made. If SBA's determination is not received by the contracting officer within 10 working days after SBA's receipt of the protest, the contracting officer shall ascertain when such determination can be expected. In cases where further de- lay in awarding the contract would be disadvantageous to the Government, it shall be presumed that the questioned bidder or offeror is a small business concern. § 1-1.704 Agency program direction and operation. [Reserved] § 1-1.705 Cooperation with the Small Business Administration. § 1-1.705-1 General. It is a requirement of the Small Busi- ness Act that SBA and procurement agencies consult and cooperate in carry- ing out the policies of that Act. Such consultation and cooperation is particu- larly significant in the areas and pro- grams described in §§ 1-1.705-2 through 1-1.705-7. § 1-1.705-2 SBA representatives. SBA may assign one or more repre- sentatives (hereinafter referred to as "SBA representatives") on a full- or part-time basis to any procuring activity for the purpose of carrying out SBA responsibilities under the Small Business Act. SBA representatives will comply with agency directives concerning the conduct of procurement personnel and instructions concerning release of pro- curement information. § 1-1.705-3 Screening of procurements. (a) Individual set-asides. SBA repre- sentatives (cleared for security where classified procurements are to be screened) shall, upon request, promptly be afforded an opportunity at the pro- curing activity to review all proposed procurements for the purpose of recom- mending set-asides if it is anticipated that the resulting contract or contracts will exceed $2,500 unless in the case of procurements which are not expected to exceed $10,000, the head of the pro- curing activity determines that such review would unduly delay the procure- ment process. A copy of the determi- nation and the justification therefor shall be furnished to the SBA repre- sentative. Where it is anticipated that the resulting contract or contracts will exceed $2,500, such SBA representatives shall, upon request, promptly be afforded an opportunity to make recommenda- tions concerning proposed procurements, including that they be exclusively or partially set aside for small business concerns. The contracting officer shall afford the SBA representative an opportunity to recommend appropriate names of small business concerns for inclusion in lists of bidders for firms to be solicited in connection with current and future procurements. (b) Class set-asides. SBA representa- tives shall be afforded an opportunity to make recommendations that current and future procurements, or portions thereof, of selected items or services, or groups of like items or services, shall be set aside as provided in § 1-1.706, for ex- clusive small business participation. Such set-asides, when approved by the contracting officer, shall be known as class set-asides. Concurrence in a class set-aside shall not be dependent upon the existence of a current procurement if future procurements be clearly foreseen. can § 1-1.705-4 Access to information. Upon request, and subject to applicable security regulations, SBA representatives shall be given access to available or rea- sonably obtainable information, includ- ing technical data (including drawings FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 32, JUNE 1963) 132.1 PART 1-1 GENERAL 1-1.705-4 Г and specifications), procurement history, bidders lists, and planned requirements immediately upon receipt by the procur- ing activity. The SBA representative will be furnished such other available or reasonably obtainable information may be required for the SBA referral program. as § 1-1.705-5 Joint small business set- asides. The policies and procedures for joint small business set-asides, set forth in § 1-1.706, were developed cooperatively with the SBA and Government procure- ment agencies. § 1-1.705-6 Certificates of competency. Section 1-1.708 prescribes policies and procedures governing cooperative action with SBA concerning certificates of com- petency. § 1-1.705-7 Performance of contract by SBA. In accordance with the Small Business Act (15 U.S.C. 637(a)), in any case in which the Administrator of SBA certi- fies to the head of the procuring agency concerned that SBA is competent to per- form any specific contract, the contract- ing officer is authorized, in his discre- tion, to award the contract to SBA upon such terms and conditions, consistent with applicable procurement regulations, as may be agreed upon between SBA and the contracting officer. § 1-1.706 Procurement set-asides for small business. § 1-1.706-1 General. (a) Purpose. The purpose of small business set-asides is to increase small business participation in Government procurement. (b) Applicability. This section is applicable to small business set-aside programs of executive agencies in con- nection with all procurement of property and services, maintenance, repair and construction, and research development. and (c) Implementation. Subject to any applicable preference for labor surplus area set-asides as provided in § 1-1.802, any individual procurement or class of procurements, or an appropriate part thereof, shall be set aside for the exclu- sive participation of small business con- cerns when such action (1) is jointly determined by an SBA representative and the contracting officer upon the initiation of either agency, or (2) if no SBA representative is available, is uni- laterally determined by the contracting officer to be in the interest of main- taining or mobilizing the Nation's full productive capacity, or to be in the interest of war or national defense pro- grams, or to be in the interest of assur- ing that a fair proportion of Govern- ment procurement is placed with small business concerns. (d) Initiation of set-asides. Insofar as practicable, joint determinations in- itiated by SBA representatives shall be used as the basis for small business set- asides rather than unilateral determina- tions. This, however, does not preclude an agency from initiating with SBA a proposal for a joint determination. The impracticability of arranging a joint de- termination should not be treated as an obstacle to making a set-aside based on a unilateral determination initiated by the contracting officer in an otherwise appropriate case. § 1-1.706-2 proposals. Review of SBA set-aside (a) (1) When an SBA representative has recommended that all, or a portion, of an individual procurement or class of procurements be set aside for small business, the contracting officer (or other designated representative) of the pro- curement agency shall promptly either (i) concur in the recommendation, or (ii) disapprove the recommendation, stating in writing his reasons for disap- proval. The SBA representative shall be allowed two working days to appeal any Lo (NEXT PAGE IS 132, 3) FEDERAL PROCUREMENT REGULATIONS 132.2 (FPR CIRC, 20, SEPTEMBER 1961) SUBPART 1-1. 7 SMALL BUSINESS CONCERNS special method of procurement known as "Small Business Restricted Advertising." Whenever possible, the small business restricted advertising method, as defined in § 1-1.701-9, shall be used. Invitations for bids and requests for proposals in- volving total small business set-asides shall be restricted to small business con- cerns. Bids received from firms which do not qualify as small business concerns shall be considered nonresponsive and shall be rejected. (c) In procurements involving total set-asides for small business, each invi- tation for bids or request for proposals shall contain the following notice, ex- cept that such notice may be modified to include the applicable specific small business definition. NOTICE OF TOTAL SMALL BUSINESS SET-ASIDE (a) Restriction. Bids or proposals under this procurement are solicited from small business concerns only and this procurement is to be awarded only to one or more small business concerns. This action is based on a determination by the Contracting Officer, 1-1.706-5 (c) alone or in conjunction with a representative of the Small Business Administration, that it is in the interest of maintaining or mobil- izing the Nation's full productive capacity, in the interest of war or national defense pro- grams, or in the interest of assuring that a fair proportion of Government procurement is placed with small business concerns. Bids or proposals received from firms which are not small business concerns shall be con- sidered nonresponsive. (b) Definition. A "small business con- cern is a concern, including its affiliates, which is independently owned and operated, is not dominant in the field of operation in which it is bidding on Government contracts, and can further qualify under the criteria set forth in regulations of the Small Business Administration (13 CFR 121.3-8). In addi- tion to meeting these criteria, a manufac- turer or a regular dealer submitting bids or proposals in his own name must agree to furnish in the performance of the contract end items manufactured or produced in the United States, its possessions, or Puerto Rico, by small business concerns: Provided, That this additional requirement does not apply in connection with construction or service contracts. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 32, JUNE 1963) 132.5 PART 1-1 GENERAL 1-1.706-6 § 1-1.706–6 Partial set-asides. (a) General. Subject to the condi- tions set forth in § 1-1.706-1, a portion of a procurement shall be set aside for ex- clusive small business participation where- (1) The procurement is not appro- priate for total set-aside pursuant to § 1-1.706-5; (2) The procurement is severable into two or more economic production runs or reasonable lots; and (3) One or more small business con- cerns are expected to have the technical competence and productive capacity to furnish a severable portion of the pro- curement at a reasonable price. Similarly, a class of procurements (in- cluding but not limited to contracts for maintenance, repair, and construction) may be partially set aside in accordance with § 1-1.706-2(c). (b) Dividing the procurement. Where a portion of a procurement is to be set aside for small business pursuant to (a) of this § 1-1.706-6, the procurement shall be divided into a set-aside portion and a non-set-aside portion, each of which shall be not less than an economic production run or reasonable lot. Inso- far as practicable, the set-aside portion will be such as to make maximum use of small business capacity. Delivery and other terms applicable to the set-aside portion of an item and those applicable to the non-set-aside portion of that item shall be comparable. (c) Short-form notice. In invita- tions for bids or requests for proposals, involving partial set-asides pursuant to this subpart, shall contain a notice sub- stantially as set forth in this paragraph or in paragraph (d) of this § 1-1.706-6. The notice used may be appropriately modified to include the applicable spe- cific small business definition. NOTICE OF PARTIAL SMALL BUSINESS SET-ASIDE (a) General. A portion of this procure- ment, as identified elsewhere in the Schedule, has been set aside for award only to one or more small business concerns. Negotiations for award of this set-aside portion will be conducted only with responsible small busi- ness concerns who have submitted responsive bids on the non-set-aside portion at a unit price within 120 percent of the highest award made on the non-set-aside portion. Negotiations shall be conducted with such small business concerns in the following or- der of priority: Group 1. Small business concerns which are also persistent labor surplus area con- cerns. Group 2. Small business concerns which are also substantial labor surplus area con- cerns. Group 3. Small business concerns which are not labor surplus area concerns. Within each of the above groups, negotia- tions with such concerns will be in the order of their bids on the non-set-aside portion, beginning with the lowest responsive bid. The set-aside shall be awarded at the highest unit price awarded on the non-set-aside por- tion, adjusted to reflect transportation and other cost factors which were considered in evaluating bids on the non-set-aside portion. However, the Government reserves the right not to consider token bids or other devices designed to secure an unfair advantage over FEDERAL (NEXT PAGE IS 132,7) PROCUREMENT REGULATIONS 132.6 (FPR CIRC, 32, JUNE 1963) SUBPART 1-1.7 SMALL BUSINESS CONCERNS ୮ L other bidders eligible for the set-aside por- tion. The partial set-aside of this procure- ment for small business concerns is based on a determination by the Contracting Officer, alone or in conjunction with a representative of the Small Business Administration, that it is in the interest of maintaining or mo- bilizing the Nation's full productive capac- ity, or in the interest of war or national de- fense programs, or in the interest of assuring that a fair portion of Government procure- ment is placed with small business concerns. (b) Definitions. (1) A "small business concern" is a con- cern, including its affiliates, which is inde- pendently owned and operated, is not domi- nant in the field of operation in which it is bidding on Government contracts, and can further qualify under the criteria set forth in regulations of the Small Business Adminis- tration (13 CFR 121.3-8). In addition to meeting these criteria, a manufacturer or a regular dealer submitting bids or proposals in his own name must agree to furnish in the performance of the contract end items manufactured or produced in the United States, its possessions, or Puerto Rico, by small business concerns: Provided, That this additional requirement does not apply in connection with construction or service contracts. (2) The term "labor surplus area” means a geographical area which is a persistent labor surplus area or a substantial labor surplus area, or both, as defined below: (i) "Persistent labor surplus area" means an area which (A) is classified by the Department of Labor as an "Area of Sub- stantial and Persistent Labor Surplus” (also called "Area of Substantial and Presistent Unemployment") and is listed as such by that Department in conjunction with its publication "Area Labor Market Trends," or (B) is certified as an area of substantial and persistent labor surplus by the Department of Labor pursuant to a request by a prospec- tive contractor. (ii) "Substantial labor surplus area” means an area which (A) is classified by the Department of Labor as an "Area of Sub- stantial Labor Surplus" (also called "Area of Substantial Unemployment") and which is listed as such by that Department in con- junction with its publication "Area Labor Market Trends," or (B) is certified as an area of substantial labor surplus by the De- partment of Labor pursuant to a request by a prospective contractor. 1~1.706~6 (c) (3) The term "labor surplus area con- cern" includes persistent labor surplus area concerns and substantial labor surplus area concerns as defined below: (i) "Persistent labor surplus area con- cern" means a concern that agrees to per- form, or cause to be performed, a substantial proportion of a contract in persistent labor surplus areas. A concern shall be deemed to perform a substantial proportion of a con- tract in persistent labor surplus areas if the costs that the concern will incur on account of manufacturing or production performed in such areas (by itself or its first-tier subcon- tractors) amount to more than 50 percent of the contract price. (ii) "Substantial labor surplus area concern" means a concern that agrees to perform, or cause to be performed, a sub- stantial proportion of a contract in sub- stantial labor surplus areas. A concern shall be deemed to perform a substantial pro- portion of a contract in substantial labor surplus areas if the costs that the concern will incur on account of manufacturing or production performed in substantial labor surplus areas or in substantial and persistent labor surplus areas (by itself or its first-tier subcontractors) amount to more than 50 percent of the contract price. (c) Identification of Areas of Performance. Each bidder desiring to be considered for award as a small business labor surplus area concern on the set-aside portion of this pro- curement shall identify in his bid the geo- graphical areas in which he proposes to per- form, or cause to be performed, a substantial proportion of the production of the contract. If the Department of Labor classification of any such area changes after the bidder has submitted his bid, the bidder may change the areas in which he proposes to perform: Provided, That he so notifies the Contracting Officer before award of the set-aside portion. Priority for negotiation will be based upon the labor surplus classification of the desig- nated production areas as of the time of the proposed award. (d) Agreement. The bidder agrees that, if awarded a contract as a small business persistent labor surplus area concern under the set-aside portion of this procurement, he will perform, or cause to be performed, a substantial proportion of the production in areas classified at the time of award, or at the time of performance of the contract, as persistent labor surplus areas; and that if awarded a contract as a small business sub- stantial labor surplus area concern under the set-aside portion of this procurement, he will FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 32, JUNE 1963) 132.7 PART 1-1 GENERAL 1-1.706-6 (c) L perform, or cause to be performed, a sub- stantial proportion of the production in areas classified at the time of award, or at the time of performance of the contract, as substan- tial or persistent labor surplus areas. (End of Notice) (d) Long-form notice. Where it is anticipated that bids may be received which appear designed to take unfair advantage of other bidders, by devices such as unrealistically low bids on mere token quantities, the notice set forth below may be used instead of the short- form notice in (c) of this § 1-1.706–6: NOTICE OF PARTIAL SMALL BUSINESS SET-ASIDE (a) General. This procurement has been divided into two parts. All concerns, whether small business or not, may participate in accordance with customary procedures in that portion of this procurement herein called the "non-set-aside portion". The quantities of the non-set-aside portion are set forth elsewhere in this Schedule. The other portion of the items to be procured has been set aside for participation by small business concerns. This is called the "set- aside portion" and awards therefor are made in accordance with special procedures set forth in paragraph (c) of this Notice. This apportionment is based on a determination by the Contracting Officer, alone or in con- junction with a representative of the Small Business Administration, that it is in the interest of maintaining or mobilizing the Nation's full productive capacity, or in the interest of war or national defense programs, or in the interest of assuring that a fair proportion of Government procurement is placed with small business concerns. "Small business concern" is defined in paragraph (d) of this Notice. (b) Non-Set-Aside Procedure. Portion and Award (1) A bidder which is not a small busi- ness concern shall submit a bid only for the non-set-aside portion of the procurement. Award thereof will be made in accordance with customary procedures. (2) A bidder which is a small business concern and is interested in receiving an award for a quantity of an Item not exceeding the quantity set forth in the non-set-aside portion of the procurement, should submit a bid in the same manner as other concerns bidding only on the non-set-aside portion. If such a bidder is interested in receiving an award for a quantity of an Item in addition to the quantity set forth in the non-set-aside portion, he must bid the entire quantity of the non-set-aside portion of the Item, and indicate such additional quantity of the Item as he desires by so specifying on the Bidder's Statement of Set-Aside Quantity Desired. Thus, the Bidder's Statement of Set-Aside Quantity Desired is not to be used unless the bidder has bid the entire quantity of an Item under the non-set-aside portion. However, a small business concern which receives no award, or receives an award for less than the total quantity of an Item for which it submitted a bid under the non-set- aside portion, may be eligible for an award of the quantity it bid, or the unawarded quantity thereof, under the following pro- cedure governing the set-aside portion. (c) Set-Aside Portion and Award Pro- cedure. Award of the set-aside portion of this procurement will be made after award has been completed on the non-set-aside portion. It will be made only to small busi- ness concerns which are found to be eligible in accordance with (1) below; on the basis of priorities for award set forth in (2) below; for quantities as provided in (3) below; and at prices determined in accordance with (4) below: (1) Eligibility. To be eligible for con- sideration for the set-aside portion of an Item, the small business concern must have submitted a responsive bid on such Item in accordance with the requirements of (b) (2) above, at a unit price no greater than 120 percent of the highest unit price for such Item awarded under the non-set-aside por- tion. However, see (5) below when separate quantities are offered at different prices and see (6) below when separate quantities are offered at tie-in prices. (2) Priorities. Negotiations for the set- aside portion will be conducted with eligible concerns in the following order of priority: Group 1. Small business concerns which are also persistent labor surplus area concerns. Group 2. Small business concerns which are also substantial labor surplus area concerns. Group 3. Small business concerns which are not labor surplus area concerns. Within each of the above groups, nego- tiation for each Item will be conducted with eligible concerns in the order of their bids on the non-set-aside portion, beginning with the lowest responsive bid. However, see (5) below for the method of determining the bid (NEXT PAGE IS 132.9) FEDERAL PROCUREMENT REGULATIONS > 132.8 (FPR CIRC. 20, SEPTEMBER 1961) SUBPART 1-1.7 SMALL BUSINESS CONCERNS when separate quantities are offered at dif- ferent prices and see (6) below when separate quantities are offered at tie-in prices. (3) Quantity. The quantity of the set- aside portion of an Item which may be awarded to an eligible concern shall be as follows: (i) Where a concern has not specified a quantity on the Bidder's Statement of Set- Aside Quantity Desired, the quantity shall be no greater than the quantity of such con- cern's bid on the non-set-aside portion of that Item, less the quantity, if any, of that Item awarded to that concern under the non- set-aside portion. (ii) Where a concern has specified a quantity on the Bidder's Statement of Set- Aside Quantity Desired, the quantity shall be no greater than the total of the entire non-set-aside portion of the Item and the quantity thereof specified on the Bidder's Statement of Set-Aside Quantity Desired, less the quantity, if any, of that Item awarded to that concern under the non-set- aside portion. (4) Price. The set-aside portion will be awarded at the highest unit price awarded on the non-set-aside portion, adjusted to reflect transportation and other cost factors which were considered in evaluating bids on the non-set-aside portion. However, see (6) and (7) below for the highest unit price when the highest award is made as a result of tie-in bids or all-or-none type of qualification. (5) Separate Quantities at Quantities at Different Prices. Where a concern has submitted a bid for separate quantities of the non-set- aside portion of an Item at different prices, without conditioning the Government's right to accept one or more such quantities upon its concurrent acceptance of another quantity of the Item, each separate quan- tity shall be considered as a separate bid for the purpose of determining the eligibil- ity of the concern with respect to the 120 percent limit prescribed in (c) (1) above, and for the purpose of determining under (c) (2) above, the standing of that bid in the order of negotiations for the set-aside portion of that Item. (6) Separate Quantities at Tie-in Prices. Where a concern has submitted a bid for separate quantities of the non-set-aside por- tion of an Item at different prices, and has conditioned the Government's right to ac- cept any one or more of such quantities upon its concurrent acceptance of another quantity of the Item, the weighted average 1—1.706—6 (d) of the prices for such conditioned quantities shall be considered the unit price for the purpose of determining, with respect to such conditioned quantities, (i) the eligibility of the firm with respect to the 120 percent limit of (c) (1) above, (ii) the priority status of the firm under (c) (2) above, and (iii) the highest unit price for awards under (c) (4) above if the highest award on the non-set-aside portion was made on such conditioned bid. (7) All or None Bids. Where a concern has submitted an "all or none” bid for more than one Item and thereby has conditioned the Government's right to award any Item upon its concurrent award of another Item, the unit prices bid for each Item on an “all or none" basis shall be considered inde- pendent unit prices for the purpose of de- termining the eligibility and priority status of the concern for the set-aside portion of each Item. In no event will a set-aside award be made for an Item to such bidder at a higher unit price than his "all or none” unit price bid for the Item on the non-set- aside portion. (d) Definitions. (1) A "small business concern" is a con- cern, including its affiliates, which is inde- pendently owned and operated, is not domi- nant in the field of operation in which it is bidding on Government contracts, and can further qualify under the criteria set forth in regulations of the Small Business Admin- istration (13 CFR 121.3-8). In addition to meeting these criteria, a manufacturer or a regular dealer submitting bids or proposals in his own name must agree to furnish in the performance of the contract end items manufactured or produced in the United States, its possessions, or Puerto Rico, by small business concerns: Provided, That this additional requirement does not apply in connection with construction or service contracts. (2) The term "labor surplus area" means a geographical area which is a persistent la- bor surplus area or a substantial labor sur- plus area, or both, as defined below: (i) "Persistent labor surplus area" means an area which (A) is classified by the Department of Labor as an "Area of Sub- stantial and Persistent Labor Surplus" (also called "Area of Substantial and Persistent Unemployment") and is listed as such by that Department in conjunction with its publication "Area Labor Market Trends," FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 32, JUNE 1963) 132.9 PART 1-1 GENERAL 1—1.706—6 (d) L or (B) is certified as an area of substantial and persistent labor surplus by the Depart- ment of Labor pursuant to a request by a prospective contractor. (ii) "Substantial labor surplus area" means an area which (A) is classified by the Department of Labor as an "Area of Sub- stantial Labor Surplus" (also called "Area of Substantial Unemployment") and which is listed as such by that Department in con- junction with its publication "Area Labor Market Trends," or (B) is certified as an area of substantial labor surplus by the Department of Labor pursuant to a request by a prospective contractor. (3) The term "labor surplus area con- cern" includes persistent labor surplus area concerns and substantial labor surplus area concerns as defined below: (i) "Persistent labor surplus area concern" means a concern that agrees to perform, or cause to be performed, a sub- stantial proportion of a contract in persistent labor surplus areas. A concern shall be deemed to perform a substantial proportion of a contract in persistent labor surplus areas if the costs that the concern will incur on account of manufacturing or production performed in such areas (by itself or its first-tier subcontractors) amount to more than 50 percent of the contract price. (ii) "Substantial labor surplus area concern" means a concern that agrees to per- form, or cause to be performed, a substan- tial proportion of a contract in substantial labor surplus areas. A concern shall be deemed to perform a substantial proportion of a contract in substantial labor surplus areas if the costs that the concern will incur on account of manufacturing or pro- duction performed in substantial labor sur- plus areas or in substantial and persistent labor surplus areas (by itself or its first-tier subcontractors) amount to more than 50 percent of the contract price. (e) Identification of Areas of Performance. Each bidder desiring to be considered for award as a small business labor surplus area concern on the set-aside portion of this procurement shall identify in his bid the geographical areas in which he proposes to perform, or cause to be performed, a sub- stantial proportion of the production of the contract. If the Department of Labor classi- fication of any such area changes after the bidder has submitted his bid, the bidder may change the areas in which he proposes to perform; Provided, That he so notifies the Contracting Officer before award of the set- aside portion. Priority for negotiation will be based upon the labor surplus classification of the designated production areas as of the time of the proposed award. (f) Agreement. The bidder agrees that, if awarded a contract as a small business persistent labor surplus area concern under the set-aside portion of this procurement, he will perform, or cause to be performed, a substantial proportion of the production in areas classified at the time of award, or at the time of performance of the contract, as persistent labor surplus areas; and that if awarded a contract as a small business substantial labor surplus area concern under the set-aside portion of this procurement, he will perform, or cause to be performed, a substantial proportion of the production in areas classified at the time of award, or at the time of performance of the contract, as substantial or persistent labor surplus areas. (g) Token Bids. Notwithstanding the provisions of this Notice, the Government reserves the right, in determining eligibility of priority for set-aside negotiations, not to consider token bids or other devices de- signed to secure an unfair advantage over other bidders eligible for the set-aside portion. (h) Instruction for Indicating Portion of Set-Aside Quantity Desired. The quantity of each Item which has been set aside is set forth on the attached Bidder's Statement of Set-Aside Quantity Desired, which is to be filled in only by small business concerns, as provided in (b) (2) above. Furthermore, it is to be used by such a bidder only when (1) he has submitted a bid for the entire non-set-aside quantity of an Item, and (2) he desires a total quantity in excess of the non-set-aside quantity thereof. Whether or not a small business concern may participate in the set-aside portion is dependent on its eligibility in accordance with (c) above. It should be noted, however, that to be eligible for the set-aside portion the bidder need not have filled in the Bidder's Statement of Set-Aside Quantity Desired. The latter (NEXT PAGE IS 132.11) FEDERAL PROCUREMENT REGULATIONS 132.10 (FPR CIRC, 20, SEPTEMBER 1961) SUBPART 1-1.8 LABOR SURPLUS AREA CONCERNS 1−1.804–2 (b) petency and productive capacity to fur- nish a severable portion of the procure- ment at a reasonable price, is expected to submit bids or offers. (b) If deemed practicable by the con- tracting officer, procurements between $2,500 and $10,000 may be partially set aside for labor surplus area concerns. (c) In furtherance of the policy to as- sure that a fair proportion of the total purchases and contracts are placed with small business concerns, each labor sur- plus area set-aside shall provide that, in addition to labor surplus area con- cerns, small business concerns not per- forming in such areas are also eligible for award of any set-aside quantities not awarded to labor surplus area concerns (see § 1-1.804-2). (d) None of the following is, in itself, sufficient cause for not making a labor surplus area set-aside: (1) A large part of previous pro- curements of the item in question has been placed with labor surplus area concerns; (2) The item to be purchased is on an established planning list under the Industrial Readiness Planning Program; (3) The item to be purchased is on a Qualified Products .List; (4) A period of less than thirty days from the date of issuance of invitations for bids or requests for proposals is pre- scribed for the submission of bids or proposals; or (5) The procurement is classified. (e) Where it is determined that a por- tion of a procurement is to be set aside for labor surplus areas, the procurement shall be divided into a non-set-aside por- tion and a set-aside portion. Insofar as practical, the set-aside portion will be such as to make the maximum use of the capacity of labor surplus area concerns. Delivery terms and other terms applicable to the set-aside por- tion of an item and those applicable to the non-set-aside portion of that item shall be comparable. § 1-1.804-2 ors. Notice to bidders or offer- (a) Invitations for bids or requests for proposals, involving set-asides pur- suant to this subpart, shall contain a notice substantially as set forth in either paragraph (b) or (c) below. The notice may be modified to include the appli- cable specific small business definition. The notice used shall be made a part of each contract under the set-aside por- tion of the procurement. (b) Short-form notice. NOTICE OF LABOR SURPLUS AREA SET-ASIDE (a) General. A portion of this procure- ment, as identified elsewhere in the Schedule, has been set aside for award only to one or more labor surplus area concerns, and, to a limited extent, to small business concerns which do not qualify as labor surplus area concerns. Negotiations for award of the set-aside portion will be conducted only with responsible labor surplus area concerns (and small business concerns to the extent indi- cated below) which have submitted respon- sive bids or proposals on the non-set-aside portion at a unit price no greater than 120 percent of the highest award made on the non-set-aside portion. Negotiations for the set-aside portion will be conducted with such bidders in the following order of priority: Group 1. Persistent labor surplus area con- cerns which are also small business con- cerns. Group 2. Other persistent labor surplus area concerns. Group 3. Substantial labor surplus area con- cerns which are also small business con- cerns. Group 4. Other substantial labor surplus area concerns. Group 5. Small business concerns which are not labor surplus area concerns. Within each of the above groups, negotia- tions with such concerns will be in the order of their bids on the non-set-aside portion, beginning with the lowest responsive bid. The set-aside portion shall be awarded at the J FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 32, JUNE 1963) 134.3 PART 1-1 GENERAL 1~1.804–2 (b) highest unit price awarded on the non-set- aside portion, adjusted to reflect transpor- tation and other cost factors which were considered in evaluating bids on the non- set-aside portion. However, the Government reserves the right not to consider token bids or other devices designed to secure an unfair advantage over other bidders eligible for the set-aside portion. (b) Definitions. (1) The term "labor surplus area' means a geographical area which is a per- sistent labor surplus area or a substantial labor surplus area, or both, as defined below: (i) "Persistent labor surplus area" means an area which (A) is classified by the Department of Labor as an "Area of Sub- stantial and Persistent Labor Surplus" (also called "Area of Substantial and Per- sistent Unemployment") and is listed as such by that Department in conjunction with its publication "Area Labor Market Trends," or (B) is certified as an area of substantial and persistent labor surplus by the Department of Labor pursuant to a re- quest by a prospective contractor. (ii) "Substantial labor surplus area” means an area which (A) is classified by the Department of Labor as an "Area of Sub- stantial Labor Surplus" (also called "Area of Substantial Unemployment") and which is listed as such by that Department in con- junction with its publication "Area Labor Market Trends," or (B) is certified as an area of substantial labor surplus by the De- partment of Labor pursuant to a request by a prospective contractor. (2) The term "labor surplus area con- cern" includes persistent labor surplus area concerns and substantial labor surplus area concerns as defined below: (i) "Persistent labor surplus area con- cern" means a concern that agrees to per- form, or cause to be performed, a substantial proportion of a contract in persistent labor surplus areas. A concern shall be deemed to perform a substantial proportion of a contract in persistent labor surplus areas if the costs that the concern will incur on account of manufacturing or production per- formed in such areas (by itself or its first- tier subcontractors) amount to more than 50 percent of the contract price. (ii) "Substantial labor surplus area concern" means a means a concern that agrees to perform, or cause to be performed, a sub- stantial proportion of a contract in sub- stantial labor surplus areas. A concern shall be deemed to perform a substantial propor- tion of a contract in substantial labor surplus areas if the costs that the concern will incur on account of manufacturing or production performed in substantial labor surplus areas or in substantial and persistent labor surplus areas (by itself or its first-tier subcon- tractors) amount to more than 50 percent of the contract price. (3) A "small business concern" is a con- cern, including its affiliates, which is inde- pendently owned and operated, is not domi- nant in the field of operation in which it is bidding on Government contracts, and can further qualify under the criteria set forth in regulations of the Small Business Admin- istration (13 CFR 121.3-8). In addition to meeting these criteria, a manufacturer or a regular dealer submitting bids or proposals in his own name must agree to furnish in the performance of the contract end items manufactured or produced in the United States, its possessions, or Puerto Rico, by small business concerns: Provided, That this additional requirement does not apply in connection with construction or service contracts. (c) Identification of Areas of Performance. Each bidder desiring to be considered for award as a labor surplus area concern on the set-aside portion of this procurement shall identify in his bid the geographical areas in which he proposes to perform, or cause to be performed, a substantial pro- portion of the production of the contract. If the Department of Labor classification of any such area changes after the bidder has submitted his bid, the bidder may change the areas in which he proposes to perform, provided that he so notifies the Contracting Officer before award of the set-aside portion. Priority for negotiation will be based upon the labor surplus classification of the desig- nated production areas as of the time of the proposed award. (d) Agreement. The bidder agrees that, if awarded a contract as a persistent labor surplus area concern under the set-aside portion of this procurement, he will perform, or cause to be performed, a substantial pro- portion of the production in areas classified at the time of award, or at the time of per- formance of the contract, as persistent labor surplus areas; and that if awarded a contract as a substantial labor surplus area concern under the set-aside portion of this procure- ment, he will perform, or cause to be per- formed, a substantial proportion of the pro- duction in areas classified at the time of (NEXT PAGE IS 134.5) FEDERAL PROCUREMENT REGULATIONS A 134.4 (FPR CIRC, 32, JUNE 1963) SUBPART 1–1.8 LABOR SURPLUS AREA CONCERNS 1-1.804–2 (c) Lo (2) The term "labor surplus area con- cern" includes persistent labor surplus area concerns and substantial labor surplus area concerns as defined below: (i) "Persistent labor surplus area con- cern" means a concern that agrees to per- form, or cause to be performed, a substantial proportion of a contract in persistent labor surplus areas. A concern shall be deemed to perform a substantial proportion of a con- tract in persistent labor surplus areas if the costs that the concern will incur on account of manufacturing or production performed in such areas (by itself or its first-tier sub- contractors) amount to more than 50 per- cent of the contract price. (ii) "Substantial labor surplus area concern" means a concern that agrees to per- form, or cause to be performed, a substantial proportion of a contract in substantial labor surplus areas. A concern shall be deemed to perform a substantial proportion of a contract in substantial labor surplus areas if the costs that the concern will incur on account of manufacturing or production per- formed in substantial labor surplus areas or in substantial and persistent labor surplus areas (by itself or its first-tier subcontract- ors) amount to more than 50 percent of the contract price. (3) A "small business concern" is a con- cern, including its affiliates, which is inde- pendently owned and operated, is not domi- nant in the field of operation in which it is bidding on Government contracts, and can further qualify under the criteria set forth in regulations of the Small Business Admin- istration (13 CFR 121.3-8). In addition to meeting these criteria, a manufacturer or a regular dealer submitting bids or proposals in his own .name must agree to furnish in the performance of the contract end items manufactured or produced in the United States, its possessions, or Puerto Rico, by small business concers: Provided, That this additional requirement does not apply in connection with construction or service contracts. (e) Identification of Areas of Perform- ance. Each bidder desiring to be considered for award as a labor surplus area concern on the set-aside portion of this procure- ment shall identify in his bid the geograph- ical areas in which he proposes to perform, or cause to be performed, a substantial pro- portion of the production of the contract. If the Department of Labor classification of any such area changes after the bidder has submitted his bid, the bidder may change the areas in which he proposes to perform: Provided, That he so notifies the Contract- ing Officer before award of the set-aside por- tion. Priority for negotiation will be based upon the labor surplus classification of the designated production areas as of the time of the proposed award. (f) Agreement. The bidder agrees that, if awarded a contract as a persistent labor surplus area concern under the set-aside portion of this procurement, he will per- form, or cause to be performed, a substantial proportion of the production in areas classi- fied at the time of award, or at the time of performance of the contract, as persistent labor surplus areas; and that if awarded a contract as a substantial labor surplus area concern under the set-aside portion of this procurement, he will perform, or cause to be performed, a substantial proportion of the production in areas classified at the time of award, or at the time of performance of the contract, as substantial or persistent labor surplus areas. (g) Token Bids. Notwithstanding the pro- visions of this Notice, the Government re- serves the right, in determining eligibility or priority for set-aside negotiations, not to consider token bids or other devices designed to secure an unfair advantage over other bidders eligible for the set-aside portion. (h) Instruction for Indicating Portion of Set-Aside Quantity Desired. The quantity of each Item which has been set aside is set forth on the attached Bidder's Statement of Set-Aside Quantity Desired, which is to be filled in only by labor surplus area con- cerns and small business concerns, as pro- vided in (b)(2) above. above. Furthermore, it is to be used by such a bidder only when (1) he has submitted a bid for the entire non- set-aside quantity of an Item, and (2) he desires a total quantity in excess of the non- set-aside quantity thereof. Whether or not a labor surplus area concern or small busi- ness concern may participate in the set-aside portion is dependent on its eligibility in ac- cordance with (c) above. It should be noted, however, that to be eligible for the set-aside portion the bidder need not have filled in the Bidder's Statement of Set-Aside Quan- tity Desired. The latter should only be filled in where the bidder desires a quantity in excess of the non-set-aside quantity. BIDDER'S STATEMENT OF SET-ASIDE QUANTITY DESIRED 1 2 3 Item No. Set-aside quantity Portion of set-aside quantity desired [Columns numbered 1 and 2 will be filled in by the issuing office. Column No. 3 will be left blank for the bidder or offeror to fill in.] [End of Notice] FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 32, JUNE 1963) 134.7 PART 1-1 GENERAL 1—1.804—3 (a) § 1-1.804-3 Award procedures. (a) Awarding the non-set-aside por- tion. Awards on the non-set-aside por- tion shall be made in accordance with normal procurement procedures. a (b) Awarding the set-aside portion. (1) After all awards have been made on the non-set-aside portion, award of the set-aside portion shall be effected by negotiation with eligible concerns as provided in the applicable Notice used. To determine whether concern is eligible for preferential consideration as a labor surplus area concern the area classification of the Department of La- bor in effect at the time of the award shall be used. Contracts for the set- aside portion shall specify the preferen- tial status of the bidder or offeror on which the award was based. (2) If equal low bids were received on the non-set-aside portion from con- cerns which are eligible for the set-aside portion, the concern which is awarded the non-set-aside portion (under the equal low bid procedures of § 1-2.407-6) shall have the first priority with respect to negotiations for the set-aside portion. (c) Non-awarded set-aside portion. If any part of the set-aside quantity cannot be awarded by the method de- scribed in this § 1-1.804, any unawarded portion may be procured by advertising or negotiation, as appropriate, in ac- cordance with existing regulations. A record of the reasons for failure to award the set-aside portion to labor surplus area concerns shall be included in the contract file. § 1-1.804-4 Withdrawal of set-asides. If, prior to the award of a contract in- volving a labor surplus set-aside, the contracting officer considers that the set- aside is detrimental to the public interest, e.g., because of unreasonable prices, the contracting officer shall withdraw the set-aside and complete the procurement by advertising or negotiation, as appro- priate, in accordance with existing reg- ulations. A record of the reasons for the withdrawal of any set-aside shall be made and included in the contract file. § 1-1.804-5 Contract authority. Contracts for set-asides made under this subpart shall cite as legal authority for negotiation section 302 (c) (1) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 252(c) (1)), the revised Armed Services Pro- curement Act of 1947 (10 U.S.C. 2304(a) (1)), or other applicable proper author- ity (see § 1-3.201). § 1-1.805 Subcontracting with labor sur- plus area concerns. § 1-1.805-1 General. (a) In furtherance of the general pol- icy stated in § 1-1.802, procuring agen- cies shall encourage certain prime con- tractors to place subcontracts with con- cerns which will perform a substantial proportion of the production in areas of labor surplus, where this can be done consistent with efficient performance of contracts and at prices no higher than are obtainable elsewhere. (See § 1-1.710 for subcontracting policies with respect to small business concerns.) (b) As used in this Subpart 1-1.8, the term subcontractor includes a supplier and applies at any level of performance of the contract; and the term subcon- tract includes a purchase order. § 1-1.805-2 Labor surplus area subcon- tracting program. The Government's labor surplus area subcontracting program requires Gov- ernment prime contractors to assume an affirmative obligation with respect to subcontracting with labor surplus area concerns. In contracts which range from $5,000 to $500,000, the contractor undertakes the obligation of using his best efforts to place his subcontracts with concerns which will perform such sub- contracts substantially in areas of labor surplus, where this can be done con- sistent with the efficient performance of the contract and at prices no higher than are obtainable elsewhere. This under- taking is set forth in the contract clause prescribed in § 1-1.805-3 (a). In con- tracts which may exceed $500,000, the contractor is required, pursuant to the (NEXT PAGE IS 134.9) FEDERAL PROCUREMENT REGULATIONS ך 134.8 (FPR CIRC. 23, JANUARY 1962 SUBPART 1-1.9 REPORTING POSSIBLE ANTITRUST VIOLATIONS ୮ Subpart 1-1.9-Reporting Possible § 1-1.901 Antitrust Violations General. (a) Section 302(d) of the Federal Property and Administrative Services Act of 1949 requires, with respect to ad- vertised procurement, that bids be re- ferred to the Attorney General for ap- propriate action when in the opinion of the agency head they evidence any viola- tion of the antitrust laws. The referral of such bids shall be in accordance with this Subpart 1–1.9. (b) Where proposals received in com- petitive negotiated procurements evi- dence violations of the antitrust laws, the procedures in this Subpart 1-1.9 may be used in referring such proposals to the Attorney General. (c) The reports required by this sub- part are in addition to and are not to be considered as satisfying the require- ments of Subpart 1-1.16 for reporting identical bids to the Attorney General. § 1-1.902 Documents to be transmitted. In reporting cases of possible viola- tions of the antitrust laws to the Attor- ney General, each agency shall trans- mit, in addition to a copy of each suspect bid, the documents and statements enumerated below (the expression "sus- pect bids" or variations thereof, as used in this Subpart 1-1.9, shall be deemed to include any bids which indicate practices which may evidence possible violations of the antitrust laws including collu- sive bidding, follow-the-leader pricing, rotated low bids, identical bids, or any other bid device intended to deprive the Government of the benefit of full and free competition): (a) One copy of the invitation for bids and any amendments thereto. (b) An abstract of all bids received for each item covered by the bid invita- tion for which suspect bids were received, showing for each such item- (1) The unit and total price bid. 1-1.902 (c) (4) (2) The net price to the Govern- ment after discounts and allowance for transportation, or other costs, are ab- sorbed by the bidder. (3) The name of the manufacturer of the item or the source of supply if the bidder is a dealer or distributor, and the location of the plant from which ship- ment will be made. Where identical bids are filed by dealers, distributors, or job- bers representing the same manufacturer or supplier, they frequently indicate ad- herence to the supplier's list or suggested price to the Government. Unless the procurement agency has some evidence that such identical bids resulted from collusion or concert of action among the bidders they need not be reported to the Attorney General. (4) The destination of shipments, and whether the price quoted includes or excludes the cost of transportation to destination. (5) The identity of the successful bidder, and, where identical low bids were submitted by several bidders, an indication of how the award was made. (c) Copies of documents filed by sus- pect bidders as part of the bid submission or obtained by the procuring agency such as the following- (1) Contracts with contingent fee representatives who acted on behalf of one or more of the bidders who submitted identical bids or assisted them in the preparation of their bids. (2) Correspondence or other evi- dence of patent rights owned or licensed by bidders quoting identical prices. (3) Evidence of the existence of financial or other ties between bidders submitting suspect bids as revealed by Dun and Bradstreet or other reliable financial reports. (4) Any pertinent financial or cor- porate information concerning the suspect bids as may be contained in financial statements or annual reports to stockholders. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 34, AUGUST 1963) 135 PART 1-1 GENERAL 1-1.902 (d) (d) Copies of reports containing the findings of any special investigations conducted by the procurement agency concerning the bids reported. (e) Copies of any correspondence be- tween the procurement agency and the suspect bidders revealing the factors responsible for the filing of suspect bids, or explaining the prices bid. 1-1.903 Additional information. In addition to the documentary matter described above, the following informa- tion must be submitted, or appropriate remarks made, to the degree available. with respect to each suspected antitrust violation: (a) Where there is a prior pattern of procurement of the item for which suspect bids were received, indicate the procurement dollar agency's annual value or purchases of the item in each of the three calendar years preceding the year in which the suspect bids were received. (b) With respect to purchases of the item in prior years, submit an abstract of all suspect bids received in response to each invitation for bids issued in the preceding three-year period, setting forth in such abstract the information described in section 1-1.902. If this in- formation was submitted with a prior reference of identical bids to the Attor- ney General it will be necessary only to state that the information was submitted with a suspect bid reference of a specified date. (c) Indicate whether the pattern of bidding in the three-year period preced- ing the receipt of the suspect bids re- ported appears to indicate such practices as bid rotation, sharing of the business, collusive bidding, or any other form of joint action. If such practices are indi- cated, explain in detail. (d) If there are any known financial, personal, or other than personal rela- tionships among any of the suspect bidders, describe them. (e) Indicate if the Government's spec- ifications for the item are so drawn that only a limited number of potential bidders are capable of meeting these specifications. (f) Indicate whether the item is cov- ered by active patents and if such pat- ents are owned or controlled by any of the suspect bidders. If information is available, submit full details, including any evidence that patent control may have a bearing on price identity. (g) If there are any known manufac- turers or suppliers of the item who con- sistently avoid bidding on Government contracts, identify such suppliers or manufacturers and indicate whether the procurement agency has any knowledge as to the reasons why these firms avoid seeking Government business. (h) Indicate if the prices bid by the suspect bidders are their published list prices or if they are prices applicable only to the particular bid. If the prices quoted by the suspect bidders are not their published list prices, state whether they appear to have been arrived at by the application of a uniform Government discount from list prices or by some other method of computation. If available, furnish photostatic copies of suspect bid- ders' and other bidders' price lists. (i) Indicate whether it is known to be the general practice of the manufac- turers of the item to adhere to pricing systems which may be characterized as delivered pricing, zone pricing, or basing point pricing. If the answer is in the affirmative, describe the nature of the pricing system used. (j) Indicate whether, in the opinion of the procurement agency, the suspect or tie bids submitted appear to stem from collusion or conspiracy on the part of the suspect bidders, and, if so, explain the basis for this opinion. FEDERAL PROCUREMENT REGULATIONS * 136 (FPR CIRC. 34, AUGUST 1963) SUBPART 1-1. 10 PUBLICIZING PROCUREMENT ACTIONS ୮ § 1-1.1001 General policy. Proposed procurements which offer competitive opportunities for prospective prime contractors or subcontractors shall be publicized as prescribed in this Subpart 1–1.10, to increase competition, thus assisting small business and labor surplus area concerns and broadening industry participation in Government procurement programs. § 1-1.1002 Availability of invitations for bids and requests for proposals. A reasonable number of copies of each invitation for bids and request for pro- posals publicized in the Department of Commerce Synopsis (see § 1-1.1003–1), including specifications and other perti- nent information, shall be maintained by the issuing office. To the extent such unclassified invitations for bids and re- quests for proposals are available, they shall be provided to manufacturers, con- struction contractors, and regular deal- ers and to others having a legitimate interest therein, such as publishers, trade associations, procurement information services and others who disseminate in- formation concerning invitations for bids and requests for proposals; otherwise the procuring activity may limit the avail- ability of invitations for bids and re- quests for proposals to perusal at the issuing office. § 1-1.1003 Synopses of proposed pro- curements. § 1-1.1003–1 Department of Commerce Synopsis. (a) The "Commerce Business Daily, Synopsis of U.S. Government Proposed Procurement, Sales and Contract Awards," informally known as "Depart- ment of Commerce Synopsis" or "Synop- sis," is published daily, except Saturdays, Sundays, and holidays, by the U.S. De- partment of Commerce, Chicago, Illinois. Section 8, Public Law 87-305, approved September 26, 1961, empowers the Sec- retary of Commerce to obtain notice of certain proposed procurement actions from any Federal department, establish- 1-1.1003-2(a) (1) ment, or agency engaged in procurement of supplies and services in the United States; and to publicize such notices in the Department of Commerce Synopsis immediately after the necessity for the procurement is established. (b) The primary purpose of the De- partment of Commerce Synopsis is to provide industry with information con- cerning current Government contract- ing and subcontracting opportunities, including information as to the identity and location of Government contracting offices and prime contractors having current or potential need for certain types of products or services. (c) The Department of Commerce Synopsis is available on an annual sub- scription basis, and subscriptions can be entered at any Department of Com- merce office. Complimentary subscrip- tions are available to participating Gov- ernment activities upon request. (d) Procurement agencies shall de- velop procedures for assuring that pro- posed procurements are publicized in the Synopsis as required by this section 1-1.1003. § 1-1.1003-2 General requirements. (a) In accordance with section 8 of Public Law 87-305, all proposed defense procurement actions of $10,000 and above, and all proposed civilian agency procurement actions actions of $5,000 and above, will be publicized promptly in the Department of Commerce Synopsis, ex- cept that the following need not be so publicized: (1) Procurements of a classified na- ture where the information necessary to be included or referenced in the solic- itation (invitation for bids or request for proposals) is in itself of a classified nature and the public disclosure of this information would violate security re- quirements. All other classified pro- curements shall be published in the Synopsis if sufficient information of an unclassified nature can be provided in the solicitation to enable a prospective contractor to submit a bid or proposal; FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 24, JULY 1962) 137 PART 1-1 GENERAL ୮ L 1-1.1003-2 (a)(2) (2) Procurements of perishable subsistence; (3) Procurements which are for util- ity services and the procuring agency in accordance with applicable law has pre- determined the utility concern to whom the award will be made; (4) Procurements which are of such unusual and compelling emergency that the Government would be seriously in- jured if bids or offers were permitted to be made more than 15 calendar days after issuance of the invitation for bids or request for proposals or the date of transmittal of the synopsis, whichever is earlier; (5) Procurements which are made by an order placed under an existing con- tract; (6) Procurements which are made from another Government department or agency, or a mandatory source of supply; (7) Procurements which are for per- sonal or professional services; (8) Procurements which are for serv- ices from educational institutions; (9) Procurements in which only for- eign sources are to be solicited; or (10) Procurements for which it is de- termined in writing by the procuring agency, with the concurrence of the Ad- ministrator of the Small Business Ad- ministration, that advance publicity is not appropriate or reasonable. (The term "defense procurement actions," as used in this § 1-1.1003-2, shall apply only to procurements made by the De- partment of Defense). (b) The dollar amount specified in § 1-1.1003-2(a) is not a prohibition against publicizing procurements below that amount where it is determined that such publication would be advantageous to industry or to the Government. § 1-1.1003-3 ment. Research and develop- Advance notices of the Government's interest in a given field of research and development shall be published in the Synopsis in accordance with § 1-1.1003– 7(b) (7), except where security considera- tions prohibit such publication. Such notices will enable potential sources to learn of research and development pro- grams and provide such sources with an adequate opportunity to submit infor- mation which will permit evaluation of their research and development capa- bilities. Each specific procurement of research and development shall be pub- licized in the Synopsis unless (a) one of the exceptions in § 1-1.003-2 is appli- cable, or (b) an advance notice has been published in the Synopsis and such notice was sufficiently specific to permit potential sources to request solicitations for the procurement. § 1-1.1003-4 Synopses of subcontract opportunities. Prime contractors and subcontractors should be encouraged to use the Synopsis to publicize opportunities in the field of subcontracting stemming from Govern- ment business. Prime contractors and their subcontractors will be advised to mail subcontract information directly to the U.S. Department of Commerce, Ad- ministrative Service Office, Room 1300, 433 West Van Buren Street, Chicago 7, Illinois, in format ready for printing. § 1-1.1003-5 Pre-invitation notices. Where pre-invitation notices are used (see § 1-2.205-4), the preinvitation in- formation shall be included in the Syn- opsis. The information need not be re- published in the Synopsis when the invitation for bids concerned is subse- quently issued. § 1-1.1003-6 Time of publicizing. To allow concerns which are not on current bidders lists ample time to pre- pare bids or proposals, procuring activi- ties should, when feasible, publicize pro- posed procurements before issuance of invitations for bids and requests for pro- posals. Prompt reporting is particularly important when a short time for submit- ting bids or proposals is involved. FEDERAL PROCUREMENT REGULATIONS 138 (FPR CIRC, 35, AUGUST 1963) SUBPART 1-1. 10 PUBLICIZING PROCUREMENT L ACTIONS § 1-1.1003–7 Preparation and transmit- tal. (a) Procuring activities shall transmit synopses of proposed procurements as follows: (1) When teletypewriter service is available, synopses shall be forwarded as frequently as practical each day via tele- typewriter covering invitations for bids and requests for proposals or quotations issued on that day, or at the earliest practical time prior to the issuance of such invitations and requests as is deemed appropriate, to the following ad- dress: Synopsis, U.S. Department of Commerce, Administrative Service Office, Chicago, Illinois. (2) When teletypewriter service is not available, synopses normally shall be sent by airmail or ordinary mail, which- ever is considered more expeditious, ad- dressed as follows: U.S. Department of Commerce (Synopsis), Administrative Service Office, Room 1300, 433 West Van Buren Street, Chicago, Ill., 60607. This address should be used also when com- mercial telegraph facilities are used. (b) Each synopsis message shall be prepared as described below: (1) Spacing. Except as provided in § 1-1.1003-7(b) (4), lines in the text will begin flush with the left margin and will not exceed 69 typewritten spaces in length. Double spaced lines will be used in the text. Each procurement shall be described in a separate paragraph. (2) Message number. The first line of the message text will state the "trans- mittal number" of the message being sent. Synopses will be numbered con- secutively by the reporting activity dur- ing the calendar year, using a new series of numbers beginning with number one for the first message of each calendar year. (3) Contracting office and address. The name and address of the contracting office will begin on the second line of the message text and continue straight across the page and on the subsequent line or lines if necessary. No abbrevia- 1—1.1003–7 (b) (5) tions are to be used except for the name of the State. The address may include an attention phrase directed to an official by name, title, or reference code. (4) Description of procurements. The appropriate classification code (see § 1-1.1005 and subparagraph (5) of this § 1-1.1003-7(b)) for each proposed pro- curement of supplies and services shall begin five spaces from the left margin followed by two hyphens and the descrip- tion of the procurement. As used in this Subpart 1-1.10, the term "supplies" in- cludes materials and equipment. The description shall be in narrative form, double spaced, with each succeeding line commencing flush with the left margin. The description shall be clear, concise, and in such detail that it will be under- stood by interested parties. Descriptions shall include, as appropriate, commonly used names of supply items, basic ma- terials from which fabricated, general size or dimensions, citations of specifica- tion and drawing numbers, quantities, units of measure, invitation for bid or request for proposal numbers, opening dates, places of delivery, and other pertinent data. Where a term or in- definite quantity contract is involved, the description should so indicate and, where applicable, include a statement as to the duration of the contract period. If an item is covered by one or more specifications requiring qualification testing and approval, and such require- ment has not been waived, the notation "QPL" shall be inserted immediately following the specification number. Federal stock numbers should be in- cluded where one has seen assigned. Only standard, commonly understood abbreviations may be used. For pur- poses of clarity, two hyphens should be used instead of punctuation marks to separate quantities, purchase reference numbers, opening dates,, and other ele- ments of the description. Copies of the Commerce Business Daily will be helpful as a guide in preparing messages. (5) Several items on one invitation for bids or request for proposals. Where FEDERAL PROCUREMENT REGULATIONS و (FPR CIRC. 35, AUGUST 1963) 138.1 PART 1-1 GENERAL 1-1.1003-7(b) (5) "" several items are included in the same invitation for bids or request for pro- posals, a blanket statement such as "The following described items are to be pro- cured under Invitation for Bids (or Request for Proposals) No. ‒‒‒‒‒‒, Open- ing Date should be inserted following the classification code and preceding the description of the items. If more than one class of supplies or serv- ices is involved, enter the code for the class accounting for the largest dollar volume of the procurement. (6) Procurements involving set- asides. If the proposed procurement in- volves a small business set-aside (see § 1-1.706) or labor surplus area set- aside (see § 1-1.804), the synopsis mes- sage shall— (i) Where there is a 100 percent small business set-aside, state that “The proposed procurement(s) listed herein is (are) totally set aside for small busi- ness." Separate messages should be sent covering those proposed procure- ments which involve 100 percent small business set-asides in order to facilitate proper identification in the synopsis. (ii) Where there is a partial small business or labor surplus area set-aside, state that "An additional quantity of (Insert number of units and description) is being reserved for (Insert "small business" or "labor surplus area," as appropriate) under concerns determination." a partial set-aside (7) Research and development item. Notices which invite the submission of information as to research and develop- ment capabilities in given fields of in- terest shall be headed "Research and Development Sources Sought." This shall be followed by a statement similar to the following: "Firms having research and development capabilities in the field of and whose facilities (Be specific) and personnel include (Describe in substantial detail minimum facilities and personnel required) are invited to submit complete informa- tion to the procuring office listed above. Information furnished should include the total number of employees and pro- fessional qualifications of scientists, en- gineers, and technical personnel; a de- scription of general and special facilities; an outline of previous projects; a state- ment regarding industrial security clear- ance, if previously granted; and other available descriptive literature. This is not a request for a proposal." § 1-1.1004 Synopses of contract awards. Awards of all unclassified contracts to be performed in whole or in part within the United States, exceeding $25,000 in amount, shall be publicized in the Department of Commerce Synopsis (see § 1-1.1003-1). This dollar amount is not a prohibition against publicizing smaller awards where it is determined that such publication would be advan- tageous to industry or to the Govern- ment. § 1-1.1004-1 Preparation and trans- mittal. (a) Procuring activities shall trans- mit synopses of contract awards by air- mail or ordinary mail, whichever is con- sidered more expeditious, before the close of business at the end of each week, addressed as follows: U.S. Department of Commerce, Administrative Service Office, Ref. CA, Room 1300, 433 West Van Buren Street, Chicago, Illinois, 60607. (b) Each synopsis message shall be prepared as described below: (1) Spacing shall be as stated in § 1-1.1003-7(b) (1). (2) The contracting office and ad- dress will be shown as described in § 1-1.1003-7(b) (3). (3) The appropriate classification code (see § 1-1.1005) for each contract award shall begin five spaces from the left margin and be followed by two hyphens and the common name of the supplies or services. If a contract covers more than one class of supplies or serv- ices, enter the code for the class which FEDERAL PROCUREMENT REGULATIONS ل 138.2 (FPR CIRC, 35, AUGUST 1963) SUBPART 1-1. 10 PUBLICIZING PROCUREMENT ACTIONS 1-1.1005–1 Г L ୮ Lo accounts for the largest dollar amount. Immediately following the common name, using full lines across the page, enter the contract number, the number of the invitation for bids or request for proposals (in parenthesis), the quantity, unit, and dollar amount for each item, and the name and address of the con- tractor. The quantity, unit, and dollar amount for individual items of $25,000 or less in a single award need not be shown. In lieu thereof, a statement, such as "various items" or "20 items" or "items 3, 5, 6, 7, 9, 16, 20, and 23", fol- lowed by the total dollar amount of the award for such items, may be used. (4) When requested by the prime contractor, a statement will be included regarding the industries, crafts, proc- esses, or component items in or for which subcontracts are available and sub- contractors are desired, together with the general area, if any, indicated by the prime contractor, such as Southeast States, West Coast, New England. § 1-1.1005 Classification codes. The classification codes to be shown in synopses messages, as required by § 1-1.1003-7(b) (4) for proposed pro- curements and § 1-1.1004–1(b) (3) for contract awards, shall be in accordance with this § 1-1.1005. Services (includ- ing construction and experimental, de- velopmental, test, and research work) shall be coded with the applicable letter code set forth in § 1-1.1005-1. Supplies shall be coded with the applicable two- digit numerical code set forth in § 1-1.- 1005-2. § 1-1.1005-1 Codes for services. The code letters to be used for services are as follows: Code Description of Services A Experimental, Developmental, Test, and Research Work (research includes both basic and applied research). J Maintenance and Repair of Equipment. K Modification, Alteration, and Rebuilding of Equipment. L Technical Representative Services (Ex- ample: Services of technical specialists required to advise and assist with re- spect to the installation, checking, op- eration, and maintenance of complex equipment). M Operation and Maintenance of Govern- ment-Owned Facility. N Installation of Equipment (use code K if the procurement also involves modifi- cation, alteration, or rebuilding of the equipment). P Salvage Services (services required to sal- vage property of any kind). Medical Services. Q R Architect, Engineer, Expert, and Consul- tant Services. S Housekeeping Services— Examples: Utility services (gas, electric, tele- phone, etc.). Laundry and dry cleaning services. Custodial-janitorial service. Insect and rodent control. Packing and crating. Storage services. Garbage and trash collection. Food service. Fueling service. Fire protection. Building and grounds maintenance. Care of remains-funeral services. Guard services. T Photographic, Mapping, Printing, and Publication Services- Examples: Film processing. Cataloging. Charting. Reproduction. Technical writing. Art. Training Services. Printing. U V Transportation Services. Examples: Passenger and cargo transportation. Vessel charter. Vessel operation. Tug service. Stevedoring service. Vehicle hire. Railway equipment charter. W Lease or Rental, Except Transportation Equipment. Examples: Lease of ADP or EAM equipment. Lease of earth-moving equipment. Y Construction (includes contruction, alter- FEDERAL PROCUREMENT REGULATIONS لم (FPR CIRC, 35, AUGUST 1963) 138.3 PART 1-1 GENERAL 1-1.1005-1 ୮ L L ation, and repair of buildings, struc- tures, and other improvements to real property, including roads, bridges, tunnels, sewers, power lines, railways, docks, levees, and canals). Z Miscellaneous (includes services which do not fall within any of the above). § 1-1.1005-2 Codes for supplies. The The two-digit code numbers to be used for supplies are as set forth below. numbers and descriptions used are the same as the 76 assigned commodity groups of the Federal Supply Classifica- tion system as shown in the Cataloging Handbook, H 2-1, Federal Supply Clas- sification, Part 1, Groups and Classes. This handbook, together with Catalog- ing Handbooks H 2-2 (Numeric Index of Classes) and H 2-3 (Alphabetic Index), will be helpful in determining the proper code to be assigned to supply items in synopses messages. These handbooks may be purchased from the Superin- tendent of Documents, U.S. Government Printing Office, Washington 25, D.C. Code Description of Supplies 10 Weapons. 11 Nuclear Ordnance. 12 Fire Control Equipment. 13 Ammunition and Explosives. 14 Guided Missiles. 15 Aircraft; and Airframe Structural Com- ponents. 16 Aircraft Components and Accessories. 17 Aircraft Launching, Landing, and Ground Handling Equipment. 18 Space Vehicles. 19 Ships, Small Craft, Pontoons, and Float- ing Docks. 20 Ship and Marine Equipment. 22 Railway Equipment. 23 Motor Vehicles, Trailers, and Cycles. 24 Tractors. 25 Vehicular Equipment Components. 26 Tires and Tubes. 28 Engines, Turbines, and Components. 29 Engine Accessories. 30 Mechanical Power Transmission Equip- ment. 31 Bearings. 32 Woodworking Machinery and Equipment. 34 Metalworking Machinery. 35 Service and Trade Equipment. 36 Special Industry Machinery. 37 Agricultural Machinery and Equipment. 38 Construction, Mining, Excavating, and Highway Maintenance Equipment. 39 Materials Handling Equipment. 40 Rope, Cable, Chain, and Fittings. 41 Refrigeration and Equipment. Air-Conditioning 42 Fire Fighting, Rescue, and Safety Equip- ment. 43 Pumps and Compressors. 44 Furnace, Steam Plant, and Drying Equip- ment; and Nuclear Reactors. 45 Plumbing, Heating, and Sanitation Equipment. 46 Water Purification and Sewage Treat- ment Equipment. 47 Pipe, Tubing, Hose, and Fittings. Valves. 48 49 Maintenance and Repair Shop Equip- ment. 51 Hand Tools. 52 Measuring Tools. 53 Hardware and Abrasives. 54 Prefabricated Structures and Scaffolding. 55 Lumber, Millwork, Plywood, and Veneer. 56 Construction and Building Materials. 58 Communication Equipment. 59 Electrical and Electronic Components. Equipment 61 Electric Wire, and Power and Distribu- tion Equipment. 62 Lighting Fixtures and Lamps. 63 Alarm and Signal Systems. 65 Medical, Dental, and Veterinary Equip- ment and Supplies. 66 Instruments and Laboratory Equipment. 67 Photographic Equipment. 68 Chemicals and Chemical Products. 69 Training Aids and Devices. 71 Furniture. 72 Household and Commercial Furnishings 73 and Appliances. Food Preparation and Serving Equipment. 74 Office Machines and Data Processing Equipment. 75 Office Supplies and Devices. 76 77 Books, Maps, and Other Publications. Musical Instruments, Phonographs, and Home-Type Radios. 78 Recreational and Athletic Equipment. 79 Cleaning Equipment and Supplies. 80 Brushes, Paints, Sealers, and Adhesives. 81 Containers, Packaging, and Packing Sup- plies. 83 Textiles, Leather, and Furs. 84 Clothing and Individual Equipment. 85 Toiletries. 87 Agricultural Supplies. 88 Live Animals. 89 Subsistence. 91 Fuels, Lubricants, Oils, and Waxes. 93 Nonmetallic Fabricated Materials. 94 Nonmetallic Crude Materials. 95 Metal Bars, Sheets, and Shapes. 96 Ores, Minerals, and Their Primary Prod- ucts. 99 Miscellaneous. (NEXT PAGE IS 139) J FEDERAL PROCUREMENT REGULATIONS ☆ U. S. GOVERNMENT PRINTING OFFICE: 1963 O 702-503 (35) 138.4 (FPR CIRC. 35, AUGUST 1963) SUBPART 1-1, 11 QUALIFIED PRODUCTS 1-1.1101 (c) Subpart 1-1.11-Qualified Products 1-1.1101 Procurement of qualified products. (a) Whenever procurement of quali- fied products is to be made, only bids or proposals offering products which have been qualified prior to the opening of ad- vertised bids or the award of negotiated contracts shall be considered in making an award. Manufacturers having prod- ucts which have been qualified but which are not yet included on the qualified products list involved, should be given consideration and an opportunity to offer evidence of such qualification in the time interval before award must be made. (Other instructions concerning establishment of qualified products lists, qualification of products, etc., are con- tained in General Services Administra- tion Regulation 1-VI, Part 2.) (b) Whenever procurement of quali- fied products is to be made by formal advertising, the following provision shall be inserted in invitations for bids: QUALIFIED PRODUCTS With respect to products described in this invitation as requiring qualification, awards will be made only for such products as have, prior to the time set for opening of bids, been tested and approved for inclusion in the qualified products list identified below. Manufacturers who wish to have a product tested for qualification are urged to com- municate with the office designated below. Manufacturers having products not yet listed, but which have been qualified, are requested to submit evidence of such quali- fication with their bids, so that they may be given consideration. [Identify the Qualified Products List in- volved and give the name and address of the office with which manufacturers should communicate.] (c) The provision in section 1-1.1101 (b) shall be appropriately modified and used in requests for proposals when pro- curement of qualified products is to be made by negotiation. (NEXT PAGE IS 141) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 34, AUGUST 1963) 139 Subpart 1-1.12 [Reserved] Subpart 1-1.13 [Reserved] L Subpart 1-1.14 Subpart 1-1.15 [Reserved] [Reserved] (NEXT PAGE IS 175) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 34, AUGUST 1963) 141 SUBPART 1-1, 16 REPORTS OF IDENTICAL BIDS Subpart 1-1.16-Reports of Identical § 1-1.1601 Bids General. (a) This Subpart 1-1.16, developed cooperatively with the Department of Justice, prescribes procedures for sub- mitting reports to the Attorney General in accordance with Executive Order No. 10936 of April 24, 1961 (3 CFR, 1961 Supp., pp. 104-106), when identical bids are received in connection with the pro- curement of personal property or non- personal services (including construc- tion). (b) The purpose of the Executive order is to discourage identical bidding; to reduce the costs of the Government; to aid in the enforcement of the anti- trust laws and the maintenance of a com- petitive economy; and to provide the Attorney General such information as may tend to establish the presence of a conspiracy in restraint of trade and which may warrant further investiga- tion with a view to preferring civil or criminal charges. (c) The reports required by this sub- part are in addition to and are not to be considered as satisfying the require- ments of Subpart 1-1.9 for reporting cases of possible antitrust law violations to the Attorney General. § 1-1.1602 Definitions. As used in this Subpart 1-1.16, the fol- lowing terms shall have the meanings set forth: (a) "Identical bids" means two or more bids for the same line item which: (1) Are identical on their face (dis- regarding the application of evaluation factors such as discount and transporta- tion cost) as to unit price or total line item amount; or (2) Are found, in the normal process of evaluating bids for award, to be iden- tical as to unit price or total line item amount. (Line item evaluation compu- tations beyond those normally made to determine the low acceptable bidder are not required.) 1-1.1603-1(b) (b) “Line item" means a procurement item (as defined in § 1-1.220) specified in an invitation for bids which, under the terms of the invitation, is susceptible to a separate contract award. (c) "Bid value" means the dollar amount computed by multiplying the line item quantity specified in the invitation for bids by the lowest unit price bid for the line item. Where a line item quan- tity is not specified in the invitation, as in the case of requirements type or in- definite quantity type contracts, the bid value of the line item is the dollar amount computed by multiplying the estimated line item quantity by the lowest unit price bid for the line item. § 1-1.1603 Reporting requirements. § 1-1.1603-1 Cases to be reported. (a) A report shall be submitted by executive agencies to the Attorney Gen- eral as provided in this § 1-1.1603 when- ever (1) the total bid value of all line items covered by an invitation for bids issued under formal advertising proce- dures, or under small business restricted advertising procedures (see § 1-1.701–9), exceeds $10,000, and (2) identical bids have been received on at least one line item having a bid value of more than $2,500. However, a report will not be submitted where bids are received only from foreign sources in response to in- vitations for bids requiring delivery and performance outside the United States, its possessions, and the Commonwealth of Puerto Rico. (b) Reports are required on reportable identical bids regardless of whether an award is made on the line item, the in- vitation is canceled, or some other dis- position is made after bid opening. Line items on which identical bids are re- ceived are not reportable if the bid value of the line item is $2,500 or less. Like- wise, line items on which no identical bids are received afe not reportable. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 34, AUGUST 1963) 175 PART 1-1 GENERAL 1-1, 1603-2 ୮ § 1-1.1603-2 Preparation of reports. (a) Identical bid reports shall be made on U.S. Department of Justice Form DJ- 1500, Identical Bid Report for Procure- ment (for illustration of the form, see § 1-16.903-DJ1500). Form DJ-1500 is available in pads of 100 at General Serv- ices Administration supply depots (Fed- eral Stock No. 7540-823-7870). Instruc- tions for filling out the form are printed on the cover of each pad of forms. (b) All bids on each line item on which reportable identical bids are received shall be shown on the report whether or not the identical bids were the low bids. § 1-1.1603-3 Submission of reports. (a) Identical bid reports shall be sent to the Attorney General within 20 days following the disposition of all bids re- ceived in response to the invitation for bids, whether by the awarding of one or more contracts or other action. (b) Two completed copies of each identical bid report, together with one copy of the invitation for bids and one copy of the completed abstract of bids, shall be sent to the Attorney General, Washington 25, D.C., Ref. AT-IBR. When the number of line items on an invitation exceeds 100, a copy of the ab- stract of bids need not be furnished. such cases, however, the identical bid re- port shall be annotated to indicate the number of line items and the number of bidders on the invitation. In (c) A copy of each identical bid report shall be retained by the reporting activity. § 1-1.1604 Supplemental requests by Attorney General. The Attorney General may, from time to time, request such supplemental in- formation with respect to identical bid reports submitted to him as he may deem necessary for effective enforcement of Lantitrust laws. § 1-1.1605 Information to be obtained from bidders. § 1-1.1605–1 Invitation for bids provi- sion. A provision substantially as follows shall be inserted in all invitations for bids for the procurement of personal property or nonpersonal services (includ- ing construction) under either formal advertising procedures or small business restricted advertising procedures where it is estimated that the total bid value of all line items covered by the invitation may exceed $10,000: PARENT COMPANY AND EMPLOYER IDENTIFICA- TION NUMBER Each bidder shall furnish the following information by filling in the appropriate blocks: (a) Is the bidder owned or controlled by a parent company as described below? Yes] No [ ] (For the purpose of this bid, a parent company is defined as one which either owns or controls the activities and basic business policies of the bidder. To own another com- pany means the parent company must own at least a majority (more than 50 percent) of the voting rights in that company. To control another company, such ownership is not required; if another company is able to formulate, determine, or veto basic busi- ness policy decisions of the bidder, such other company is considered the parent company of the bidder. This control may be exercised through the use of dominant minority voting rights, use of proxy voting, contractual ar- rangements, or otherwise.) (b) If the answer to (a) above is "Yes," bidder shall insert in the space below the name and main office address of the parent company. (Name) (Address) (c) Bidder shall insert in the applicable space below, if he has no parent company, his own employer's identification number (E.I. No.) (Federal social security number used on employer's quarterly Federal tax re- turn, U.S. Treasury Department Form 941), or, if he has a parent company, the E.I. No. of his parent company. FEDERAL PROCUREMENT REGULATIONS 176 (FPR CIRC. 34, AUGUST 1963) SUBPART 1-1. 16 REPORTS OF IDENTICAL BIDS ୮ L L Bidder's E.I. No. Parent Company's E.I. No. § 1-1.1605-2 mation. Failure to provide infor- (a) If a bid does not contain the in- formation called for by the invitation for bids provision in § 1-1.1605-1 and an identical bid report is required under § 1-1.1603-1, one inquiry shall be made 1~1,1605–2 (b) of the bidder in an effort to obtain the information. If the information is not available after inquiry, the identical bid report shall be annotated so to indicate. (b) Failure to provide information concerning employer identification num- ber or parent company relationship shall not be considered a basis for rejection of bids. (END OF PART) FEDERAL PROCUREMENT REGULATIONS 177 (FPR CIRC, 34, AUGUST 1963) DEPOSITED BY THE UNITED STATES OF AMERICA CONTENTS OF PART 1-2 PROCUREMENT BY FORMAL ADVERTISING PART 1-2-PROCUREMENT BY Sec. 1-2.000 FORMAL ADVERTISING Scope of part. Sec. Subpart 1-2.1-Use of Formal Advertising 1-2.303-5 1-2.101 Meaning of formal advertising. 1-2.303-6 1-2.102 Policy. 1-2.303-7 1-2.303 Late bids. 1-2.303-1 General. 1-2.303-2 Consideration for award. 1-2.303-3 Mailed bids. 1-2.303-4 Telegraphic bids. Hand-carried bids. Notification to late bidders. Disposition of late bids. 1-2.103 General requirements for for- 1-2.303-8 Records. 1-2.104 mally advertised contracts. Types of contracts. 1-2.304 Modification or withdrawal of bids. 1-2.104-1 General. 1-2.305 Late modifications and with- drawals. 1-2.104-2 Firm fixed-price contracts. 1-2.104-3 Fixed-price contracts with esca- lation. 1-2.104-4 Indefinite delivery-type contracts. 1-2.105 Solicitation for informational or planning purposes. Subpart 1-2.4-Opening of Bids and Award of Contract 1-2.401 Receipt and safeguarding of bids. 1-2.402 Opening of bids. Subpart 1-2.2-Solicitation of Bids 1-2.403 1-2.201 Preparation of invitations for 1-2.404 bids. 1-2.404-1 1-2.202 Miscellaneous rules for solicita- 1-2.404-2 tion of bids. 1-2.202-1 Bidding time. 1-2.202-2 Telegraphic bids. 1-2.202-3 Place and method of delivery of supplies. 1-2.202-4 Bid samples. 1-2.202-5 Descriptive literature. 1-2.203 Methods of soliciting bids. 1-2.203-1 Mailing or delivering to prospec- tive bidders. 1-2.203-2 Displaying in public places. 1-2.203-3 Publicity in newspapers and trade journals. 1-2.203-4 Synopses of invitations for bids. Records of invitations for bids and records of bids. Bidders mailing lists. 1-2.204 1-2.205 1-2.205-1 Establishment of lists. 1-2.205-2 Removal of names from bidders mailing lists. 1-2.205-3 Reinstatement on bidders mailing lists. 1-2.205-4 Excessively long bidders mailing lists. Release of bidders mailing lists. Small business and labor surplus area set-asides. Amendment of invitations for bids. Recording of bids. Rejection of bids. Cancellation of invitation after opening. Rejection of individual bids. 1-2.404-3 Notice to bidders of rejection of all bids. 1-2.404-4 Restrictions on disclosure of de- scriptive literature. 1-2.404-5 All or none qualifications. 1-2.405 1-2.406 Minor informalities or irregular- ities in bids. Mistakes in bids. 1-2.406-1 General. 1-2.406-2 Apparent clerical mistakes. 1-2.406-3 Other mistakes disclosed before award. 1-2.406-4 Disclosure of mistakes after 1-2.407 award. Award. 1-2.407-1 General. 1-2.407-2 1-2.407-3 Responsible bidder. Discounts. 1-2.407-4 Price escalation. 1-2.407-5 Other factors to be considered. 1-2.407-6 Equal low bids. 1-2.407-7 Statement and certificate of award. 1-2.407-8 Protests against award. Information to bidders. 1-2.408 1-2.409 Synopses of contract awards. Subpart 1-2.5-Two-Step Formal Advertising 1-2.205-5 1-2.206 1-2.207 1-2.208 Cancellation of invitations before opening. 1-2.209 Qualified products. 1-2.501 1-2.502 General. Subpart 1-2.3-Submission of Bids 1-2.503 1-2.301 1-2.302 Responsiveness of bids. Time of bid submission. Conditions for use. Procedures. 1-2.503-1 Step One. 1-2.503-2 Step Two. FEDERAL PROCUREMENT REGULATIONS Г i (FPR CIRC, 33, JULY 1963) PART 1-2 PROCUREMENT BY FORMAL ADVERTISING. 1-2,104-3 1-2.000 Scope of part. This part sets forth (a) the basic re- quirements for procurement of personal property and nonpersonal services (in- cluding construction) by formal adver- tising, (b) the information to be con- tained in solicitations of bids, (c) methods in soliciting bids, (d) policies with respect to the submission of bids, and (e) requirements with respect to the opening and evaluation of bids and the awarding of contracts. Subpart 1-2.1-Use of Formal Advertising 1-2.101 ing. Formal advertising means procure- ment by competitive bids and awards, as prescribed in this Part 1-2, and in- volves the following basic steps: Meaning of formal advertis- and (a) Preparation of the invitations for bids, describing the requirements of the Government clearly, accurately, completely, but avoiding unnecessarily restrictive specifications or requirements which might unduly limit the number of bidders. The term "invitation for bids" means the complete assembly of related documents (whether attached or incor- porated by reference) furnished pros- pective bidders for the purpose of bidding. (b) Publicizing the invitation for bids through distribution to prospective bid- ders, posting in public places, and such other means as may be appropriate, in sufficient time to enable prospective bid- ders to prepare and submit bids before the time set for public opening of bids. (c) Submission of bids by prospective contractors. (d) Awarding the contract, after bids are publicly opened, to that responsible bidder whose bid, conforming to the in- vitation for bids, will be most advanta- geous to the Government, price and other factors considered (or rejecting all bids). 1-2.102 Policy. Basic Government procurement law provides that all contracts for property and services, with certain stated excep- tions, shall be made by formal advertis- ing. (See Subpart 1-3.2 for discussion of the exceptions.) In accordance with this requirement, procurements shall generally be made by soliciting bids from all qualified sources of supplies or serv- ices deemed necessary by the contracting officer to assure full and free competition consistent with the procurement of the required property or services. Current lists of bidders shall be maintained in ac- cordance with section 1-2.205. 1-2.103 General requirements for for- mally advertised contracts. No contract shall be deemed to have been made by formal advertising unless: (a) Bids have been solicited as re- quired by Subpart 1-2.2; (b) Bids have been submitted as re- quired by Subpart 1-2.3; and (c) Determination has been made as to the responsible bidder (see section 1-1.310) whose bid is responsive to the invitation for bids and is most advan- tageous to the Government, price and other factors considered, and award is made as prescribed in Subpart 1-2.4. 1-2.104 Types of contracts. 1-2.104-1 General. Procurement contracts awarded after formal advertising shall be of the firm fixed-price type, except that fixed-price contracts with escalation may be used where some flexibility is necessary and feasible. 1-2.104-2 Firm fixed-price contracts. See section 1-3.403-1. 1-2.104-3 Fixed-price contracts with escalation. Escalation clauses are not normally de- sirable, but in appropriate cases clauses providing for upward and downward re- vision of prices may be used, in accord- ance with section 1-3.403-2, in order to protect the interest of both the Govern- ment and contractor. In addition, where the contracting officer, on the basis of his knowledge of the market or previous FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 6, FEB. 1960) 201 PART 1-2 PROCUREMENT BY FORMAL ADVERTISING L ما 1-2, 104- 3 advertisements for like items, expects that a requirement for firm fixed-price bids will unnecessarily restrict competi- tion or unreasonably increase bid prices, invitations for bids may include an es- calation clause approved by the agency concerned. Any escalation clause shall provide an escalation ceiling identical for all bidders so that each bidder is afforded an equal opportunity to bid on the es- calation basis. In evaluating bids, see section 1-2.407-4. 1-2.104-4 Indefinite contracts. delivery type O See (a) Definite quantity contracts. section 1-3.405-5 (a). (b) Requirements contracts. See sec- tion 1-3.405–5(b). (c) Indefinite quantity contracts. See section 1-3.405-5 (c). 1-2.105 Solicitation for informational or planning purposes. See section 1-1.314. FEDERAL PROCUREMENT REGULATIONS 202 (FPR CIRC. 6, FEB. 1960) SUBPART 1-2, 2 SOLICITATION OF BIDS 1-2, 201 (a) (20) Subpart 1-2.2-Solicitation of Bids 1-2.201 Preparation of invitations for bids. Forms used in inviting bids are pre- scribed in Subparts 1-16.1 and 1-16.4. Invitations for bids shall contain the ap- plicable information in paragraphs (a) and (b) of this section 1-2.201, and any other information required for a partic- ular procurement. (a) For supply and service contracts, including construction, invitations for bids shall contain the following infor- mation if applicable to the procurement involved. (1) Invitation number. (2) Name and address of issuing activity. (3) Date of issuance. (4) Date, hour, and place of opening. (Prevailing local time shall be used. See section 1-2.202-1 concerning concerning bidding time.) (5) Number of pages. (6) Where required by agency proce- dures, requisition or other purchase au- thority, and appropriation and account- ing data. (7) A description of supplies or serv- ices to be furnished under each item in sufficient detail to permit proper com- petition. Such description shall comply with sections 1-1.305 and 1-1.307. (8) The time of delivery or perform- ance requirements (see section 1-1.316). (9) Permission, if any, to submit tele- graphic bids (see section 1-2.202-2). (10) Permission, if any, to submit al- ternative bids, including alternative material or design. (11) [Reserved] (12) Bid guarantee, performance and payment bond requirements, if any. If a bid guarantee is required, see instruc- tions in section 1-10.102-2. (13) Any authorized special provisions relating to Government-furnished prop- erty proposed to be furnished for the performance of the contract. (14) Where the contracting officer has reason to believe that Government prop- erty may be employed, a provision that if the bidder plans to use, in performing the work bid upon, any items of Govern- ment property in the bidder's possession under a facilities contract or other agree- ment independent of the invitation for bids, the bidder shall so state in the bid and, upon request of the contracting officer, submit evidence that a facilities contract or other separate agreement authorizes the bidder to use each item of such Government property for per- forming the work bid upon. (15) When considered necessary by the contracting officer, a requirement that all bids must allow a period for acceptance by the Government of not less than a minimum period stipulated in the invitation for bids, and that bids offering less than the minimum stipu- lated acceptance period will be rejected. The minimum period so stipulated should be no more than reasonably required for evaluation of bids and other preaward processing. To accomplish the fore- going, a paragraph substantially as fol- lows may be included in the invitation for bids: Bid acceptance period. Bids offering less than days for acceptance by the Gov- ernment from the date set for opening will be considered nonresponsive and will be rejected. (16) In unusual cases, where bidders are required to have special technical qualifications due to the complexity of the equipment being procured or for some other special reason, a statement of such required qualifications and a pro- vision requiring the bidder to state that it meets such qualifications. (17) Any authorized special provi- sions, necessary for the particular pro- curement, relating to such matters as progress payments, patent licenses, liqui- dated damages, escalation, Buy Ameri- can Act, etc. (18) Any additional contract provi- sions or conditions required by law or regulation. (19) Any applicable wage determina- tions of the Secretary of Labor (for con- struction, alteration, or repair con- tracts). (20) If Government costs or expendi- tures other than bid prices are to be considered in the evaluation of bids, such factors must be identified and included. FEDERAL PROCUREMENT REGULATIONS FPR CIRC. 21, OCTOBER 1961) 203 PART 1-2 PROCUREMENT BY FORMAL ADVERTISING 1–2, 201˚(a)(21), (21) If the invitation for bids contains a price escalation clause, include a pro- vision reflecting the requirements of sec- tion 1-2.407–4(b). (22) Directions for obtaining copies of any documents, such as plans, draw- ings, and specifications, which have been incorporated by reference. (23) Pending revision of paragraph 4 of the Terms and Conditions of the In- vitation for Bids on the back of Stand- ard Form 30 (October 1957 edition) and Standard Form 33 (October 1957 edi- tion) and of paragraph 7 of Standard Form 22 (January 1961 edition), the fol- lowing provision shall be substituted, as to each form, for the cited paragraph: · Late bids and modifications or with- drawals. (a) Bids and modifications or withdrawals thereof received at the office des- ignated in the Invitation for Bids after the exact time set for opening of bids will not be considered unless: (1) They are received before award is made; and either (2) they are sent by registered mail or by certified mail for which an official dated post office stamp (postmark) on the original Receipt for Certified Mail has been obtained, or by tele- graph if authorized, and it is determined by the Government that the late receipt was due solely to delay in the mails, or delay by the telegraph company, for which the bidder was not responsible; or (3) if submitted by mail (or by telegram if authorized), it is de- termined that the late receipt was due solely to mishandling by the Government after re- ceipt at the Government installation: Pro- vided, That timely receipt at such installa- tion is established upon examination of an appropriate date or time stamp (if any) of such installation, or of other documentary evidence of receipt (if readily available) within the control of such installation or the post office serving it. However, a modifica- tion which makes the terms of the otherwise acceptable bid more favorable to the Gov- ernment will be considered at any time it is received and may thereafter be accepted. (b) Bidders using certified mail are cau- tioned to obtain a legibly postmarked dated Receipt for Certified Mail and retain it against the chance that the postmark thereon will be required as evidence that a late bid was timely mailed. If the postmark on such receipt, or on the registered mail wrapper, shows the hour of mailing as well as the date, the time of mailing shall be established accordingly; if it shows the date but not the hour, the time of mailing shall be deemed to be the last minute of the date shown unless the bidder furnishes evidence from the post office of mailing which, (1) in the case of registered mail, establishes an earlier time; or (2) in the case of certified mail, where the Receipt for Certified Mail identifies the post office station of mailing, establishes that the business day of that sta- tion ended at an earlier time, in which case the time of mailing shall be deemed to be the last minute of the business day of that sta- tion. If any such Receipt for Certified Mail does not show the date, the bid shall not be considered. (24) A statement that the Nondiscrim- ination in Employment clause is not ap- plicable to contracts (i) not involving the employment of persons, (ii) not ex- ceeding $10,000, (iii) where work is to be performed entirely outside the United· States and no recruitment of workers within the United States is involved, (iv) for standard commercial supplies or raw materials not exceeding $100,000, or (v) specifically exempted by the Ex- ecutive Vice Chairman of the Presi- dent's Committee on Equal Employment Opportunity. (25) A statement substantially as fol- lows (prominently placed in the invitation): Caution to bidders-Late bids. See the special provision entitled "Late Bids and Modifications or Withdrawals" which provides that late bids and modifications or with- drawals thereof sent through the mails ordi- narily will be considered ONLY IF TIMELY MAILED BY REGISTERED MAIL OR BY CERTIFIED MAIL FOR WHICH A POSTMARKED RECEIPT HAS BEEN OBTAINED AS SPECIFIED IN SUCH PROVISION. (26) Pending revision of paragraph 10 of the Terms and Conditions of the Invi- tation for Bids on the back of Standard Form 30 (October 1957 edition) and Standard Form 33 (October 1957 edi- tion), the following shall be substituted, as to each form, for the cited paragraph: Definition of Small Business. A small business concern for the purpose of Gov- ernment procurement is a concern, includ- ing its affiliates, which is independently 204 (NEXT PAGE IS 204,1) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 34, AUGUST 1963) SUBPART 1-2, 2 SOLICITATION OF BIDS } 1-2, 202-1 (a) owned and operated, is not dominant in the field of operation in which it is bidding on Government contracts and can further qualify under the criteria concerning num- ber of employees, average annual receipts, or other criteria, as prescribed by the Small Business Administration. (See Code of Fed- eral Regulations, Title 13, Part 121, as amended, which contains detailed industry definitions and related procedures.) (27) A provision in accordance with section 1-1.1605-1 concerning parent company relationship and and employer identification number. (28) The Certification of Noncollusion, as required by section 1-1.317. (b) For supply and services contracts, excluding construction, invitations for bids shall contain the following, in addi- tion to the information required by sec- tion 1–2.201(a), if applicable to the pro- curement involved. (1) Discount provisions (see section 1-2.407-3). (2) The quantity of supplies or serv- ices to be furnished under each item, and any provision for quantity variation. (3) Any requirement for prior testing and qualification of a product, when the item to be purchased is on a qualified products list (see Subpart 1-1.11). (4) When needed for the purpose of bid evaluation, pre-award surveys, or in- spection, a requirement that bidders state the place (including the street ad- dress) from which the supplies will be furnished or where the services will be performed. Where it is reasonably antic- ipated that producing facilities will be used in the performance of the contract, or where the Government requires the information, bidders will be required to state (a) the full address of principal producing facilities (if designation of such address is not feasible, a full ex- planation will be required) and (b) names and addresses of owner and oper- ator, if other than bidder. (5) Place and method of delivery (see section 1-2 202–3). (6) Preservation, packaging, packing, and marking requirements, if any. (7) Place, method, and conditions of inspection. (8) If no award will be made for less than the full quantities advertised, a statement to that effect. (9) If award is to be made by specified groups of items or in the aggregate, a statement to that effect. (10) If the invitation for bids gives the Government an option to increase or decrease quantities specified, a state- ment of the maximum percentage of such increase or decrease. (11) Any applicable requirements for samples or descriptive literature (see sections 1-2.202-4 and 1-2.202-5). (12) Any requirement for preproduc- tion samples or tests, including a state- ment that the Government reserves the right to waive the requirement as to those bidders offering a product which has been previously procured or tested by the Government, and a statement that bidders offering such products, who wish to rely on such prior procurement or test, must furnish with the bid in- formation from which it may be clearly established that prior Government ap- proval is presently appropriate for the pending procurement. (13) Pending revision of paragraph 6 of the Terms and Conditions of the In- vitation for Bids on the back of Standard Form 30 (October 1957 edition) and Standard Form 33 (October 1957 edi- tion), the following provision shall be substituted, as to each form, for the cited paragraph: Labor information. If a contract result- ing from this Invitation for Bids is subject to the Walsh-Healey Public Contracts Act, a minimum wage determination under the Act is applicable to all employees of the con- tractor who are engaged in the manufacture or furnishing of the supplies required under the contract. Information in this connec- tion as well as general information regard- ing requirements of the Act concerning overtime payment, child labor, safety and health, etc., should be obtained from the Wage and Hour and Public Contracts Di- visions, Department of Labor, Washington 25, D.C., or from any of the Divisions' offices throughout the various states. It is impor- tant that requests for information include the Invitation number, name and address of the issuing agency, and a description of the supplies. 1-2.202 Miscellaneous rules for solici tation of bids. 1-2.202-1 Bidding time. (a) Policy. Consistent with the needs of the Government for obtaining the supplies or services, all invitations for bids shall allow sufficient bidding time (NEXT PAGE IS 205) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 36, AUGUST 1963) 204.1 U. S. GOVERNMENT PRINTING OFFICE: 1963 O 702-503 (37) } SUBPART 1-2, 2 SOLICITATION OF BIDS ■ (i.e., the period of time between the date of distribution of an invitation for bids and the date set for opening of bids) to permit prospective bidders to prepare and submit bids. This will facilitate competition on reasonable and equal terms. Undue limitation of bidding time tends to restrict competition. Also, when prospective bidders do not have adequate time for computing prices and obtaining needed information on which to base their bids, higher prices to the Govern- ment may result from inclusion of un- necessary contingency allowances or the unwillingness of some to submit bids. (b) Factors to be considered. The urgency of the Government's need for the items or services, the complexity of the invitation, the extent of subcontract- ing anticipated, the use of pre-invita- tion notices, the geographic distribution of bidders, the normal time for mail transmission of both invitations and bids, and other related factors, must be considered in establishing bidding time. For example, a bidding time of 30 days may be inadequate when bidders are re- quired to prepare special drawings, designs, and samples, or to obtan quo- tations from several suppliers and sub- contractors, as frequently is the case in construction and production contracts. Conversely, a bidding time of 15 days may be adequate when bids would rea- sonably be expected to be based on stocks-on-hand, or current regular pro- duction, or service personnel and facili- ties regularly available (as in the case of maintenance and repair of structures, and similar work.) (c) Minimum bidding time. As a gen- eral rule, bidding time shall be not less than 15 calendar days when procuring standard commercial articles and serv- ices and not less than 30 calendar days when procuring other than standard commercial articles or services. This rule need not be observed in special cir- cumstances, or where the urgency for the supplies or services does not permit such delay. Procurement activities shall develop procedures for assuring that these bidding time requirements are observed. 1 × 2,202~3 (b)(2) 1-2.202-2 Telegraphic bids. As a general rule, telegraphic bids will not be authorized. However, when in the judgment of the contracting officer the date set for opening of bids will not allow bidders sufficient time to prepare and submit bids on the prescribed forms, or when prices are subject to frequent changes, telegraphic bids may be au- thorized. When such bids are author- ized the invitation for bids shall require the bidder to include in the telegraphic bid specific reference to the invitation, the items or sub-items, quantities, and unit prices for which the bid is sub- mitted, the time and place of delivery, and a statement that the bidder agrees to all the terms, conditions, and provi- sions of the invitation. In order that the contract may be executed on the proper forms, the invitation for bids will also provide that telegraphic bids should be confirmed on the prescribed form and submitted promptly to the contracting officer. 1-2.202-3 Place and method of de- livery of supplies. (a) Invitations for bids solicited f.o.b. origin shall state that bids will be evalu- ated on the basis of bid price plus trans- portation cost to the Government from point of origin to one or more desig- nated destinations. (b) Invitations for bids solicited f.o.b. origin or destination shall include as much of the following information as is pertinent to the particular procurement and shall require bidders to furnish the Government such of the following infor- mation as may be appropriate: (1) Method of shipment, such as rail, water, air, or truck. (2) Minimum quantities or lots, such as less than carload, less than truck load, carload, or truck load. (Where appro- priate, the invitation should elicit infor- mation of the minimum size of shipments which the prospective supplier will make, so that freight evaluation may be on a realistic basis. The supplier should be cautioned that, if it ships in lesser quan- tities, it may be charged with any excess costs resulting.) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 9, JUNE 1960) 205 PART 1-2 PROCUREMENT BY FORMAL ADVERTISING 1—2, 202–3 (b) (3) weight. (3) Guaranteed shipping Bidders should be required to furnish in- formation regarding shipping weight and cube of items to be procured so that proper transportation costs can be com- puted. (The bidder should be cautioned that, if actual shipping weights or cubes vary from the guarantees, it may be charged with any excess costs resulting.) (4) Packing, crating, and other prep- arations. (5) Transit privileges. (Traffic man- agement personnel can furnish necessary information and analysis of situations where transit privileges may be bene- ficial.) (6) Any other shipping information required for evaluation. (c) When the exact destination of the supplies being purchased is not known at the time bids are solicited, but the general geographical section in which delivery will be made is known, such as East Coast, Middle West, or West Coast, for purposes of evaluation of bids only, a definite place(s) or zone(s) shall be des- ignated in the known geographical sector of delivery as the place to which trans- portation costs will be computed in de- termining the low bidder. The invitation should specify that bids will be submitted f.o.b. origin and that shipment will be made on Government bill of lading. So that prospective bidders may understand the method of evaluation to be used, the invitation shall contain a provision sub- stantially as follows: For the purpose of evaluating bids (and for no other purpose), the final destinations for the supplies will be considered to be as fol- lows: insert destination(s)]. 1-2.202-4 Bid samples. (a) Definition. The term “bid sam- ple" means a sample required by the invitation for bids to be furnished by a bidder as a part of his bid to show the characteristics of a product offered in his bid. The term does not include any type of sample submitted after bid open- ing such as one submitted to evidence a manufacturer's ability to produce. (b) Policy. Bidders shall not be re- quired to furnish a bid sample of a product they propose to furnish unless there are certain characteristics of the product which cannot be described ade- quately in the applicable specification or purchase description, thus necessitating the submission of a sample to assure procurement of an acceptable product. It may be appropriate to require bid samples, for example, where the pro- curement is of products that must be suitable from the standpoint of balance, facility of use, general "feel," color, or pattern, or that have certain other char- acteristics which cannot be described adequately in the applicable specifica- tions. However, where more than a minor portion of the characteristics of the product cannot be adequately de- scribed in the specification, the product should be procured by negotiation in accordance with section 1-3.210. (c) Justification. The reasons why acceptable products cannot be procured without the submission of bid samples shall be set forth and filed in the case file, except where such submission is required by the formal specifications (Federal, military, departmental, etc.) applicable to the procurement. (d) Requirements of invitation for bids. When bid samples are required, the invitation for bids shall (1) state the number and, if appropriate, the size of the samples to be submitted and otherwise fully describe the samples re- quired, (2) state clearly the purpose for which the samples are needed and the requirements against which they will be tested or evaluated, and (3) include a provision in accordance with (e) below. Where samples are not considered nec- essary and a waiver of the sample re- quirements of a specification has been authorized, a statement shall be included in the invitation for bids that notwith- standing the requirements of the speci- fications, samples will not be required. (e) Invitation for for bids bids provision. When bid samples are required, a pro- vision substantially as follows (modified, FEDERAL PROCUREMENT REGULATIONS 206 (FPR CIRC, 11, AUGUST 1960) SUBPART 1-2, 2 SOLICITATION OF BIDS حا if appropriate, in accordance with (f) below) shall be included in the invita- tion for bids: BID SAMPLES (a) Bid samples, in the quantities, sizes, etc., required for the items so indicated in this Invitation for Bids, must be furnished as a part of the bid and must be received before the time set for opening bids. Sam- ples will be evaluated to determine com- pliance with the specifications or other requirements of this Invitation for Bids. (b) Failure of samples to conform to the requirements of this Invitation for Bids will require rejection of the bid. Failure to fur- nish samples by the time specified in the Invitation for Bids will require rejection of the bid, except that a late sample trans- mitted by mail may be considered under the provision for considering late bids, as set forth elsewhere in this Invitation for Bids. (c) Products delivered under any result- ing contract shall conform to the approved sample as to the characteristics for which the sample was required and shall conform to the specifications as to all other charac- teristics. (f) Waiver of requirement for bid samples. (1) The provision prescribed in (e) above may be modified to provide that the requirement for furnishing samples may be waived as to a bidder who offers a product previously or currently being procured or tested by the procuring ac- tivity and found to comply with specifi- cation requirements conforming in every material respect with those in the cur- rent invitation for bids so that further evaluation or testing would not add to the Government's knowledge of the ac- ceptability of the product. When pro- vision is to be made for such waiver, the invitation for bids provision in (e) above shall be modified by adding substantially the following at the end of paragraph (b) thereof: However, the requirement for furnishing samples may be waived as to a bidder if (1) the bidder states in his bid that the product he is offering to furnish is the same as a 1-2, 202-5(a) product he has offered to the [* on a previous procurement and (2) the Con- tracting Officer determines that such product was previously procured or tested by the [* and found to comply with specification requirements conforming in every material respect to those in this Invi- tation for Bids. * Contracting officer shall insert "procuring activity" or such other designation as may be provided by agency procedures. (2) Where considered necessary be- cause of the nature of the product, the provision in (f) (1) above may be limited to provide for waiving the requirement only if the product offered is produced at the same plant at which the product previously procured or tested was pro- duced. (g) Unsolicited samples. If bid sam- ples are not required by the invitation for bids, but samples are furnished with a bid, they will not be considered as qualifying the bid, and will be disre- garded, unless it is clear from the bid or accompanying papers that it was the bidder's intention so to qualify the bid. (h) Disposition of samples. Samples, if not destroyed in testing, shall be re- turned to bidders at their request and expense, unless otherwise specified in the invitation for bids. See paragraph 2(b) of the Terms and Conditions of the Invitation for Bids of Standard Forms 30 and 33, which are illustrated in Sub- part 1-16.9. 1-2.202-5 Descriptive literature. (a) Definition. As used in this section 1-2.202-5, the term "descriptive litera- ture" means information, such as cuts, illustrations, drawings and brochures, which show the characteristics or con- struction of a product or explain its operation, furnished by a bidder as a part of his bid to describe the products. offered in his bid. The term includes only information required to determine acceptability of the product, and ex- cludes other information such as that FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 11, AUGUST 1960) 206.1 PART 1-2 PROCUREMENT BY FORMAL ADVERTISING 1—2, 202-5 (a) furnished in connection with the qualifi- cations of a bidder or for use in oper- ating or maintaining equipment. (b) Policy. Bidders shall not be re- quired to furnish descriptive literature as a part of their bids unless the con- tracting agency deems that such litera- ture is needed to enable it to determine before award whether the products of- fered meet the specification require- ments of the invitation for bids and to establish exactly what the bidder pro- poses to furnish. It may be appropriate to require descriptive literature in the procurement of highly technical or spe- cialized equipment, or where considera- tions such as design or style are impor- tant in determining acceptability of the product. (c) Justification. The reasons why acceptable products cannot be procured without the submission of descriptive literature shall be set forth and filed in the case file, except where such submis- sion is required by the formal specifica- tions (Federal, military, departmental, etc.) applicable to the procurement. (d) Requirements of invitation for bids. When descriptive literature is re- quired, the invitation for bids shall clearly state what descriptive literature is to be furnished, the purpose for which it is required, the extent to which it will be considered in the evaluation of bids, and the rules which will apply if a bidder fails to furnish it before bid opening or if the literature furnished does not com- ply with the requirements of the invita- tion for bids. Where descriptive litera- ture is not considered necessary and a waiver of the literature requirements of a specification has been authorized, a statement shall be included in the invi- tation for bids that notwithstanding the requirements of the specifications, de- scriptive literature will not be required. (1) Except as provided in (2) below, if bidders are to furnish descriptive literature as a part of their bids, a pro- vision substantially as follows (modified, if appropriate, in accordance with (e) (1) below) shall be included in the invi- ↳tation for bids: REQUIREMENT FOR DESCRIPTIVE LITERATURE (a) Descriptive literature as specified in this Invitation for Bids must be furnished as a part of the bid and must be received The before the time set for opening bids. literature furnished must be identified to show the item in the bid to which it per- tains. The descriptive literature is required to establish, for the purposes of bid evalua- tion and award, details of the products the bidder proposes to furnish as to | * 1. (b) Failure of descriptive literature to show that the product offered conforms to the specifications and other requirements of this Invitation for Bids will require rejec- tion of the bid. Failure to furnish the de- scriptive literature by the time specified in the Invitation for Bids will require rejection of the bid, except that if the material is transmitted by mail and is received late, it may be considered under the provisions for considering late bids, as set forth elsewhere in this Invitation for Bids. *Contracting officer shall insert signifi- cant elements such as design, materials, components, or performance characteristics; or methods of manufacture, construction, assembly, o operation, as appropriate. (2) When brand name or equal purchase descriptions are used, the re- quirements of this section 1-2.202-5 are met by inserting in the invitation for bids the brand names provision set forth in section 1-1.307-6. Waiver of requirements for de- scriptive literature. (1) The provision prescribed in (d) (1) above may be modified to provide that the requirements for furnishing descriptive literature may be waived as to a particular bidder if (i) the bidder states in his bid that the product he is offering to furnish is the same as a product previously or currently being furnished to the procuring activity and (ii) it is determined by the contracting officer that such product complies with the specification requirements of the current invitation for bids. When pro- vision is to be made for such waiver, the invitation for bids provision in (d) (1) FEDERAL PROCUREMENT REGULATIONS 206.2 (FPR CIRC. 11, AUGUST 1960) SUBPART 1-2, 2 SOLICITATION OF BIDS above shall be modified by adding sub- stantially the following at the end of paragraph (b) thereof: However, the requirements for furnishing descriptive literature may be waived as to a bidder if (1) the bidder states in his bid that the product he is offering to furnish is the same as a product he has previously furnished to the [* | under a prior contract and the bidder identifies the con- tract, and (2) the Contracting Officer de- termines that such product meets the requirements of this Invitation for Bids. *Contracting officer shall insert "procuring activity" or such other designation as may be provided by agency procedures. (2) If the invitation for bids con- tains a provision for waiver in accord- ance with (e) (1) above, a bidder may submit his bid either on the basis of the descriptive literature to be furnished or on the basis of a previously procured product. If he elects to submit his bid on one basis, he is precluded from having his bid considered on the alternative basis after bids are opened. (f) Unsolicited descriptive literature. If the furnishing of descriptive literature is not required by the invitation for bids, but such literature is furnished with a bid, it will not be considered as qualifying the bid, and will be disregarded, unless it is clear from the bid or accompanying papers that it was the bidder's intention so to qualify the bid. (g) See section 1-2.404-4 for require- ments with respect to restrictions on the public disclosure of descriptive literature submitted by a bidder. I-2.203 Methods of soliciting bids. 1–2.203–1 Mailing or delivering to prospective bidders. Invitations for bids or pre-invitation notices (see section 1-2.205-4(c)) shall be mailed (or delivered) to a sufficient number of prospective bidders so as to elicit adequate competition. Invitations for bids may be mailed for informational purposes to Government agencies, in- cluding procurement information offices, or to such other organizations as may be authorized by agency procedures. 1-2, 205–1 (a) 1-2.203-2 Displaying in public places. Copies of unclassified invitations for bids shall be displayed at the procuring office and/or at other appropriate public places. 1-2.203–3 Publicity in newspapers and trade journals. (a) Free publicity. A brief announce- ment of the proposed procurement, or copies of unclassified invitations for bids, may be made available for free publica- tion to newspapers and to trade journals and magazines. Paid ad- (b) Paid advertisements. vertisements in newspapers and trade journals shall be contracted for in ac- cordance with agency procedures pursuant to 5 U.S.C. 22a; 44 U.S.C. 321, 322, and 324; and Title 7, Chapter 5200, General Accounting Office Policy and Procedures Manual for Guidance of Fed- eral Agencies. 1-2.203-4 Synopses of invitations for bids. Synopses of invitations for bids shall be prepared and publicized in the De- partment of Commerce "Synopsis of U.S. Government Proposed Procurement, Sales, and Contract Awards," in accord- ance with section 1-1.1003. 1-2.204 Records of invitations for bids and records of bids. Each agency shall retain a record of every invitation for bids issued and dis- tributed by it and of each abstract or record of bids. The file of the invitation for bids should show the distribution which was made and the date thereof. 1-2.205 Bidders mailing lists. 1-2.205-1 Establishment of lists. (a) Bidders mailing lists shall be es- tablished by procuring activities to as- sure access to adequate sources of supply and service except where the require- ments of the procuring activity can be (NEXT PAGE IS 207) FEDERAL PROCUREMENT REGULATIONS (FPR Circ. 11, AUGUST 1960) 206.3 SUBPART 1-2, 2 SOLICITATION OF BIDS obtained within the local trade area through utilization of simplified small purchase procedures (see Subpart 1-3.6) or are nonrecurring. (b) All eligible and qualified concerns which have submitted bidders mailing list applications, or which the procuring activity considers capable of filling the requirements of a particular procure- ment, shall be placed on the appropriate bidders mailing list. Planned producers under the Industrial Readiness Planning Program shall be included on the bidders mailing list for their planned items. (c) Bidder's Mailing List Application (Standard Form 129) shall be used for obtaining information needed, as pre- scribed in section 1-16.802, in the estab- lishment and maintenance of bidders mailing lists. 1-2.205-2 Removal of names from bidders mailing lists. (a) The name of each concern failing to respond to an invitation for bids, or pre-invitation notice (see section 1- 2.205-4(c)), may be removed from the bidders mailing list without notice to the concern, but only for the item or items involved in such invitation or notice. Where a concern fails to respond to two consecutive invitations for bids or pre-invitation notices, its name shall be removed from the bidders mailing list to the extent indicated above, except that, in individual cases, concerns thus failing to respond may be retained on a bidders mailing list if such retention is considered to be in the best interests of the Government. Both actual bids and written requests for retention on the bid- ders mailing lists are "responses" to in- vitations for bids or pre-invitation notices. (b) The names of concerns which have been (1) debarred from entering into Government contracts or (2) other- wise determined to be ineligible to receive an award of a Government contract, shall be removed from the bidders mail- ing lists to the extent required by such debarment or determination of ineligi- bility. 1—2, 205–4 (c) 1-2.205-3 Reinstatement on bidders mailing lists. Concerns which have been removed from bidders mailing lists may be rein- stated upon request or by filing a new application on Standard Form 129. No concern which is debarred or ineligible shall be reinstated during the period of debarment or while ineligible. 1-2.205-4 lists. Excessively long bidders (a) General. To prevent excessive administrative costs of a procurement, mailing lists should be used in a way which will promote competition com- mensurate with the dollar value of the purchase to be made. As much of the mailing list will be used as is compatible with efficiency and economy in secur- ing adequate competition as required by law. Where the number of bidders on a mailing list is considered excessive in re- lation to a specific procurement, the list may be reduced by any method consistent with the foregoing, including those de- scribed in paragraphs (b) and (c) of this section. The. fact that less than an en- tire mailing list is used shall not in itself preclude furnishing of bidding sets to others upon request therefor, or consid- eration of bids received from bidders who were not invited to bid. (b) Rotation of lists. Mailing lists may be rotated, but to do so will require considerable judgment as to whether the size of the transaction justifies the ro- tation. In rotating a list, the interests of small business and the existence of labor surplus areas shall be considered. (c) Pre-invitation notices. In lieu of initially forwarding complete bid sets, the procuring activity may send pre- invitation notices to concerns on the mailing list. The notice shall (1) specify the date by which bidders should return the notice in order to receive a complete bid set, (2) describe the requirement so as to furnish a complete item description and a condensation of other essential in- formation to provide concerns with an intelligible basis for judging whether they have an interest in the procurement, FEDERAL PROCUREMENT REGULATIONS (fpr Circ. 20, SEPTEMBER 1961) 207 PART 1-2 PROCUREMENT BY FORMAL ADVERTISING ୮ L 1—2.205—4 (c) and (3) expressly notify concerns that if no bid is to be submitted they should ad- vise the issuing office in writing if future invitations are desired for the type of supplies or services involved. Drawings, plans, and specifications normally will not be furnished with the pre-invitation notice. The return date of the notice must be sufficiently in advance of the mailing date of the invitation for bids to permit an accurate estimate of the number of bid sets required. Bid sets will be sent to concerns which request them. This procedure is particularly suitable to major purchasing activities where lengthy invitations for bids and long bidders lists are common. 1-2.205-5 Release of bidders mailing lists. (a) [Reserved] (b) When invitations for bids for con- struction contracts have been issued, trade journals, prospective subcontrac- tors, material suppliers, and others hav- ing a bona fide interest in such informa- tion, may be supplied, upon request, with a list of all prospective bidders furnished copies of the plans and specifications. 1-2.206 Small business and labor sur- plus area set-asides. See Subparts 1-1.7 and 1-1.8. 1-2.207 bids. Amendment of invitations for (a) If after issuance of invitations for bids but before the time set for opening of bids it becomes necessary to make changes in quantities, specifications, de- livery schedules, opening dates, etc., or to correct a defective or ambiguous invita- tion, such changes shall be accomplished by issuance of an amendment to the in- vitation for bids. (b) Each amendment issued to an in- vitation for bid shall: (1) Be serially numbered, using a separate series of numbers for each in- vitation for bids concerned. (2) Include the number of the invi- tation for bids concerned. (3) Clearly state the changes made in the invitation for bids and the extension of the opening date, if any. If no exten- sion of the time set for opening is in- volved, the amendment shall so state. (4) Include instructions to bidders for acknowledging receipt of the amendment and information concerning the effect of failure to acknowledge or return the amendment. (c) Before issuing an amendment to an invitation for bids, the period of time remaining until the time set for opening and the need for extending this period by postponing the time set for opening must be considered. Where only a short time remains before the time set for opening, consideration should be given to notifying bidders of an extension of time by telegraph or telephone. Such notification should be confirmed in the amendment. (d) Any information given to a pro- spective bidder concerning an invitation for bids shall be furnished promptly to all other prospective bidders, as an amendment to the invitation, if such information is necessary to bidders in submitting bids on the invitation or if the lack of such information would be prejudicial to uninformed bidders. No award shall be made on the invitation unless such amendment has been issued in sufficient time to permit all prospec- tive bidders to consider such information in submitting or modifying their bids. 1-2.208 Cancellation of invitations be- fore opening. (a) Cancellation of an invitation for bids usually involves the loss of time, effort, and money spent by the Gov- ernment and bidders in carrying the procurement process up to the point of cancellation. Invitations for bids should not be cancelled unless cancellation is clearly in the public interest, such as where there is no longer a requirement for the material or service or where amendments to the invitation would be of such magnitude that a new invitation FEDERAL PROCUREMENT REGULATIONS 208 (FPR CIRC, 18, JULY 1961) SUBPART 1-2, 2 SOLICITATION OF BIDS 1-2, 209 Γ L is desirable. Where an invitation is can- celled, bids which have been received shall be returned unopened to the bid- ders and a notice of cancellation shall be sent to all prospective bidders to whom invitations for bids were issued. (b) The notice of cancellation shall identify the invitation for bids; briefly explain the reason the invitation is being cancelled; and, where appropriate, as- sure prospective bidders that they will be given an opportunity to bid on any resolicitation of bids or any future re- quirements for the type of material or services involved. The cancellation shall be recorded in accordance with section 1-2.403. 1-2.209 Qualified products. See Subpart 1-1.11. ୮ (NEXT PAGE IS 211) FEDERAL PROCUREMENT REGULATIONS (FFR CIRC. 6, FEB. 1960) 209 SUBPART 1-2, 3 SUBMISSION OF BIDS 1—2, 303—3 (a) Subpart 1-2.3-Submission of Bids 1-2.301 Responsiveness of bids. (a) To be considered for award, a bid must comply in all material respects with the invitation for bids so that, both as to the method and timeliness of sub- mission and as to the substance of any resulting contract, all bidders may stand on an equal footing and the integrity of the formal advertising system may be maintained. (b) Telegraphic bids shall not be con- sidered unless permitted by the invita- tion for bids. (c) Bids should be filled out, executed, and submitted in accordance with the instructions which are contained in the invitation for bids. If a bidder uses its own bid form or a letter to submit a bid, the bid may be considered only if (1) the bidder accepts all the terms and condi- tions of the invitation, and (2) award on the bid would result in a binding con- tract, the terms and conditions of which do not vary from the terms and condi- tions of the invitation. 1-2.302 Time of bid submission. Bids shall be submitted so as to be received in the office designated in the invitation for bids not later than the exact time set for opening of bids. Where telegraphic bids are authorized, a telegraphic bid received in such office by telephone from the receiving tele- graph office not later than the time set for opening of bids shall be considered if such bid is confirmed by the telegraph company by sending a copy of the writ- ten telegram which formed the basis for the telephone call. L. the telephone 1-2.303 Late bids. 1-2.303-1 General. Bids received at the office designated in the invitation for bids after the exact time set for opening of bids are late bids. Late bids shall not be considered for award except as authorized in this section 1-2.303. 1-2.303-2 Consideration for award. A late bid shall be considered for award only if: (a) It is received before award; and either (b) It was sent by registered mail or by certified mail for which an official dated post office stamp (postmark) on the original Receipt for Certified Mail has been obtained, or by telegraph if authorized, and it is determined that the lateness was due solely to a delay in the mails (based on evidence pursuant to § 1-2.303-3), or to a delay by the tele- graph company, for which the bidder was not responsible; or (c) If submitted by mail (or by tele- gram where authorized), it was received at the Government installation in suffi- cient time to be received at the office designated in the invitation by the time set for opening and, except for delay due to mishandling on the part of the Gov- ernment at the installation, would have been received on time at the office des- ignated. The only evidence acceptable to establish timely receipt at the Gov- ernment installation is that which can be established upon examination of an appropriate date or time stamp (if any) of such installation, or of other docu- mentary evidence of receipt (if readily available) within the control of such in- stallation or the post office serving it. 1-2.303-3 Mailed bids. (a) Registered mail. The time of mailing of a late bid mailed by registered mail shall be determined by the date, and hour if shown, in the postmark. If the postmark shows the date but not the hour of mailing, the time of mailing shall be deemed to be the last minute of the date shown unless the bidder fur- nishes evidence from the post office of mailing which establishes an earlier time. If the postmark does not show the date of mailing, the bid shall be deemed to have been mailed too late unless the bidder furnishes evidence from the post office of mailing which establishes a timely date. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 28, OCTOBER 1962) 211 PART 1-2 PROCUREMENT BY FORMAL ADVERTISING ୮ 1~2, 303~ 3 (b) (b) Certified mail. The time of mail- ing of a late bid for which a postmarked Receipt for Certified Mail was obtained shall be determined by the official post office stamp (postmark) on the original Receipt for Certified Mail, to be fur- nished by the bidder, showing the date of receipt by the post office at the time of mailing. If this postmark shows the hour of mailing as well as the date, the time of mailing shall be established ac- cordingly; if it shows the date but not the hour, the time of mailing shall be deemed to be the last minute of the date shown, except that where the Receipt for Certified Mail identifies the post office station of mailing and the bidder fur- nishes evidence from the post office sta- tion of mailing that the business day of that station ended at an earlier time, the time of mailing shall be deemed to be the last minute of the business day of that station. If this postmark does not show the date of mailing, the bid shall be deemed to have been mailed too late. (c) Delivery time. Information con- cerning the normal time for mail deliv- ery shall be obtained by the procuring activity from the postmaster, superin- tendent of mails, or a duly authorized representative for that purpose, of the post office serving that activity. When time permits, such information shall be Lobtained in writing. 1-2.303-4 Telegraphic bids. A late telegraphic bid shall be pre- sumed to have been filed with the tele- graph company too late to be received in time, except where the bidder dem- onstrates by clear and convincing evi- dence, which includes substantiation by an authorized official of the telegraph company, that the bid, as received at the office designated in the invitation for bids, was filed with the telegraph company in sufficient time to have been delivered by normal transmission pro- cedure so as not to have been late (see § 1-2.302). 1-2.303-5 Hand-carried bids. A late hand-carried bid, or any other late bid not submitted by mail or tele- gram, shall not be considered for award. 1-2.303-6 Notification to late bidders. Where a late bid is received and it is clear from available information that under § 1-2.303-2 such late bid cannot be considered, the contracting officer or his authorized representative shall promptly notify the bidder that his bid was received late and will not be con- sidered (see also § 1-2.303-7). How- ever, where a late bid is transmitted by registered mail and received before award but it is not clear from available information whether the bid can be con- sidered, or in any case of a late bid transmitted by certified mail received before award, the bidder shall be promptly notified substantially as follows: 9 Your bid in response to Invitation for Bids No. dated was received after the time for opening specified in the Invitation. Accordingly, your bid will not be considered for award unless, (1) there is re- ceived from you by clear and con- (Date) vincing evidence from the post office of mail- ing which establishes the date (and hour, if possible) that the bid was deposited with that post office, and (2) it is determined by the Government that late receipt was due solely to a delay in the mail for which you are not responsible. In the case of certified mail, the original postmarked Receipt for Certified Mail must be furnished and is the only evidence acceptable under (1) above, except that, where the Receipt for Certified Mail identifies the post office station of mail- ing, evidence from such station of its closing time is also acceptable. The foregoing notification shall be ap- propriately modified in the case of late telegraphic bids. 1-2.303–7 Disposition of late bids. A late bid which is not for considera- tion shall be held unopened until after award and then returned to the bidder (unless other disposition is requested or agreed to by the bidder). However, an unidentified late bid may be opened FEDERAL PROCUREMENT RE REGULATIONS : 212 (FPR CIRC. 28, OCTOBER 1962) SUBPART 1-2, 3 SUBMISSION OF BIDS 1-2,305 solely for identification purposes, but it shall be resealed immediately and no in- formation contained therein disclosed. 1-2.303-8 Records. The following shall, if available, be in- cluded in the contracting office files with respect to each late bid: (a) A statement of the date and hour of mailing or filing. (b) A statement of the date and hour of receipt. (c) The determination of whether or not the late bid was considered for award, with supporting facts. (d) A statement of the disposition of the late bid. (e) The envelope, or other covering, if the late bid was considered for award. * 1-2.304 L bids. Modification or withdrawal of (a) Bids may be modified or withdrawn by written or telegraphic notice received in the office designated in the invitation for bids not later than the exact time set for opening of bids. A telegraphic modi- fication or withdrawal of a bid received in such office by telephone from the re- ceiving telegraph office not later than the time set for opening of bids shall be considered if such message is confirmed by the telegraph company by sending a copy of the written telegram which formed the basis for the telephone call. Modifications received by telegram (in- cluding a record of those telephoned by the telegraph company) shall be sealed in an envelope by a proper official who shall write thereon the date and time of receipt and by whom, the invitation for bid number, and his signature. No in- formation contained therein shall be dis- closed before the time set for bid opening. (b) A bid may be withdrawn in person by a bidder or his authorized representa- tive, provided his identity is made known and he signs a receipt for the bid, but only if the withdrawal is prior to the exact time set for opening of bids. 1-2.305 Late modifications and with- drawals. Modifications of bids and requests for withdrawal of bids which are received in the office designated in the invitation for bids after the exact time set for open- ing are "late modifications" and "late withdrawals," respectively. A late modi- fication or late withdrawal shall be sub- ject to the rules and procedures appli- cable to late bids set forth in § 1-2.303. However, a late modification of the otherwise acceptable bid shall be opened at any time it is received, and if in the judgment of the contracting officer it makes the terms of the bid more favorable to the Government, it shall be considered. In the case of late modifi- cations and late withdrawals, the notice set forth in § 1-2.303-6 shall be appro- priately modified. (NEXT PAGE IS 215) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 28, OCTOBER 1962) 213 ! SUBPART 1-2, 4 OPENING OF BIDS AND AWARD OF CONTRACT 1—2.404—1(a) Subpart 1-2.4-Opening of Bids and Award of Contract 1-2.401 Receipt and safeguarding of bids. (a) All bids (including modifications) received prior to the time set for opening shall be kept unopened, except as stated in section 1-2.401(b), and secure in a locked bid box or other locked receptacle. Prior to bid opening, information con- cerning the identity and number of bids received shall be made available only to Government employees who have a proper need for such information. When bid samples are submitted, they shall be handled with sufficient care to prevent disclosure of characteristics before bid opening. (b) Unidentified bids may be opened solely for the purpose of identification and then only by an authorized official. If a sealed bid is opened by mistake, the person who opens the bid will immedi- ately write his signature and position title on the envelope and deliver it to the proper official. This official shall im- mediately write on the envelope an ex- planation of the opening, the date and time opened, the invitation for bid num- ber, and his signature. Bids opened by mistake or for identification purposes shall be resealed in the envelope and no information contained therein shall be disclosed prior to the public bid opening. 1-2.402 Opening of bids. (a) The official designated as the bid opening officer shall decide when the time set for bid opening has arrived and shall so declare to those present. All bids received prior to the time set for opening shall then be publicly opened and, when practicable, read aloud to the persons present, and be recorded. If it is impracticable to read the entire bid, as where many items are involved, the total amount bid shall be read, if feasible. The original of each bid shall be carefully safeguarded, particularly until the abstract of bids required by section 1-2.403 has been made and its accuracy verified. (b) Performance of the procedure in section 1-2.402(a) may be delegated to an assistant, but the bid opening officer remains fully responsible for the actions of such assistant. (c) Examination of bids by interested persons shall be permitted if it does not interfere unduly with the conduct of Government business. However, orig- inal bids shall not be allowed to pass out of the hands of a Government official unless duplicate copies of such bids are not available for public inspection. In such cases, the original bids may be ex- amined by the public only under the immediate supervision of a Government official and under conditions which pre- clude possibility of a substitution, addi- tion, deletion, or alteration in the bids. However, see section 1-2.404-4 with re- spect to public disclosure of descriptive literature submitted by a bidder on a restrictive basis. 1-2.403 Recording of bids. The invitation number, bid opening date, general description of the procure- ment item, names of bidders, prices bid, and any other information required for bid evaluation, shall be entered in an ab- stract or record which, except in the case of a classified procurement, shall be available for public inspection. When the items are too numerous to warrant the recording of all bids completely, an entry shall be made of the invitation number, opening date, general descrip- tion of the procurement items, and the total price bid where definite quantities are involved. The record or abstract shall be completed as soon as practicable after the bids have been opened and read. The bid opening officer shall certify the accuracy of the record or abstract. If the invitation for bids is cancelled before the time set for bid opening, this fact shall be recorded, together with a state- ment of the number of concerns invited to bid and the number of bids received. 1-2.404 Rejection of bids. 1-2.404–1 Cancellation of invitation after opening. (a) Preservation of the integrity of the competitive bid system dictates that, after bids have been opened, award must FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 11, AUGUST 1960) 215 PART 1-2 PROCUREMENT BY FORMAL ADVERTISING 1–2.404–1 (a) be made to that responsible bidder who submitted the lowest responsive bid, un- less there is a compelling reason to re- ject all bids and cancel the invitation. Every effort shall be made to anticipate changes in a requirement prior to the date of opening and to notify all pros- pective bidders of any resulting modifi- cation or cancellation, thereby permit- ting bidders to change their bids and preventing unnecessary exposure of bid prices. As a general rule, after opening, an invitation for bids should not be can- celled and readvertised due solely to in- creased requirements for the items being procured. Award should be made on the initial invitation for bids and the addi- tional quantity should be treated as a new procurement. (b) Invitations for bids may be can- celled after opening but prior to award, and all bids rejected, where such action is consistent with section 1-2.404-1(a) and the contracting officer determines in writing that cancellation is in the best interest of the Government for rea- sons such as the following: (1) Inadequate, ambiguous, or other- wise deficient specifications were cited in the invitation for bids. (2) The supplies or services are no longer required. (3) The invitation for bids did not provide for consideration of all factors of cost to the Government, such as cost of transporting Government-furnished property to bidders' plants. (4) Bids received indicate that the needs of the Government can be satisfied by a less expensive article differing from that on which the bids were invited. (5) All otherwise acceptable bids re- ceived are at unreasonable prices. (See section 1-3.214 concerning authority to negotiate in such situations.) (6) The bids were not independently arrived at in open competition, were col- lusive, or were submitted in bad faith. (See section 1-3.214 concerning authority to negotiate in such situations and Sub- part 1-1.9 for reports to be made to the Department of Justice. ) (c) Should administrative difficulties be encountered after bid opening which may delay award beyond bidders' acceptance pericds, the several lowest bidders should be requested, before ex- piration of their bids, to extend the bid acceptance period (with consent of sure- ties, if any) in order to avoid the need for readvertisement. § 1-2.404-2 Rejection of individual bids. (a) Any bid which fails to conform to the essential requirements of the in- vitation for bids, such as specifications, delivery schedule, or permissible alter- nates thereto, shall be rejected as non- responsive. (b) Ordinarily, a bid shall be rejected where the bidder imposes conditions which would modify requirements of the invitation for bids or limit his liability to the Government so as to give him an advantage over other bidders. For ex- ample, bids shall be rejected in which the bidder: (1) Attempts to protect himself against future changes in conditions, such as increased costs, if total price to the Government cannot be determined for bid evaluation. (2) Fails to state a price and, in lieu thereof, states that price shall be "price in effect at time of delivery." (3) States a price but qualifies such price as being subject to "price in effect at time of delivery." (4) Where not authorized by the in- vitation, conditions or qualifies his bid by stipulating that the bid is to be con- sidered only if, prior to date of award, bidder receives (or does not receive) award under a separate procurement. (5) Limits rights of Government un- der any contract clause. However, a low bidder may be requested to delete objectionable conditions from his bid if these conditions do not go to the sub- stance, as distinguished from the form of the bid. A condition goes to the substance of a bid where it affects price, quantity, quality, or delivery of the items offered. FEDERAL PROCUREMENT REGULATIONS 216 ↑ (FPR CIRC. 6, FEB. 1960) SUBPART 1-2, 4 OPENING OF BIDS AND AWARD PURCHASED THROUGH DOC. X. PROJECT OF CONTRACT (c) Any bid may be rejected if the contracting officer determines in writing that it is unreasonable as to price. (d) Bids received from any person or concern debarred or ineligible shall be rejected if the period of debarment or ineligibility has not expired (see Sub- part 1-1.6). (e) Low bids received from concerns determined to be not responsible, pur- suant to section 1-1.310, shall be rejected (but, if bidder is a small business con- cern, see Subpart 1-1.7 with respect to certificates of competency). (f) Where a bid guarantee is required and a bidder fails to furnish it in ac- cordance with the requirements of the invitation for bids, the bid shall be re- jected except as otherwise provided in section 1-10.102-5. (g) The originals of all rejected bids, and any written findings with respect to such rejections, shall be preserved with the papers relating to the procurement. 1-2.404–3 Notice to bidders of rejec- tion of all bids. When it is determined to reject all bids, the contracting officer shall notify each bidder that all bids have been re- jected, stating the reason for such action. 1-2.404-4 Restrictions on disclosure of descriptive literature. (a) When a bid is accompanied by descriptive literature (as defined in sec- tion 1-2.202-5(a)), and the bidder im- poses a restriction that such literature may not be publicly disclosed, such re- striction renders the bid nonresponsive if it prohibits the disclosure of sufficient information to permit competing bidders to know the essential nature and type of the products offered or those elements of the bid which relate to quantity, price and delivery terms. The provisions of this paragraph (a) do not apply to un- solicited descriptive literature submitted by a bidder if such literature does not qualify the bid (see section 1-2.202-5 (f)). (b) Descriptive literature restricted by a bidder against public disclosure shall not be disclosed in a manner which would contravene the restriction with- out permission of the bidder. 1—2,405 (d) 1-2.404-5 All or none qualifications. Unless the invitation for bids so pro- vides a bid is not rendered nonrespon- sive by the fact that the bidder specifies that award will be accepted only on all, or a specified group, of the items included in the invitation for bids. However, bid- ders shall not be permitted to withdraw or modify "all or none" qualifications after bid opening since such qualifica- tions are substantive and would violate the competitive bid process. 1-2.405 Minor informalities or irregu- larities in bids. A minor informality or irregularity is one which is merely a matter of form or is some immaterial variation from the exact requirements of the invitation for bids, not affecting the price, quality, quantity, or delivery of the supplies or performance of the services being pro- cured and the correction or waiver of which would not be prejudicial to other bidders. The contracting officer shall either give the bidder an opportunity to cure any deficiency resulting from a minor informality or irregularity in a bid or, where it is not to the disadvan- tage of the Government, shall waive any such deficiency. Examples of minor in- formalities or irregularities include: (a) Failure of bidder to return the number of copies of signed bids required by the invitation for bids. (b) Failure to furnish required infor- mation concerning the number of bid- ders' employees. (c) Failure of bidder to sign its bid, but only if the unsigned bid is accom- panied by other material indicating the bidder's intention to be bound by the unsigned bid document, such as a bid guarantee, or a letter signed by the bid- der referring to and clearly identifying the bid itself. Where a firm submitting a bid has formally adopted or authorized, before the date set for opening of bids, the execution of documents by printed or stamped signature and submits evi- dence of such authorization and the bid carries such a signature, it shall be re- garded as duly signed. (d) Failure of a bidder to acknowl- edge receipt of an amendment to an invitation for bids, but only if: FEDERAL REGULATIONS PROCUREMENT (FPR CIRC. 11, AUGUST 1960) 217 PART 1-2 PROCUREMENT BY FORMAL ADVERTISING F7 1-2,405 (d) (1) (1) The bid received clearly indicates that the bidder received the amendment, such as where the amendment added another item to the invitation for bids and the bidder submitted a bid thereon; ΟΙ (2) The amendment clearly would have no effect on price, quality, quantity, or delivery of the items bid upon, such as an amendment correcting a typographi- cal mistake in the name of the Govern- ment procuring activity. 1-2.406 Mistakes in bids. 1-2.406-1 General. After the opening of bids, contracting officers shall examine all bids for mis- takes. In cases of apparent mistakes and in cases where the contracting offi- cer has reason to believe that a mistake may have been made, he shall request from the bidder a verification of the bid, calling attention to the suspected mis- take. If the bidder alleges a mistake, the matter shall be processed in accordance with this section 1-2.406. Such actions shall be taken prior to award. 1-2.406-2 Apparent clerical mistakes. Any clerical mistake, apparent on the face of a bid, may be corrected by the contracting officer prior to award, if the contracting officer has first obtained from the bidder verification of the bid actually intended. Examples of such apparent mistakes are: obvious mis- placement of a decimal point; obviously incorrect discounts (for example, 1 per- cent 10 days, 2 percent 20 days, 5 percent 30 days); obvious reversal of the price f.o.b. destination and the price f.o.b. origin; and obvious mistake in designa- tion of unit. Correction shall be re- flected in the award document. 1-2.406-3 Other mistakes disclosed before award. (a) Heads of executive agencies are authorized, in order to minimize delay in contract awards, to make the adminis- trative determinations described below in connection with mistakes in bids al- leged after opening of bids and before award. The authority contained herein to permit correction of bids is limited to bids which, as submitted, are responsive to the invitation for bids, and may not be used to permit correction of bids to make them responsive. This authority is in addition to that in section 1-2.406-2 or that which may be otherwise available. (1) A determination may be made per- mitting the bidder to withdraw his bid where the bidder requests permission to do so and clear and convincing evidence establishes the existence of a mistake. However, if the evidence is clear and convincing both as to the existence of a mistake and as to the bid actually in- tended, and if the bid, both as uncor- rected and corrected, is the lowest re- ceived, a determination may be made to correct the bid and not permit its with- drawal. (2) A determination may be made permitting the bidder to correct his bid where the bidder requests permission to do so and clear and convincing evidence establishes both the existence of a mis- take and the bid actually intended. However, if such correction would result in displacing one or more lower accept- able bids, the determination shall not be made unless the existence of the mistake and the bid actually intended are ascer- tainable substantially from the invita- tion and bid itself. If the evidence is clear and convincing only as to the mis- take, but not as to the intended bid, a determination permitting the bidder to withdraw his bid may be made. (3) If the evidence does not warrant a determination under subparagraph (1) or (2) of this paragraph, a determina- tion may be made that a bidder may neither withdraw nor correct his bid. (b) Heads of executive agencies may delegate to a central authority in their agencies, without power of redelegation, authority to make the determinations under this section 1-2.406-3. (c) Each proposed determination shall be approved by the agency's Gen- eral Counsel, Associate General Counsel, an Assistant General Counsel, or other comparable legal officer. (d) Suspected or alleged mistakes shall be processed as follows: (1) Whenever the contracting officer suspects that a mistake may have been made in a bid, he shall immediately request the bidder to verify the bid. Such request shall inform the bidder why the request for verification is made that a mistake is suspected and the basis for such suspicion; e.g., that the bid is significantly out of line with FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 12, SEPT. 1960) 218 SUBPART 1-2, 4 OPENING OF BIDS AND AWARD OF CONTRACT the next low or other bids or with the Government's estimate. If the time for acceptance of bids is likely to expire before a decision can be made, the con- tracting officer shall request all bidders whose bids may become eligible for award to extend the time for acceptance of their bids. If the bidder whose bid is believed erroneous does not grant such extension of time and a decision cannot be reached before expiration of the time for acceptance, even if handled by tele- graph or telephone as provided in sub- paragraph (4) of this paragraph, the bid shall be considered as originally sub- mitted. (2) If the bidder verifies his bid, the contracting officer shall consider it as originally submitted. If the bidder al- leges a mistake, the contracting officer shall advise him to support his allegation by statements concerning the alleged mistake and by all pertinent evidence, such as the bidder's file copy of the bid, his original worksheets and other data used in preparing the bid, subcontractors' and suppliers' quotations, if any, pub- lished price lists, and any other evidence which will serve to establish the mistake, the manner in which it occurred, and the bid actually intended. (3) Where the bidder furnishes evi- dence in support of an alleged mistake, the case shall be referred to the appro- priate authority together with the fol- lowing data: (i) All evidence furnished by the bidder. (ii) A copy of the bid, of the invitation for bids, and any specifications or draw- ings relevant to the alleged mistake. (iii) An abstract or record of the bids received. (iv) A written statement by the con- tracting officer setting forth- (A) The expiration date of the bid in question and of the other bids submitted; (B) Specific information as to how and when the mistake was alleged; (C) A summary of the evidence sub- mitted by the bidder; 1~2.406–3 (e) (D) In the event only one bid was received, a quotation of a recent con- tract price for the supplies or services involved or, in the absence of a recent comparable contract, the contracting of- ficer's estimate of a fair price for the supplies or services and the basis for such estimate; (E) Any additional evidence consid- ered pertinent including copies of all cor- respondence between the contracting officer and the bidder concerning the al- leged mistake; and (F) The course of action with re- spect to the bid that the contracting offi- cer considers proper on the basis of the evidence. (4) When time is of the essence, be- cause of the expiration of bids or other- wise, the contracting officer may refer the case by telegraph or telephone to the designated authority. Ordinarily, how- ever, contracting officers will not refer mistake in bid cases to the designated authority by telegraph or telephone, par- ticularly when the determinations set forth in this section 1-2.406–3(a) (2) and (3) are applicable, since actual examina- tion of the evidence is generally neces- sary to determine the proper action to be taken. (5) Where the bidder fails or refuses to furnish evidence in support of a sus- pected or alleged mistake, the contract- ing officer shall consider the bid as sub- mitted unless the amount of the bid is so far out of line with the amounts of other bids received or with the amount estimated by the agency or determined by the contracting officer to be reason- able, or there are other indications of error so clear, as reasonably to justify the conclusion that acceptance of the bid would be unfair to the bidder or to other bona fide bidders, in which case it may be rejected. The attempts made to obtain the information required and the action taken with respect to the bid shall be fully documented. (e) Nothing contained in this section 1-2.406-3 shall deprive the Comptroller General of his statutory right to question FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 19, SEPTEMBER 1961) 219 PART 1-2 PROCUREMENT BY FORMAL ADVERTISING 1−2.406–3 (e) the correctness of any administrative determination made hereunder nor de- prive any bidder of his right to have the matter determined by the Comptroller General should he so request. All doubt- ful cases shall be submitted to the Comp- troller General for advance decision in accordance with agency procedures. (f) Each agency shall maintain rec- ords of all administrative determinations made in accordance with this section 1-2.406-3, the facts involved, and the action taken in each case. Copies of all such administrative determinations shall be included in the case file. Where a contract is awarded, the General Ac- counting Office copy of the contract, wherever filed, shall be accompanied by a signed copy of any related determina- tion. 1-2.406-4 Disclosure of mistakes after award. (a) When a mistake in a contractor's bid is not discovered until after the award, the mistake may be corrected by contract amendment or supplemental agreement if correcting the mistake would make the contract more favorable to the Government without changing the essential requirements of the contract. (b) In addition to the cases contem- plated in (a) above, heads of executive agencies are authorized, under the cir- cumstances set forth in (c) below, to make the administrative determinations described below in connection with mis- takes in bids alleged or disclosed after award. This authority is in addition to that provided by Public Law 85-804 (50 U.S.C. 1431-1435), the so-called perma- nent First War Powers Act, or that which may be otherwise available. (1) A determination may be made to rescind a contract where the original contract price does not exceed $1,000. (2) A determination may be made to reform a contract, irrespective of amount, (i) to delete the item or items involved in the mistake where such dele- tion does not reduce the contract price by more than $1,000, or (ii) to increase the price where such increase does not exceed $1,000 and if the contract price, as corrected, does not exceed that of the next lowest acceptable bid under the original invitation for bids. (c) Determinations under (b) of this section 1-2.406-4 may be made only on the basis of clear and convincing evi- dence that a mistake in bid was made, and either that the mistake was mutual or that the unilateral mistake made by the contractor was so apparent as to have charged the contracting officer with notice of the probability of the mis- take. If the evidence does not warrant a determination under (b) (1) or (b) (2) of this section 1-2.406-4, a determination may be made that no change shall be made in the contract as awarded. (d) Heads of executive agencies may delegate to one central authority only in their agencies, without power of redele- gation, authority to make the determi- nations under this section 1-2.406–4. (e) Each proposed determination shall be approved by the agency's Gen- eral Counsel, Associate General Counsel, an Assistant General Counsel, or other comparable legal officer. (f) Mistakes disclosed after award shall be processed as follows: (1) Whenever a mistake in bid is alleged or disclosed after award, the contracting officer shall advise the con- tractor to support the alleged error by written statements and by all pertinent evidence, such as the contractor's file copy of the bid, his original worksheets and other data used in preparing the bid, subcontractors' and suppliers' quo- tations (if any), published price lists, and any other evidence which will serve to establish the mistake, the manner in which it occurred, and the bid actually intended. (2) Where the contractor furnishes evidence in support of an alleged mis- take, the case shall be referred to the appropriate authority together with the following data: (i) All evidence furnished by the contractor. (ii) A.copy of the contract, in- cluding a copy of the bid and any speci- fications or drawings relevant to the alleged mistake, and any change orders or supplemental agreements thereto. (iii) An abstract or record of the bids received. (NEXT PAGE IS 220.1) FEDERAL PROCUREMENT REGULATIONS 220 (FPR CIRC. 19, SEPTEMBER 1961) SUBPART 1-2, 4 OPENING OF BIDS AND AWARD OF CONTRACT Γ (iv) A written statement by the contracting officer setting forth- (A) Specific information as to how and when the mistake was alleged or disclosed; (B) A summary of the evidence submitted by the contractor; (C) His opinion whether a bona fide mistake was made in the bid and whether he was, or should have been, on constructive notice of the mistake before the award, together with the reasons or data upon which his opinion is based; (D) In the event only one bid was received, a quotation of a recent contract price for the supplies or services involved or, in the absence of a recent comparable contract, the contracting officer's estimate of a fair price for the supplies or services, and the basis for such estimate; evidence (E) Any additional considered pertinent, including copies of all relevant correspondence between the contracting officer and the contractor concerning the alleged mistake; (F) The course of action with respect to the alleged mistake that the contracting officer considers proper on the basis of the evidence, and, if other than a change in contract price is recom- mended, the manner by which the item will otherwise be procured; and (G) The status of performance and payments under the contract, in- cluding contemplated performance and payments. (g) Nothing contained in this section 1-2.406-4 shall deprive the Comptroller General of his statutory right to ques- tion the correctness of any administra- tive determination made hereunder nor deprive any contractor of his right to have the matter determined by the Comptroller General should he request. SO (h) Each agency shall maintain rec- ords of all administrative determinations made in accordance with this section 1– 2.406-4, the facts involved, and the action taken in each case. A copy of the determination shall be attached to 1—2. 407–1 each copy of any contract rescission or reformation resulting therefrom. (i) Where administrative determina- tion is precluded by the limitations set forth in this section, the matter will be submitted to the Comptroller General for decision in accordance with agency procedures. (j) Nothing contained in this section 1-2.406-4 prevents an agency from sub- mitting doubtful cases to the Comp- troller General. 1-2.407 Award. 1-2.407-1 General. Unless all bids are rejected, award shall be made by the contracting officer by written notice, within the time for acceptance specified in the bid or ex- tension thereof, to that responsible bid- der whose bid, conforming to the invitation for bids, will be most advan- tageous to the Government, price and other factors considered. (For discus- sion of other factors to be considered, see section 1-2.407-5.) Award shall not be made until all required approvals have been obtained. Awards shall be effected by mailing or otherwise furnish- ing to the successful bidder a properly executed award document or notice of award. When an advance notice of award is issued, it shall be followed as scon as possible by the formal docu- ments. When more than one award re- sults from any single invitation for bids, separate award documents shall be exe- cuted, each suitably numbered. When an award is made to a bidder for less than all the items which may be awarded to that bidder and additional items are being withheld for subsequent award, the first award to that bidder shall state that the Government may make subse- quent awards on such additional items within the bidder's bid acceptance pe- riod. All provisions of the invitation for bids, including any acceptable additions or changes made by a bidder in the bid, shall be clearly and accurately set forth (either expressly or by reference) in the FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 12, SEPT, 1960) 220.1 PART 1-2 PROCUREMENT BY FORMAL ADVERTISING 1—2.407—1 award document, since the award is an acceptance of the bid, and the bid and the award constitute the contract. 1-2.407-2 Responsible bidder. Before awarding the contract, the con- tracting officer shall determine that a prospective contractor is responsible (see section 1-1.310). 1-2.407-3 Discounts. (a) Prior to issuing an invitation for bids (except one for construction), a de- termination shall be made as to what minimum period for prompt payment discounts will be considered in the evalu- ation of bids and such minimum period shall be stated in the invitation for bids. In determining the minimum period for a particular procurement, consideration shall be given to: (1) The place of delivery, inspection, and acceptance in relation to the place of payment of invoices or vouchers. (2) The number of days required to process invoices or vouchers from receipt through payment in the normal course of business. (3) The need for prolonged acceptance testing or other unusual circumstances tending to retard the normal processing of invoices or vouchers. (NEXT PAGE IS 221) FEDERAL PROCUREMENT REGULATIONS ✰ U. S. GOVERNMENT PRINTING OFFICE: 1960 - 572504 (50) 220.2 (FPR CIRC, 12, SEPT. 1960) SUBPART 1-2, 4 OPENING OF BIDS AND AWARD OF CONTRACT Generally, the minimum period will be expressed in multiples of ten days; e.g., "ten calendar days," "twenty calendar days," or "thirty calendar days," since these time intervals coincide with the discount terms generally offered by in- dustry. (b) In determining which of several bids received is the lowest, any discount offered shall be deducted from the bid price on the assumption that the dis- count will be taken, unless the discount offered is for a lesser period than the minimum number of days specified in the invitation for bids. (See section 1-2.407-3(a).) Where bids otherwise equal offer the same discount rate, the bid offering the longer discount period shall be considered as being the most advantageous to the Government. (c) If a bid offers a prompt payment discount for a period less than that spec- ified in the invitation for bids, the dis- count shall not be considered in the evaluation of bids. If a bid would have been the lowest bid received if the dis- count offered were considered, but award is not made thereon because the offered discount cannot be considered, a notation to that effect shall be made upon the ab- stract or record of bids and on Standard Form 1036 (Statement and Certificate of Award) if used (see section 1-2.407–7). (d) In any case, the offered discount of the successful bidder shall form a part of the award, whether or not such dis- count was considered in the evaluation of its bid, and such discount shall be taken if payment is made within the discount period. 1-2.407-4 Price escalation. (a) Where an invitation for bids does not contain a price escalation clause, bids received which quote a price and contain a price escalation provision, with a ceil- ing (usually expressed in terms of a maximum percentage increase) above which the price will not escalate, will be evaluated on the maximum possible es- calation of the quoted base price. Bids which contain escalation with no ceiling shall be rejected unless a clear basis for evaluation exists. (b) Where an invitation for bids con- tains a price escalation clause and no bidder takes exception to the escalation provisions, bids shall be evaluated on the 1—2.407—6 (a) basis of the quoted prices without the allowable escalation being added. Where a bidder increases the maximum per- centage of escalation stipulated in the invitation for bids or limits the down- ward escalation provisions of the invita- tion, the bid will be rejected as non- responsive. Where a bidder deletes the escalation clause from its bid, the bid will be rejected as nonresponsive since the downward escalation provisions are thereby limited. Where a bidder de- creases the maximum percentage of es- calation stipulated in the invitation for bids, the bid shall be evaluated at the base price on an equal basis with bids that do not reduce the stipulated ceiling. However, if after evaluation, the bidder offering the lower ceiling is in a position to receive the award, the award shall reflect the lower ceiling. 1-2.407-5 Other factors to be con- sidered. The factors set forth in paragraphs (a) through (f), of this section, among others, may be for consideration in eval- uating bids for award. (a) Foreseeable costs or delays to the Government resulting from differences in inspection, location of supplies, trans- portation, etc. (b) Changes made or requested by the bidder in any of the provisions of the invitation for bids to the extent that any such change does not constitute ground for rejection of the bid under the pro- visions of section 1-2.404. (c) Advantages or disadvantages to the Government that might result from making more than one award. (d) Qualified products (see Subpart 1-1.11). (e) Local, State, and Federal taxes (see Part 1-11). (f) Origin of supplies, whether domes- tic or foreign, and, if foreign, the appli- cation of the Buy American Act or any other prohibition on foreign purchases (see Part 1-6). § 1-2.407-6 Equal low bids. (a) In furtherance of the small busi- ness and labor surplus area policies set forth in Subparts 1-1.7 and 1-1.8, award shall be made in accordance with the following order of priority when two or more low bids are equal in all respects 7 FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 31, MARCH 1963) 221 PART 1-2 PROCUREMENT BY FORMAL ADVERTISING L 1—2.407—6(a) (taking into consideration cost of trans- portation, cash discounts, and any other factors properly to be considered): (1) Persistent labor surplus area concerns (as defined in § 1-1.801-1(a)) that are also small business concerns (as defined in Subpart 1-1.7). (2) Other persistent labor surplus area concerns. (3) Substantial labor surplus area concerns (as defined in § 1-1.801-1(b)) that are also small business concerns. (4) Other substantial labor surplus area concerns. (5) Other small business concerns. (6) Other concerns. (b) If the application of (a) of this § 1-2.407-6 results in two or more bid- ders being eligible for award, the award shall be made to the bidder who will make the most extensive use of small business subcontractors. If two or more bidders still remain eligible for award, award shall be made by a draw- ing by lot limited to such bidders. If time permits, the bidders involved shall be given an opportunity to be present at the drawing by lot. Such drawing shall be witnessed by at least three persons and the contract file shall contain the names and addresses of those witnesses. (c) In each award where preference is to be given under this section, the contracting officer shall, prior to award, obtain from such concern a written statement that it will perform, or cause to be performed, the contract in accord- ance with the circumstances justifying the priority. 1-2.407-7 Statement and certificate of award. (a) In connection with each contract made by formal advertising, the con- tracting officer shall include in the con- tract file evidence of compliance with section 1-2.103. Where required by agency procedures pursuant to General Accounting Office regulations, Standard Form 1036 (Statement and Certificate FEDERAL PROCUREMENT REGULATIONS > 222 (FPR CIRC. 31, MARCH 1963) SUBPART 1-2, 4 OPENING OF BIDS AND AWARD OF CONTRACT L of Award) shall be used for this pur- pose. Where the preparation of Stand- ard Form 1036 is not required, informa- tion of a similar nature (hereinafter re- ferred to as the certificate) shall be filled with the General Accounting Office copy of the contract. (b) The certificate shall either state that the accepted bid was the lowest bid received, or list all lower bids and set forth reasons for their rejection. These reasons shall be set forth in such detail as is necessary to justify the award. For the purpose of this certificate, the lowest bid received is considered to be that bid which is lowest after a consideration of price factors only. The cost of trans- portation to the destination indicated in the invitation for bids, any acceptable discount offered by a bidder, and if the invitation so specifies, any other Govern- ment cost factor, shall be considered price factors in determining the lowest bidder for purposes of this certificate. In each case where an award is made after receipt of equal low bids, the cer- tificate shall set forth the manner in which the tie was broken. Where an award involves a mistake in bid and the matter has been resolved by administra- tive action, a copy of the bidder's veri- fication in the case of an apparent mis- take, or the written administrative determination concerned, shall be at- tached to the certificate. Where an award involves a mistake in bid on which the Comptroller General has rendered a decision, the certificate shall contain a citation by number and date of the decision and a copy thereof shall be at- tached to the certificate. 1-2.407-8 Protests against award. (a) General. Contracting officers shall consider all protests or objections to the award of a contract, whether sub- mitted before or after award. If the protest is oral and the matter cannot otherwise be resolved, written confirma- tion of the protest shall be requested. The protester shall be notified in writ- ing of the final decision on the written Lprotest. 1-2, 407-8 (b)(2) (b) Protests before award. If award has not been made, the contracting officer may require that written confirmation of an oral protest be submitted by a specified time and inform the protester that award will be withheld until the specified time. If the written protest is not received by the time specified, the oral protest may be disregarded and award may be made in the normal man- ner unless the contracting officer, upon investigation, finds that remedial action is required, in which event such action shall be taken. (1) In appropriate cases, notice of a protest will be given to bidders affected thereby. For example, when a protest against the making of an award is re- ceived and the contracting officer deter- mines to withhold the award pending disposition of the protest, the bidders whose bids might become eligible for award should be informed of the protest and requested, before expiration of the time for acceptance of their bids, to ex- tend the time for acceptance (with con- sent of sureties, if any) in order to avoid the need for readvertisement. In the event of failure to obtain such extension of bids, then consideration should be given to proceeding with award under (b) (3) below. (2) Where a protest has been lodged with the procuring agency, the views of the Office of the Comptroller General regarding the protest should be obtained before award whenever such action is considered to be desirable. Where it is known that a protest against the making of an award has been lodged directly with the Comptroller General, a determination to make award under (b) (3) below must be approved at an appropriate level above that of the con- tracting officer, in accordance with agency procedures. While award need not be withheld pending final disposition by the Comptroller General of a protest, a notice of intent to make award in such circumstances shall be furnished the Comptroller General, and formal or in- formal advice should be obtained con- cerning the current status of the case prior to making the award. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 11, AUGUST 1960) 223 PART 1-2 PROCUREMENT BY FORMAL ADVERTISING 1-2.407-8 (b)(3) (3) Where a written protest against the making of an award is received, award shall not be made until the matter is resolved, unless the contracting officer determines that: (i) The items to be procured are urgently required; or (ii) Delivery or performance will be unduly delayed by failure to make award promptly; or (iii) A prompt award will other- wise be advantageous to the Government. If award is made under (i), (ii) or (iii) above, the contracting officer shall docu- ment the file to explain the need for an immediate award, and shall give written notice of the decision to proceed with the award to the protester and, as appropri- ate, to others concerned. (c) Protests after award. A protest received after award shall be handled in accordance with agency procedures. 1-2.408 Information to bidders. Where feasible, procuring activities should (a) notify unsuccessful bidders promptly of the fact that their bids were not accepted, and (b) extend the ap- preciation of the procuring activity for the interest the unsuccesful bidder has shown in submitting a bid. Notification to unsuccessful bidders may be ac- complished either orally or in writing through the use of a form postal card or other appropriate means. Should addi- tional information be requested, the pro- curing activity shall either provide the unsuccessful bidders with the name and address of the successful bidder, to- gether with the contract price, or when workload does not permit, inform the in- quirers as to the location where a copy of the abstract of bids is available for inspection. In addition, when an inquiry is made by an unsuccessful bidder whose price bid was lower than the successful bidder, sufficient information shall be furnished in the reply to the unsuccess- ful bidder to fully explain the basis for award. If a request is received from an inquirer who is not a bidder or a repre- sentative of a bidder, the procuring activity may furnish the name of the successful bidder(s) and, if requested, the price(s) at which award(s) were made. However, where such requests re- quire so large an amount of work as to interfere with the normal operations of the procuring activity, the inquirer will be advised where a copy of the abstract of bids may be seen. 1-2.409 Synopses of contract awards. See section 1-1.1004. FEDERAL PROCUREMENT REGULATIONS ↑ 224 (FPR CIRC, 33, JULY 1963) L SUBPART 1-2, 5 TWO-STEP FORMAL ADVERTISING § 1-2.501 General. (a) Two-step formal advertising is a method of procurement designed to promote the maximum competition practicable when available specifications are not sufficiently definite to permit a formally advertised procurement in ac- cordance with Subparts 1-2.2, 1-2.3, and 1-2.4. It is a flexible procedure and is especially useful, in procurement of com- plex and technical items, to prevent the elimination of potentially qualified pro- ducers from the competitive base. (b) Two-step formal advertising is conducted in two phases. The first step consists of the request for, and the sub- mission, evaluation, and, if necessary, discussion of a technical proposal, with- out pricing, to determine the acceptabil- ity of the supplies or services offered. As used in this context, the word "tech- nical" has a broad connotation and, among other things, includes engineer- ing approach, special manufacturing processes, and special testing tech- niques. Also, when required to clarify basic technical requirements, other re- lated requirements such as management approach, manufacturing plan, or facil- ities to be utilized may be clarified in this step. The second step consists of a formally advertised procurement, con- fined to those offerors who submitted an acceptable technical proposal in Step One. (c) This method of procurement re- quires that the contracting officer work closely with technical personnel and rely on their specialized knowledge in deter- mining the technical requirements of the procurement and the criteria to be used in evaluating technical proposals, and in making such evaluation. An objective of the two-step procedure is to permit the development of a sufficiently de- scriptive statement of the Government's requirements, including the development of a technical data package, so that sub- sequent procurements may be made by conventional formal advertising. 1—2.503–1 (a)(2) § 1-2.502 Conditions for use. The two-step formal advertising meth- od of procurement may be used when its use has been approved at a level higher than the contracting officer and when all of the following conditions are present: (a) Available specifications or pur- chase descriptions are not sufficiently definite or complete to permit full and free competition without engineering evaluation and necessary discussion of the technical aspects of the requirement to insure mutual understanding between each source and the Government. (b) Definite criteria exist for evaluat- ing technical proposals, such as applica- ble design, manufacturing, testing, and performance requirements, and special requirements for operational suitability and ease of maintenance; however, such criteria shall not include consideration of capacity or credit credit as defined in § 1-1.708 of this chapter. (c) More than one technically quali- fied source is expected to be available both initially and after technical evalua- tion. (d) A firm fixed-price contract or a fixed-price contract with escalation (see § 1-2.201(a) (21)) will be used. § 1-2.503 Procedures. § 1–2.503–1 Step One. (a) Requests for technical proposals. A request for technical proposals shall be distributed to qualified sources in ac- cordance with § 1-1.302-1 of this chapter. In addition, the request shall be synop- sized in accordance with Subpart 1–1.10 and publicly posted in accordance with § 1–2.203–2. The request may be in the form of a letter and shall contain, as a minimum, the following information: (1) The best practicable description of the supplies or services required. (2) Notification of the intent to con- duct the procurement in two steps and the actions involved. FEDERAL PROCUREMENT REGULATIONS ୮ (FPR CIRC, 33, JULY 1963) 225 ୮ L L PART 1-2 PROCUREMENT BY FORMAL ADVERTISING 1 — 2,50 3–1 (a) (3) (3) The requirements of the tech- nical proposal, i.e., the necessary details such as drawings, data, presentation, etc., to be submitted. (4) The criteria for evaluating the technical proposal (§ 1-2.502(b)). (5) A statement that the technical proposals shall not include prices or pric- ing information. (6) The date by which the proposal must be received and a statement sub- stantially as follows: Late Technical Proposals. The Govern- ment reserves the right to consider technical proposals or modifications thereof received after the date specified for receipt. (7) A statement that the Govern- ment may discuss the technical aspects of the proposal with the concern sub- mitting the proposal. (8) A statement that in the second step of the procurement only bids based upon technical proposals determined to be acceptable, either initially or as a re- sult of discussions, will be considered for award; and that each bid in the second step must be based on the bidder's own technical proposal. (9) A statement that sources sub- mitting unacceptable technical proposals will be so notified upon completion of the technical evaluation. (10) A statement either that only one technical proposal may be submitted by each offeror or that multiple technical proposals may be submitted. When compliance with specifications permit utilization of essentially different tech- nical approaches, it is generally in the interest of the Government to authorize the submission of multiple proposals. If multiple proposals are authorized the re- quest shall include a statement substan- tially as follows: Multiple Technical Proposals. In the first step of this two-step procurement, offerors are authorized and encouraged to submit multiple technical proposals presenting dif- ferent basic approaches. Each technical pro- posal submitted will be separately evaluated and the offeror will be notified as to its acceptability. (b) Receipt and evaluation of tech- nical proposals. The following actions. will be taken with respect to receipt and evaluation of technical proposals: (1) Every precaution shall be taken to safeguard technical proposals against disclosure to unauthorized persons. (2) Any reference to price or cost will be removed. (3) Technical evaluation of the pro- posals will be based upon the criteria contained in the request for technical proposals and such evaluation will not include consideration of capacity or credit as defined in § 1-1.708 of this chapter. (4) Technical proposals will be cat- egorized as acceptable or unacceptable. Proposals will not be categorized as un- acceptable when a reasonable effort on the part of the Government could bring the proposals to an acceptable status and increase competition. The contracting officer shall arrange for any necessary discussions with sources submitting tech- nical proposals for the purpose of ob- taining additional information or clari- fication which may be required. When, after discussion and submission of nec- essary information and clarification, technical proposals are determined to be acceptable, they will be so categorized. If, however, it is determined at any time that a technical proposal is not reason- ably susceptible to being made accept- able, it should be classified as unaccept- able and no discussions of it need thereafter be initiated. (5) Upon final determination that a technical proposal is unacceptable, the contracting officer shall notify the source submitting the proposal of that fact. The notice shall indicate, in general terms, the basis for such determination including a statement of whether rejec- tion was based on failure to furnish suffi- cient information or on an unacceptable engineering approach. (c) [Reserved.] (d) Discontinuance. If, as a result of the evaluation of technical proposals, it appears necessary to discontinue the J FEDERAL PROCUREMENT REGULATIONS 226 (FPR CIRC, 33, JULY 1963) SUBPART 1-2, 5 TWO-STEP FORMAL ADVERTISING Г L two-step advertising method of procure- ment, the full facts and circumstances will be set forth in writing and submitted to the office which originally approved the method of procurement. If that of- fice approves the discontinuance, each source will be notified in writing of the discontinuance and the reasons therefor. § 1-2.503-2 Step Two. Upon completion of Step One, a for- mally advertised procurement in accord- ance with Subparts 1-2.2, 1-2.3, and 1-2.4 will be conducted, except that in- vitations for bids- (a) Will be issued only to and con- sidered only from those sources whose technical proposals have been evaluated and determined to be acceptable under Step One, (b) Will include the following state- ment: This invitation for bids is issued pursuant to two-step formal advertising procedures in subpart 1-2.5 of the Federal Procurement Regulations. Bids will be considered only from those firms who have submitted accept- able technical proposals pursuant to the first step of such procedures as initiated by-- (Identify the request for technical proposals) Any bidder who has submitted multiple technical proposals in the first step of this two-step procurement may submit a separate bid covering each technical proposal which has been determined acceptable by the Government. 1-2.503-2 (d) (c) Will prominently state that the supplies or services to be procured will be in accordance with the specifications and the bidder's technical proposal, as finally accepted, under the request for technical proposals. This may be ac- complished in the Schedule item descrip- tion by a provision substantially in the form of the following example: - Radio antenna, in accordance with Ex- hibit No. ---- dated (use other description of specifications as appropriate) and your Technical Proposal (insert specific identification of the bidder's pro- posal including any revision thereof as finally accepted), incorporated herein by reference. Nothing contained in said Technical Proposal shall constitute a waiver of any of the provi- sions of said Exhibit (or specifications). (d) Will not be synopsized (see Sub- part 1-1.10) or publicly posted (see § 1-2.203-2), except that the names of firms which have submitted acceptable technical proposals in Step One of two- step formal advertising will be listed in the Commerce Business Daily for the benefit of prospective subcontractors. Such lists should be followed by a state- ment substantially as follows: It is sug- gested that small business firms or others interested in subcontracting opportuni- ties in connection with this procurement make direct contact with the above firms. (END OF PART) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 33, JULY 1963) 227 } CONTENTS OF PART 1-3 PROCUREMENT BY NEGOTIATION Sec. 1-3.000 Subpart 1-3.1-Use of Negotiation 1-3.100 Scope of subpart. 1-3.101 General requirements for nego- tiation. PART 1-3-PROCUREMENT BY NEGOTIATION Scope of part. Sec. 1-3.404-4 1-3.405 1-3.405-1 1-3 405-2 Cost-plus-incentive-fee contract. Other types of contracts. Time and materials contract. Labor-hour contract. Letter contract. 1-3.405-3 1-3.405-4 Basic agreement. 1-3.405-5 1-3.102 Factors to be considered in nego- tiated contracts. Indefinite delivery type contracts. Subpart 1-3.5-[Reserved] 1-3.103 Dissemination of procurement information. Subpart 1-3.6-Small Purchases 1-3.104 Disclosure of mistakes after award. 1-3.600 1-3.601 Scope of subpart. Purpose. Subpart 1-3.2-Circumstances Permitting 1-3.602 Policy. Negotiation 1-3.603 Competition. 1-3.200 Scope of subpart. 1-3.201 1-3.202 Public exigency. 1-3.203 National emergency. Purchases not in excess of $2,500. 1-3.204 1-3.205 Personal or professional services. Services of educational insti- tutions. 1-3.206 Purchases outside the United States. 1-3.207 1-3.208 Medicines or medical supplies. Property purchased for authorized resale. 1-3.209 1-3.210 1-3.211 1-3.212 1-3.213 standardization Technical equipment requiring and inter- changeability of parts. 1-3.214 1-3.215 Subsistence supplies. Impracticable to secure competi- tition by formal advertising. Experimental, developmental, or research work. Purchases not to be publicly disclosed. Negotiation after advertising. Otherwise authorized by law. Subpart 1-3.3-Determinations, Findings, and Authorities Determinations and findings re- quired. 1-3.606 Solicitation. Data to support small purchases. Imprest funds method. General. Definition of imprest fund. Agency responsibilities. Use of imprest funds. Limitations. Procurement and payment. Tax exemption certificates. Order-Invoice-Voucher. Standard Form 44. Standard Forms 147 and 148. Blanket purchase arrangements. 1-3.606-1 General. Authority to use blanket pur- chase arrangements. Establishment of account. Documentation, Agency implementation. Interagency use of local term contracts. Subpart 1-3.7-[Reserved] Subpart 1-3.8-Price Negotiation Policies and Techniques 1-3.603-1 1-3.603-2 1-3.604 (petty cash) 1-3.604-1 1-3.604-2 1-3.604-3 1-3.604-4 1-3.604-5 1-3.604-6 1-3.604-7 1-3.605 1-3.605-1 1-3.605-2 1-3.606-2 1-3.606-3 1-3.606-4 1-3.606-5 1-3.607 1-3.301 1-3,800 Scope of subpart. 1-3.302 Form and requirements of deter- minations and findings; preser- vation of data. 1-3.801 Basic policy. Subpart 1-3.4-Types of Contracts 1-3.400 Scope of subpart. 1-3.401 Types of contracts. 1-3.402 Selection of contract type. 1-3.403 1-3.403-1 Firm fixed-price contract. 1-3.403-2 1-3.404 type con- tracts. 1-3.404-1 Cost contract. 1-3.404-2 1-3.404-3 Cost-sharing contract. Cost-plus-a-fixed-fee contract. Fixed-price type contracts. Fixed-price contract with esca- lation. Cost-reimbursement 1-3 808-1 1-3.808-2 1-3.808-3 1-3.808-4 Preparation for negotiation. Conduct of negotiations. Selection of offerors for negotia- . tion and award. Pricing individual contracts. Cost, profit, and price relation- ships. Pricing techniques. General. Price analysis. Cost analysis. Profit. Subcontracting. Sole source items. Audit as a pricing aid. 1-3.802 1-3.803 Type of contract. 1-3.804 1-3.805 1-3.806 1-3.807 1-3.808 1-3.808-5 1-3.808-6 1-3.809 FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 19, SEPTEMBER 1961) opod i CONTENTS OF PART 1-3 PROCUREMENT BY NEGOTIATION Sec. Subpart 1-3.9—Subcontracting Policies and 1-3.900 1-3.901 1-3.902 L1-3.902-1 1-3.902-1 Procedures Scope of subpart. General. "Make-or-buy" programs. Review of program. Sec. 1-3.902-2 Approval of programs. 1-3.902-3 Contract clause. 1-3.902-4 1-3.903 Administration of program. Review and approval of contrac- tor's purchasing system and subcontracts. [Reserved] FEDERAL PROCUREMENT REGULATIONS ii (FPR CIRC. 23, JANUARY 1962) PART 1-3 PROCUREMENT BY NEGOTIATION L 1-3.000 Scope of part. (a) This part prescribes policies and procedures which shall be observed by executive agencies in connection with procurement by negotiation. While ref- erences are made in this part to author- izing sections of the Federal Property and Administrative Services Act of 1949, to further the objectives of consistency and uniformity in Government procure- ment practices, such references shall be deemed likewise as references to com- parable requirements under applicable laws. (b) This part sets forth the following policies and procedures: (1) The basic requirements for the procurement of property and services by means of negotiation; (2) The different circumstances under which negotiation is permitted; (3) Determinations and findings that may be required before a contract is entered into by negotiation; (4). Types of negotiated contracts and their use; (5) Price negotiation policies and techniques; and (6) Subcontracting policies and procedures. Subpart 1-3.1-Use of Negotiation 1-3.100 Scope of subpart. This subpart deals with the nature and use of negotiation as distinguished from formal advertising, and with limitations upon that use. 1-3.101 General negotiation. requirements for No contract shall be entered into as a result of negotiation unless or until the following requirements have been satisfied: (a) The contemplated procurement comes within one of the circumstances permitting negotiation; (b) Any necessary determinations and findings have been made; 1—3.102 (e) (c) Such clearance or approval as is prescribed by applicable agency proce- dures has been obtained; and (d) The prospective contractor has been determined to be responsible. 1-3.102 Factors to be considered in negotiated contracts. Whenever property or services are to be procured by negotiation, offers shall be solicited from all such qualified sources as are deemed necessary by the contracting officer to assure full and free competition, consistent with the procure- ment of the required property or services, in accordance with the basic policies set forth in this Part 1-3, to the end that the procurement will be made to the best advantage of the Government, price and other factors considered. Such offers shall be supported by statements and analyses of estimated costs or other evi- dence of reasonable prices and other matters deemed necessary by the con- tracting officer. Negotiation shall there- upon be conducted with due attention being given to the following, and any other appropriate factors: (a) Comparison of prices quoted and consideration of other prices for the same or similar property or services, with due regard to production costs, in- cluding extra pay shift, multi-shift and overtime costs, and any other factor re- lating to the price, such as profits, cost of transportation, and cash discounts. (b) Comparison of the business repu- tation, capacity, and responsibility of the respective persons or firms who sub- mit offers. (c) Consideration of the quality of the property or services offered, including the same or similar property or services previously furnished, with due regard to conformance with specification re- quirements. (d) Consideration of delivery require- ments. (e) Discriminating use of price and cost analyses. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 23, JANUARY 1962) 301 PART 1-3 PROCUREMENT BY NEGOTIATION ୮ L 1-3, 102 (f) (f) Investigation of price aspects of any important subcontract. (g) Individual bargaining, by mail or by conference. (h) Consideration of cost sharing. (i) Effective utilization in general of the most desirable type of contract. (j) Consideration of the size of the business concern. (k) Consideration as to whether the prospective supplier requires expansion or conversion of plant facilities. (1) Consideration as to whether the prospective supplier is located in a sur- plus or scarce labor area. (m) Consideration as to whether the prospective supplier will have an ade- quate supply of qualified labor. (n) Consideration of subcontracting, with the extensive use of small business subcontractors being considered a fa- vorable factor. (0) Consideration of the existing and potential workload of the prospective supplier. (p) Consideration of broadening the industrial base by the development of additional suppliers. (q) Consideration of whether the con- tractor requires Government furnished property, machine tools, or facilities. 1 3.103 Dissemination of ment information. procure- (a) Synopses of proposed procure- ments and contract awards shall be pre- pared and publicized in the Department of Commerce "Synopsis of U.S. Govern- ment Proposed Procurement, Sales, and Contract Awards," in accordance with the requirements of sections 1-1.1003 and 1-1.1004. (b) Promptly after making awards in any procurement in excess of $10,000, the contracting officer normally shall give written notice to the unsuccessful offerors that their proposals were not accepted. Upon request, unsuccessful offerors whose offered prices were lower than those of the contractor which re- ceived the award shall be furnished the reasons why their proposals were not ac- cepted; but in no event will an offeror's cost breakdown, profit, overhead rates, trade secrets, or other confidential busi- ness information be disclosed to any other offeror. accordance (c) Classified information shall be furnished only in with agency regulations governing the han- dling of classified information. 1-3.104 award. Disclosure of mistakes after When a mistake in a contractor's pro- posal is not discovered until after award, the authority to correct mistakes con- tained in § 1-2.406-4 may be utilized in accordance with the limitations and pro- cedures set forth therein. FEDERAL PROCUREMENT REGULATIONS 302 (FPR CIRC. 23, JANUARY 1962) SUBPART 1-3, 2 CIRCUMSTANCES PERMITTING NEGOTIATION ୮ L Subpart 1-3.2-Circumstances Permitting Negotiation 1-3.200 Scope of subpart. Subject to the limitations prescribed in this Subpart 1-3.2, or as otherwise provided by law, procurement may be effected by negotiation under any one of the exceptions contained in sections 302(c) (1) through 302(c) (15) of the Act. 1-3.201 National emergency. (a) Authority. Section 302(c) (1) of the Act (41 U.S.C. 252 (c)(1)) provides that purchases and contracts may be negotiated if "determined to be neces- sary in the public interest during the period of a national emergency declared by the President or by the Congress." At present, a state of national emergency exists by reason of Presidential Procla- mation No. 2914 of December 16, 1950 (3 CFR). (b) Determination. The Administra- tor of General Services has determined, pursuant to this section of the Act, that it is necessary in the public interest during this period of national emergency that contracts be negotiated by execu- tive agencies to assist labor surplus areas and small business concerns as provided in paragraph (c) below. (c) Application. (1) The authority of this section of the Act shall be used, in accordance with the foregoing determination, to ne- gotiate contracts in furtherance of the policies for assistance to labor surplus areas as are stated in the Office of Civil and Defense Mobilization Defense Man- power Policy No. 4 (Revised), June 6, 1960 (25 F.R. 5283). 5283). (See Subpart 1-1.8.) (2) The authority of this section of the Act shall also be used, in accordance with the foregoing determination, to negotiate unilateral set-aside contracts with small business concerns, where small business joint set-aside determina- tions pursuant to Subpart 1-1.7 are not feasible, when it is determined by the contracting officer to be in the interest of 1-3.202 (b) (i) maintaining or mobilizing the Na- tion's full productive capacity, (ii) war or national defense programs, or (iii) as- suring that a fair proportion of the total purchases and contracts for property and services for the Government are placed with small business concerns. 1-3.202 Public exigency. Pursuant to the authority of section 302(c) (2) of the Act, purchases and con- tracts may be negotiated without formal advertising if "the public exigency will not admit of the delay incident to advertising." (a) Application. In order for this au- thority to be used, the need must be compelling and of unusual urgency, as when the Government would be seriously injured, financially or otherwise, if the property or services to be purchased or contracted for were not furnished by a certain time, and when they could not be procured by that time by means of formal advertising. This applies irre- spective of whether that urgency could For should have been foreseen. example, this authority may be used when property or services are needed at once because of a fire, flood, explosion, cr other disaster. ΟΙ (b) Limitations. Every contract ne- gotiated under this authority shall be accompanied by a signed statement of the contracting officer justifying its use. When purchase action under this au- thority is based on telephone or other oral offers, a written confirmation of the accepted cffer shall be secured and made a part of the purchase case file. A rec- ord shall be established also in such cases containing the following informa- tion as a minimum: name and address of each offeror quoting, item description, unit price, delivery time, and discount terms. If quotations lower than the accepted quotation are received, the rea- scns for their rejection shall be recorded and made a part of the purchase file. Negotiation under this authority is sub- ject to the preparation of appropriate determinations and findings prescribed in Subpart 1-3.3. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 18, JULY 1961) 303 PART 1-3 PROCUREMENT BY NEGOTIATION 1-3.203 1-3.203 Purchases not in excess of $2,500. Pursuant to the authority of section 302(c)(3) of the Act, purchases and con- tracts may be negotiated without formal advertising if "the aggregate amount in- volved does not exceed $2,500.” (a) Application. Contracts or pur- chases aggregating $2,500 or less shall be made under the authority of this section 1-3.203 rather than under any of the other authorities for negotiation. In arriving at the "aggregate amount in- volved" there must be included all prop- erty and services which would properly be grouped together in a single transac- tion and which would be included in a single advertisement for bids if the pro- curement were being effected by formal advertising. Purchases or contracts ag- gregating more than $2,500 shall not be broken down into several purchases or contracts of less than $2,500. (b) Procedure. Purchases and con- tracts aggregating not more than $2.500 shall be made in accordance with Sub- part 1-3.6. 1-3.204 ices. Personal or professional serv- Pursuant to the authority of section 302(c) (4) of the Act, purchases and con- tracts may be negotiated without formal advertising if "for personal or profes- sional services." (a) Application. This authority shall be used only when all of the following conditions have been satisfied: (1) If personal services, they are required to be performed by an indi- vidual contractor in person (not by a concern); if professional services, they may be performed either by an individual contractor in person or a concern; (2) The services are of a profes- sional nature, or are to be performed under Government supervision and paid for on a time basis; and (3) Procurement of the services is authorized by law and is effected in ac- cordance with the requirements of appli- cable law. (b) Limitations. (1) The authority of this section 1– 3.204, and the conditions imposed upon its use, shall not apply to the procure- ment by negotiation of any types of serv- ices authorized under any other provis- ions of this subpart. (2). Use of authority of this section 1-3.204 for professional engineering, ar- chitectural and landscape architectural services for any public building or public improvement (exclusive of bridges, roads, sidewalks, sewers, mains, or similar items) the construction cost of which is estimated to be $200,000 or more, shall be subject to prior clearance with the General Services Administration. 1-3.205 tutions. Services of educational insti- Pursuant to the authority of section 302(c) (5) of the Act, purchases and con- tracts may be negotiated without formal advertising if "for any service to be ren- dered by any university, college, or other educational institution." (a) Application. The following are illustrative of circumstances with respect to which this authority may be used: (1) Educational or vocational train- ing services to be rendered by any uni- versity, college, or other educational in- stitution in connection with the training and education of personnel, and for nec- essary material, services, and supplies furnished by any such institution in con- nection therewith. (2) Experimental, developmental, or research work (including services, tests and reports necessary ΟΙ incidental thereto) to be conducted by any univer- sity, college, or other educational insti- tution; and reports furnished in con- nection therewith. (3) Analyses, studies, or reports (statistical or otherwise) to be conducted (NEXT PAGE IS 304,1) REGULATIONS FEDERAL PROCUREMENT 304 (FPR CIRC. 18, JULY 1961) SUBPART 1-3, 2 CIRCUMSTANCES PERMITTING NEGOTIATION or prepared by any university, college, or other educational institution. 1-3.206 Purchases outside the United States. Pursuant to the authority of section 302(c) (6) of the Act, purchases and con- tracts may be negotiated without formal advertising if "the supplies or services are to be procured and used outside the limits of the United States and its pos- sessions." This authority shall be used only for the procurement of property or services which are actually purchased from sources outside and used outside the limits of the United States, its Ter- ritories and possessions, such as property or services (including construction) for overseas installations or for the use of overseas personnel. 1-3.207 Medicines or medical sup- plies. Pursuant to the authority of section 302(c) (7) of the Act, purchases and con- tracts may be negotiated without formal advertising if "for medicines or medical supplies." (a) Application. This authority shall be used only for such supplies as are peculiar to the field of medicine, includ- ing technical equipment, such as surgi- cal instruments, surgical and orthopedic appliances, X-ray supplies and equip- ment, and the like. (b) Limitations. Whenever the prob- able cost of property to be purchased by negotiation under this authority will ex- ceed $10,000, suitable advance publicity of the proposed purchase shall be given for a period of at least 15 days, wherever practicable. 1—3.208 (b) The requirement of "suit- able advance publicity" shall be deemed to be complied with if circulation of no- tice of intent to negotiate is made to business concerns engaged in the manu- facture and or sale of the products in- including volved, qualified concerns known to have current interest in sell- ing such products to the Government. Where desirable, publication of the in- tention to negotiate through newspapers or other similar media may be used to supplement circularization. 1-3.208 Property purchased for au- thorized resale. Pursuant to the authority of section 302(c) (8) of the Act, purchases and con- tracts may be negotiated without formal advertising if "for property purchased for authorized resale. (a) Application. This authority shall be used only for purchases for resale through commissaries or other similar facilities, and ordinarily only for pur- chases of articles with brand names or of a proprietary nature as required by patrons of the selling activities. (b) Limitations. Whenever the prob- able cost of property to be purchased by negotiation under this authority will exceed $10,000, suitable advance publicity of the proposed purchase shall be given for a period of at least 15 days, wherever practicable. This shall be accomplished in the manner set forth in section 1- 3.207(b). When exercising this author- ity, regardless of the probable cost, competitive proposals shall be solicited from all such qualified sources of supply as the contracting cfficer deems neces- sary to assure full and free competition, (NEXT PAGE IS 305) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 18, JULY 1961) 304.1 SUBPART 1-3, 2 CIRCUMSTANCES PERMITTING NEGOTIATION consistent with the type and character of the procurement. 1-3.209 Subsistence supplies. Pursuant to the authority of section 302(c) (9) of the Act, purchases and con- tracts may be negotiated without formal advertising if "for perishable or non- perishable subsistence supplies." (a) Application. The authority of this paragraph may be used for the pur- chase of any and all kinds of subsistence supplies. (b) Limitation. When exercising this authority, competitive proposals shall be solicited from all such qualified sources of supply as the contracting officer deems necessary to assure full and free competition, consistent with the type and character of the procurement. 1-3.210 Impracticable to secure com- petition by formal advertising. Pursuant to the authority of section 302(c) (10) of the Act, purchases and contracts may be negotiated without formal advertising if "for supplies or services for which it is impracticable to secure competition.' (a) Application. The following are illustrative of circumstances with re- spect to which this authority may be used: (1) When property or services can be obtained from only one person or firm (sole source of supply). (2) When competition is precluded because of the existence of patent rights, copyrights, secret processes, control of basic raw material, or similar circum- stances. (3) When bids have been solicited pursuant to the requirements of formal advertising, and no responsive bid has been received from a responsible bidder. (4) When bids have been solicited pursuant to the requirements of formal advertising and the responsive bid or bids do not cover the quantitative re- quirements of the invitation for bids, in which case, negotiation is permitted for the remaining requirements of the in- vitation for bids. 1−3.210 (a) (12) (5) When the contemplated pur- chase is for training film, motion picture productions, or manuscripts. (6) When the contemplated con- tract is for technical nonpersonal serv- ices in connection with the assembly, in- stallation, or servicing (or the instruction of personnel therein) of equipment of a highly technical or specialized nature. (7) When the contemplated con- tract involves maintenance, repair, alter- ation, or inspection and the exact nature or amount of the work to be done is not known. (8) When the contemplated con- tract is for studies or surveys other than those which may be negotiated under sctions 302(c) (5) or (11) of the Act. (9) When the contemplated con- tract is for stevedoring, terminal, ware- housing, or switching services, and when either the rates are established by law or regulation, or the rates are so numer- ous or complex that it is impracticable to set them forth in the specifications of a formal invitation for bids. (10) When the contemplated con- tract is for commercial ocean or air transportation, including time charters, space charters, and voyage charters over trade routes not covered by common car- riers (negotiation for transportation services when the services can be pro- cured from common carriers is author- ized by section 321 of the Transportation Act of 1940 (49 U.S.C. 65)-see section 1-3.215), and including services for the operation of Government-owned vessels or aircraft. (11) When it is impossible to draft for an invitation for bids adequate speci- fications or any other adequately de- tailed description of the required prop- erty or services. (12) When the contemplated con- tract is for services related to the pro- curement of perishable subsistence, such as protective storage, icing, processing, packaging, handling, and transportation, and it is impracticable to advertise for such services a sufficient time in advance of the delivery of the perishable sub- sistence. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 27, SEPTEMBER 1962) 305 PART 1-3 PROCUREMENT BY NEGOTIATION 1−3.210 (b) (b) Limitations. Each contract nego- tiated under this authority shall be ac- companied by a signed statement of the contracting officer justifying its use. 1-3.211 Experimental, developmental, or research work. Pursuant to the authority of section 302(c) (11) of the Act, purchases and contracts may be negotiated without formal advertising if "the agency head determines that the purchase or con- tract is for experimental, developmental, or research work, or for the manufacture or furnishing of property for experi- mentation, development, research, or test." (a) Application. The following are illustrative of circumstances with respect to which this authority may be used: (1) When the contemplated con- tract relates to theoretical analysis, ex- ploratory studies, and experimentation in any field of science or technology. (2) When the contemplated con- tract is for developmental work and calls for the practical application of investiga- tive findings and theories of a scientific or technical nature. (3) When the contemplated con- tract is for such quantities and kinds of equipment, supplies, parts, accessories, or patent rights thereto, and drawings or designs thereof, as are necessary for experimentation, development, research, or test. (4) When the contemplated con- tract is for services, tests, and reports necessary or incidental to experimental, developmental, or research work. (b) Limitations. This authority shall not be used for contracts for quantity production, except that such quantities may be purchased as are necessary to permit complete and adequate experi- mentation, development, research, or test. Research or development contracts which call for the production of a rea- sonable number of experimental or test models or prototypes shall not be re- garded as contracts for quantity produc- tion. Negotiation under this authority is also subject to the preparation of ap- propriate determinations and findings ings prescribed by Subpart 1-3.3. (c) Reporting requirement. Section 302(c) (11) of the Act requires that at the end of each six-month period there shall be furnished to the Congress a re- port of contracts entered into pursuant to this authority. Each executive agency entering into such contracts, under the authority of section 302(c) (11) of the Act, shall submit agencywide reports to the General Services Administration as provided in (1) and (2) below. The Gen- eral Services Administration will sub- mit consolidated reports to the Congress. (1) Reports shall be prepared semi- annually to cover the periods January 1 through June 30, and July 1 through December 31, and be submitted in an original and one copy to the General Services Administration, Office of Fi- nance and Administration, General Serv- ices Building, Washington 25, D.C., within 30 work days after the close of the period covered by the report. (2) Reports should contain the fol- lowing information for each contract en- tered into pursuant to section 302 (c) (11) of the Act during the report period: (i) Name of contractor; (ii) Dollar amount of contract (including amendments); and (iii) Brief description of the work required to be performed under the con- tract. (When necessary, because of the national security, the word "classified" may be used in lieu of the description.) (3) Negative reports are not re- quired. 1-3.212 Purchases not to be publicly disclosed. Pursuant to the authority of section 302(c) (12) of the Act, purchases and contracts may be negotiated without for- mal advertising if "for property or serv- ices as to which the agency head deter- mines that the character, ingredients, or components thereof are such that the purchase or contract should not be publicly disclosed." FEDERAL PROCUREMENT REGULATIONS ل 306 (FPR CIRC. 27, SEPTEMBER 1962) SUBPART 1-3. 2 CIRCUMSTANCES PERMITTING NEGOTIATION 1-3, 213 (b)(2) (vii) (a) Application. This authority shall be used only when required by considera- tions of national security. (b) Limitations. Negotiation under this authority is subject to the prepara- tion of appropriate determinations and findings prescribed by Subpart 1-3.3. 1-3.213 Technical equipment requir- ing standardization and interchange- ability of parts. (a) Authority. (1) Pursuant to the authority of cection 302 (c) (13) of the Act, purchases and contracts may be negotiated without formal advertising if "for equipment which the agency head determines to be technical equipment, and as to which he determines that the procurement thereof without advertising is necessary in spe- cial situations or in particular localities in order to assure standardization of equipment and interchangeability of parts and that such standardization and interchangeability is necessary in the public interest." (2) This section 1-3.213 provides authority only to employ negotiation as distinguished from advertising and does not constitute authority to make pur- chases of equipment. The latter must be elsewhere derived. (b) Application. (1) This authority may be used for purchasing additional units and replace- ment items of technical equipment and spare parts by negotiation in order to assure standardization of equipment and interchangeability of parts where, in special situations or in particular locali- ties, such standardization and inter- changeability is determined necessary in the public interest. Examples of sit- uations where this authority may be used are: (i) Where, in special situations or in particular localities, it has been found necessary to limit the variety and quan- tity of parts that must be carried in stock. of (ii) Where standardization technical equipment is necessary in spe- cial situations or in particular localities so that parts may be available and inter- changed among items of damaged or worn equipment. (iii) Where, in special situations or particular localities, technical equip- ment is available from a number of suppliers which would have such vary- ing performance characteristics (not- withstanding detailed specifications and rigid inspection) as would prevent stand- ardization and interchangeability of parts. (2) Consideration shall be given to the following and other pertinent factors before making a determination to pro- cure specified makes and models under the authority of this section 1-3.213: (i) The practicability of inter- changing parts and cannibalizing equip- ment. (ii) The probability that future procurement of the selected item of equipment can be effected at reasonable prices. (iii) Whether the standardization will appreciably reduce the variety and quantity of parts that must be carried in stock. (iv) The value of similar equip- ment and its supporting parts on hand. (v) Possible savings in training personnel. (vi) Whether the standardization will adversely affect existing specifica- tions and standards. (vii) The degree to which the current design of the specified make and model has been changed from the de- sign of equipment of the same make and (NEXT PAGE IS 307) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 27, SEPTEMBER 1962) 306.1 SUBPART 1–3. 2 CIRCUMSTANCES PERMITTING NEGOTIATION model already in the supply system. (3) Standardization approval under this authority shall be for a stated period of time which bears a reasonable rela- tionship to the life of the equipment. (c) Justification. (1) In arriving at a determination that standardization of equipment and interchangeability of its parts are neces- sary in the public interest, such stand- ardization must be in fact fully justified as genuinely "necessary in the public interest." It is not sufficient that it merely be generally desirable. Nor is an arbitrary or perfunctory conclusion suf- ficient. Facts must clearly show the compelling reasons why it is necessary, as for example: (i) Substantial savings possible through standardization (estimated an- nual savings to be indicated when pos- sible). (ii) Minimizing potential break- down of a specifically identified service or function which might endanger life, property or the orderly conduct of vital Government functions. (2) The term "in special situations" precludes application of the authority to generally prevailing or generalized conditions. The law assumes that it will be necessary to employ the authority only under unusual or abnormal condi- tions. (3) The term "particular localities" has reference to remote locations which are not only remote in the sense of phys- ical distance from large metropolitan areas, but remote from available stocks of replacement parts and, possibly, re- lated service facilities. For example, it is not enough to conclude that standard- ization is required of a motor vehicle in Alaska because of remote location if in fact replacement parts of various ve- hicle makes are readily available. It must be shown expressly, and not by in- ference, (i) that the location involved is inaccessible because of stated conditions, such as the absence of a connected road system, or (ii) that there are not avail- able within stated reasonable distances, adequate stocks of replacement parts or personnel and facilities necessary to per- form required services, and that there are circumstances which make it im- practical to maintain at the location such stocks and furnish such service for more than a particular number of makes of vehicles. Most using activities within the United States (excluding Alaska) could not be considered to meet these requirements. However, there may be cases where, because of extremely un- usual conditions, standardization at a particular location within the United 1-3, 213 (e) (2) States may be necessary in the public interest. (d) Limitations. (1) This authority shall not be used for initial procurement of equipment and spare parts which ultimately will be standardized, or for the purpose of se- lecting arbitrarily the equipment of cer- tain suppliers; nor shall it be used un- less and until the agency head has determined that: (i) The equipment constitutes technical equipment; (ii) Standardization of such equipment and interchangeability of its parts are necessary in the public inter- est; and (iii) Negotiation is necessary in special situations or in particular locali- ties in order to assure required stand- ardization of equipment and inter- changeability of parts. (e) Determination and findings. (1) Negotiation under this author- ity is subject to the requirement for preparation of appropriate determina- tions and findings as provided by Sub- part 1-3.3. (2) The following example of find- ings and determinations is illustrative of the type and amount of information which may be considered sufficient to justify negotiation under section 302 (c) (13) of the Act: DEPARTMENT OF THE INTERIOR FINDINGS AND DETERMINATIONS UNDER SECTION 302 (C) (13) OF THE FEDERAL PROPERTY PROP- ERTY AND ADMINISTRATIVE SERVICES ACT OF 1949 Findings In accordance with the requirements of section 302 (c) (13) and 307 of the Federal Property and Administrative Services Act of 1949, I make the following findings: 1. The Alaska Road Commission has stated that it has a requirement for 25 (Make and trucks as set forth in (letter) or (req- type) uisition) dated mitted, by letter dated (Name and title) -9 and has sub- signed by information in justifica- -) tion for such purchase under section 302(c) (13), as described or included in the findings set forth below. 2. The trucks in question are required for use at Alaska. This lo- (District or area) cation is accessible only by of (Indicate: i.e. "boat" and for several months or "boat and air" etc.) each year is accessible only by The Government's operations which consist require the use (General description only) of trucks of this type. The location pres- ently has > of these trucks with stocks FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 1, MAR. 1959) 307 PART 1-3 PROCUREMENT BY NEGOTIATION 1-3, 213 (e) (2) of spare parts determined necessary from experience to maintain these trucks in proper operational efficiency. There are also trucks of other manufacture with required stocks of spare parts which will gradually be eliminated by standardization. No commer- cial supply or service centers are maintained at this remote location or within approx- imately miles thereof. 3. It is impractical to provide service and repair facilities for numerous makes of ve- hicles and to maintain stocks of parts nec- essary to keep the various makes in operat- ing condition. Each make of vehicle usually requires additional special equipment for proper servicing and repair. This results in added cost, housing, and related adminis- trative expense. Similarly each additional make requires the maintenance of separate stocks of spare service and repair parts which require additional bins, storage, and clerical and administrative expenses. The annual savings in cost estimated to result from the maintenance of reduced stocks of parts made possible by standardizing on these trucks is 4. (State other factors and details as ap- plicable.) 5. Under these circumstances the Alaska Road Commission regards the standardiza- tion and interchangeability as necessary in the public interest. Determinations 1. Based upon the foregoing findings, I hereby determine, within the meaning of section 302 (c) (13) of the Federal Property and Administrative Services Act of 1949, that: A. The equipment described is technical equipment; B. Negotiation is necessary, in the situa- tion and in the locality described, in order to assure standardization of the equipment and interchangeability of parts; and C. Such standardization and interchange- ability is necessary in the public interest. 2. Upon the basis of these findings and determinations, I hereby authorize the ne- gotiation of a contract (or contracts) for procurement of the equipment described in these findings pursuant to section 302 (c) (13) of the Federal Property and Ad- ministrative Services Act of 1949. Secretary of the Interior. 1-3.214 Negotiation after advertising. Pursuant to the authority of section 302(c).(14) of the Act, purchases and contracts may be negotiated without formal advertising if "for property or services as to which the agency head de- termines that bid prices after advertising therefor are not reasonable (either as to all or some part of the requirements) or have not been independently arrived at in open competition." (a) Application. This authority is de- signed to cope with cases where bids re- ceived after advertising are too high, although not actually identical or appar- ently collusive, and cases of apparent collusive bidding. Indications of possible violation of antitrust laws or collusive bidding are to be reported in accordance with procedures prescribed in Subpart 1-1.9 of this chapter. Where, after ad- vertising, some of the bids do not appear reasonable, and the reasonable bids do not cover the full quantity required, the contracting officer may, at his discretion, accept the reasonable bids. Rejection of the bids not accepted and negotiation for the balance of the quantity required must be preceded by the determination re- quired by this section 1-3.214. Negotia- tion for the balance is subject also to the requirements of section 1–3.214(b). (b) Limitations. After appropriate determination, and after rejection of bids, no contract shall be negotiated under this authority unless: (1) Notification of intention to ne- gotiate and reasonable opportunity to negotiate have been given to each respon- sible bidder which submitted a bid in response to the invitation for bids; and (2) The negotiated price is the low- est negotiated price offered by any re- sponsible supplier. 1-3.215 Otherwise authorized by law. Pursuant to the authority under sec- tion 302(c) (15) of the Act, purchases and contracts may be negotiated without formal advertising if "otherwise author- ized by law." This provision preserves the authority to negotiate contracts con- ferred by other legislation. The follow- ing are typical examples: (a) Foreign Assistance Act of 1961 (22 U.S.C. 2151 et seq.). (b) Small Business Act (Public Law 85-536). (c) Section 321 of the Transportation Act of 1940 (49 U.S.C. 65). (This law permits negotiation for transportation services when the services required can be procured from any common carrier. This authority shall not be used to elim- inate competition from companies which are not common carriers when the serv- ices may also be performed by such com- panies.) When negotiating pursuant to other stat- utory authority, the purchase or contract instrument should cite the applicable law authorizing negotiation. FEDERAL REGULATIONS PROCUREMENT 308 (FPR CIRC, 24, JULY 1962) SUBPART 1-3. 3 DETERMINATIONS, FINDINGS, . AND AUTHORITIES Subpart 1-3.3-Determinations, Findings, and Authorities 1-3.301 Determinations and findings required. In addition to the required determina- tions and findings set forth in Subpart 1-3.2, the following determinations in connection with entering into contracts by negotiation are required to be made in writing, supported by written findings as specified in section 1-3.302: (a) The determination required by section 304(b) of the Act as to estimated cost of and fees to be paid under cost- plus-a-fixed fee contracts; (b) The determination required by section 304(b) of the Act that use of a cost or a cost-plus-a-fixed fee, or incen- tive-type contract, is likely to be less costly than other methods, or that it is impracticable to secure property or serv- ices of the kind or quality required with- out use of such a contract; and (c) The determination required by section 303(b) of the Act that it is in the public interest to reject all bids. 1-3.302 Form and requirements of determinations and findings; pres- ervation of data. (a) Each determination or decision required under section 1-3.211 through section 1-3.214 and section 1-3.301 shall be based on written findings made by the official making such determination or decision, which findings shall be final, and available for a period of at least six years following the date of the determi- nation or decision. A copy of such find- ings shall be filed with the General Accounting Office copy of the contract. (b) The form of determination and findings required shall be sufficient to satisfy the requirements of the applica- ble provisions of law, and shall be in such form as may be prescribed in agency instructions. (c) The use of negotiation under sec- tions 1-3.202 and 1-3.210 shall be accom- panied by a signed statement of the contracting officer justifying the use of negotiation, a copy of which must be filed with the General Accounting Office copy of the contract. (d) In any case where a purchase or contract is negotiated under section 1-3.201 and sections 1-3.207 through 1-3.214, data with respect to negotiation shall be preserved in the files for a period of six years following final payment on such purchase or contract. Such data shall be sufficient to show: 1-3, 302(e) (2) The extent of competition se- cured; and (3) Other essential information bearing on the actual negotiations. (e) Where in other cases of negotia- tion, the requirements of paragraph (a), (c), and (d) of this section 1-3.302 are not applicable, final data shall neverthe- less be made a part of the file to support the action taken. This includes the in- formal records required with respect to purchases resulting from oral offers. (1) The reason and basis for use of negotiation; FEDERAL PROCUREMENT REGULATIONS (NEXT PAGE IS 311) (FPR CIRC, 1, Mar. 1959) 309 SUBPART 1-3, 4 TYPES OF CONTRACTS Subpart 1-3.4-Types of Contracts 1-3.400 Scope of subpart. This subpart (a) describes and defines types of contracts for procurement by negotiation, (b) defines the areas of ap- plicability in which each type of contract may be used appropriately and sets forth considerations and policies governing the choice of type of contract, and (c) im- poses conditions on the use of certain of the available types of contracts. 1-3.401 Types of contracts. Contracts negotiated under this Part 1-3 may be of any of the types or com- bination of types described in this Sub- part 1-3.4, which will promote the best interests of the Government, subject to the following restrictions. The cost- plus-a-percentage-of-cost system of con- tracting shall not be used. In further- ance of this policy, all prime contracts and letter contracts, on other than a firm fixed-price basis, shall by an appropriate clause prohibit cost-plus-a-percentage- of-cost subcontracts. In addition, all cost-plus-fee subcontracts under prime contracts which are on other than a firm fixed-price basis shall limit the payment of fees to those prescribed by agency procedures within the limitations of sec- tion 304 of the Act. 1-3.402 Selection of contract type. (a) The firm fixed-price contract shall be used unless, under the applications and limitations contained in this Sub- part 1-3.4, the use of another type of contract is more appropriate. However, the selection of an appropriate type of contract is of primary importance in ob- taining fair and reasonable prices under all of the circumstances. The type of contract therefore has a direct effect upon the resulting price or cost to the Government. Type of contract and pric- ing are inter-related and should be so considered together in negotiation, in ac- cordance with the provisions of section 1-3.803. (b) In determining the type of con- tract to be utilized, consideration should be given to such factors as: (1) Type and complexity of the item. (2) Urgency of the requirement. (3) The period of contract perform- ance and the length of production run. (4) Degree of competition present. (5) Difficulty of estimating per- formance costs due to such factors as the lack of firm specifications, the lack of production experience, or the instabil- ity of design. (6) Availability of comparative price 1-3,40 3-1 (b) data, or lack of firm market prices or wage levels. (7) Prior experience with the con- tractor. (8) Extent and nature of subcon- tracting contemplated. (9) Assumption of business risk. (10) Technical capability and finan- cial responsibility of the contractor. (11) Administrative costs of both parties. (c) Early agreement should be reached between the Government and the con- tractor on the type of contract best suited to the procurement. Except in the case of a firm fixed-price contract, contract files shall include documenta- tion to show the reasons why the par- ticular contract type was utilized. 1-3.403 Fixed-price type contracts. The fixed-price type contract gener- ally provides for a firm price, or under the appropriate circumstances may pro- vide for an adjustable price, for the supplies or services which are being pro- cured. Fixed-price contracts are of types so designed as to facilitate proper pric- ing under varying circumstances. 1-3.403-1 Firm fixed-price contract (a) Description. The firm fixed-price contract provides for a price which is not subject to any adjustment by reason of the cost experience of the contractor in the performance of the contract. This type of contract, when appropri- ately applied as set forth in this section 1-3.403-1, places the maximum risk and responsibility upon the contractor and affords him the greatest incentive for efficient performance with the resultant benefit in earnings. Utilization of the firm fixed-price contract imposes a minimum administrative burden on the contracting parties. (b) Applicability. The firm fixed- price contract is suitable for use in procurements when stable and reason- ably definite specifications are available and when fair and reasonable pricing can be achieved, such as where (1) adequate competition has made initial quotations effective; (2) prior purchases of the same or similar supplies or serv- ices provide reasonable price compari- son; (3) experienced cost information or sound estimates of the probable cost of performance are available in the negotiation of contract prices; or (4) any other reliable basis for proper pric- ing can be utilized consistent with the purpose of this type of contract. The firm fixed-price contract is particularly suitable in the purchase of standard FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 1, MAR, 1959) 311 PART 1-3 PROCUREMENT BY NEGOTIATION 1-3,403—1 (b) commercial items, modified commercial items, or other items for which adequate information on production and cost is available. (c) Limitation. The firm fixed-price contract shall not be used when con- tingencies proposed in the contract price are considered unreasonable. 1-3.403-2 Fixed-price contract with escalation. (a) Description. The fixed-price con- tract with escalation provides for the upward and downward revision of the stated contract price upon the occur- rence of certain contingencies which are specifically defined in the contract. These contingencies should be limited to those beyond the normal control of the contractor. The business risk of the contractor in a fixed-price contract is reduced by the inclusion of escalation provisions in which the Government agrees to revise the stated price upon the happening of the prescribed con- tingency. Where escalation is agreed upon, upward adjustments shall be limited by the establishment of a reason- able ceiling, and provisions will be in- cluded for downward adjustments in those instances where the prices or rates fall below the base levels provided in the contract. In the establishment of the base levels from which escalation will operate, contingency allowances shall be eliminated from the base to be set forth in the contract to the extent that escalation is provided for any par- ticular contingency. Generally, escala- tion provisions are of two broad types. (1) Price escalation provides for ad- justment of the contract price on the basis of increases or decreases from an agreed upon level in published or estab- lished prices of specific items or in price levels of the contract end items. (2) Labor and material escalation provides for adjustment of the contract price on the basis of increases or de- creases from agreed standards or indices in wage rates, specific material costs, or both. (b) Applicability. Use of this type of contract is appropriate where serious doubt exists as to the stability of market and labor conditions which will exist during an extended period of produc- tion and contingencies which would otherwise be included in a firm fixed- price contract are identifiable and can be covered separately by escalation. Its usefulness is limited by the difficulties inherent in its administration. (1) Price escalation may be used under the conditions stated above when the items to which escalation will be applied are standard materials or ar- ticles normally sold at "established" or 312 "published" prices in a competitive com- mercial market or are modifications thereof, the prices of which can be rea- sonable related to the prices of such standard materials or articles. (2) Labor and material escalation generally is suitable for use when the types and kinds of labor and material that the contractor intends to use in the performance of a contract that covers an extended period of time prevents him from accepting the full risk of possible cost increases and the Government is unwilling to accept the proposed con- tingency factors. (c) Limitation. Escalation shall not be used to provide protection against contingencies arising from the lack of accurate estimates of the quantities of labor or material required for perform- ance of the contract. 1-3.404 tracts. Cost-reimbursement type con- (a) Description. The cost-reim- bursement type of contract provides for payment to the contractor of allowable costs incurred in the performance of the contract, to the extent prescribed in the contract. This type of contract estab- lishes an estimate of total cost for the purpose of obligation of funds, and a ceiling which the contractor may not exceed (except at his own risk) without prior approval or subsequent ratification of the contracting officer. (b) Applicability. The cost-reim- bursement type contract is suitable for use when the nature and complexity of the procurement is such that costs of performance cannot be estimated with reasonable accuracy. In addition, it is essential that the contractor's cost ac- counting system is adequate for the de- termination of costs applicable to the contract, and appropriate surveillance by Government personnel during perform- ance will give reasonable assurance that inefficient or wasteful methods are not being used. (c) Limitations. The cost-reimburse- ment type contract may be used only after a determination that: (1) Such method of contracting is likely to be less costly than other meth- ods; or (2) It is impractical to secure prop- erty or services of the kind or quality required without the use of such type of contract. 1-3.404-1 Cost contract. (a) Description. The cost contract is a cost-reimbursement type contract under which the contractor receives no fee. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 1, Mar. 1959) SUBPART 1-3. 4 TYPES OF CONTRACTS (b) Applicability. The following are illustrative situations in which the use of this type of contract may be apppro- priate: (1) Research and development work, particularly with nonprofit educa- tional institutions or other non-profit organizations. (2) Facilities contracts. (3) Initial small quantity procure- ments of new items with anticipated sub- sequent large production runs. 1-3.404-2 Cost-sharing contract. (a) Description. A cost-sharing con- tract is a cost-reimbursement type con- tract under which the contractor re- ceives no fee but is reimbursed only for an agreed portion of its allowable costs. (b) Applicability. A cost-sharing contract is suitable for those procure- ments which cover production or re- search projects which are jointly spon- sored by the Government and the contractor with benefit to the contractor in lieu of full monetary reimbursement of costs. In consideration of this bene- fit, the contractor agrees to absorb a por- tion of the costs of performance. The following are illustrative situations in which this type of contract is generally desirable: (1) Jointly sponsored research and development work with nonprofit edu- cational institutions or other nonprofit organizations. (2) Other research and develop- ment work where the results of the con- tract may have commercial benefit to the contractor. 1-3.404-3 Cost-plus-a-fixed-fee tract. con- (a) Description. The cost-plus-a- fixed-fee contract is a cost-reimburse- ment type of contract which provides for the payment of a fixed fee to the contractor. The fixed fee once negoti- ated does not vary with actual cost, but may be adjusted as a result of any subsequent changes in the work or serv- ices to be performed under the contract. 1-3,404-3 (c) (b) Applicability. The cost-plus-a- fixed-fee contract is suitable for use when a cost-reimbursement type of contract is appropriate as provided in section 1-3.404(b), and when the parties agree that the procurement should be profit bearing in the form of a fixed fee. The following are illustrative situations in which this type of contract may be appropriate: (1) Research and development work where the scope and nature thereof can- not be definitely specified. (2) Definite specifications exist but the contractor lacks a valid basis for es- timating costs because the property called for is not an item regularly manu- factured, or the services called for have not been previously performed, or par- tial experience will not reveal a proper pricing level for the remainder of the production. (3) Production or construction con- tracts where the specifications are not complete or where major changes sub- stantially affecting the scope of the work are expected. (4) Work to be performed in a Gov- ernment-owned plant with the use of Government-owned facilities. (c) Limitations. The fixed fees shall not exceed those prescribed by agency procedures within the limitations set forth in the first sentence of section 304(b) of the Act, which sentence reads in part as follows: * in the case of a cost-plus-a-fixed- fee contract the fee shall not exceed 10 per centum of the estimated cost of the contract, exclusive of the fee,, as determined by the agency head at the time of entering into such contract (except that a fee not in excess of 15 per centum of such estimated cost is au- thorized in any such contract for experi- mental, developmental, or research work and that a fee inclusive of the contractor's costs and not in excess of 6 per centum of the estimated cost, exclusive of fees, as deter- mined by the agency head at the time of entering into the contract, of the project to which such fee is applicable is authorized in contracts for architectural or engineering services relating to any public works or util- ity project). " FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 24, JULY 1962) 313 PART 1-3 PROCUREMENT BY NEGOTIATION 1— 3. 404- 3 (d) (d) Contractors' investment in work- in-process. It is the policy of the ex- ecutive branch of the Government that contractors having cost-reimbursement type contracts should maintain a reason- able investment in the property and facilities acquired and in the services rendered in the performance of such contracts. This investment provides a strong incentive for the contractor to strive for greater efficiency and economy and better management, with resultant lower costs to the Government. (1) In keeping with this policy, cost- reimbursement type contracts other than those set forth below shall provide for interim payment of not to exceed 80 percent of the costs incurred by the con- tractor in the performance of the contract: (i) Contracts under which the contractors receive no fee or profit. (ii) Contracts with educational institutions or nonprofit organizations. (iii) Contracts solely for the op- eration of Government-owned plants or vessels. (iv) Contracts with small busi- ness concerns. (v) Contracts for research and development which do not provide for quantity production. (vi) Contracts for performance outside the United States, its Territory, its possessions, and Puerto Rico. (vii) Contracts having an esti- mated cost not in excess of $250,000. (viii) Contracts for construction and architect-engineer services. (ix) As determined by the agency head concerned, contracts in which the applications of the policy would impose undue hardship on the contractor or adversely affect the interests of the Government. (2) An appropriate clause imple- menting this policy shall be inserted in all cost-reimbursement type supply contracts. (3) Application of this policy need not affect the method of payment of the fee, but the extent of the contractor's capital investment in the performance of the contract will be taken into con- sideration in fixing the amount of fee or profit. 1-3.404-4 Cost-plus-incentive-fee con- tract. (a) Description. The cost-plus-in- centive-fee contract is a cost-reimburse- ment-type contract with provision for a fee which is adjusted by formula in accordance with the relationship which total allowable costs bear to target costs. Under this type of contract, there is negotiated initially a target cost, a target fee, a minimum and maximum fee, and a fee adjustment formula. After per- formance of the contract, the fee payable to the contractor is determined in ac- cordance with the formula. The formula provides, within limits, for increases in fee above target fee when total allowable costs are less than target costs, and de- creases in fee below target fee when total allowable costs exceed target costs. The provision for increase or decrease in the fee is designed as an incentive to the contractor to increase the efficiency of performance. (b) Applicability. The cost-plus-in- centive-fee contract is suitable for use where a cost-reimbursement-type of contract is found necessary and where there is a probability that its use will result in lower costs to the Government than other forms of cost-reimbursement- type contracts through cost reduction incentive to the contractor. (c) Limitation. The target and the maximum fee shall be subject to the ad- ministrative limitations stated in sec- tion 1-3.404-3 (c). (d) Contractors' investment in work- in-process. See section 1–3.404–3(d). 1-3.405 Other types of contracts. 1-3.405-1 tract. Time and materials con- (a) Description. The time and mate- rials type of contract provides for the procurement of property or services on FEDERAL PROCUREMENT REGULATIONS 314 (FPR CIRC. 24, JULY 1962) SUBPART 1-3. 4 TYPES OF CONTRACTS 1-3.405-3 (b) the basis of (1) direct labor hours at specified fixed hourly rates (which rates include direct and indirect labor, over- head, and profit) and (2) material at cost. Material handling costs may be included in the charge for "material at cost," to the extent they are clearly ex- cluded from any factor of the charge computed against direct labor hours. This type of contract may establish either a price ceiling, or a ceiling amount which the contractor may not exceed (except at his own risk). (b) Applicability. The time and ma- terials contract is used only in those sit- uations where it is not possible at the time of placing the contract to estimate the extent or duration of the work or to anticipate costs with any substantial accuracy. Particular care should be ex- ercised in the use of this type of contract since its nature does not encourage effi- ciency. Thus it is essential that this type of contract be used only where pro- vision is made for adequatę controls, in- cluding appropriate surveillance by Gov- ernment personnel during performance, to give reasonable assurance that ineffi- cient or wasteful methods are not being used. This type of contract may be used in the procurement of (1) engineering and design services, in connection with the production of property; (2) the engi- neering, design, and manufacturer of dies, jigs, fixtures, gauges, and special machine tools; (3) repair, maintenance, or overhaul work; and (4) work to be performed in emergency situations. (c) Limitation. This type of contract may be used only after determination that no other type of contract will suit- ably serve. 1-3.405-2 Labor-hour contract. (a) Description. The labor-hour type of contract is a variant of the time and material type contract differing only in that materials are not involved in the contract or are not supplied by the contractor. (b) Applicability. The labor-hour type of contract is applicable in those procurements described for the time and materials type contract, but in situa- tions in which contractor-furnished ma- terials are not involved. (c) Limitations. This type of contract may be used only after determination that no other type of contract will suit- ably serve. 1-3.405-3 Letter contract. (a) Description. A letter contract is a written preliminary contractual in- strument which authorizes immediate commencement of manufacture of prop- erty, or performance of services, includ- ing, but not limited to, preproduction planning, and the procurement of nec- essary materials. (b) Applicability. A letter contract may be entered into when (1) the in- terests of the Government demand that the contractor be given a binding com- mitment so that work can be commenced immediately, and (2) negotiation of a definitive contract in sufficient time to (NEXT PAGE IS 315) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 24, JULY 1962) 314.1 U. S. GOVERNMENT PRINTING OFFICE: 1962 O - 652502 (8) SUBPART 1-3,4 TYPES OF CONTRACTS meet the procurement need is not pos- sible, as, for example, when the nature of the work involved prevents the prep- aration of definitive requirements, spec- ifications, or cost data. (c) Limitations. (1) A letter contract shall be used only after a determination in accordance with agency procedures that no other type of contract is suitable. (2) A letter contract shall not be entered into without competition when competition is practicable. (3) A letter contract shall be super- seded by a definitive contract at the earliest practicable date. Executive agencies shall prescribe the limit of ef- fectiveness of letter contracts. (4) The maximum liability of the Government stated in the letter contract generally shall not exceed 50% of the total estimated cost of the procurement, but this liability may be increased in ac- cordance with agency procedures. (d) Content. Letter contracts shall be specifically negotiated and shall, as a minimum requirement, include agree- ment as to the following: (1) That the contractor will pro- ceed immediately with performance of the contract, including procurement of necessary materials; (2) The extent and method of pay- ments in the event of termination either for the convenience of the Government or for default; (3) That the contractor is not au- thorized to expend moneys or incur ob- ligations in excess of the maximum liability of the Government as stated in the letter contract; (4) The type of definitive contract; (5) As many definitive contract pro- visions as possible; (6) That the contractor shall pro- vide such price and cost information as may reasonably be required by the con- tracting officer; and (7) That the contractor and the Government shall promptly enter into negotiations in good faith to reach agree- ment upon and execute a definitive con- tract. 1-3.405-4 Basic agreement. (a) Description. A basic agreement is a written instrument of understanding executed between a procuring agency and a contractor which sets forth the negotiated contract clauses which shall be applicable to future procurements entered into between the parties during the term of the basic agreement. The use of the basic agreement contem- plates the coverage of a particular pro- curement by the execution of a formal contractual document which will pro- 1—3,405–5 (a) (1) vide for the scope of the work, price, delivery, and additional matters peculiar to the requirement of the specific pro- curement involved, and shall incorporate by reference or append the contract clauses agreed upon in the basic agree- ment, as required or applicable. (b) Applicability. (1) Basic agreements are appro- priate for use when (i) past experience and future plans indicate that a substan- tial number of separate contracts may be entered into with a contractor during the term of the basic agreement, and (ii) substantial recurring negotiating prob- lems exist with a particular contractor. (2) Amendment or supersession: A basic agreement shall be amended only by an amendment of the basic agreement itself and shall not be modified or super- seded by individual contracts or pur- chase orders entered into under and subject to the terms of such basic agree- ment. As a minimum, basic agreements will be reviewed annually on the anni- versary of their effective date and re- vised at that time to conform with the current requirements of this chapter. Amendments shall not have retroactive effect. (3) Discontinuance of basic agree- ment: Basic agreements shall provide for discontinuance of their future appli- cation upon 30 days written notice by either party. Discontinuance of basic agreement will not affect any individual contract referencing the basic agreement (or the the clauses appended thereto) entered into prior to the effective date of discontinuance. (c) Limitations. (1) Basic agreements shall neither cite appropriations to be charged nor be used alone for the purpose of obligating funds. (2) Basic agreements shall not in any manner provide for or imply any agreement on the part of the Govern- ment to place future orders or contracts with the contractor involved. Basic agreements shall not be used in any manner to restrict competition. (3) Basic agreements shall be util- ized only in connection with negotiated contracts. 1-3.405-5 Indefinite delivery type contracts. One of the following indefinite de- livery type contracts may be used for procurements where the exact time of delivery is not known at time of con- tracting. (a) Definite quantity contracts. (1) Description. This type of con- tract provides for a definite quantity of FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 1, MAR, 1959) 315 PART 1-3 PROCUREMENT BY NEGOTIATION 1—3.405–5 (a) (1) specified property or for the perform- ance of specified services for a fixed pe- riod, with deliveries or performance at designated locations upon order. De- pending on the situation, the contract may provide for: (i) firm fixed-prices or (ii) price escalation. (2) Applicability. This type of con- tract is particularly suitable for use where it is known in advance that a definite quantity of property or services will be required during a specific period and are regularly available or will be available after a short lead time. Ad- vantages of this type of contract are that it permits stocks in storage depots to be maintained at minimum levels and permits direct shipment to the user. (b) Requirements contract. (1) Description. This type of con- tract provides for filling all actual pur- chase requirements of specific property or services of designated activities dur- ing a specified contract period with de- liveries to be scheduled by the timely placement of orders upon the contractor by activities designated either specifical- ly or by class. Depending on the situa- tion, the contract may provide for: (i) firm fixed-prices or (ii) price escalation. An estimated total quantity is stated for the information of prospective contrac- tors, which estimate should be as realistic as possible. The estimate may be ob- tained from the records of previous re- quirements and consumption, or by other means. Care should be used in writing and administering this type of contract to avoid imposition of an impossible bur- den on the contractor. Therefore, the contract shall state, where feasible, the maximum limit of the contractor's obli- gation to deliver and, in such event, shall also contain appropriate provision lim- iting the Government's obligation to order. When large individual orders or orders from more than one activity are anticipated, the contract may specify the maximum quantities which may be ordered under each individual order or during a specified period of time. Sim- ilarly, when small orders are anticipated, the contract may specify the minimum quantities to be ordered. (2) Applicability. A requirements contract may be used for procurements where it is impossible to determine in advance the precise quantities of the property or services that will be needed by designated activities during a definite period of time. Advantages of this type of contract are: (i) Flexibility with respect to both quantities and delivery scheduling; (ii) Supplies or services need be ordered only after actual needs have materialized; (iii) Where production lead time is involved, deliveries may be made more promptly because the contractor is usually willing to maintain limited stocks in view of the Government's commit- ment; (iv) Price advantages or savings may be realized through combining sev- eral anticipated requirements into one quantity procurement; and (v) It permits stocks to be main- tained at minimum levels and allows direct shipment to the user. Generally, the requirements contract is appropriate for use when the item or service is commercial or modified com- mercial in type and when a recurring need is anticipated. (c) Indefinite quantity contract. (1) Description. This type of con- tract provides for the furnishing of an indefinite quantity, within stated limits, of specific property or services, during a specified contract period, with deliveries to be scheduled by the timely placement of orders upon the contractor by activi- ties designated either specifically or by class. Depending on the situation, the contract may provide for: (i) firm fixed- prices or (ii) price escalation. The con- tract shall provide that during the contract period the Government shall order a stated minimum quantity of the property or services and that the con- tractor shall furnish such stated mini- mum and, if and as ordered, any addi- tional quantities not exceeding a stated maximum which should be as realistic as possible. The maximum may be ob- tained from the records of previous re- quirements and consumption, or by other means. When large individual orders or orders from more than one activity are anticipated, the contract may specify the maximum quantities which may be ordered under each individual order or during a specified period of time. Sim- ilarly, when small orders are anticipated, the contract may specify the minimum quantities to be ordered. (2) Applicability. An indefinite quantity contract may be used where it is impossible to determine in advance the precise quantities of the property or services that will be needed by desig- nated activities during a definite period of time and it is not advisable for the Government to commit itself for more than a minimum quantity. Advantages of this type of contract are: (i) Flexibility with respect to both quantities and delivery scheduling; (ii) Property or services need be ordered only after actual needs have materialized; (iii) The obligation of the Gov- ernment is limited; and FEDERAL PROCUREMENT REGULATIONS 316 (FPR CIRC, 1, MAR, 1959) SUBPART 1-3, 4 TYPES OF CONTRACTS 1-3,405—5 (c) (2) (iv) It permits stocks to be main- tained at minimum levels and allows di- rect shipment to the user. The indefinite quantity contract should be used only when the item or service is commercial or modified commercial in type and when a recurring need is anticipated. FEDERAL PROCUREMENT REGULATIONS (NEXT PAGE IS 319) (FPR CIRC, 1, MAR, 1959) 317 Subpart 1-3.5-[Reserved] FEDERAL PROCUREMENT REGULATIONS (NEXT PAGE IS 321) 319 (FPR CIRC, 1, MAR, 1959) SUBPART 1-3, 6 SMALL PURCHASES Subpart 1-3.6-Small Purchases 1-3.600 Scope of subpart. This subpart prescribes policies and procedures for the purchasing of sup- plies and nonpersonal services from commercial sources when the aggregate amount involved in any one transaction does not exceed $2,500. Such purchases shall be termed "small purchases." This subpart is not applicable to the procure- ment of supplies and services initially estimated to exceed $2,500 even though awards under such procurements do not exceed $2,500. 1-3.601 Purpose. The objectives of the simplified pur- chase methods prescribed herein are to reduce the administrative costs in ac- complishing small purchases, to improve opportunities for small business con- cerns to obtain a fair proportion of Government purchases and contracts, and to eliminate costly and time con- suming paper processes. 1-3.602 Policy. (a) Small purchases shall be made by negotiation, except under special circum- stances where it is clearly in the best in- terest of the Government to accomplish such purchases by more formal methods. con- (b) The objective of helping small concerns to participate in Government contracting has wide potential applica- tion where small purchases are cerned, and accordingly, placement of small purchases with small concerns is specifically encouraged, consistent, of course, with other valid considerations, such as price feasibility. (c) When quotations are recived on a number of related items (such as hard- ware items, spare parts for vehicles, or office supplies, etc.), one purchase order shall normally be issued to the firm quot- ing the lowest aggregate prices rather than issuing more than one purchase order on the basis of accepting the lowest quotation on each item. · 1—3.603—1 (b) (d) In arriving at the aggregate amount involved in any one transaction, there must be included all supplies and services which would properly be grouped together in a single transaction and which would be included in a single ad- vertisement for bids if the procurement were being effected by formal advertis- ing. Requirements aggregating more than $2,500 shall not be broken down into several purchases which are less than $2,500 merely for the purpose of permitting negotiation or utilizing the small purchase methods authorized under this subpart. (e) Any one of the purchase methods set forth in this subpart which is deter- mined the most suitable to the immediate requirement and which will accomplish the procurement in the most efficient and economical manner shall be utilized. 1-3.603 Competition. 1-3.603–1 Solicitation. (a) Reasonable competition means ob- taining a sufficient number of quotations from qualified sources of supply so as to assure that the procurement is fair to the Government, price and other factors considered, including the administrative cost of the purchase. In arriving at the number of quotations to be solicited, due consideration will be given to the cost of the proposed solicitation in relation to the potential benefits to be derived by the Government, consistent with good busi- ness. (b) Reasonable coverage of the mar- ket for small purchases does not ordinar- ily require going outside the trade area in which the procurement office is located to obtain quotations. However, competi- tion shall not be limited to suppliers of well-known and widely distributed makes or brands, nor shall quotations be solic- ited purely on a selective personal pref- erence basis. New supply sources, disclosed through trade journals or other media, shall be continuously reviewed and, when appropriate, added to the list of available sources. FEDERAL PROCUREMENT REGULATIONS ! (FPR CIRC, 4 321 SEPT. 1959) PART 1-3 PROCUREMENT BY NEGOTIATION 1-3.603-1 (c) (c) The following factors influence the number of quotations required in connection with any particular purchase: (1) The nature of the article or service to be procured, and whether highly competitive and readily available in several makes or brands, or relatively noncompetitive. (2) Information obtained in making recent purchases of the same or similar item. (3) The urgency of the proposed purchase. (4) The dollar value of the proposed purchase. (5) Past experience concerning spe- cific dealers' prices. (d) Solicitation of quotations may be effected orally or in writing. Written sclicitation should be used only in such circumstances as where (1) the suppliers are located outside the local area, (2) special specifications are involved, (3) a large number of items are included in a single proposed procurement, or (4) ob- taining oral quotations is not considered efficient. (e) Where it is the practice for sup- pliers to furnish standing price quota- tions on supplies or services required on an intermittent and recurring basis, this information may be used in lieu of ob- taining individual quotations each time a purchase is contemplated. In such cases, the purchaser shall assure that the price information is current and that the Gov- ernment obtains the benefit of maximum discounts. 1-3.603-2 chases. Data to support small pur- (a) Tne manner of securing quota- tions, and the nature and extent of in- formation to be required for small pur- chases, are for determination by the procuring agency, but should be limited to only that deemed necessary to con- clude purchase action. (b) The following are illustrative of the extent to which quotation informa- tion should be recorded: (1) Oral solicitations. When oral price quotations are obtained, informal records should be established which will reflect clearly the propriety of placing the order at the price paid with the supplier concerned. In most cases, this will consist merely of showing the names of the suppliers contacted and the prices and other terms and conditions quoted by each. Handwritten notations on the purchase action request form of the agency, or whatever medium the pur- chaser is using as his basis for making the purchase, are satisfactory for this purpose. (2) Written solicitations. Reten- tion in the purchase files of written quotations received, or references to printed price lists used, will usually suf- fice as the record supporting the price paid. (c) Purchase data collected or com- piled during the course of arranging the purchase are for administrative and guidance value in making the purchase and issuing the appropriate purchase document. The retention of such data in the purchase files for use in subsequent reference, or as administratively re- quired by agencies for management re- view, should be limited in time and quantity to the minimum necessary for such use. 1-3.604 Imprest funds (petty cash) 7 method. 1-3.604-1 General. Section 1-3.604 prescribes policies and procedures for making small purchases of supplies and nonpersonal services through the use of imprest funds. Re- lated policies and regulations concerning bonding requirements and the establish- ment of, and accounting for, imprest funds are contained in Treasury Depart- ment Circular Nos. 1030 an 969, and GAO Manual 7 GAO 2700 and 5120. 1-3.604-2 Definition of imprest fund. The term "imprest fund" means a fixed cash or petty cash fund in the form of 7 FEDERAL PROCUREMENT REGULATIONS 322 SEPT. 1959) (FPR CIRC, 4 SUBPART 1-3. 6 SMALL PURCHASES currency, coin, or Government check which has been advanced by an official Government disbursing office, without charge to a Government appropriation or fund account, to a duly authorized cashier for cash payment or other cash requirement purposes as specified in his designation or authorization. The fund may be of a revolving type, replenished to a fixed amount as spent or used, or of a stationary nature such as a change making fund. 1-3.604-3 Agency responsibilities. Each agency using imprest funds for small cash purchases of supplies or non- personal services shall have the respon- sibility of periodically reviewing and de- termining whether there is continuing need for each fund established, and that amounts of such funds are not in excess of actual needs. Agencies should take prompt action to have imprest funds ad- justed to a level commensurate with demonstrated needs whenever circum- In this stances warrant such action. connection, each agency shall: (a) Study agency practices to insure that full advantage is taken of all small purchase processes; and (b) Develop and issue appropriate implementing regulations. 1-3.604-4 Use of imprest funds. (a) The cash payment processes de- scribed in this section should be used for making small purchases whenever ad- vantageous to the Government. purchases will generally be advantageous in the following circumstances: Cash (1) When vendors are reluctant to honor small purchase orders. (2) When vendors are not equipped to bill agencies for purchases in accord- ance with normal business practices. (3) When supplies or nonpersonal services are needed at locations not served by purchase offices or when the established sources of issue are not con- veniently accessible to point of use. (4) When provisions for local credit arrangements and monthly billings by vendors are impracticable. 1-3.604-6 (b) (b) The following are typical pro- curements for which the use of imprest funds would be suitable: (1) Emergency, fill-in, occasional, or special purchases of supplies or services. (2) Repair of equipment. (3) Perishable subsistence. (4) Public utility bills where location of the activity is so situated as to make cash payment more efficient. (5) Postage stamps, parcel post, COD, postal charges, local drayage, trans- portation tokens or passes (including cash fares), and taxi fares. (6) Expenses incident to travel and emergency travel advances (as specified in Treasury Department Circular No. 1030). 1-3.604-5 Limitations. (a) Small purchases made pursuant to imprest fund procedures may not exceed $100 for any one transaction, except that under emergency conditions the amount for any one transaction may be increased not to exceed $250. Ex- ceptions or additions needed in con- nection with procurement matters described in § 1-3.604-4, as well as the maximum dollar limitation for any one procurement transaction, should be ad- dressed to the Treasury Department (pursuant to Treasury Department Cir- cular No. 1030). The granting of any such exceptions or additions will be co- ordinated with the Administrator of General Services or his designee. Ap- proved exceptions now existing will automatically be continued without specific request from the agency to which exceptions have been granted. (b) Supplies or services subject to restrictions under any provision of law or regulation may not be purchased through use of imprest funds except under conditions which fully comply with such statutory and regulatory restrictions. 1-3.604-6 Procurement and payment. (a) Small purchases utilizing imprest funds may be made only by authorized employees. (b) When payment for small pur- chases is made from imprest funds, no J FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 27, SEPTEMBER 1962) 323 PART 1-3 PROCUREMENT BY NEGOTIATION 1-3.604-6 (b) purchase order need be issued unless it is advantageous to the Government, for example, when required by the vendor to grant Government discounts. When so required, any authorized purchase order form may be used and will be endorsed "payment to be made in cash." (c) Receipts must be secured for each payment from imprest funds (pursuant to the provisions of GAO Manual 7 GAO 5120). (d) The cashier may either reimburse employees for amounts paid by them for authorized purchases or furnish the cash necessary to comsummate such purchases. Purchases for which cash has been furnished in advance should be confirmed within five work days from the date of advance. 1-3.604-7 Tax exemption certificates. Since purchases made through the use of imprest funds are of relatively small value, Government tax exemption cer- tificates (Standard Form 1094-Revised) generally shall not be used in connection with purchases made under the author- Lity of this section. 1-3.605 Order-Invoice-Voucher. 1-3.605-1 Standard Form 44. (a) Prescribed form. Standard Form 44 (Purchase Order-Invoice-Voucher) shall be used by Federal agencies in con- nection with the procurement of and payment for purchases of supplies and nonpersonal services, whenever: (1) The amount of the purchase is not in excess of $2,500; (2) A single payment is contem- plated; (3) Its use is determined by the agency to be more efficient or economi- cal in making purchases, such as when its use will minimize paper work and administrative expense and act as an in- centive, to the mutual advantage of busi- ness and the Government, for sellers to do business with the Government by simplifying purchasing procedure and expediting payment; and (4) No more than the copies pro- vided are essential to administrative dis- tribution needs. (b) Instructions for use. General procedural instructions governing the use of Standard Form 44, are printed on the forms and the inside cover of the book. (c) Agency implementation. (1) Each Federal agency having need for this type purchase order form should issue instructions providing for: (i) Use of Standard Form 44, for small purchases made under the criteria set forth in section 1-3.605-1(a). (ii) Accountability and safeguard- ing of the forms. (iii) Controlling and accounting for purchases made. (2) Agency instructions shall be consistent with the provisions on Stand- ard Form 44, and of this section. Agency procurement and accounting procedures should provide insofar as practicable for unrestricted use of the form under the criteria provided. (d) Availabilty of form. (1) Standard Form 44 is available from General Services Administration stores in books of twenty-five carbon interleaved sets. These books may be ordered in the same manner as other standard forms. (2) Standard Form 44 may be or- dered overprinted with agency name, address, and serial number; and with special weight paper, length of carbons, type of construction, and number of sets per book as specified by the ordering agency. The format of the form, the number of copies per set, and the color of the paper will not be changed. The instructions which appear on the inside front cover may be altered to suit the ordering agency's specific requirements. FEDERAL PROCUREMENT REGULATIONS 1 324 SEPT. 1959) (FPR CIRC, 4 SUBPART 1-3.6 SMALL PURCHASES 1-3.605-2 Standard Forms 147 and 148. (a) Prescribed forms. (1) Standard Form 147 (Order- Invoice-Voucher) and Standard Form 148 (Order-Invoice-Voucher, Continua- tion Sheet) provide in one set of forms a purchase or delivery order, vendor's in- voice, receiving report, and public voucher, with requisite space for pur- chase data, vendor's invoicing, and allied budget, accounting, and voucher pay- ment data. These forms are designated primarily for use when single delivery, single payment transactions are contem- plated at the time of issuance, and are for use by all Federal agencies when in the judgment of the agency the use of a combined order-invoice, receiving report, and voucher will simplify the procure- ment process. (2) Primary uses of Standard Form 147 are: (i) As a purchase order for small purchases. (ii) As a delivery order for order- ing or scheduling delivery against an established contract. (3) The use of Standard Form 147 as a delivery order against a blanket purchase order is in keeping with its intended use. (b) Expanded use of the form. (1) The use of Standard Form 147 may be expanded to include purchase ac- tions other than those generally con- templated for this type of form, if it is determined by an agency as the result of a study of its procurement operations that such expanded use would result in standardization or simplification of pro- cedures or of minimizing paper work and administrative expense. Such ex- panded use may be authorized by the head of the agency. (2) The use of additional parts, creating more than six-part (or in some cases seven-part) sets, must be author- ized in writing by the head of the depart- ment or independent agency, and be based on a complete study of operations which fully justifies the necessity for 1−3.605—2 (d) (3) each additional part. These findings and determinations must be on file in the agency and available to representatives of the General Services Administration and the General Accounting Office. (c) Availability of form. (1) Standard Form 147 is available in six-part sets from General Services Administration regional offices for the convenience of agencies not requiring overprinting, and may be ordered in the same manner as other standard forms. (2) Standard Forms 147 and 148 may be ordered overprinted with agency name, address, and serial number; and with special weight paper, length of car- bons, or other items as specified by the ordering agency. The format of the form, the color of the paper, and the number of copies (except when au- thorized pursuant to section 1-3.605–2 (b)(2)) shall not be changed. (d) Special instructions. (1) Each agency is expected to de- velop and issue internal administrative instructions regarding the use of the forms consistent with the provisions of this section. (2) The use of the forms contem- plates that the vendor will utilize copy 1 (original) as his invoice in billing the Government. However, in furtherance of the policy of encouraging vendors to make consolidated periodic billings in instances where several orders have been placed with the same dealer in the same billing period, agencies are requested to instruct vendors to make consolidated periodic billings on their own invoices or statement forms supported by originals of the Standard Forms. (3) When procurement documented on the forms is paid for in cash, copy 1 of Standard Form 147 should be marked paid and signed and dated by the vendor or agent on the face thereof in the usual commecrial manner. The vendor's cer- tificate need not be signed when the form is receipted for cash payment. Cash register receipts or other commercial re- ceipts may be attached in lieu of signa- ture by the vendor. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 4 325 SEPT. 1959) PART 1-3 PROCUREMENT BY NEGOTIATION 1−3.605-2 (e) (e) Terms and conditions. (1) Additional terms and conditions not inconsistent with those on the form may be added in the space provided, or otherwise. (2) Additional terms and conditions inconsistent with those on the form may not be used unless authorized by the head of the using agency or the officer desig- nated by him for this purpose. A copy of each such approval for use of incon- sistent terms and conditions shall be forwarded to the Administrator of General Services. 1-3.606 Blanket purchase arrange- ments. 1-3.606-1 General. This section establishes policy relating to the purchase of day-to-day require- ments through arrangements with vend- ors or dealers to furnish such supplies or nonpersonal services as the Govern- ment may purchase from such sources during a stated period of time. Gener- ally, these arrangements should be made only with local sources so that individual purchases thereunder can be effected with a minimum of time and paper work. In addition to making blanket purchase arrangements for small purchases, simi- lar blanket purchase accounts may be established with Federal Supply Sched- ule contractors, if not inconsistent or at variance with the terms of the applicable Federal Supply Schedule Contract. 1-3.606-2 Authority to use blanket purchase arrangements. (a) Blanket purchase arrangements are authorized when: (1) A wide variety of items in a broad class of goods, like hardware, are generally purchased from local suppliers but the exact items, quantities, and de- livery requirements are not known in advance and may vary considerably. (2) There is a need to provide local commercial sources of supply for one or more offices or projects in a given area that do not have or need authority to purchase otherwise. (3) In any other case where the writing of numerous purchase orders can be avoided through the use of this procedure. (b) Blanket purchase arrangements should be made with local firms from whom numerous individual purchases will likely be made in a given period. For example, where past experience has shown that certain commercial firms selling supplies in a local area are de- pendable and consistently lower in price than other supply firms in the area deal- ing in the same commodities, and numerous small purchases are usually made from such suppliers, it would be advantageous to establish blanket pur- chase arrangements with these firms. (c) There is no prohibition against making these arrangements with several suppliers for the same class or classes of items. Where experience indicates that prices vary between suppliers, it is prer- erable to have several blanket purchase arrangements so that delivery orders can be placed with the firm offering the best price. 1-3.606-3 Establishment of account. If it is determined that blanket pur- chase arrangements with certain sup- pliers would be advantageous, such sup- pliers should be contacted, preferably in person or through correspondence, in order to make the necessary arrange- ments with respect to securing maxi- mum discounts, documenting the indi- vidual purchase transactions, periodic billing, and other necessary details. 1-3.606-4 Documentation. (a) Any documentation is permissible that assures the following: (1) That the vendor and purchaser are in agreement as to what is being purchased. (2) That at the time of delivery a record of sale and receipt is created. (3) That at the time of billing for payment the foregoing the foregoing requirements FEDERAL PROCUREMENT REGULATIONS 326 SEPT. 1959) (FPR CIRC, 4 SUBPART 1-3, 6 SMALL PURCHASES have provided evidence of the items, quantity, price, date sold and other rele- vant data. (b) The issuance of a formal purchase order to document blanket purchase arrangements may be necessary only in certain instances. Such instances may be: when required by the vendor for administrative or tax exemption pur- poses; when administratively deemed necessary in the best interests of the Government by an agency; or when it is necessary to fix the extent of items covered, quantity, prices, expenditure authorized, activities participating, or otherwise identify or isolate areas of the arrangement. The issuance of a pur- chase order for Government purchasing or accounting reasons alone is not necessary. (1) Purchase orders establishing blanket purchase arrangements, when required, may be general and broad in language with only sufficient detail to indicate the general nature of supplies or services to be covered, and may or may not, as the need dictates, be specific as to quantity, quality, specifications, or time limitation. The blanket purchase orders may be issued on any authorized purchase order form. Individual blanket purchase orders terminate when the pur- chases thereunder total the dollar amount limitation or the stated time period expires. (2) In any contemplated amend- ment of a blanket purchase order, due consideration should be given to possible changes in market conditions, sources of supply, etc., which may warrant placing a new order with the same or a different source in preference to amendment. 1-3.606-5 Agency implementation. The following general instructions are set forth for agency use in the issuance of administrative regulations implement- ing this policy: (a) The vendor-agency relationship is that of an open account limited only by the maximum amount and time pe- riod limitations fixed by that agency. 1—3.606–5 (g) (b) The vendor-agency arrangement may be limited to furnishing individual items, or commodity groups or classes, or it may be unlimited for all items or serv- ices that the source of supply is in a posi- tion to furnish. (c) The requirements of one or more activities, offices, or projects in a geo- graphical area may be secured by this means. (d) Authority and responsibility for effecting blanket purchase arrangements should be delegated by agencies to the lowest agency level to which the respon- sibility of providing supplies for its own operations or to other offices, installa- tions, projects, or functions is placed or assigned. Such levels may be organized supply points, separate independent or detached field parties or one-man posts or activities. (e) The use of blanket purchase ar- rangements does not exempt the agency from responsibility for keeping obliga- tions and expenditures within available funds, but this should be accomplished by the use of simplified methods avoiding detailed fiscal recordation for individual deliveries and similar transactions under arrangements referred to above. (f) The use of a blanket purchase arrangement does not authorize pur- chases not otherwise authorized by laws or regulations applicable; e.g., the blan- ket purchase arrangement, being a method of simplifying the making of in- dividual small purchases, may not be used to avoid the $2,500 limitation. (g) The blanket purchase arrange- ment and individual purchases there- under are primarily designed to reduce the amount of documentation in connec- tion with small purchases. The same policies as to selection of suppliers on the basis of price, time discounts, quality of merchandise, and responsibility of sup- pliers pertain to blanket purchase ar- rangements and purchases thereunder as to purchases made by other approved methods. Individual purchases should be made only after making price com- parisons with other sources available to the extent practicable, consistent with the purchase involved. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 4 326.1 SEPT. 1959) PART 1-3 PROCUREMENT BY NEGOTIATION 1—3.606–5 (h) (h) Constant consideration should be given to possible changes in market con- ditions, sources of supply, and other pertinent factors which may warrant making new arrangements with different dealers or vendors, or modifying existing arrangements. 1-3.607 Interagency use of local term contracts. (a) General. This section provides for the cooperative use by the field office of one executive agency of the local term contracts of another agency, or another office of the same agency, under the circumstances outlined, and establishes criteria for local contracting by an agency for the combined needs of several agency offices in the area. These con- tracts provide a means of meeting the local requirements of supplies and serv- ices not available from normal agency internal supply channels or other pre- scribed sources of supply. All Federal agencies are urged to participate in this program. (b) General conditions warranting use. The use of term contracts usually will be found expedient and economical under any or all of the following con- ditions: (1) When the day-to-day require- ments for the supply or service are con- tinuing or recurring. (2) When the probable total re- quirements only are known and it is expedient and economical to have a source of supply and price determined in advance of the individual instances of actual need. (3) When this method best meets the needs for providing ordering offices with ready sources of supply. (c) Use of existing contracts. To the extent practicable, when approved by the contracting office and the contract per- mits or may be amended to permit the use of an existing local term contract of another office of the same agency or of another agency in lieu of entering into a separate contract, such use should be considered under any of the following circumstances: (1) When such use will obviate the administrative expense and time delay incident to making a separate contract. (2) When there is a price advantage to be gained, freight and other costs considered. (3) When the requiring office has local purchasing authority but is not staffed or authorized to execute con- tracts. (d) Multiple use contracts. In fur- therance of the economical and other advantages to be gained from cross uti- lization of local term contracts, wherever possible the requirements of several of- fices in the same community should be combined and included in a single contract: (1) When there is a local repetitive need for a particular article or servicè by the individual agencies; (2) When an advantage accrues to requiring offices or activities through es- tablishment of such contracts; and (3) When it is expedient and prac- tical for a single office to perform the contracting function for other offices, de- livery or performance under the contract being arranged for by the participating offices as required. (e) Selection of contracting agency. The following criteria usually will de- termine which of the agency offices in any given area having a common need for a given article or service should as- sume the responsibility for contracting for the requirements of the group in ad- dition to its own needs: (1) Current or potential preponder- ant use of consumption. (2) Actual or potential qualifica- tions and experience of contracting per- sonnel, with due regard to adequacy of staff. (3) Physical location of the con- tracting office in relation to market area serving the agencies. FEDERAL PROCUREMENT REGULATIONS 326,2 SEPT. 1959) (FPR CIRC, 4 SUBPART 1-3, 6 SMALL PURCHASES } (4) Consideration of the bid prices consistently received for a given article or service by individual contracting of- fices. (f) Responsibilities of contracting of- fice and participating offices. The re- sponsibilities of the contracting agency and of the other participating offices with respect to common local term con- tracts, except where other arrangements have been made, normally will be: (1) Contracting office. (i) Arranging with participating offices for submission of estimated re- quirements. 1−3.607 (f) (2) (ii) Soliciting and analyzing bids and awarding and executing contracts. (iii) Exercising general contract administration, except followup and ex- pediting. (iv) Making available to the par- ticipating office such contract data as is required for placing orders, payment of invoices, etc. (2) Other participating offices. (i) Placing of orders directly with contractor. (ii) Arranging for inspection and acceptance. (iii) Arranging for billing and paying the contractor. (NEXT PAGE IS 327) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 4 326.3 SEPT. 1959) } Subpart 1-3.7-[Reserved] FEDERAL PROCUREMENT REGULATIONS (NEXT PAGE IS 329) (FPR CIRC, I, Mar, 1959) 327 SUBPART 1-3.8 PRICE NEGOTIATION POLICIES AND TECHNIQUES Subpart 1-3.8—Price Negotiation Policies and Techniques 1-3.800 Scope of subpart. This subpart sets forth the price ne- gotiation policies and techniques appli- cable to negotiated prime contracts and those subcontracts which are subject to approval or review within an agency. The principles in this subpart apply to negotiation of prices on all types of con- tracts and to revised prices as well as initial prices. 1-3.801 Basic policy. (a) General. It is the policy of the Government to procure property and services from responsible sources at fair and reasonable prices calculated to result in the lowest ultimate overall cost to the Government. Sound pricing depends primarily upon the exercise of sound judgment by all personnel concerned with the procurement. (b) Responsibility of contracting offi- cers. (1) Contracting officers, acting with- in the scope of their appointments (and in some cases acting through their au- thorized representatives) are the exclu- sive agents of their respective agencies to enter into and administer contracts on behalf of the Government in accordance with agency procedures. Each contract- ing officer is responsible for performing or having performed all administrative actions necessary for effective contract- ing. The contracting officer shall exer- cise reasonable care, skill, and judgment and shall avail himself of all of the organizational tools (such as the advice of specialists in the fields of contracting, finance, law, contract audit, engineer- ing, traffic management, and cost analy- sis) necessary to accomplish the purpose as, in his discretion, will best serve the interests of the Government. (2) To the extent services of special- ists are utilized in the negotiation of contracts, the contracting officer must coordinate a team of experts, requesting advice from them, evaluating their coun- sel, and availing himself of their skills as much as possible. The contracting officer shall obtain simultaneous coordi- nation of the specialist efforts to the greatest practical extent. He shall not, however, transfer his own responsibili- ties to them. Thus, the final negotiation of price, including evaluation of cost estimates, remains the responsibility of the contracting officer. (c) Responsibility of other personnel. Personnel, other than the contracting officer, who determine quality, quantity, and delivery requirements for items to be purchased, can influence the degree of 1-3,802 (c) competition obtainable as well as have a material effect upon the prices. Failure to finalize requirements in sufficient time to allow : (1) A reasonable period for prepa- ration of requests for proposals; (2) Preparation of quotations by offerors; (3) Contract negotiation and prep- aration; and (4) Adequate manufacturing lead time; causes delinquency in delivery and un- economical prices. Requirements issued on an urgent basis or with unrealistic delivery schedules should be avoided since they generally increase price or re- strict desired competition. Personnel determining requirements, specifications, adequacy of sources of supply, and like matters have responsibility in such areas, equal to that of the contracting officer, for timely, sound, and economical pro- curement. 1-3.802 Preparation for negotiation. (a) Product or service. Knowledge of the product or service, and its use, is essential to sound pricing. Before so- liciting quotations, every contracting officer should develop, where feasible, an estimate of the proper price level or value of the product or service to be purchased. Such estimates may be based on a physical inspection of the product and review of such items as drawings, specifications, job process sheets, and prior procurement data. When neces- sary, requirements and technical spe- cialists should be consulted. The pri- mary responsibility for the adequacy of specifications and for the delivery re- quirements must necessarily rest with requirements and technical groups. However, the contracting officer should be aware of the effect which these fac- tors may have on prices and competition, and should, prior to award, inform re- quirements and technical groups of any unsatisfactory effect which their de- cisions have on prices or competition. (b) Selection of prospective sources. Selection of qualified sources for solici- tation of proposals is basic to sound pric- ing. Proposals should be invited from a sufficient number of competent poten- tial sources to insure adequate compe- tition. (c) Requests for proposals. Requests for proposals shall contain the informa- tion necessary to enable a prospective offeror to prepare a quotation properly. The request for proposals shall be as complete as possible with respect to: item description or statement of work; speci- fications; Government-furnished prop- erty, if any; required delivery schedule; FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 1, MAR, 1959) 329 PART 1-3 PROCUREMENT BY NEGOTIATION 1-3,802 (c) and contract clauses. If a price break- down is required, the request for pro- posals shall so state. Requests for pro- posals shall specify a date for submission of proposals; any extension of time granted to one prospective offeror shall be granted uniformly to all. Each re- quest for proposals shall be released to all prospective offerors at the same time and no offeror shall be given the ad- vantage of advance knowledge that pro- posals are to be requested. Generally, requests for proposals shall be in writing. However, in appropriate cases, such as the procurement of perishable subsist- ence, oral requests for quotations are authorized. 1-3.803 Type of contract. (a) The selection of an appropriate contract type and the negotiation of prices are related and should be consid- ered together. Section 1-3.402 lists some of the factors for this joint consideration. The objective is to negotiate a contract type and price that includes reasonable contractor risk and provides the con- tractor with the greatest incentive for efficient and economical performance. When negotiations indicate the need for using other than a firm fixed price con- tract, there should be compatibility be- tween the type of contract selected and the contractor's accounting system. (b) In the course of a procurement program, a series of contracts, or a single contract running for a lengthy term, the circumstances which make for a selec- tion of a given type of contract at the outset will frequently change so as to make a different type more appropriate during later periods. In particular, the repetitive or unduly protracted use of cost-reimbursement type or time and materials contracts is to be avoided where experience has provided a basis for firmer pricing which will promote efficient performance and will place a more reasonable degree of risk on the contractor. Thus, in the case of a time and materials contract, continuing con- sideration should be given to converting to another type of contract as early in the performance period as practicable. 1-3.804 Conduct of negotiations. Evaluation of offerors' or contractors' proposals, including price revision pro- posals, by all personnel concerned with the procurement, as well as subsequent negotiations with the offeror or con- tractor, shall be completed expeditiously. Complete agreement of the parties on all basic issues shall be the objective of the contract negotiations. Oral discus- sions or written communications shall be conducted with offerors to the extent necessary to resolve uncertainties relat- ing to the purchase or the price to be paid. Basic questions should not be left for later agreement during price revision or other supplemental proceedings. Cost and profit figures of one offeror or con- tractor shall not be revealed to other offerors or contractors. 1-3.805 Selection of offerors for ne- gotiation and award. (a) The normal procedure in negoti- ated procurements, after receipt of initial proposals, is to conduct such written or oral discussions as may be required to obtain agreements most advantageous to the Government. Negotiations shall be conducted as follows: (1) Where a responsible offeror sub- mits a responsive proposal which, in the contracting officer's opinion, is clearly and substantially more advantageous to the Government than any other proposal, negotiations may be conducted with that offeror only; or (2) Where several responsible offer- ors submit offers which are grouped so that a moderate change in either the price or the technical proposal would make any one of the group the most ad- vantageous offer to the Government, further negotiations should be con- ducted with all offerors in that group. Whenever negotiations are conducted with more than one offeror, no indication shall be made to any offeror of a price which must be met to obtain further con- sideration, since such practice consti- tutes an auction technique which must be avoided. No information regarding the number or identity of the offerors par- ticipating in the negotiations shall be made available to the public or to anyone whose official duties do not require such knowledge. Whenever negotiations are being conducted with several offerors, while such negotiations may be con- ducted successively, all offerors partici- pating in such negotiations shall be of- fered an equitable opportunity to submit such pricing, technical, or other revisions in their proposals as may result from the negotiations. All offerors shall be in- formed that after the submission of final revisions, no information will be fur- nished to any offeror until award has been made. (b) There are certain circumstances where formal advertising is not possi- ble and negotiation is necessary. In the conduct of such negotiations, where a substantial number of clearly competi- tive proposals has been obtained and and where the contracting officer is satis- fied that the most favorable proposal is fair and reasonably priced, award may FEDERAL PROCUREMENT REGULATIONS 1 330 (FPR CIRC, 1, MAR, 1959) SUBPART 1-3.8 PRICE NEGOTIATION POLICIES AND TECHNIQUES be made on the basis of the initial pro- posals without oral or written discussion; provided, that the request for proposals notifies ali offerors of the possibility that award may be made without discussion of proposals received and, hence, that proposals should be submitted initially on the most favorable terms, from a price and technical standpoint, which the of- feror can submit to the Government. In any case where there is uncertainty as to the pricing or technical aspects of any proposal, the contracting officer shall not make an award without further explora- tion and discussion prior to award. Also, when the proposal most advantageous to the Government involves a material de- parture from the stated requirements, consideration shall be given to offering the other firms which submitted pro- posals an opportunity to submit new proposals on a technical basis which is comparable to that of the most advan- tageous proposal; provided, that this can be done without revealing to the other firms any information which is entitled to protection (c) A request for proposals may pro- vide that after receipt of initial technical proposals, such proposals will be evalu- ated to determine those which are ac- ceptable to the Government or which, after discussion, can be made acceptable, and upon submission of prices there- after, award shall be made to that offeror of an acceptable proposal who is the low responsible offeror. (d) The procedures set forth in para- graphs (a), (b), and (c) of this section 1-3.805 may not be applicable in appro- priate cases when procuring research and development, or special services (such as architect-engineer services) or when cost-reimbursement type contract- ing is anticipated. (e) Whenever in the course of nego- tiation a substantial change is made in the Government's requirements, for ex- ample, increases or decreases in quanti- ties or material changes in the delivery schedules, all offerors shall be given an equitable opportunity to submit revised proposals under the revised require- ments. 1-3.806 Pricing individual contracts. (a) Each contract shall be priced separately and independently, and no consideration shall be given to losses or profits realized or anticipated in the per- formance of other contracts. This pro- hibition shall not be construed to prohibit forward pricing agreements applicable to several contracts. (b) Contracting officers shall not rely on profit limiting statutes as remedies for ineffective pricing. Such statutes 1-3,807 (c) generally provide for the recapture of excessive profits, but they do not recap- ture the costs of inefficiency and waste which may result from failure to nego- tiate reasonable prices initially. 1-3.807 Cost, profit, and price rela- tionships. (a) When products are sold in the open market, costs are not necessarily the controlling factor in establishing a particular seller's price. Similarly, where competition may be ineffective or lacking, estimated costs plus estimated profit are not the only pricing criteria. In some cases, the price appropriately may represent only a part of the seller's cost and include no estimate for profit or fixed fee, as in research and development projects where the contractor is willing to share part of the costs. In other cases, price may be controlled by competition as set forth in section 1-3.805 (a). The objective of the contracting officer shall be to negotiate fair and reasonable prices in which due weight is given to all rele- vant factors. (b) Profit is only one element of the price proposal and normally represents a smaller proportion of the total price than do such other estimated elements as labor and material. While the public interest requires that excessive profits be avoided, the contracting officer should not become so preoccupied with particu- lar elements of a contractor's estimate of cost and profits that the most important consideration, the total price itself, is distorted, or diminished in its signifi- cance. Government procurement is pri- marily concerned with the reasonable- ness of a negotiated price and only secondarily with the eventual cost and profit. (c) Particularly where effective com- petition is lacking the estimate for profit or the proposed fixed fee should be analyzed in the same manner as all other elements of price, applying tests and con- siderations discussed in section 1–3.808-4. A fair and reasonable provision for profit cannot be made by simply applying a certain predetermined percentage to the cost estimate or selling price of a prod- uct. If, for example, a factor of 10% were used as a flat percentage rate for estimating profit in a situation where two sources were needed to meet the requirement, the result might be grossly inequitable. If one supplier proposes to and produces at a unit cost of $1,000 and the second at a unit cost of $1,500, with a flat 10% factor applied to both trans-. actions as estimated profit, the second: and higher cost supplier would receive $150 profit while the lower cost supplier would receive only $100. FEDERAL PROCUREMENT REGULATIONS 1 (FPR CIRC, 1, MAR, 1959) 331 PART 1-3 PROCUREMENT BY NEGOTIATION 1-3,808 1-3.808 1-3.808-1 Pricing techniques. General. Policies set forth in this section 1-3.808 may be applied in a variety of ways in the evaluation of offerors' or contractors' proposals and in the negotiation of con- tract prices. The extent to which any particular method, or combination of methods, should be used will depend upon the judgment of the contracting officer. The following sections describe several of the principal price negotia- tion techniques and the circumstances under which each may be used. These considerations are equally applicable to initial and subsequent price negotiations. 1-3.808-2 Price analysis. (a) Some form of price analysis should be made in every procurement, even when competitive proposals have been submitted. The presence of effec- tive competition, however, may make it possible to limit considerably the degree of price analysis required. (b) One form of price analysis is the comparison of prior quotations and con- tract prices with current quotations for the same or similar end items. To pro- vide a suitable basis for comparison, ap- propriate allowances may have to be made for differences in such factors as specifications, quantities ordered, time for delivery, Government-furnished ma- terials, and the general level of business and prices. (c) Rough yardsticks may often be de- veloped (in such terms as dollars per pound, per horsepower, or other units) to point up apparent gross inconsisten- cies which should be subjected to addi- tional pricing techniques, including cost analysis. Such yardsticks should be considered as an indispensable adjunct to cost analysis, since a study of a single offeror's estimated costs in sole source situations will not indicate whether the proposed price is fair and reasonable in comparison with other products of the same kind. 1-3.808-3 Cost analysis. (a) The need for cost analysis de- pends on the effectiveness of the methods of price analysis, the amount of the pro- posed contract, and the cost and time needed to accumulate the information necessary for analysis. When cost an- alysis is undertaken, the contracting of- ficer must exercise judgment in deter- mining the extent of the analysis. Cost analysis is desirable whenever: (1) Effective competition has not been obtained; (2) A valid basis for price compari- son has not been established, because of the lack of definite specifications, the novelty of the product, or for other reasons; (3) Price comparisons have revealed apparent inconsistencies which cannot be satisfactorily explained or otherwise reasonably accounted for; (4) The prices quoted appear to be excessive on the basis of information available; (5) The proposed contract is of a signifiicant amount and is to be awarded to a sole source; (6) The proposed contract will probably represent a substantial per- centage of the contractor's total volume of business; or (7) A cost-reimbursement, incen- tive, price redeterminable, or time and material contract is negotiated. (b) Cost analysis involves the evalu- ation of specific elements of cost and the effect on prices of such factors as: (1) Allowances for contingencies; (2) The necessity for certain costs; (3) The reasonableness of amounts estimated for the necessary costs; (4) The basis for allocation of over- head costs; and (5) The appropriateness of alloca- tions of particular overhead costs to the proposed contract. (c) Among the several types of cost comparisons that should be made where the necessary data are available, are comparisons of a contractor's or offeror's current estimated costs with: (1) Actual costs previously incurred by the contractor or offeror; and with its last prior estimate for the same or similar item or with a series of prior estimates; (2) Current estimates from other possible sources; and (3) Prior estimates or historical costs of other contractors manufactur- ing the same or related items. (d) Forecasting future trends in costs from historical cost experience is of pri- mary importance in pricing. In periods of either rising or declining costs, an adequate cost analysis must include some evaluation of the trends. Even in periods of relative price stability, trend analysis of basic labor and materials costs should be undertaken in cases involving pro- duction of recently developed, complex equipment. In some cases, probable in- creases in labor efficiency, and reductions in material spoilage as a contractor's work force gains in experience with such new products can be predicted statis- tically. Efficiency curves may be devised to predict the reduction in the spoilage rate; learning curves may be devised to evaluate reductions in labor hours. Effective use of learning curves depends FEDERAL PROCUREMENT REGULATIONS 332 (FPR CIRC. 1, MAR, 1959) SUBPART 1-3.8 PRICE NEGOTIATION POLICIES AND TECHNIQUES on the presence of the following ele- ments: (1) Direct labor should represent a substantial element of the total price; (2) The contract price should be large enough to warrant the time spent in collecting the statistical data neces- sary to construct valid curves; (3) The proposed contract should cover production over a relatively long period; (4) A substantial body of historical labor cost data must be available; and (5) The product must be a complex, non-standard item requiring a sub- stantial amount of assembly labor (where relatively large amounts of auto- matic machinery are to be employed, or the product is a relatively standard item, learning curves may be of little value). 1-3.808-4 Profit. (a) General. Where competition is adequate and effective and proposals are on a firm fixed-price basis, the contract- ing officer normally need not consider in detail the amount of estimated profit in- cluded in a price. However, when de- tailed analysis of profit is appropriate due to lack of competition or for some other reason, the factors discussed in the following paragraphs should be con- sidered. (b) Degree of risk. The degree of risk assumed by the contractor should in- fluence the amount of profit a contractor is entitled to anticipate. For example, where a portion of the risk has been shifted to the Government through un- usual contingency provisions, or other risk-reducing measures, the amount of profit to which the contractor is rea- sonably entitled is less than where the contractor assumes all risk. (c) Extent of Government assistance. The Government encourages its contrac- tors to perform their contracts with the minimum of financial, facility, or other assistance from the Government. Where extraordinary financial, facility, or other assistance must be furnished to a con- tractor by the Government, such ex- traordinary assistance should have a modifying effect in determining what constitutes a fair and reasonable profit. (d) Performance record of contractor. The contractor's past and present per- formance, and cooperation in such areas as engineering (including inventive, de- sign simplification, and developmental contributions) and quality control should, in appropriate measure, affect the amount of profit. (e) Character of contractor's business. Recognition must be given to the type of business normally carried on by the 1-3,808-5 (b) (3) contractor, the complexity of manufac- turing techniques, the rate of capital turnover, and the effect of such individ- ual procurement upon such business. For example, where a contractor is en- gaged in an industry where the turnover of working capital is low, generally the profit objective on individual contracts is higher than in those industries where the turnover is more rapid. (f) Contractor's performance. In ad- dition to the factors set forth in section 1-3.102, the contractor's performance should be evaluated in such areas as quality of product, quality control, scrap and spoilage, efficiency in cost control (including need for and reasonableness of costs incurred), meeting delivery schedule, timely compliance with con- tractual provisions, creative ability in product development (giving considera- tion to commercial potential of product), management of subcontract programs, and any unusual services furnished by the contractor. To encourage and main- tain a high degree of contractor effi- ciency and economy, the negotiator must recognize that good performance de- serves a greater opportunity for profit than poor performance. 1-3.808-5 Subcontracting. (a) The amount and quality of sub- contracting may be a major factor in- fluencing price. Since a large portion of the procurement dollar is spent by prime contractors in subcontracting for work, raw materials, parts, and com- ponents, efficient purchasing practices by a contractor will contribute heavily toward efficient and economical produc- tion. (b) While basic responsibility rests with the prime contractor for decisions to "make or buy," for selection of sub- contractors, and for subcontract prices and subcontract performance, the con- tracting officer must have adequate knowledge of those elements and their effects on prime contract prices. Con- sequently, during price negotiations, when circumstances warrant such action, the contracting officer may require the offeror or contractor to furnish adequate information, for use in evaluating the proposed price, with respect to: (1) The purchasing practices of the prime contractor; (2) The principal components to be subcontracted and the contemplated sub- contractors, including the degree of com- petition obtained, cost or price analyses or price comparisons accomplished, and the extent of subcontract supervision; (3) The types of subcontracts, i.e., firm fixed-price or other; and FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 1, Mar, 1959) 333 PART 1-3 PROCUREMENT BY NEGOTIATION 1~3,808–5 (b) (4) (4) The estimated total extent of subcontracting, including procurement of purchased parts and materials. The evaluation of total subcontracting should not be reduced to applying arbi- trary percentages of profit to subcontract prices in negotiating the prime contract price. Such elements as economies achieved through "make or buy" de- cisions, and the necessity of closer su- pervision of subcontractors performing complex work (through the furnishing of engineering or other technical assist- ance), should be fully considered. (c) When the prime contract is to be placed on a firm fixed-price basis, there is no need, for pricing purposes, to pro- vide for review or approval by the con- tracting officer of subcontracts prior to their placement. (d) When the prime contract is not to be placed on a firm fixed-price basis, review of subcontracts prior to placement may be desirable since the ultimate cost to the Government will depend in part on subcontract prices and performance. Prime contract provisions requiring ad- vance notification, review, or approval of subcontracts shall be consistent with the type of contract and the conditions ap- plicable to its use as described in Sub- part 1-3.4. For example, if the contract is on a firm fixed-price basis except for a clause permitting price escalation re- sulting from cost increases for certain materials, the prime contract may limit the contracting officer's right of review to subcontracts for materials covered by the escalation clause. In the case of cost-reimbursement type contracts, ad- vance notification, prior consent, or ap- proval of subcontracts should be re- quired. Contract provisions requiring advance notification to the contracting officer of proposed subcontracts for ma- terials, components, and other pur- chases may be appropriate both for in- formation as to sources and prices and to provide an opportunity for review and for approval or objection by the con- tracting officer prior to award of the subcontracts. Such provisions are par- ticularly necessary when: (1) The prime contractor's pur- chasing policy and system or perform- ance thereunder are considered inade- quate; (2) Subcontracts are for items for which there is no cost information or for which the proposed prices appear un- reasonable, and the amounts involved are substantial ; (3) Close working arrangements or other business or ownership affiliations exist between the prime and the sub- contractor which may preclude the free use of competition or result in higher subcontract prices than would other- wise be obtained; (4) A subcontract is being proposed at a price less favorable than that which has been given by the subcontractor to the Government, all other factors such as manufacturing period and quantity being comparable; or (5) A subcontract is to be placed on a fixed-price incentive, time and ma- terial, or cost-reimbursement basis. The contract provisions relating to sub- contracts should be consistent with the amount and character of subcontract work and with the overall character of the prime contract, involving the Gov- ernment to the minimum extent practi- cable in the contractor's exercise of management responsibility, but giving reasonable assurance that the Govern- ment is receiving the greatest practical return for its expenditure. Provisions in prime fixed-price contracts relating to subcontract review may, as appropri- ate, be confined to one major subcon- tract or to certain classes of subcon- tracts; may set a floor above which advance approval of proposed subcon- tracts may be required before placement; or may be tailored to cover unusual or particular circumstances. In those in- stances where a contractor's purchasing system has been deemed adequate, re- view of subcontracts generally may not be necessary. However, contracting of- ficers shall conduct periodic reviews of the application of the system to insure conformance therewith. In instances where subcontracts have been placed on a cost-reimbursement or time and mate- rials basis, contracting officers should be skeptical of approving the repetitive or unduly protracted use of such types of subcontracts and should follow the prin- ciples of section 1-3.803(b). (e) In cases where the prime contract reserves a right for the contracting officer to review or approve subcontracts, the prime contract shall also reserve to the Government the right to inspect and audit the books and records of such sub- contractors. Whenever such first tier subcontracts are of the cost-reimburse- ment, fixed-price incentive, or time and material type, a similar right shall be re- served to the Government to inspect and audit the books and records of lower tier subcontractors: Provided, That such a right shall not be reserved contractually below the point where a firm fixed-price subcontract intervenes. (f) Where subcontracts are placed on a fixed-price incentive basis, it is par- ticularly important in negotiating revi- sions of prime contract prices that there be substantial assurance that there was initial close pricing of subcontracts. FEDERAL PROCUREMENT REGULATIONS 334 (FPR CIRC, 1, MAR, 1959) SUBPART 1-3, 8 PRICE NEGOTIATION POLICIES > AND TECHNIQUES 1-3.808-6 Sole source items. When purchases of standard commer- cial or modified standard commercial items are to be made from sole source suppliers, use of the techniques of price and cost analysis may not always be possible. In such instances and consist- ent with the volume of procurement normally consummated with the contrac- tor, the contractor's price lists and dis- count or rebate arrangements should be examined and negotiations conducted on the basis of the "best user," "most favored customer," or similar practice customarily followed by the contractor. Such price negotiations should consider the volume of business anticipated for a fixed period, such as a fiscal year, rather than the size of the individual procure- ment being negotiated. 1-3.809 Audit as a pricing aid. (a) General. The audit services of the agencies should be utilized as a pric- ing aid by the contracting officer to the fullest extent appropriate when the dol- lar amount involved is sufficiently large, or special circumstances exist which warrant the time and expense required for the particular type of advisory audit, special survey, or audit analysis of price or cost desired. Judicious use of audit services will expedite proper pricing. The determination as to the necessity of an audit report for pricing purposes is the responsibility of the contracting offi- cer. When requesting audit services, the contracting officer shall state the pur- pose for which the report is to be used and define any specific areas of audit examination which should be given spe- cial attention. 1~3.809 (c) (4) (b) Application. Except for contracts containing retroactive price revision clauses, pricing techniques are concerned mainly with estimates of future costs. Therefore, audit reports for either retro- active or prospective pricing should not only establish costs accrued to a specific cut-off point for price proposal purposes but also should include cost trends and other available information which would be of assistance to the contracting officer in price negotiation. Such audit reports will serve a useful purpose in: (1) The evaluation of contingency allowances, overhead allocations, pur- chasing management similar cost elements; efficiency, and (2) Both the initial and subsequent pricing of contracts containing price revision clauses; and (3) Establishing limitations on costs and price revision adjustments. (c) Conditions for use. Close coordi- nation between the audit agency and procurement personnel will assist in de- termining the necessity of audit of price or cost proposals or the necessity of special surveys relating to contractor's accounting or purchasing systems. Some of the conditions under which the con- tracting officer should consider the use of audit services include: (1) Inadequate knowledge concern- ing the contractor's accounting policies, cost systems, or substantially changed methods or levels of operation. (2) Previous unfavorable experience indicating doubtful reliability of the con- tractor's estimating, accounting, or pur- chasing methods. (3) Procurement of a new product for which cost experience is lacking. (4) Contract performance requiring a substantial period of time. (NEXT PAGE IS 337) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 23, JANUARY 1962) 335 SUBPART 1-3. 9 SUBCONTRACTING POLICIES AND PROCEDURES ୮ L L Subpart 1-3.9—Subcontracting Policies and Procedures § 1-3.900 Scope of subpart. This subpart sets forth policies ana procedures for the evaluation, review, and approval of a contractor's "make-or- buy" program, purchasing system, and proposed subcontracts. § 1-3.901 General. (a) Information as to the contractor's "make-or-buy" program, purchasing sys- tem, and proposed subcontracts may be important to (1) negotiation of reason- able contract prices (see § 1-3.808–5), (2) assurance of satisfactory contract performance, or (3) carrying out Gov- ernment policies regarding small busi- ness (see § 1-1.710-1), labor surplus areas (see § 1-1.805-1), acquisition and use of Government facilities, maintenance of mobilization base, or other policies which may be appropriate to the particular procurement. Therefore, Government surveillance of a contractor's "make-or- buy" program, purchasing system, and proposed subcontracts is required as set forth in this Subpart 1-3.9. Where "make-or-buy" decisions and subcon- tracting will have a substantial impact on any of the above mentioned factors, the contractor's "make-or-buy" pro- gram and subcontracting should, to the extent practicable, be evaluated and agreed on during negotiations. (b) The subcontracting policies and procedures in this Subpart 1-3.9 should generally be applied to procurement where (1) the item, system, or work is complex, the dollar value is substantial, or competition is restricted, and (2) either (i) cost-reimbursement, price re- determination, or incentive-type con- tracts are to be used, or (ii) make-or- buy decisions are expected to have a sub- stantial impact on negotiations leading to a firm fixed-price contract. § 1-3.902 "Make-or-buy” programs. 1-3.902-1 (c) § 1-3.902-1 Review of program. (a) A "make-or-buy" program is that part of a contractor's written plan for the development or production of an end item which outlines the major compo- nents, assemblies, subassemblies, and parts to be manufactured (including testing, treating, and assembling) in his own facilities, and those which will be obtained elsewhere by subcontract. A "make" item is any item produced, or work performed, by the contractor or his affiliate, subsidiary, or division. (b) (1) Where the nature of the pro- curement is such that, in view of the fac- tors referred to in § 1-3.901 (b), review of the "make-or-buy" program is appropri- ate or is otherwise considered essential, the prospective contractor shall be re- quired to submit his proposed "make- or-buy" program, together with sufficient related data, to the contracting officer for evaluation of such factors in (e) of this § 1-3.902-1 as are pertinent. (2) At the time a request for pro- posals is issued, the procuring agency shall request potential suppliers to fur- nish a "make-or-buy" program on all negotiated procurements except as other- wise provided in (3), (4), or (5) of this § 1-3.902-1(b). (3) A "make-or-buy" program will not be required when a proposed con- tract has a total estimated value of less than $1,000,000 unless the contracting officer specifically determines that a “make-or-buy” program is appropriate. (4) Research and development con- tracts are exempt from the provisions of this § 1-3.902 unless it can reasonably be anticipated that follow-on quantities of the product will be procured. (5) A "make-or-buy" program will not be required if the contracting officer determines that none of the factors in § 1-3.901(b) are applicable. (c) The contractor will be informed that the program he submits should be confined to important items which, be- cause of their complexity, quantity, cost FEDERAL PROCUREMENT REGULATIONS ୮ (FPR CIRC. 23, JANUARY 1962) 337 PART 1-3 PROCUREMENT BY NEGOTIATION 1-3.902-1(c) or requirement for additional Govern- ment facilities, normally would require company management review of the make-or-buy decision, "Detail parts" or "off-the-shelf" items will not be in- corporated in a "make-or-buy" program unless their potential impact on such program or production schedule makes their inclusion necessary. If the design status of the end item being procured is not sufficiently advanced to permit ac- curate precontract identification of all items that may be subject to "make-or- buy" decisions, the contractor shall be notified that such items must be sub- mitted, when identifiable under the terms of the Changes to Make-or-Buy Program clause (see § 1-3.902-3). (d) The contractor shall be required to submit, with his proposal, a "make-or- buy" program of important items in- cluding in addition to information required by § 1-3.902-1(b), (1) a de- scription by which each such item can be readily identified, (2) a recommenda- tion to make or buy the item or defer the decision, (3) when feasible, the names of proposed subcontractors, and (4) the important items to be made by the contractor, including a designation of the plant and division in which the contractor proposes to perform the work. (e) "Make-or-buy" programs shall be evaluated and agreed upon by the con- tractor and the procuring activity at the earliest practicable time during negoti- ations. In reviewing the "make-or- buy" program during the negotiations, the effect of the following factors on the interests of the Government shall be considered: (1) The effect of the contractor's plan to make-or-buy, as the case may be, on price, quality, delivery, and per- formance. (2) Whether the contractor plans to broaden his base of subcontractors through competition. (3) Whether the contractor has properly considered the competence, abilities, experience, and capacities Lavailable other available within other firms. (4) Whether small business con- cerns can produce the item or perform the work in question and at what price. (5) Whether the contractor or ma- jor subcontractors propose to do work in plant, the nature of which differs sig- nificantly from their normal in-plant operations or for which they are not historically suited. (6) Whether production of the item or performance of the work will create a requirement, either directly or indi- rectly, for additional facilities to be furnished by the Government, or the continued use of Government-owned fa- cilities, by the contractor or by subcon- tractors. (7) Whether the contractor pro- posed to ask the Government to furnish additional facilities to do the work in plant for which there is capacity else- where which is competitive in quality, delivery, and overall cost, and is ac- ceptable as a source to the contractor. (8) Whether the item or work has been subcontracted on this or previous contracts. (9) Other factors, such as the na- ture of the item, experience with similar items, future requirements, engineering, tooling, starting load costs, market con- ditions, and the availability of person- nel and material. (f) The procuring agency will review the "make-or-buy" program to deter- mine if all appropriate items are in- cluded or if it contains items that should be deleted because of their relatively minor importance. In all considera- tions relative to a "make-or-buy" pro- gram, the procuring agency will obtain the advice and assistance of all appro- priate personnel whose knowledge would contribute to the adequacy of the review. (g) Before agreeing to a "make-or- buy" program (or consenting to any change therein which, in the opinion of the contracting officer, would reduce the anticipated participation of small busi- ness), the procuring activity shall invite the advice and counsel of the SBA by FEDERAL REGULATIONS PROCUREMENT 338 (FPR CIRC, 23, JANUARY 1962) SUBPART 1-3, 9 SUBCONTRACTING POLICIES AND PROCEDURES to permitting SBA representatives (regu- Pearly assigned to the larly assigned to the activity) to review all pertinent facts and make recommen- dations thereon. Such review by SBA should be concurrent with the review by the procuring activity (or, in the case of changes, the contracting officer). Where urgent circumstances do not per- mit such a concurrent review, or where SBA fails to respond on a timely basis, the contracting officer shall include an explanatory statement in the contract file and shall transmit a copy to the SBA representative. (h) After agreement on the program is reached, the contracting officer shall notify the contractor as to the Govern- ment's approval of the program and shall inform the contractor as to any require- ment for further review during perform- ance of the contract. For example, if follow-on procurements occur, the pro- curing activity and the contractor will review the existing “make-or-buy” pro- gram to determine whether it should be revised. § 1-3.902-2 Approval of programs. (a) Proposed "make" items shall not be agreed to when the products or serv- ices under consideration: (1) Are not regularly manufactured or provided by the contractor, and are available-quality, quantity, delivery, and other essential factors considered- from other firms at prices no higher than if the contractor makes or provides the product or service; or (2) Are regularly manufactured or provided by the contractor, and are available-quality, quantity, delivery, and other essential factors considered- from other firms at prices lower than if the contractor makes or provides the product or service; Provided, That such items may be agreed to, notwithstanding (1) and (2), if in the opinion of the contracting officer the overall cost of the contract to the Gov- ernment would be increased if the items were “bought”. L were 1−3.902—4(a) (b) Approval of the contractor's pur- chasing system shall not constitute ap- proval of the "make-or-buy" program. § 1-3.902-3 Contract clause. The following clause shall be incor- porated in all cost-reimbursement, price redetermination, or incentive type con- tracts as to which a "make-or-buy" pro- gram has been agreed upon: CHANGES TO MAKE-OR-BUY PROGRAM The Contractor agrees to perform this con- tract in accordance with the "make-or-buy" program attached to this contract, except as hereinafter provided. If the Contractor de- sires to change the "make-or-buy" program, he shall notify the Contracting Officer in writing of the proposed change reasonably in advance and shall submit justification in sufficient detail to permit evaluation of the proposed change. Changes in the place of performance of work on any "make" item in the "make-or-buy" program are subject to this requirement. With respect to items deferred at the time of negotiation of this contract for later addition to the "make-or- buy" program, the Contractor shall notify the Contracting Officer of each proposed addition at the earliest possible time, to- gether with justification in sufficient detail to permit evaluation. The Contractor shall not, without the written consent of the Con- tracting Officer, make changes or additions to the program. However, in his discretion, the Contracting Officer may ratify in writing any changes or additions. The "make-or- buy" program attached to this contract shall be deemed to be modified in accordance with the written consent or ratification by the Contracting Officer. [End of Clause] § 1-3.902-4 Administration of program. (a) On applicable contracts, the cog- nizant contract administration office will establish a procedure with the con- tractor to assure timely compliance with the terms of the contract clause. This procedure will include provisions for processing changes to the established "make-or-buy" program and for obtain- ing "make-or-buy" decisions for items reserved for deferred decisions or un- identified at the time of contract negotiations. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 23, JANUARY 1962) 339 PART 1-3 PROCUREMENT BY NEGOTIATION ୮ 1-3.902-4 (b) (b) When a "make-or-buy" program is agreed upon with a contractor, or there are changes or additions to a "make-or- buy" program, the consideration given each item on such program will be docu- mented in the contract file. If a con- tract (including supplemental agree- ments for new procurement) except one specifically exempted by § 1-3.902-1(b), does not include the Changes to Make- or-Buy Program clause, the contracting officer will document the contract file with a written statement of facts to sus- tain and make clear the appropriateness of the determination not to include the clause. Such determination will be based on one of the following: (1) the contract is on a firm fixed-price basis; (2) the contract is not exempt but there are no items which can be identified as requir- ing a "make-or-buy" program as de- fined in § 1-3.902-1(a); or (3) a devia- tion has been approved. § 1-3.903 Review and approval of con- tractor's purchasing system and sub- contracts. [Reserved] (END OF PART) FEDERAL PROCUREMENT REGULATIONS ୮ 340 (FPR CIRC, 23, JANUARY 1962) CONTENTS OF PART 1-4 OF PART 1-4 SPECIAL TYPES AND METHODS OF PROCUREMENT PART 1-4-SPECIAL TYPES AND METHODS OF PROCUREMENT Subpart 1-4.1-[Reserved] Sec. Subpart 1-4.6-Livestock Products 1-4.600 Scope. 1-4.601 1-4.602 1-4.603 1-4.604 1-4.605 General. Subpart 1-4.2-[Reserved] Subpart 1-4.3-[Reserved] Subpart 1-4.4-[Reserved] Subpart 1-4.5-[Reserved] Definition of livestock products. Exception. Procedures. Statement of eligibility clause. 1-4.606 Humane method of slaughter clause. 1-4.607 Reporting violations. livestock FEDERAL PROCUREMENT REGULATIONS . i Į L (FPR CIRC. 13, NOVEMBER 1960) جا 7 SUBPART 1-4, 1—(RESERVED) SUBPART 1-4. 2—(RESERVED) SUBPART 1-4. 3—(RESERVED) SUBPART 1-4. 4—(RESERVED) SUBPART 1-4. 5-(RESERVED) (NEXT PAGE IS 425) FEDERAL PROCUREMENT REGULATIONS 401 (FPR CIRC, 13, NOVEMBER 1960) SUBPART 1-4.6 LIVESTOCK PRODUCTS 1-4.605 Subpart 1-4.6-Livestock Products § 1-4.600 Scope. This subpart sets forth the policies and procedures applicable to the pro- curement of livestock products. § 1-4.601 General. Public Law 85-765, as amended, com- monly known as the Humane Slaughter Act of 1958 (7 U.S.C. 1901-1906), pro- vides certain restrictions on the procure- ment of livestock products by Federal agencies and instrumentalities. The Act states the policy of the United States to be that the slaughtering of livestock, and the handling of live- stock in connection with slaughter, shall be carried out only by humane methods. In essence, the Act prohibits the pur- chase by the Federal Government of livestock products produced or processed by any slaughterer or processor which in any of its plants (or in the plants of an affiliated slaughterer or processor) slaughters, or handles in connection with slaughter, livestock by any method other than humane. Further, the Act requires a supplier to make a statement concerning his eligibility under the Act to supply livestock products, the state- ment to be such that the maker will be subject to prosecution if the statement is false. § 1-4.602 Definition of livestock prod- ucts. "Livestock products" means any article of food, or any article intended for or capable of being used as food, for either humans or animals, which is derived or prepared, in whole or in part, from slaughtered cattle, calves, horses, mules, sheep, swine, or goats. Livestock prod- ucts do not include (a) supplies, the animal product portion of which is less than 5 percent by weight of the net unit weight, and (b) poultry. § 1-4.603 Exception. The requirements of this Subpart 1-4.6 do not apply to contracts for livestock products, executed and to be performed outside the United States, its possessions, or Puerto Rico. § 1-4.604 Procedures. (a) Proposed suppliers of livestock products shall be informed of the re- quirements of the Humane Slaughter Act and shall be required to furnish a statement of eligibility in accordance with this § 1-4.604. (b) Except as provided in § 1-4.604 (c) and (d) below, the Statement of Eligibility (Humane Slaughter Act), set forth in § 1-4.605 below, shall be in- cluded in all invitations for bids, re- quests for proposals, and other contrac- tual documents for livestock products, and shall be required to be duly signed by the supplier (contractor). (c) Where small purchases are in- volved (see Subpart 1-3.6), it will be sufficient if, as a part of the purchase documentation, the supplier (contrac- tor) furnishes, over his signature, only paragraph (a) of said Statement of Eligibility (Humane Slaughter Act). (d) When frequent purchases are made from the same supplier (contrac- tor) or the contracting officer deems it otherwise appropriate, the Statement of Eligibility (Humane Slaughter Act) may be obtained from the supplier (contrac- tor) at reasonable intervals, but not less often than annually. When such State- ment has been obtained, the clause set forth in § 1-4.606 below may be inserted, in lieu of said Statement of Eligibility (Humane Slaughter Act), in all con- tracts or purchase orders issued to the supplier. § 1-4.605 Statement of eligibility clause. The following statement of eligibility clause shall be used in accordance with § 1-4.604 above: STATEMENT OF ELIGIBILITY (HUMANE SLAUGH- TER ACT) any (a) The supplier (contractor) agrees that livestock products sold to the Government, except products produced or processed from livestock slaughtered outside the United States, its possessions, and Puerto Rico, con- form to the requirements of the Humane Slaughter Act of 1958 (7 U.S.C. 1901–1906). (b) "Livestock products" means article of food, or any article intended for or capable of being used as food, for either humans or animals, which is derived or prepared, in whole or in part, from slaugh- tered livestock, namely, cattle, calves, horses, mules, sheep, swine, or goats. Livestock products do not include (1) supplies, the animal product portion of which is less than 5 percent by weight of the net unit weight, and (2) poultry. (c) A slaughterer or processor shall be FEDERAL PROCUREMENT REGULATIONS 425 (FPR CIRC, 13, NOVEMBER 1960) PART 1-4 SPECIAL TYPES AND METHODS 426 7 1-4.605 OF PROCUREMENT deemed to be affiliated with another slaugh- terer or processor if it controls, or is con- trolled by, or is under common control with, such other slaughterer or processor. (d) Livestock products which conform to the requirements of the Humane Slaughter Act of 1958 are products which have been produced and processed either: (1) By those slaughterers and proces- sors which, in all of their plants and in all of the plants of slaughterers and processors with which they are affiliated, slaughter, and handle in connection with slaughter, live- stock only by methods designated as humane by the Secretary of Agriculture; or (2) From livestock slaughtered in ac- cordance with the ritual requirements of the Jewish faith or any other religious faith that prescribes a method of slaughter whereby the animal suffers loss of consciousness by anemia of the brain caused by the simultane- ous and instantaneous severance of the carotid arteries with a sharp instrument, which ritual requirements have been desig- nated as humane methods of slaughter by the subject Act. (e) This statement is made with full knowledge that it will be relied upon by the Government in entering into contracts with the supplier (contractor) and in payment of claims thereunder. WARNING Making any false statement herein or sub- mission of any false claim hereunder will subject supplier (contractor) to punishment as provided in Title 18, United States Code, Crimes and Criminal Procedure. Date By (Name of Supplier- Contractor) (Title) (Address) § 1-4.606 Humane method of livestock slaughter clause. The following clause shall be used in accordance with § 1-4.604(d) above: HUMANE METHOD OF LIVESTOCK SLAUGHTER (a) The supplier (contractor) agrees that livestock products sold to the Government, except products produced or processed from livestock slaughtered outside the United States, its possessions, and Puerto Rico, con- form to the requirements of the Humane Slaughter Act of 1958 (7 U.S.C. 1901-1906). (b) The supplier (contractor) shall have furnished the Government a Statement of Eligibility (Humane Slaughter Act) before award of this contract or issuance of this purchase order, and such Statement is hereby incorporated by reference. § 1-4.607 Reporting violations. Reports of possible violation of a statement of eligibility given in accord- ance with § 1-4.604 shall be made to the Department of Justice by each agency in accordance with agency procedures. (END OF PART) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 13. NOVEMBER 1960) CONTENTS OF PART 1-5 SPECIAL AND DIRECTED SOURCES OF SUPPLY L ୮ PART 1-5-SPECIAL AND DIRECTED Sec. SOURCES OF SUPPLY Subpart 1-5.1-[Reserved] Subpart 1-5.2-[Reserved] Subpart 1-5.3-Excess Personal Property 1-5.300 Scope of subpart. Definition of excess personal prop- erty. Implementation of policy. Subpart 1-5.6-[Reserved] Subpart 1-5.7-[Reserved] Subpart 1-5.8-[Reserved] Subpart 1-5.9-Use of GSA Supply Sources by Prime Contractors in Performing Cost-Reim- bursement Type Contracts Sec. 1-5.900 1-5.301 1-5.901 1-5.302 1-5.902 Policy. 1-5.303 1-5.903 1-5.304 Assistance by General Services Ad- L ministration in filling require- 1-5.903-1 ments from excess. 1-5.903-2 1-5.904 1-5.905 Subpart 1-5.4-[Reserved] Subpart 1-5.5— [Reserved] Scope of subpart. Policy. Authorization to prime contrac- tors. Procedure for placing orders. Orders under Federal Supply Schedule contracts. Orders for GSA stores stock. Furnishing information to con- tractors. Payment for GSA stores stock. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 22, NOVEMBER 1961) i SUBPART 1–5.1—(RESERVED) SUBPART 1-5.2-(RESERVED) (NEXT PAGE IS 511) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 22, NOVEMBER 1961) 501 SUBPART 1-5, 3 EXCESS PERSONAL PROPERTY L ୮ Subpart 1-5.3-Excess Personal Property § 1-5.300 Scope of subpart. This subpart sets forth policies and re- lated material regarding the use of ex- cess personal property as a source of supply. This subpart does not include, modify, or supersede instructions con- cerning the reassignment of personal property within executive agencies and the transfer of excess, or other instruc- tions concerning the utilization of Gov- ernment-owned personal property, which are contained in Chapter III, Title 1, Personal Property Management, Regula- tions of the General Services Adminis- tration. § 1-5.301 Definition of excess personal property. "Excess personal property" means any personal property under the control of any Federal agency which is not required for its needs and the discharge of its responsibilities, as determined by the head thereof. § 1-5.302 Policy. To the fullest extent practicable, agencies shall use excess personal prop- erty as the first source of supply in fulfilling their requirements and require- ments of their cost-type contractors. § 1-5.303 Implementation of policy. (a) In giving effect to the policy stated in § 1-5.302, agencies should provide that: (1) Personnel authorized to approve actions for procurement or other acqui- sition of personal property will make positive efforts to obtain excess before such actions are undertaken. (2) Personnel mentioned in (1) of this § 1-5.303(a) will receive available information concerning excess personal property from appropriate General Serv- ices Administration regional offices. (b) Prior to procurement or other acquisition of property, careful and re- ceptive consideration shall be given to 1-5.304 (b) utilization of known usable excess per- sonal property of a similar type, includ- ing the possibility of substitution or adaptation of excess items not identical with requested items, whether the excess items are unused, rehabilitated, or in used condition, and regardless of whether the intended acquisition would be from General Services Administration stores stock or from other sources of supply. § 1-5.304 Assistance by General Services Administration in filling require- ments from excess. (a) Information regarding the avail- ability of excess personal property may be obtained through the following: (1) Personal contact with the Gen- eral Services Administration or the hold- ing installation. (2) Review of excess personal prop- erty catalogs and bulletins circularized by the General Services Administration. (3) Submission of personal property requirements to the regional offices of the General Services Administration. (GSA Form 1539, Request for Excess Per- sonal Property, is available for this pur- pose.) (4) Examination and inspection of reports and samples of excess personal property assembled for this purpose in General Services Administration regional offices. (b) The General Services Administra- tion will assist agencies in meeting their requirements for property of the types excepted from reporting as excess by subsection 302.02, Chapter III, Title 1, Personal Property Management, Regula- tions of the General Services Adminis- tration. Federal agencies requiring such property should contact the appropriate General Services Administration regional office. General Services Administration area utilization officers, stationed at key military excess generating points throughout the United States, are screening and offering for Government use non-reported excess personal prop- erty as it becomes available for transfer. Ј (NEXT PAGE IS 513) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 22, NOVEMBER 1961) 511 ୮ SUBPART 1–5.4—(RESERVED) L SUBPART 1–5.5— (RESERVED) SUBPART 1—5.6—(RESERVED) SUBPART 1-5.7—(RESERVED) SUBPART 1-5.8—(RESERVED) Г ୮ (NEXT PAGE IS 551) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 22, NOVEMBER 1961) 513 UNITED DEPOSITED AMERICA THE BY STATES OF L L SUBPART 1-5.9 USE OF GSA SUPPLY SOURCES BY PRIME CONTRACTORS IN PERFORMING COST- REIMBURSEMENT TYPE CONTRACTS Subpart 1-5.9-Use of GSA Supply Sources by Prime Contractors in Performing Cost-Reimbursement Type Contracts § 1-5.900 Scope of subpart. This subpart prescribes policies and procedures for the guidance of Federal agencies in authorizing the use of Gen- eral Services Administration (GSA) sup- ply sources (Federal Supply Schedule contracts and GSA stores stock) by their prime contractors in performing cost- reimbursement type contracts (see § 1-3.404). § 1-5.901 Policy. (a) When a Federal agency deems that it is in the best interest of the Government to do so, the agency shall authorize its prime contractors to utilize GSA supply sources in performing cost- reimbursement type contracts. Before issuing such an authorization the agency should determine the advantage to be obtained therefrom in the performance of such contracts in terms of price, de- livery, contract administration, and any other significant factors, and shall take into account any recommendations of the prime contractor. (b) Except as otherwise specifically authorized by the Administrator of Gen- eral Services, Government prime con- tractors and their subcontractors shall not be authorized to utilize GSA supply sources in connection with the perform- ance of any fixed-price type contract, or any subcontract thereunder, or any sub- contract under a cost-type contract, whether or not such contract provides for price adjustment, escalation, redeter- mination or modification, or cost-reduc- tion incentive. § 1-5.902 tractors. Authorization to prime con- (a) Authorization to prime contrac- tors to utilize GSA supply sources shall be given only if title to property ordered under Federal Supply Schedule contracts will pass to and vest in the Government directly from the Federal Supply Sched- 1-5.903-1 ule contractor (rather than through the prime contractor), and title to Govern- ment-owned property ordered from GSA stores stock will remain in the Government. (b) Authorizations shall be in writing and shall cite the number of the cost- reimbursement type contract; specify any applicable limitations on the author- ity, including the period of eligibility; and contain any other pertinent infor- mation (e.g., requirements relative to ordering, receiving, inspection, and payment). (c) Copies of each authorization shall be forwarded to the General Services Ad- ministration, Federal Supply Service, Office of Supply Operations, General Services Building, Washington 25, D.C., and to the GSA regional office serving the geographical area in which the facil- ities of the authorized prime contractor are located. § 1-5.903 Procedure for placing orders. § 1-5.903-1 Orders under Federal Sup- ply Schedule contracts. Orders placed by cost-reimbursement type prime contractors under Federal Supply Schedule contracts shall shall be placed in accordance with the provisions of the applicable Federal Supply Sched- ule and the authorization. They shall be accompanied by a copy of the author- ization (unless a copy was previously fur- nished to the Federal Supply Schedule contractor) and shall contain a state- ment as follows: This order is placed in behalf of the (insert name of authorizing Federal agency)____, in furtherance of U.S. Govern- ment contract No. -(insert number of cost-reimbursement type contract) ----, pur- suant to written authorization dated -} [1 --]. In the event of any inconsistency between the terms and conditions of this order and those of your Federal Supply Schedule contract, the latter will govern. ¹ Insert "a copy of which is attached," or "a copy of which you have on file," or other suitable language, as appropriate. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 38, JANUARY 1964) 551 PART 1-5 SPECIAL AND DIRECTED SOURCES OF SUPPLY 1-5.903- 2 § 1-5.903-2 Orders for GSA stores stock. Orders placed by cost-reimbursement type prime contractors for GSA stores stock shall be placed in accordance with the authorization. They shall show the address to which billings are to be sent and shall contain a statement as follows: This order is placed in behalf of the (insert name of authorizing Federal agency) in furtherance of U.S. Govern- ment contract No. (insert number of cost-reimbursement type contract) pursuant dated____ - to written authorization § 1-5.904 Furnishing information to contractors. Federal agencies shall assist their prime contractors authorized to use GSA supply sources in obtaining perti- nent Federal Supply Schedules and the GSA Stores Stock Catalog and appro- priate supplements thereto, and shall furnish them with any other helpful information. § 1-5.905 Payment for GSA stores stock. Bills for GSA stores stock will not be rendered by GSA until after shipment has been made. Agencies should direct their cost-reimbursement type prime contractors to make prompt payment. Contractors should be given permission to pay any such bills upon receipt. Nec- essary adjustments will be made by GSA subsequent to payment. (END OF PART) FEDERAL PROCUREMENT REGULATIONS 552 (FPR CIRC, 38, JANUARY 1964) CONTENTS OF PART 1-6 FOREIGN PURCHASES Sec. 1-6.200 Scope. 1-6.201 Definitions. PART 1-6-FOREIGN PURCHASES Subpart 1-6.2-Buy American Act- Construction Contracts Sec. 1-6.202-3 1-6.202-4 1-6.203 1-6.203-1 1-6.203-2 1-6.203-3 1-6.202 Buy American policy. Panamanian material used Canal Zone. in Noting exceptions and findings. Unreasonable cost determination. General. Cost computation. Deviations by agency head. 1-6.203-4 Small business. 1-6.202-1 General. 1-6.204 Invitation provision. 1-6.202-2 Determining domestic construc- tion material. 1-6.205 Contract clause. 1-6.206 Violations. FEDERAL PROCUREMENT REGULATIONS Lj (FPR CIRC. 5 JAN. 1960) i ני SUBPART 1-6, 2 BUY AMERICAN ACT- CONSTRUCTION CONTRACTS 1-6, 202- 3 ୮ L L Subpart 1-6.2-Buy American Act- Construction Contracts 1-6.200 Scope. This subpart implements the Buy American Act (41 U.S.C. 10a-10d) and the policies set forth in Executive Order 10582, December 17, 1954 (3 CFR Supp.), with respect to construction contracts. This subpart does not apply to construc- tion contracts (a) executed on Standard Form 19, Invitation, Bid, and Award (Construction, Alteration, or Repair) (small-amount construction contract form), or (b) not involving appropriated funds. 1-6.201 Definitions. As used in this subpart, the following definitions apply: (a) "Construction" means construc- tion, alteration, or repair of any public building or public work. (b) "Construction material" means any article, material, or supply brought to the construction site for incorporation in the building or work. (c) “Component” means any article, material, or supply directly incorporated in construction material. (d) "Domestic construction material” means an unmanufactured construction material which has been mined or pro- duced in the United States, or a manu- factured construction material which has been manufactured in the United States if the cost of its components which are mined, produced, or manufactured in the United States exceeds 50 percent of the cost of all its components. (e) "Nondomestic construction ma- terial" means a construction material other than a domestic construction material. (f) "United States" means the States, the District of Columbia, Puerto Rico, American Samoa, the Canal Zone, the Virgin Islands, and any other place sub- ject to its jurisdiction. 1-6.202 Buy American policy. 1-6.202-1 General. Only domestic construction material shall be used in the performance of con- tracts for construction in the United States made by executive agencies, ex- cept for particular material as to which it is determined: (a) By the agency head, that to make such requirement is impracticable; (b) In accordance with agency pro- cedures, that domestic construction ma- terial is unavailable in sufficient and reasonably available commercial quan- tities and of a satisfactory quality; or (c) In accordance with section 1–6.203, that to make such requirement would unreasonably increase the cost. 1-6.202-2 Determining domestic con- struction material. In determining whether a construc- tion material is a domestic construction material: (a) Only the construction material and its components shall be considered. (b) A component shall be considered to have been mined, produced, or manu- factured in the United States (regardless of its source in fact) if the construction material in which it is incorporated is manufactured in the United States and the component is of a class or kind deter- mined by the agency concerned to be not mined, produced, or manufactured in the United States in sufficient and reason- ably available commercial quantities and of a satisfactory quality. 1-6.202-3 Panamanian material used in Canal Zone. Construction material mined, pro- duced, or manufactured in the Republic of Panama, when purchased for use in the Canal Zone, is exempted from the provisions of the Buy American Act (under item 3 of the Memorandum of า FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 5 JAN. 1960) 601 PART 1-6 FOREIGN PURCHASES 1-6,202-3 L Lo Understandings Reached ancillary to the Treaty of Mutual Understanding and Cooperation between the United States of America and the Republic of Panama, signed January 25, 1955). 1-6.202-4 ings. Noting exceptions and find- Exceptions for nondomestic construc- tion material because use of particular domestic construction material would be impracticable or would unreasonably in- crease the cost or because domestic con- struction material is unavailable shall be noted in the contract. Findings justify- ing such exceptions shall be made a matter of public record. 1–6.203 tion. 1-6.203-1 Unreasonable cost determina- General. A determination shall be made that the use of domestic construction ma- terial would unreasonably increase the cost where, with respect to each particu- lar construction material: (a) A bid or proposal offers nondo- mestic construction material (not listed as excepted in the invitation for bids or request for proposals), the cost of which, plus 6 percent thereof, is less than the cost of comparable domestic construction material; and (b) That bid or proposal offers the lowest price of any received, after adding to each bid or proposal, for evaluation purposes, 6 percent of the cost of all nondomestic construction material, which qualifies under paragraph (a) above, offered in each bid or proposal. 1-6.203-2 Cost computation. The cost of construction material shall be computed as including all costs of de- livery to the construction site. The cost of nondomestic construction material shall also include any applicable duty. Computations shall be based on costs on the date of opening of bids or proposals. 1-6.203-3 Deviations by agency head. Deviations from the requirements of section 1-6.203-1 may be authorized by the agency head in accordance with sec- tion 1-1.009 of this chapter, the Buy American Act, and Executive Order 10582. 1-6.203-4 Small business. Nothing in section 1-6.203-1 shall af- fect the authority or responsibility of an executive agency to place a fair propor- tion of its total contracts with small business concerns. 1-6.204 Invitation provision. Invitations for bids and requests for proposals for affected construction work shall include the following provision: INFORMATION REGARDING BUY AMERICAN ACT (a) The Buy American Act (41 U.S.C. 10a- 10d) generally requires that only domestic construction material be used in the perfor- mance of this contract. (See the clause en- titled "Buy American" in Standard Form 23A, General Provisions, Construction Contracts.) This requirement does not apply to the fol- lowing construction material or components: [List the excepted construction material or components] (b) (1) Furthermore, bids or proposals of- fering use of additional nondomestic con- struction material may be acceptable for award if the Government determines that use of comparable domestic construction ma- terial is impracticable or would unreasonably increase the cost or that domestic construc- tion material (in sufficient and reasonably available commercial quantities and of a satisfactory quality) is unavailable. Re- liable evidence shall be furnished justifying such use of additional nondomestic con- struction material. (2) Where it is alleged that use of domes- tic construction material would unreasonably increase the cost: (i) Data shall be included, based on a reasonable canvass of suppliers, demonstrat- ing that the cost of each such domestic con- struction material would exceed by more than 6 percent the cost of comparable non- domestic construction material. (All costs of delivery to the construction site shall be included, as well as any applicable duty.) (ii) For evaluation purposes, 6 percent of the cost of all additional nondomestic con- struction material, which qualifies under paragraph (i) above, will be added to the bid or proposal. FEDERAL PROCUREMENT REGULATIONS 602 JAN. 1960) (FPR CIRC. 5 - SUBPART 1-6. 2 BUY AMERICAN ACT- CONSTRUCTION CONTRACTS (3) When offering additional nondomestic construction material, bids or proposals may also offer, at stated prices, any available com- parable domestic construction material, so as to avoid the possibility that failure of a nondomestic construction material to be acceptable, under (1) above, will cause rejec- tion of the entire bid. 1-6.205 Contract clause. Contracts for affected construction work shall include the following clause: BUY AMERICAN (a) Agreement. In accordance with the Buy American Act (41 U.S.C. 10a-10d) and Executive Order 10582, December 17. 1954 (3 CFR Supp.), the Contractor agrees that only domestic construction material will be used (by the Contractor, subcontractors, ma- terialmen, and suppliers) in the performance of this contract, except for nondomestic material listed in the contract. (b) Domestic construction material. "Con- struction material" means any article, ma- terial, or supply brought to the construction site for incorporation in the building or work. An unmanufactured construction ma- terial is a "domestic construction material" if it has been mined or produced in the United States. A manufactured construction ma- terial is a "domestic construction material" if it has been manufactured in the United States and if the cost of its components which have been mined, produced, or manu- 1–6.206 factured in the United States exceeds 50 per- cent of the cost of all its components. "Component" means any article, material, or supply directly incorporated in a construc- tion material. A component (c) Domestic component. shall be considered to have been "mined, produced, or manufactured in the United States" (regardless of its source in fact) if the article, material, or supply in which it is incorporated was manufactured in the United States and the component is of a class or kind determined by the Government to be not mined, produced, or manufactured in the United States in sufficient and reasonably available commercial quantities and of a satisfactory quality. 1-6.206 Violations. If the head of the agency concerned finds there has been a failure to comply with the Buy American provisions of the contract, he shall make public his find- ings and no other contract for the con- struction, alteration, or repair of any public building or public work in the United States or elsewhere shall be awarded, as provided in the Buy Ameri- can Act, to the contractor, subcontrac- tors, materialmen, or suppliers with which the contractor is associated or affiliated, for a period of 3 years after such finding is made public. (For debar- ment procedures, see Subpart 1–1.6.) (END OF PART) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 5 603 - JAN. 1960) CONTENTS OF PART 1-7 CONTRACT CLAUSES PART 1-7-CONTRACT CLAUSES Sec. 1-7. 101-24 1-7.101-25 1-7. 101-28 Sec. 1-7.000 Scope of part. Subpart 1-7.1-Fixed-Price Supply Contracts 1-7.100 Scope of subpart. 1-7. 101-26 1-7.101 Clauses. 1-7.101-1 Definitions. 1-7.101-27 1-7.101-2 Changes. 1-7.101-3 Extras. 1-7.101-4 1-7.101-5 1-7.101-6 1-7.101-7 Payments. 1-7.101-8 1-7.101-9 Variation in quantity. Inspection. Responsibility for supplies. Assignment of claims. Additional bond security. 1-7.101-10 Examination of records. 1-7.101-11 Default. 1-7.101-12 Disputes. 1-7.101-13 Notice and assistance regarding 1-7.101-14 Buy American Act. Humane slaughter of livestock. Utilization of concerns in labor surplus areas. Small business subcontracting program. Labor surplus area subcontract- ing program. Termination for convenience of the Government. Subpart 1-7.2-[Reserved] Subpart 1-7.3-[Reserved] Subpart 1-7.4-[Reserved] Subpart 1-7.5-[Reserved] Subpart 1-7.6—Fixed-Price Construction patent infringement. 1-7.600 1-7.101-15 Convict labor. 1-7.601 1-7.101-16 Eight-hour law of 1912- 1912-over- time compensation. 1-7.601-1 Act. 1-7.602 1-7.602-1 1-7.101-18 Nondiscrimination in employ- ment. 1-7.101-17 Walsh-Healey Public Contracts 1-7.101-19 Officials not to benefit. 1-7.101-20 1--7. 101-21 Covenant against contingent fees. Utilization concerns. of small business 1-7.602-3 1-7. 101-22 Federal, State, and local taxes. 1-7. 101-23 Liquidated damages. Contracts Scope of subpart. Required clauses. Clauses in standard construction contract forms. Additional standardized clauses. Price adjustment for suspension, delay, or interruption of the work. 1-7.602-2 Termination for convenience of the Government, in contracts estimated to exceed $10,000. Termination for convenience of the Government, in contracts estimated not to exceed $10,000. FEDERAL PROCUREMENT REGULATIONS J (FPR CIRC, 29, NOVEMBER 1962) H. PART 1-7 CONTRACT CLAUSES 1-7.101-3 ୮ 1-7.000 Scope of part. This part sets forth contract clauses for use in connection with the procure- ment of personal property and nonper- sonal services (including construction). Subpart 1-7.1-Fixed-Price Supply Contracts 1-7.100 Scope of subpart. This sets forth subpart sets contract clauses for use in fixed-price supply contracts. 1-7.101 Clauses. Except as otherwise provided in this section 1-7.101, the clauses set forth in this section shall be used in fixed-price supply contracts entered into by formal advertising and, unless inappropriate, should be used in negotiated contracts (other than for small purchases as de- fined in Subpart 1-3.6). 1-7.101-1 Definitions. DEFINITIONS As used throughout this contract, the fol- lowing terms shall have the meanings set forth below: (a) The term "head of the agency" or "Secretary" as used herein means the Secretary, the Under Secretary, any Assistant Secretary, or any other head or assistant head of the executive or mili- tary department or other Federal agency; and the term "his duly authorized repre- sentative" means any person or persons or board (other than the Contracting Officer) authorized to act for the head of the agency or the Secretary. (b) The term "Contracting Officer" means the person executing this contract on behalf of the Government, and any other officer or civilian employee who is a properly desig- nated Contracting Officer; and the term in- cludes, except as otherwise provided in this contract, the authorized representative of a Contracting Officer acting within the limits of his authority. (c) Except as otherwise provided in this contract, the term "subcontracts" includes purchase orders under this contract. 1-7.101-2 Changes. CHANGES The Contracting Officer may at any time, by a written order, and without notice to the sureties, make changes, within the general scope of this contract, in any one or more of the following: (i) Drawings, designs, or specifications, where the supplies to be fur- nished are to be specially manufactured for the Government in accordance therewith; (ii) method of shipment or packing; and iii) place of delivery. If any such change causes an increase or decrease in the cost of, or the time required for, the performance of any part of the work under this contract, whether changed or not changed by any such order, an equitable adjustment shall be made in the contract price or delivery schedule, or both, and the contract shall be modified in writing accordingly. Any claim by the Con- tractor for adjustment under this clause must be asserted within 30 days from the date of receipt by the Contractor of the notification of change: Provided, however, That the Contracting Officer, if he decides that the facts justify such action, may re- ceive and act upon any such claim asserted at any time prior to final payment under this contract. Where the cost of property made obsolete or excess as a result of a change is included in the Contractor's claim for adjustment, the Contracting Officer shall have the right to prescribe the manner of disposition of such property. Failure to agree to any adjustment shall be a dispute concerning a question of fact within the meaning of the clause of this contract en- titled "Disputes." However, nothing in this clause shall excuse the Contractor from pro- ceeding with the contract as changed. 1-7.101-3 Extras. EXTRAS Except as otherwise provided in this con- tract, no payment for extras shall be made FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 21, OCTOBER 1961) 701 PART 1-7 CONTRACT CLAUSES 1-7. 101-3 unless such extras and the price therefor have been authorized in writing by the Con- tracting Officer. 1-7.101-4 Variation in quantity. VARIATION IN QUANTITY No variation in the quantity of any item called for by this contract will be accepted unless such variation has been caused by conditions of loading, shipping, or packing, or allowances in manufacturing processes, and then only to the extent, if any, specified elsewhere in this contract. 1-7.101-5 Inspection. INSPECTION (a) All supplies (which term throughout this clause includes without limitation raw materials, components, intermediate assem- blies, and end products) shall be subject to inspection and test by the Government, to the extent practicable at all times and places including the period of manufacture, and in any event prior to acceptance. (b) In case any supplies or lots of sup- plies are defective in material or workman- ship or otherwise not in conformity with the requirements of this contract, the Gov- ernment shall have the right either to reject them (with or without instructions as to their disposition) or to require their cor- rection. Supplies or lots of supplies which have been rejected or required to be cor- rected shall be removed, or, if permitted or required by the Contracting Officer, cor- rected in place by and at the expense of the Contractor promptly after notice, and shall not thereafter be tendered for acceptance unless the former rejection or requirement of correction is disclosed. If the Contractor fails promptly to remove such supplies or lots of supplies which are required to be removed, or promptly to replace or correct such supplies or lots of supplies, the Gov- ernment either (i) may by contract or other- wise replace or correct such supplies and charge to the Contractor the cost occasioned the Government thereby, or (ii) may ter- minate this contract for default as provided in the clause of this contract entitled "De- fault.' Unless the Contractor corrects or replaces such supplies within the delivery schedule, the Contracting Officer may re- quire the delivery of such supplies at a re- duction in price which is equitable under the circumstances. Failure to agree to such reduction of price shall be a dispute concern- ing a question of fact within the meaning of the clause of this contract entitled "Dis- putes." (c) If any inspection or test is made by the Government on the premises of the Con- tractor or a subcontractor, the Contractor without additional charge shall provide all reasonable facilities and assistance for the safety and convenience of the Government inspectors in in the performance of their duties. If Government inspection or test is made at a point other than the premises of the Contractor or a subcontractor, it shall be at the expense of the Government except as otherwise provided in this contract: Pro- vided, That in case of rejection the Govern- ment shall not be liable for any reduction in value of samples used in connection with such inspection or test. All inspections and tests by the Government shall be performed in such a manner as not to unduly delay the work. The Government reserves the right to charge to the Contractor any additional cost of Government inspection and test when supplies are not ready at the time such inspection and test is requested by the Con- tractor or when reinspection or retest is ne- cessitated by prior rejection. Acceptance or rejection of the supplies shall be made as promptly as practicable after delivery, except as otherwise provided in this contract; but failure to inspect and accept or reject sup- plies shall neither relieve the Contractor from responsibility for such supplies as are not in accordance with the contract require- ments nor impose liability on the Govern- ment therefor. (d) The inspection and test by the Gov- ernment of any supplies or lots thereof does not relieve the Contractor from any responsi- bility regarding defects or other failures to meet the contract requirements which may be discovered prior to acceptance. Except as otherwise provided in this contract, accept- ance shall be conclusive except as regards latent defects, fraud, or such gross mistakes as amount to fraud. (e) The Contractor shall provide and maintain an inspection system acceptable to the Government covering the supplies hereunder. Records of all inspection work by the Contractor shall be kept complete and available to the Government during the performance of this contract and for such longer period as may be specified elsewhere in this contract. FEDERAL PROCUREMENT REGULATIONS 702 (FPR CIRC, 21, OCTOBER 1961) SUBPART 1-7.1 FIXED-PRICE SUPPLY CONTRACTS 1-7.101-9 ୮ 1-7.101-6 Responsibility for supplies. RESPONSIBILITY FOR SUPPLIES Except as otherwise provided in this con- tract, (i) the Contractor shall be responsible for the supplies covered by this contract until they are delivered at the designated delivery point, regardless of the point of inspection; (ii) after delivery to the Government at the designated point and prior to acceptance by the Government or rejection and giving not- ice thereof by the Government, the Govern- ment shall be responsible for the loss or de- struction of or damage to the supplies only if such loss, destruction, or damage results from the negligence of officers, agents, or employees of the Government acting within the scope of their employment; and (iii) the Contractor shall bear all risks as to re- jected supplies after notice of rejection, ex- cept that the Government shall be respon- sible for the loss, or destruction of, or damage to the supplies only if such loss, destruc- tion or damage results from the gross negli- gence of officers, agents, or employees of the Government acting within the scope of their employment. 1-7.101-7 Payments. PAYMENTS The Contractor shall be paid, upon the submission of proper invoices or vouchers, the prices stipulated herein for supplies de- livered and accepted or services rendered and accepted, less deductions, if any, as herein provided. Unless otherwise specified, pay- ment will be made on partial deliveries ac- cepted by the Government when the amount due on such deliveries so warrants; or, when requested by the Contractor, payment for ac- cepted partial deliveries shall be made when- ever such payment would equal or exceed either $1,000 or 50 percent of the total amount of this contract. 1-7.101-8 Assignment of claims. ASSIGNMENT OF CLAIMS (a) Pursuant to the provisions of the As- signment of Claims Act of 1940, as amended (31 U.S.C. 203, 41 U.S.C. 15), if this contract provides for payments aggregating $1,000 or more, claims for moneys due or to become due the Contractor from the Government under this contract may be assigned to a bank, trust company, or other financing in- stitution, including any Federal lending Lagency, and may thereafter be further as- signed and reassigned to any such institu- tion. Any such assignment or reassignment shall cover all amounts payable under this contract and not already paid, and shall not be made to more than one party, except that any such assignment or reassignment may be made to one party as agent or trustee for two or more parties participating in such financing. Unless otherwise provided in this contract, payments to an assignee of any moneys due or to become due under this contract shall not, to the extent provided in said Act, as amended, be subject to reduction or setoff. (b) In no event shall copies of this con- tract or of any plans, specifications, or other similar documents relating to work under this contract, if marked, "Top Secret," "Secret," or "Confidential," be furnished to any assignee of any claim arising under this contract or to any other person not entitled to receive the same. However, a copy of any part or all of this contract so marked may be furnished, or any information contained therein may be disclosed, to such assignee upon the prior written authorization of the Contracting Officer. The last sentence of paragraph (a) of the Assignment of Claims clause shall be included only in contracts entered into in time of war or national emergency (as defined in the Assignment of Claims Act of 1940, as amended) by the Department of Defense, the General Services Admin- istration, the Atomic Energy Commis- sion, the National Aeronautics and Space Administration, the Federal Aviation Agency, or any other department or agency of the United States designated by the President pursuant to clause 4 of the proviso of section 1 of the Assign- ment of Claims Act of 1940, as amended by the Act of May 15, 1951, 65 Stat. 41. 1-7.101-9 Additional bond security. ADDITIONAL BOND SECURITY If any surety upon any bond furnished in connection with this contract becomes un- acceptable to the Government, or if any such surety fails to furnish reports as to his fi- nancial condition from time to time as re- quested by the Government, the Contractor shall promptly furnish such additional se- curity as may be required from time to time to protect the interests of the Government REGULATIONS FEDERAL PROCUREMENT ୮ (FPR CIRC. 21, OCTOBER 1961) 703 PART 1-7 CONTRACT CLAUSES 1-7.101-9 L and of persons supplying labor or materials in the prosecution of the work contemplated by this contract. 1-7.101-10 Examination of records. EXAMINATION OF RECORDS (a) The Contractor agrees that the Comp- troller General of the United States or any of his duly authorized representatives shall, until the expiration of three years after final payment under this contract, have access to and the right to examine any directly perti- nent books, documents, papers, and records of the Contractor involving transactions re- lated to this contract. (b) The Contractor further agrees to in- clude in all his subcontracts hereunder a provision to the effect that the subcontractor agrees that the Comptroller General of the United States or any of his duly authorized representatives shall, until the expiration of three years after final payment under the subcontract, have access to and the right to examine any directly pertinent books, docu- ments, papers, and records of such subcon- tractor, involving transactions related to the subcontract. The term "subcontract" as used in this clause excludes (i) purchase orders not exceeding $2,500 and (ii) subcon- tracts or purchases orders for public utility services at rates established for uniform ap- plicability to the general public. The above clause shall be included in negotiated contracts exceeding $2,500 but need not be included in contracts entered into by means of formal advertising. 1-7.101-11 Default. Insert the clause set forth in section 1-8.707 under the conditions prescribed in section 1–8.700–2(b) (1). 1-7.101-12 Disputes. DISPUTES (a) Except as otherwise provided in this contract, any dispute concerning a question of fact arising under this contract which is not disposed of by agreement shall be decided by the Contracting Officer, who shall reduce his decision to writing and mail or otherwise furnish a copy thereof to the Contractor. The decision of the Contracting Officer shall be final and conclusive unless within 30 days from the date of receipt of such copy, the Contractor mails or other- wise furnishes to the Contracting Officer a written appeal addressed to the Secretary. The decision of the Secretary or his duly authorized representative for the determina- tion of such appeals shall be final and conclusive unless determined by a court of competent jurisdiction to have been fraudu- lent, or capricious, or arbitrary, or so grossly erroneous as necessarily to imply bad faith, or not supported by substantial evidence. In connection with any appeal proceeding under this clause, the Contractor shall be afforded an opportunity to be heard and to offer evidence in support of its appeal. Pending final decision of a dispute here- under, the Contractor shall proceed dili- gently with the performance of the contract and in accordance with the Contracting Officer's decision. (b) This "Disputes" clause does not pre- clude consideration of law questions in con- nection with decisions provided for in para- graph (a) above: Provided, That nothing in this contract shall be construed as mak- ing final the decision of any administrative official, representative, or board on a ques- tion of law. 1-7.101-13 Notice and assistance re- garding patent infringement. NOTICE AND ASSISTANCE REGARDING PATENT INFRINGEMENT (a) The Contractor shall report to the Contracting Officer, promptly and in reason- able written detail, each notice or claim of patent infringement based on the perform- ance of this contract of which the Con- tractor has knowledge. (b) In the event of litigation against the Government on account of any claim of patent infringement arising out of the per- formance of this contract or out of the use of any supplies furnished or work or service performed hereunder, the Contractor shall furnish to the Government, upon request, all evidence and information in possession of the Contractor pertaining to such litiga- tion. Such evidence and information shall be furnished at the expense of the Govern- ment except in those cases in which the Contractor has agreed to indemnify the Gov- ernment against the claim being asserted. The above clause shall be included only if the amount of the contract exceeds $5,000. FEDERAL PROCUREMENT REGULATIONS a 704 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-7. 1 FIXED-PRICE SUPPLY CONTRACTS 1-7.101-14 Buy American Act BUY AMERICAN ACT (a) In acquiring end products, the Buy American Act (41 U.S. Code 10a-d) pro- vides that the Government give preference to domestic source end products. For the purpose of this clause: (i) "Components" means those articles, materials, and supplies, which are directly incorporated in the end products; (ii) "End products" means those articles, materials, and supplies, which are to be acquired under this contract for public use; and (iii) A A "domestic source end product" means (A) an unmanufactured end product which has been mined or produced in the United States and (B) an end product manu- factured in the United States if the cost of the components thereof which are mined, produced, or manufactured in the United States exceeds 50 percent of the costs of all its components. For the purposes of this (a) (iii) (B), components of foreign origin of the same type or kind as the products re- ferred to in (b) (ii) or (iii) of this clause shall be treated as components mined, pro- duced, or manufactured in the United States. (b) The Contractor agrees that there will be delivered under this contract only do- mestic source end products, except end products: (i) Which are for use outside the United States; (ii) Which the Government determines are not mined, produced, or manufactured in the United States in sufficient and reasonably available commercial quantities and of a satisfactory quality; (iii) As to which the Secretary determines the domestic preference to be inconsistent with the public interest; or (iv) As to which the Secretary determines the cost to the Government to be unrea- sonable. (The foregoing requirements are adminis- tered in accordance with Executive Order No. 10582, dated December 17, 1954.) 1-7.101-15 Convict labor. Insert the clause set forth in section 1-12.203 under the conditions contained in section 1-12.202. 1-7.101-16 Eight-hour law of 1912— overtime compensation. Insert the clause set forth in section 1-12.303 under the conditions contained in section 1-12.302. 1-7. 101–18 (d) 1-7.101-17 Walsh-Healey Public Con- tracts Act. Insert the clause set forth in section 1-12.604 under the conditions contained in section 1-12.602. 1-7.101-18 Nondiscrimination in em- ployment. NONDISCRIMINATION IN EMPLOYMENT (The following clause is applicable unless this contract is exempt under the rules and regulations of the President's Committee on Equal Employment Opportunity issued pur- suant to Executive Order No. 10925 of March 6, 1961 (26 F.R. 1977).) In connection with the performance of work under this contract, the Contractor agrees as follows: (a) The Contractor will not discriminate against any employee or applicant for em- ployment because of race, creed, color, or national origin. The Contractor will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, creed, color, or national origin. Such action shall include, but not be limited to, the following: employment, upgrading, demotion or transfer; recruitment or cruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including appren- ticeship. The Contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided by the Contracting Officer setting forth the provisions of this Nondiscrimina- tion clause. re- (b) The Contractor will, in all solicita- tions or advertisements for employees placed by or on behalf of the Contractor, state that all qualified applicants will receive consid- eration for employment without regard to race, creed, color, or national origin. (c) The Contractor will send to each labor union or representative of workers with which he has a collective bargaining agree- ment or other contract or understanding, a notice, to be provided by the agency Con- tracting Officer, advising the said labor union or workers' representative of the Contractor's commitments under this Nondiscrimination clause, and shall post copies of the notice in conspicuous places available to employees and applicants for employment. (d) The Contractor will comply with all provisions of Executive Order No. 10925 of March 6, 1961, and of the rules, regulations, and relevant orders of the President's Com- mittee on Equal Employment Opportunity created thereby. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 29, NOVEMBER 1962) 705 PART 1-7 CONTRACT CLAUSES 1-7. 101-18 (e) (e) The Contractor will furnish all infor- mation and reports required by Executive Order No. 10925 of March 6, 1961, and by the rules, regulations, and orders of the said Committee, or pursuant thereto, and will permit access to his books, records, and ac- counts by the contracting agency and the Committee for purposes of investigation to ascertain compliance with such rules, regu- lations, and orders. (f) In the event of the Contractor's non- compliance with the Nondiscrimination clause of this contract or with any of the said rules, regulations, or orders, this con- tract may be cancelled in whole or in part and the Contractor may be declared ineligi- ble for further government contracts in ac- cordance with procedures authorized in Ex- ecutive Order No. 10925 of March 6, 1961, and such other sanctions may be imposed and remedies invoked as provided in the said Executive order or by rule, regulation, or order of the President's Committee on Equal Employment Opportunity, or as otherwise provided by law. (g) The Contractor will include the pro- visions of the foregoing paragraphs (a) through (f) in every subcontract or pur- chase order unless exempted by rules, regu- lations, or orders of the President's Com- mittee on Equal Employment Opportunity issued pursuant to section 303 of Executive Order No. 10925 of March 6, 1961, so that such provisions will be binding upon each subcontractor or vendor. The Contractor will take such action with respect to any subcontract or purchase order as the con- tracting agency may direct as a means of enforcing such provisions, including sanc- tions for noncompliance: Provided, however, That in the event the Contractor becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction by the contracting agency, the Contractor may request the United States to enter into such litigation to protect the interests of the United States. 1-7.101-19 Officials not to benefit. OFFICIALS NOT TO BENEFIT No member of or delegate to Congress, or resident commissioner, shall be admitted to any share or part of this contract, or to any benefit that may arise therefrom; but this provision shall not be construed to extend to this contract if made with a corporation for its general benefit. 1-7.101-20 gent fees. Covenant against contin- Insert the clause set forth in section 1-1.503 under the conditions contained in section 1-1.501. 1-7.101-21 Utilization of small busi- ness concerns. Insert the clause set forth in § 1-1.710- 3(a) under the conditions and in the manner prescribed therein. 1-7.101-22 taxes. Federal, State, and local Insert the clause set forth in section 1-11.401-1 under the conditions con- tained therein. 1-7.101-23 Liquidated damages. Insert the provision set forth in section 1-1.315-3 under the conditions and in the manner prescribed in section 1-1.315. 1-7.101-24 Humane slaughter of live- stock. Insert the clause set forth in section 1-4.605 or in section 1-4.606 under the procedures provided in section 1-4.604. 1-7.101-25 Utilization of concerns in labor surplus areas. Insert the clause set forth in § 1-1.805- 3(a) under the conditions and in the manner prescribed therein. 1-7.101-26 Small business subcon- tracting program. Insert the clause set forth in § 1-1.710- 3(b) under the conditions and in the manner prescribed therein. 1-7.101-27 Labor surplus area sub- contracting program. Insert the clause set forth in § 1-1.805- 3(b) under the conditions and in the manner prescribed therein. 1-7.101-28 Termination for conven- ience of the Government. Whenever a termination for conven- ience clause is to be included, insert either the clause set forth in section 1-8.701 or the clause set forth in section 1-8.705-1, as appropriate, under the con- ditions prescribed in sections 1-8.700-2 (a) (1) and 1-8.700-2(a) (2). 7 J FEDERAL PROCUREMENT REGULATIONS 706 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-7. 1 FIXED-PRICE SUPPLY CONTRACTS 1-7.101-27 (e) The Contractor will furnish all infor- mation and reports required by Executive Order No. 10925 of March 6, 1961, and by the rules, regulations, and orders of the said Committee, or pursuant thereto, and will permit access to his books, records, and ac- counts by the contracting agency and the Committee for purposes of investigation to ascertain compliance with such rules, regu- lations, and orders. (f) In the event of the Contractor's non- compliance with the Nondiscrimination clause of this contract or with any of the said rules, regulations, or orders, this con- tract may be cancelled in whole or in part and the Contractor may be declared ineligi- ble for further government contracts in ac- cordance with procedures authorized in Ex- ecutive Order No. 10925 of March 6, 1961, and such other sanctions may be imposed and remedies invoked as provided in the said Executive order or by rule, regulation, or order of the President's Committee on Equal Employment Opportunity, or as otherwise provided by law. (g) The Contractor will include the pro- visions of the foregoing paragraphs (a) through (f) in every subcontract or pur- chase order unless exempted by rules, regu- lations, or orders of the President's Com- mittee on Equal Employment Opportunity issued pursuant to section 303 of Executive Order No. 10925 of March 6, 1961, so that such provisions will be binding upon each subcontractor or vendor. The Contractor will take such action with respect to any subcontract or purchase order as the con- tracting agency may direct as a means of enforcing such provisions, including sanc- tions for noncompliance: Provided, however, That in the event the Contractor becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction by the contracting agency, the Contractor may request the United States to enter into such litigation to protect the interests of the United States. 1-7.101-19 Officials not to benefit. OFFICIALS NOT TO BENEFIT No member of or delegate to Congress, or resident commissioner, shall be admitted to any share or part of this contract, or to any benefit that may arise therefrom; but this provision shall not be construed to extend to this contract if made with a corporation for its general benefit. 1-7.101-20 Covenant against contin- gent fees. Insert the clause set forth in section 1-1.503 under the conditions contained in section 1-1.501. § 1-7.101-21 Utilization of small busi- ness concerns. Insert the clause set forth in § 1-1.710- 3(a) under the conditions and in the manner prescribed therein. 1-7.101-22 Federal, State, and local taxes. Insert the clause set forth in section 1-11.401-1 under the conditions con- tained therein. 1-7.101-23 Liquidated damages. Insert the provision set forth in section 1-1.315-3 under the conditions and in the manner prescribed in section 1-1.315. 1-7.101-24 Humane slaughter of live- stock. Insert the clause set forth in section 1-4.605 or in section 1-4.606 under the procedures provided in section 1-4.604. § 1-7.101-25 Utilization of concerns in labor surplus areas. Insert the clause set forth in § 1-1.805- 3(a) under the conditions and in the manner prescribed therein. § 1-7.101-26 Small business subcon- tracting program. Insert the clause set forth in § 1-1.710– 3(b) under the conditions and in the manner prescribed therein. § 1-7.101-27 Labor surplus area sub- contracting program. Insert the clause set forth in § 1-1.805- 3(b) under the conditions and in the manner prescribed therein. 7 ך (NEXT PAGE IS 707) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 23, JANUARY 1962) 706.1 ୮ ட Lo Subpart 1-7.2-[Reserved] Subpart 1-7.3-[Reserved] Subpart 1-7.4-[Reserved] Subpart 1-7.5-[Reserved] FEDERAL (NEXT PAGE IS 709) REGULATIONS PROCUREMENT (FPR CIRC. 5 - JAN. 1960) 707 SUBPART 1-7, 6 FIXED-PRICE CONSTRUCTION J CONTRACTS 1-7.602-3 Subpart 1-7.6-Fixed-Price Construction Contracts 1-7.600 Scope of subpart. This subpart sets forth contract clauses for use in fixed-price construction contracts. 1-7.601 Required clauses. Clauses in standard con- ▷ 1-7.601-1 ୮ struction contract forms. Subpart 1-16.4 prescribes standard forms for construction contracts which contain clauses required for use in ac- cordance with said subpart. In addition, clauses are prescribed and set forth else- where, as follows: (a) The clause entitled Termination for Default-Damages for Delay-Time Extensions, for use in contracts esti- mated to exceed $10,000, is set forth in section 1-8.709-1 to be used as pre- scribed in section 1-8.700–2(b) (4). (b) The clause entitled Termination for Default-Damages for Delay-Time Extensions, for use in contracts esti- mated not to exceed $10,000, is set forth in section 1-8.709-2 to be used as pre- scribed in section 1-8.700-2(b) (5). standardized 1-7.602 Additional clauses. 1-7.602-1 Price adjustment for sus- pension, delay, or interruption of the work. The following clause shall be inserted in fixed-price construction contracts whenever it is desired to provide for sus- pension of the work for the convenience of the Government and/or to provide for administrative relief for unreasonable periods of delay caused by the contract- ing officer in the administration of the contract: PRICE ADJUSTMENT FOR SUSPENSION, DELAY, OR INTERRUPTION OF THE WORK (a) The Contracting Officer may order the Contractor in writing to suspend all or any part of the work for such period of time as he may determine to be appropriate for the convenience of the Government. (b) If, without the fault or negligence of the Contractor, the performance of all or any part of the work is, for an unreasonable period of time, suspended, delayed, or in- terrupted by an act of the Contracting Officer in the administration of the contract, or by his failure to act within the time specified in the contract (or if no time is specified, within a reasonable time), an ad- justment shall be made by the Contracting Officer for any increase in the cost of per- formance of the contract (excluding profit) necessarily caused by the unreasonable pe- riod of such suspension, delay, or interrup- tion, and the contract shall be modified in writing accordingly. No adjustment shall be made to the extent that performance by the Contractor would have been prevented by other causes even if the work had not been so suspended, delayed, or interrupted. claim under this clause shall be allowed (i) for any costs incurred more than twenty days before the Contractor shall have noti- fied the Contracting Officer in writing of the act or failure to act involved (but this re- quirement shall not apply where a suspension order has issued), and (ii) unless the claim, in an amount stated, is asserted in writing as soon as practicable after the termination of such suspension, delay, or interruption but not later than the date of final payment under the contract. Any dispute concern- ing a question of fact arising under this clause shall be subject to the Disputes clause. No 1-7.602-2 Termination for conven- ience of the Government, in con- tracts estimated to exceed $10,000. Whenever a termination for conven- ience clause is to be included in contracts estimated to exceed $10,000, insert the clause set forth in section 1-8.703 under the conditions prescribed in section 1- 8.700-2(a) (5). 1-7.602-3 Termination for conven- ience of the Government, in con- tracts estimated not to exceed $10,000. Whenever a termination for conven- ience clause is to be included in contracts estimated not to exceed $10,000, insert the clause set forth in section 1-8.705-2 under the conditions prescribed in sec- tion 1-8.700-2(a) (6). (END OF PART) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 29, NOVEMBER 1962) 709 CONTENTS OF PART 1-8 TERMINATION OF CONTRACTS PART 1-8-TERMINATION OF CONTRACTS Sec. 1-8.000 Scope and applicability of part. Subpart 1-8.1-Definition of Terms 1-8.101 Definitions. Subpart 1-8.2-General Principles Applicable to the Termination for Convenience and Settle- ment of Fixed-Price Type and Cost-Reimburse- ment Type Contracts 1-8.200 Scope of subpart. Sec. 1-8.211-4 1-8.212 1-8.212-1 1-8.212-2 1-8.213 Action by board. Payment. Partial payments upon termina- tion. Final payment upon termination. Cost principles applicable to the settlement of research and de- velopment contracts with edu- cational institutions. Subpart 1-8.3-Additional Principles Applicable to the Settlement of Fixed-Price Type Contracts Terminated for Convenience General. Cost principles. Allowance for profit. Adjustment for loss. 1-8.201 General. 1-8.301 1-8.202 Notice of termination. 1-8.302 1-8.203 Methods of settlement. 1-8.303 1-8.204 Duties of prime contractor after 1-8.304 1-8.305 Deductions. 1-8.205 1-8.306 Completed end items. 1-8.307 1-8.307-1 1-8.206 1-8.207 receipt of notice of termination. Duties of contracting officer after issuance of notice of termina- tion. Fraud or other criminal conduct. Accounting review of prime con- tract settlement proposals and of subcontract settlements. Settlement of subcontract claims. Subcontractor's rights. Prime contractor's rights and ob- ligations. Settlement procedure. 1-8.307-2 1-8.308 Settlement proposals. Submission of settlement pro- posals. Bases for settlement proposals. Limitation on settlements. Subpart 1-8.4—Additional Principles Applicable to the Settlement of Cost-Reimbursement Type Contracts Terminated for Convenience General. Discontinuance of invoices or 1-8.208 1-8.208-1 1-8.208-2 1-8.401 1-8.208-3 1-8.402 1-8.208-4 Authorization for subcontract settlements, without approval 1-8.403 or ratification. 1-8.208-5 Recognition of judgments and arbitration awards. 1-8.404 1-8.208-6 Delay in settlement of subcon- 1-8.404-1 tractor claims. 1-8.208-7 Government assistance in settle- ment of subcontracts. 1-8.208-8 Assignment of rights under sub- contracts. 1-8.209 Settlement agreements. 1-8.209-1 General. 1-8.209-2 Excepted items. 1-8.404-3 1-8.404-4 1-8.404-5 1-8.404-6 1-8.404-7 1-8.209-3 Government property. vouchers. Notice to the General Accounting Office. Procedure after invoices or vouch- ers are discontinued. Submission of settlement pro- posal. 1-8.404-2 Interim negotiations. Partial payments. Adjustment of overhead costs. Information concerning previous cost invoices or vouchers. [Reserved.] [Reserved.] 1-8.404-8 Final settlement. Procedure for partial termination. General. Submission of settlement proposal (fee only). Submission of invoices or vouch- ers. Adjustment of fee. Subpart 1-8.5-Disposition of Termination Inventory 1-8.209-4 No-cost settlement. 1-8.405 1-8.209-5 Partial settlements. claims. 1-8.209-7 1-8.210 1-8.209-6 Joint settlement of two or more Settlement by determination. Contracting officer's negotiation memorandum. 1-8.405-1 1-8.405-2 1-8.405-3 1-8.211 Review and approval of proposed settlements. 1-8.406 1-8.211-1 L 1-8.211-2 Settlement review boards. Required review and approval. 1-8.211-3 Scope of review. 1-8.501 General. FEDERAL PROCUREMENT REGULATIONS i (FPR CIRC. 29, NOVEMBER 1962) CONTENTS OF PART 1-8 TERMINATION OF CONTRACTS ட ୮ 1-8.502 1-8.502-1 1-8.502-2 1-8.502-3 Cost-reimbursement type con- tracts. 1-8.503 Inventory schedules. 1-8.503-1 Submission of inventory sched- ules. 1-8.503-2 Separate schedules. 1-8.503-3 Inventory descriptions. 1-8.503-4 1-8.503-5 Common items. 1-8.503-6 Withdrawals from schedules. adequate schedules. 1-8.504 Scrap and salvage. 1-8.504-1 General. 1-8.504-2 Scrap warranty. 1-8.505 Screening of serviceable and us- Sec. 1-8.501-1 Methods of disposal. 1-8.501-2 General restrictions on contrac- tor's authority. Contractor-acquired property. Purchase or retention at cost. Return of property to suppliers. Inventory schedule certificate. inventory 1-8.503-7 Rejection and correction of in- Sec. Subpart 1-8.6-Termination for Default Scope of subpart. General. Default termination of fixed- price supply contracts. The Government's right to termi- nate for default. Effect of termination for default. Procedure in case of default. Procedure in lieu of termination for default. Documentation in contract file. Repurchase against contractor's account. Other damages. Default termination of fixed-price construction contracts. Termination of the contractor's right to proceed. Effect of termination for default. Procedure in case of default 1-8.600 1-8.601 1-8.602 1-8.602-1 1-8.602-2 1-8.602-3 1-8.602-4 1-8.602-5 1-8.602-6 1-8.602-7 1-8.603 1-8.603-1 1-8.603-2 1-8.603-3 able property. 1-8.603-4 Dealings with surety-take over 1-8.506 Government-furnished property. agreements. 1-8.507 Sale or other disposition of termi- 1-8.603-5 nation inventory. 1-8.507-1 General. 1-8.507-2 [Reserved.] 1-8.507-3 [Reserved.] 1-8.603-6 1-8.603-7 1-8.604 1-8.507-4 Proceeds of sale. 1-8.507-5 Applicability of antitrust laws. 1-8.605 1-8.507-6 Foreign contractor inventory. 1-8.508 Donations. 1-8.509 Destruction or abandonment. 1-8.510 Special machinery, tooling, and equipment. 1-8.700 1-8.511 Removal and storage. 1-8.511-1 Special storage at the expense and risk of the contractor. 1-8.511-2 Storage at the expense and risk 1-8.700-1 1-8.700-2 1-8.701 Procedure in lieu of termination for default. Documentation in contract file. Liquidation of liability. Default termination of cost- reimbursement type contracts. Default termination of certain fixed-price research and devel- opment contracts. Subpart 1-8.7-Clauses Scope and applicability of sub- part. Scope. Applicability. Termination clause for fixed-price of the Government. contracts 1-8.512 1-8.513 Review of property disposal. Subcontractor termination inven- 1-8.702 Termination clause for cost- tory. 1-8.703 reimbursement type contracts. Termination clause for fixed-price 1-8.513-1 General policy. 1-8.513-2 Inventory schedules. 1-8.704 1-8.513-3 Scrap and salvage. 1-8.513-4 1-8.514 Serviceable and usable property. Adjustment prior to final settle- ment. 1-8.704-1 1-8.704-2 1-8.514-1 Duty of contractors to inform Government. 1-8.705 1-8.514-2 Right of Government to review L 1-8.515 inventory schedules. Accounting for termination in- ventory. 1-8.705-1 1-8.705-2 1-8.706 construction contracts. Research and development con- tracts with educational and other nonprofit institutions. Termination clause. Suggested clause for subcontracts. Short-form termination for con- venience clauses for fixed-price type contracts. Supply and service contracts. Construction contracts. Subcontract termination clause. ii FEDERAL PROCUREMENT REGULATIONS لم (FPR CIRC. 29, NOVEMBER 1962) CONTENTS OF PART 1-8 TERMINATION OF CONTRACTS ୮ Sec. 1-8.707 Default 1-8.708 L 1-8.709 clause for fixed-price supply contracts. Excusable delays clause for cost- reimbursement type contracts. Default clause for fixed-price con- struction contracts. 1-8.709-1 Long-form clause. 1-8.709-2 Short-form clause. 1-8.710 Default clause for fixed-price re- search and development con- tracts. Subpart 1-8.8-Formats of Notices, Forms, Warranties, and Agreements Notice of termination for conven- ience of the Government. Telegraphic notice. 1-8.800 Scope of subpart. 1-8.801 1-8.801-1 1-8.801-2 1-8.802 Letter notice. forms. 1-8.802-1 Format 802-1, Formats of settlement proposal Settlement Pro- posal (Inventory Basis)-fixed- price type contracts. 1-8.802-2 Format 802-2, Settlement Pro- posal (Total Cost Basis) — fixed-price type contracts. 1-8.802-3 Format 802-3, Settlement Pro- posal (Short Form)-fixed- price type contracts. 1-8.802-4 Format 802-4, Settlement Pro- posal for Cost-Reimbursement Type Contracts. 1-8.803 1-8.803-1 Formats of inventory schedules. Format 803-1, Inventory Sched- ule A (Metals in Mill Product Form). 1-8.803-2 Format 803-2, Inventory. Sched- ule A-Continuation Sheet (Metals in Mill Product Form). 1-8.803-3 Format 803-3, Inventory Schedule B. 1-8.803-4 Format 803-4, Inventory Sched- ule B-Continuation Sheet. 1-8.803-5 Format 803-5, Inventory Sched- ule C (Work in Process). Sec. 1-8.803-6 Format 803-6, Inventory Schedule C-Continuation Sheet (Work in Process). 1-8.803-7 Format 803-7, Inventory Sched- ule D (Dies, Jigs, Fixtures, etc., and Special Tools). 1-8.803-8 Format 803–8, Inventory Schedule D-Continuation Sheet (Dies, Jigs, Fixtures, etc., and Special Tools). 1-8.803-9 Format 803-9, Termination In- ventory Schedule E (Short Form for Use with Format 802-3 Only). 1-8.804 Formats of miscellaneous forms. 1-8.804-1 Format 804-1, Schedule of Ac- counting Information. 1-8.804-2 Format 804-2, Application for 1-8.805 1-8.806 1-8.806-1 Partial Payment. Scrap warranty. Formats of settlement agreement. Settlement agreement for use in settling fixed-price prime con- tracts after complete termi- nation. 1-8.806-2 Settlement agreement for use in settling fixed-price prime con- tracts after partial termination. 1-8.806-3 Partial settlement agreement, for use in settling fixed-price prime contracts after complete or par- tial termination where settle- ment pertains only to settle- ments with subcontractors. 1-8.806-4 Settlement agreement for use in settling cost-reimbursement type prime contracts after com- plete termination where settle- ment includes costs. 1-8.806-5 Settlement agreement for use in settling cost-reimbursement type prime contracts after com- plete termination where settle- ment is limited to fee. 1-8.806-6 No-cost settlement agreement- partial termination. 1-8.806-7 No-cost settlement agreement- complete termination. FEDERAL PROCUREMENT REGULATIONS iii (FPR CIRC, 29, NOVEMBER 1962) ; PART 1-8 TERMINATION OF CONTRACTS 1-8. 101(e) § 1-8.000 Scope and applicability of part. (a) This part sets forth policies and procedures relating to the complete or partial termination of contracts for the convenience of the Government or for default, and sets forth policies and pro- cedures relating to the settlement of claims arising therefrom. It includes contract clauses, with respect to ter- mination and excusable delay, and sug- gested formats of notices, forms, war- ranties, and agreements related to the termination and settlement of contracts. (b) This part applies to contracts which initially or by amendment pro- vide for termination for the convenience of the Government or for the default of the contractor, whether or not the clauses in the contract with respect to termination are those set forth in Sub- part 1-8.7. However, to the extent that clauses actually used in contracts are inconsistent with the provisions of this part, the provisions of the clauses ac- tually used shall control. Where a ter- mination for convenience clause has not been included in a contract, this part may also be used for guidance in negotiating a settlement agreement, or in making an equitable adjustment (see § 1-8.601 (c)). (c) This part also applies to the dis- posal of contractor inventory arising out of any modification of a cost-reimburse- ment type contract pursuant to the Changes clause. (d) When the head of a procuring activity so authorizes, the provisions of this part may be utilized: (1) In determining any equitable ad- justment as a result of modification of any contract, other than a cost-reim- bursement type contract, pursuant to the Changes clause; (2) In the disposal of any property which has become obsolete or excess for any reason under a contract whenever the cost of such property is made the basis of a claim by the contractor against the Government; or L (3) In the disposal of contractor in- ventory generally. Subpart 1-8.1-Definition of Terms § 1-8.101 Definitions. As used in this part, the following terms have the meanings stated: (a) “Amount of claim" or "amount of settlement" means that amount which (1) does not have deducted from the gross claim or settlement (i) credits for retention or other disposal of termina- tion inventory allocated to the claim, (ii) credits for advance payments, and (iii) credits for partial payments (see § 1- 8.212-1); but (2) does have deducted from the gross claim or settlement (i) the amount payable for completed arti- cles or work at the contract price, and (ii) amounts payable for the settlement or discharge of termination claims of subcontractors. (This definition applies only when the taking of an action de- pends upon the amount of a termination claim or settlement; e.g., the amount which determines whether audit of a prime contract claim is required, or the amount which determines whether a settlement must be reviewed by a settle- ment review board.) (b) "Common items" means materials which are common in nature to both the terminated contract and the contractor's other work. (c) "Continued portion of the con- tract" means that portion of a partially terminated contract which relates to work or end items not already completed and accepted prior to the effective date of termination and which the contractor must continue to perform. "Contractor-acquired property" means property procured or otherwise provided by the contractor for the per- formance of a contract, whether or not the Government has title by the terms of the contract or exercises its con- tractual right to take title. (e) "Contractor inventory" means (1) any property acquired by and in the pos- session of a contractor or subcontractor (including Government-furnished prop- erty) under a contract pursuant to the terms of which title is vested in the Gov- ernment, and in excess of the amounts FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 29, NOVEMBER 1962) 801 PART 1-8 TERMINATION OF CONTRACTS 1-8. 101 (e) L L needed to complete full performance un- der the entire contract; and (2) any property which the Government is ob- ligated to or has an option to take over under any type of contract as a result either of any changes in the specifica- tions or plans thereunder or of the termi- nation of such contract (or subcontract thereunder), prior to completion of the work, for the convenience or at the option of the Government. (f) "Effective date of termination" means the date upon which the notice of termination first requires the contractor to stop performance, in whole or in part, under the contract. If, however, the termination notice is received subsequent to the date fixed for termination, then the effective date of termination means the date on which the notice is received. (g) "Government-furnished property" means property in the possession of or acquired directly by the Government, and subsequently delivered or otherwise made available to the contractor. (h) "Government property" means all property owned by or leased to the Gov- ernment or acquired by the Government under the terms of a contract; except that property to which the Government has acquired a lien or title solely as a re- sult of partial, advance, or progress payments shall not be classified as Gov- ernment property. With this exception, Government property includes (1) Gov- ernment-furnished property, and (2) that part of contractor-acquired prop- erty title to which is vested in the Government. (i). "Material" means property which may be incorporated into or attached to an end item to be delivered under a con- tract or which may be consumed or ex- pended in the performance of a con- tract. It includes, but is not limited to, raw and processed material, parts, com- ponents, assemblies, and small tools and supplies which may be consumed in nor- mal use in the performance of the contract. (j) "Other work" means any current or scheduled work of the contractor, whether Government or commercial, other than work related to the ter- minated contract. (k) "Plant clearance period" means, for each particular property classifica- tion (such as raw materials, purchased parts, and work in process) at any one plant or location, a period beginning with the effective date of the termina- tion for convenience and ending 90 days after receipt by the contracting officer of acceptable inventory schedules cov- ering all items of that particular prop- erty classification in the termination in- ventory at that plant or location, or ending on such later date as may be agreed to by the contracting officer and the contractor. Final phase of a plant clearance period means that part of a plant clearance period which occurs after the receipt of acceptable inventory schedules covering all items of the par- ticular property classification at the plant or location. (1) "Plant equipment" means personal property of a capital nature (consisting of machinery, equipment, furniture, vehicles, machine tools, and accessory and auxiliary items, but items, but excluding special tooling) used or capable of use in the manufacture of supplies or in the performance of services or for adminis- trative or general plant purpose. (m) "Prime contract" means any con- tract as defined in § 1-1.208 entered into by any executive agency. (n) "Production equipment" means those items of plant equipment which are located within a manufacturing, process- ing, assembly, or service establishment, and which are used for cutting, abrading, grinding, shaping, forming, joining, measuring, testing, heating, or treating production materials or work in process. (0) "Salvage" means property which, because of its worn, damaged, deterio- rated, or incomplete condition, or be- cause of its specialized nature, has no reasonable prospect of sale or use as serviceable property without major re- pairs or alterations but which has some value in excess of its scrap value. FEDERAL PROCUREMENT REGULATIONS 802 (FPR CIRC, 29, NOVEMBER 1962) SUBPART 1-8, 1 DEFINITION OF TERMS 1-8, 101 (y) L ୮ (p) "Scrap" means property which has no reasonable prospect of being sold except for the recovery value of its basic material content. (q) "Serviceable or usable property” means property which has reasonable prospect of further use or sale either in its existing form or with minor repairs or alterations. (r) "Settlement agreement" means a written agreement, in the form of an amendment to the contract, between the contractor and the Government settling all or a severable portion of a settlement proposal. (s) "Settlement proposal" means a termination claim submitted by a con- tractor or subcontractor in the form, and supported by the data, required by this Part 1-8. (t) "Special machinery and equip- ment" means that part of plant equip- ment which was acquired or constructed solely for the performance of the ter- minated contract or the terminated con- tract and other Government contracts, and as to which the contractor claims loss of useful value. (u) "Special tooling" means all jigs, dies, fixtures, molds, patterns, special taps, special gauges, special test equip- ment, other special equipment and man- ufacturing aids, and replacements there- of, acquired or manufactured by the contractor for use in the performance of a contract, which are of such a spe- cialized nature that, without substantial modification or alteration, their use is limited to the production of such sup- plies or parts thereof, or the perform- ance of such services, as are peculiar to the needs of the Government. The term does not include-(1) items of tooling or equipment acquired by the contractor prior to the contract, or replacements or thereof, whether or not altered adapted for use in the performance of the contract, (2) consumable small tools, or (3) general or special machine tools, or similar capital items. (v) "Subcontract" means any con- tract, as defined in § 1-1.208, other than a prime contract, entered into by a prime contractor or a subcontractor, calling for supplies or services required for the performance of any one or more prime contracts. (w) "Termination claim" means anv claim by a contractor or subcontractor, permitted by the terms of a prime cor· tract, for compensation for the termina tion, in whole or in part, of the prime contract or a subcontract thereunder, and any other claim which this Part 1-8 authorizes to be asserted and settled in connection with a termination settle- ment. (x) "Termination inventory" means any items of physical property pur- chased, supplied, manufactured, fur- nished, or otherwise acquired for per- formance of the terminated contract and properly allocable to the terminated por- tion of the contract. The term does not include any facilities, material, produc- tion or other equipment, or special tool- ing, which are subject to a separate contract or a special contract provision governing the use or disposition thereof. Termination inventory may include contractor-acquired property and Gov- ernment-furnished property. (y) "Terminated portion of the con- tract" means that portion of a termi- nated contract which relates to work or end items not already completed and accepted prior to the effective date of termination and which the contractor is not to continue to perform. (NEXT PAGE IS 805) • FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 29, NOVEMBER 1962) 803 SUBPART 1-8, 2 GENERAL PRINCIPLES APPLICABLE TO THE TERMINATION FOR CONVENIENCE AND SETTLEMENT OF FIXED-PRICE TYPE AND COST-REIMBURSEMENT TYPE CONTRACTS 1-8.203 Subpart 1-8.2-General Principles Applicable to the Termination for Convenience and Settlement of Fixed-Price Type and Cost-Reim- bursement Type Contracts § 1-8.200 Scope of subpart. This Subpart 1-8.2 deals with general principles applicable to the termination and to the settlement of both fixed-price type and cost-reimbursement type con- tracts terminated for the convenience of the Government. Additional principles applicable to the settlement of fixed- price and cost-reimbursement types of contracts, terminated for convenience, are set forth in Subparts 1-8.3 and 1-8.4, respectively. § 1-8.201 General. (a) Contracts shall be terminated for the convenience of the Government when it is determined that such action is in the best interest of the Government, or under the circumstances provided in § 1-8.601(b). (b) A well-drafted termination for convenience clause defines the rights of the Government and of the contractor in a termination of the contract for the convenience of the Government and pro- vides for the settlement of claims there- under. Thus, the contractual right to terminate a contract for the convenience of the Government and to make a settle- ment agreement (as defined in § 1-8.101 (r)) is based on such a clause. However, the power of a contracting activity to issue a termination notice does not de- pend on the existence of a termination for convenience clause in the contract. In the absence of a termination for con- venience clause, however, such action normally constitutes a breach of con- tract. Such a breach of contract may subject the Government to liability for common-law damages, including antici- patory profits, unless the Government arrives at a voluntary settlement with the contractor. (c) A contract which initially does not provide for termination for the con- venience of the Government may, with the consent of the contractor, be amended either prior to or after termi- nation to incorporate such a clause. Even though a contract is not amended, a settlement agreement may be entered into after termination of the contract. § 1-8.202 Notice of termination. SO (a) Contracts shall be terminated for convenience only by a written notice to the contractor (see § 1-8.801 for sug- gested formats of notices of termination for convenience), stating: (1) That the contract is being ter- minated for the convenience of the Gov- ernment (citing the appropriate contract clause, if any, authorizing such termina- tion); tion; (2) The effective date of termina- (3) The extent of termination and, if a partial termination, the portion of the contract to be continued; and (4) Any special instructions. (b) A copy of the notice of termina- tion shall be sent to each known assignee, guarantor, or surety of the contractor. § 1-8.203 Methods of settlement. Settlement of cost-reimbursement type contracts and of fixed-price type contracts terminated for convenience may be effected by (a) negotiated agree- ment, (b) determination by the contract- ing officer, (c) costing out under proper invoices or vouchers (in the case of costs under cost-reimbursement type con- tracts), or (d) a combination of these methods. Every effort shall be made to J FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 29, NOVEMBER 1962) 805 PART 1-8 TERMINATION OF CONTRACTS 1-8.203 L reach a fair and prompt settlement with the contractor. The negotiated agree- ment is the most expeditious and most satisfactory method of settling termina- tion claims and shall be used whenever feasible. Settlement by determination shall be used only when a termination claim cannot be settled by agreement. § 1-8.204 Duties of prime contractor after receipt of notice of termina- tion. After receipt of the notice of termi- nation, the contractor must comply with the termination clause of the contract and the notice of termination, except as otherwise directed by the contracting officer under the authority of the clause. The clause and the notice generally should require, among other things, that the contractor: (a) Stop work on the terminated por- tion of the contract and discontinue placing subcontracts thereunder; re- (b) Terminate all subcontracts lated to the terminated portion of the prime contract; (c) Immediately advise the contract- ing officer of any special circumstances precluding the stoppage of work; (d) If the termination is partial, per- form the continued portion of the con- tract and submit promptly any request for an equitable adjustment of price with respect to the continued portion of the contract, supported by evidence of any increase in the cost thereof; (e) Take such action as may be neces- sary, or as the contracting officer may direct, to protect and preserve property in the possession of the contractor in which the Government has or may ac- quire an interest; and, to the extent di- rected by the contracting officer, deliver such property to the Government; (f) Promptly notify the contracting officer in writing of any legal proceed- ings against the contractor growing out of any subcontract or other commit- ment related to the terminated portion of the contract; (g) Settle all outstanding liabilities and all claims arising out of termination of subcontracts, obtaining any approvals or ratifications required by the contract- ing officer; (h) Promptly submit his own settle- ment proposal, supported by appropriate schedules; and (i) Dispose of any termination inven- tory, as directed or authorized by the contracting officer. § 1-8.205 Duties of contracting officer after issuance of notice of termina- tion. (a) In accordance with the termina- tion clause in the contract and with the notice of termination, the contracting officer shall, among other things: (1) Direct the action required of the prime contractor; (2) Examine the settlement propo- sal of the prime contractor and, when appropriate, the settlement proposals of subcontractors; (3) Promptly negotiate settlement with the contractor and enter into a settlement agreement; and (4) To the extent that he is unable to negotiate settlement after due and diligent effort, promptly settle the con- tractor's claim by determination. (b) To expedite settlement, the con- tracting officer shall seek assistance from specially qualified personnel (such as legal, accounting, inspecting, engineer- ing, and property disposal personnel) so that such personnel may: (1) Assist in dealings with the con- tractor; (2) Render advice on legal and con- tractual matters; (3) Conduct accounting reviews and render advice and assistance on account- ing matters; and (4) Perform the following functions with respect to the termination inven- tory— (i) Verify its existence; (ii) Determine qualitative and quantitative allocability; FEDERAL PROCUREMENT REGULATIONS 806 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8, 2 GENERAL PRINCIPLES APPLICABLE TO THE TERMINATION FOR CONVENIENCE AND SETTLEMENT OF FIXED-PRICE TYPE AND COST-REIMBURSEMENT TYPE CONTRACTS L (iii) Make recommendations con- cerning serviceability and unserviceabil- ity; (iv) Undertake necessary screen- ing and redistribution; and (v) Assist the contractor in ac- complishing other disposition. (c) An initial conference shall be held with the contractor as promptly as pos- sible to develop a definite program for effecting the settlement. Where appro- priate in the judgment of the contract- ing officer after consulting the prime contractor, principal subcontractors should be present. Topics discussed at the conference should include: (1) General principles relating to the settlement of any termination claim, including obligations of the contractor under the termination clause of the contract; (2) Extent of the termination, point at which work is stopped, and status of any plans, drawings, and information which would have been delivered had the contract been completed; (3) Status of any continuing work; (4) Obligation of the contractor to terminate subcontracts and general prin- ciples to be followed in settlement of subcontractor claims; (5) Names of subcontractors in- volved and the respective dates termina- tion notices were issued to them; (6) Contractor personnel handling, and methods for, review and settlement of subcontractor claims; (7) Arrangements for transfer of title and delivery to the Government of any material required by the Govern- ment; (8) General principles and proce- dures to be followed in the protection, preservation, and disposition of con- tractor's and subcontractors' termina- tion inventories, including the prepara- tion of termination inventory schedules; 1-8.207(a) (9) Contractor accounting practices and submission of accounting data (see § 1-8.307-1(c); (10) Form in which settlement pro- posals shall be submitted; (11) Accounting review of settle- ment proposals; (12) Any requirement for interim financing in the nature of partial pay- ments; and (13) Tentative time schedule for ne- gotiation of the settlement, including submission by the contractor and sub- settlement proposals, contractors of termination inventory schedules, and ac- counting information schedules. § 1-8.206 Fraud or other criminal con- duct. Whenever the contracting officer has reason to suspect fraud or other criminal conduct in connection with the settle- ment of a terminated contract, he shall discontinue all negotiations with the con- tractor and shall report the facts in ac- cordance with agency procedures. § 1-8.207 Accounting review of prime contract settlement proposals and of subcontract settlements. (a) Each settlement proposal submit- ted by a prime contractor shall be re- ferred by the contracting officer to the agency audit office for appropriate ex- amination and recommendation when the amount of claim (see § 1-8.101(a)) is $2,500 or over. The contracting officer- may, when circumstances indicate the necessity therefor, refer a settlement proposal to the agency audit office when the amount of claim is less than $2,500. The referral shall be in writing, shall indicate any specific information or data which the contracting officer desires to have developed, and shall include any facts or circumstances within the knowl- edge of the contracting officer which will FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 29, NOVEMBER 1962) 807 PART 1-8 TERMINATION OF CONTRACTS ㄱ ​1-8.207 (a) assist the agency audit office in the per- formance of its function. The agency audit office should develop such informa- tion and should make such further ac- counting review as it deems appropriate. The agency audit office should submit written comments and recommendations to the contracting officer, in accordance with agency procedures. (b) Subcontract settlements submit- ted by a contractor to the contracting officer for approval or ratification in ac- cordance with § 1-8.208 shall be referred to the agency audit office for review and recommendations if (1) the amount of settlement is $25,000 or more, unless an accounting review of the settlement pro- posal has been performed by the agency audit office, or (2) the contracting officer considers an accounting review, in whole or in part, desirable. The review under (1) or (2) does not relieve the prime contractor or higher tier subcontractor of the responsibility for performing an accounting review. The agency audit of- fice should submit written comments and recommendations to the contracting of- ficer, in accordance with agency pro- cedures. (c) (1) The responsibility of the prime contractor and of each subcontractor, set forth in § 1-8.208-1, for settlement of immediate subcontractors' settlement proposals includes responsibility for per- forming accounting reviews and any necessary field audits. However, in the situations outlined in (i) through (iv) of this § 1-8.207(c) (1), the agency audit office generally should be requested to perform the accounting review of a sub- contractor's settlement proposal where: (i) A subcontractor objects to an accounting review of his records by an upper tier contractor for competitive reasons; (ii) The agency audit office cur- rently is performing audit work at the subcontractor's plant, or where it can be performed more economically Lefficiently; or (iii) Audit by the agency audit of- fice is necessary for consistent audit treatment and orderly administration; or (iv) The contractor has a sub- stantial or controlling financial inter- est in the subcontractor. (2) Duplication by the agency audit office of accounting reviews performed by the upper tier contractor on subcon- tractor settlement proposals should be avoided to the extent possible. However, when appropriate, the Government should make additional reviews. Where the contractor is performing accounting reviews in accordance with this § 1-8.207, the contracting officer should request the agency audit office to examine periodi- cally the contractor's accounting review procedures (including but not limited to audit programs, cost principles applied, working papers, and audit reports) and performance thereunder and make such comments and recommendations to the contracting officer as may be deemed appropriate. § 1-8.208 claims. Settlement of subcontract § 1-8.208-1 Subcontractor's rights. Unless otherwise specifically provided, a subcontractor has no no contractual rights against the Government upon the termination of a prime contract. The rights of a subcontractor are against the prime contractor or intermediate sub- contractor with whom he has contracted. Upon termination of a prime contract, the prime contractor and each subcon- tractor are responsible for the prompt settlement of the termination claims of their immediate subcontractors. § 1-8.208-2 Prime contractor's rights and obligations. Each termination for convenience clause provides that, after receipt of a notice of termination, the prime con- tractor shall (except as otherwise di- rected by the contracting officer) termi- nate all subcontracts to the extent that they relate to the performance of any FEDERAL PROCUREMENT REGULATIONS + 808 (FPR CIRC, 29, NOVEMBER 1962) SUBPART 1-8, 2 GENERAL PRINCIPLES APPLICABLE TO THE TERMINATION FOR CONVENIENCE AND SETTLEMENT OF FIXED-PRICE TYPE AND COST-REIMBURSEMENT TYPE CONTRACTS L L work terminated by a notice of termina- tion. Prime contractors should, for their own protection, include a termination clause in their subcontracts. A suggested subcontract termination clause is set forth in § 1-8.706. The failure of a prime contractor to include an appropriate termination clause in any subcontract, or to exercise his rights thereunder, shall not (a) affect the right of the Govern- ment to require the termination of the subcontract, or (b) increase the obliga- tion of the Government beyond that which would have arisen if the subcon- tract had contained an appropriate ter- mination clause. In any such case, the reasonableness of the prime contractor's settlement with the subcontractor should normally be measured by the aggregate amount which would be due under sub- paragraphs (1), (2), and (3) of para- graph (e) of the suggested subcontract termination clause. Reimbursement in excess of that amount shall be allowed only in unusual cases, and then only when the contracting officer is satisfied that the terms of the subcontract were negotiated in good faith and did not un- reasonably increase the rights of the subcontractor. § 1-8.208-3 Settlement procedure. (a) Settlements with subcontractors shall be made in general conformity with the policies and principles relating to settlement of prime contracts as set forth in this Subpart 1-8.2 and in Sub- parts 1-8.3 or 1-8.4, as applicable. How- ever, the basis and form of the subcon- tractor's settlement proposal must be acceptable to the prime contractor or the next higher tier subcontractor. Each such settlement shall be supported by accounting and other data sufficient for adequate review by the Government. In no event shall the Government pay to the prime contractor any amount for loss of anticipatory profits or conse- 1—8.208~3(c) quential damages resulting from the ter- mination of any subcontract (but see § 1-8.208-5). (b) Except as provided in § 1-8.208-4, (1) all subcontractor termination inven- tory shall be disposed of and accounted for in accordance with Subpart 1-8.5, and (2) the contracting officer shall require the prime contractor to submit to him for approval or ratification all termina- tion settlements with subcontractors. In submitting each settlement, the prime contractor shall certify that he has ex- amined the subcontractor's claims in- cluded therein, that they are allocable to the terminated portion of the prime contract (or are the result of a change order-see § 1-8.000 (d) (1), and that the settlement is fair and reasonable, was negotiated in good faith, and is not more favorable to the subcontractor than if the Government were not involved. The contractor shall also certify that he has received from all his immediate sub- contractors certifications substantially in the form of his own certification. With respect to settlements with more remote subcontractors, the contractor shall certify that he has no information leading him to doubt their reasonable- ness or their allocability to the termi- nated portion of the prime contract. (c) The contracting officer shall promptly examine each subcontract set- tlement required to be submitted to him (including the basis and form of the proposal upon which the settlement was based) to satisfy himself that the sub- contract termination was made necessary by the termination of the prime con- tract (or by issuance of a change order- see § 1-8.000 (d) (1)), and that the settle- ment was arrived at in good faith, is reasonable in amount, and is allocable to the terminated portion of the con- tract (or, if allocable only in part, that the proposed allocation is reasonable). FEDERAL PROCUREMENT REGULATIONS 809 (FPR CIRC. 29, NOVEMBER 1962) PART 1-8 TERMINATION OF CONTRACTS L ୮ 1-8.208-3(c) In considering the reasonableness of any subcontract settlement, the contracting officer shall be guided generally by the provisions of this Part 1-8 relating to the settlement of prime contracts, and shall comply with any applicable require- ments of §§ 1-8.207 and 1-8.211 relating to accounting and other reviews. Upon completion of the examination, the con- tracting officer shall notify the contrac- tor in writing of (1) his approval or ratification, or (2) his reasons for dis- approval. § 1-8.208-4 Authorization for subcon- tract settlements without approval or ratification. (a) (1) The contracting officer may, upon the written request of the prime contractor, authorize him in writing to conclude settlements of his terminated subcontracts without approval or rati- fication by the contracting officer when the amount of settlement (see § 1-8.101 (a)) is $10,000 or less and if: (i) The contracting officer is satis- fied with the adequacy of the procedures used by the contractor in settling termi- nation claims (including proposals for retention, sale, or other disposal of ter- mination inventory) of his immediate and lower tier subcontractors. (The contracting officer shall obtain the ad- vice and recommendations of (A) the agency audit office with respect to the adequacy of the contractor's audit ad- ministration, including personnel, and (B) the cognizant disposal office with re- spect to the adequacy of the contractor's procedures and personnel for the admin- istration of property disposal matters.); (ii) Any termination inventory included in determining the amount of the settlement will be disposed of in ac- cordance with § 1-8.513, except that the disposition of such inventory shall not (A) be subject to review by the contract- ing officer under § 1-8.513-1 or § 1-8.513- 3, or (B) be subject to § 1-8.513-4; and (iii) The settlement will be ac- companied by a certificate substantially similar to the certificate contained in the appropriate settlement format set forth in § 1–8.802. Le size proposal (2) An authorization granted under (a)(1) of this § 1-8.208-4 may be exer- cised only in settling subcontracts which have been terminated as a result of termination for convenience or modifi- cation of the prime contract by the Government. (b) Section 1-8.513 shall apply to any disposal of completed end items allocable to the terminated subcontract, except that completed end items allocable to the terminated subcontract may be disposed of without review by the contracting officer under § 1-8.513-1 or § 1-8.513-3, and without screening under § 1-8.513–4, if the total amount thereof (at the sub- contract price) when added to the amount of the settlement does not ex- ceed the amount authorized under this § 1-8.208-4. (c) A contracting officer granting the above authorization to a contractor shall be responsible for periodically making a selective review of settlements and set- tlement procedures to determine (1) whether the contractor is making ade- quate reviews and fair settlements, and (2) whether such authorization shall re- main in effect. In connection with these periodic reviews, the contracting officer should obtain the advice and recom- mendations of the agency audit office with respect to the auditing aspects of the contractor's review procedures and those of the cognizant disposal office with respect to property disposal aspects of the contractor's review procedures. Whenever the contracting officer deter- mines that the contractor's procedures are not adequate or that improper settle- ments are being made, he shall revoke the authorization by written notice to the contractor. The revocation shall take effect only from the date of receipt. (d) Any number of separate settle- ments may be made with a single sub- contractor. However, claims which nor- mally would be included in a single set- tlement proposal, such as those based on a series of separate orders for the same item under one contract, shall be consolidated wherever possible, and shall not be divided in order to bring them within an authorization. FEDERAL PROCUREMENT REGULATIONS 810 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8. 2 GENERAL PRINCIPLES APPLICABLE TO THE TERMINATION FOR CONVENIENCE AND SETTLEMENT OF FIXED-PRICE TYPE AND COST-REIMBURSEMENT TYPE CONTRACTS L (e) Upon written request of the con- tractor and with the prior written approval of the head of the procuring activity or of a deputy or principal assistant in the procuring activity responsible for contract matters, an authorization granted under (a)(1) of this § 1-8.208-4 may be increased to au- thorize the contractor to conclude settlements under a particular prime contract when the amount of settlement is more than $10,000 but not more than $25,000. Such authorization in excess of $10,000 may be limited to specific subcontracts or classes of subcontracts. § 1-8.208-5 Recognition of judgments and arbitration awards. (a) In the event a subcontractor ob- tains a final judgment against a prime contractor, the contracting officer shall, for the purposes of settling the prime contract, treat the amount of the judg- ment as a cost of settling with the sub- contractor, to the extent such judgment is properly allocable to the terminated portion of the prime contract, if: (1) The prime contractor has made reasonable efforts to include in his sub- contract the termination clause in § 1-8.706 or a similar clause excluding payment of anticipatory profits or con- sequential damages; (2) The provisions of the subcon- tract relating to the rights of the parties upon its termination, in whole or in part, are fair and reasonable and do not unreasonably increase the common law rights of the subcontractor; (3) The contractor has made rea- sonable efforts to settle the claim of the subcontractor; (4) The contractor has given prompt notice to the contracting officer of the initiation of the proceedings in which the judgment was rendered and has not refused to give the Government control of the defense of the proceed- ings; and 1-8.208-7 (5) The contractor has diligently defended the suit or, if the Government has assumed control of the defense of the proceedings, has rendered such rea- sonable assistance as has been requested by the Government. (b) If the conditions stated in (1) through (5) of § 1-8.208-5(a) are not all met, the contracting officer may allow the contractor such part of the judgment as he considers a fair amount for set- tling the termination claim under the subcontract, giving due regard to the policies set forth in this Part 1-8 for settlement of such claims. (c) Where a contractor and his sub- contractor submit a subcontractor termi- nation claim to arbitration under any applicable law or contract provision, the contracting officer shall recognize the amount of the arbitration award as the cost of settling the claim of the subcon- tractor to the same extent and under the same conditions as specified in (a) and (b) of this § 1-8.208-5. § 1-8.208-6 Delay in settlement of sub- contractor claims. Where a prime contractor is unable to settle with a subcontractor and such inability is delaying the settlement of the prime contract, the contracting offi- cer may settle with the prime contractor, excepting from the settlement the whole or any part of the claim of such subcon- tractor and reserving the rights of the Government and of the prime contractor with respect thereto. § 1-8.208-7 Government assistance in settlement of subcontracts. In unusual cases the contracting officer may determine that it is in the best in- terest of the Government to offer assist- ance to the prime contractor in the settlement of a particular subcontract. Such a situation may exist when the prime contractor has made all reason- able efforts to negotiate the settlement FEDERAL PROCUREMENT REGULATIONS (fpr Circ. 29, NOVEMBER 1962) 811 PART 1-8 TERMINATION OF CONTRACTS 1-8.208-7 without success and the contracting offi- cer believes that with the assistance of the Government a settlement can be reached. Such assistance shall be fur- nished only with the consent of the prime contractor. In such cases, the Government may concurrently approve an agreement entered into by the prime contractor and a subcontractor covering the settlement of one or more subcon- tracts. In any such case, payment to the subcontractor shall be effected through the prime contractor as part of the overall settlement with the latter. § 1-8.208-8 Assignment of rights under subcontracts. (a) The termination for convenience clauses set forth in Subpart 1-8.7, except the short-form clauses, obligate the prime contractor to assign to the Gov- ernment, in the manner, at the times, and to the extent directed by the con- tracting officer, all his right, title, and interest under any subcontracts termi- nated by reason of termination of the prime contract. The contracting officer shall not require such assignment unless he determines that it is in the best in- terest of the Government. (b) In giving the Government the right to require the assignment of the prime contractor's interest in terminated subcontracts, the termination for con- venience clauses set forth in Subpart 1-8.7 (except the short-form clauses) also provide that the Government shall have the right, in its discretion, to settle and pay any or all claims arising out of the termination of such subcontracts. This right does not obligate the Govern- ment to settle and pay termination claims of subcontractors. As a general rule, the prime contractor is obligated to settle and pay such claims. Where, however, the contracting officer deter- mines that it is in the best interest of the Government to settle and pay direct a subcontractor's termination claim, he shall first obtain approval in accordance with agency procedures. An example of a situation in which the best interest of the Government would be served by effecting a direct settlement would be where a subcontractor is the sole source for a product and it appears that a delay by the prime contractor in settlement or payment of the subcontractor's claim would jeopardize the financial position of the subcontractor. Direct settlements with subcontractors are not encouraged. § 1-8.209 Settlement agreements. § 1-8.209-1 General. When a settlement has been negotiated with respect to the terminated portion of a contract and all required reviews have been obtained, the contractor and the contracting officer shall enter into a settlement agreement, substantially in the appropriate format set forth in § 1-8.806. The settlement shall cover (a) any setoffs and counterclaims which the Government may have against the contractor and which may be applied against the terminated contract, and (b) all claims of subcontractors except claims which are specifically excepted from the agreement and reserved for separate settlement. § 1-8.209-2 Excepted items. Where any rights or claims of the Gov- ernment or of the contractor are to be excepted from the settlement, the set- tlement agreement shall specify the na- ture and extent of the excepted items. However, care shall be taken so that the wording of the exception does not create any new rights in the parties be- yond those in existence prior to the ex- ecution of the settlement agreement. The separate settlement of excepted items shall be in accordance with the provisions of this Part 1-8 and shall be set forth in settlement agreements. 1-8.209–3 Government property. Before any settlement agreement is executed, the contracting officer shall determine the accuracy of the Govern- ment property account, if any, for the FEDERAL PROCUREMENT REGULATIONS 812 (FPR CIRC, 29, NOVEMBER 1962) SUBPART 1-8, 2 GENERAL PRINCIPLES APPLICABLE TO L THE TERMINATION FOR CONVENIENCE AND SETTLEMENT OF FIXED-PRICE TYPE AND COST-REIMBURSEMENT TYPE CONTRACTS ך terminated contract. If the audit dis- closes property for which the contractor cannot account, the settlement agree- ment shall reserve the rights of the Gov- ernment with respect to such property or make an appropriate deduction from the amount otherwise due the contractor. § 1-8.209-4 No-cost settlement. (a) If no costs have been incurred by the contractor with respect to the ter- minated portion of the contract or if the contractor is willing to waive the costs incurred by him and if no amounts are due to the Government under the contract, a no-cost settlement agreement shall be executed substantially in the format set forth in § 1-8.806-6 or § 1–8.806–7, as applicable. (b) Under a terminated cost-reim- bursement type contract, the settlement agreement shall cover only the fee, if any, where the contractor has invoiced or vouchered out all costs within the period during which he may submit in- voices or vouchers (see §§ 1-8.402(a) and 1-8.405-1). § 1-8.209-5 Partial settlements. Every effort should be made by the contracting officer to settle in one agree- ment all rights and liabilities of the parties under the contract except those arising from any continued portion of the contract. Generally, contracting of- ficers shall not attempt to make partial settlements covering particular items of the prime contractor's settlement pro- posal. However, when a contracting of- ficer cannot promptly effect a complete settlement under the terminated con- tract, a partial settlement may be en- tered into if (a) the issues on which agreement has been reached are clearly severable from other issues, and (b) the partial settlement would not prejudice, the interests of the Government or the contractor in disposing of the unsettled part of the claim. 1-8.209-7(b) § 1-8.209-6 Joint settlement of two or more claims. (a) With the consent of the contrac- tor, a single settlement agreement may be negotiated to cover the termination claims under two or more contracts, even though the contracts being terminated are with different bureaus or divisions within the contracting agency or with different contracting agencies. (b) Such joint settlements shall be in accordance with arrangements made be- tween the contracting offices. (c) Each such joint settlement agree- ment shall (1) clearly identify the con- tracts involved; (2) apportion the total amount of the settlement among the several contracts on some reasonable basis; (3) have attached or incorporated therein a schedule showing the appor- tionment; and (4) be distributed and attached to each contract involved in the same manner as other contract amendments. § 1-8.209-7 tion. Settlement by determina- (a) General. To the extent that the contractor and contracting officer are unable to agree upon the settlement of a terminated contract or if a termination claim is not submitted within the period required by the termination clause in the contract, the contracting officer shall issue a determination of the amount due in accordance with with the termination clause in the contract, including any cost principles incorporated therein by reference. The contracting officer shall comply with the applicable provisions of §§ 1-8.209-1 through 1-8.209-6 in making any such determination. (b) Notice to contractor. Before is- suing a determination of the amount due the contractor, the contracting offi- cer shall give the contractor not less than 15 days' notice by certified mail (return receipt requested) to submit, FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 29, NOVEMBER 1962) 813 PART 1-8 TERMINATION OF CONTRACTS L 1-8.209-7(b) on or before a stated date, written evi- dence substantiating the amount claimed to be due. (c) Submission of evidence. (1) The contractor has the burden of establishing, by proof satisfactory to the contracting officer, the amount claimed. (2) The contractor may submit such vouchers, verified transcripts of books of account, affidavits, audit reports, and other documents, as he wishes. The contracting officer may request the con- tractor to submit such additional docu- ments and data, and may cause such accounting, investigations, and audits to be made, as he deems appropriate. (3) The contracting officer may ac- cept photostatic or other copies of docu- ments and records, without requiring original documents unless there is a question of authenticity. (4) If the contractor wishes to con- fer with the contracting officer, or if the contracting officer wishes additional in- formation from Government personnel or from independent experts, or wishes to consult persons whose affidavits or re- ports have been submitted, the contract- ing officer may, in his discretion, hold such conferences as he deems appro- priate. (d) Determinations. After reviewing the information submitted or otherwise available to him, the contracting officer shall determine the amount due and shall transmit a copy of his determina- tion to the contractor by certified mail (return receipt requested). The letter of transmittal shall advise the contrac- tor that the determination is his final decision. In addition, the letter shall state whether or not an appeal may be taken under the Disputes clause (see (f) of this § 1-8.209-7). The determination shall set forth the amount due the con- tractor and shall be supported by de- tailed schedules, additional information, and analyses, as appropriate. An ade- quate explanation shall be given for each major item of disallowance. The con- tracting officer need not reconsider (1) any settlement with a subcontractor, (2) any disposition of property, or (3) any other action relating to the terminated portion of the contract, where such set- tlement, disposition, or other action has been previously ratified or approved by him or another duly authorized contract- ing officer. (e) Preservation of evidence. The contracting officer shall retain in appro- priate files of the contracting agency all written evidence and other data or copies thereof, relied upon by him in making his determination, except that copies of original books of account need not be made. Books of account, together with other original papers and documents, shall be returned to the contractor with- in a reasonable time. (f) Appeals. The contractor has a right of appeal, under the Disputes clause of the contract, from any settle- ment by determination, except that the contractor has no such right of appeal where he has failed to submit his settle- ment proposal within the time provided in the contract and has failed to request extension of such time. The pendency of an appeal shall not affect the author- ity of the contracting officer to settle the termination claim or any part there- of by a negotiated agreement with the contractor at any time before the appeal is decided. § 1-8.210 Contracting officer's negotia- tion memorandum. The contracting officer shall, at the conclusion of the settlement negotia- tions, prepare and sign a memorandum setting forth the principal elements of the settlement for inclusion in the con- tract file and for the use of reviewing authorities, if any. If the settlement was negotiated on the basis of individ- ual items, the contracting officer shall specify the factors considered with re- spect to each item. If the settlement was negotiated on an overall lump-sum basis, the contracting officer need not evaluate each item or group of items individually, but the total amount of the • FEDERAL PROCUREMENT REGULATIONS ་ 814 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8. 2 GENERAL PRINCIPLES APPLICABLE TO THE TERMINATION FOR CONVENIENCE AND SETTLEMENT OF FIXED-PRICE TYPE AND COST REIMBURSEMENT TYPE CONTRACTS recommended settlement shall be sup- ported in reasonable detail. The memo- randum shall include explanations of matters as to which differences and doubtful questions were settled by agree- ment, and the factors taken into con- sideration in connection therewith, and any other matters which, in the opinion of the contracting officer, will assist re- viewing authorities, if any, in under- standing the basis for the settlement. § 1-8.211 Review and approval of pro- posed settlements. § 1-8.211-1 Settlement review boards. Each agency shall provide for the re- view of proposed settlements as required in § 1-8.211-2 (a) and (b). The review shall be by a settlement review board (or other group created for that pur- pose) established on a permanent or temporary basis. More than one such board may be established if settlements are to be made at different locations, if personnel with different qualifications are needed for different contracts, or if for other reasons the establishment of more than one board is considered de- sirable. Each settlement review board should be composed of at least three qualified and disinterested employees. The membership of each board should include at least one lawyer and one ac- countant. § 1-8.211-2 Required review and ap- proval. (a) When required. Prior to execut- ing a settlement agreement, or issuing a determination of the amount due under the termination clause of a contract, or approving or ratifying a subcontract set- tlement, the contracting officer shall submit each such settlement or determi- nation for review and approval by a settlement review board if: (1) The amount of settlement (see § 1-8.101(a)), by agreement or determi- nation, involves $50,000 or more; 1-8.211-3 (2) The settlement or determina- tion is limited to adjustment of the fee of a cost-reimbursement contract or sub- contract and (i) in the case of a complete termination, the fee, as adjusted, is $50,000 or more; or (ii) in the case of a partial termination, the fee, as ad- justed, with respect to the terminated portion of the contract or subcontract is $50,000 or more; (3) The head of the procuring ac- tivity concerned determines that a review of a specific case or class of cases is de- sirable; or (4) The contracting officer, in his discretion, desires review by the settle- ment review board. (b) Level of review. When the amount of settlement (see § 1-8.101(a)), by agreement or determination, is in excess of $1,000,000, the review and approval of the settlement shall be by a board at or above the level of the head of the pro- curing activity. (c) Submission of information. The contracting officer shall, in accordance with agency procedures, submit to the settlement review board a statement of the proposed settlement agreement or determination, supported by such de- tailed information as is required for an This adequate review. information should normally include copies of (1) the contractor's or subcontractor's set- tlement proposal, (2) the audit report, (3) the property disposal report and any required approvals in connection there- with, and (4) the contracting officer's memorandum explaining the settlement (see § 1-8.210). The board may, in its discretion, require the submission of ad- ditional information. § 1-8.211-3 Scope of review. The function of a settlement review board is to determine the overall reason- ableness of the proposed settlement agreement or determination from the standpoint of protecting the Govern- ment's interest. The board may vary FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 29, NOVEMBER 1962) 815 PART 1-8 TERMINATION OF CONTRACTS ما 1-8.211-3 the scope and intensity of the review ac- cording to the size and complexity of the proposed settlement agreement or deter- mination and any other relevant factors. It is not intended that the board ex- amine in detail every element entering into the proposed settlement agreement or determination, but the board may in- quire into selected elements of the pro- posed settlement agreement or deter- mination to assure that it has been developed competently and is based on adequate information. § 1-8.211-4 Action by board. The settlement review board shall give written notification to the contracting officer of its approval, disapproval, or other decision with respect to the pro- posed settlement agreement or deter- mination. The notification may include an opinion with respect to the decision and any other matter considered in con- nection therewith. Failure of the board to furnish a decision as to any proposed settlement agreement or determination within 30 days after submission to the board of all information required pur- suant to § 1-8.211-2(c) shall operate as an approval by the board. § 1-8.212 Payment. § 1-8.212-1 Partial payments upon ter- mination. (a) General. If the contract author- izes partial payments on termination claims prior to settlement, a fixed-price prime contractor, or a cost-reimburse- ment prime contractor whose settlement proposal includes costs, may request such partial payments at any time after sub- mission of interim or final settlement proposals. A suggested format of a form to be used in applying for partial pay- ment is set forth in § 1-8.804-2. Appli- cations for partial payments shall be processed promptly. Partial payments to a subcontractor shall be made only through the prime contractor. No par- tial payments shall be made on ac- count of profit or fee which may be claimed with respect to the terminated portion of the contract. In exercising his discretion as to the extent to which par- tial payments shall be made, the con- tracting officer shall consider the dili- gence of the contractor in settling with his subcontractors and in preparing his own claim. (b) Amount of partial payment. Be- fore approving any partial payment re- quested by the contractor, the contract- ing officer shall have made such accounting, engineering, or other spe- cialized reviews as he deems proper of the data required in this Part 1-8 to be submitted in support of the contractor's settlement proposals. If such reviews and the contracting officer's examination of the data indicate that the requested partial payment is proper, the contract- ing officer may, in his discretion, author- ize payments as follows: (1) An amount up to 100 percent of the contract price, adjusted in ac- cordance with § 1-8.306, for undelivered acceptable items completed prior to the termination date, or completed there- after with the approval of the contract- ing officer, which are included in the contractor's settlement proposals pursu- ant to § 1-8.306; (2) An amount up to 100 percent of the amount of any subcontract settle- ment effected and paid by the prime con- tractor, if the settlement has been ap- proved or ratified by the contracting officer pursuant to § 1-8.208-3(c) or has been authorized pursuant to § 1-8.208-4; (3) An amount up to 90 percent of the direct cost of termination inventory, including costs of raw materials, pur- chased parts, supplies, and direct labor; (4) A reasonable amount, not to ex- ceed 90 percent, of other allowable costs (including manufacturing and adminis- trative overhead) allòcable to the termi- nated portion of the contract and not included in (1), (2), or (3) of this § 1-8.212-1(b); and (5) An amount up to 100 percent of partial payments made to subcontractors in conformity with this § 1-8.212-1(b). FEDERAL PROCUREMENT REGULATIONS 816 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8. 2 GENERAL PRINCIPLES APPLICABLE TO THE TERMINATION FOR CONVENIENCE AND SETTLEMENT OF FIXED-PRICE TYPE AND COST-REIMBURSEMENT TYPE CONTRACTS L Where an assignment of claims has been made under the contract, partial pay- ments shall not be made to other than the assignee unless the parties to the as- signment consent in writing writing to the payments. (d) Security for partial payments. To the extent that any partial payment is made with respect to completed end items or for direct or indirect costs of termination inventory, the interests of the Government shall be protected by transfer of title to the Government of the completed end items or termination inventory concerned, or by the creation of a lien in favor of the Government, paramount to all other liens, on such completed end items or termination in- ventory, or by other means authorized by agency procedures. (e) Deductions in computing amount of partial payments. There shall be de- ducted from the gross amount of any partial payment otherwise payable under § 1-8.212-1(b): (1) All unliquidated balances of progress payments and advance pay- (including ments interest thereon) theretofore made to the contractor and which are allocable to the terminated portion of the contract; and (2) The amounts of all credits aris- ing from the purchase, retention, or sale of property the costs of which are in- cluded in the application for partial payment. (f) Limitation on total amount: ef- fect of overpayment. The total amount. of all partial payments shall not exceed the amount which will, in the opinion of the contracting officer, become due to the contractor by reason of the termination. If the total of partial payments made to the contractor should exceed the amount finally determined to be due the con- tractor on his termination claim, the 1—8.212-2(a) overpayment shall be repayable to the Government on demand, together with interest computed at the rate of 6 per- cent per annum from the date such over- payment was received by the contractor to the date of repayment. However, no interest shall be charged for any such overpayment attributable to a reduction in the contract termination claim by rea- son of retention or other disposition of termination inventory, until 10 days after the date of such retention or dis- position, or such later date as is set by the contracting officer because of the circumstances; and no interest shall be charged for overpayment under cost- reimbursement research and develop- ment contracts (without profit or fee to the contractor) if the overpayments are repaid to the Government within 30 days after demand. (g) Certification and approval of par- tial payments. Partial payments in a specific amount shall be made on the basis of vouchers or invoices certified by the contractor. The certification shall include, in addition to any other provi- sions ordinarily required to be included in such certificate, the following: The payment covered by this voucher is a partial payment on account of the Con- tractor's termination claim under contract No. The invoice or voucher, if proper, shall be approved by the contracting officer by noting thereon the following: Payment in the amount of $.. proved. ap- § 1-8.212-2 Final payment upon termi- nation. the (a) Negotiated settlement. At time of execution of a settlement agree- ment, a voucher or invoice showing the amount agreed upon, less any portion previously paid, shall be prepared and FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 29, NOVEMBER 1962) 817 PART 1-8 TERMINATION OF CONTRACTS 1-8.212-2 (a) processed for payment. A copy of the settlement agreement shall be attached to the voucher or invoice. In (b) Settlement by determination. the event of a settlement by determina- tion: (1) If the contractor has not ap- pealed the determination within the time allowed for appeal, a voucher or invoice showing the amount so deter- mined to be due, less any portion pre- viously paid, shall be prepared and processed for payment; or (2) If the contractor has appealed the determination, a voucher or invoice showing the amount finally determined on such appeal to be due, less any por- tion previously paid, shall be prepared and processed for payment. Pending de- termination of any appeal, an invoice or voucher pursuant to (1) of this § 1-8.212- L. may be 2(b) may be processed for payment, without prejudice to the rights of either party on the appeal. (c) Interest. No interest shall be paid by the Government on the amount due under a settlement agreement or a set- tlement by determination. § 1-8.213 Cost principles applicable to the settlement of research and de- velopment contracts with educational institutions. Subject to the general policies set forth in § 1-8.301, the cost principles and pro- cedures set forth in Subpart 1-15.3 shall be used, in accordance with § 1-15.103 and Subpart 1-15.6, as a guide for the negotiation of settlements under fixed- price or cost-reimbursement type con- tracts for experimental, developmental, or research work with educational in- stitutions. FEDERAL PROCUREMENT REGULATIONS 818 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8, 3 ADDITIONAL PRINCIPLES APPLICABLE TO THE SETTLEMENT OF FIXED-PRICE TYPE CONTRACTS TERMINATED FOR CONVENIENCE Г Subpart 1-8.3-Additional Principles Applicable to the Settlement of Fixed-Price Type Contracts Termi- nated for Convenience § 1-8.301 General. (a) A settlement should compensate the contractor fairly for the work done and the preparations made for the termi- nated portions of the contract, including an allowance for profit thereon which is reasonable under the circumstances. Fair compensation is a matter of judg- ment and cannot be measured exactly. In a given case, various methods may be equally appropriate for arriving at fair compensation. The application of stand- ards of business judgment, as distin- guished from strict accounting prin- ciples, is the heart of a settlement. The (b) The primary objective is to nego- tiate a settlement by agreement. parties may agree upon a total amount to be paid the contractor without agreeing on or segregating the particular ele- ments of costs or profit comprising this amount. (c) Cost and accounting data may provide guides, but are not rigid meas- ures, for ascertaining fair compensation. In appropriate cases, costs may be esti- mated, differences compromised, and doubtful questions settled by agreement. Other types of data, criteria, or standards may furnish equally reliable guides to fair compensation. The amount of rec- ordkeeping, reporting, and accounting, in connection with the settlement of termination claims, shall be kept to the minimum compatible with the reasonable protection of the public interest. § 1-8.302 Cost principles. The principles set forth in the appli- cable subpart of Part 1-15, or in the cor- responding agency regulations, shall be used as a guide for the evaluation of cost information in the negotiation of a ter- mination settlement. 1-8.303(b)(8) § 1-8.303 Allowance for profit. (a) General. Profit shall be allowed only on preparations made and work done by the contractor for the termin- ated portion of the contract but may not be allowed on the contractor's settlement expenses. Anticipatory profits and con- sequential damages shall not be allowed (but see § 1-8.208-5). Any reasonable method may be used to arrive at a fair profit, separately or as a part of the whole settlement. (b) Factors to be considered. In the negotiation of profit, factors to be con- sidered include: (1) Extent and difficulty of the work done by the contractor as com- pared with the total work required by the contract; (however, engineering esti- mates of the percentage of completion ordinarily should not be required but, if available, should be considered); (2) Engineering work, production scheduling, planning, technical study and supervision, and other necessary services; (3) Efficiency of the contractor, with particular regard to (i) attainment of quantity and quality production, (ii) re- duction of costs, and (iii) economy in the use of materials, facilities, and man- power; (4) Amount and source of capital employed, and extent of risk assumed; (5) Inventive and developmental contributions, and cooperation with the Government and other contractors in supplying technical assistance; (6) Character of the business, in- cluding the source and nature of ma- terials and the complexity of manufac- turing techniques; (7) The rate of profit which the contractor would have earned had the contract been completed; (8) Character, extent, and difficulty of subcontracting, including selection, FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 29, NOVEMBER 1962) 819 PART 1-8 TERMINATION OF CONTRACTS 1-8.303(b) (8) ■** placement, and management of subcon- tracts, settlement of terminated subcon- tracts, and engineering, technical assist- ance, and other services rendered, but the profit shall not be measured by the amount of the contractor's payments to subcontractors for settlement of their termination claims; and L (9) The rate of profit both parties contemplated at the time the contract was negotiated. (c) Profit in settlements by determi- nation. The formula for determining profit, set forth in paragraph (e) (2) (iii) of the termination clause for fixed-price contracts (§ 1-8.701) and subparagraph (e) (1) (iii) of the clause for fixed-price construction contracts (§ 1-8.703), is ap- plicable only to a settlement by determi- nation (see § 1-8.209-7) and shall not be used in establishing the profit allowed in a settlement by negotiation. § 1-8.304 Adjustment for loss. (a) In the negotiation or determina- tion of any settlement, no profit shall be allowed if it appears that the con- tractor would have incurred a loss had the entire contract been completed. The amount of loss shall be negotiated or de- termined, and an adjustment in the amount of settlement shall be made as specified in (b) or (c) of this § 1-8.304. In estimating the cost to complete, con- sideration shall be given to expected pro- duction efficiencies and to other factors affecting the cost to complete. (b) If the settlement is on an inven- tory basis (see § 1-8.307-2), the contrac- tor shall not be paid more than the total of the amounts in (1) through (3) be- low, less all disposal credits and all un- liquidated advance and progress pay- ments previously made to the contractor under the contract: (1) The amount negotiated or de- termined for settlement expenses; (2) The contract price, as adjusted, for acceptable completed end items (see § 1-8.306); and (3) The remainder of the settlement amount otherwise agreed or determined (not excluding the allocable portion of initial costs (see § 1-15.205-42 (c)), re- duced by multiplying that remainder by the ratio of (i) the total contract price to (ii) the total cost incurred prior to termination plus the estimated cost to complete the entire contract. (c) If the settlement is on a total cost basis (see § 1-8.307-2), the contractor shall not be paid more than the total of the amounts in (1) and (2) below, less all disposal and other credits, all advance and progress payments, and all other amounts previously paid to the contrac- tor under the contract: (1) The amount negotiated or de- termined for settlement expenses; and (2) The remainder of the total set- tlement amount otherwise agreed or de- termined, reduced by multiplying that remainder by the ratio of (i) the total contract price to (ii) that remainder plus the estimated cost to complete the entire contract. § 1-8.305 Deductions. From the amount payable to the con- tractor under a settlement, there shall be deducted (a) the agreed price for any part of the termination inventory pur- chased or retained by the contractor, and the proceeds of sale of any materials sold by him which have not otherwise been paid or credited to the Government; (b) the fair value, as determined by the contracting officer, of any part of the termination inventory which, prior to transfer of title to the Government or to a buyer pursuant to Subpart 1-8.5, is destroyed, lost, stolen, or so damaged as to become undeliverable, except for nor- mal spoilage or to the extent the Gov- ernment has expressly assumed the risk of loss; and (c) such other amounts as appropriate in the particular case. § 1-8.306 Completed end items. Promptly after the effective date of termination, the contracting officer (a) shall have all undelivered completed end items (1) inspected, and (2) accepted if they comply with the prime contract FEDERAL PROCUREMENT REGULATIONS 820 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8.3 ADDITIONAL PRINCIPLES APPLICABLE TO THE SETTLEMENT OF FIXED-PRICE TYPE CONTRACTS TERMINATED FOR CONVENIENCE requirements; and (b) shall determine which accepted end items shall be de- livered under the contract. The con- tractor shall invoice completed end items so accepted and delivered and be paid for them at the contract price in the usual manner. He shall not include such end items in his termination claim. Where completed end items, though ac- cepted, are not to be delivered under the contract, the contractor shall include such end items in his settlement pro- posal at the contract price, appropriately adjusted for any saving of freight or other charges, together with any credits for their purchase, retention, or sale. § 1-8.307 Settlement proposals. § 1-8.307-1 Submission of settlement proposals. The (a) Subject to the provisions of the termination clause in the contract, the contractor shall promptly submit to the contracting officer a settlement proposal setting forth the amount claimed to be due by reason of the termination. proposal shall be submitted within one year after the effective date of the ter- mination or within one or more exten- sions thereof granted by the contracting officer. (b) The settlement proposal shall cover all elements of the contractor's claim, including settlements with sub- contractors. With the consent of the contracting officer, proposals may be filed in successive steps covering sepa- rate portions of a claim. Such interim proposals shall include all costs of a par- ticular type, except as the contracting officer may authorize otherwise. (c) A settlement proposal shall be in the form established by the procuring agency (see § 1-8.802 for suggested for- mats of forms), but shall be in reason- able detail supported by adequate ac- counting data and shall include certificate substantially as contained in a 1-8.307—2(a). the appropriate settlement proposal for- mat set forth in § 1-8.802. A suggested format of a form for obtaining account- ing information is in § 1-8.804-1. Ac- tual, standard (appropriately adjusted), or average costs, may be used in pre- paring settlement proposals if such costs are determined in accordance with generally recognized accounting prin- ciples consistently followed by the con- tractor. Where actual, standard, or average costs are not reasonably avail- able, estimated costs may be used if the method of arriving at the estimates is approved by the contracting officer. contractor shall not be required to main- tain unduly elaborate cost accounting systems merely because his contracts may subsequently be terminated. A (d) If the total amount of claim is less than $2,500, a simplified settlement proposal form (see § 1-8.802-3) may be used. Claims which would normally be included in a single settlement proposal, such as those based on a series of sepa- rate orders for the same item under one contract, shall be consolidated wherever possible and shall not be divided in such a way as to bring them below $2,500. § 1-8.307-2 Bases for settlement pro- posals. (a) General. The preferred account- ing basis for preparing the settlement proposal is the inventory basis, since the contractor must compute and set forth costs applicable to that portion of the contract which is terminated. How- ever, if costs are so recorded in the con- tractor's books as to make it impossible to separate costs between completed units and work in process, it will not be possible to use the inventory basis; in which case the contracting officer may approve the total cost basis, which is a more indirect method of arriving at the contractor's costs applicable to the terminated portion of the contract. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 29, NOVEMBER 1962) 821 PART 1-8 TERMINATION OF CONTRACTS L 1-8.307-2 (a) Termination claims shall not be sub- mitted on any basis other than the in- ventory and total cost bases without the prior approval of the head of the pro- curing activity or his duly authorized representative. (b) Inventory basis. (1) Under the inventory basis the contractor shall claim only costs charge- able or allocable to that portion of the contract which is terminated, and the settlement proposal shall itemize sepa- rately: (i) At purchase or manufacturing cost, each of the following-metals, raw materials, purchased parts, work in process, finished parts, components, dies, jigs, fixtures, and tooling; (ii) Charges such as engineering costs, initial costs, and general and ad- ministrative costs; (iii) Costs of settlements with subcontractors; (iv) Settlement expenses; and (v) Other proper charges. (2) An allowance for profit (see § 1-8.303) or adjustment for loss (see § 1-8.304 (b)) shall be made to complete the gross termination claim. All un- liquidated advance and progress pay- ments, and all disposal and other credits known when the proposal is submitted, shall then be deducted. (c) Total cost basis. (1) When use of the inventory basis is not practicable or will unduly delay settlement, the total cost basis may be used if approved in advance by the con- tracting officer. (2) When the total cost basis is used under a complete termination, all costs incurred under the contract up to the effective date of termination shall be itemized and the costs of settlements with subcontractors and applicable set- tlement expenses shall be added. An allowance for profit (see § 1-8.303) or adjustment for loss (see § 1-8.304 (c)) shall be made. The contract price for all end items which have been or are to be delivered and accepted shall be deducted. All unliquidated advance payments, unliquidated progress pay- ments, and disposal and other credits known when the proposal is submitted shall also be deducted. (3) When the total cost basis is used under a partial termination, the settle- ment proposal shall not be submitted until completion of the continued por- tion of the contract. The settlement proposal shall be prepared in accordance with (2) of this § 1-8.307-2(c), except that all costs incurred to the date of completion of the continued portion of the contract shall be included. § 1-8.308 Limitation on settlements. Exclusive of settlement costs, the total amount payable to the contractor on ac- count of a settlement, whether through negotiation or by determination, shall not exceed the total contract price as re- duced by the amount of payments other- wise made and as further reduced by the contract price of work not terminated. FEDERAL PROCUREMENT REGULATIONS 822 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8.4 ADDITIONAL PRINCIPLES APPLICABLE TO THE SETTLEMENT OF COST-REIM BURSEMENT TYPE CONTRACTS TERMINATED FOR CONVENIENCE L Subpart 1-8.4-Additional Principles Applicable to the Settlement of Cost-Reimbursement Type Con- tracts Terminated for Convenience § 1-8.401 General. Termination clauses for cost-reim- bursement type contracts (see §§ 1-8.702 and 1-8.704) provide for the settlement of costs and of fee, if any. The provi- sions of the particular contract govern- ing costs shall determine what costs are allowable. § 1-8.402 Discontinuance of invoices or vouchers. · (a) Where the contract has been com- pletely terminated, the contractor shall not use invoices or Standard Form 1034 vouchers after the last day of the sixth month following the month in which the termination notice is effective; however, he may elect to discontinue the use of such invoices or vouchers at any time prior thereto. Where the contractor has invoiced or vouchered out all costs with- in the six-month period, his claim for fee, if any, may be submitted on a form of the type suggested in § 1-8.802-4 or by letter; but in either case the contractor must substantiate the amount of the fee he claims and submit an appropriate certification. The claim for fee must be submitted to the contracting officer with- in one year from the effective date of termination, unless the period has been extended in accordance with the terms of the contract. When the use of in- voices or vouchers has been discontinued, all uninvoiced or unvouchered costs and claim for fee, if any, shall thereafter be submitted in accordance with § 1-8.404. (b) Where the contract has been par- tially terminated, the provisions of § 1-8.405 shall be applied. 1-8.404— 1 § 1-8.403 Notice to the General Account- ing Office. If the General Accounting Office does not make site audits of an agency's contracts, the contracting officer shall promptly send a copy of the notice of termination to the General Accounting Office; in addition, he shall advise that office of the date on which the six-month vouchering period will expire, or of the contractor's election to discontinue the use of invoices or vouchers prior to ex- piration of the six-month period. If site audits are conducted, such copy and information shall be included in the file available to the General Accounting Office. § 1-8.404 Procedure after invoices or vouchers are discontinued. § 1-8.404-1 proposal. Submission of settlement The contractor shall submit a settle- ment proposal covering his costs and his claim, if any, for a fee. Such proposal shall be submitted to the contracting officer within one year from the effective date of termination, unless the period has been extended in accordance with the terms of the contract. The proposal shall be submitted in the form required by the procuring agency (see suggested format of form in § 1-8.802-4), but shall include a certificate substantially as con- tained in the format set forth in § 1- 8.802-4. The proposal shall contain only uninvoiced or unvouchered costs, and the contractor may not include in such proposal those costs which (a) have been finally disallowed by the contracting of- ficer or the General Accounting Office, or (b) are the subject of a reclaim in- voice or voucher, or any costs of a similar nature. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 29, NOVEMBER 1962) 823 PART 1-8 TERMINATION OF CONTRACTS 1-8.404-2 ☛ § 1–8.404–2 Interim negotiations. L The contracting officer and the con- tractor shall proceed immediately to take all action required by the termination clause of the contract and by this Part 1-8 (including negotiation of settlements with fixed-price subcontractors), but no final settlement agreement shall be ex- ecuted until there has been full com- pliance with § 1-8.404-5. § 1-8.404-3 Partial payments. Requests for partial payments shall be made and processed in accordance with § 1-8.212–1. § 1-8.404-4 costs. Adjustment of overhead (a) If the contract contains a nego- tiated overhead rate clause which pro- vides for the negotiation of a final over- head rate and it appears that adjust- ment of overhead costs applicable to in- voiced or vouchered costs under proce- dures established for determining nego- tiated final overhead rates will unduly delay final settlement, the contracting officer after obtaining appropriate infor- mation from the agency audit office may agree with the contractor: (1) To negotiate the amount of overhead for the contract for the period for which fixed overhead rates have not previously been negotiated, based upon audit recommendations requested by the contracting officer for such purpose; or (2) That any overhead adjustment shall be reserved in the final settlement agreement, pending establishment of ne- gotiated final overhead rates. (b) Where an amount of overhead is negotiated pursuant to (a)(1) of this § 1-8.404-4, the contractor shall elimi- nate such overhead and the related direct costs on which it was based from the to- tal overhead and base (direct) costs used to compute overhead for other con- tracts performed during the applicable accounting period. § 1-8.404-5 Information concerning previous cost invoices or vouchers. Prior to proceeding with the settle- ment, the contracting officer, with the cooperation of the accounting office where the invoices or vouchers have been certified, shall determine the payments previously made under the contract and any General Accounting Office excep- tions taken thereto. § 1-8.404-6 § 1-8.404-7 [ Reserved.] [Reserved.] § 1-8.404-8 Final settlement. (a) The contracting officer may pro- ceed with completion of the settlement and execution of an appropriate settle- ment agreement at any time after de- velopment of the information required by § 1-8.404-5. (b) The fee shall be adjusted as pro- vided in § 1-8.406. (c) The final settlement agreement may include all claims of the Govern- ment and of the contractor under the terminated contract, except that no amount may be allowed for any item of cost which is the subject of a General Accounting Office exception, either cleared by deduction or uncleared, or for any other item of cost of the same na- ture, unless a reclaim invoice or voucher covering such cost has been presented by the contractor and authorized by the General Accounting Office for payment. (d) The provisions of the contract governing the types of reimbursable costs shall constitute the basis of nego- tiation; however, if an overall settle- ment of costs is agreed upon, agreement on each separate element of cost is not necessary. In appropriate cases, differ- ences may be compromised and doubtful questions settled by agreement. An over- all settlement shall not, under any cir- cumstances, be made the means of re- imbursing contractors for costs which, under the provisions of the contract, are clearly not allowable. FEDERAL PROCUREMENT REGULATIONS 824 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8. 4 ADDITIONAL PRINCIPLES APPLICABLE TO THE SETTLEMENT OF COST-REIM BURSEMENT TYPE CONTRACTS TERMINATED FOR CONVENIENCE 1-8.406 ୮ § 1-8.405 Procedure for partial termi- nation. § 1-8.405-1 General. (a) In the event of a partial termina- tion, the settlement shall be limited to adjustment of the fee, if any, in accord- ance with §§ 1-8.405-2 and 1-8.406, un- less the contracting officer determines that: (1) The terminated portion is clearly severable from the balance of the contract; or (2) Performance of the contract is virtually complete, or that performance of any continued portion is only on sub- sidiary items or spare parts, or is other- wise not substantial. (b) In the case of the exceptions in (a) of this § 1-8.405-1, the procedures in § 1-8.402, 1-8.403, and 1-8.404 are ap- plicable. § 1-8.405-2 Submission of settlement proposal (fee only). The contractor shall submit a settle- ment proposal which shall be limited to the amount of his claim, if any, for a fee. Such proposal shall be submitted to the contracting officer within one year from the effective date of termination, unless the period has been extended in accord- ance with the terms of the contract. The proposal may be submitted on a form of the type suggested in § 1-8.802-4 or by letter; but in either case the contractor must substantiate the amount of the fee he claims and submit an appropriate certification. § 1-8.405-3 vouchers. Submission of invoices or In the event of a partial termination where settlement is limited to adjust- ment of fee, if any, the contractor shall continue to submit by invoice or voucher all costs reimbursable under the contract, including (a) his own costs allocable to the terminated portion of the contract, (b) costs of settlements with subcontrac- tors properly identified as such, and (c) applicable settlement expenses. The contractor shall not be reimbursed for costs of settlements with subcontractors unless the approvals or ratifications re- quired pursuant to the contract have been otbained (see § 1-8.208). § 1-8.406 Adjustment of fee. The adjusted fee to be paid, if any, shall be determined in the manner pro- vided by the contract, generally based on percentage of completion of the con- tract or of the terminated portion there- of. Where this basis is used, factors such as the extent and difficulty of the work performed by the contractor (including but not limited to planning, scheduling, technical study, engineering work pro- duction and supervision, placing and su- pervising subcontracts to the extent rea- sonably required, and work performed by the contractor in (a) stopping per- formance, (b) settling claims of sub- contractors, and (c) disposing of termi- nation inventory) shall be compared with the total work required by the contract or by the terminated portion thereof. The ratio of costs incurred to the total estimated cost of performing the con- tract or the terminated portion thereof is only one factor in computing the per- centage of completion of the contract. This percentage may be either greater or less than that indicated by the ratio of costs incurred, depending upon the evaluation by the contracting officer of the above factors and other relevant considerations. (NEXT PAGE IS 827) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 29, NOVEMBER 1962) 8 25 SUBPART 1-8.5 DISPOSITION OF TERMINATION INVENTORY 1-8.502-1 L Subpart 1-8.5-Disposition of Termi- nation Inventory § 1-8.501 General. § 1-8.501-1 Methods of disposal. Subject to the Government exercising its right under the termination clause in a contract to acquire title to, and re- quire delivery of, any items of termina- tion inventory, termination inventory shall be disposed of in the manner most favorable to the Government. As here- inafter set forth in this Subpart 1-8.5, methods of disposal include purchase or retention by the prime contractor or subcontractor at cost; return to sup- pliers; utilization, donation, or sale (after screening as provided in § 1- 8.505); and destruction or abandonment. § 1-8.501-2 General restrictions on con- tractor's authority. The following general restrictions are in addition to specific restrictions set forth in this Subpart 1-8.5: (a) The authority of a contractor to purchase, retain, or dispose of termina-. tion inventory or to authorize or approve a purchase, retention, or disposition by a subcontractor is subject to (1) any applicable Government restrictions on the disposition of property which is either classified for security reasons or is dangerous to public health, safety, or welfare, and (2) any contract provisions regarding the disposition of material subject to a lien. (b) Contractors shall not sell termi- nation inventory to persons known by them to be officers or employees of the Federal Government, except to the ex- tent determined by the heads of the con- tracting agencies to be in the best in- terest of the Government and except under procedures and safeguards, pre- scribed by the heads of such agencies, adequate to preclude collusion and fraud. (c) With respect to termination in- ventory, the authority of a higher tier contractor to approve a sale by a sub- contractor to apppprove a or contractor or to approve a purchase or retention at less than cost by a subcon- tractor, and the authority of a subcon- tractor to sell with the approval of the next higher tier contractor or to pur- chase or retain such inventory at less than cost with the approval of the next higher tier contractor does not include (1) a sale without competitive bids by a subcontractor to the next higher tier contractor or to an affiliate of such con- tractor or of the subcontractor, or' (2) a sale without competitive bids, or a purchase or retention at less than cost, by a subcontractor affiliated with the next higher tier contractor. Each such excluded sale, purchase, or retention re- quires the written approval of the con- tracting officer. A firm shall be con- sidered to be affiliated with another firm if, by reason of stock ownership or other- wise, (1) they are under common con- trol, or (2) there is any common interest between them which is sufficient to cre- ate a reasonable doubt that the bargain- ing between them is completely in the best interest of the Government. § 1-8.502 Contractor-acquired property. § 1-8.502-1 Purchase or retention at cost. Subject to the requirement of §§ 1- 8.502-3 and 1-8.510, contractors shall be encouraged to purchase or retain con- tractor-acquired property at cost. No part of the cost of property so purchased or retained shall be included in settle- ment proposals. In any instance in which a contractor purchases or retains any allocable contractor-acquired prop- erty for use in other continuing Govern- ment contracts or commercial operations, handling and transportation charges necessitated by the purchase or retention of such property may be in- cluded in the contractor's settlement proposal as "other costs", if such costs are reasonable. Where property pur- chased or retained is for use on a contin- uing Government contract and is not in excess of the quantitative require- ments for completion of that contract, FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 29, NOVEMBER 1962) 827 PART 1-8 TERMINATION OF CONTRACTS 1-8.502-1 that property shall be considered prop- erly allocable to the continuing contract if that contract is subsequently termi- nated, even though its procurement would otherwise constitute undue antic- ipation of production schedules. If, as a result of the purchase or retention of property from a terminated contract for use on a continuing Government con- tract, the contractor terminates subcon- tracts under the continuing Government contract, the charges incurred by reason of the termination of such subcontracts may be included in the termination claim under the terminated contract. § 1-8.502-2 pliers. Return of property to sup- Subject to the requirement of §§ 1- 8.502-3 and 1-8.510, contractors are au- thorized and shall be encouraged to return allocable quantities of contractor- acquired property to suppliers for full credit less the supplier's normal restock- ing charge, or 15 percent of cost, which- ever is less. Contractors shall not include in their settlement proposals the cost of such property returned to sup- pliers in accordance with this paragraph. Contractors may include in their settle- ment proposals as "other costs" the transportation, handling, and restocking charges with respect to the property so returned. § 1-8.502-3 contracts. Cost-reimbursement type Under cost-reimbursement type con- tracts, the contractor's right to purchase or retain contractor-acquired property at cost or to return such property to suppliers shall be subject to the approval of the contracting officer after adjust- ment of previously reimbursed costs for such property. § 1-8.503 Inventory schedules. § 1-8.503-1 Submission of inventory schedules. (a) Inventory schedules shall be sub- Lmitted in the form prescribed by the procuring agency (see § 1-8.803 for sug- gested formats of forms), but shall include a certificate substantially as con- tained in the inventory schedules set forth in §§ 1-8.803-1, 1-8.803-3, 1-8.803- 5, and 1-8.803-7, or, if appropriate, sub- stantially as contained in the inventory schedule set forth in § 1-8.803-9. (b) As promptly as possible after re- ceipt of a notice of termination, the prime contractor is required to submit inventory schedules to the contracting officer covering all items of termina- tion inventory, including Government- furnished property; but, except where title to materials purchased by the con- tractor is vested in the Government, termination inventory purchased or re- tained at cost or returned to suppliers, pursuant to § 1-8.502, shall not be listed. Inventory schedules may be submitted prior to submission of the settlement pro- posal. Submission shall not be delayed in order to supply complete cost data on items of work in process where such data is not readily available. Partial schedules may be submitted from time to time when they cover substantial por- tions of a particular property classifica- tion in the termination inventory. Each schedule submitted shall be designated by the contractor as "partial" or "final." § 1-8.503-2 Separate schedules. Separate sets of schedules shall be submitted (a) for contractor-acquired property, and (b) for Government-fur- nished property. Within each of those categories schedules shall be submitted for each property classification pre- scribed by the procuring agency. § 1-8.503-3 Inventory descriptions. A commercial description, adequate for screening and disposal purposes, of each item having commercial value shall be included in the inventory schedules. Where any items of termination inven- tory bear a Government identification number, such number shall be listed on the inventory schedules. In the case of FEDERAL PROCUREMENT REGULATIONS 8 28 (FPR CIRC, 29, NOVEMBER 1962) SUBPART 1-8. 5 DISPOSITION OF TERMINATION INVENTORY ୮ L other items, the contractor shall fur- nish a description sufficient to enable the contracting officer to determine the proper disposition thereof. The con- tractor shall consult the contracting of- ficer when in doubt as to the extent of description required. The contractor need not itemize material believed to be scrap or salvage if (a) such material is physically segregated in the contractor's plant, and (b) the contractor submits a statement describing the material gen- erally, setting forth its approximate cost, and giving such other information as may be necessary for the contracting officer to determine whether the material is scrap or salvage. If the material is determined by the contracting officer to be scrap or salvage (see § 1-8.504), the contractor may make a single descrip- tive entry on an inventory schedule cov- ering such material and indicating its approximate total cost. § 1-8.503-4 tificate. Inventory schedule cer- The certificate on the inventory sched- ules prescribed by the procuring agency (see § 1-8.503-1(a)) shall be executed by the contractor on each schedule sub- mitted. The certificate, among other things, tenders to the Government title to the property listed therein, unless the Government already has title thereto. § 1-8.503-5 Common items. Except for property delivery of which has been required by the Government and except for Government-furnished property, the contractor's inventory schedules shall not include any common items (as defined in § 1-8.101(b)) which are reasonably usable on other work of the contractor without loss to him. § 1-15.205-42(a).) (See § 1-8.503-6 Withdrawals from inven- tory schedules. If at any time prior to final disposi- tion any items of contractor-acquired property listed in the contractor's inven- tory schedules become reasonably usable 1-8.503-7(b) ( 1) on other work of the contractor without loss to him and that fact is known to the contractor, the contractor is required to purchase or retain such items at cost in accordance with § 1-8.502-1 or § 1-8.- 502-3, whichever is applicable, and to amend his inventory schedules and his settlement proposal accordingly. Upon notification to the contracting officer, the contractor may similarly purchase or retain at cost any other items of property included in his inventory sched- ules. Withdrawal of Government-fur- nished property included in inventory schedules is subject to approval by the contracting officer. 1-8.503-7 Rejection and correction of inadequate schedules. (a) General. Contracting officers shall cause to be verified, to the extent practicable, the physical count and con- dition of inventories, including Gov- ernment-furnished property, listed on the contractor's inventory schedules. If any inventory schedule submitted by a contractor is found to be inadequate, the contractor shall be promptly notified and required to correct or supplement the schedule as to the items which are deficient. Inventory schedules shall not be rejected if the information contained therein is adequate for disposal purposes, even if complete cost data on work in process are not available. Rejection of an inventory schedule shall be limited where possible to specific items thereon and shall not necessarily render the en- tire schedule unacceptable. (b) Effect on plant clearance period. (1) Where only individual items on the inventory schedules covering all items of a particular property classifi- cation are in need of correction or ampli- fication, the inventory schedules as sub- mitted shall be considered acceptable for purposes of starting the final phase of a plant clearance period (see § 1-8.101 (k)). However, where the inad- equacy of an inventory schedule requires the return of the entire schedule to the contractor for correction or revision, the FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 29, NOVEMBER 1962) 8 29 PART 1-8 TERMINATION OF CONTRACTS 1-8.503-7 (b) (1) final phase of the plant clearance period as to the property classification covered thereby shall not begin until acceptable final schedules covering that property classification have been submitted. (2) The contracting officer shall, within 15 days after receipt of the final schedule, advise the contractor of any deficiencies apparent in the inventory schedule, or the schedules shall be deemed acceptable for purposes of start- ing the final phase of a plant clearance period. However, should substantial er- rors develop which were not apparent from the inventory schedules previously deemed acceptable, the final phase of a plant clearance period shall not be deemed to have commenced until cor- rected schedules have been submitted, unless the contracting officer determines that no unwarranted delay in disposal operations was occasioned thereby. § 1-8.504 Scrap and salvage. § 1-8.504-1 General. Promptly after the submission of in- ventory schedules by the contractor, the contracting officer shall review, or cause to be reviewed, the contractor's treat- ment of any items of termination in- ventory as scrap or salvage (see § 1-8.503-3). The review shall include a careful examination of the inventory schedules and in appropriate cases phy- sical inspection of the property involved. Prior to determining that such items are scrap or salvage, the contracting officer shall obtain such approvals as may be required by agency procedures. If the contracting officer determines that any of the materials listed by the contractor as scrap or salvage are serviceable or usable materials, the contractor shall, in accordance with such determination, submit revised inventory schedules (see § 1-8.503-7). Property which is deter- mined to be scrap and which, by other Government regulations, is required to be segregated by alloy or otherwise, shall be so segregated by the contractor. Property determined to be scrap or sal- vage may, with the approval of the con- tracting officer, be delivered to a Gov- ernment agency, sold, or otherwise disposed of by the contractor in accord- ance with the provisions of § 1-8.505, § 1-8.507, § 1–8.508, or § 1-8.509. In ap- propriate cases, when approved by the contracting officer, such sales may be consolidated with the contractor's sales of scrap and salvage generated from his other work and, in such cases, the scrap warranty required by § 1-8.504–2 may be waived in the discretion of the contract- ing officer. § 1-8.504-2 Scrap warranty. (a) If any termination inventory is sold as scrap, a scrap warranty, sub- stanially as set forth in § 1-8.805, shall be obtained. (b) Releases from liability under scrap warranties may be granted on behalf of the Government by the contracting offi- cer if, as consideration for the release, the Government is paid the difference between (1) the price for which the ma- terial was sold as scrap, and (2) an amount, approved by the contracting officer, not less than that which the ma- terial would bring if it were sold at a fair and reasonable price for purposes other than use as scrap. Such releases shall be granted by the Government and the consideration paid to the Govern- ment, even though the contract contain- ing the warranty was not made direct with the Government. (c) In the event of resale of any ma- terial subject to a scrap warranty, the seller is required to obtain an appropri- ate scrap warranty from the purchaser thereof. Upon tender of the warranty to the Government, the seller shall be released by the Government from liability under his own warranty. § 1-8.505 Screening of serviceable and usable property. Serviceable and usable property in- cluded in the contractor's inventory schedules shall be screened as required FEDERAL PROCUREMENT REGULATIONS 8 30 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8.5 DISPOSITION OF TERMINATION INVENTORY 1-8.508 L ୮ by Chapter III, Title I, Personal Prop- erty Management, Regulations of the General Services Administration, and as required by agency procedures. If, as a result of such screening, any item of serviceable and usable property is de- sired by any agency of the Government for stock, diversion to other contracts, or other purposes, the contracting officer shall direct the delivery of such property. § 1-8.506 erty. Government-furnished prop- Government-furnished property in- cluded in termination inventory, return of which has not been required by the Government, may be disposed of in the same manner as other termination in- ventory. The contracting officer is re- quired to approve all such dispositions and may specify methods for preparing and routing inventory schedules cover- ing such property. § 1-8.507 Sale or other disposition of termination inventory. § 1-8.507-1 General. The sale (including purchase or re- tention at less than cost) shall be con- sistent with section 304.00, Chapter IV, Title 1, Personal Property Management, Regulations of the General Services Administration. § 1-8.507-2 § 1-8.507-3 [Reserved.] [Reserved.] § 1-8.507-4 Proceeds of sale. Proceeds of any sale are to be covered into the Treasury as miscellaneous re- ceipts except where the contract or any subcontract thereunder authorizes the proceeds to be credited to the price or cost of the work covered by such contract or subcontract (40 U.S.C. 485 (a) and (e)). The clauses set forth in §§ 1-8.701, 1-8.702, 1-8.703, and 1-8.704-1 include provision for the proceeds of sale to be applied in reduction of any payments to be made to the contractor under the contract, or otherwise credited to the price or cost of the work covered by the contract, or paid in such manner as the contracting officer may direct. A similar provision is included in the clause, set forth in § 1-8.706, suggested for use by a contractor in making subcontracts. § 1-8.507-5 laws. Applicability of antitrust Whenever any termination inventory which has or may cost the Government $3,000,000 or more (or any patents, proc- esses, techniques, or inventions, irre- spective of cost) is to be sold or other- wise disposed of to private interests, the agency concerned shall promptly notify the Attorney General and the Adminis- trator of General Services of the pro- posed disposal and the probable terms or conditions thereof and shall include in the notification the information required by section 101.11, Chapter IV, Title 1, Personal Property Management, Regula- tions of the General Services Adminis- tration. Disposition shall not be made until the agency has received advice from the Attorney General as to whether, so far as he can determine, the proposed disposition would tend to create or main- tain a situation inconsistent with the antitrust laws. § 1-8.507-6 Foreign contractor inven- tory. The sale or other disposition of con- tractor inventory located in foreign countries shall be made in accordance with agency procedures established to implement Title IV, Federal Property and Administrative Services Act of 1949 (40 U.S.C. 511-514). § 1-8.508 Donations. After utilization screening is completed but prior to being offered for sale or being otherwise disposed of in accord- ance with § 1-8.507, termination inven- tory may be donated for authorized purposes in accordance with Chapter IV, Title 1, Personal Property Management, Regulations of the General Services Ad- ministration, and with agency proce- dures. FEDERAL PROCUREMENT REGULATIONS لم (FPR CIRC, 29, NOVEMBER 1962) 831 PART 1-8 TERMINATION OF CONTRACTS 1-8.509(a) * § 1-8.509 Destruction or abandonment. (a) Termination inventory which is Government-furnished property or con- tractor-acquired property and which is not otherwise disposed of under this Part 1-8 may, in accordance with Gen- eral Services Administration and agency regulations, be destroyed or abandoned; provided that the contracting officer has determined that it has no commercial value and no value to the Government, or that the estimated cost of its care and handling is greater than the probable sale price, or that because of its nature it constitutes a danger to public health, safety, or welfare. Any such determina- tion shall be subject to review in accord- ance with § 1-8.512. (b) Termination inventory which has been classified for security reasons, and which is not required for the Govern- ment's needs, shall, unless such clas- sification is removed or changed by proper authority, be disposed of in ac- cordance with applicable security reg- ulations. (c) No termination inventory shall be abandoned on the contractor's premises without the contractor's consent. § 1-8.510 Special machinery, tooling, and equipment. Except as otherwise provided in the contract, if the settlement is to include any item of cost on account of special machinery and equipment, or special tooling, the contracting officer shall take appropriate steps to protect the Govern- ment's interest by: (a) Requiring transfer of title to such property to the Government; (b) Requiring the inclusion of such property in the contractor's inventory schedules, to be treated in the same man- ner as termination inventory; or (c) In the event of purchase or re- tention by the contractor, making an equitable adjustment of the costs to be included in the settlement for such prop- erty, which adjustment shall take into account the rate of amortization thereon, the possible use thereof on other work of the contractor, the ultimate disposal value thereof, and any rights to be re- tained by the Government. § 1-8.511 Removal and storage. § 1-8.511-1 Special storage at the ex- pense and risk of the contractor. At any time during the plant clearance period, the contractor may, upon written notice to the contracting officer, store any items of termination inventory, not previously disposed of, in a warehouse or other storage location on or off his own premises, unless otherwise directed by the contracting officer within 10 days of the receipt by the contracting officer of such notice. Such storage shall in no way modify the responsibility of the contractor with respect to such property. The expense of such storage, including any removal incident thereto, shall be borne by the contractor, unless the con- tracting officer determines that such re- moval or storage is for the convenience of the Government. § 1-8.511-2 Storage at the expense and risk of the Government. At any time after expiration of the plant clearance period, the contractor may submit to the contracting officer a list, certified as to quantity and quality, of any items of termination inventory not previously disposed of, exclusive of items the disposition of which has been directed or authorized by the contracting officer, and may request the Government to remove such items or enter into a stor- age agreement covering them. Not later than 15 days thereafter, the Gov- ernment shall accept title to such items and remove them or enter into a written storage agreement covering the same; however, the list submitted shall be sub- ject to verification by the contracting officer at the time of removal of the items or, if the items are stored, within 45 days from the date of submission of the list. Any adjustment necessary to correct the list as submitted shall be made prior to final settlement. PROCUREMENT REGULATIONS FEDERAL ୮ 832 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8. 5 DISPOSITION OF TERMINATION INVENTORY 1-8.513-4 * Ꭶ 1-8.512 Review of property disposal. Property disposal matters shall be re- viewed by a reviewing authority within the agency as provided in Chapter IV, Title 1, Personal Property Management, Regulations of the General Services Ad- ministration, and as may be further pro- vided in agency procedures. § 1-8.513 Subcontractor termination in- ventory. § 1-8.513-1 General policy. (a) The prime contractor and each subcontractor are primarily responsible for the disposition of the termination in- ventory of their respective next lower tier subcontractors, but all such disposals shall be subject to review by the con- tracting officer as provided in § 1-8.208- 3(c) (but see § 1-8.208-4). The policies and provisions set forth in §§ 1-8.501, 1-8.502, 1-8.506, 1-8.508, 1-8.509, and 1-8.512 shall be applicable in the case of subcontractors. Any rights which the prime contractor has or acquires in the termination inventory of his first tier or lower tier subcontractors shall, to the extent directed by the contracting officer, be exercised for the benefit of the Gov- ernment, in accordance with the pro- visions of the contract between the Government and the prime contractor. (b) Subcontractors in all tiers shall prepare inventory schedules in accord- ance with the requirements of this Part 1-8. Normally disposition instructions for termination inventory, except serv- iceable and usable property, will be fur- nished by the next higher tier subcon- tractor or the prime contractor, as the case may be. Each subcontractor may submit his next lower tier subcontrac- tors' inventory schedules of serviceable and usable property directly to the con- tracting officer for review and disposi- tion instructions, unless otherwise di- rected by the contracting officer. In the interest of expediting disposition of ter- mination inventory, the cognizant con- tracting officer shall permit such direct submission, unless he determines that the submission of inventory schedules through all intermediate tiers of sub- contractors is necessary in the best in- terest of the Government. When such a determination is made, it must be in writing and a copy submitted to the head of the procuring activity concerned for review. § 1-8.513-2 Inventory schedules. With respect to termination inventory for which their subcontractors claim re- imbursement, the prime contractor and each higher tier subcontractor shall ob- tain information substantially equiva- lent to that called for by § 1-8.503. In any event, full information on the con- dition and usability of such inventory shall be furnished, and certificates sim- ilar to those contained on the formats in § 1-8.803 shall be obtained from the subcontractor. For this purpose, forms similar to the formats of inventory schedules set forth in § 1-8.803 may be used. § 1-8.513-3 Scrap and salvage. The prime contractor and each higher tier subcontractor shall review any rec- ommendations of their respective sub- contractors concerning scrap and sal- vage. If the prime contractor or the higher tier subcontractor determines that any of the materials are service- able and usable materials, he shall re- quire the subcontractor to submit re- vised inventory data in accordance with such determination. The Government shall not be bound by any determination that material is scrap or salvage unless the determination and any sale of the material as scrap or salvage have the prior approval of the contracting officer. A scrap warranty running to the Govern- ment shall be obtained wherever such material is sold as scrap. § 1-8.513-4 Serviceable and usable property. Subcontractor termination inventory, which is not purchased or retained at FEDERAL PROCUREMENT REGULATIONS J (FPR CIRC, 29, NOVEMBER 1962) 833 PART 1-8 TERMINATION OF CONTRACTS 1-8.513-4 L L cost and which is determined to be serv- iceable and usable property, shall be disposed of by: (a) Submission for screening and pos- sible redistribution within the Govern- ment or donation; or (b) Sales to third parties (including purchases or retentions at less than cost by the subcontractor, a higher tier sub- contractor, or the prime contractor) made in general conformity with § 1-8.- 507. § 1-8.514 Adjustment prior to final settlement. § 1-8.514-1 Duty of contractors to in- form Government. By the terms of the inventory sched- ule certificate contained on the formats set forth in § 1-8.803 (also see § 1-8.503- 4), the contractor or subcontractor is required to inform the Government of any substantial change in the status of his termination inventory arising be- tween the date of submission of his ter- mination inventory schedules and final disposition of such inventory. § 1-8.514-2 Right of Government to re- view inventory schedules. (a) Regardless of any disposition of termination inventory pursuant to this Subpart 1-8.5, the Government shall continue to have the right, prior to final settlement, to require additional infor- mation concerning such inventory, to contest its allocability to the terminated portion of the contract, or to exclude such inventory from the settlement on any proper grounds. (b) If, prior to final settlement, the Government determines that any por- tion of the termination inventory is not allocable to the terminated contract or should be excluded from the settlement on any other grounds, the cost thereof, and any credits related thereto, shall be excluded from the settlement. If the contractor has actually paid to the Gov- ernment the proceeds realized from the disposition of such inventory, the Gov- ernment shall repay such proceeds to the contractor. If such inventory has been delivered to the Government, normally it should be returned to the contractor at the contractor's expense and risk. § 1-8.515 Accounting for termination inventory. (a) Prior to final settlement with the prime contractor, all termination in- ventory of the prime contractor and his subcontractors must be accounted for as follows: (1) By purchase or retention at cost by the contractor or subcontractor, or by return to suppliers, and omission or withdrawal of such inventory from the contractor's inventory schedules; (2) By transfer to the Government; (3) By donation; (4) By sale (including purchase or retention at less than cost by the con- tractor or subcontractor) and applica- tion of the proceeds or agreed value in reduction of the contractor's claim, or otherwise to the credit of the Govern- ment; (5) By destruction ment; or or abandon- (6) By other disposition in accord- ance with the terms of the contract and of this Part 1-8. (b) In the event that any termination inventory not disposed of is lost, de- stroyed, damaged, or for any reason can- not be delivered by the contractor at the time of settlement of his termination claim, such termination inventory, unless the Government has expressly assumed the risk involved or unless the contract provides otherwise, shall be accounted for as inventory purchased or retained by the contractor, and the fair value of the inventory, as determined by the con- tracting officer, shall be deducted from the termination claim. FEDERAL PROCUREMENT REGULATIONS 834 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8, 6 TERMINATION FOR DEFAULT L 1-8.602-2(a) Subpart 1-8.6-Termination for Default § 1-8.600 Scope of subpart. This subpart sets forth policies and procedures for the utilization and appli- cation of the Default clause set forth in § 1-8.707 for fixed-price supply contracts, the Termination for Default-Damages for Delay-Time Extensions clauses set forth in § 1-8.709 for fixed-price con- struction contracts, the Default clause set forth in § 1-8.710 for certain fixed- price research and development con- tracts, and the Termination for De- fault or for Convenience of the Government clause set forth in § 1-8.702 for cost-reimbursement type contracts. The scope of this subpart does not in- clude default with respect to individual purchase orders issued under Federal Supply Schedule contracts, for which there are special instructions in section 303.03, Chapter II, Title I, Personal Property Management, Regulations of the General Services Administration. § 1-8.601 General, (a) Termination for default is gen- erally the exercise of a contractual right of the Government to terminate, in whole or in part, the contractor's right to pro- ceed by reason of his failure, actual or anticipatory, to perform his obligations under the contract. (b) If the contract provides for its termination for convenience of the Gov- ernment and if, after issuance of a notice of termination for default under one of the clauses set forth in § 1-8.702, § 1-8.707, § 1-8.709-1, or § 1-8.710, it is determined for any reason that, under the provisions of the clause, the con- tractor was not in default or that the default was excusable, each of the clauses provides that the notice of ter- mination shall be deemed to have been issued under the termination for con- venience provisions of the contract, and that the rights and obligations of the parties shall be governed accordingly. (c) If no termination for convenience clause is included in the contract and if, after issuance of a notice of termination for default, it is determined for any rea- son that the contractor was not in de- fault or if, in connection with a construc- tion contract, it is determined that the default was excusable, each of the clauses in §§ 1-8.707, 1-8.709-1, and 1-8.710 provides that the contract shall be equitably adjusted to compensate for such termination. (d) Notwithstanding the provisions of (b) and (c) of this § 1-8.601, the con- tract may be reinstated by mutual agree- ment where the contracting officer de- termines that such reinstatement is in the best interest of the Government. (e) In addition to the termination rights and remedies provided in the con- tract clauses set forth in §§ 1-8.702, 1-8.707, 1-8.709, and 1-8.710, the Gov- ernment may in appropriate cases pur- sue termination or cancellation rights and remedies provided by law or by other clauses of the contract. § 1-8.602 Default termination of fixed- price supply contracts. § 1-8.602-1 The Government's right to terminate for default. Under contracts containing the De- fault clause in § 1-8.707, the Government has the right, subject to the notice re- quirements of the clause with respect to (b) and (c) of this § 1-8.602-1, to ter- minate the whole or any part of the contract for default if the contractor (a) fails to make delivery of the supplies or to perform the services within the time specified in the contract, (b) fails to perform any other provision of the con- tract, or (c) fails to make progress so as to endanger performance of the contract. § 1-8.602-2 Effect of termination for default. (a) Under a termination for default the Government is not liable for the contractor's costs on undelivered work, and is entitled to the repayment of any FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 29, NOVEMBER 1962) 835 PART 1-8 TERMINATION OF CONTRACTS ୮ 1-8.602-2 (a) advance payments and of any progress payments applicable to such work. The Government may elect, pursuant to paragraph (d) of the Default Clause set forth in § 1-8.707, to require the con- tractor to transfer title and deliver to the Government completed supplies and manufacturing materials, in the manner and to the extent directed by the con- tracting officer. The contracting offi- cer shall not use the Default clause as authority to acquire any completed sup- plies or manufacturing materials unless he has made certain that the Govern- ment does not already have title thereto under some other provision of the con- tract. In the event manufacturing ma- terials are to be acquired by the Gov- ernment under the authority of the Default clause for the purpose of furnishing the materials to any other contractor, the contracting officer shall take such action only after giving due consideration to the difficulties that such contractor may encounter in making use of the materials. (b) Subject to the provisions of (c) of this § 1-8.602-2, the Government shall pay to the contractor the contract price for any completed supplies, and the amount agreed upon by the contract- ing officer and the contractor for any manufacturing materials, acquired by the Government pursuant to the Default clause. (c) In order to protect the Govern- ment from overpayment for any com- pleted supplies or manufacturing mate- rials, that might result from failure to make provision for the Government's potential liability to laborers and mate- rialmen for lien rights outstanding against such supplies or materials after the Government has paid the contractor therefor, the contracting officer shall take one or more of the following meas- ures before making the payment referred to in (b) of this § 1-8.602-2: (1) Ascertain whether the payment bonds, if any, furnished by the contrac- tor are adequate to satisfy all lienors' claims, or whether it is feasible to ob- tain similar bonds to cover outstanding liens; (2) Require the contractor to fur- nish appropriate statements from labor- ers and materialmen disclaiming any lien rights they may have to the supplies and materials; (3) Obtain appropriate agreement by the Government, the contractor, and lienors assuring release of the Govern- ment from any potential liability to the contractor or lienors; (4) Withhold from the amount oth- erwise due for the supplies or materials such amounts as the contracting officer determines to be necessary to protect the Government's interest, but only if the measures set forth in (1), (2), and (3) cannot be accomplished or are otherwise deemed inadequate; (5) Take any other action the con- tracting officer deems appropriate, con- sidering the particular circumstances and the degree of the contractor's sol- vency. (d) The contractor is liable to the Government for any excesss costs for supplies and services procured similar to those terminated (see § 1-8.602-6), and for any other damages, whether or not repurchase is effected (see § 1-8.602-7). However, where the failure to perform arises out of causes which are excusable under paragraph (c) of the clause set forth in § 1-8.707, the contractor shall not be liable for any excess costs. § 1-8.602-3 fault. Procedure in case of de- (a) Subparagraph (a) (i) of the De- fault clause covers situations where the contractor has in fact defaulted by fail- ure to make delivery of the supplies or to perform the services within the time specified by the contract or any extension thereof. In such situations, no notice of failure by the contractor or of the possi- bility of termination for default is re- quired by the terms of the clause to be sent to the contractor prior to the actual notice of termination; however, to avoid FEDERAL PROCUREMENT REGULATIONS 836 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1–8. 6 TERMINATION FOR DEFAULT L creating a situation in which the Gov- ernment will be deemed to have waived the contract delivery date without a new date having been established, a prelimi- nary notice shall be sent the contractor setting a new date by which the con- tractor will be permitted to make delivery or complete performance, or otherwise, reserving the Government's rights under the Default clause. Dependent upon the circumstances in each case, such a pre- liminary notice (1) shall call the con- tractor's attention to his contractual liabilities should the contract be termi- nated for default under subparagraph (a) (i) of the clause, (2) may request an explanation of the contractor's failure, (3) may state that failure of the con- tractor to present such explanation may be taken as an admission that no valid explanation exists, and (4) may invite the contractor to discuss the matter at a conference. (b) Subparagraph (a)(ii) of the De- fault clause covers situations in which the contractor fails to perform any of the other provisions of the contract (such as not furnishing a required perform- ance bond) or so fails to make progress as to endanger performance of the con- tract in accordance with its terms. In either of such situations, the contracting officer must formally notify the con- tractor of such failure and allow at least 10 days for cure of the failure before issuing a termination notice. Such noti- fication shall set forth in concise but complete form all of the provisions of the contract which the contractor has failed to meet, or a summary of the find- ings which have demonstrated that the contractor has failed to make acceptable progress in the performance of the con- tract, or both. The extent of detail to be included will vary depending upon the nature and amount of previous cor- respondence with the supplier; but any such previous correspondence relied upon shall be specifically referenced in the preliminary notice. The preliminary no- tice (1) shall state that a notice of default may be issued termination for default may be issued 1—8.602—3(c)(8) upon expiration of the 10-day (or longer) period unless the failure to perform or to make adequate progress toward per- formance has been cured, (2) shall call the contractor's attention to his con- tractual liabilities in the event the con- tract is terminated for default, (3) shall request an explanation of the contrac- tor's failure to perform the contract, (4) may state that failure of the contractor to present such explanation may be taken as an admission that no valid explana- tion exists, and (5) may invite the con- tractor to discuss the matter at a conference. (c) The contracting officer shall con- sider the following factors in determin- ing whether to terminate a contract for default: (1) The provisions of the contract and applicable laws and regulations; (2) The specific failure of the con- tractor and the excuses, if any, made by the contractor for such failure; (3) The availability of the supplies or services from other sources; (4) The urgency of the need for the supplies or services and the period of time which would be required to obtain the supplies or services from other sources as compared with the time in which delivery could be obtained from the delinquent contractor; (5) The degree of essentiality of the contractor in the Government pro- curement program and the effect of a termination for default upon the con- tractor's capability as a supplier under other contracts; (6) The effect of a termination for default on the ability of the contractor to liquidate guaranteed loans, progress payments, or advance payments; (7) The availability of funds to fi- nance repurchase costs which may prove to be uncollectible from the defaulted contractor, and the availability of funds to finance termination costs if the de- fault is determined to be excusable; and (8) Any other pertinent facts and circumstances. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 29, NOVEMBER 1962) 837 PART 1-8 TERMINATION OF CONTRACTS L L 1—8.602—3 (d) (d) If, after compliance with the pro- cedures in (a) through (c) of this § 1-8.602-3, the contracting' officer de- termines that termination for default is proper, he shall issue a notice of ter- mination which shall: (1) Set forth the contract number and date; (2) Describe the acts or omissions constituting the default; (3) State that the contractor's right to proceed further with performance of the contract (or a specified portion of the contract) is terminated; (4) If the contracting officer has not determined whether the failure to per- form is excusable, state that the sup- plies or services terminated may be procured against the contractor's ac- count, and that the contractor may be held liable for any excess costs; (5) If the contracting officer has determined that the failure to perform is not excusable, state that the notice of termination constitutes such decision and state that the contractor will be held liable for any excess costs, and also state that the contractor has the right to ap- peal such decision under the Disputes clause: (6) State that the Government re- serves all rights and remedies provided by law or under the contract, in addi- tion to charging excess costs; and (7) State that the notice constitutes a decision that the contractor is in de- fault as specified and that the con- tractor has the right to appeal under the Disputes clause. (e) The same distribution shall be made of the termination notice as was made of the contract. In addition, a copy shall be furnished to the surety, if any, and the procuring activity's fiscal office shall be advised to withhold further payments under the terminated contract pending additional instructions which shall be given when sufficient informa- tion is available. (f) If the contracting officer deter- mines before issuance of the notice of termination that the contractor's failure to perform arose from causes beyond his control and without his fault or negli- gence and that termination is in the best interest of the Government, the con- tracting officer shall either terminate the contract for convenience where the con- tract contains a termination for con- venience clause or terminate the con- tract for default, without assessing excess costs, where the contract does not contain a termination for convenience clause. • (g) If the contracting officer has not been able to determine, prior to issuance of the notice of termination, whether the contractor's failure to perform arose from causes beyond his control and with- out his fault or negligence, he shall make a written decision on that point as soon as practicable after issuance of the no- tice of termination. Such decision shall be delivered promptly to the contractor with a notification that he has the right to appeal the decision as specified in the Disputes clause. (See § 1-8.601(b) with respect to the situation where the con- tract contains a termination for conveni- ence clause and the causes of the failure to perform are excusable.) § 1-8.602-4 Procedure in lieu of termi- nation for default. The following courses of action, among others, are available to the contracting officer in lieu of termination for default, when in the best interest of the Govern- ment: (a) Permit the contractor, his surety, or his guarantor to continue perform- ance of the contract under a revised de- livery schedule; (b) Permit the contractor to continue performance of the contract by means of a subcontract or other business ar- rangement with an acceptable third party, provided the rights of the Govern- ment are adequately preserved; or (c) If the requirement for the supplies and services specified in the contract no longer exists and the contractor is not liable to the Government for damages FEDERAL PROCUREMENT REGULATIONS 8 38 (FPR CIRC. 29, NOVEMBER 1962) SUBPART. 1-8, 6 * TERMINATION FOR DEFAULT 1-8.603-1 L as provided in § 1-8.602-7, execute a no- cost termination settlement agreement utilizing the formats set forth in §§ 1- 8.806-6 and 1-8.806-7 as a guide. § 1-8.602-5 file. Documentation in contract In all cases where a contract is termi- nated for default or where a procedure authorized by § 1-8.602-4 is followed, the contract file shall be well documented to explain fully the reasons for the action taken. § 1-8.602-6 Repurchase against con- tractor's account. (a) Where the supplies or services are still required after termination and the contractor is liable for excess costs, re- purchase of supplies or services which are the same as or similar to those called for in the contract shall be made against the contractor's account as soon as prac- ticable after termination. Such repur- chase shall be at as reasonable a price as practicable considering the quality re- quired by the Government and the time within which the supplies or services are required. The contract of repurchase may be made for a quantity in excess of the undelivered quantity terminated for default, when such excess quantity is needed, (so long as this does not result in paying a higher unit price than avail- able for the undelivered quantity) but excess cost may be charged against the defaulting contractor for no more than the undelivered quantity terminated for default (including variations in quantity permitted by the terminated contract). (b) If the repurchase is for a quantity not in excess of the undelivered quantity terminated for default, the legal require- ments with respect to formal adver- tising are inapplicable. However, the contracting officer shall use formal ad- vertising procedures except where there is good reason to negotiate. If the con- tracting officer decides to negotiate the repurchase contract, he shall note the reason in the contract file and shall iden- tify the procurement as a repurchase in accordance with the provisions of the Default clause in the defaulted con- tract. If the repurchase is for a quantity in excess of the undelivered quantity ter- minated for default, for the purpose of determining whether advertising or ne- gotiation should be used, the entire quan- tity shall be treated as new procurement. (c) If repurchase is effected at a price in excess of the price of the supplies terminated, the contracting officer shall make a written demand on the contrac- tor for the total amount of such excess. If the contractor fails to make payment, the contracting officer shall follow agency procedures for collecting claims in favor of the Government. § 1-8.602-7 Other damages. (a) If a contract is terminated for default or if a course of action in lieu of termination for default is followed (see § 1-8.602-4), the contracting officer shall promptly ascertain and make de- mand for any liquidated damages to which the Government may be entitled under the contract. Pursuant to the contract provisions for liquidated dam- ages in § 1-1.315-3, such damages are in addition to any excess cost of reprocure- ment. (b) If the Government has suffered any other ascertainable damages as a result of the contractor's default, the contracting officer shall, on the basis of legal advice, take appropriate action to assert the Government's claim for such damages. § 1-8.603 Default termination of fixed- price construction contracts. § 1-8.603-1 Termination of the con- tractor's right to proceed. Under contracts containing either of the Termination for Default-Damages for Delay-Time Extensions clauses set forth in § 1-8.709, the Government has the right, to the extent provided in such clauses, to terminate the contractor's right to proceed with the work, or any separable part thereof, if the contractor does not prosecute the work required by FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 29, NOVEMBER 1962) 8 39 PART 1-8 TERMINATION OF CONTRACTS 1-8.603-1 the contract with such diligence as will insure its completion, or fails to com- plete it, within the time specified in the contract or any extension thereof. § 1-8.603-2 default. Effect of termination for If a contractor's right to proceed is terminated for default, the Government may take over and complete the work or cause it to be completed and the con- tractor and his sureties shall be liable to the Government for any increased costs caused thereby. If the contract contains the clause set forth in § 1-8.- 709-1, the contractor and his sureties shall, in addition to increased costs in completing the work, be liable for liqui- dated damages if liquidated damages are provided in the contract, or for actual damages if liquidated damages are not so provided. § 1-8.603-3 Procedure in case of de- fault. (a) The contracting officer shall con- sider the following factors in determin- ing whether to terminate a contract for default: (1) The provisions of the contract and applicable laws and regulations; (2) The specific failure of the con- tractor and excuses, if any, made by the contractor for such failure; (3) The period of time which would be required for the Government or an- other contractor to complete the work as compared to the time required for com- pletion by the delinquent contractor; (4) The effect of a termination for default on the ability of the contractor to liquidate guaranteed loans, progress payments, or advance payments; (5) The availability of funds to fi- nance the increased cost to complete, to the extent that such costs may not be covered by surety protection, and the availability of funds to finance termina- tion costs should it subsequently be de- termined that the delay was excusable; and (6) Any other pertinent facts and circumstances. (b) If the contracting officer deter- mines that the contractor's failure to perform arises from causes which are excusable under the terms of the con- tract, the contracting officer shall not terminate the contractor's right to pro- ceed, nor shall he charge the contractor with liquidated damages (or if no liqui- dated damages, then actual damages) because of any delays occasioned by such causes. See (b) and (c) of § 1-8.601 regarding action to be taken if the de- fault is determined to be excusable after issuance of the notice of termination. (c) If the contracting officer deter- mines that termination for default is in the best interest of the Government, he shall promptly send a written notice to the contractor terminating his right to proceed. The notice shall: (1) Set forth the contract number and date; (2) Describe the act or omissions, and the extent of the resultant delay, constituting the default; (3) State that the contractor's right to proceed further with performance of the contract (or of a specified portion of the contract) is terminated; (4) State that the Government may cause the contract to be completed and that the contractor will be held liable for any increased costs; (5) State that the Government re- serves all rights and remedies provided by law or under the contract, in addition to charging increased costs; (6) State that the notice constitutes a decision, pursuant to the Disputes clause, that the contractor is in default as specified and that the contracting officer has determined that the delay is not excusable; and (7) State that the contractor has the right to appeal as specified in the Disputes clause. (d) The same distribution shall be made of the termination notice as was made of the contract. In addition, a copy shall be furnished to the surety, and the procuring activity's fiscal office FEDERAL PROCUREMENT REGULATIONS لم 840 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8. 6 TERMINATION FOR DEFAULT ୮ shall be advised to withhold further payments under the terminated contract pending additional instructions which shall be given when sufficient informa- tion is available. (e) Promptly after issuance of the termination notice, the contracting of- ficer shall determine the manner in which the work is to be completed and whether the materials, appliances, and plant which are on the site will be needed. § 1-8.603-4 Dealings with surety-take- over agreements. (a) By reason of the surety's liability for damages resulting from the contrac- tor's default, the surety has certain rights and interests in connection with the completion of the contract work and the application of the undisbursed funds available therefor. An expenditure in excess of the amount reasonably neces- sary for completion or a diversion of funds to other use may result in reduc- ing the surety's liability. Because of such interests of the surety, proposals by the surety concerning the completion of the work should be given due considera- tion, and the decision as to the action to be taken shall be made on the basis of the best interest of the Government, including the possible effect of such action upon the Government's rights against the surety. (b) Where the surety desires to com- plete the contract work, completion by the surety should normally be permitted unless the contracting officer has rea- son to believe that the persons, firms, or corporations by whom the surety pro- poses to have the work done are so in- competent or unqualified that the in- terests of the Government would be substantially prejudiced by their efforts. (c) Because of the possibility of con- flicting claims to unpaid prior earnings (retained percentages or amounts rep- resenting unpaid progress estimates) of the defaulting contractor, the surety may condition its offer of completion upon the execution by the Government of a "takeover" agreement fixing the surety's rights to payment from such funds. In that event the contracting officer may in his discretion (but not before the effec- tive date of termination) enter into a written agreement with the surety. 1-8.603-4(c)(4) Further, consideration should be given to having the agreement include both the surety and the defaulting contractor in order to eliminate any disagreement as to the contractor's residual rights, such as claims to unpaid prior earnings. The agreement shall provide that the surety will undertake to complete the work required by the contract in accord- ance with all the terms and conditions of the contract, and that the Govern- ment will pay the surety in the manner provided by the contract, but not in excess of the surety's costs and expenses, the balance of the contract price unpaid at the time of default; subject, however, to the following conditions: (1) Any unpaid earnings of the de- faulting contractor, including retained percentages and progress estimates for work accomplished prior to termination, shall be subject to claims by the Govern- ment against the contractor, except to the extent that the amount thereof may be required to pay to the completing surety its actual costs and expenses in- curred in the completion of the work, exclusive of its payments and obligations under the payment bond given in con- nection with the contract. (2) Such agreement shall not waive or release the Government's right to liquidated damages for delays in com- pletion of the work, except to the extent that such delays may be excused under the provisions of the contract. (3) If the contract proceeds have been assigned to a financing institution, the surety may not be paid from retained percentages or amounts representing unpaid progress estimates earned by or payable to the contractor unless the as- signee shall consent in writing to such payment. (4) In no event shall the surety be entitled to be paid any amount in excess of its total expenditures necessarily made in completing the work and dis- charging its liabilities under the payment bond of the defaulting contractor. Furthermore, payments to the surety to reimburse it for discharging its liabili- ties under the payment bond of the de- faulting contractor shall be only on au- thority of (i) mutual agreement between the Government, the defaulting contrac- tor, and the surety, or (ii) determina- tion of the Comptroller General as to FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 29, NOVEMBER 1962) 841 PART 1-8 TERMINATION OF CONTRACTS L 1—8.603—4 (c) (4) payee and amount, or (iii) order of a court of competent jurisdiction. § 1-8.603-5 Procedure in lieu of termi- nation for default. If, after due consideration, the con- tracting officer determines that termina- tion is not in the best interest of the Gov- ernment although the contractor is in default, the contracting officer may per- mit the contractor to continue the work, and the contractor and his sureties shall be liable to the Government for liqui- dated damages, as specified in the con- tract, or if liquidated damages are not so specified, to any actual damages oc- casioned by the failure of the contractor to complete the work in accordance with the terms of the contract. § 1-8.603–6 file. Documentation in contract In all cases where a contractor's right to proceed is terminated for default or where the procedure authorized by § 1-8.603-5 is followed, the contract file shall be well documented to explain fully the reasons for the action taken. § 1-8.603-7 Liquidation of liability. In accordance with the provisions of the contract, the contractor and his surety are liable to the Government for resulting damages. All retained per- centages of progress payments previously made to the contractor and any progress payments due for work completed prior to the termination of the right to pro- ceed shall be used for the purpose of liquidating the liability of the contractor and his surety to the Government for such damages. Where the retained and unpaid amounts are insufficient to liqui- date such liability, steps shall be taken to recover the additional sum from the contractor and his surety. § 1-8.604 Default termination of cost- reimbursement type contracts. (a) Under cost-reimbursement type contracts containing the Termination for Default or for Convenience of the Gov- ernment clause in § 1-8.702, the Govern- ment has the right to terminate the of the contract for default for the reasons con- tained in paragraph (a) (1) clause. (b) Settlement of a cost-reimburse- ment type contract terminated for de- fault is subject to the principles set forth in Subparts 1-8.2 and 1-8.4 and is per- formed in the same manner and with the same consequences as when the contract is terminated for convenience except: (1) The costs of preparing the con- tractor's settlement proposal are not al- lowable (see paragraph (e)(1) (iii) of the clause in § 1-8.702); and (2) The fixed fee, if any, is paid only with respect to articles delivered and ac- cepted (see paragraph (e) (1) (iv) (B) of the clause in § 1-8.702). (c) In order that the best interests of the Government will be served, the pro- cedures set forth in §§ 1-8.602 and 1-8.603 shall be used to the extent ap- propriate in considering the termination for default of a cost-reimbursement type contract; however, a cost-reimbursement type contract does not contain any pro- vision for recovery of excess costs of reprocurement after termination for default. § 1-8.605 Default termination of cer- tain fixed-price research and de- velopment contracts. (a) Under fixed-price research and development contracts containing the Default clause in § 1-8.710, the Govern- ment has the right to terminate the con- tract for default under the conditions set forth in the clause. (b) The language of the Default clause in § 1-8.710 closely parallels the wording of the Default clause set forth in § 1-8.707 for use in fixed-price supply contracts. That being the case, the guidelines and procedures in § 1-8.602 are generally applicable and shall be fol- lowed to the extent appropriate in con- sidering the termination for default of a fixed-price research and development contract containing the Default clause in § 1-8.710. FEDERAL PROCUREMENT REGULATIONS 842 (FPR CIRC, 29, NOVEMBER 1962) SUBPART 1-8. 7 CLAUSES ୮ L L Subpart 1-8.7—Clauses § 1-8.700 Scope and applicability of subpart. § 1-8.700-1 Scope. This subpart contains certain contract clauses related to the termination of contracts (1) for the convenience of the Government, and (2) for default. § 1-8.700-2 Applicability. (a) Termination for convenience clauses. The clauses set forth in §§ 1- 8.701 through 1-8.706 are prescribed for use in accordance with this § 1–8.700- 2(a) whenever an agency considers it necessary or desirable to provide in its contracts for termination for the con- When- venience of the Government. ever such a clause is to be included: (1) In any fixed-price contract in excess of $2,500 for (i) supplies, or (ii) experimental, developmental, or research work where a profit is contemplated, the clause set forth in § 1-8.701 shall be used, except as otherwise permitted by § 1-8.700-2(a) (2), when the contract is entered into by formal advertising or by negotiation. (2) In any fixed-price supply con- tract which is not in excess of $10,000, the short-form termination clause set forth in §1-8.705-1 is authorized for use in lieu of any other clause providing for termination for the convenience of the Government. The short-form clause is also authorized for use in any service contract (such as contracts for rental of unreserved garage space and laundry and dry-cleaning services) where it is intended that a termination claim will not be made in the event of termina- tion for the convenience of the Govern- ment. (3) In any cost-reimbursement type contract for (i) supplies, or (ii) ex- perimental, developmental, or research work where a fee is contemplated, the clause set forth in § 1-8.702 shall be used. (4) In any fixed-price or cost-reim- bursement type contract for experi- mental, developmental, or research work 1-8.700-2(b)(3) placed with an educational or nonprofit institution on a no-fee or no-profit basis, the clause set forth in § 1-8.704-1 shall be used. (5) In any fixed-price construction contract estimated to exceed $10,000, the clause set forth in § 1-8.703 shall be used when the contract is entered into by formal advertising or by negotiation. (6) In any fixed-price construction contract estimated not to exceed $10,000, the clause set forth in § 1-8.705-2 shall be used when the contract is entered into by formal advertising or by nego- tiation. (7) Suggested clauses for use in cer- tain subcontracts are covered in §§ 1.8- 704-2 and 1-8.706. (b) Termination for default clauses. (1) In any fixed-price supply contract, the clause set forth in § 1-8.707 shall be used when the contract is entered into by formal advertising and, unless inap- propriate, should be used when the con- tract is negotiated (other than for small purchases made in accordance with Sub- part 1-3.6). Pending publication of a new edition of Standard Form 32 (to re- place the September 1961 edition), the last sentence of paragraph (e) of that clause may be deleted when the clause is used in a contract which contains a clause providing for termination for con- venience of the Government, and regula- tions of agencies may so provide. (2) In any cost-reimbursement type contract for (i) supplies, or (ii) experi- mental, developmental, or research work where a fee is contemplated, the clause set forth in § 1-8.702 shall be used when- ever an agency considers it desirable to provide a termination for default clause in such a contract. (3) In any fixed-price research and development contract except a contract awarded on the basis of no-profit to an educational or nonprofit institution, the clause set forth in § 1-8.710 shall be used whenever an agency considers it desir- able to provide a termination for de- fault clause in such a contract. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 29, NOVEMBER 1962) 843 PART 1-8 TERMINATION OF CONTRACTS 1—8.700—2 (b)(4) (4) In any fixed-price construction contract estimated to exceed $10,000, the clause set forth in § 1-8.709-1 shall be used, except as modified by the footnote to § 1-8.709-1, when the contract is en- tered into pursuant to formal advertis- ing. The clause is for optional use in negotiated contracts. During periods of national emergency, agencies may amend paragraph (d) of the clause as provided in § 1-16.404 (e). Furthermore, pending publication of a new edition of Standard Form 23A (to replace the April 1961 edition), the last sentence of para- graph (e) of the clause set forth in § 1-8.709-1 may be deleted when the clause is used in a contract which con- tains a clause providing for termination for convenience of the Government, and regulations of agencies may so provide. (5) In any fixed-price construction contract estimated not to exceed $10,000, the clause set forth in § 1-8.709-2 shall be used, except as modified by the foot- note to § 1-8.709-2, when the contract is entered into pursuant to formal ad- vertising. The clause is for optional use in negotiated contracts. (c) Excusable delays clause. A clause substantially as set forth in § 1-8.708 shall be used in a contract containing the termination clause set forth in § 1-8.702. (d) Special termination clauses. Spe- cial termination clauses may be used in contracts such as letter contracts, time and materials contracts, labor-hour con- tracts, and facilities contracts for which no clauses are prescribed for use by (a) and (b) of this § 1-8.700-2; however, the principles set forth in this Part 1-8 should be followed to the extent prac- ticable. § 1-8.701 Termination clause for fixed- price contracts. The following clause is applicable as prescribed in § 1-8.700–2(a)(1): TERMINATION FOR CONVENIENCE OF THE GOVERNMENT (a) The performance of work under this contract may be terminated by the Govern- ment in accordance with this clause in whole, or from time to time in part, when- ever the Contracting Officer shall determine that such termination is in the best inter- est of the Government. Any such termina- tion shall be effected by delivery to the Contractor of a Notice of Termination spec- ifying the extent to which performance of work under the contract is terminated, and the date upon which such termination be- comes effective. (b) After receipt of a Notice of Termina- tion, and except as otherwise directed by the Contracting Officer, the Contractor shall: (1) Stop work under the contract on the date and to the extent specified in the Notice of Termination; (2) Place no further orders or subcon- tracts for materials, services, or facilities, except as may be necessary for completion of such portion of the work under the con- tract as is not terminated; (3) Terminate all orders and subcon- tracts to the extent that they relate to the performance of work terminated by the No- tice of Termination; (4) Assign to the Government, in the manner, at the times, and to the extent directed by the Contracting Officer, all of the right, title, and interest of the Contrac- tor under the orders and subcontracts so ter- minated, in which case the Government shall have the right, in its discretion, to settle or pay any or all claims arising out of the termi- nation of such orders and subcontracts; (5) Settle all outstanding liabilities and all claims arising out of such termination of orders and subcontracts, with the approval or ratification of the Contracting Officer, to the extent he may require, which approval or ratification shall be final for all the purposes of this clause; (6) Transfer title to the Government and deliver in the manner, at the times, and to the extent, if any, directed by the Con- tracting Officer, (i) the fabricated or unfab- ricated parts, work in process, completed work, supplies, and other material produced as a part of, or acquired in connection with the performance of, the work terminated by the Notice of Termination, and (ii) the com- pleted or partially completed plans, draw- ings, information, and other property which, if the contract had been completed, would have been required to be furnished to the Government; (7) Use his best efforts to sell, in the manner, at the times, to the extent, and at the price or prices directed or authorized by FEDERAL PROCUREMENT REGULATIONS 844 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8, 7 CLAUSES 1-8.701(e) L the Contracting Officer, any property of the types referred to in (6) above: Provided, however, That the Contractor (i) shall not be required to extend credit to any pur- chaser, and (ii) may acquire any such prop- erty under the conditions prescribed by and at a price or prices approved by the Con- tracting Officer: And provided further, That the proceeds of any such transfer or dispo- sition shall be applied in reduction of any payments to be made by the Government to the Contractor under this contract or shall otherwise be credited to the price or cost of the work covered by this contract or paid in such other manner as the Contract- ing Officer may direct; (8) Complete performance of such part of the work as shall not have been termi- nated by the Notice of Termination; and (9) Take such action as may be neces- sary, or as the Contracting Officer may di- rect, for the protection and preservation of the property related to this contract which is in the possession of the Contractor and in which the Government has or may acquire an interest. At any time after expiration of the plant clearance period, as defined in Subpart 1-8.1 of the Federal Procurement Regula- tions (41 CFR 1-8.1), as the definition may be amended from time to time, the Contractor may submit to the Contracting Officer a list, certified as to quantity and quality, of any or all items of termination in- ventory not previously disposed of, exclu- sive of items the disposition of which has been directed or authorized by the Contract- ing Officer, and may request the Government to remove such items or enter into a storage agreement covering them. Not later than fifteen (15) days thereafter, the Government will accept title to such items and remove them or enter into a storage agreement cov- ering the same: Provided, That the list sub- mitted shall be subject to verification by the Contracting Officer upon removal of the items or, if the items are stored, within forty-five (45) days from the date of sub- mission of the list, and any necessary ad- justment to correct the list as submitted shall be made prior to final settlement. (c) After receipt of a Notice of Termina- tion, the Contractor shall submit to the Contracting Officer his termination claim, in the form and with certification prescribed by the Contracting Officer. Such claim shall be submitted promptly but in no event later than one year from the effective date of termination, unless one or more exten- sions in writing are granted by the Contract- ing Officer upon request of the Contractor made in writing within such one-year period or authorized extension thereof. However, if the Contracting Officer determines that the facts justify such action, he may re- ceive and act upon any such termination claim at any time after such one-year period or any extension thereof. Upon failure of the Contractor to submit his termination claim within the time allowed, the Contract- ing Officer may, subject to any review required by the contracting agency's pro- cedures in effect as of the date of execution of this contract, determine, on the basis of information available to him, the amount, if any, due to the Contractor by reason of the termination and shall thereupon pay to the Contractor the amount so determined. (d) Subject to the provisions of paragraph (c), and subject to any review required by the contracting agency's procedures in effect as of the date of execution of this contract, the Contractor and the Contracting Officer may agree upon the whole or any part of the amount or amounts to be paid to the Contractor by reason of the total or partial termination of work pursuant to this clause, which amount or amounts may include a reasonable allowance for profit on work done: Provided, That such agreed amount or amounts, exclusive of settlement costs, shall not exceed the total contract price as reduced by the amount of payments otherwise made and as further reduced by the contract price of work not terminated. The contract shall be amended accordingly, and the Contractor shall be paid the agreed amount. Nothing in paragraph (e) of this clause, prescribing the amount to be paid to the Contractor in the event of failure of the Contractor and the Contracting Officer to agree upon the whole amount to be paid to the Contractor by rea- son of the termination of work pursuant to this clause, shall be deemed to limit, restrict, or otherwise determine or affect the amount or amounts which may be agreed upon to be paid to the Contractor pursuant to this paragraph (d). (e) In the event of the failure of the Contractor and the Contracting Officer to agree as provided in paragraph (d) upon the whole amount to be paid to the Contractor by reason of the termination of work pursuant to this clause, the Contracting Officer shall, subject to any review required by the con- tracting agency's procedures in effect as of FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 29, NOVEMBER 1962) 845 PART 1-8 · TERMINATION OF CONTRACTS L 1-8.701(e) the date of execution of this contract, deter- mine, on the basis of information available to him, the amount, if any, due to the Con- tractor by reason of the termination and shall pay to the Contractor the amounts de- termined as follows: (1) For completed supplies accepted by the Government (or sold or acquired as pro- vided in paragraph (b) (7) above) and not theretofore paid for, a sum equivalent to the aggregate price for such supplies computed in accordance with the price or prices speci- fied in the contract, appropriately adjusted for any saving of freight or other charges; (2) The total of- (i) The costs incurred in the per- formance of the work terminated, including initial costs and preparatory expense al- locable thereto, but exclusive of any costs attributable to supplies paid or to be paid for under paragraph (e) (1) hereof; (ii) The cost of settling and paying claims arising out of the termination of work under subcontracts or orders, as provided in paragraph (b)(5) above, which are properly chargeable to the terminated portion of the contract (exclusive of amounts paid or pay- able on account of supplies or materials de- livered or services furnished by subcontrac- tors or vendors prior to the effective date of the Notice of Termination, which amounts shall be included in the costs payable under (i) above); and (iii) A sum, as a profit, equal to 2 percent of that part of the amount deter- mined under (i) above which represents the cost of articles and materials not processed by the Contractor, plus a sum equal to 8 percent of the remainder of such amount, but the aggregate of such sums shall not exceed 6 percent of the whole of the amount determined under (i) above: Provided, how- ever, That if it appears that the Contractor would have sustained a loss on the entire contract had it been completed, no profit shall be included or allowed under this sub- division (iii) and an appropriate adjustment shall be made reducing the amount of the settlement to reflect the indicated rate of loss; and (3) The reasonable costs of settlement, including accounting, legal, clerical, and other expenses reasonably necessary for the preparation of settlement claims and sup- porting data with respect to the terminated portion of the contract and for the termina- tion and settlement of subcontracts thereun- der, together with reasonable storage, trans- portation. and other costs incurred in connection with the protection or disposi- tion of property allocable to this contract. The total sum to be paid to the Contractor under (1) and (2) of this paragraph (e) shall not exceed the total contract price as reduced by the amount of payments other- wise made and as further reduced by the con- tract price of work not terminated. Except for normal spoilage, and except to the extent that the Government shall have otherwise expressly assumed the risk of loss, there shall be excluded from the amounts payable to the Contractor as provided in (e) (1) and (2)(i) above, the fair value, as determined by the Contracting Officer, of property which is destroyed, lost, stolen, or damaged so as to become undeliverable to the Government, or to a buyer pursuant to paragraph (b) (7). (f) Any determination of costs under par- agraph (c) or (e) hereof shall be governed by the principles for consideration of costs set forth in ,1 as in effect on the - date of this contract. (g) The Contractor shall have the right of appeal, under the clause of this contract en- titled "Disputes," from any determination made by the Contracting Officer under para- graph (c) or (e) above, except that, if the Contractor has failed to submit his claim within the time provided in paragraph (c) above and has failed to request extension of such time, he shall have no such right of appeal. In any case where the Contracting Officer has made a determination of the amount due under paragraph (c) or (e) above, the Government shall pay to the Con- tractor the following: (1) if there is no right of appeal hereunder or if no timely appeal has been taken, the amount so determined by the Contracting Officer; or (2) if an ap- peal has been taken, the amount finally de- termined on such appeal. (h) In arriving at the amount due the Contractor under this clause there shall be deducted (1) all unliquidated advance or other payments on account theretofore made to the Contractor, applicable to the termi- nated portion of this contract; (2) any claim which the Government may have against the Contractor in connection with this contract; and (3) the agreed price for, or the proceeds of sale of, any materials, supplies, or other things acquired by the Contractor or sold, pursuant to the provisions of this clause, and not otherwise recovered by or credited to the Government. FEDERAL PROCUREMENT REGULATIONS 846 (fpr circ. 29, NOVEMBER 1962) SUBPART 1-8.7 CLAUSES ୮ L (1) If the termination hereunder be par- tial, prior to the settlement of the termi- nated portion of this contract, the Con- tractor may file with the Contracting Officer a request in writing for an equitable adjust- ment of the price or prices specified in the contract relating to the continued portion of the contract (the portion not terminated by the Notice of Termination), and such equi- table adjustment as may be agreed upon shall be made in such price or prices. (j) The Government may from time to time, under such terms and conditions as it may prescribe, make partial payments and in- payments on account against costs curred by the Contractor in connection with the terminated portion of this contract whenever in the opinion of the Contracting Officer the aggregate of such payments shall be within the amount to which the Con- tractor will be entitled hereunder. If the total of such payments is in excess of the amount finally agreed or determined to be due under this clause, such excess shall be payable by the Contractor to the Govern- ment upon demand, together with interest computed at the rate of 6 percent per annum for the period from the date such excess payment is received by the Contractor to the date on which such excess is repaid to the Government: Provided, however, That no interest shall be charged with respect to any such excess payment attributable to a re- duction in the Contractor's claim by reason of retention or other disposition of termina- tion inventory until ten days after the date of such retention or disposition, or such later date as determined by the Contracting Offi- cer by reason of the circumstances. (k) Unless otherwise provided for in this contract, or by applicable statute, the Con- tractor, from the effective date of termina- tion and for a period of three years after final settlement under this contract, shall preserve and make available to the Govern- ment at all reasonable times at the office of the Contractor but without direct charge to the Government, all his books, records, doc- uments, and other evidence bearing on the costs and expenses of the Contractor under this contract and relating to the work ter- minated hereunder, or, to the extent ap- proved by the Contracting Officer, photo- graphs, microphotographs, or other authen- tic reproductions thereof. [End of Clause] 1 The contracting agency shall insert the reference which is appropriate to that agency: Subpart 1-15.2 of the Federal Pro- curement Regulations (41 CFR 1-15.2); or the corresponding agency regulations; or both. 1-8.702 (b)(3) § 1-8.702 Termination clause for cost- reimbursement type contracts. The following clause is applicable as and prescribed in §§ 1-8.700-2(a) (3) 1-8.700-2(b) (2): TERMINATION FOR DEFAULT OR FOR CONVEN- IENCE OF THE GOVERNMENT (a) The performance of work under the contract may be terminated by the Govern- ment in accordance with this clause in whole, or from time to time in part: (1) Whenever the Contractor shall de- fault in performance of this contract in ac- cordance with its terms (including in the term "default" any such failure by the Con- tractor to make progress in the prosecution of the work hereunder as endangers such performance), and shall fail to cure such default within a period of ten days (or such longer period as the Contracting Officer may allow) after receipt from the Contracting Officer of a notice specifying the default; or (2) Whenever for any reason the Con- tracting Officer shall determine that such termination is in the best interest of the Government. Any such termination shall be effected by delivery to the Contractor of a Notice of Termination specifying whether termination is for the default of the Contractor or for the convenience of the Government, the ex- tent to which performance of work under the contract is terminated, and the date upon which such termination becomes effective. If, after notice of termination of this con- tract for default under (1) above, it is de- termined for any reason that the Contractor was not in default pursuant to (1), or that the Contractor's failure to perform or to make progress in performance is due to causes beyond the control and without the fault or negligence of the Contractor pur- suant to the provisions of the clause of this contract relating to excusable delays, the Notice of Termination shall be deemed to have been issued under (2) above, and the rights and obligations of the parties hereto shall in such event be governed accord- ingly. (b) After receipt of a Notice of Termina- tion and except as otherwise directed by the Contracting Officer, the Contractor shall: (1) Stop work under the contract on the date and to the extent specified in the Notice of Termination; (2) Place no further orders or subcon- tracts for materials, services, or facilities, except as may be necessary for completion of such portion of the work under the con- tract as is not terminated; (3) Terminate all orders and subcon- tracts to the extent that they relate to the FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 29, NOVEMBER 1962) 847 PART 1-8 TERMINATION OF CONTRACTS ୮ L 1—8.702(b)(3) performance of work terminated by the No- tice of Termination; (4) Assign to the Government, in the manner and to the extent directed by the Contracting Officer, all of the right, title, and interest of the Contractor under the orders or subcontracts so terminated, in which case the Government shall have the right, in its discretion, to settle or pay any or all claims arising out of the termination of such orders and subcontracts; (5) With the approval or ratification of the Contracting Officer, to the extent he may require, which approval or ratification shall be final and conclusive for all purposes of this clause, settle all outstanding liabilities and all claims arising out of such termina- tion of orders and subcontracts, the cost of which would be reimbursable in whole or in part, in accordance with the provisions of this contract; (6) Transfer title to the Government (to the extent that title has not already been transferred) and deliver in the manner, at the times, and to the extent directed by the Contracting Officer, (i) the fabricated or un- fabricated parts, work in process, completed work, supplies, and other material produced as a part of, or acquired in respect of the performance of, the work terminated by the Notice of Termination; (ii) the completed or partially completed plans, drawings, in- formation, and other property which, if the contract had been completed, would be re- quired to be furnished to the Government; and (iii) the jigs, dies, and fixtures, and other special tools and tooling acquired or manufactured for the performance of this contract for the cost of which the Contractor has been or will be reimbursed under this contract; (7) Use his best efforts to sell, in the manner, at the times, to the extent, and at the price or prices directed or authorized by the Contracting Officer, any property of the types referred to in (6) above: Provided, however, That the Contractor (i) shall not be required to extend credit to any purchaser, and (ii) may acquire any such property under the conditions prescribed by and at a price or prices approved by the Contracting Officer: And provided further, That the pro- ceeds of any such transfer or disposition shall be applied in reduction of any payments to be made by the Government to the Contractor under this contract or shall otherwise be credited to the price or cost of the work covered by this contract or paid in such other manner as the Contracting Officer may direct; (8) Complete performance of such part of the work as shall not have been termi- nated by the Notice of Termination; and (9) Take such action as may be necessary, or as the Contracting Officer may direct, for the protection and preservation of the property related to this contract which is in the possession of the Contractor and in which the Government has or may acquire an interest. The Contractor shall proceed immediately with the performance of the above obliga- tions notwithstanding any delay in deter- mining or adjusting the amount of the fee, or any item of reimbursable cost, under this clause. At any time after expiration of the plant clearance period, as defined in Sub- part 1-8.1 of the Federal Procurement Regu- lations (41 CFR 1-8.1), as the definition may be amended from time to time, the Con- tractor may submit to the Contracting Officer a list, certified as to quantity and quality, of any or all items of termination inventory not previously disposed of, exclusive of items the disposition of which has been directed or authorized by the Contracting Officer, and may request the Government to remove such items or enter into a storage agreement cov- ering them. Not later than fifteen (15) days thereafter, the Government will accept such items and remove them or enter into a storage agreement covering the same: Pro- vided, That the list submitted shall be sub- ject to verification by the Contracting Officer upon removal of the items or, if the items are stored, within forty-five (45) days from the date of submission of the list, and any necessary adjustment to correct the list as submitted shall be made prior to final settle- ment. (c) After receipt of a Notice of Termina- tion, the Contractor shall submit to the Con- tracting Officer his termination claim in the form and with the certification prescribed by the Contracting Officer. Such claim shall be submitted promptly but in no event later than one year from the effective date of termination, unless one or more extensions in writing are granted by the Contracting Officer upon request of the Contractor made in writing within such one-year period or authorized extension thereof. However, if the Contracting Officer determines that the facts justify such action, he may receive and act upon any such termination claim at any time after such one-year period or any ex- tension thereof. Upon failure of the Con- tractor to submit his termination claim within the time allowed, the Contracting FEDERAL PROCUREMENT REGULATIONS 848 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8.7 CLAUSES Officer may, subject to any review required by the contracting agency's procedures in effect as of the date of execution of this con- tract, determine, on the basis of information available to him, the amount, if any, due to the Contractor by reason of the termination and shall thereupon pay to the Contractor the amount so determined. (d) Subject to the provisions of paragraph (c), and subject to any review required by the contracting agency's procedures in effect as of the date of execution of this contract, the Contractor and the Contracting Officer may agree upon the whole or any part of the amount or amounts to be paid (includ- ing an allowance for the fee) to the Con- tractor by reason of the total or partial termination of work pursuant to this clause. The contract shall be amended accordingly, and the Contractor shall be paid the agreed amount. (e) In the event of the failure of the Con- tractor and the Contracting Officer to agree in whole or in part, as provided in para- graph (d), as to the amounts with respect to costs and fee, or as to the amount of the fee, to be paid to the Contractor in connec- tion with the termination of work pursuant to this clause, the Contracting Officer shall, subject to any review required by the con- tracting agency's procedures in effect as of the date of execution of this contract, deter- mine, on the basis of information available to him, the amount, if any, due to the Con- tractor by reason of the termination and shall pay to the Contractor the amount deter- mined as follows: fee- (1) If the settlement includes cost and (i) There shall be included therein all costs and expenses reimbursable in accord- ance with this contract, not previously paid to the Contractor for the performance of this contract prior to the effective date of the Notice of Termination, and such of these costs as may continue for a reasonable time thereafter with the approval of or as directed by the Contracting Officer: Provided, how- ever, That the Contractor shall proceed as. rapidly as practicable to discontinue such costs; (ii) There shall be included therein so far as not included under (i) above, the cost of settling and paying claims arising out of the termination of work under sub- contracts or orders, as provided in para- graph (b) (5) above, which are properly chargeable to the terminated portion of the 1-8.702 (f) (iii) There shall be included therein the reasonable costs of settlement, including accounting, legal, clerical, and other ex- penses reasonably necessary for the prepara- tion of settlement claims and supporting data with respect to the terminated portion. of the contract and for the termination and settlement of subcontracts thereunder, to- gether with reasonable storage, transporta- tion, and other costs incurred in connection with the protection or disposition of termi- nation inventory: Provided, however, That if the termination is for default of the Con- tractor there shall not be included any amounts for the preparation of the Con- tractor's settlement proposal; and (iv) There shall be included therein a portion of the fee payable under the con- tract determined as follows- (A) In the event of the termination of this contract for the convenience of the Government and not for the default of the Contractor, there shall be paid a percentage of the fee equivalent to the percentage of the completion of work contemplated by the contract, less fee payments previously made hereunder: or (B) In the event of the termination of this contract for the default of the Con- tractor, the total fee payable shall be such proportionate part of the fee (or, if this con- tract calls for articles of different types, of such part of the fee as is reasonably allocable to the type of article under consideration) as the total number of articles delivered to and accepted by the Government bears to the total number of articles of a like kind called for by this contract. If the amount determined under this sub- paragraph (1) is less than the total payment theretofore made to the Contractor, the Con- tractor shall repay to the Government the excess amount. (2) If the settlement includes only the fee, the amount thereof will be determined in accordance with subparagraph (1)(iv) above. (f) The Contractor shall have the right of appeal, under the clause of this contract en- titled "Disputes," from any determination made by the Contracting Officer under para- graph (c) or (e) above, except that, if the Contractor has failed to submit his claim within the time provided in paragraph (c) above and has failed to request extension of such time, he shall have no such right of appeal. In any case where the Contracting Officer has made a determination of the FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 29, NOVEMBER 849 November 1962) PART 1-8 TERMINATION OF CONTRACTS 7 L 1-8.702(f) amount due under paragraph (c) or (e) above, the Government shall pay to the Con- tractor the following: (1) if there is no right of appeal hereunder or if no timely appeal has been taken, the amount so determined by the Contracting Officer, or (2) if an ap- peal has been taken, the amount finally determined on such appeal. (g) In arriving at the amount due the Contractor under this clause there shall be deducted (1) all unliquidated advance or other payments theretofore made to the Con- tractor, applicable to the terminated portion of this contract, (2) any claim which the Government may have against the Contrac- tor in connection with this contract, and (3) the agreed price for, or the proceeds of sale of, any materials, supplies, or other things acquired by the Contractor or sold pursuant to the provisions of this clause and not otherwise recovered by or credited to the Government. (h) In the event of a partial termination, the portion of the fee which is payable with respect to the work under the continued portion of the contract shall be equitably adjusted by agreement between the Contrac- tor and the Contracting Officer, and such ad- justment shall be evidenced by an amend- ment to this contract. (i) The Government may from time to time, under such terms and conditions as it may prescribe, make partial payments and payments on account against costs incurred by the Contractor in connection with the terminated portion of the contract whenever in the opinion of the Contracting Officer the aggregate of such payments shall be within the amount to which the Contractor will be entitled hereunder. If the total of such pay- ments is in excess of the amount finally determined to be due under this clause, such excess shall be payable by the Contractor to the Government upon demand, together with interest computed at the rate of 6 percent per annum, for the period from the date such excess payment is received by the Con- tractor to the date on which such excess is repaid to the Government: Provided, how- ever, That no interest shall be charged with respect to any such excess payment attribut- able to a reduction in the Contractor's claim by reason of retention or other disposition of termination inventory until ten days after the date of such retention or disposition, or such later date as determined by the Con- tracting Officer by reason of the circum- stances. (j) The provisions of this clause relating to the fee shall be inapplicable if this con- tract does not provide for payment of a fee. § 1-8.703 Termination clause for fixed- price construction contracts. The following clause is applicable as prescribed in § 1-8.700-2(a) (5): TERMINATION FOR CONVENIENCE OF THE GOVERNMENT (a) The performance of work under this contract may be terminated by the Govern- ment in accordance with this clause in whole, or from time to time in part, when- ever the Contracting Officer shall determine that such termination is in the best interest of the Government. Any such termination shall be effected by delivery to the Contrac- tor of a Notice of Termination specifying the extent to which performance of work under the contract is terminated, and the date upon which such termination becomes effective. (b) After receipt of a Notice of Termina- tion, and except as otherwise directed by the Contracting Officer, the Contractor shall: (1) Stop work under the contract on the date and to the extent specified in the Notice of Termination; (2) Place no further orders or subcon- tracts for materials, services, or facilities ex- cept as may be necessary for completion of such portion of the work under the contract as is not terminated; (3) Terminate all orders and subcon- tracts to the extent that they relate to the performance of work terminated by the Notice of Termination; (4) Assign to the Government, in the manner, at the times, and to the extent di- rected by the Contracting Officer, all of the right, title, and interest of the Contractor under the orders and subcontracts so termi- nated, in which case the Government shall have the right, in its discretion, to settle or pay any or all claims arising out of the term- ination of such orders and subcontracts; (5) Settle all outstanding liabilities and all claims arising out of such termination of orders and subcontracts, with the approval or ratification of the Contracting Officer to the extent he may require, which approval or ratification shall be final for all the purposes of this clause; (6) Transfer title to the Government and deliver in the manner, at the times, and to the extent, if any, directed by the Con- tracting Officer, (i) the fabricated or un- fabricated parts, work in process, completed work, supplies, and other material produced as a part of, or acquired in connection with the performance of, the work terminated FEDERAL PROCUREMENT REGULATIONS 850 (FPR CIRC, 29, NOVEMBER 1962) SUBPART 1-8, 7 CLAUSES 1-8.703(e) by the Notice of Termination, and (ii) the completed or partially completed plans, drawings, information, and other property which, if the contract had been completed, would have been required to be furnished to the Government; (7) Use his best efforts to sell, in the manner, at the times, to the extent, and at the price or prices directed or authorized by the Contracting Officer, any property of the types referred to in (6) above: Provided, however, That the Contractor (i) shall not be required to extend credit to any pur- chaser, and (ii) may acquire any such prop- erty under the conditions prescribed and at a price or prices approved by the Contracting Officer: And provided further, That the pro- ceeds of any such transfer or disposition shall be applied in reduction of any pay- ments to be made by the Government to the Contractor under this contract or shall otherwise be credited to the price or cost of the work covered by this contract or paid in such other manner as the Contracting Officer may direct; (8) Complete performance of such part of the work as shall not have been termi- nated by the Notice of Termination; and (9) Take such action as may be neces- sary, or as the Contracting Officer may di- rect, for the protection and preservation of the property related to this contract which is in the possession of the Contractor and in which the Government has or may ac- quire an interest. At any time after expiration of the plant clearance period, as defined in Subpart 1–8.1 of the Federal Procurement Regulations (41 CFR 1–8.1), as the definition may be amend- ed from time to time, the Contractor may submit to the Contracting Officer Officer a list, certified as to quantity and quality, of any cr all items of termination inventory not previously disposed of, exclusive of items the disposition of which has been directed or authorized by the Contracting Officer, and may request the Government to remove such items or enter into a storage agreement covering them. Not later than fifteen (15) days thereafter, the Government will accept title to such items and remove them or enter into a storage agreement covering the same: Provided, That the list submitted shall be subject to verification by the Contracting Officer upon removal of the items or, if the items are stored, within forty-five (45) days from the date of submission of the list, and any necessary adjustment to correct the list as submitted shall be made prior to final settlement. or Such (c) After receipt of a Notice of Termina- tion, the Contractor shall submit to the Contracting Officer his termination claim, in the form and with the certification pre- scribed by the Contracting Officer. claim shall be submitted promptly but in no event later than one year from the effective date of termination, unless one or more extensions in writing are granted by the Contracting Officer upon request of the Con- tractor made in writing within such one-year period authorized extension thereof. However, if the Contracting Officer deter- mines that the facts justify such action, he may receive and act upon any such termi- nation claim at any time after such one-year period or extension thereof. Upon failure of the Contractor to submit his termination claim within the time allowed, the Contract-. ing Officer may, subject to any review re- quired by the contracting agency's proce- dures in effect as of the date of execution of this contract, determine, on the basis of information available to him, the amount, if any, due to the Contractor by reason of the termination and shall thereupon pay to the Contractor the amount so determined. (d) Subject to the provisions of paragraph (c), and subject to any review required by the contracting agency's procedures in effect as of the date of execution of this contract, the Contractor and the Contracting Officer may agree upon the whole or any part of the amount or amounts to be paid to the Con- tractor by reason of the total or partial ter- mination of work pursuant to this clause, which amount or amounts may include a reasonable allowance for profit on work done: Provided, That such agreed amount or amounts, exclusive of settlement costs, shall not exceed the total contract price as reduced by the amount of payments otherwise made and as further reduced by the contract price of work not terminated. The contract shall be amended accordingly, and the Contractor shall be paid the agreed amount. Nothing in paragraph (e) of this clause, prescribing the amount to be paid to the Contractor in the event of failure of the Contractor and the Contracting Officer to agree upon the whole amount to be paid to the Contractor by rea- son of the termination of work pursuant to this clause, shall be deemed to limit, restrict, or otherwise determine or affect the amount or amounts which may be agreed upon to be paid to the Contractor pursuant to this paragraph (d). (e) In the event of the failure of the Con- tractor and the Contracting Officer to agree as provided in paragraph (d) upon the whole FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 29, NOVEMBER 1962) 851 PART 1-8 TERMINATION OF CONTRACTS 1-8.703 (e) amount to be paid to the Contractor by rea- son of the termination of work pursuant to this clause, the Contracting Officer shall, subject to any review required by the con- tracting agency's procedures in effect as of the date of execution of this contract, deter- mine, on the basis of information available to him, the amount, if any, due to the Con- tractor by reason of the termination and shall pay to the Contractor the amounts determined as follows: (1) With respect to all contract work performed prior to the effective date of the Notice of Termination, the total (without duplication of any items) of— (i) The cost of such work; (ii) The cost of settling and paying claims arising out of the termination of work under subcontracts or orders as provided in paragraph (b)(5) above, exclusive of the amounts paid or payable on account of sup- plies or materials delivered or services fur- nished by the subcontractor prior to the ef- fective date of the Notice of Termination of work under this contract, which amounts shall be included in the cost on account of which payment is made under (i) above; and (iii) A sum, as a profit, equal to 2 per- cent of the part of the amount determined under (i) above, which represents the cost of articles or materials delivered to the site but not incorporated in the work in place on the effective date of the Notice of Termina- tion, plus a sum equal to 8 percent of the remainder of such amount, but the aggregate of such sums shall not exceed 6 percent of the whole of the amount determined under (i) above: Provided, however, That if it ap- pears that the Contractor would have sus- tained a loss on the entire contract had it been completed, no profit shall be included or allowed under this subdivision (iii) and an appropriate adjustment shall be made reducing the amount of the settlement to reflect the indicated rate or loss; and (2) The reasonable cost of the preserva- tion and protection of property incurred pur- suant to paragraph (b) (9); and any other reasonable cost incidental to termination of work under this contract, including expense incidental to the the determination of the amount due to the Contractor as the result of the termination of work under this contract. The total sum to be paid to the Contractor under (1) above shall not exceed the total contract price as reduced by the amount of payments otherwise made and as further reduced by the contract price of work not terminated. Except for normal spoilage, and except to the extent that the Govern- ment shall have otherwise expressly assumed the risk of loss, there shall be excluded from the amounts payable to the Contractor under (1) above, the fair value, as determined by the Contracting Officer, of property which is destroyed, lost, stolen, or damaged so as to become undeliverable to the Government, or to a buyer pursuant to paragraph (b)(7). (f) Any determination of costs under paragraph (c) or (e) hereof shall be gov- erned by the principles for consideration of costs set forth in ,1 as in effect on the date of this contract. (g) The Contractor shall have the right of appeal, under the clause of this contract entitled "Disputes," from any determination made by the Contracting Officer under para- graph (c) or (e) above, except that, if the Contractor has failed to submit his claim within the time provided in paragraph (c) above and has failed to request extension of such time, he shall have no such right of appeal. In any case where the Contracting Officer has made a determination of the amount due under paragraph (c) or (e) above, the Government shall pay to the Con- tractor the following: (1) if there is no right of appeal hereunder or if no timely appeal has been taken, the amount so deter- mined by the Contracting Officer, or (2) if an appeal has been taken, the amount finally determined on such appeal. (h) In arriving at the amount due the Contractor under this clause there shall be deducted (1) all unliquidated advance or other payments on account theretofore made to the Contractor, applicable to the ter- minated portion of this contract, (2) any claim which the Government may have against the Contractor in connection with this contract, and (3) the agreed price for, or the proceeds of sale of, any materials, supplies, or other things kept by the Con- tractor or sold, pursuant to the provisions of this clause, and not otherwise recovered by or credited to the Government. (i) If the termination hereunder be par- tial, prior to the settlement of the terminated portion of this contract, the Contractor may file with the Contracting Officer a request in writing for an equitable adjustment of the price or prices specified in the contract relating to the continued portion of the contract (the portion not terminated by the Notice of Termination), and such equi- table adjustment as may be agreed upon shall be made in such price or prices; however, FEDERAL PROCUREMENT REGULATIONS 852 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8.7 CLAUSES 1-8.704-1 (c) L L nothing contained herein shall limit the right of the Government and the Contractor to agree upon the amount or amounts to be paid to the Contractor for the completion of the continued portion of the contract when said contract does not contain an established contract price for such continued portion. (j) The Government may from time to time, under such terms and conditions as it may prescribe, make partial payments and payments on account against costs incurred by the Contractor in connection with the terminated portion of this contract when- ever in the opinion of the Contracting Of- ficer the aggregate of such payments shall be within the amount to which the Con- tractor will be entitled hereunder. If the total of such payments is in excess of the amount finally agreed or determined to be due under this clause, such excess shall be payable by the Contractor to the Govern- ment upon demand, together with interest computed at the rate of 6 percent per annum for the period from the date such excess payment is received by the Contractor to the date on which such excess is repaid to the Government: Provided, however, That no interest shall be charged with respect to any such excess payment attributable to a reduction in the Contractor's claim by rea- son of retention or other disposition of ter- mination inventory until ten days after the date of such retention or disposition, or such later date as determined by the Contracting Officer by reason of the circumstances. (k) Unless otherwise provided for in this contract, or by applicable statute, the Con- tractor, from the effective date of termina- tion and for a period of three years after final settlement under this contract, shall preserve and make available to the Govern- ment at all reasonable times at the office of the Contractor, but without direct charge to the Government, all his books, records, documents, and other evidence bearing on the costs and expenses of the Contractor under this contract and relating to the work terminated hereunder, or, to the extent ap- proved by the Contracting Officer, photo- graphs, microphotographs, or other authentic reproductions thereof. [End of Clause] 1 The contracting agency shall insert the reference which is appropriate to that agen- cy: Subpart 1-15.4 of the Federal Procure- ment Regulations (41 CFR 1-15.4); or the corresponding agency regulations; or both. § 1-8.704 Research and development contracts with educational and other nonprofit institutions. § 1-8.704-1 Termination clause. The following clause is applicable as prescribed in § 1-8.700-2(a) (4): TERMINATION FOR CONVENIENCE OF THE GOVERNMENT (a) The performance of work under this contract may be terminated, in whole or from time to time in part, by the Govern- ment whenever for any reason the Con- tracting Officer shall determine that such termination is in the best interest of the Government. Termination of work here- under shall be effected by delivery to the Contractor of a Notice of Termination speci- fying the extent to which performance of work under the contract is terminated and the date upon which such termination be- comes effective. (b) After receipt of the Notice of Ter- mination the Contractor shall cancel his outstanding commitments hereunder cov- ering the procurement of materials, supplies, equipment, and miscellaneous items. In ad- dition, the Contractor shall exercise all rea- sonable diligence to accomplish the cancel- lation or diversion of his outstanding commitments covering personal services and extending beyond the date of such termina- tion to the extent that they relate to the performance of any work terminated by the notice. With respect to such canceled com- mitments the Contractor agrees to (1) settle all outstanding liabilities and all claims arising out of such cancellation of commit- ments, with the approval or ratification of the Contracting Officer, to the extent he may require, which approval or ratification shall be final for all purposes of this clause, and (2) assign to the Government, in the man- ner, at the time, and to the extent directed by the Contracting Officer, all of the right, title, and interest of the Contractor under the orders and subcontracts so terminated, in which case the Government shall have the right, in its discretion, to settle or pay any or all claims arising out of the termination of such orders and subcontracts. (c) The Contractor shall submit his ter- mination claim to the Contracting Officer promptly after receipt of a Notice of Ter- mination, but in no event later than one year from the effective date thereof, unless one or more extensions in writing are granted by the Contracting Officer upon FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 29, NOVEMBER 1962) 853 PART 1-&- TERMINATION OF CONTRACTS L ୮ Lo 1-8.704-1(c) written request of the Contractor within such one-year period or authorized extension thereof. Upon failure of the Contractor to submit his termination claim within the time allowed, the Contracting Officer may, subject to any review required by the con- tracting agency's procedures in effect as of the date of execution of this contract, deter- mine, on the basis of information available to him, the amount, if any, due to the Con- tractor by reason of the termination and shall thereupon pay to the Contractor the amount so determined. (d) Any determination of costs under paragraph (c) shall be governed by the cost principles set forth in Subpart 1-15.3 of the Federal Procurement Regulations (41 CFR 1-15.3), as in effect on the date of this con- tract, except that if the Contractor is not an educational institution the determination shall be governed by 1 (e) Subject to the provisions of paragraph (c) above, and subject to any review re- quired by the contracting agency's proce- dures in effect as of the date of execution of this contract, the Contractor, and the Contracting Officer may agree upon the whole or any part of the amount or amounts to be paid to the Contractor by reason of the termination under this clause, which amount or amounts may include any reasonable can- cellation charges thereby incurred by the Contractor and any reasonable loss upon outstanding commitments for personal serv- ices which he is unable to cancel: Provided, however, That in connection with any out- standing commitments for personal services which the Contractor is unable to cancel, the Contractor shall have exercised reason- able diligence to divert such commitments to his other activities and operations. such agreement shall be embodied in an amendment to this contract and the Con- tractor shall be paid the agreed amount. Any (f) The Government may from time to time, under such terms and conditions as it may prescribe, make partial payments against costs incurred by the Contractor in connection with the terminated portion of this contract, whenever, in the opinion of the Contracting Officer, the aggregate of such payments is within the amount to which the Contractor will be entitled here- under. If the total of such payments is in excess of the amount finally agreed or deter- mined to be due under this clause, such excess shall be payable by the Contractor to the Government upon demand: Provided, That if such excess is not so paid upon de- mand, interest thereon shall be payable by the Contractor to the Government at the rate of 6 percent per annum, beginning 30 days from the date of such demand. (g) The Contractor agrees to transfer title to the Government and deliver in the manner, at the times, and to the extent, if any, directed by the Contracting Officer, such information and items which, if the con- tract had been completed, would have been required to be furnished to the Government, including: (1) Completed or partially completed plans, drawings, and information; and (2) Materials or equipment produced or in process or acquired in connection with the performance of the work terminated by the notice. Other than the above, any termination in- ventory resulting from the termination of the contract may, with the written approval of the Contracting Officer, be sold or ac- quired by the Contractor under the condi- tions prescribed by and at a price or prices The approved by the Contracting Officer. proceeds of any such disposition shall be applied in reduction of any payments to be made by the Government to the Contractor under this contract or shall otherwise be credited to the price or cost of work cov- ered by this contract or paid in such other manner as the Contracting Officer may di- rect. Pending final disposition of property arising from the termination, the Contractor agrees to take such action as may be neces- sary, or as the Contracting Officer may direct, for the protection and preservation of the property related to this contract which is in the possession of the Contractor and in which the Government has or may acquire an interest. (h) Any disputes as to questions of fact which may arise hereunder shall be sub- ject to the "Disputes" clause of this contract. [End of Clause] 1 The contracting agency shall insert the reference which is appropriate to that agency: Subpart 1-15.2 of the Federal Pro- curement Regulations (41 CFR 1-15.2); or the corresponding agency regulations; both. or FEDERAL PROCUREMENT REGULATIONS 854 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8.7° 3. CLAUSES 1-8.706 (b)(6) termination 7 L § 1-8.704-2 Suggested clause for sub- contracts. The clause set forth in § 1-8.704-1 is suggested for use in a subcontract placed with an educational or nonprofit insti- tution provided the subcontract is placed on a no-fee or no-profit basis and pro- vided the clause is suitably altered (1) to indicate the relationship between the prime contractor and the subcontractor, and (2) to indicate the appropriate cost principles on which the subcontract is negotiated. § 1-8.705 Short-form termination for convenience clauses for fixed-price type contracts. § 1-8.705-1 Supply and service tracts. service con- The following clause is applicable as prescribed in § 1-8.700-2(a) (2) : TERMINATION FOR CONVENIENCE OF THE GOVERNMENT The Contracting Officer, by written notice, may terminate this contract, in whole or in part, when it is in the best interest of the Government. If this contract is for supplies and is so terminated, the Contractor shall be compensated in accordance with Part 1-8 of the Federal Procurement Regulations (41 CFR 1-8), in effect on this contract's date. To the extent that this contract is for serv- ices and is so terminated, the Government shall be liable only for payment in accord- ance with the payment provisions of this contract for services rendered prior to the effective date of termination. § 1-8.705-2 Construction contracts. The following clause is applicable as prescribed in § 1-8.700-2(a) (6) : TERMINATION FOR CONVENIENCE OF THE GOVERNMENT The Contracting Officer, by written notice, may terminate this contract, in whole or in part, when it is in the interest of the Gov- ernment. If this contract is terminated, the Contractor shall be compensated in accord- ance with Part 1-8 of the Federal Procure- ment Regulations (41 CFR 1-8), in effect on this contract's date. § 1-8.706 Subcontract clause. The following termination clause is suggested for use in fixed-price subcon- tracts: TERMINATION (a) The performance of work under this contract may be terminated, in whole or from time to time in part, by the buyer in accordance with this clause. Termination of work hereunder shall be effected by de- livery to the seller of a Notice of Termina- tion specifying the extent to which per- formance of work under the contract is terminated, and date upon which such ter- mination becomes effective. (b) After receipt of a Notice of Termina- tion and except as otherwise directed by the buyer, the seller shall: (1) Stop work under the contract on the date and to the extent specified in the Notice of Termination; (2) Place no further orders or subcon- tracts for materials, services, or facilities ex- cept as may be necessary for completion of such portions of the work under the con- tract as may not be terminated; (3) Terminate all orders and subcon- tracts to the extent that they relate to the performance of any work terminated by the Notice of Termination; (4) Assign to the buyer, in the manner, and to the extent directed by the buyer, all or the right, title, and interest of his seller under the orders or subcontracts terminated; SO (5) Settle all outstanding liabilities and all claims arising out of such termination of orders and subcontracts subject to the ap- proval or ratifictaion of the buyer to the extent he may require, which approval or ratification shall be final for all the purposes of this clause; (6) Transfer title and deliver to the buyer in the manner, to the extent, and at the times directed by the buyer (i) the fabricated or unfabricated parts, work in process, completed work, supplies, and other material produced as a part of, or acquired in connection with the performance of, the work terminated by the Notice of Termina- tion, and (ii) the completed or partially com- pleted plans, drawings, information, and other property which, if the contract had been completed, would be required to be fur- nished to the buyer; FEDERAL PROCUREMENT REGULATIONS ך (fpr Circ. 29, NOVEMBER 1962) (FPR CIRC. 855 PART 1-8 TERMINATION OF CONTRACTS 1-8.706(b)(7) ㄱ ​L (7) Use his best efforts to sell, in the manner, to the extent, at the time, and at the price or prices directed or authorized by the buyer, any property of the types referred to in (6) above: Provided, however, That the seller (i) shall not be required to extend credit to any purchaser, and (ii) may acquire any such property under the conditions pre- scribed by and at a price or prices approved by the buyer: And provided further, That the proceeds of any such transfer or disposi- tion shall be applied in reduction of any payments to be made by the buyer to the seller under this contract or shall otherwise be credited to the price or cost of the work covered by this contract or paid in such other manner as the buyer may direct; (8) Complete performance of such part of the work as shall not have been termi- nated by the Notice of Termination; and (9) Take such action as may be neces- sary or as the buyer may direct for protection and preservation of the property related to this contract which is in the possession of the seller and in which the buyer or the Government has or may acquire an interest. (c) After receipt of a Notice of Termina- tion, the seller shall submit to the buyer his termination claim, in the form and with the certification prescribed by the buyer. Such claim shall be submitted promptly, but not later than six (6) months from the effective date of termination. Upon Upon failure of the seller to submit his termination claim within the time allowed, the buyer may determine, on the basis of information available to him, the amount, if any, due to the seller with respect to the termination and such determi- nation shall be final. After the buyer has made a determination under this paragraph, he shall pay the seller the amount determined. So (d) Subject to the provisions of paragraph (c) the seller and the buyer may agree upon the whole or any part of the amount or amounts to be paid to the seller by reason of the total or partial termination of work pursuant to this clause, which amount or amounts may include a reasonable allow- ance for profit on work done and the buyer shall pay the agreed amount or amounts: Provided, That such agreed amount or amounts, exclusive of settlement costs, shall not exceed the total contract price as reduced by the amount of payments otherwise made and as further reduced by the contract price of work not terminated. Nothing in para- graph (e) below prescribing the amount to be paid to the seller in the event of the failure of the seller and the buyer to agree upon the whole amount to be paid to the seller by reason of the termination of work pursuant to this clause, shall be deemed to limit, restrict, or otherwise determine or affect the amount or amounts which may be agreed upon to be paid to the seller pursuant to this paragraph (d). (e) In the event of the failure of the seller and the buyer to agree as provided in para- graph (d) upon the whole amount to be paid to the seller by reason of the termina- tion of work pursuant to this clause, the buyer, but without duplication of any amounts agreed upon in accordance with paragraph (d), shall pay to the seller the following amounts: (1) For completed supplies accepted by the buyer (or sold or acquired as provided in paragraph (b)(7) above) and not there- tofore paid for, forthwith a sum equivalent to the aggregate price for such supplies com- puted in accordance with the price or prices specified in the contract, appropriately ad- Justed for any saving of freight or other charges; (2) In respect of the work terminated as permitted by this clause, the total (without duplication of any items) of— (i) The cost of such work, including initial costs and preparatory expenses allo- cable thereto, exclusive of any costs attrib- utable to supplies paid or to be paid for under (1) above; and (ii) The cost of settling and paying claims arising out of the termination of work under subcontracts or orders as pro- vided in paragraph (b) (5) above, exclusive of the amounts paid or payable on account of supplies or materials delivered or services furnished by the subcontractor prior to the effective date of the Notice of Termination of work under this contract, which amount shall be included in the cost on account of which payment is made under (i) above; and (iii) A sum, as a profit, equal to 2 percent of the part of the amount deter- mined under (i) above which represents the cost of articles and materials not processed by the seller, plus a sum equal to 8 percent of the remainder of such amount, but the aggregate of such sum shall not exceed 6 percent of the whole of the amount deter- mined under (i) above, which amount for the purpose of this subdivision (iii) shall exclude any charges for interest on borrow- ings: Provided, however, That if it appears that the seller would have sustained a loss FEDERAL PROCUREMENT REGULATIONS 856 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8. 7 CLAUSES L on the entire contract had it been com- pleted, no profit shall be included or allowed under this subdivision (iii) and an appro- priate adjustment shall be made reducing the amount of the settlement to reflect the indicated rate of loss; and (3) The reasonable costs of settlement, including accounting, legal, clerical, and other expenses reasonably necessary for the preparation of settlement claims and sup- porting data with respect to the terminated portion of the contract and for the termina- tion and settlement of subcontracts there- under, together together with reasonable storage, transportation, and other costs incurred in connection with the protection or disposi- tion of the property allocable to this contract. The total sum to be paid to the seller under (1) and (2) above shall not exceed the total contract price as reduced by the amount of payments otherwise made and as further reduced by the contract price of work not terminated. Except for normal spoilage and except to the extent that the buyer or the Government shall have otherwise ex- pressly assumed the risk of loss, there shall be excluded from the amounts payable to the seller under (1) and (2) (i) above the fair value as determined by the buyer of property which is destroyed, lost, stolen, or damaged so as to become undeliverable to the buyer or to a purchaser pursuant to paragraph (b) (7). (f) The obligation of the buyer to make any payments under this clause shall be subject to deductions with respect to (1) all unliquidated advance or other payments on account theretofore made to the seller applicable to the terminated portion of this contract, (2) any claim which the buyer may have against the seller, in connection with this contract, and (3) the agreed price for, or the proceeds of sale of, any materials, supplies, or other things retained by the seller or sold, and not otherwise recovered by or credited to the buyer. (g) If the termination hereunder be par- tial, prior to the settlement of the termi- nated portion of this contract, the seller may file with the buyer a request in writing that an equitable adjustment be made in the price or prices specified in the contract for the work in connection with the continued portion not terminated by the Notice of Termination, and the appropriate equitable adjustment shall be made in such price or prices. 1-8.707(a) (h) The buyer may, from time to time, under such terms and conditions as he may prescribe, make partial payments and pay- ments on account against costs incurred by the seller with respect to the terminated portion of the contract, whenever in the opinion of the buyer the aggregate of such payments shall be within the amount to which the seller will be entitled hereunder. If the total of such payments is in excess of the amount finally agreed upon or deter- mined to be due under this clause, such excess shall be payable by the seller to the buyer upon demand, together with interest computed at the rate of 6 percent per an- num, for the period from the date such excess payment is received by the seller to the date on which such excess is repaid: Provided, however, That no interest shall be charged with respect to any such excess pay- ment attributable to a reduction in the seller's claim by reason of retention or other disposition of termination inventory until ten days after the date of such retention or disposition, or such later date as determined by the buyer by reason of the circumstances. (i) For the purpose of paragraphs (c) and (e) above, the amounts of the payments to be made by the buyer to the seller shall be determined in conformity with the policies and principles set forth in Part 1-8 of the Federal Procurement Regulations (41 CFR 1-8), in effect at the date of this contract. Unless otherwise provided for in this con- tract, or by applicable statute, the seller, for a period of three years after final settlement under the contract shall make available to the buyer and the Government at all reason- able times at the office of the seller all his books, records, documents, or other evidence bearing on the costs and expenses of the seller under the contract and in respect of the termination of work hereunder or, to the extent approved by the Government, photo- graphs, microphotographs, or other authen- tic reproductions thereof. § 1-8.707 Default clause for fixed-price supply contracts. The following clause is applicable as prescribed in § 1-8.700-2(b)(1): DEFAULT (a) The Government may, subject to the provisions of paragraph (c) below, by writ- ten notice of default to the Contractor, ter- minate the whole or any part of this contract in any one of the following circumstances: FEDERAL PROCUREMENT REGULATIONS ل (FPR CIRC. 29, NOVEMBER 1962) 857 PART 1-8 TERMINATION OF CONTRACTS L 1—8.707 (a) (i) (i) If the Contractor fails to make de- livery of the supplies or to perform the serv- ices within the time specified herein or any extension thereof; or (ii) If the Contractor fails to perform any of the other provisions of this contract, or so fails to make progress as to endanger performance of this contract in accordance with its terms, and in either of these two circumstances does not cure such failure within a period of 10 days (or such longer period as the Contracting Officer may author- ize in writing) after receipt of notice from the Contracting Officer specifying such failure. (b) In the event the Government termi- nates this contract in whole or in part as provided in paragraph (a) of this clause, the Government may procure, upon such terms and in such manner as the Contracting Officer may deem appropriate, supplies or services similar to those so terminated, and the Contractor shall be liable to the Govern- ment for any excess costs for such similar supplies or services: Provided, That the Con- tractor shall continue the performance of this contract to the extent not terminated under the provisions of this clause. (c) Except with respect to defaults of subcontractors, the Contractor shall not be liable for any excess costs if the failure to perform the contract arises out of causes beyond the control and without the fault or negligence of the Contractor. Such causes may include, but are not restricted to, acts of God or of the public enemy, acts of the Government in either its sovereign or contractual capacity, fires, floods, epidemics, quarantine restrictions, strikes, freight em- bargoes, and unusually severe weather; but in every case the failure to perform must be beyond the control and without the fault or negligence of the Contractor. If the failure to perform is caused by the default of a sub- contractor, and if such default arises out of causes beyond the control of both the Con- tractor and subcontractor, and without the fault or negligence of either of them, the Contractor shall not be liable for any excess costs for failure to perform, unless the sup- plies or services to be furnished by the sub- contractor were obtainable from other sources in sufficient time to permit the Con- tractor to meet the required delivery schedule. (d) If this contract is terminated as pro- vided in paragraph (a) of this clause, the Government, in addition to any other rights provided in this clause, may require the Contractor to transfer title and deliver to the Government, in the manner and to the extent directed by the Contracting Officer, (i) any completed supplies, and (ii) such partially completed supplies and materials, parts, tools, dies, jigs, fixtures, plans, draw- ings, information, and contract rights (here- inafter called "manufacturing materials”) as the Contractor has specifically produced or specifically acquired for the performance of such part of this contract as has been ter- minated; and the Contractor shall, upon di- rection of the Contracting Officer, protect and preserve property in possession of the Contractor in which the Government has an interest. Payment for completed supplies delivered to and accepted by the Government shall be at the contract price. Payment for manufacturing materials delivered to and accepted by the Government and for the protection and preservation of property shall be in an amount agreed upon by the Con- tractor and Contracting Officer; failure to agree to such amount shall be a dispute concerning a question of fact within the meaning of the clause of this contract en- titled "Disputes." The Government may withhold from amounts otherwise due the Contractor for such completed supplies or manufacturing materials such sum as the Contracting Officer determines to be neces- sary to protect the Government against loss because of outstanding liens or claims of former lien holders. (e) If, after notice of termination of this contract under the provisions of this clause, it is determined for any reason that the Contractor was not in default under the pro- visions of this clause, or that the default was excusable under the provisions of this clause, the rights and obligations of the parties shall, if the contract contains a clause pro- viding for termination for convenience of the Government, be the same as if the notice of termination had been issued pursuant to such clause. If, after notice of termination of this contract under the provisions of this clause, it is determined for any reason that the Contractor was not in default under the provisions of this clause, and if this contract does not contain a clause providing for ter- mination for convenience of the Govern- ment, the contract shall be equitably ad- justed to compensate for such termination and the contract modified accordingly; fail- ure to agree to any such adjustment shall be a dispute concerning a question of fact FEDERAL PROCUREMENT REGULATIONS 858 (FPR CIRC, 29, NOVEMBER 1962) SUBPART 1-8. 7 CLAUSES L within the meaning of the clause of this contract entitled "Disputes." (f) The rights and remedies of the Govern- ment provided in this clause shall not be exclusive and are in addition to any other rights and remedies provided by law or un- der this contract. § 1-8.708 Excusable delays clause for cost-reimbursement type contracts. The following clause is applicable as prescribed in § 1-8.700-2(c): EXCUSABLE DELAYS Except with respect to defaults of sub- contractors, the Contractor shall not be in default by reason of any failure in perform- ance of this contract in accordance with its terms (including any failure by the Con- tractor to make progress in the prosecution of the work hereunder which endangers such performance) if such failure arises out of causes beyond the control and without the fault or negligence of the Contractor. Such causes may include, but are not restricted to, acts of God or of the public enemy, acts of the Government in either its sovereign or contractual capacity, fires, floods, epi- demics, quarantine restrictions, strikes, freight embargoes, and unusually severe weather, but in every case the failure to per- form must be beyond the control and with- out the fault or negligence of the Contractor. If the failure to perform is caused by the failure of a subcontractor to perform or make progress, and if such failure arises out of causes beyond the control of both the Contractor and subcontractor, and with- out the fault or negligence of either of them, the Contractor shall not be deemed to be in default, unless (a) the supplies or services to be furnished by the subcontractor were ob- tainable from other sources, (b) the Con- tracting Officer shall have ordered the Con- tractor in writing to procure such supplies or services from such other sources, and (c) the Contractor shall have failed to com- ply reasonably with such order. Upon re- quest of the Contractor, the Contracting Officer shall ascertain the facts and extent of such failure and, if he shall determine that any failure to perform was occasioned by any one or more of the said causes, the delivery schedule shall be revised accord- ingly, subject to the rights of the Govern- ment under the clause hereof entitled Termination for Default or for Convenience of the Government. 1—8.709—1 (d) ( 1) § 1-8.709 Default clause for fixed-price construction contracts. § 1-8.709-1 Long-form clause. The following clause is applicable as prescribed in § 1-8.700−2(b) (4): TERMINATION FOR DEFAULT DAMAGES FOR DELAY-TIME EXTENSIONS (a) If the Contractor refuses or fails to prosecute the work, or any separable part thereof, with such diligence as will insure its completion within the time specified in this contract, or any extension thereof, or fails to complete said work within such time, the Government may, by written notice to the Contractor, terminate his right to pro- ceed with the work or such part of the work as to which there has been delay. In such event the Government may take over the work and prosecute the same to completion, by contract or otherwise, and may take possession of and utilize in completing the work such materials, appliances, and plant as may be on the site of the work and neces- sary therefor. Whether or not the Contrac- tor's right to proceed with the work is terminated, he and his sureties shall be liable for any damage to the Government re- sulting from his refusal or failure to com- plete the work within the specified time. (b) If fixed and agreed liquidated damages are provided in the contract and if the Government so terminates the Con- tractor's right to proceed, the resulting consist damage will of such liquidated damages until such reasonable time as may be required for final completion of the work together with any increased costs occasioned the Government in completing the work. (c) If fixed and agreed liquidated damages are provided in the contract and if the Government does not so terminate the Con- tractor's right to proceed, the resulting damage will consist of such liquidated damages until the work is completed or accepted. (d) The Contractor's right to proceed shall not be so terminated nor the Con- tractor charged with resulting damage if: (1) The delay in the completion of the work arises from unforeseeable causes be- yond the control and without the fault or negligence of the Contractor, including but not restricted to, acts of God, acts of the public enemy, acts of the Government in either its sovereign or contractual capacity, FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 29, NOVEMBER 1962) 859 PART 1-8 TERMINATION OF CONTRACTS r ㄱ ​L 1-8.709—1 (d) (1) acts of another contractor in the perform- ance of a contract with the Government, fires, floods, epidemics, quarantine restric- tions, strikes, freight embargoes, unusually severe weather, or delays of subcontractors or suppliers arising from unforseeable causes beyond the control and without the fault or negligence of both the Contractor and such subcontractors or suppliers; and (2) The Contractor, within 10 days from the beginning of any such delay (unless the Contracting Officer grants a further period of time before the date of final payment under the contract), notifies the Contract- ing Officer in writing of the causes of delay. The Contracting Officer shall ascertain the facts and the extent of the delay and ex- tend the time for completing the work when, in his judgment, the findings of fact jus- tify such an extension, and his findings of fact shall be final and conclusive on the parties, subject only to appeal as provided in the clause of this contract entitled "Dis- putes.” 1 (e) If, after notice of termination of the Contractor's right to proceed under the pro- visions of this clause, it is determined for any reason that the Contractor was not in default under the provisions of this clause, or that the delay was excusable under the provisions of this clause, the rights and ob- ligations of the parties shall, if the contract contains a clause providing for termination for convenience of the Government, be the same as if the notice of termination had been issued pursuant to such clause. If, in the foregoing circumstances, this contract does not contain a clause providing for termination for convenience of the Govern- ment, the contract shall be equitably ad- justed to compensate for such termination and the contract modified accordingly; fail- ure to agree to any such adjustment shall be a dispute concerning a question of fact within the meaning of the clause of this contract entitled "Disputes." (f) The rights and remedies of the Gov- ernment provided in this clause are in addi- tion to any other rights and remedies pro- vided by law or under this contract. [End of Clause] 1 When Standard Form 23A is used, the words "the clause of this contract entitled 'Disputes'" shall not be substituted for the words "Clause 6 of these General Provisions" in that form. § 1-8.709-2 Short-form clause. The following clause is applicable as prescribed in § 1-8.700-2(b) (5): TERMINATION FOR DEFAULT-DAMAGES FOR DELAY-TIME EXTENSIONS (a) If the Contractor does not prosecute the work so as to insure completion, or fails to complete it, within the time specified, the Government may, by written notice to the Contractor, terminate his right to proceed. Thereafter, the Government may have the work completed and the Contractor shall be liable for any resulting excess cost to the Government. If the Government does not terminate the Contractor's right to proceed, he shall continue the work and shall be liable to the Government for any actual damages occasioned by such delay unless liquidated damages are stipulated. (b) The Contractor's right to proceed shall not be terminated nor the Contractor charged with actual or liquidated damages under (a) above because of any delays in completion of the work due to causes other than normal weather, beyond his control and without his fault or negligence, including but not restricted to, acts of God, acts of the public enemy, acts of the Government (in either its sovereign or contractual capacity), acts of another contractor in the performance of a contract with the Government, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, and unusually severe weather, or delays of subcontractors or suppliers due to causes beyond their control and without their fault or negligence: Pro- vided, That the Contractor shall within 10 days from the beginning of any such delay, unless the Contracting Officer shall grant a further period of time prior to the date of final settlement of the contract, notify the Contracting Officer in writing of the causes of delay. The Contracting Officer shall ascertain the facts and the extent of the delay and extend the time for completing the work when in his judgment the findings of fact justify such an extension, and his findings of fact shall be final and conclu- sive on the parties hereto, subject only to appeal as provided in the clause of this contract entitled "Disputes." | End of Clause ] 1 When Standard Form 19 is used, the words "the clause of this contract entitled 'Dis- putes' " shall not be substituted for the words "Clause 3 hereof" in that form. FEDERAL PROCUREMENT REGULATIONS 860 (fpr Circ. 29, NOVEMBER 1962) SUBPART 1-8.7 CLAUSES 1-8.710 (e) L § 1-8.710 Default clause for fixed-price research and development contracts. The following clause is applicable as prescribed in § 1-8.700-2(b) (3) : DEFAULT (a) The Government may, subject to the provisions of paragraph (c) of this clause, by written notice of default to the Contractor, terminate the whole or any part of this con- tract in any in any one of the following cir- cumstances: (1) If the Contractor fails to perform the work called for by this contract within the time(s) specified herein or any exten- sion thereof; or (2) If the Contractor fails to perform any of the other provisions of this contract, or so fails to prosecute the work as to en- danger performance of this contract in ac- cordance with its terms, and in either of these two circumstances does not cure such failure within a period of 10 days (or such longer period as the Contracting Officer may authorize in writing) after receipt of notice from the Contracting Officer specifying such failure. (b) In the event the Government termi- nates this contract in whole or in part as provided in paragraph (a) of this clause, the Government may procure, upon such terms and in such manner as the Contract- ing Officer may deem deem appropriate, work similar to the work so terminated and the Contractor shall be liable to the Govern- ment for any excess costs for such similar work: Provided, That the Contractor shall continue the performance of this contract to the extent not terminated under the pro- visions of this clause. (c) Except with respect to defaults of sub- contractors, the Contractor shall not be liable for any excess costs if the failure to perform the contract arises out of causes beyond the control and without the fault or negligence of the Contractor. Such causes may include, but are not restricted to, acts of God or of the public enemy, acts of the Government in either its sovereign or con- tractual capacity, fires, floods, epidemics, quarantine restrictions, strikes, freight em- bargoes, and unusually severe weather; but in every case the failure to perform must be beyond the control and without the fault or negligence of the Contractor. If the failure to perform is caused by the de- fault of a subcontractor, and if such default arises out of causes beyond the control of both the Contractor and subcontractor, and without the fault or negligence of either of them, the Contractor shall not be liable for any excess costs for failure to perform unless the supplies or services to be furnished by the subcontractor were obtainable from other sources in sufficient time to permit the Con- tractor to meet the required delivery sched- ule or other performance requirements. (d) If this contract is terminated as pro- vided in paragraph (a) of this clause, the Government, in addition to any other rights provided in this clause, may require the Contractor to transfer title and deliver to the Government, in the manner and to the extent directed by the Contracting Officer, any of the completed or partially completed work not theretofore delivered to, and ac- cepted by, the Government and any other property, including contract rights, spe- cifically produced or specifically acquired for the performance of such part of this contract as has been terminated; and the Contractor shall, upon the direction of the Contracting Officer, protect and preserve property in the possession of the Contractor in which the Government has an interest. The Govern- ment shall pay to the Contractor the con- tract price, if separately stated, for com- pleted work accepted by the Government and the amount agreed upon by the Con- tractor and the Contracting Officer for (1) completed work for which no separate price is stated, (2) partially completed work, (3) other property described above which is ac- cepted by the Government, and (4) the pro- tection and preservation of property. Failure to agree shall be a dispute concerning a question of fact within the meaning of the clause of this contract entitled "Disputes." The Government may withhold from amounts otherwise due the Contractor for such completed supplies or manufacturing materials such sum as the Contracting Of- ficer determines to be necessary to protect the Government against loss because of out- standing liens or claims of former lien holders. (e) If, after notice of termination of this contract under the provisions of this clause, it is determined for any reason that the Contractor was not in default under the pro- visions of this clause, or that the default was excusable under the provisions of this clause, the rights and obligations of the parties shall, if the contract contains a clause pro- FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 29, NOVEMBER 1962) 861 PART 1-8 TERMINATION OF CONTRACTS 1-8.710 (e) viding for termination for convenience of the Government, be the same as if the notice of termination had been issued pursuant to such clause. If, after notice of termination of this contract under the provisions of this clause, it is determined for any reason that the Contractor was not in default under the provisions of this clause, and if this contract does not contain a clause providing for termination for convenience of the Govern- ment, the contract shall be equitably ad- justed to compensate for such termination and the contract modified accordingly; fall- ure to agree to any such adjustment shall be a dispute concerning a question of fact within the meaning of the clause of this contract entitled "Disputes." (f) The right and remedies of the Govern- ment provided in this clause shall not be exclusive and are in addition to any other rights and remedies provided by law or under this contract. FEDERAL PROCUREMENT REGULATIONS 862 (FPR CIRC, 29, NOVEMBER 1962) SUBPART 1-8. 8 FORMATS OF NOTICES, FORMS, L WARRANTIES, AND AGREEMENTS 1-8.801-2(1) Subpart 1-8.8-Formats of Notices, Forms, Warranties, and Agree- ments § 1-8.800 Scope of subpart. This subpart contains certain sug- gested formats of notices, forms, war- ranties, and agreements related to the termination and settlement of contracts. The formats are for guidance of agencies in their implementation of this Part 1-8. § 1-8.801 Notice of Notice of termination convenience of the Government. § 1-8.801-1 Telegraphic notice. for (a) The following format of tele- graphic notice is suggested for use where a supply contract is being completely terminated. With appropriate modifi- cation, the notice can be used in connec- tion with other than a supply contract. TELEGRAPHIC NOTICE-COMPLETE TERMINATION Date XYZ Corporation New York, New York - Your contract No. is hereby ter- minated in its entirety pursuant to clause of the contract effective [here insert "immediately" or "on 19__," (in- serting the date) or "as soon as you have delivered thereunder including previous de- liveries the following items" (listing items)]. Immediately stop all work, terminate sub- contracts and place no further orders except to extent (insert if applicable "that is neces- sary to perform any portion thereof not ter- minated hereby or") that you or a subcon- tractor wish to retain and continue for own account any work in process or other mate- rials. Telegraph similar instructions to all subcontractors and suppliers. Letter and instructions follow. Contracting Officer (b) The following format of tele- graphic notice is suggested where a sup- ply contract is being partially termi- nated. With appropriate modification, the notice can be used in connection with other than a supply contract. • TELEGRAPHIC NOTICE-PARTIAL TERMINATION XYZ Corporation Date New York, New York Your contract No. is hereby par- 19_-, tially terminated pursuant to clause of the contract effective on on which date you will reduce its total num- ber of items to be delivered as follows (in- serting instructions as to reduced deliveries). Immediately stop all work, terminate sub- contracts and place no further orders ex- cept to extent that is necessary to perform any portion thereof not terminated hereby or that you or a subcontractor wish to re- tain and continue for own account any work in process or other materials. Telegraph similar instructions to all subcontractors and suppliers. Letter and instructions follow. Contracting Officer § 1-8.801-2 Letter notice. The following format of letter notice of termination of a prime supply con- tract is suggested for use. With appro- priate modification, it is suitable for use in terminating other than a supply contract and in terminating a sub- contract. LETTER NOTICE OF TERMINATION TO PRIME CONTRACTORS [At the top of the notice set out all special details relating to the particular termina- tion: e.g., name and address of company, number of prime contract terminated, serv- ice involved, appropriation or allotment, etc. Two alternative forms of paragraph No. 1 are set out below. If this written termina- tion notice confirms a telegraphic notice previously sent, use the first of the alterna- tive paragraphs No. 1 below. If no previous telegraphic notice has been sent, use the second.] > 1. Effective Date of Termination. This letter will confirm the Government's tele- gram to you dated 19__, ter- minating [in part] your Contract No. (hereinafter referred to as "the contract") for the convenience of the Government, in accordance with the clause thereof entitled FEDERAL PROCUREMENT REGULATIONS (fpr Circ. 29, NOVEMBER 1962) 863 PART 1-8 TERMINATION OF CONTRACTS 1-8.801-2(1) ୮ L "Termination for Convenience of the Gov- ernment" [or, in the case of a cost-reim- bursement-type contract, "Termination for Default or for Convenience of the Govern- ment"]. Such termination is effective on the date and in the manner stated in the tele- gram referenced above [or a copy of which is attached hereto]. (or) 1. Effective Date of Termination. You are notified that your Contract No. (here- inafter referred to as "the contract") is here- by terminated [in part] for the convenience of the Government, in accordance with the clause thereof entitled "Termination for Convenience of the Government" [or, in the case of a cost-reimbursement-type contract, "Termination for Default or for Convenience of the Government"]. Such termination will be effective: [Here insert either "immediately upon your receipt of this Notice" or "on 19 (in- "" serting the date) or "as soon as you have delivered under the contract the following number of each of the items listed below, including those heretofore delivered, to wit: or, "on 19__, on which date you are hereby directed to reduce the total number of items to be delivered under the contract as follows": (here insert instructions as to reduced deliveries.) ] -3 2. Cessation of Work and Notification to Immediate Subcontractors. (a) You shall stop all work, make no further shipments, and place no further orders in connection with the contract, except (1) to the extent necessary to perform any portion thereof not terminated by this Notice, or (2) to the extent that you may wish to retain and con- tinue any work in process or other materials for your own account, or (3) to the extent the Contracting Officer authorizes you to continue work in process for reasons of safety, or to clear [or avoid damage to] equipment or to avoid immediate complete spoilage of work in process having a definite commercial value, or otherwise to prevent undue loss to the Government. [If you be- lieve the authorization referred to in para- graph 2(a)(3) is necessary or advisable, you shall immediately notify the Contracting Officer by telephone or personal conference and obtain instructions.] You shall keep adequate records of your compliance with this paragraph 2(a) showing (i) the date you received your Notice of Termination, (ii) the effective date of such termination, and (iii) the extent of completion of performance on such effective date. (b) You shall give notice of termination to each of your immediate subcontractors (including suppliers) who will be affected by the termination of your contract. In such notice you shall (1) give him the number of your contract with the Government; (2) state that it has been terminated (or termi- nated in part, if that is the case) for the convenience of the Government; (3) give him the name and address of the Contracting Officer; (4) instruct him to stop all work, to make no further shipments, to place no more orders, and to terminate all subcontracts under this contract with you (subject to the same exceptions stated in paragraph 2(a)); (5) direct him to submit his settlement pro- posal promptly in order to expedite settle- ment; and (6) request him to give similar notice and instructions to his immediate subcontractors. (c) You shall notify the Contracting Officer of the number of articles completed under the contract and still on hand, and arrange with him for their delivery or other disposal. (d) You shall forthwith transfer title to the Government and deliver in accordance with any instructions of the Contracting Officer, all items of termination inventory (including subcontractor termination inven- tory which under the terms of the subcon- tract or purchase order concerned you have the right to take over) of the following types or classes: [Insert proper identification or "none".] (e) You shall notify the Contracting Officer of any pending legal proceedings which relate to any subcontracts or purchase orders under the terminated contract or which have resulted in or which are intended to result in a lien or encumbrance on any termination inventory other than termina- tion inventory you propose and are author- ized to purchase, retain, or dispose of. The Contracting Officer shall also be promptly notified of any such proceedings brought after receipt of this Notice. (f) You shall submit your settlement proposal and take such other action as may be required by the Contracting Officer or un- der the termination clause contained in your contract. 3. Termination Inventory. In connection with settlement of your claim it will be nec- essary to establish that all your termination inventory and that of your subcontractors FEDERAL PROCUREMENT REGULATIONS 864 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8. 8 FORMATS OF NOTICES, FORMS, L WARRANTIES, AND AGREEMENTS has been properly accounted for. For de- tailed information, see Subpart 1-8.5 of the Federal Procurement Regulations (41 CFR 1-8.5). 4. Completed End Items. Subject to § 1-8.306 of the Federal Procurement Regu- lations (41 CFR 1-8.306), you will invoice ac- ceptable completed end items under the contract in the usual way and not include them in your settlement proposal. 5. Patents. Your attention is called to any provisions of the contract which may require you to make a disclosure of, and to deliver to the Government instruments of license or assignment respecting, all inven- tions, discoveries, and patent applications made by you in the performance of the con- tract. You are urged to forward such dis- closures and instruments of license or as- signment to the Contracting Officer promptly, inasmuch as these contractual obligations must be complied with before execution of the final settlement agreement. This para- graph may be disregarded if the contract contains no such patent provisions. 6. Settlements with Subcontractors. You remain liable to your subcontractors and suppliers for claims arising by reason of the termination of their subcontracts or orders. You are requested to settle such termination claims as promptly as possible. For pur- 1-8.801-2(8) poses of reimbursement by the Government, such settlements will be governed by the provisions of Part 1-8 of the Federal Pro- curement Regulations (41 CFR 1-8). 7. Office in Charge of Settlement. The Office named below will be in charge of the settlement of your claim. As to any mat- ters not covered by this Notice, you should consult the Office named below. 8. Acknowledgment of Receipt of Notice. Please acknowledge receipt of this notice as shown below. (Contracting Officer) (Name of Office) (Address) ACKNOWLEDGMENT OF NOTICE The undersigned hereby acknowledges re- ceipt of a signed copy of the foregoing Notice 19__. on (Name of Contractor) By (Title) (NEXT PAGE IS 867) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 29, NOVEMBER 1962) 865 SUBPART 1-8, 8 FORMATS OF NOTICES, FORMS, WARRANTIES, AND AGREEMENTS, 1-8,802-1 § 1-8.802 Formats of settlement proposal forms. Formats § 1-8.802-1 Format 802-1, Settlement Proposal (Inventory Basis)—fixed-price type contracts. (a) Page 1 of Format 802–1. SETTLEMENT PROPOSAL (Inventory Basis) FOR USE BY A FIXED-PRICE PRIME CONTRACTOR OR FIXED-PRICE SUBCONTRACTOR THIS PROPOSAL APPLIES TO (Check one) A PRIME CONTRACT WITH THE GOVERNMENT SUBCONTRACT OR PURCHASE ORDER NO(S). SUBCONTRACT OR PURCHASE ORDER COMPANY STREET ADDRESS NAME ADDRESS CONTRACTOR WHO SENT NOTICE OF TERMINATION CITY AND STATE IF MONEYS PAYABLE UNDER THE CONTRACT HAVE BEEN ASSIGNED, GIVE THE FOLLOWING NAME OF ASSIGNEE ADDRESS FORMAT 804-1 (Schedule of Accounting Information) 2 NAME OF GOVERNMENT AGENCY GOVERNMENT PRIME CONTRACT NO. CONTRACTOR'S REFERENCE NO. EFFECTIVE DATE OF TERMINATION PROPOSAL NO. IS IS NOT ATTACHED. (If not, explain) CHECK ONE INTERIM FINAL SECTION 1-STATUS OF CONTRACT OR ORDER AT EFFECTIVE DATE OF TERMINATION PRODUCTS COVERED BY TERMINATED CONTRACT OR PURCHASE ORDER PREVIOUSLY SHIPPED AND INVOICED (a) (b) FINISHED ON HAND INCLUDED IN THIS PROPOSAL UNFINISHED OR NOT COMMENCED TO BE COMPLETED (Partial termi- nation only) (e) NOT TO BE COMPLETED (0) TOTAL COVERED BY CONTRACT OR ORDER (8) ITEM (a) Quantity Quantity $ PAYMENT TO BE RECEIVED THROUGH INVOICING (c) SPECIM Quantity $ SECTION PROPOSED SETTLEMENT (Use Columns (b) and (c) Only Where Previous Proposal Has Been Filed) TOTAL PREVIOUSLY PROPOSED (b) INCREASE OR DECREASE BY THIS PROPOSAL (c) TOTAL PROPOSED TO DATE (d) FOR USE OF CONTRACTING AGENCY ONLY (e) 1 METALS (from Format 803-1) 2❘ RAW MATERIALS (other than metals) (from Format 803-3) 3 | PURCHASED PARTS (from Format 803–3) 4 FINISHED COMPONENTS (from Format 803–3)(See Schedule A) 5 MISCELLANEOUS INVENTORY (from Format 803–3) 6 WORK IN PROCESS (from Format 803–5) (See Schedule A)' 7 DIES, JIGS, FIXTURES AND SPECIAL TOOLS (Format 803-7) 8 OTHER COSTS (from Schedule B) 9 GENERAL AND ADMINISTRATIVE EXPENSES (from Schedule C) 10 TOTAL (Items 1 to 9 inclusive) 11| PROFIT (explain in Schedule D) 12 SETTLEMENT EXPENSES (from Schedule E) 13 TOTAL (Items 10 to 12 inclusive) 14 SETTLEMENTS WITH SUBCONTRACTORS (from Schedule F) 15 ACCEPTABLE FINISHED PRODUCT (from Format 803-3) 16 GROSS PROPOSED SETTLEMENT (Items 13 thru 15) 17 DISPOSAL AND OTHER CREDITS (from Schedule G) NET PROPOSED SETTLEMENT (Item 16 less 17) 19 ADVANCE, PROGRESS & PARTIAL PAYMENTS (from Schedule H) | 20 NET PAYMENT Requested (Item 18 less 19) WHERE THE SPACE PROVIDED FOR ANY INFORMATION IS INSUFFICIENT, ATTACH SEPARATE SUPPORTING SCHEDULES FEDERAL PROCUREMENT REGULATIONS J (FPR CIRC. 29, NOVEMBER 1962) 867 PART 1-8 TERMINATION OF CONTRACTS ୮ L 1-8.802-1 (b) Page 2 of Format 802–1. SCHEDULE A—ANALYSIS OF INVENTORY COST (Items 4 and 6) Furnish the following information (unless not reasonably available) in respect to inventories of finished components and work in process included in this proposal: FINISHED COMPONENTS WORK IN PROCESS ITEM TOTAL DIRECT LABOR TOTAL DIRECT MATERIALS TOTAL INDIRECT EXPENSES SCHEDULE B-OTHER COSTS (Item 8) EXPLANATION SCHEDULE C—GENERAL AND ADMINISTRATIVE EXPENSES_LIM 9) DETAIL OF EXPENSES SPECIMEN AMOUNT AMOUNT SCHEDULE D—PROFIT (Item 11) EXPLANATION AMOUNT WHERE THE SPACE PROVIDED FOR ANY INFORMATION IS INSUFFICIENT, ATTACH SEPARATE SUPPORTING SCHEDULES 2 FEDERAL PROCUREMENT REGULATIONS TOTAL FOR USE OF CONTRACTING AGENCY ONLY FOR USE OF CONTRACTING AGENCY ONLY FOR USE OF CONTRACTING AGENCY ONLY 868 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8. 8 FORMATS OF NOTICES, FORMS, WARRANTIES, AND AGREEMENTS 1–8.802— 1 (c) Page 3 of Format 802–1. SCHEDULE E— SETTLEMENT EXPENSES (Item 12) ITEM EXPLANATION AMOUNT SCHEDULE F—SETTLEMENTS WITH IMMEDIATE SUBCONTRACTORS AND SUPPLIERS (Item 14) NAME AND ADDRESS OF SUBCONTRACTOR BRIEF DESCRIPTION OF PRODUCT CANCELED AMOUNT OF SETTLEMENT SPECIMEN SCHEDULE G-DISPOSAL AND OTHER CREDITS (Item 17) DESCRIPTION FOR USE OF CONTRACTING AGENCY ONLY FOR USE OF CONTRACTING AGENCY ONLY AMOUNT FOR USE OF CONTRACTING AGENCY ONLY (If practicable, show separately amount of disposal credits applicable to acceptable finished product included in Item 15) NOTE. — Individual items of small amounts may be grouped into a single entry in Schedules B, C, D, E, and G. WHERE THE SPACE PROVIDED FOR ANY INFORMATION IS INSUFFICIENT, ATTACH SEPARATE SUPPORTING SCHEDULES لما FEDERAL PROCUREMENT REGULATIONS ך (FPR CIRC. 29, NOVEMBER 1962) 869 PART 1-8 TERMINATION OF CONTRACTS ୮ L 1-8.802-1 (d) Page 4 of Format 802–1. DATE SCHEDULE H-ADVANCE, PROGRESS AND PARTIAL PAYMENTS TYPE OF PAYMENT AMOUNT FOR USE OF CONTRACTING AGENCY ONLY SPECIMEN WHERE THE SPACE PROVIDED FOR-1 RMATION IS INSUPEKRENT, ATTACH SEPARATE SUPPORTING SCHEDULES CERTIFICATE THE UNDERSIGNED, individually and as an authorized representative of the contractor, certifies that he has examined this settlement proposal and that, to the best of his knowledge and belief: (1) As To Contractor's Own CHARGES.-The proposed settlement (exclusive of charges set forth in Item 14) and sup- porting schedules and explanations have been prepared from the books of account and records of the contractor in ac- cordance with recognized commercial accounting practices; they include only those charges allocable to the terminated portion of this contract; they have been prepared with knowledge that they will, or may, be used directly or indirectly as the basis of settlement of a claim or claims against the United States or an agency thereof; and the charges as stated are fair and reasonable. (2) As to Subcontractors' CHARGES.-(4) The contractor has examined, or caused to be examined, to an extent he considered adequate in the circumstances, the claims of his immediate subcontractors (exclusive of claims filed against such immediate subcontractors by their subcontractors); (b) the settlements on account of immediate subcontractors' own charges are fair and reasonable, said charges are allocable to the terminated portion of this contract and said settlements were ne- gotiated in good faith and are not more favorable to his immediate subcontractors than those which the contractor would make if reimbursement by the Government were not involved; (c) the contractor has received from all his immediate subcontractors appropriate certificates with respect to their claims, which certificates are substantially in the form of this certificate; and (d) the contractor has no information leading him to doubt (i) the reasonableness of the settlements with more remote subcontractors, or (ii) that the charges for them are allocable to this contract. Upon receipt by the con- tractor of amounts covering settlements with his immediate subcontractors, the contractor will pay or credit them promptly with the amounts so received, to the extent that he has not previously done so. The term "subcontractor" as used above includes suppliers. NAME OF CONTRACTOR L NAME OF SUPERVISORY ACCOUNTING OFFICIAL BY (Signature of authorized official) TITLE TITLE DATE REGULATIONS FEDERAL PROCUREMENT 870 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8.8 FORMATS OF NOTICES, FORMS, WARRANTIES, AND AGREEMENTS 1-8.802-2 § 1-8.802-2 Cost Basis)—fixed-price Format 802-2, Settlement Proposal (Total Cost Basis)– type contracts. (a) Page 1 of Format 802-2. SETTLEMENT PROPOSAL (Total Cost Basis) FOR USE BY A FIXED-PRICE PRIME CONTRACTOR OR FIXED-PRICE SUBCONTRACTOR THIS PROPOSAL APPLIES TO (Check one) A PRIME CONTRACT WITH THE GOVERNMENT SUBCONTRACT OR PURCHASE ORDER NO(S). SUBCONTRACT OR PURCHASE ORDER COMPANY STREET ADDRESS CONTRACTOR WHO SENT NOTICE OF TERMINATION NAME ADDRESS IF MONEYS PAYABLE UNDER THE CONTRACT HAVE BEEN ASSIGNED, GIVE THE FOLLOWING NAME OF ASSIGNEE ADDRESS CITY AND STATE NAME OF GOVERNMENT AGENCY GOVERNMENT PRIME CONTRACT NO. CONTRACTOR'S REFERENCE NO. EFFECTIVE DATE OF TERMINATION PROPOSAL NO. FORMAT 804-1 (Schedule of Accounting Information) IS IS NOT ATTACHED (If not, explain) NO. CHECK ONE INTERIM FINAL SECTION I—STATUS OF CONTRACT OR ORDER AT EFFECTIVE DATE OF TERMINATION PRODUCTS COVERED BY TERMINATED CONTRACT OR PURCHASE ORDER (2) ITEM (a) Quantity $ Quantity PREVIOUSLY SHIPPED AND INVOICED (b) FINISHED ON HAND PAYMENT TO BE RECEIVED THROUGH INVOICING (c) PAYMENT NOT TO DE RECEIVED THROUGH INVOICING UNFINISHED OR NOT COMMENCED SUBSEQUENTLY COMPLETED AND INVOICED ¹ (e) SPECIMEN $ Quantity \SECTION IT—PROPOSED SETTLEMENT (Use Columns (b) and (c) Only Where Previous Proposal Has Been Filed) TOTAL PREVIOUSLY PROPOSED (b) INCREASE OR DECREASE BY THIS PROPOSAL (c) 1 NOT TO BE COMPLETED TOTAL PROPOSED TO DATE (d) (1) TOTAL COVERED BY CONTRACT OR ORDER (g) FOR USE OF CONTRACTING AGENCY ONLY (e) 1❘ DIRECT MATERIAL 2 DIRECT LABOR Г 3 INDIRECT FACTORY EXPENSE (from Schedule A) 5 6 7 ས DIES, JIGS, FIXTURES AND SPECIAL TOOLS (Format 803-7) OTHER COSTS (from Schedule B) GENERAL AND ADMINISTRATIVE EXPENSES (from Schedule C) TOTAL COSTS (Items 1 thru 6) 8 PROFIT (explain in Schedule D) 9 TOTAL (Items 7 and 8) 10 DEDUCT-FINISHED PRODUCT INVOICED OR TO BE INVOICED ¹ 11 TOTAL (Item 9 less Item 10) 12 SETTLEMENT EXPENSES (from Schedule E) 13 TOTAL (Items 11 and 12) 14 SETTLEMENTS WITH SUBCONTRACTORS (from Schedule F) 15 GROSS PROPOSED SETTLEMENT (Items 13 thru 14) 16 | DISPOSAL AND OTHER CREDITS (from Schedule G) 17 NET PROPOSED SETTLEMENT (Item 15 less 16) 18 ADVANCE, PROGRESS AND PARTIAL PAYMENTS (from Schedule H) 19 NET PAYMENT REQUESTED (Item 17 less 18) ・ Column (e), Section I, should only be used in the event of a partial termination, in which case the total cost reported in Section II should be accumulated to date of completion of the continued portion of the contract and the deduction for finished product (Item 10, Section II) should be the contract price of finished product in Columns (b), (c) and (e), Section I. WOTE.—Inventory schedules (Formats #03-1, 803-3, 803-5, and 803-7) applicable to inventories allocable to this contract and en hand at date of termination must be filed. WHERE THE SPACE PROVIDED FOR ANY INFORMATION IS INSUFFICIENT, ATTACH SEPARATE SUPPORTING SCHEDULES FEDERAL PROCUREMENT REGULATIONS (FPR 871 CIRC. 29, NOVEMBER 1962) PART 1-8 TERMINATION OF CONTRACTS 1-8.802-2 ୮ (b) Page 2 of Format 802-2. SCHEDULE A—INDIRECT FACTORY EXPENSE (Item 3) DETAIL OF EXPENSES METHOD OF ALLOCATION AMOUNT SCHEDULE B-OTHER COSTS (Item 5) ITEM EXPLANATION AMOUNT SPECIMEN SCHEDULE & GENERAL AND ADMINISTRATIVE EXPENSES (Item 6) DETAIL OF EXPENSES MERFIOD OF ALLOCATION AMOUNT SCHEDULE D-PROFIT (Item 8) EXPLANATION AMOUNT L WHERE THE SPACE PROVIDED FOR ANY INFORMATION IS INSUFFICIENT, ATTACH SEPARATE SUPPORTING SCHEDULES FEDERAL PROCUREMENT REGULATIONS FOR USE OF CONTRACTING AGENCY ONLY FOR USE OF CONTRACTING AGENCY ONLY FOR USE OF CONTRACTING AGENCY ONLY FOR USE OF CONTRACTING AGENCY ONLY 872 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8. 8 FORMATS OF NOTICES, FORMS, WARRANTIES, AND AGREEMENTS (c) Page 3 of Format 802-2. SCHEDULE E-SETTLEMENT EXPENSES (Item 12) ITEM EXPLANATION AMOUNT AMOUNT OF SETTLEMENT SCHEDULE F-SETTLEMENTS WITH IMMEDIATE SUBCONTRACTORS AND SUPPLIERS (Item 14) NAME AND ADDRESS OF SUBCONTRACTOR BRIEF DESCRIPTION OF PRODUCT CANCELED SPECIMEN SCHEDULE G-DISPOSAL AND OTHER CREDITS (Item 16) DESCRIPTION AMOUNT 1-8.802-2 FOR USE OF CONTRACTING AGENCY ONLY FOR USE OF CONTRACTING AGENCY ONLY FOR USE OF CONTRACTING AGENCY ONLY (If practicable, show separately amount of disposal credits applicable to acceptable finished product reported on Format 803–3) NOTE.—Individual items of small amounts may be grouped into a single entry in Schedules A, B, C, D, E,¨and G. WHERE THE SPACE PROVIDED FOR ANY INFORMATION IS INSUFFICIENT, ATTACH SEPARATE SUPPORTING SCHEDULES FEDERAL PROCUREMENT REGULATIONS ך (FPR CIRC. 29, NOVEMBER 1962) 873 PART 1-8 TERMINATION OF CONTRACTS L ୮ 1-8.802-2 (d) Page 4 of Format 802–2. SCHEDULE H-ADVANCE, PROGRESS AND PARTIAL PAYMENTS DATE TYPE OF PAYMENT AMOUNT FOR USE OF CONTRACTING AGENCY ONLY SPECIMEN WHERE THE SPACE PROVIDED, NSUSFICIENT, ATTACH SEPARATE SUPPORTING SCHEDULES CERTIFICATE The Undersigned, individually ages an authorized representative of the contractor, certifies that he has examined this settlement proposal and that, to the best of his knowledge and belief: (1) As to Contractor's Own Charges.-The proposed settlement (exclusive of charges set forth in Item 14) and sup- porting schedules and explanations have been prepared from the books of account and records of the contractor in ac- cordance with recognized commercial accounting practices; they include only those charges allocable to the terminated portion of this contract; they have been prepared with knowledge that they will, or may, be used directly or indirectly as the basis of settlement of a claim or claims against the United States or an agency thereof; and the charges as stated are fair and reasonable. (2) AS TO Subcontractors' Charges. — (a) The contractor has examined, or caused to be examined, to an extent he considered adequate in the circumstances, the claims of his immediate subcontractors (exclusive of claims filed against such immediate subcontractors by their subcontractors); (b) the settlements on account of immediate subcontractors' own charges are fair and reasonable, said charges are allocable to the terminated portion of this contract and said settlements were ne- gotiated in good faith and are not more favorable to his immediate subcontractors than those which the contractor would make if reimbursement by the Government were not involved; (c) the contractor has received from all his immediate subcontractors appropriate certificates with respect to their claims, which certificates are substantially in the form of this certificate; and (d) the contractor has no information leading him to doubt (i) the reasonableness of the settlements with more remote subcontractors, or (ii) that the charges for them are allocable to this contract. Upon receipt by the con- tractor of amounts covering settlements with his immediate subcontractors, the contractor will pay or credit them promptly with the amounts so received, to the extent that he has not previously done so. The term "subcontractor" as used above includes suppliers. NAME OF CONTRACTOR L NAME OF SUPERVISORY ACCOUNTING OFFICIAL BY (Signature of authorized official) TITLE TITLE DATE REGULATIONS FEDERAL PROCUREMENT 874 (FPR CIRC, 29, NOVEMBER 1962) SUBPART 1-8. 8 FORMATS OF NOTICES, FORMS, WARRANTIES, AND AGREEMENTS 1-8.802-3 Format 802-3, Settlement Proposal (Short Form)-fixed-price type § 1-8.802-3 Format 802-3, contracts. (a) Page 1 of Format 802-3. SETTLEMENT PROPOSAL (SHORT FORM) FOR USE BY A PRIME CONTRACTOR OR SUBCONTRACTOR IN SETTLEMENT OF A FIXED-PRICE TERMINATED CONTRACT WHEN TOTAL CHARGES CLAIMED ARE LESS THAN $2500. THIS PROPOSAL APPLIES TO (Check one) COMPANY A PRIME CONTRACT WITH THE GOVERNMENT SUBCONTRACT OR PURCHASE ORDER NO(S). SUBCONTRACT OR PURCHASE ORDER CONTRACTOR WHO SENT NOTICE OF TERMINATION NAME ADDRESS STREET ADDRESS CITY AND STATE NAME OF GOVERNMENT AGENCY GOVERNMENT PRIME CONTRACT NO. IF MONEYS PAYABLE UNDER THE CONTRACT HAVE BEEN ASSIGNED, GIVE THE FOLLOWING NAME OF ASSIGNEE ADDRESS • CONTRACTOR'S REFERENCE NO. EFFECTIVE DATE OF TERMINATION NO. SECTION I-STATUS OF CONTRACT OR ORDER AT EFFECTIVE DATE OF TERMINATION PRODUCTS COVERED BY TERMINATED CONTRACT OR PURCHASE ORDER FINISHED ON HAND INCLUDED IN THIS PROPOSAL UNFINISHED OR NOT COMMENCED TOBE COMPLETED (Partial termi- nation only) (•) NOT TO BE COMPLETED (F) TOTAL COVERED BY CONTRACT OR ORDER (g) (a) PREVIOUSLY SHIPPED AND INVOICED (b) QUANTITY $ QUANTITY $ QUANTITY PAYMENT TO BE RECEIVED THROUGH INVOICING (c) ECTION HPROPOSED SETTLEMENT SPECIMEN (Include only items alotable to the terminated portion of contract) 1 CHARGE FOR ACCEPTABLE FINISHED PRODUCT NOT COVERED BY INVOICING (From Format 803-9) CHARGE FOR WORK IN PROCESS, RAW MATERIAL, ETC., ON HAND (From Format 803-9) OTHER CHARGES INCLUDING PROFIT AND SETTLEMENT EXPENSES AMOUNT OF CHARGE 2 3 4 CHARGES FOR SETTLEMENT(S) WITH SUBCONTRACTORS 5 GROSS PROPOSED SETTLEMENT (Items 1 thru 4) 6 DISPOSAL AND OTHER CREDITS (From Format 803-9, Col. g) 7 NET PROPOSED SETTLEMENT (Item 5 less 6) 8 ADVANCE, PROGRESS AND PARTIAL PAYMENTS 9 NET PAYMENT REQUESTED (Item 7 less 8) $ $ $ $ $ $ $ $ $ List your inventory on Format 803–9 and attach a copy bereto. Retain for the applicable period specified in the prime contract all papers and records relating to this proposal for future examination by your customer or by the contracting officer. GIVE A BRIEF EXPLANATION OF HOW YOU ARRIVED AT THE AMOUNTS SHOWN IN ITEMS 3, 4, 6 AND 7 THE UNDERSIGNED CERTIFIES THAT THE ABOVE PROPOSED SETTLEMENT INCLUDES ONLY CHARGES ALLOCABLE TO THE TERMINATED PORTION OF THE CONTRACT OR PURCHASE ORDER, THAT THE TOTAL CHARGES (item 5) AND THE DISPOSAL CREDITS (item 6) ARE FAIR AND REASONABLE, AND THAT THIS PROPOSAL HAS BEEN PREPARED WITH KNOW- LEDGE THAT IT WILL, OR MAY, BE USED DIRECTLY OR INDIRECTLY AS A BASIS FOR SETTLE- MENT OF A CLAIM OR CLAIMS AGAINST THE UNITED STATES OR AN AGENCY THEREOF. NAME OF YOUR COMPANY BY (Signature of authorized official) TITLE DATE WHERE THE SPACE PROVIDED FOR ANY INFORMATION IS INSUFFICIENT, ATTACH SEPARATE SUPPORTING SCHEDULES FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 29, NOVEMBER 1962) 875 PART 1-8 TERMINATION OF CONTRACTS L 1-8,802-3 (b) Page 2 of Format 802-3. INSTRUCTIONS 1. This settlement proposal should be submitted to the con- tracting officer, if you are a prime contractor, or to your cus- tomer, if you are a subcontractor. The term contract as used hereafter includes a sub-contract or a purchase order. 2. Claims which would normally be included in a single set- tlement proposal, such as those based on a series of separate orders for the same item under one contract should be consoli- dated wherever possible, and must not be divided in such a way as to bring them below $2,500.00. 3. You should review any provisions of your contract relating to termination and consult your customer or contracting officer for further information. Government regulations pertaining to the basis for determining a fair and reasonable termination settlement are contained in Part 1-8, Federat-pement Rel ulations (41 CFR 1-8). Your claim for fair compensation should be prepared on the basis of the costs shown by your accounting ཅ༽༼ ༢ Jocco records. Where your costs are not so shown you may use any reasonable basis for estimating your costs which will provide for fair compensation for the preparations made and work done for the terminated portion of the contract, including a reason- able profit on such preparation and work. 4. Generally your settlement proposal may include under items 2, 3, and 4, the following: (a) COSTS.—Costs incurred which are reasonably necessary and are properly allocable to the terminated portion of your contract under recognized commercial accounting practices, including direct and indirect manufacturing, selling and distribu- tion, administrative, and other costs and expenses incurred. (b) SETTLEMENT WITH SUBCONTRACTORS. —Reasonable settlements of claims of subcontractors allocable to the termi- nated portion of the sub-contract. Copies of such settlements will be attached hereto. (C) SETTLEMENT EXPENSES.—Reasonable costs of protecting and preserving termination inventory in your possession and preparing of your claim. youclaim. PROFIT.A reasonable profit with respect to the prep- arations you have made and work you have actually done for the terminated portion of your contract. No profit should be included with respect to work which has not been done, nor shall profit be included with respect to settlement expenses, or with respect to settlement with subcontractors. 5. If you use this form, your total charges being claimed (line 5), must be less than $2,500.00. The government has the right to examine your books and records relative to this proposal, and if you are a subcontractor your customer must be satisfied with your proposal. FEDERAL PROCUREMENT REGULATIONS 876 (FPR CIRC, 29, NOVEMBER 1962) SUBPART 1-8. 8 FORMATS OF NOTICES, FORMS, WARRANTIES, AND AGREEMENTS § 1-8.802-4 Contracts. 1-8.802- 4 Format 802-4, Settlement Proposal for Cost-Reimbursement Type SETTLEMENT PROPOSAL FOR COST-REIMBURSEMENT TYPE CONTRACTS To be used by prime contractors submitting termination claims on cost-reimbursement type contracts under Part 1-8 of the Federal Procurement Regulations (41 CFR 1-8). Also suitable for use in connection with terminated cost-reimbursement type subcontracts. COMPANY PROPOSAL NUMBER STREET ADDRESS CITY AND STATE ITEM (a) 1. DIRECT MATERIAL 2. DIRECT LABOR 3. INDIRECT FACTORY EXPENSE 4. DIES, JIGS, FIXTURES AND SPECIAL TOOLS 5. OTHER COSTS $ TOTAL PREVIOUSLY SUBMITTED (b) CHECK ONE PARTIAL FINAL GOVERNMENT PRIME CONTRACT NO. REFERENCE NO. EFFECTIVE DATE OF TERMINATION $ INCREASE OR DECREASE BY THIS PROPOSAL (c) $ 6. GENERAL AND ADMINISTRATIVE EXPENSE $ $ $ 7. TOTAL COSTS (Items 1 thru 6) 8. FEE 9. SETTLEMENT EXPENSES 10. SETTLEMENTS WITH SUBCONTRACTORS TOTAL SUBMITTED TO DATE (d) GROSS. PROPOSED SETTLEMENT (Items 7 thru 10) 12. DISPOSAL AND OTHER CREDITS 13. NET PROPOSED SETTLEMENT (Item 11 less 12) $ $ 15. NET PAYMENT REQUESTED (Item 13 less 14) 14. PREVIOUS PAYMENTS TO CONTRACTOR SPECIMEN CERTIFICATE $ $ The undersigned, individually and as an authorized representative of the contractor, certifies that he has examined this settlement proposal and that, to the best of his knowledge and belief: (1) AS TO CONTRACTOR'S OWN CHARGES-The proposed settlement (exclusive of charges set forth in Item 10) and supporting schedules and explanations have been prepared from the books of account and records of the contractor in ac- cordance with the terms of the contract; they include only those charges allocable to the terminated contract; they have been prepared with knowledge that they will, or may, be used directly or indirectly as the basis of settlement of a claim or claims against the United States or an agency thereof; and the charges as stated are fair and reasonable. (2) AS TO SUBCONTRACTORS' CHARGES-(a) The contractor has examined, or caused to be examined, to an ex- tent he considered necessary in the circumstances, the claims of his immediate subcontractors (exclusive of claims filed against such immediate subcontractors by their subcontractors); (b) the settlements on account of immediate subcontractors' own charges are fair and reasonable, said charges are allocable to the terminated portion of this contract and said settlements were nego tiated in good faith and are not more favorable to his immediate subcontractors than those which the contractor would make if reimbursement by the Government were not involved; (c) the contractor has received from all his immediate subcon- tractors appropriate certificates with respect to their claims, which certificates are substantially in the form of this certificate; and (d) the contractor has no information leading him to doubt (i) the reasonableness of the settlements with more re- mote subcontractors, or (ii) that charges for them are allocable to this contract. Upon receipt by the contractor of amounts covering settlements with his immediate subcontractors, the contractor will pay or credit them promptly with the amounts so received, to the extent that he has not previously done so. The term subcontractor as used above includes suppliers. NAME OF CONTRACTOR NAME OF SUPERVISORY ACCOUNTING OFFICIAL BY (Signature of authorized official) TITLE TITLE FEDERAL PROCUREMENT DATE (NEXT PAGE IS 879) REGULATIONS ୮ - (FPR CIRC. 29, NOVEMBER 1962) 877 SUBPART 1-8. 8 FORMATS OF NOTICES, FORMS, FEDERAL PROCUREMENT REGULATIONS PROPERTY CLASSIFICATION (See Instruction on reperse) PAGE NO. NO. OF PAGES INVENTORY SCHEDULE A (METALS IN MILL PRODUCT FORM) DATE TERMINATION THIS SCHEDULE APPLIES TO (Check one) A PRIME CONTRACT WITH THE GOVERNMENT NAME ADDRESS SUBCONTRACT(S) OR PURCHASE ORDER(S) NONTERMINATION CONTRACTOR WHO SENT NOTICE OF TERMINATION PRODUCT COVERED BY CONTRACT OR ORDER GOVERNMENT PRIME CONTRACT NO. SUBCONTRACT OR P.O. NO. DESCRIPTION REFERENCE NO. COMPANY STREET ADDRESS CITY AND STATE LOCATION OF MATERIAL COST FOR USE cos cos § 1-8.803 Formats of inventory schedules. § 1-8.803-1 Format 803–1, Inventory Schedule A (Metals in Mill Product Form). (a) Page 1 of Format 803–1. QUANTITY UNIT OF MEASURE CONTRACTOR'S OFFER OR OF CON- UNIT TOTAL PROCEEDS OF SALE TRACTING AGENCY ONLY (c) (d) (dl) FORM, SHAPE, ROLLING TREATMENT ITEM (Where applicable, type of NO. Example: HR coiled edge. strip, CR flat sheets hex rod, tubing in straight lengths, etc.; slit edge, rounded edge, ek.) (a) (b) HEAT TREATMENT, Temper, HaroNESS, FINISH, ETC. (Example: Annealed and pickled, Y hard, polished, etc.) (61) SPECIFICATIONS, AND Alloy or Other Vari-| able DesignATION IN THE SPECIFICATION (62) THICKNESS (Wall for Tubing, class for pipe, type for copper watertube DIMENSIONS WIDTH (O. D. for tube diameter of rod, size for pipe, monu. facturer's SPECIME FOR USE OF CON- TRACTING AGENCY ONLY C (g) to INVENTORY SCHEDULE CERTIFICATE The undersigned, individually and as an authorized representative of the contractor, certifies that he has examined this Inventory Schedule, page numbers inclusive, dated ; that in the exercise of his best judgment and to the best of his knowledge, based upon information believed by him to be reliable, said Schedule has been prepared in accordance with applicable instructions; that the inventory described therein is allocable to the designated contract and is located at the places specified; if the property reported therein is termination inventory, that the quantities are not in excess of the reasonable quan- titative requirements of the terminated portion of the contract; that said Schedule does not include any items reasonably usable, without loss to the contractor, on his other work; that the costs shown on said Schedule NAME OF CONTRACTOR BY (Signature of authorized official) are in accordance with the contractor's books of account; and that the prices shown in column g, representing the proceeds of authorized sale of the items covered thereby, are fair and reasonable. The contractor agrees to inform the contracting officer of any substantial change in the status of the inven. tory shown in this Schedule between the date hereof and the final disposition of such inventory. Subject to any authorized prior disposition, title to the inventory listed in this Schedule is hereby tendered to the Government and is warranted to be free and clear of all liens and encumbrances. TITLE DATE NAME OF SUPERVISORY ACCOUNTING OFFICIAL L TITLE WARRANTIES, AND AGREEMENTS 1-8.803— 1 (FPR CIRC. 29, NOVEMBER 1962) 879 PART 1-8 TERMINATION OF CONTRACTS L ୮ 1-8.803-1 (b) Page 2 of Format 803-1. INSTRUCTIONS FOR USE-INVENTORY SCHEDULE A METALS IN MILL PRODUCT FORM L A. CLASSIFICATION (a) List metals in raw or primary form as furnished by the mill and on which there has been no subsequent fabricating opera- tion. Do not include castings and forgings, which are to be listed on Format 803-3. Use a new form, with continuation sheets if necessary, for each type of metal, and write the name of the metal or alloy in the "Property Classification" block pro- vided in the upper right-hand corner of the form. Examples are: Alloy Steel Copper Aluminum Carbon Steel Stainless Steel Free Cutting Brass Manganese Bronze Silver Tin (b) In addition, on the sheets for any such metal, list like forms of the metal or alloy together in sequence. For example, on the sheet or sheets used to list Carbon Steel, group together all the strip, then follow with the sheets, then the bar stock, etc. B. DESCRIPTION (Column b).—Full commercial description and weight is required for all items. Kre C. CONDITION (Column c).—For purpose of indicating condition of material, the code indicated below should be used. quires the combination of a letter and a number in each (as E4 or N2). Use the letter "X," without a Tumber formate- rial considered to have no further value for use as originally to tended, but of possible salvage value other than as scrap If considered scrap, insert an "'S."'* nce CODE: N-NEW 1-Excellent 2-Good 3-Fair 4-Poor E-Used-reconditioned O-Used-usable without repairs R-Used-repairs required D. COST (Columns e and f). Any generally recognized basis for costing inventory may be used, provided it has been regularly used by the contractor and properly reflects his costs. E. COMMON ITEMS.-Any items of inventory reasonably usable, without loss to the contractor on his other work, because they are materials, parts, or components, common in nature to both the terminated contract and other work of the contractor, are not to be listed except for items the delivery of which has been required by the Government and except for Government-furnished prop- erty. (See Inventory Schedule Certificate.) F. PROCEEDS OF AUTHORIZED SALE (Column g).—Insert the let- ter "A" after the amount if the sale (or credit for acquisition) has been authorized or approved by the contracting officer or cus- tomer. Insert the letter "C" if the amount represents your offer to acquire or sell. In either case, quantity should also be shown (on a second line) if less than the full quantity shown in col- umn d. G. GOVERNMENOWNED PROPERTY Lah Government furnished property should be listed on sep- arate theers marked to show that the items are Government- furdished b) Where Title to materials purchased by the contractor is ested in the Government, such materials should be listed and ost data supplied. H. MISCELLANEOUS (a) Separate Schedules.—If the space provided for any infor- mation called for is insufficient, attach separate supporting schedules. (b) Continuation Sheets.—Use Format 803-2 whenever more than one page is required. (c) Number of Copies.-The number of sets of inventory sched- ules required will be indicated by the contracting officer or the customer from whom the notice of termination is received. FEDERAL PROCUREMENT REGULATIONS 880 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8, 8 FORMATS OF NOTICES, FORMS, FEDERAL PROCUREMENT CONTRACTOR'S OFFER OR PROCEEDS OF SALE FOR USE OF CON. TRACTING AGENCY TERMINATION NONTERMINATION PROPERTY CLASSIFICATION (See Instructions on Format 803-1) DATE PAGE NO. NO. OF PAGES INVENTORY SCHEDULE A-CONTINUATION SHEET (METALS IN MILL PRODUCT FORM) GOVERNMENT PRIME CONTRACT NO. SUBCONTRACT OR P.O. NO. | REFERENCE NO. FOR USE OF CON- COST QUANTITY UNIT OF MEASURE UNIT TOTAL (d) (di) (0) (1 (g) CONDITION (Use code) INCHES (c) DIMENSIONS LENGTH THICKNESS WIDTH (65) (63) (64) FEET HEAT TREATMENT, Temper, HardNESS, FINISH, ETC. (b1) DESCRIPTION SPECIFICATIONS, & ALLOY OR Other Variable DeSIG- NATION IN THE SPECIFICATION (62) TRACTING AGENCY ONLY ITEM NO. FORM, SHAPE, ROLL- ING TREATMENT (a) (b) REGULATIONS (NEXT PAGE IS 883) SPECIMEN ONLY WARRANTIES, AND AGREEMENTS 1-8.803- 2 § 1-8.803-2 cas Format 803–2, Inventory Schedule A—Continuation Sheet (Metals in Mill Product Form). (FPR CIRC. 29, NOVEMBER 1962) 881 SUBPART 1-8.8 FEDERAL PROCUREMENT REGULATIONS INVENTORY SCHEDULE B DATE PROPERTY CLASSIFICATION (See Instruction on reverse) PAGE NO.Į NUMBER OF PAGES NONTERMINATION MISCEL- LANEOUS COMPANY RAW MATERIALS (Other than metals) PURCHASED PARTS TERMINATION FINISHED COMPONENTS FINISHED PRODUCT THIS SCHEDULE APPLIES TO (Check one) A PRIME CONTRACT WITH THE GOVERNMENT SUBCONTRACT(S) OR PURCHASE ORDER(S) CONTRACTOR WHO SENT NOTICE OF TERMINATION NAME ADDRESS PRODUCT COVERED BY CONTRACT OR ORDER GOVERNMENT PRIME CONTRACT NO. FOR USE OF CON- TRACTING AGENCY ONLY ITEM NO. (0) SUBCONTRACT OR P.O. NO. REFERENCE NO. DESCRIPTION STREET ADDRESS CITY AND STATE LOCATION OF MATERIAL cos § 1-8.803-3 (a) Page 1 of Format 803-3. Format 803–3, Inventory Schedule B. ITEM (If property has commercial value, furnish ndequate commercial description (See Instr.). Otherwise, furnish description sufficient to enable contracting officer or authorized contractor to determine appropriate disposition thereof. Where practicable, show manufacturer's name, address and catalog number. Where cols. bl and b2 are not applicable, write col. b entry across the two cols.) (b) GOVERNMENT PART OR DRAWING NUMBER AND REV. NUMBER (61) TYPE OF PACKING (Bulk, bbls, crates, etc.) CONDITION e code) QUANTITY i(d) SPECIMEN UNIT OF MEASURE (dl) COST (For finished product, show contract price instead of cost) UNIT (0) CONTRACTOR'S OFFER OR FOR USE OF CON- TOTAL (ค PROCEEDS OF SALE (g) TRACTING AGENCY ONLY INVENTORY SCHEDULE CERTIFICATE to • The undersigned, individually and as an authorized representative of the contractor, certifies that he has examined this Inventory Schedule, page numbers inclusive, dated that in the exercise of his best judgment and to the best of his knowledge, based upon information believed by him to be reliable, said Schedule has been prepared in accordance with applicable instructions; that the inventory described therein is allocable to the designated contract and is located at the places specified; if the property reported therein is termination inventory, that the quantities are not in excess of the reasonable quantitative requirements of the terminated portion of the contract; that said Schedule does not include any items reasonably usable, without loss to the contractor, on his other work; that the costs shown on said Schedule are in accordance with the contractor's books of account; and that the prices shown in column g, representing the proceeds of authorized sale of the items covered thereby, are fair and reasonable. The contractor agrees to inform the contracting officer of any substantial change in the status of the in- ventory shown in this Schedule between the date hereof and the final disposition of such inventory. Subject to any authorized prior disposition, title to the inventory listed in this Schedule is hereby tendered to the Government and is warranted to be free and clear of all liens and encumbrances. NAME OF CONTRACTOR NAME OF SUPERVISORY ACCOUNTING OFFICIAL BY (Signature of authorized official) TITLE TITLE DATE WARRANTIES, FORMATS OF NOTICES, FORMS, AND AGREEMENTS 1-8.803-3 (FPR CIRC. 29, NOVEMBER 1962) 883 PART 1-8 TERMINATION OF CONTRACTS 1-8.803- 3 ୮ L L (b) Page 2 of Format 803-3. RAW MATERIALS INSTRUCTIONS FOR USE-INVENTORY SCHEDULE B PURCHASED PARTS + • FINISHED COMPONENTS • FINISHED PRoducts • MISCELLANEOUS A. CLASSIFICATION.—1. The term "Raw Materials" is here used to in- clude materials in primary form. Examples of the many different general classifications of raw materials (other than metals) include: Chemical Pulp and paper Paper board Plastics (pri- mary forms) Oils, fats, and waxes Rubber Shoe cut stock Textiles Cement Kapok Cork Hair Cotton Lumber Wool Hides and skins Leather Glass 2. Examples of some of the large number of general classifications of parts, components, finished products, or miscellaneous include: Engines and turbines Compressors and pumps Insulated wire and cable Nuts and bolts Conveyors Fans and blowers Bearings Valves Surgical Instruments Electric Motors Drugs Ignition Equipment 3. Items having no commercial value may be placed in a single classi- fication designated "No Commercial Value.'' For items deemed to have commercial value, use a new form for each classification. Insert the name of the classification in the designated block at the upper right-hand corner of the inventory form and arrange the items falling under that classification in sequence under separate subheadings. For example, on the sheet on sheets used to list Chemicals, group separately all Acids, all Alkalis, fin Resins, etc. Under the general classification of Insulated Wire and Cable, group separately all Asbestos-Insulated Copper Wire all Rubber-Insulated Copper Wire, all Magnet Wire, etc. On the shepts for Drugs/groups rately all Antitoxins, all Vaccines, all Strychnine Derivatites all Morphine Derivatives, etc. B. DESCRIPTION (Column b).-A full commercial description is required for all items which have commercial value. For other items, furnish only such description as is sufficient to enable the contracting officer or the customer to determine the appropriate disposition. Where there is doubt as to the extent of the description required, consult the contracting officer or the customer. C. CONDITION (Column c).-For purpose of indicating condition of ma- terial, the code indicated below should be used. It requires the combi- nation of a letter and a number in each instance (as £4 or N2). Use the letter "X" without a number, for material considered to have no further value for use as originally intended, but of possible salvage value other than as scrap. If considered scrop, insert on ''S."' CODE: N-New E-Used-reconditioned O-Used-usable without repairs R-Used-repairs required 1-Excellent 2-Good 3-Fair 4-Poor D. COST (Columns e and f). Any generally recognized basis for costing inventory may be used, provided it has been regularly used by the con- tractor and properly reflects his costs. E. COMMON ITEMS:-Any items of inventory reasonably usable, without loss to the contractor on his other work, because they are materials, parts, or components, common in nature to both the terminated contract and other work of the contractor, are not to be listed except for items the delivery of which has been required by the Government and except for Government- furnished property. (See Inventory Schedule Certificate.) F. PROCEEDS OF AUTHORIZED SALE (Column g).-Insert the letter "A" after the amount the sale (or credit for acquisition) has been authorized or approved by the contracting officer or customer, Insert the letter "C" the amount represents your offer to acquire or sell. In either case, quan- by should abo be shown (on a second line) if less than the full quantity shown in talum tity VERNMENT-OWNED PROPERTY (a) Government-furnished property should be listed on separate sheets, marked to show that the items are Government-furnished. (b) Where title to materials purchased by the contractor is vested in the Government, such materials should be listed and cost data supplied. H. MISCELLANEOUS (a) Separate Schedules. If the space provided for any information called for is insufficient, attach separate supporting schedules. (b) Continuation Sheets. Use Format 803-4 whenever more than one page is required. (c) Number of Copies. The number of sets of inventory schedules re- quired will be indicated by the contracting officer or the customer from whom the notice of termination is received. FEDERAL PROCUREMENT REGULATIONS 884 (FPR CIRC, 29, NOVEMBER 1962) SUBPART 1-8.8 FORMATS OF NOTICES, FORMS, TERMINATION NONTERMINATION FINISHED PRODUCT MISCELLANEOUS PROPERTY CLASSIFICATION (See Instruction on Format 803-3) DATE § 1-8.803-4 cas PAGE [NO. OF NO. PAGES CONTRACTOR'S CONDITION (Use code) COST QUANTITY UNIT OF MEASURE (For finished product, show contract price instead of cost) (c) (d) (d1) UNIT (e) TOTAL (f) GOVERNMENT PART OR DRAWING NUMBER AND REV. NUMBER (61) TYPE OF PACKING (Bulk, bbls, crates, etc.) (62) INVENTORY SCHEDULE B—CONTINUATION SHEET RAW MATERIALS (Other than Metals) GOVERNMENT PRIME CONTRACT NO. PURCHASED PARTS SUBCONTRACT OR P.O. NO. FINISHED COMPONENTS REFERENCE NO. FOR USE OF CON. TRACTING AGENCY ITEM NO. ITEM ONLY (a) (b) DESCRIPTION (NEXT PAGE IS 887) SPECIMEN FOR USE OF CON. TRACTING AGENCY ONLY OFFER OR PROCEEDS OF SALE (8) Format 803-4, Inventory Schedule B-Continuation Sheet. WARRANTIES, AND AGREEMENTS 1-8.803- 4 FEDERAL 885 (FPR 1962) PROCUREMENT CIRC. 29, NOVEMBER 2 E REGULATIONS SUBPART 1-8.8 FEDERAL PROCUREMENT DATE |PAGE NO. | NO. OF PAGES INVENTORY SCHEDULE C (WORK IN PROCESS) TERMINATION NONTERMINATION SEE REVERSE FOR INSTRUCTIONS THIS SCHEDULE APPLIES TO (Check one) COMPANY A PRIME CONTRACT WITH THE GOVERNMENT SUBCONTRACT(S) OR PURCHASE ORDER(S) CONTRACTOR WHO SENT NOTICE OF TERMINATION REGULATIONS NAME ADDRESS PRODUCT COVERED BY CONTRACT OR ORDER DESCRIPTION GOVERNMENT PRIME CONTRACT NO. SUBCONTRACT OR P.O. NO. FOR USE OF CON. TRACTING AGENCY ITEM NO. ONLY 좁은 ​(a) REFERENCE NO. STREET ADDRESS CITY AND STATE LOCATION OF MATERIAL cas § 1-8.803-5 Format 803-5, Inventory Schedule C (Work in Process). (a) Page 1 of Format 803–5. COST FOR USE (Information in Column ● need not be given if not reasonably available) CONTRACTOR'S OFFER OR OF CON. PROCEEDS OF SALE UNIT TOTAL ค TRACTING AGENCY ONLY (8) ITEM (If property has commercial value, furnish adequate commercial description. Otherwise furnish description sufficient to enable contracting officer or author. •ized contractor to determine appropriate disposition thereof.) (b) ESTIMATED WEIGHT (61) CONDITION! (Use code) UNIT OF QUANTITY | MEASURE (d) (d1) SPECIMEN INVENTORY SCHEDULE CERTIFICATE WARRANTIES, FORMATS OF NOTICES, FORMS, AND AGREEMENTS 1-8.803-5 to ; The undersigned, individually and as an authorized representative of the contractor, certifies that he has examined this Inventory Schedule, page numbers inclusive, dated that in the exercise of his best judgment and to the best of his knowledge, based upon information believed by him to be reliable, said Schedule has been prepared in accordance with applicable instructions; that the inventory described therein is allocable to the designated contract and is located at the places specified; if the property reported therein is termination inventory, that the quantities are not in excess of the reasonable quantitative requirements of the terminated portion of the contract; that said Schedule does not include any items reasonably usable, without loss to the contractor, on his other work; that the costs shown on said Sched- NAME OF CONTRACTOR BY (Signature of authorized official) ule are in accordance with the contractor's books of account; and that the prices shown in column g, repre senting the proceeds of authorized sale of the items covered thereby, are fair and reasonable. The contractor agrees to inform the contracting officer of any substantial change in the status of the inven tory shown in this Schedule between the date hereof and the final disposition of such inventory. Subject to any authorized prior disposition, title to the inventory listed in this Schedule is hereby tendered to the Government and is warranted to be free and clear of all liens and encumbrances. TITLE DATE NAME OF SUPERVISORY ACCOUNTING OFFICIAL TITLE (FPR CIRC, 29, 887 NOVEMBER 1962) PART 1-8 TERMINATION OF CONTRACTS ୮ L 1-8.803-5 (b) Page 2 of Format 803-5. INSTRUCTIONS FOR USE-INVENTORY SCHEDULE C WORK IN PROCESS A. CLASSIFICATION.—No classification of items is required. Finished components are not to be listed on this form but on Format 803-3. Other items which have not lost their identity through whole or partial assembly and which are deemed to have further commercial use are also to be listed on Format 803-3. B. DESCRIPTION (Column b).—Furnish such description as is suf- ficient to enable the contracting officer or the customer to deter- mine the appropriate disposition. C. CONDITION (Column c). For material considered to have possible salvage value other than scrap, insert an "X." If con- sidered scrap, insert an "S."' D. COST (Columns e and f). -Any generally recognized basis for costing inventory may be used, provided it has been regu- larly used by the contractor and properly reflects his costs. E. COMMON ITEMS.-Any items of inventory reasonably usable, without loss to the contractor on his other work, because they are materials, parts, or components, common in nature to both the terminated contract and other work of the contractor, are not to be listed except for items the delivery of which has been required by the Government and except for Government-furnished prop- erty. (See Inventory Schedule Certificate.) F. PROCEEDS OF AUTHORIZED SALE (Column g).—Insert the letter "A" after the amount if the sale (or credit for acquisition) has been authorized or approved by the contracting officer or customer. Insert the letter "C" if the amount represents your offer to acquire or sell. In either case, quantity should also be shown (on a second line) if less than the full quantity shown in column d. G. GOVERNMENT-OWNED PROPERTY (a) Government-furnished property should be listed on sepa- rate sheets, marked to show that the items are Government- furnished. (b) Where title to materials purchased by the contractor is vested in the Government, such materials should be listed and cost data supplied. H. MISCELLANEOUS (a) Separate Schedules.-If the space provided for any infor- mation called for is insufficient, attach separate supporting sched- ules. (b) Continuation Sheets. -Use Format 803-6 whenever more than one page is required. (c) Number of copies.—The number of sets of inventory sched- ules required will be indicated by the contracting officer or the customer from whom the notice of termination is received. SPECIMEN L FEDERAL PROCUREMENT REGULATIONS 888 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8, 8 FORMATS OF NOTICES, FORMS, GOVERNMENT PRIME CONTRACT NUMBER FOR USE OF CON. | ITEM TRACTING AGENCY NO. ONLY D NONTERMINATION DATE PAGE NO. NO. OF PAGES CONTRACTOR'S FOR USE OFFER OR OF CON. PROCEEDS OF TRACTING SALE AGENCY COST UNIT OF QUANTITY MEASURE UNIT TOTAL P IP • f INVENTORY SCHEDULE C-CONTINUATION SHEET (WORK IN PROCESS) [(po sn) •sn) CONDITION ESTIMATED WEIGHT TERMINATION SUBCONTRACT OR P. O. NO. REFERENCE NUMBER FEDERAL PROCUREMENT REGULATIONS DESCRIPTION ITEM b (NEXT PAGE IS 891) 19 SPECIMEN B ONLY § 1-8.803-6 Format 803–6, Inventory Schedule C—Continuation Sheet (Work in Process). WARRANTIES, AND AGREEMENTS 1-8.803-6 (FPR CIRC. 29, NOVEMBER 1962) 889 SUBPART 1-8. 8 FORMATS OF NOTICES, FORMS, CIRC, 29, NOVEMBER INVENTORY SCHEDULE D (DIES, JIGS, FIXTURES, ETC., AND SPECIAL TOOLS) DATE TERMINATION NONTERMINATION PROPERTY CLASSIFICATION (See Instruction on reverse) PAGE NO. NO. OF PAGES THIS SCHEDULE APPLIES TO (Check one) COMPANY A PRIME CONTRACT WITH THE GOVERNMENT SUBCONTRACTOR(S) OR PURCHASE ORDER(S) CONTRACTOR WHO SENT NOTICE OF TERMINATION NAME ADDRESS SUBCONTRACT OR P.O. NO. REFERENCE NO. PRODUCT COVERED BY CONTRACT OR ORDER GOVERNMENT PRIME CONTRACT NUMBER FOR USE OF CON- TRACTING AGENCY ONLY ITEM NO. (0) DESCRIPTION (If property has commercial value, furnish adequate commercial description. Otherwise furnish description sufficient to enable contracting officer or author - ized contractor to determine appropriate disposition thereof. Where practica. ble, show manufacturer's name, address, and catalog No.) (b) CONDITION (Use code) STREET ADDRESS CITY AND STATE LOCATION OF MATERIAL QUANTITY COST cas § 1-8.803-7 Format 803–7, Inventory Schedule D (Dies, Jigs, Fixtures, etc., and Special Tools). (a) Page 1 of Format 803–7. APPLICABLE TO THIS CONTRACT TO ENTIRE CONTRACT (F1) TO PORTION NOT TO BE COMPLETED CONTRACTOR'S OFFER OR PROCEEDS OF SALE FOR USE OF CON- TRACTING AGENCY ONLY (12) (g) (c) (d) UNIT SPECIMEN to INVENTORY SCHEDULE CERTIFICATE The undersigned, individually and as an authorized representative of the contractor, certifies that he has examined this Inventory Schedule, page numbers inclusive, dated that in the exercise of his best judgment and to the best of his knowledge, based upon information believed by him to be reliable, said Schedule has been prepared in accordance with applicable instructions; that the inventory described therein is allocable to the designated contract and is located at the places specified; if the property reported therein is termination inventory, that the quantities are not in excess of the reasonable quantitative requirements of the terminated portion of the contract; that said Schedule does not include any items reasonably usable, without loss to the contractor, on his other work; that the costs shown on said NAME OF CONTRACTOR BY (Signature of authorized official) Schedule are in accordance with the contractor's books of account; and that the prices shown in column g, representing the proceeds of authorized sale of the items covered thereby, are fair and reasonable. The contractor agrees to inform the contracting officer of any substantial change in the status of the in- ventory shown in this Schedule between the date hereof and the final disposition of such inventory. Subject to any authorized prior disposition, title to the inventory listed in this Schedule is hereby tendered to the Government and is warranted to be free and clear of all liens and encumbrances. TITLE DATE NAME OF SUPERVISORY ACCOUNTING OFFICIAL TITLE WARRANTIES, AND AGREEMENTS 1-8.803-7 FEDERAL 891 (FPR PROCUREMENT 1962) REGULATIONS WR PART 1-8 TERMINATION OF CONTRACTS 1-8.803-7 L ୮ L (b) Page 2 of Format 803-7. A. CLASSIFICATION INSTRUCTIONS FOR USE—INVENTORY SCHEDULE D DIES, JIGS, FIXTURES, ETC., AND SPECIAL TOOLS a. Items having no commercial value may be placed in a single classi- fication designated "No Commercial Value.'' For items deemed to have commercial value, general classifications may be limited to the following: Dies: Special Tools Jigs Gauges Fixtures b. Use a new form for each such general classification. Insert the name of the classification in the designated block in the upper right-hand corner of the form and list the items falling under that classification in sequence. For example, on the sheet used to list Dies, group separately all Extruding Dies, all Forging Dies, all Forming Dies, etc. On the sheet used for Gauges, group separately all Thread Gauges, all Radius Gauges, all Depth Gauges, etc. Whenever possible, listing of Special Tools should identify the names and numbers of the parts for which the tools are used, using the Govern- ment part number where assigned. B. DESCRIPTION (Column b).—An adequate commercial description is re- quired for all items which have commercial value. For other items, fur- nish description sufficient to enable the contracting officer or the customer to determine the appropriate disposition. Also indicate weight for each item. C. CONDITION (Column c).—For purpose of indicating condition of ma- terial, the code indicated below should be used. It requires the combina- tion of a letter and a number in each instance (as E4 or N2). Use the letter "X," without a number, for material considered to have no further value for use as originally intended, but of possible salvage, oly than as scrap. If considered scrap, insert an "'S."' CODE: N-New E-Used-reconditioned O-Used-usable without repairs R-Used-repairs required D. COSTS (Columns e and f).—Any generally recognized basis for costing inventory may be used, provided it has been regularly used by the contrac- for and properly reflects his costs. E. COMMON ITEMS. —Any items of inventory reasonably usable, without loss to the contractor on his other work, because they are materials, parts, or components, common in nature to both the terminated contract and other work of the contractor, are not to be listed except for items the delivery of which has been required by the Government and except for Government- furnished property. (See Inventory Schedule Certificate.) F. PROCEEDS OF AUTHORIZED SALE (Column g).-Insert the letter "A" after the amount if the sale (or credit for acquisition) has been authorized or approved by the contracting officer or customer. Insert the letter "C" In either case, quan- if the amount represents your offer to acquire or sell. tity should also be shown (on a second line) if less than the full quantity 'shown in Column d. G. GOVERNMENT-OWNED PROPERTY (a) Government-furnished property should be listed on separate sheets, marked to show that the items are Government-furnished. (b) Where titled materials purchased by the contractor is vested in the Government, such materials should be listed and cost data supplied. MISCELLANEOUS (૫૦૦ Jules. If the space provided for any information called for is insufficient, attach separate supporting schedules. SPECIN Excelle Continuation Sheets. — Use Format 803-8 whenever more than one page is required. (c) Number of Copies.-The number of sets of inventory schedules re- quired will be indicated by the contracting officer or the customer from whom the notice of termination is received. FEDERAL PROCUREMENT REGULATIONS 892 (FPR CIRC. CIRC, 29, NOVEMBER 1962) SUBPART 1-8.8 FORMATS OF NOTICES, FORMS, PAGE NO. NO. OF PAGES FOR USE OF CON- TRACTING AGENCY ONLY COST CONTRACTOR'S APPLICABLE TO THIS CONTRACT QUANTITY OFFER OR PROCEEDS OF UNIT TOTAL (d) (0) (F) TO ENTIRE CONTRACT (f1) TO PORTION NOT SALE TO BE COMPLETED (f2) (6) INVENTORY SCHEDULE D-CONTINUATION SHEET (DIES, JIGS, FIXTURES, ETC., AND SPECIAL_TOOLS) TERMINATION GOVERNMENT PRIME CONTRACT NO. SUBCONTRACT OR P.O. NO. REFERENCE NO ■ NONTERMINATION PROPERTY CLASSIFICATION (See instruction on Format 803-7) DATE AGENCY ONLY FEDERAL PROCUREMENT REGULATIONS CONDITION (Use code) (b) (c) DESCRIPTION (NEXT PAGE IS 895) SPECIMEN § 1-8.803-8 Format 803-8, Inventory Schedule D-Continuation Sheet (Dies, Jigs, Fixtures, etc., and Special Tools). WARRANTIES, AND AGREEMENTS 1-8.803-8 (FPR CIRC, 29, NOVEMBER 1962) 893 SUBPART 1-8.8 FORMATS OF NOTICES, FORMS, CIRC, 29, NOVEMBER TERMINATION INVENTORY SCHEDULE E (SHORT FORM FOR USE WITH FORMAT 802-3 ONLY) THIS SCHEDULE APPLIES TO (Check one) DATE COMPANY NAME A PRIME CONTRACT WITH THE GOVERNMENT SUBCONTRACT(S) OR PURCHASE ORDER(S) CONTRACTOR WHO SENT NOTICE OF TERMINATION ADDRESS PRODUCT COVERED BY TERMINATED CONTRACT OR ORDER GOVERNMENT PRIME CONTRACT NUMBER SUBCONTRACT OR P.O. NO. FOR USE OF CON. TRACTING AGENCY ONLY (0) DESCRIPTION REFERENCE NO. STREET ADDRESS CITY AND STATE LOCATION OF MATERIAL PAGE NO. NO. OF PAGES ነ UNIT OF COST (For finished product, show contract price instead of cost) CONTRACTOR'S OFFER OR ITEM ITEM (If property has commercial value, furnish adequate commercial description. Otherwise, furnish description sufficient to enable contracting officer or author. NO. ized contractor to determine appropriate disposition thereof. Where prac. ficable show manufacturer's name, address, and catalog number. Where cols. bl and b2 are not applicable, write col. b entry across those two cols.) (6) GOVERNMENT PART OR DRAWING NUMBER AND REV. NUMBER (61) TYPE OF PACKING (Bulk, bbls., crates, etc.) (62) CONDITION (Use code) QUANTITY MEASURE (d) (di) SPECIMEN UNIT (•) FOR USE OF CON. PROCEEDS OF SALE TRACTING AGENCY TOTAL (f) ONLY (g) WARRANTIES, AND AGREEMENTS အာ § 1-8.803-9 Format 803–9, Termination Inventory Schedule E (Short Form for Use with (a) Page 1 of Format 803-9. Format 802-3 Only). to TERMINATION INVENTORY SCHEDULE CERTIFICATE The undersigned, individually and as an authorized representative of the contractor, certifies that he has examined this Termination Inventory Schedule, page numbers inclusive, dated ; that in the exercise of his best judgment and to the best of his knowledge, based upon information believed by him to be reliable, said Schedule has been prepared in accordance with appli cable instructions; that the inventory described therein is allocable to the designated contract and is located at the places specified; that the quantities are not in excess of the reasonable quantitative requirements of the terminated portion of the contract; that said Schedule does not include any items reasonably usable, NAME OF CONTRACTOR BY (Signature of authorized official) without loss to the contractor, on his other work; that the costs shown on said Schedule are in accordance with the contractor's books of account; and that the prices shown in column g, representing the proceeds of authorized sale of the items covered thereby, are fair and reasonable. The contractor agrees to inform the contracting officer of any substantial change in the status of the inven- tory shown in this Schedule between the date hereof and the final disposition of such inventory. Subject to any authorized prior disposition, title to the inventory listed in this Schedule is hereby tendered to the Government and is warranted to be free and clear of all liens and encumbrances. TITLE DATE NAME OF SUPERVISORY ACCOUNTING OFFICIAL TITLE 1-8.803-9 FEDERAL 895 (FPR PROCUREMENT 1962) REGULATIONS D M PART 1-8 TERMINATION OF CONTRACTS L 1-8.803-9 (b) Page 2 of Format 803-9. INSTRUCTIONS FOR USE TERMINATION INVENTORY SCHEDULE (Short Form) FOR USE WITH FORMAT 802-3 ONLY A. CLASSIFICATION.-No specific classification required but similar items should be grouped together. Several classifications may be listed on one form. B. DESCRIPTION (Column b).-A full commercial description is required for all items which have commercial value. For other items, furnish only such description as is sufficient to enable the contracting officer or the cus- tomer to determine the appropriate disposition. C. CONDITION (Column c).-For purposes of indicating condition of ma- terial, the code indicated below should be used. It requires the combina- tion of a letter and a number in each instance (as E4 or N2). Use the letter "X," without a number for material considered to have no further value for use as originally intended, but of possible salvage value other than as scrap. If considered scrap, insert on "S." E-Used-reconditioned CODE: N-New O-Used-usable without repairs R-Used-repairs required 1-Excellent 2-Good 3-Fair 4-Poor D. COST (Columns e and f).—Any generally recognized basis for costing inventory may be used, provided it has been regularly used by the con- tractor and properly reflects his costs. E. COMMON ITEMS.—Any items of inventory reasonably usable, without loss to the contractor on his other work, because they are materials, parts, or components, common in nature to both the terminated contract and other work of the contractor, are not to be listed except for items the delivery of which has been required by the Government and except for Government- furnished property (See Inventory Schedule Certificate.) F. PROCEEDS OF AUTHORIZED SALE (Column g).-Insert the letter "A" after the amount if the sale (or credit for acquisition) has been authorized or approved by the contracting officer or customer. Insert the letter "C" if the amount represents your offer to acquire or sell. In either case, quantity should be also shown (on a second line) if less than the full quan- tity shown in Column d. G. GOVERNMENT-OWNED PROPERTY (a) Government-furnished property should be listed on separate sheets, marked to show that the items are Government-furnished. (b) Where title to materials purchased by the contractor is vested in the Government, such materials should be listed and cost data supplied. H. MISCELLANEOUS (a) Separate Schedules. If the space provided for any information called for is insufficient, attach separate supporting schedules. (b) Number of pres.-The number of sets of inventory schedules re- quired will be indicated by the contracting officer or the customer from the botice of termination is received. SPECIMEN L FEDERAL PROCUREMENT REGULATIONS 896 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8. 8 FORMATS OF NOTICES, FORMS, WARRANTIES, AND AGREEMENTS § 1-8.804 Formats of miscellaneous forms. § 1-8.804-1 Format 804–1, Schedule of Accounting Information. 1-8.804-1 (a) Page 1 of Format 804–1. SCHEDULE OF ACCOUNTING INFORMATION To be used by prime contractors submitting termination claims under Part 1-8 of the Federal Procurement Regulations (41CFR 1-8). Also suitable for use by subcontractor in effecting subcontract settlements with prime contractor or intermediate subcontractors. THIS PROPOSAL APPLIES TO (Check one) A PRIME CONTRACT WITH THE GOVERNMENT SUBCONTRACT OR PURCHASE ORDER SUBCONTRACT OR PURCHASE ORDER NO.(S) COMPANY STREET ADDRESS CONTRACTOR WHO SENT NOTICE OF TERMINATION CITY AND STATE NAME ADDRESS 1. NAME TITLE NAME OF GOVERNMENT AGENCY GOVT. PRIME CONTRACT CONTRACTOR'S REFERENCE EFFECTIVE DATE OF NO. TERMINATION NO. INDIVIDUAL IN YOUR ORGANIZATION FROM WHOM ADDITIONAL INFORMATION MAY BE REQUESTED ON QUESTIONS RELATING TO: PROPERTY DISPOSAL ACCOUNTING MATTERS ADDRESS NAME TELEPHONE NO. TITLE ADDRESS TELEPHONE NO. 3. 2. ARE THE ACCOUNTS OF THE CONTRACTOR SUBJECT TO REGULAR PERIODIC EXAMINATION BY INDEPENDENT PUBLIC ACCOUNTANTS? YES NO (Name and address of accountants) SPECIMEN INDEPENDENT ACCOUNTANTS, IF ANY WHO HAVE REVIEWED OR ASSISTED IN THE PREPARATION OF THE ATTACHED PROPOSAL NAME ADDRESS 4. GOVERNMENTAL AGENCY WHICH HAS REVIEWED YOUR ACCOUNTS IN CONNECTION WITH A PRIOR SETTLEMENT PROPOSAL DURING THE CUR- RENT AND PRECEDING FISCAL YEAR NAME ADDRESS 5. HAVE THERE BEEN ANY SIGNIFICANT DEVIATIONS FROM YOUR REGULAR ACCOUNTING PROCEDURES AND POLICIES IN ARRIVING AT THE COSTS SET FORTH IN THE ATTACHED PROPOSAL? YES NO. IF "YES," EXPLAIN BRIEFLY 6. WERE THE DETAILED COST RECORDS USED IN PREPARING THE PROPOSAL CONTROLLED BY AND IN AGREEMENT WITH YOUR GENERAL BOOKS OF ACCOUNT? YES NO 7. WERE INVENTORY QUANTITIES BASED ON A PHYSICAL COUNT AS OF THE DATE OF TERMINATION? YES NO. IF "NO," EXPLAIN EXCEPTIONS WHERE THE SPACE PROVIDED FOR ANY INFORMATION IS INSUFFICIENT, ATTACH SEPARATE SCHEDULES 1 FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 29, NOVEMBER 1962) 897 PART 1-8 TERMINATION OF CONTRACTS 1-8.804-1 L ୮ (b) Page 2 of Format 804-1. 8. IS THIS SETTLEMENT PROPOSAL BASED ON STANDARD COSTS? MENT FOR ANY SIGNIFICANT VARIATIONS BEEN MADE? ☐ YES NO. YES L NO. IF "YES," HAS ADJUSTMENT TO ACTUAL COST OR ADJUST- IF "NO," EXPLAIN 9. DOES THIS PROPOSAL INCLUDE CHARGES FOR MAJOR INVENTORY ITEMS AND CLAIMS OF SUBCONTRACTORS COMMON TO THIS TERMINATED CONTRACT AND OTHER WORK OF THE CONTRACTOR? YESNO. IF "YES," EXPLAIN THE METHOD USED IN ALLOCATING AMOUNTS TO THE TERMINATED PORTION OF THIS CONTRACT 10. EXPLAIN BRIEFLY YOUR METHOD OF PRICING INVENTORIES, INDICATING WHETHER MATERIAL HANDLING COST HAS BEEN INCLUDED IN CHARGES FOR MATERIALS 11. ARE ANY PARTS, MATERIALS, OR FINISHED PRODUCT, KNOWN TO BE DEFECTIVE, INCLUDED IN THE INVENTORIES? EXPLAIN 12. HAVE ANY CHARGES BEEN INCLUDED IN THIS PROPOSAL IN RESPECT OF SEWERANCE, DISA "'YES," FURNISH BRIEF EXPLANATION AND ESTIMATES OF AMOUNTS INCLUREU YESNO. IF "YES," DISMISSAL, OR SEPARATION PAY? YESNO. IF SPECIMEN 13. DOES THIS PROPOSAL INCLUDE ANY ELEMENT OF PROFIT TO THE CONTRACTOR OR A RELATED ORGANIZATION, OTHER THAN PROFIT SET FORTH SEPARATELY IN THE PROPOSAL OR INCLUDED IN THE CONTRACT PRICE AT WHICH ACCEPTABLE FINISHED PRODUCT, IF ANY, IS INCLUDED IN THE PROPOSAL? YES NO. ☐ ☐ IF "'YES," EXPLAIN BRIEFLY 14. DESCRIBE BRIEFLY THE NATURE OF INDIRECT EXPENSE ITEMS INCLUDED IN INVENTORY COSTS (see Schedule A, Format 802-1); AND EX- PLAIN YOUR METHOD OF ALLOCATION USED IN PREPARING THIS PROPOSAL, INCLUDING IF PRACTICABLE, THE RATES USED AND THE PERIOD OF TIME UPON WHICH THEY ARE BASED 15. DO THE COSTS SET FORTH IN THE ATTACHED PROPOSAL INCLUDE PROVISIONS FOR ANY RESERVES OTHER THAN DEPRECIATION RESERVES? YES NO. IF "YES," LIST SUCH RESERVES 16. STATE METHOD OF ACCOUNTING FOR TRADE AND CASH DISCOUNTS EARNED, REBATES, ALLOWANCES, AND VOLUME PRICE ADJUSTMENTS. ARE SUCH ITEMS EXCLUDED FROM COSTS CLAIMED? YES NO WHERE THE SPACE PROVIDED FOR ANY INFORMATION IS INSUFFICIENT, ATTACH SEPARATE SCHEDULES 2 (NEXT PAGE IS 898, 1) FEDERAL PROCUREMENT REGULATIONS 898 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8. 8 FORMATS OF NOTICES, FORMS, WARRANTIES, AND AGREEMENTS 1-8.804-1 (c) Page 3 of Format 804–1. 17. STATE POLICIES RELATING TO RECORDING OF OVERTIME, SHIFT PREMIUMS AND PRODUCTION BONUSES 18. DOES CONTRACTOR HAVE A PENSION PLAN? YES NO. IF "YES," STATE METHOD OF FUNDING AND ABSORPTION OF PAST AND CUR- RENT PENSION SERVICE COSTS 19. STATE GENERAL POLICIES RELATING TO DEPRECIATION AND AMORTIZATION OF FIXED ASSETS; BASES, UNDERLYING POLICIES 20. STATE POLICY OR PROCEDURE FOR RECORDING AND WRITING OFF STARTING LOAD SPECIMEN Г 21. ARE PERISHABLE TOOLS AND MANUFACTURING SUPPLIES CHARGED DIRECTLY TO CONTRACT COSTS OR INCLUDED IN OVERHEAD EXPENSES? 22. POLICIES FOR DISTINGUISHING BETWEEN CHARGES TO CAPITAL (fixed) ASSET ACCOUNTS AND TO REPAIR AND MAINTENANCE ACCOUNTS WHERE THE SPACE PROVIDED FOR ANY INFORMATION IS INSUFFICIENT, ATTACH SEPARATE SCHEDULES 3 FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 29, NOVEMBER 1962) 898.1 PART 1-8 TERMINATION OF CONTRACTS L 1-8.804– 1 (d) Page 4 of Format 804–1. 23. METHOD OF RECORDING AND ABSORBING (1) GENERAL ENGINEERING AND GENERAL DEVELOPMENT EXPENSE AND (2) ENGINEERING AND DEVELOPMENT EXPENSE DIRECTLY APPLICABLE TO THE TERMINATED CONTRACT L. 24. TYPES AND SOURCE OF MISCELLANEOUS INCOME AND CREDITS AND MANNER OF RECORDING IN THE INCOME OR THE COST ACCOUNTS SUCH AS RENTAL OF YOUR FACILITIES TO OUTSIDE PARTIES, ETC. 25. ARE COSTS AND INCOME FROM CHANGE ORDERS SEGREGATED FROM OTHER CONTRACT COSTS AND INCOME? YES NO. IF "YES" BY WHAT METHOD? NO. 26. ARE SETTLEMENT EXPENSES APPLICABLE TO PREVIOUSLY TERMINATED CONTRACTS EXCLUDED FROM THE ATTACHED PROPOSALS? IF "NO" EXPLAIN 27. STATE POLICY AND PROCEDURE FOR VERIFICATION AND NEGO SPECIMEN ENLEMENTS WITH SUBCONTRACTORS AND VENDORS 28. METHOD OF COMPUTING PROFIT CLAIMED IN THE ATTACHED PROPOSAL AND REASON FOR SELECTING THE METHOD USED. FURNISH ESTI- MATE OF AMOUNT OR RATE OF PROFIT IN DOLLARS OR PERCENT ANTICIPATED HAD THE CONTRACT BEEN COMPLETED 29. WHAT IS LENGTH OF TIME (production cycle) REQUIRED TO PRODUCE ONE OF THE END ITEMS FROM THE TIME THE MATERIAL ENTERS THE PRODUCTION LINE TO THE COMPLETION AS THE FINISHED PRODUCT? 30. METHOD OF ALLOCATING GENERAL AND ADMINISTRATIVE EXPENSE CERTIFICATE I HEREBY CERTIFY THAT, TO THE BEST OF MY KNOWLEDGE AND BELIEF, THE ABOVE STATEMENTS ARE TRUE AND CORRECT. NAME OF CONTRACTOR BY (Signature of supervisory accounting official) TITLE DATE WHERE THE SPACE PROVIDED FOR ANY INFORMATION IS INSUFFICIENT, ATTACH SEPARATE SCHEDULES 4 FEDERAL PROCUREMENT REGULATIONS 898.2 (FPR CIRC, 29, NOVEMBER 1962) SUBPART 1-8. 8 FORMATS OF NOTICES, FORMS, WARRANTIES, AND AGREEMENTS § 1-8.804-2 Format 804-2, Application for Partial Payment. (a) Page 1 of Format 804-2. APPLICATION FOR PARTIAL PAYMENT For use by Prime Contractor or Subcontractor under contracts terminated for the convenience of the Government THIS APPLICATION APPLIES TO (Check one) A PRIME CONTRACT WITH THE GOVERNMENT SUBCONTRACT OR PURCHASE ORDER NUMBER(S) SUBCONTRACT OR PURCHASE ORDER APPLICANT STREET ADDRESS CONTRACTOR WHO SENT NOTICE OF TERMINATION NAME ADDRESS CITY AND STATE IF CONTRACTOR HAS GUARANTEED LOANS OR HAS ASSIGNED MONEYS DUE UNDER CONTRACT, GIVE THE FOLLOWING: NAME AND ADDRESS OF FINANCING INSTITUTION NAME OF GOVERNMENT AGENCY NAME AND ADDRESS OF GUARANTOR NAME AND ADDRESS OF ASSIGNEE NO. GOVERNMENT PRIME CONTRACT NUMBER CONTRACTOR'S REFERENCE NUMBER EFFECTIVE DATE OF TERMINATION AMOUNT REQUESTED $ DATE OF THIS APPLICATION 1-8.804-2 APPLICATION NUMBER UNDER THIS TERMINATION SECTION I.—STATUS OF CONTRACT OR ORDER AT EFFECTIVE DATE OF TERMINATION PRODUCTS COVERED BY TERMINATED CONTRACT OR PURCHASE ORDER (4) QUANTITY $ PREVIOUSLY SHIPPED AND INVOICED (b) FINISHED ON HAND PAYMENT TO RE RECEIVE THROUGH INVOICING SPECIM QUANTITY $ QUANTITY $ SECTION II.-APPLICANT'S OWN TERMINATION CHARGES (Exclusive of his Subcontractors' Charges) INCLUDED IN THIS ICATION UNFINISHED OR NOT COMMENCED TO BE COMPLETED (e) NOT TO BE COMPLETED (f) TOTAL COVERED BY CONTRACT OR ORDER (8) SETTLEMENT PROPOSAL ATTACHED PREVIOUSLY SUBMITTED ITEM CHARGES AS LISTED IN SETTLEMENT PROPOSAL $ 1 ACCEPTABLE FINISHED PRODUCT (at contract price) 2 WORK IN PROCESS 3 RAW MATERIALS, PURCHASED PARTS, AND SUPPLIES 4 GENERAL AND ADMINISTRATIVE EXPENSE 5 TOTAL (sum of lines 1, 2, 3, and 4) $ 6 TOOLS, DIES, JIGS, FIXTURES, ETC. 7 OTHER COSTS 8 SETTLEMENT EXPENSES 9 TOTAL (sum of lines 5, 6, 7, and 8) $ 10 SUBCONTRACTOR SETTLEMENTS APPROVED BY CONTRACTING OFFICER OR SETTLED UNDER A DELEGATION OF AUTHORITY AND PAID BY APPLICANT $ AMOUNTS RECEIVED a UNLIQUIDATED PARTIAL, PROGRESS, AND ADVANCE PAYMENTS RECEIVED h DISPOSAL AND OTHER CREDITS C TOTAL (sum of lines a and b) d AMOUNT OF PARTIAL PAYMENT REQUESTED TOTAL (sum of lines c and d) 1 $ $ FEDERAL PROCUREMENT REGULATIONS + 7 (FPR CIRC. 29, NOVEMBER 1962) 898.3 PART 1-8 TERMINATION OF CONTRACTS ୮ L 1-8.804-2 (b) Page 2 of Format 804–2. SECTION III.-AGREEMENT OF APPLICANT IN CONSIDERATION OF ANY PARTIAL PAYMENT WHICH MAY BE MADE, THE APPLICANT AGREES As follows: (1) REPAYMENT OF EXCESS.-If any partial payment made to the contractor is in excess of the amount finally determined to be due on his termination. claim, the excess shall be repaid to the Govern- ment upon demand, with interest at the rate of 6 percent per annum. Interest shall be computed for the period from the date of the excess payment to the date of repayment, except that (i) no interest shall be charged for any such excess payment at- tributable to a reduction in the contract termina- tion claim by reason of retention or other disposi- tion of termination inventory, until 10 days after the date of such retention or disposition, or such later date as determined by the contracting officer by reason of the circumstances, and (ii) no interest shall be charged for overpayment under cost-reim- bursement type research and development contracts, (without profit or fee to the contractor) if the overpa ments are repaid to the Government within 30 days after demand. (2) Prompt Settlement of ClaIM.-The applicant will make every reasonable effort to expedite final settlement of the termination claim and the claims of his subcontractors, if any. (3) Disposal aND RETENTION OF INVENTORY.- Whenever the amount of any proceeds hereafter re- ceived by the applicant on the disposal of termina- tion inventory, plus the cost or agreed value, as the case may be, of any termination inventory which the applicant hereafter elects to retain, ex- ceeds the amount stated by the applicant in this application as the amount of his charges (Section II, Line 9) and the amount of such credits has not been included on Section II, Line b (Disposal and Other Credit the applicant within 10 days will agency of the amount of account of such inventory disposal or notify the trading ding agency SPECIN L SECTION IV.-CERTIFICATE OF APPLICANT The undersigned certifies that the amount of his own charges (exclusive of subcontractors' charges) due as of the date of this application and allocable to the terminated portion of its contract Number dated > with is not less than $ (From Sec. II, Line 9) that, to the best of applicant's knowledge, the amounts received are as set forth above; and that the applicant has not assigned any moneys payable under this contract, except as set forth above. NAME OF APPLICANT BY (Signature of authorized official) TITLE DATE WHERE THE SPACE PROVIDED FOR ANY INFORMATION IS INSUFFICIENT, ATTACH´SEPARATE SUPPORTING SCHEDULES 2 FEDERAL PROCUREMENT REGULATIONS 898.4 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8. 8 FORMATS OF NOTICES, FORMS, WARRANTIES, AND AGREEMENTS (c) Page 3 of Format 804–2. SECTION V.—RECOMMENDATION OF FIRST REVIEWING CONTRACTOR 1-8.804-2 The undersigned states that he has examined this application and has considered the applicant's general reputation. He has no reason to doubt the accuracy of the information contained in this ap- plication or that the amount certified by the applicant as due will constitute a proper charge to be included in the undersigned's termination claim against recommends that the requested partial payment be made. He The undersigned agrees that he will promptly pay over to the applicant or credit against amounts owing from the applicant any amount received for the benefit of the applicant under this application, and that he will repay to the Government on demand any amount not so paid or credited. NAME OF CONTRACTOR 1 2 3 5 L 7 BY (Signature of authorized official) TITLE DATE SECTION VI.-RECOMMENDATIONS OF OTHER REVIEWING CONTRACTORS Each of the undersigned states that he has no reason to payment requested, and recommended above jste the applicane and will constitute a proper charge in the termination claim of the undersigned CIM Each of the undersigned agrees that he will that the amount of the partial romptly pay over to his immediate subcontractor or credit against amounts owing om subcontractor any amount received for the benefit of the ap- plicant under this application, and that he will repay to the Government on demand any amount not so paid or credited. CONTRACTOR DATE IDENTIFICATION OF YOUR CONTRACT SIGNATURE OF OFFICER, PARTNER, OR OWNER WHERE THE SPACE PROVIDED FOR ANY INFORMATION IS INSUFFICIENT, ATTACH SEPARATE SUPPORTING SCHEDULES 3 FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 29, NOVEMBER 1962) 898.5 PART 1-8 TERMINATION OF CONTRACTS 1-8.805 § 1-8.805 Scrap warranty. /* $ L A warranty in the general format set forth below shall be executed by a pur- chaser of material as scrap (on direct purchase from the Government or on subsequent resale) in accordance with the requirements of § 1-8.504. SCRAP WARRANTY In consideration of the transfer to the undersigned of the property covered by this Agreement at a value based upon its being used as scrap, the undersigned represents and warrants to the United States of America as follows: (a) The property covered by this Agree- ment will be used only as scrap, either in its existing condition or after further prepa- ration, unless and until the undersigned is released from this warranty. (b) In the event the undersigned is re- leased from this warranty, any payment agreed on as consideration for such release shall be made to the United States, regard- less of whether this warranty shall have been executed at the request of the United States. (c) In the event the undersigned sells the property covered by this Agreement prior to release of this warranty, the undersigned will obtain from the purchaser and tender to the United States a warranty identical to this executed by the purchaser, and upon receipt of such other warranty, this warranty will be released by the United States. § 1-8.806 ment. Formats of settlement agree- § 1-8.806-1 Settlement agreement for use in settling fixed-price prime con- tracts after complete termination. THIS SUPPLEMENTAL AGREEMENT OF SETTLE- MENT, entered into this day of 19__, between the UNITED STATES OF AMERICA (hereinafter called "The Govern- ment") represented by the Contracting Officer executing this contract, and (a) A corporation organized and existing under the laws of the State of (b) A partnership consisting of (c) An individual doing business as -; (hereinafter called "the Contractor”). WITNESSETH THAT: WHEREAS, the Contractor and the Govern- ment have entered into Contract No. under date of 19. which, to- gether with any and all amendments, changes, modifications, and supplements thereto, is hereinafter referred to as "the contract"; and WHEREAS, the Termination for Conven- ience of the Government clause of the con- tract provides that the performance of work under the contract may at the convenience of the Government be terminated by the Government in whole, or from time to time in part, whenever the Contracting Officer shall determine that such termination is in the best interest of the Government, and that the Contractor and the Contracting Officer may agree upon the whole or any part of the amount to be paid to the Contractor by reason of such termination; and WHEREAS, by notice of termination dated the Government advised the Contractor of the complete termination of the contract for the convenience of the Government; and , WHEREAS, as used herein, the following terms shall have the meanings hereinafter set forth: (a) The term "termination inventory" means any items of physical property pur- chased, supplied, manufactured, furnished, or otherwise acquired for performance of the contract and properly allocable to the termi- nated portion of the contract. The term does not include any facilities, material, production or other equipment, or special tooling, which are subject to a separate contract or a special contract provision gov- erning the use or disposition thereof. Termination inventory may include contrac- tor-acquired property and Government- furnished property as defined below. (1) "Contractor-acquired property" means property procured or otherwise pro- vided by the Contractor for the performance of a contract, whether or not the Govern- ment has title by the terms of the contract or exercises its contractual right to take title. (2) "Government - furnished property” means property in the possession of or ac- quired directly by the Government, and sub- sequently delivered or otherwise made avail- able to the Contractor. (b) The term "subcontract" means any contract, as defined in § 1-1.208 of the Fed- eral Procurement Regulations (41 CFR 1– 1.208), other than a prime contract, entered FEDERAL PROCUREMENT REGULATIONS į 898.6 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8. 8 FORMATS OF NOTICES, FORMS, WARRANTIES, AND AGREEMENTS 1-8.806-1 L into by a prime contractor or a subcontrac- tor, calling for supplies or services required for the performance of any one or more prime contracts. (c) The term "scrap" means property which has no reasonable prospect of being sold except for the recovery value of its basic material content. NOW, THEREFORE, the parties hereto do mu- tually agree as follows: ARTICLE 1. The Contractor certifies that all contract termination inventory (includ- ing scrap) has been retained or otherwise acquired by him, sold to third parties, re- turned to suppliers, stored for the Govern- ment, delivered to the Government, or other- wise properly accounted for, and all proceeds or retention prices thereof, if any, have been taken into account in arriving at this agreement. ARTICLE 2. (a) The Contractor certifies that, prior to the execution of this agree- ment, each of the Contractor's immediate subcontractors whose claim is included in the claim settled by this agreement has fur- nished to the Contractor a certificate stat- ing (1) that all of his subcontract termina- tion inventory (including scrap) has been retained or otherwise acquired by him, sold to third parties, returned to suppliers, stored for the Government, delivered to the Govern- ment, or otherwise properly accounted for, and all proceeds or retention prices thereof, if any, were taken into account in arriving at the settlement of the subcontract or sub- contracts, and (2) that the subcontractor has received from each of the immediate subcontractors whose claim was included in his claim a substantially similar certificate. (b) The Contractor hereby transfers and conveys to the Government all the right, title, and interest, if any, which the Con- tractor has received, or is entitled to receive, in and to subcontract termination inventory, if any, not otherwise properly accounted for, and hereby assigns to the Government any and all of his rights relating thereto. ARTICLE 3. The Contractor certifies that, with respect to all items of termination in- ventory the costs of which were taken into account in arriving at the amount of this settlement, or in the settlement of any sub- contract claim included in this settlement: (a) all such items are properly allocable to the terminated portion of the contract; (b) such items are not in excess of the reason- able quantitative requirements of the termi- nated portion of the contract; (c) such items do not include any items reasonably usable without loss to the Contractor, on his other work; and (d) the Contractor has informed the Contracting Officer of any substantial change in the status of such items between the dates of his termination inventory sched- ules and the date of this agreement. ARTICLE 4. In all cases where the Con- tractor has not previously made such pay- ments, the Contractor shall, within ten (10) days after receipt of the payment provided for hereunder, pay to each of his immediate subcontractors (or to their respective as- signees) the respective amounts to which they are entitled, after deducting, if the Con- tractor so elects, any amounts then due and payable to the Contractor by such subcontractors. ARTICLE 5. (a) The Contractor has received the sum of $----- on account of work and services performed, or articles delivered, un- der the completed portion of the contract. The Government as part of this negotiated settlement hereby confirms and acknowledges the right of the Contractor, subject to the provisions of Article 6 hereof, to retain such sum heretofore paid and agrees that such sum constitutes a portion of the total amount to which the Contractor is entitled in settlement of the Contract. (b) In addition, upon execution of this agreement the Government agrees to pay to the Contractor or his assignee, upon pres- entation of proper invoices or vouchers, the sum of $------ [insert net amount of settle- ment], arrived at by deducting from the sum of $_ --- [for claim submitted on in- ventory basis, insert gross amount of settle- ment; for claim submitted on total cost basis, insert gross amount of settlement less amount set forth in 5a above], (1) the amount of $---- representing all unliqui- dated partial or progress payments previously made on account to the Contractor or his assignee and all unliquidated advance pay- ments (with interest, if any, thereon), and (2) the amount of $------ representing all applicable property disposal credits [and (3) the amount of $--- representing all other amounts due the Government under this contract except as hereinafter provided in Article 61]. Said sum of $------ [insert net amount of settlement], together with all other sums heretofore paid, constitutes pay- ment in full and complete settlement of the amount due the Contractor by reason of the 1 To be inserted where appropriate. FEDERAL PROCUREMENT REGULATIONS لم (FPR CIRC. 29, NOVEMBER 1962) 898.7 PART 1-8 TERMINATION OF CONTRACTS 1-8.806-1 ୮ L complete termination of work under the con- tract and of all other claims and liabilities of the Contractor and the Government un- der the contract, except as hereinafter pro- vided in Article 6. ARTICLE 6. Notwithstanding any other pro- vision of this agreement, the following rights and liabilities of the parties under the con- tract are hereby reserved: [The following list of reserved or excepted rights and liabilities is intended to cover those which should most frequently be re- served, and which should in any event be scrutinized at the time a settlement is signed (see § 1-8.209-2). The suggested language of the enumerated excepted items on the list may be varied in the discretion of the Con- tracting Officer to cover more accurately the exceptions needed in a particular case. Where greater accuracy or completeness may be achieved by a reference to the number of the contract clause or provision covering the matter in question, this method of enumer- ating reserved rights and liabilities may be followed. Omit any of the following which are not applicable and add any additional exceptions or reservations required.] (a) All rights and liabilities, if any, of the parties under the Renegotiation Act of 19-- [insert reference to applicable Renegotiation Act]. (b) All rights and liabilities of the parties arising under the contract articles, if any, or otherwise which relate to reproduction rights, patent infringements, inventions, and applications for patent and patents, includ- ing rights to assignments, invention reports and licenses, covenants of indemnity against patent risks, and bonds for patent indemnity obligations, together with all rights and lia- bilities under any such bond. (c) All rights and liabilities of the parties under the contract relating to options (ex- cept options to continue or increase the work under the contract), covenants not to com- pete, and covenants of indemnity. (d) All rights and liabilities of the parties under agreements with respect to the future care and disposition by the Contractor of Government-owned property remaining in his custody. (e) All rights and liabilities of the parties under the contract with respect to any con- tract termination inventory stored for the Government pursuant to Article 1 hereof. (f) All rights and liabilities of the parties under the contract with respect to any and all Government property furnished to the Contractor for the performance of this contract. (g) All rights and liabilities of the parties arising under the contract, or otherwise, con- cerning defects in, or guarantees or warran- ties relating to, any articles or component parts furnished to the Government by the Contractor pursuant to the contract or this agreement. (h) All rights and liabilities, if any, of the parties under those clauses inserted in the contract because of the requirements of statutes and Executive orders, including without limitation, any applicable clauses relating to the following topics: labor law, contingent fees, domestic articles, employ- ment of aliens, and "officials not to benefit." [If the contract contains clauses of this character inserted for reasons other than requirements of statutes or Executive orders, the suggested language should be appropri- ately modified.] In Witness Whereof, etc. § 1-8.806-2 Settlement agreement for use in settling fixed-price prime con- tracts after partial terminations. THIS SUPPLEMENTAL AGREEMENT OF SETTLE- MENT, entered into this day of ? 19__ between the UNITED STATES OF AMERICA (hereinafter called "the Govern- ment") represented by the Contracting Offi- cer executing this contract, and (a) A corporation organized and existing under the laws of the State of (b) A partnership consisting of (c) An individual doing business as --; (hereinafter called "the Contractor"). WITNESSETH THAT: WHEREAS, the Contractor and the Govern- ment have entered into Contract No. under date of 19__ which, to- gether with any and all amendments, changes, modifications, and supplements thereto, is hereinafter referred to as "the contract"; and WHEREAS, the Termination for Convenience of the Government clause of the contract provides that the performance of work under the contract may at the convenience of the Government be terminated by the Govern- ment in whole, or from time to time in part, whenever the Contracting Officer shall deter- mine that such termination is in the best interest of the Government, and that the Contractor and Contracting Officer may agree upon the whole or any part of the amount to be paid to the Contractor by reason of such termination; and FEDERAL PROCUREMENT REGULATIONS 898.8 (FPR CIRC, 29, NOVEMBER 1962) SUBPART 1-8.8 FORMATS OF NOTICES, FORMS, WARRANTIES, AND AGREEMENTS 1-8.806-2 L. WHEREAS, by notice of termination dated the Government advised the Con- tractor of the partial termination of the contract for the convenience of the Govern- ment as of the date and to the extent pro- vided in such notice, to which reference is hereby made as to the part terminated, and said part is hereinafter referred to as the "terminated portion of the contract"; and WHEREAS, as used herein, the following terms shall have the meanings hereinafter set forth: (a) The term term "termination inventory” means any items of physical property pur- chased, supplied, manufactured, furnished, or otherwise acquired for performance of the contract and properly allocable to the ter- minated portion of the contract. The term does not include any facilities, material, production or other equipment, or special tooling, which are subject to a separate con- tract or a special contract provision govern- ing the use or disposition thereof. Termina- tion inventory may may include contractor- acquired property and Government-fur- nished property as defined below. (1) "Contractor-acquired property" means property procured or otherwise pro- vided by the Contractor for the performance of a contract, whether or not the Govern- ment has title by the terms of the contract or exercises its contractual right to take title. property" (2) "Government-furnished means property in the possession of or ac- quired directly by the Government, and sub- sequently delivered or otherwise made available to the Contractor. (b) The term "subcontract" means any contract, as defined in § 1-1.208 of the Fed- eral Procurement Regulations (41 CFR 1- 1.208), other than a prime contract, entered into by a prime contractor or a subcontrac- tor, calling for supplies or services required for the performance of any one or more prime contracts. (c) The term "scrap" means property which has no reasonable prospect of being sold except for the recovery value of its basic material content. NOW, THEREFORE, the parties hereto do mu- tually agree as follows: ARTICLE 1. The terminated portion of the contract is designated as follows: (specify the terminated portion clearly as to items, including (a) item numbers, (b) descrip- tions, (c) quantity terminated, (d) unit price of items, (e) total price of terminated items, and (f) any other explanation neces- sary to avoid uncertainty or misunder- standing.) ARTICLE 2. The Contractor certifies that all contract termination inventory (includ- ing scrap) has been retained or otherwise ac- quired by him, sold to third parties, returned to suppliers, stored for the Government, de- livered to the Government, or otherwise properly accounted for, and all proceeds or retention prices thereof, if any, have been taken into account in arriving at this agree- ment. ARTICLE 3. (a) The Contractor certifies that, prior to the execution of this agree- ment, each of the contractor's immediate subcontractors whose claim is included in the claim settled by this agreement has fur- nished to the Contractor a certificate stating (1) that all his subcontract termination in- ventory (including scrap) has been retained or otherwise acquired by him, sold to third parties, returned to suppliers, stored for the Government, delivered to the Government, or otherwise properly accounted for, and all proceeds or retention prices thereof, if any, were taken into account in arriving at the settlement of the subcontract or sub- contracts, and (2) that the subcontractor has received from each of the immediate subcontractors whose claim was included in his claim a substantially similar certificate. (b) The Contractor hereby transfers and conveys to the Government all the right, title, and interest, if any, which the Con- tractor has received, or is entitled to receive, in and to subcontract termination inventory, if any, not otherwise properly accounted for, and hereby assigns to the Government any and all of his rights relating thereto. ARTICLE 4. The Contractor certifies that, with respect to all items of termination in- ventory the costs of which were taken into account in arriving at the amount of this set- tlement, or in the settlement of any sub- contract claim included in this settlement: (a) all such items are properly allocable to the terminated portion of the contract; (b) such items are not in excess of the reasonable quantitative requirements of the terminated portion of the contract; (c) such items do not include any items reasonably usable, with- out loss to the Contractor, on his other work; and (d) the Contractor has informed the Contracting Officer of any substantial change in the status of such items between the dates of his termination inventory schedules and the date of this agreement. ARTICLE 5. In all cases where the Con- tractor has not previously made such pay- ments, the Contractor shall, within ten (10) days after receipt of the payment provided for hereunder, pay to each of his immediate FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 29, NOVEMBER 1962) 898.9 PART 1-8 TERMINATION OF CONTRACTS 1-8.806-2 L. subcontractors (or to the their respective as- signees) the respective amounts to which they are entitled, after deducting, if the Con- tractor so elects, any amounts then due and payable to the Contractor by such subcon- tractors. ARTICLE 6. Upon execution of this agree- ment, the Government agrees to pay to the Contractor or his assignee, upon presentation of proper invoices or vouchers, the sum of $___ [insert net amount of settlement], arrived at by deducting from the sum of $------ [insert gross amount of settlement], (a) the amount of $---- representing all unliquidated partial or progress payments previously made on account to the Contractor or his assignee and all unliquidated advance payments (with interest, if any, thereon) ap- plicable to the terminated portion of the contract and (b) the amount of $- representing all applicable property disposal credits. Said sum of $---- [insert net amount of settlement], together with all other sums heretofore paid, constitutes pay- ment in full and complete settlement of the amount due the Contractor with respect to the terminated portion of the contract, ex- cept as hereinafter provided in Article 7. ARTICLE 7. Upon payment of said sum of $__. [insert net amount of settlement], all obligations of the Contractor to perform further work or services or to make further deliveries under the terminated portion of the contract and all obligations of the Gov- ernment to make further payments or to carry out other undertakings in connection therewith shall cease: Provided, however, That nothing herein contained shall impair or affect in any way any covenants, terms, or conditions of the contract relating to the completed or continued portion thereof: And provided further, That, with respect to the terminated portion of the contract, the following rights and liabilities of the parties are reserved. [The following list of reserved or excepted rights and liabilities relating to the termi- nated portion of the contract is intended to cover those which should most frequently be reserved, and which should in any event be scrutinized at the time a settlement agree- ment is signed (see § 1-8.209-2). The sug- gested language of the enumerated excepted items on the list may be varied in the dis- cretion of the Contracting Officer to cover more accurately the exceptions needed in a particular case. Where greater accuracy or completeness may be achieved by a reference to the number of the contract clause or pro- vision covering the matter in question, this method of enumerating reserved rights and liabilities may be followed. Omit any of the following which are not applicable and add any additional exceptions or reserva- tions required.] (a) All rights and liabilities, if any, of the parties under the Renegotiation Act of 19. [insert reference to applicable Rene- gotiation Act]. (b) All rights and liabilities, if any, of the parties under those clauses inserted in the contract because of the requirements of statutes and Executive orders, including, without limitation, any applicable clauses relating to the following topics: labor law, contingent fees, domestic articles, employ- ment of aliens, and "officials not to benefit." [If the contract contains clauses of this character inserted for reasons other than requirements of statutes or Executive orders, the suggested language should be appro- priately modified.] (c) All rights and liabilities of the parties arising under the contract articles, if any, or otherwise which relate to reproduction rights, patent infringements, inventions, and applications for patents, including rights to assignments, invention reports and licenses, covenants of indemnity against patent risks, and bonds for patent indemnity obligations, together with all rights and liabilities under any such bond. (d) All rights and liabilities of the parties arising under the contract, or otherwise, concerning defects in, or guarantees or war- ranties relating to, any articles or component parts furnished to the Government by the Contractor pursuant to the contract or this agreement. (e) All rights and liabilities of the parties with respect to any contract termination inventory stored for the Government pur- suant to Article 2 hereof. In Witness Whereof, etc. § 1-8.806-3 Partial Partial settlement agree- ment, for use in settling fixed-price prime contracts after complete or partial termination where settlement pertains only to settlements with sub- contractors. THIS SUPPLEMENTAL AGREEMENT OF SETTLE- MENT, entered into this day of 19__ between the UNITED STATES OF AMERICA (hereinafter called "the Govern- ment") represented by the Contracting Of- ficer executing this contract, and FEDERAL PROCUREMENT REGULATIONS 898.10 (FPR CIRC, 29, NOVEMBER 1962) SUBPART 1-8.8 FORMATS OF NOTICES, FORMS, L WARRANTIES, AND AGREEMENTS (a) A corporation organized and existing under the laws of the State of…. (b) A partnership consisting of (c) An --- ; individual doing --; business as (hereinafter called "the Contractor”). WITNESSETH THAT: WHEREAS, the Contractor and the Gov- ernment have entered into Contract No. 19 which, under date of together with any and all amendments, changes, modifications, and supplements thereto, is hereinafter referred to as "the contract"; and WHEREAS, the Termination for Conven- ience of the Government clause of the con- tract provides that the performance of work under the contract may at the convenience of the Government be terminated by the Government in whole, or from time to time in part, whenever the Contracting Officer shall determine that such termination is in the best interest of the Government, and that the Contractor and Contracting Officer may agree upon the whole or any part of the amount to be paid to the Contractor by reason of such termination; and WHEREAS, by notice of termination dated the Government advised the Contractor of the [complete termination of the contract for the convenience of the Government; ] 2 [partial termination of the contract for the convenience of the Govern- ment as of the date and to the extent provided in such notice, to which reference is hereby made as to the part terminated, and said part is hereinafter referred to as "the terminated portion of the contract"; ] 2 and 3 WHEREAS, the Contractor, in connection with the performance of the contract, has entered into the following subcontracts [among others]: [Insert here a list of the terminated subcontracts included in this settlement], which subcontracts were ter- minated by the Contractor in accordance with the termination for convenience clause of the contract and in accordance with the Notice of Termination received by him from the Government; and WHEREAS, the parties desire to settle that portion of the termination claim of the Con- tractor which is based upon the termination of the subcontracts listed herein; and WHEREAS, as used herein, the following terms shall have the meanings hereinafter set forth: "Insert appropriate phrase. Insert when appropriate. (a) The term 1-8,806-3 "termination inventory" means any items of physical property pur- chased, supplied, manufactured, furnished, or otherwise acquired for performance of the contract and properly allocable to the ter- minated portion of the contract. The term does not include any facilities, material, pro- duction or other equipment, or special tool- ing, which are subject to a separate contract or a special contract provision gov- erning the use or disposition thereof. Ter- mination inventory may include contractor- acquired property and Government-furnished property as defined below. property" (1) "Contractor-acquired means property procured or otherwise pro- vided by the Contractor for the performance of a contract, whether or not the Govern- ment has title by the terms of the contract or exercises its contractual right to take title. (2) "Government-furnished property" means property in the possession of or ac- quired directly by the Government, and sub- sequently delivered or otherwise made avail- able to the Contractor. (b) The term "subcontract" means any contract, as defined in § 1-1.208 of the Fed- eral Procurement Regulations (41 CFR 1-1.208), other than a prime contract, en- tered into by a prime contractor or a subcon- tractor, calling for supplies or services required for the performance of any one or more prime contracts. (c) The term "scrap" means property which has no reasonable prospect of being sold except for the recovery value of its basic material content. NOW, THEREFORE, the parties hereto do mutually agree as follows: ARTICLE 1. (a) The Contractor certifies that, prior to the execution of this agree- ment, each of the Contractor's immediate subcontractors whose claim is included in the claim settled by this agreement has fur- nished to the Contractor a certificate stating (1) that all his subcontract termination in- ventory (including scrap), has been retained or otherwise acquired by him, sold to third parties, returned to suppliers, stored for the Government, delivered to the Government, or otherwise properly accounted for, and all proceeds or retention prices thereof, if any, were taken into account in arriving at the settlement of the subcontract or subcon- tracts, and (2) that the subcontractor has received from each of the immediate sub- contractors whose claim was included in his claim a substantially similar certificate. (b) The Contractor hereby transfers and conveys to the Government all the right, L FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 29, NOVEMBER 1962) 898.11 PART 1-8 TERMINATION OF CONTRACTS 1-8.806-3 L L title, and interest, if any, which the Con- tractor has received, or is entitled to re- ceive, in and to such subcontract termina- tion inventory, to the extent that it is not otherwise properly accounted for, and hereby assigns to the Government any and all of his rights relating thereto. ARTICLE 2. In all cases where the Con- tractor has not previously made such pay- ments, the Contractor shall, within ten (10) days after receipt of the payment provided for hereunder, pay to each of his immediate subcontractors (or to their respective as- signees) the respective amounts to which they are entitled, after deducting, if the Contractor so elects, any amounts then due and payable to the Contractor by such sub- contractors. ARTICLE 3. The Contractor certifies that, with respect to all items of subcontract ter- mination inventory the costs of which were taken into account in arriving at the amount of this settlement, or in the settlement of any subcontract claim included in this set- tlement: (a) all such items are properly allocable to the terminated portion of the contract; (b) such items are not in excess of the reasonable quantitative requirements of the terminated portion of the contract; (c) such items do not include any items reason- ably usable, without loss to the Contractor, on his other work; and (d) the Contractor has informed the Contracting Officer of any substantial change in the status of such items between the dates of his termination inventory schedules and the date of this agreement. 3 $_. ARTICLE 4. Upon execution of this agree- ment the Government agrees to pay to the Contractor or his assignee, upon presentation of proper invoices or vouchers, the sum of $‒‒‒‒‒‒, which sum, [together with the amount of $------ heretofore paid the Con- tractor as partial, progress, or advance pay- ments], constitutes payment in full and complete settlement, except as hereinafter provided in Article 5, of the amount due the Contractor with respect to that portion of his termination claim which is based upon termination of the subcontracts listed here- inabove. [The first sum to be inserted above should be the net amount of this partial settlement, arrived at by deducting from the gross amount of settlements with subject subcontractors as approved by the Contract- ing Officer; the second amount to be in- serted above, which is that portion of par- tial, progress, or advance payments liqui- dated by this agreement.] 3 Insert where appropriate. ARTICLE 5. Notwithstanding any other provision of this agreement, the following rights and liabilities of the parties under the contract are hereby reserved: [Insert here a list of the reserved or ex- cepted rights and liabilities of the Govern- ment and the Contractor (see § 1-8.209–2). Reference is made to instructions set forth in Article 6 of the agreement set forth in § 1-8.806-1 and Article 7 of the agreement set forth in § 1-8.806-2 and to the reserved or excepted rights and liabilities set forth in those articles, which may be used as ap- propriately modified to meet the require- ments of any given settlement hereunder.] In Witness Whereof, etc. § 1-8.806-4 Settlement agreement for use in settling cost-reimbursement type prime contracts after complete termination where settlement in- cludes costs. THIS SUPPLEMENTAL AGREEMENT OF SETTLE- MENT, entered into this day of 19 between the UNITED STATES OF 19-- AMERICA (hereinafter called "the Govern- ment") represented by the Contracting Officer executing this contract, and (a) A corporation organized and existing under the laws of the State of (b) A partnership consisting of (c) An individual doing business as --; (hereinafter called "the Contractor”). WITNESSETH THAT: WHEREAS, the Contractor and the Govern- ment have entered into Contract No. under date of 19__ which, to- all amendments, and supplements gether with any and changes, modifications, thereto, is hereinafter referred to as "the contract"; and WHEREAS, the Termination for Default or Convenience of the Government clause of the contract provides that the performance of work under the contract may at the con- venience of the Government be terminated by the Government in whole, or from time to time in part, whenever the Contracting Officer shall determine that such termina- tion is in the best interest of the Govern- ment, and that the Contractor and Contract- ing Officer may agree upon the whole or any part of the amount to be paid to the Con- tractor by reason of such termination; and WHEREAS, by notice of termination dated the Government advised the Contractor of the complete termination of the contract for the convenience of the Government; and FEDERAL PROCUREMENT REGULATIONS 3 898.12 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8, 8 FORMATS OF NOTICES, FORMS, WARRANTIES, AND AGREEMENTS 1-8.806-4 ୮ ட L WHEREAS, as used herein, the following terms shall have the meanings hereinafter set forth: (a) The term "termination inventory" means any items of physical property pur- chased, supplied, manufactured, furnished, or otherwise acquired for performance of the contract and properly allocable to the termi- nated portion of the contract. The term does not include any facilities, material, pro- duction or other equipment, or special tool- ing, which are subject to a separate contract or a special contract provision governing the use or disposition thereof. Termination inventory may include contractor-acquired property and 'Government-furnished prop- erty as defined below. (1) "Contractor-acquired property" means property procured or otherwise pro- vided by the Contractor for the performance of a contract, whether or not the Govern- ment has title by the terms of the contract or exercises its contractual right to take title. (2) "Government-furnished property" means property in the possession of or acquired directly by the Government, and subsequently delivered or otherwise made available to the Contractor. (b) The term "subcontract" means any contract, as defined in § 1-1.208 of the Fed- eral Procurement Regulations (41 CFR 1-1.208), other than a prime contract, en- tered into by a prime contractor or a sub- contractor, calling for supplies or services required for the performance of any one or more prime contracts. (c) The term "scrap" means property which has no reasonable prospect of being sold except for the recovery value of its basic material content. NOW THEREFORE, the parties hereto do mutually agree as follows: ARTICLE 1. The Contractor certifies that all contract termination inventory (includ- ing scrap) has been retained or otherwise acquired by him, sold to third parties, re- turned to suppliers, stored for the Govern- ment, delivered to the Government, or other- wise properly accounted for, and all proceeds or retention prices thereof, if any, have been taken into account in arriving at this agree- ment. ARTICLE 2. (a) The Contractor certifies that, prior to the execution of this agree- ment, each of the Contractor's immediate subcontractors whose claim is included in the claim settled by this agreement has fur- nished to the Contractor a certificate stating (1) that all of his subcontract termination inventory (including scrap) has been re- tained or otherwise acquired by him, sold to third parties, returned to suppliers, stored for the Government, delivered to the Gov- ernment, or otherwise properly accounted for, and all proceeds or retention prices thereof, if any, were taken into account in arriving at the settlement of the subcontract or sub- contracts, and (2) that the subcontractor has received from each of the immediate sub- contractors whose claim was included in his claim a substantially similar certificate. (b) The Contractor hereby transfers and conveys to the Government all the right, title, and interest, if any, which the Contrac- tor has received, or is entitled to receive, in and to subcontract termination inven- tory, if any, not otherwise properly ac- counted for, and hereby assigns to the Gov- ernment any and all of his rights relating thereto. ARTICLE 3. The Contractor certifies that, with respect to all items of termination in- ventory the costs of which were taken into account in arriving at the amount of this settlement, or in the settlement of any sub- contract claim included in this settlement: (a) all such items are properly allocable to the terminated portion of the contract; (b) such items are not in excess of the reasonable quantitative requirements of the terminated portion of the contract; (c) such items do not include any items reasonably usable, without loss to the Contractor, on his other work; and (d) the Contractor has informed the Contracting Officer of any substantial change in the status of such items between the dates of his termination inventory sched- ules and the date of this agreement. ARTICLE 4. In all cases where the Contrac- tor has not previously made such payments, the Contractor shall, within ten (10) days after receipt of the payment provided for hereunder, pay to each of his immediate subcontractors (or to their respective as- signees) the respective amounts to which they are entitled, after deducting, if the Contractor so elects, any amounts then due and payable to the Contractor by such sub- contractors. ARTICLE 5. (a) The Contractor has received the sum of $------ on account of work and services performed, or articles delivered, un- der the contract prior to the effective date of termination. The Government as part of this negotiated settlement hereby confirms FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 29, NOVEMBER 1962) 898.13 PART 1-8 TERMINATION OF CONTRACTS L 1-8.806– 4 and acknowledges the right of the Contractor, subject to the provisions of Article 6 hereof, to retain such sum heretofore paid and agrees that such sum constitutes a portion of the total amount to which the Contractor is entitled in complete and final settlement of the contract. (b) In addition, upon execution of this agreement the Government agrees to pay to the Contractor or his assignee, upon pres- entation of proper invoices or vouchers, the sum of $------ [insert net amount of set- tlement], arrived at by deducing from the sum of $- [insert gross amount of set- tlement less amount set forth in Article 5(a) above], (1) the amount of $-- representing all unliquidated partial or prog- ress payments previously made on account to the Contractor or his assignee and all un- liquidated advance payments (with interest, if any, thereon) and (2) the amount of $___ representing all applicable property disposal credits [and (3) the amount of $------ representing all other amounts due the Government under this contract except as hereinafter provided in Article 6].4 Said sum of $____ [insert net amount of set- tlement], together with all other sums here- tofore paid, constitutes payment in full and complete settlement of the amount due the Contractor by reason of the complete termi- nation of work under the contract and of all other claims and liabilities of the Con- tractor and the Government under the con- tract, except as hereinafter provided in Arti- cle 6. ARTICLE 6. Notwithstanding any other pro- vision of this agreement the following rights and liabilities of the parties under the con- tract are hereby reserved: ex- [The following list of reserved or cepted rights and liabilities is intended to cover those which should most frequently be reserved, and which should in any event be scrutinized at the time a settlement agree- ment is signed (see § 1-8.209-2). The sug- gested language of the enumerated excepted items on the list may be varied in the dis- cretion of the Contracting Officer to cover more accurately the exceptions needed in a particular case. Where greater accuracy or completeness may be achieved by a reference to the number of the contract clause or pro- vision covering the matter in question, this method of enumerating reserved rights and liabilities may be followed. Omit any of the 4 To be inserted where appropriate. following rights which are not applicable and add any additional exceptions or reser- vations required.] (a) Claims by the Contractor against the Government for items of cost which are the subject of General Accounting Office excep- tions (or other items of cost of the same nature), which are excluded from the set- tlement without prejudice to the rights of either party, as follows: [Insert the amounts and describe the claims not waived by Con- tractor.] (b) Claims by the Contractor against the Government, as to which his right of reim- bursement is disputed, which are excluded without prejudice to the rights of either party as follows: [Insert the amounts and describe the claims with respect to which findings have been made by the Contracting Officer disallowing the item and with respect to which the contractor has taken, or in- tends to take, timely appeal.] (c) Claims by the Contractor against the Government which are unknown in amount and which involve costs claimed to be re- imbursable under the contract, as follows: [Insert the estimated amounts and describe the claims.] (d) Claims by the Contractor against the Government whose existence is unknown, based upon responsibility of the Contractor to third parties and which involve costs re- imbursable under the contract. (e) Claims by the Government against the Contractor which are based upon refunds, rebates, credits, or other accounts not now known to the Government, together with interest thereon, now due or which may be- come due the Contractor from third parties to the extent that such amounts arise out of transactions for which reimbursement has been made to the Contractor under the con- tract. Any such amounts which may here- after become due to the Contractor from any third party or other source shall be paid to the Government within 30 days after receipt by the Contractor. Interest at 6 percent per annum shall accrue and shall be paid to the Government on any such accounts as remain unpaid after the 30-day period. (f) All rights and liabilities, if any, of the parties under the Renegotiation Act of 19__. [Insert reference to applicable Renegotiation Act.] (g) All rights and liabilities of the parties arising under the contract articles, if any, or otherwise which relate to reproduction rights, patent infringements, inventions, and FEDERAL PROCUREMENT REGULATION'S { 898.14 (FPR CIRC. 29, NOVEMBER 1962) SUBPART 1-8, 8 FORMATS OF NOTICES, FORMS, WARRANTIES, AND AGREEMENTS 1-8.806-5 } L applications for patent and patents, includ- ing rights to assignments, invention reports and licenses, covenants of indemnity against patent risks, and bonds for patent indemnity obligations, together with all rights and lia- bilities under any such bond. (h) All rights and liabilities of the parties under the contract relating to options (ex- cept options to continue or increase the work under the contract), covenants not to compete, and covenants of indemnity. (1) All rights and liabilities of the parties under agreements with respect to the future care and disposition by the Contractor of Government-owned property remaining in his custody. (j) All rights and liabilities of the parties under the contract with respect to any con- tract termination inventory stored for the Government pursuant to Article 1 hereof. (k) All rights and liabilities of the parties under the contract with respect to any and all Government property furnished to or ac- quired by the Contractor for the performance of this contract. (1) All rights and liabilities of the parties arising under the contract, or otherwise, con- cerning defects in, or guarantees or warran- ties relating to, any articles or component parts furnished to the Government by the Contractor pursuant to the contract or this agreement. (m) All rights and liabilities, if any, of the parties under those clauses inserted in the contract because of the requirements of statutes and Executive orders, including, without limitation, any applicable clauses relating to the following topics: labor law, contingent fees, domestic articles, employ- ment of aliens, and "officials not to benefit." [If the contract contains clauses of this character inserted for reasons other than requirements of statutes or Executive orders, the suggested language should be appropri- ately modified.] In Witness Whereof, etc. § 1-8.806-5 Settlement agreement for use in settling cost-reimbursement type prime contracts after complete termination where settlement is limited to fee. -} THIS SUPPLEMENTAL AGREEMENT OF SETTLE- MENT, entered into this day of 19. between the UNITED STATES OF AMERICA (hereinafter called "the Govern- ment") represented by the Contracting Of- ficer executing this contract, and (a) A corporation organized and existing under the laws of the State of (b) A partnership consisting of (c) An individual doing business as -; (hereinafter called "the Contractor"). WITNESSETH THAT: WHEREAS, the Contractor and the Govern- ment have entered into Contract No. under date of 19. which, to- gether with any and all amendments, changes, modifications, and supplements thereto, is hereinafter referred to as "the contract"; and WHEREAS, the Termination for Default or for Convenience of the Government clause of the contract provides that the perform- ance of work under the contract may at the convenience of the Government be termi- nated by the Government in whole, or from time to time in part, whenever the Con- tracting Officer shall determine that such termination is in the best interest of the Government, and that the Contractor and Contracting Officer may agree upon the whole or any part of the amount to be paid to the Contractor by reason of such termi- nation; and WHEREAS, by notice of termination dated the Government advised the Contractor of the complete termination of the contract for the convenience of the Government; and WHEREAS, this settlement agreement is limited to adjustment of the fee. NOW, THEREFORE, the parties hereto do mutually agree as follows: ARTICLE 1. (a) The Contractor has re- ceived the sum of $____ on account of his fee under the contract prior to the effective date of termination. (b) In addition, upon execution of this agreement, the Government agrees to pay to the Contractor or his assignee, upon pres- entation of proper invoices or vouchers, the sum of $------ [insert net amount to be paid on account of fee]. Said sum, together with all other sums heretofore paid on ac- count of fee, constitutes payment in full and complete settlement of the amount due the Contractor on account of his fee under the contract. ARTICLE 2. The Contractor's allowable costs under the contract will be paid in ac- cordance with the applicable provisions of the contract and of Part 1-8 of the Federal Procurement Regulations (41 CFR 1-8). [Insert this Article 2 only if there are costs FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 29, NOVEMBER 1962) 898. 15 PART 1-8 TERMINATION OF CONTRACTS 1-8.806-5 L to be vouchered out (see § 1-8.402(a)) or if there are costs to be covered later by a separate settlement agreement.] ARTICLE 3. Notwithstanding any other provision of this agreement the following rights and liabilities of the parties under the contract are hereby reserved: [The following list of reserved or excepted rights and liabilities is intended to cover those which should most frequently be re- served, and which should in any event be scrutinized at the time a settlement agree- ment is signed (see § 1-8.209-2). The sug- gested langauge of the enumerated excepted items on the list may be varied in the dis- cretion of the Contracting Officer to cover more accurately the exceptions needed in a particular case. Where greater accuracy or completeness may be achieved by a reference to the number of the contract clause or pro- vision covering the matter in question, this method of enumerating reserved rights and liabilities may be followed. Omit any of the following which are not applicable and add any additional exceptions or reservations required.] (a) All rights and liabilities, if any, of the parties under the Renegotiation Act of 19 [insert reference to applicable Renego- tiation Act]. (b) All rights and liabilities of the parties arising under the contract articles, if any, or otherwise which relate to reproduction rights, patent infringement, inventions, and applications for patent and patents, includ- ing rights to assignments, invention reports and licenses, covenants of indemnity against patent risks, and bonds for patent indemnity obligations, together with all rights and liabilities under any such bond. (c) All rights and liabilities of the parties under the contract relating to options (ex- cept options to continue or increase the work under the contract), covenants not to com- pete, and covenants of indemnity. (d) All rights and liabilities of the parties under agreements with respect to the future care and disposition by the Contractor of Government-owned property remaining in his custody. (e) All rights and liabilities of the parties under the contract with respect to any and all Government property furnished to or ac- quired by the Contractor for the performance of this contract. (f) All rights and liabilities of the parties arising under the contract, or otherwise, con- cerning defects in, or guarantees or war- ranties relating to, any articles or component parts furnished to the Government by the Contractor pursuant to the contract or this agreement. (g) All rights and liabilities, if any, of the parties under those clauses inserted in the contract because of the requirements of statutes and Executive orders, including, without limitation, any applicable clauses relating to the following topics: labor law, contingent fees, domestic articles, employ- ment of aliens, and "officials not to benefit." [If the contract contains clauses of this char- acter inserted for reasons other than require- ments of statutes or Executive orders, the suggested language should be appropriately modified.] In Witness Whereof, etc. § 1-8.806-6 No-cost settlement agree- ment-partial termination. THIS SUPPLEMENTAL AGREEMENT OF SETTLE- MENT, entered into this day of 19, between the UNITED STATES OF AMERICA (hereinafter called "the Govern- ment"), represented by the Contracting Of- ficer executing this contract, and (a) A corporation organized and existing under the laws of the State of (b) A partnership consisting of (c) An individual doing business as (hereinafter called "the Contractor”). WITNESSETH THAT: WHEREAS, the Contractor and the Govern- ment have entered into Contract No. under date of all 19__ which, to- amendments, and supplements gether with any and changes, modifications, thereto, is hereinafter referred to as "the contract"; and WHEREAS, the contract provides that the performance of work thereunder may at the convenience or option of the Government be terminated by the Government in whole, or from time to time in part, whenever any such termination is determined to be for the best interest of the Government, and that the Contractor and Contracting Officer may agree upon the whole or any part of the. amount or amounts to be paid to the Con- tractor by reason of such termination; and WHEREAS, by notice of termination dated 19, the Government advised the Contractor of the partial termination of the contract for the convenience or at the option of the Government as of the date and to the extent provided in such notice, to , FEDERAL PROCUREMENT REGULATIONS { 898.16 (fpr Circ. 29, NOVEMBER 1962) SUBPART 1-8, 8 FORMATS OF NOTICES, FORMS, WARRANTIES, AND AGREEMENTS 1-8.806-7 which reference is hereby made as to the part terminated, and said part is herein- after referred to as "the terminated portion of the contract"; and WHEREAS, the Contractor is willing to waive unconditionally any claim against the Gov- ernment by reason of such termination. Now, THEREFORE, the parties hereto agree as follows: ARTICLE 1. The terminated portion of the contract is designated as follows: (Specify the terminated portion clearly as to items including (a) item numbers, (b) descrip- tions, (c) quantity terminated, (d) unit price of items, (e) total price of terminated items, and (f) any other explanation neces- sary to avoid uncertainty or misunderstand- ing.) ARTICLE 2. The Contractor hereby un- conditionally waives any claim against the Government arising under the terminated portion of the contract or by reason of its termination including, without limitation, all obligation of the Government to make further payments or to carry out other un- dertakings in connection with said termi- nated portion, and the Government acknowl- edges that the Contractor has no obligation to perform further work or services or to make further deliveries of articles or mate- rials under the terminated portion of the contract: Provided, however, That nothing herein contained shall impair or affect in any way any other covenants, terms or con- ditions of the contract: And provided fur- ther, That, with respect to the terminated portion of the contract, the following rights and liabilities of the parties are reserved: [List reserved or excepted rights and lia- bilities; see § 1-8.209-2 and Article 7 of the agreements set forth in § 1-8.806-2.] In Witness Whereof, etc. § 1-8.806-7 No-cost No-cost settlement agree- ment-complete termination. - THIS SUPPLEMENTAL AGREEMENT OF SETTLE- MENT, entered into this day of 19__ between the UNITED STATES OF AMERICA (hereinafter called "the Govern- ment"), represented by the Contracting Offi- cer executing this contract, and (a) A corporation organized and existing under the laws of the State of (b) A partnership consisting of (c) An individual doing business as (hereinafter called "the Contractor"). WITNESSETH THAT: WHEREAS, the Contractor and the Govern- ment have entered into Contract No. under date of 19. which, to- all amendments, and supplements gether with any and changes, modifications, thereto, is hereinafter referred to as "the contract"; and WHEREAS, the contract provides that the performance of work thereunder may at the convenience or option of the Government be terminated by the Government in whole, or from time to time in part, whenever any such termination is determined to be for the best interest of the Government, and that the Contractor and Contracting Officer may agree upon the whole or any part of the amount or amounts to be paid to the Contractor by reason of such termination; and WHEREAS, by notice of termination dated 19, the Government advised the Contractor of the termination of the contract for the convenience or at the option of the Government; and WHEREAS, the Contractor is willing to waive unconditionally any claim against the Gov- ernment by reason of such termination. NOW, THEREFORE, the parties hereto agree as follows: ARTICLE 1. The Contractor hereby uncon- ditionally waives any claim against the Gov- ernment by reason of the termination of the contract and, except as set forth below, re- leases it from any and all obligations arising under the contract or by reason of its ter- mination; and the Government agrees that all obligations arising under the contract or by reason of its termination, shall be deemed to be concluded; except as follows: [List reserved or excepted rights and lia- bilities; see § 1-8.209-2 and Article 6 of the agreement set forth in § 1-8.806-1.] In Witness Whereof, etc. (END OF PART) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 29, NOVEMBER 1962) 898, 17 CONTENTS OF PART 1-10 BONDS AND INSURANCE PART 1-10-BONDS AND INSURANCE Subpart 1-10.1-Bonds Definitions. Sec. 1-10.101 1-10.101-1 Bid guarantee. 1-10.101-2 Reserved]. 1-10.101-3 [Reserved. 1-10.101-4 [Reserved]. 1-10.101-5 [Reserved. Sec. 1-10.101-6 1-10.102 Construction contract. Bid guarantees in construction contracts. Applicability to negotiated pro- curements. 1-10.102-1 1-10.102-2 1-10.102-3 Amount required. 1-10.102-4 Prohibition against use. Invitation for bids provisions. 1-10.102-5 Failure to submit proper bid guarantee. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 11, AUGUST 1960) i : SUBPART 1-10. 1 BONDS Subpart 1-10.1-Bonds § 1-10.101 Definitions. As used in this subpart, the following terms have the meanings set forth in this § 1-10.101. § 1-10.101-1 Bid guarantee. “Bid guarantee" means a form of security accompanying a bid as assurance that the bidder: (a) Will not withdraw his bid within the period specified therein for accept- ance; and (b) Will execute a written contract and furnish such bonds as may be re- quired within the period specified in the bid (unless a longer period is allowed) after receipt of the prescribed forms. § 1-10.101-2 through 1-10.101-5 [Re- served] § 1-10.101-6 Construction contract. "Construction contract" means any contract for the construction, alteration, of repair of any public building or public work of the United States. § 1-10.102 Bid guarantees in construc- tion contracts. § 1-10.102-1 Applicability to negoti- ated procurement. This § 1-10.102 is applicable both to negotiated and formally advertised pro- curements. In its application to nego- tiated procurements, the terms "bid" and “invitation for bids" used in this subpart shall be construed to include their coun- terparts, i.e., "proposal" and "request for proposals," and the substitution of the latter terms whenever appropriate is authorized. § 1-10.102-2 Prohibition against use. Bid guarantees shall not be required in connection with construction contracts unless the invitation for bids specifies that the contract must be supported by a performance bond or by performance and payment bonds. In no event shall a bid not in excess of $2,000 be required to be supported by a bid guarantee (see § 1-10.102-4(a) (1)). 1-10.102-4 (a) (2) § 1-10.102-3 Amount required. (a) Whenever a bid guarantee is deemed necessary, the contracting officer shall determine the percentage (or amount) which in his best judgment, when applied to the bid price, will pro- duce a bid guarantee amount adequate to protect the Government from loss should the successful bidder fail to furnish the required performance bond or performance and payment bonds. The percentage determined shall be not less than 20 percent of the bid price except that the maximum amount re- quired shall be $3,000,000. (b) The penal sum of a bid bond may be expressed as a specified percentage of the bid price. In this fashion, the bid bond may be written by the surety be- fore the bidder's final determination of his bid price. § 1-10.102-4 Invitation for bids provi- sions. (a) Where a bid guarantee is deter- mined to be necessary, the invitation for bids shall contain: (1) A statement requiring that a bid guarantee be submitted with any bid in excess of $2,000 and containing such de- tails as are necessary to enable bidders to determine the proper amount of bid guarantee to be submitted; and (2) The following provision: BID GUARANTEE Failure to furnish a required bid guarantee in the proper amount, by the time set for opening of bids, may be cause for rejection. of the bid. A bid guarantee shall be in the form of a firm commitment, such as a bid bond, postal money order, certified check, cashier's check, irrevocable letter of credit or, in ac- cordance with Treasury Department regu- lations, bonds or notes of the United States. Bid guarantees, other than bid bonds, will be returned (a) to unsuccessful bidders as soon as practicable after the opening of bids, and (b) to the successful bidder upon exe- cution of such further contractual docu- ments and bonds as may be required by the bid as accepted. If the successful bidder withdraws his bid within the period specified therein for ac- ceptance (60 days if no period is specified) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 15, APRIL 1961) 1001 PART 1-10 BONDS AND INSURANCE I~10.102~4 (a) (2) or, upon acceptance thereof by the Govern- ment, fails to enter into the contract and give bonds within the time specified (10 days if no period is specified) after the forms are presented to him, he shall be liable for any difference by which the cost of procuring the work exceeds the amount of his bid, and the bid guarantee shall be available toward off- setting such difference. (b) The provision set forth in § 1-10.102-4(a) (2) is, made a part of Standard Form 22, Instructions to Bid- ders (Construction Contract), and the requirement of that section is met when Standard Form 22 is furnished to bid- ders. § 1-10.102-5 Failure to submit proper bid guarantee. Where an invitation for bids requires that bids be supported by a bid guaran- tee, noncompliance with such require- ment will require rejection of the bid. However, pursuant to the bid guarantee provision of the invitation for bids (see § 1-10.102-4(a) (2)), rejection of the bid is not required in these situations: (a) Where only a single bid is re- ceived. In such cases the Government may or may not require the furnishing of the bid guarantee before award. (b) Where the amount of the bid guarantee submitted, though less than the amount required by the invitation for bids, is equal to or greater than the dif- ference between the price stated in the bid and the price stated in the next higher acceptable bid. (c) Where the bid guarantee is re- ceived late and the late receipt may be waived under the rules established in § 1-2.303 for consideration of late bids. (d) Where an otherwise adequate bid guarantee becomes inadequate as a re- sult of the correction of a mistake in bid under § 1-2.406, if the bidder will in- crease the amount of the bid guarantee in proportion to the authorized bid cor- rection. (END OF PART) FEDERAL PROCUREMENT REGULATIONS 1002 (FPR CIRC, 15, APRIL 1961) CONTENTS OF PART 1-11 FEDERAL, STATE, AND LOCAL TAXES PART 1-11-FEDERAL, STATE, AND Sec. 1-11.000 LOCAL TAXES Scope of part. Subpart 1-11.1-Federal Excise Taxes Scope of subpart. Retailers' excise taxes. Jewelry and related items. Toilet preparations. Luggage and handbags. 1-11.100 1-11.101 1-11.101-1 1-11.101-2 Furs. 1-11.101-3 1-11.101-4 1-11.101-5 Special fuels. 1-11.102 1-11.102-1 1-11.102-2 Tires and tubes. 1-11.102-3 1-11.102-4 1-11.102-5 1-11.102-6 Manufacturers' excise taxes. Motor vehicles. 1-11.102-7 1-11.102-8 1-11.102-9 1-11.102-10 Gasoline. Lubricating oils. Refrigeration equipment. Electric, gas, and oil appliances. Electric light bulbs. Radio and television receiving sets, phonographs and rec- ords, and musical instru- ments. Sporting goods. Photographic equipment. 1-11.102-11 Firearms, shells, and cartridges. 1-11.102-12 Business machines. 1-11.102-13 Pens, mechanical pencils, and 1-11.102-14 1-11.103 1-11.103-1 1-11.103-2 1-11.104 1-11.105 lighters. Matches. Excise taxes on facilities and services. Communications. Transportation of persons. Use tax on highway motor ve- hicles. Selective list of supplies and services subject to Federal excise taxes. Subpart 1-11.2—Exemptions from Federal Excise Taxes 1-11.200 1-11.201 Scope of subpart. 1-11.201-1 1-11.201-2 1-11.202 Supplies for exportation or shipment to a possession or to Puerto Rico. Retailers' excise taxes. Manufacturers' excise taxes. Supplies and services for the exclusive use of the United States. 1-11.203 Supplies sold for further manu- facture. 1-11.204 Supplies for vessels and air- planes. 1-11.205 1-11.206 Exemptions from other Federal taxes. Tax exemption forms. Subpart 1-11.3-State and Local Taxes 1-11.301 1-11.302 Applicability. Tax exemption forms. Subpart 1-11.4—Contract Clause 1-11.401 1-11.401-1 Fixed-price type contracts. Clause for advertised and cer- tain negotiated contracts. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 1, MAR, 1959) i opad : SUBPART 1-11.1 FEDERAL EXCISE TAXES 1-11.000 Scope of part. (a) This part deals with Federal taxes imposed by the Internal Revenue Code upon certain supplies and services pro- cured by executive agencies; exemptions from such Federal taxes; policy for ob- taining exemption from State and local taxes; and a contract clause required or authorized for insertion in contracts. (b) Except as otherwise indicated, references are to the Internal Revenue Code of 1954 (26 U.S.C.). References to the Internal Revenue Code of 1939 are for convenience in disposing of cases to which the Internal Revenue Code of 1954 is not applicable. Subpart 1-11.1-Federal Excise Taxes 1-11.100 Scope of subpart. This subpart deals with Federal excise taxes (retailers' excises, manufacturers' excises, and the excises on facilities and services) imposed by the Internal Rev- enue Code upon certain supplies and services procured by executive agencies. Each tax is outlined as to (a) its scope and the basis of its applicability, (b) the supplies or services subject to it, and (c) its rate. Section 1-11.105 contains a se- lective list of the supplies and services subject to these Federal excise taxes, with references to applicable sections of the Internal Revenue Code of 1954, Treasury Regulations, and cross-refer- ences to the Internal Revenue Code of 1939. The availability of exemptions from these taxes is covered in Subpart 1-11.2. Attention is directed to the fact that the scope and rates of these taxes, as set forth in this Subpart 1-11.1, are subject to change from time to time by amendment to the Internal Revenue Code and Treasury Regulations. 1-11.101 Retailers' excise taxes. Chapter 31 of the Internal Revenue Code (which supersedes Chs. 9A, 19 and 20, I.R.C. 1939), as implemented by Treasury Regulations 51 and 119, im- poses retailers' excise taxes upon various types of supplies, enumerated in sections 1-11.101-1 through 1-11.101-5, sold at retail. The tax is not imposed on sales for resale. The sale of taxable supplies to the Government for use or consump- tion is a taxable retail sale. In general, the tax attaches at the time title passes from the seller and is based on the sale price. A lease of supplies is treated as a sale for the purpose of these taxes, in which event the tax is measured by the rental payments. The sale (or rental) price: (a) Excludes the retailers' excise tax itself, whether or not separately stated; 1-11,101-1 (b) Excludes, if separately stated, any retail sales tax imposed by any State, Territory, or political subdivision there- of, or the District of Columbia, irrespec- tive of whether liability for such tax is imposed on the vendor or vendee; (c) Includes any charges for packag- ing or packaging materials; and (d) Excludes all other service charges such as for transportation, delivery, in- surance, and installation. If after the tax has been paid, the sale price is adjusted for any reason, such as by discount, rebate, allowance, or return of containers, the amount of the tax ap- plicable to such sale price also shall be adjusted by credit or refund. The re- tailer, in turn, is entitled to a refund or credit from the Internal Revenue Service for such tax adjustment. 1-11.101-1 Jewelry and related items. A tax of 10 percent of the sale price is imposed upon the following supplies sold at retail: all articles commonly or commercially known as jewelry, whether real or imitation; pearls, precious and semiprecious stones, and imitations thereof; articles made of, ornamented, mounted, or fitted with precious metals or imitations thereof; watches, clocks, cases and movements for watches and clocks, which includes all time measuring devices except watches designed espe- cially for use by the blind; gold, gold- plated, silver, or sterling flatware or hollow ware and silver-plated hollow ware (which excludes silver-plated flatware); opera glasses; lorgnettes; and marine glasses, field glasses, binoculars and similar instruments, except those which, because of their size or weight, are ordinarily mounted on tripods or other bases. The tax does not apply to any articles used for religious purposes; to surgical and dental instruments; to frames or mountings for eyeglasses; to fountain pens, mechanical pencils, or smokers' pipes if the only parts of such articles which consist of precious metals are essential parts not used for orna- mentation; or to buttons, insignia, and any other devices prescribed for use with the uniforms of the Armed Forces. If the manufacturers' excise tax has been imposed on a pen, mechanical pencil, or cigarette lighter, which is further pro- cessed so as to make it subject to the retailers' excise tax on jewelry, the retailer, in computing the retailers' ex- cise tax due on the sale, is entitled to a credit or refund in the amount of the manufacturers' excise tax paid on the article. FEDERAL PROCUREMENT REGULATIONS 1101 (FPR CIRC, 1, Mar, 1959) PART 1-11 FEDERAL, STATE, AND LOCAL TAXES 1-11.101–2 1-11.101-2 Furs. A tax of 10 percent of the sales price is imposed upon the following supplies sold at retail: articles made of fur on the hide or pelt, and articles of which such fur is the component of chief value—that is, its value is more than three times that of the next most valu- able component. The tax is not imposed upon the sale of raw fur. If fur on the hide or pelt is supplied to a dresser or dyer of fur skins or a manufacturer or repairer of fur articles, who produces a taxable article for the use of the supplier of the fur, the transaction is deemed to be a sale at retail and is subject to the tax. 1-11.101-3 Toilet preparations. A tax of 10 percent of a sales price is imposed upon the following supplies sold at retail: perfume, essences, extracts, toilet waters, cosmetics, petroleum jellies, hair oils, pomades, hair dressings, hair restoratives, hair dyes, aromatic cachous, toilet powders, and any other similar sub- stance, article, or preparation by whatso- ever name known which are used or ap- plied, or intended to be used or applied for toilet purposes, but not including any article intended to be used or applied only in the care of babies. 1-11.101-4 Luggage and handbags. A tax of 10 percent of the sales price is imposed upon the following supplies (in- cluding fittings or accessories sold there- with) sold at retail: trunks; valises, traveling bags; suitcases; satchels; over- night bags; hat boxes for use by travel- ers; beach and bathing suit bags; brief cases made of leather or imitation leather; salesmen's sample and display cases; purses; handbags; pocketbooks; wallets; billfolds; card, pass, and key cases; toilet cases; and any other cases, bags, and kits, without regard to size, shape, construction, or material, for use in carrying toilet articles or wearing apparel. 1-11.101-5 Special fuels. (a) Diesel fuel. A tax at the indicated rates is imposed upon diesel fuel, other than that taxable as gasoline under sec- tion 4081 of the Internal Revenue Code (see section 1-11.102-3), which is (1) sold by any person to an owner, lessee, or other operator of a diesel-powered high- way vehicle, for use as a fuel in such vehicle; or (2) used by any person as a fuel in a diesel-powered highway vehicle unless there was a taxable sale of such liquid pursuant to (1), as follows: (i) At 3 cents per gallon, if sold for use or if used as fuel in a diesel- powered highway vehicle- 1102 (A) Which, at the time of such sale or use, is registered, or is required to be registered, for highway use under the laws of any State or foreign country; or (B) Which, if owned by the United States, is used on the highway; or (ii) At 2 cents per gallon, if sold for use or if used as fuel in a diesel- powered highway vehicle- (A) Which, at the time of such sale or use, is not registered, and is not required to be registered, for highway use under the laws of any State or for- eign country; or (B) Which, if owned by the United States, is not used on the high- way; and (iii) At an additional 1 cent per gallon, if fuel on which a tax of 2 cents was paid pursuant to (a) (ii), is used as fuel in a diesel-powered highway ve- hicle- (A) Which, at the time of such use, is registered, or is required to be registered, for highway use under the laws of any State or foreign country; or (B) Which, if owned by the United States, is used on the highway. No tax is imposed on diesel fuel sold for use or used as fuel in a nonhighway vehicle, such as certain military vehicles, construction equipment, and equipment designed for use at mines, factories, rail- road stations, and farms. (b) Special motor fuels. A tax at the indicated rates is imposed upon benzol, benzene, naphtha, liquefied petroleum gas, or any other liquid (other than kerosene, gas oil, fuel oil, or a product taxable as diesel fuel under (a) above, or as gasoline under section 4081 of the Internal Revenue Code (see section 1-11.102-3), which is (1) sold by any person to an owner, lessee, or other oper- ator of a motor vehicle, motorboat, or airplane for use as a fuel for the propul- sion thereof, or (2) used by any person as a fuel for the propulsion of a motor vehicle, motorboat, or airplane, unless there was a taxable sale of such liquid pursuant to (1) as follows: (i) At 3 cents per gallon, if such liquid is sold for use or is used as a fuel for a highway vehicle- (A) Which, at the time of such sale or use, is registered, or is required to be registered, for highway use under the laws of any State or foreign country; or (B) Which, if owned by the United States, is used on the highway; or (ii) At 2 cents per gallon, if such liquid is sold for use or is used as a fuel FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 1, MAR. 1959) SUBPART 1-11.1 FEDERAL EXCISE TAXES for the propulsion of a motorboat or air- plane, or a motor vehicle— (A) Which, at the time of such sale or use, is not registered, and is not required to be registered, for highway use under the laws of any State or foreign country; or (B) Which, if owned by the United States, is not used on the high- way; and (iii) At an additional 1 cent per gallon, if a liquid on which a tax of 2 cents was paid pursuant to (b) (ii), is used as fuel in a highway vehicle— (A) Which, at the time of such use, is registered, or required to be registered, for highway use under the laws of any State or foreign country; or (B) Which, if owned by the United States is used on the highway. (c) Refund or credit to retailer. A retailer, who has paid a tax on diesel fuel or special motor fuel, is entitled to a refund or credit of the tax paid, if such retailer has not included the tax in the sales price or otherwise collected the tax from the purchaser, has repaid the tax to the purchaser, or has the purchaser's written consent to take the refund or credit, as follows: (1) A refund or credit of 3 cents or 2 cents per gallon, as appropriate, if a liquid upon which a tax of either 3 cents or 2 cents per gallon has been paid, is not used as fuel in a diesel-powered highway vehicle or to propel a motor vehicle, motorboat, or airplane; (2) A refund or credit of 1 cent per gallon, if diesel fuel, upon which a tax of 3 cents per gallon has been paid pur- suant to (a) (i), is used as a fuel for a diesel-powered highway vehicle (i) Which, at the time of such use is not registered, and is not required to be registered, for highway use under the laws of any State or foreign country; or (ii) Which, if owned by the United States, is not used on the high- way; or (3) A refund of 1 cent per gallon, if special motor fuel, upon which a tax of 3 cents per gallon has been paid pursuant to (b) (1), is used to propel a motorboat or airplane, or motor vehicle- (i) Which, at the time of such use is not registered, and is not required to be registered, for highway use under the laws of any State or foreign country; or (ii) Which, if owned owned by the United States, is not used on the high- way. These refunds or credits shall be utilized, in accordance with agency procedures, by adjustment of the contract price 1-11,102–1 (a) (1) whenever it is economically advanta- geous to do so. (d) Refund or credit to manufacturer. If the manufacturers' excise tax on gaso- line (see section 1-11.102-3) has been paid on any material used in the produc- tion of a special motor fuel taxable under (b) above, the manufacturer of the gaso- line is entitled to a refund or credit of such tax, subject to the conditions simi- lar to those stated in the opening lines of (c) above. The contract price for special motor fuels purchased by any agency shall not include an amount for manufacturers' excise tax on gasoline used in the production of such special motor fuel. 1-11.102 Manufacturers' excise taxes. Chapter 32 of the Internal Revenue Code (which supersedes Ch. 29, I.R.C. 1939) as implemented by Treasury Regu- lations 44 and 46, imposes manufacturers' excise taxes upon various types of sup- plies, enumerated in sections 1-11.102-1 through 1-11.102-14 sold by a manufac- turer, producer, or importer. In general, the tax attaches at the time title passes from the manufacturer and is based on the sale price. A lease of supplies is treated as a sale for the purpose of these taxes, in which event the tax is measured by the rental payments even though such payments exceed the price or fair value of the supply (with the exception of a special rule which applies to the rental of trailers suitable for use with passenger automobiles, permitted by section 4216 (d), I.R.C.). The sale (or rental) price excludes the tax itself and all service charges connected with the sale, such as transportation, delivery, insurance, or installation charges, except charges for packaging and packaging materials, which are included. If after the tax has been paid, the sale price is adjusted for any reason, such as by discount, rebate, allowance, or return of containers, the amount of the tax applicable to such sale price also should be adjusted. The manufacturer, in turn, is entitled to a refund or credit from the Internal Reve- nue Service for such tax adjustment. Supplies subject to the retailers' excise tax on jewelry (see section 1-11.101-1) are not subject to manufacturers' excise taxes. 1-11.102-1 Motor vehicles. (a) A tax at the indicated rates is im- posed upon the following supplies (in- cluding parts and accessories sold there- with) sold by a manufacturer, producer, or importer: (1) Chassis and bodies of trucks, buses, truck and bus trailers and semi- trailers, and tractors of the kind chiefly FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 1, MAR. 1959) 1103 PART 1-11 FEDERAL, STATE, AND LOCAL TAXES 1−11.102–1 (a) (1) used for highway transportation in com- bination with a trailer or semitrailer- 10 percent; except that this tax does not apply to equipment designed for off-the- road use, such as certain military vehi- cles, construction equipment, and equip- ment designed for use at mines, factories, railroad stations, and farms; (2) Chassis and bodies of automo- biles, and trailers and semitrailers (other than house trailers) suitable for use with passenger automobile s-10 percent through June 30, 1958, and 7 percent thereafter; and (3) Parts or accessories-8 percent through June 30, 1958, and 5 percent thereafter. Parts or accessories are de- fined to include any article- (i) The primary use of which is to improve, repair, replace, or serve as a component part of a motor vehicle; (ii) Designed to be attached to or used in connection with a motor vehicle or to add to its utility or ornamentation; or (iii) The primary use of which is in connection with a motor vehicle whether or not essential to its operation or use. Spark plugs, storage batteries, leaf springs, coils, timers, and tire chains, which are suitable for use on or in con- nection with, or as component parts of, a taxable motor vehicle are treated as parts or accessories whether or not pri- marily adapted for such use. The tax on parts or accessories does not apply to any article sold for use (or for a single resale for use) as material in the manufacture of, or as a component part of, any ar- ticle, whether or not such article is sub- ject to a manufacturers' excise tax. If, after August 31, 1955, a manufacturer uses a tax-paid part or accessory as ma- terial in the manufacture of, or as a component part of, any article, such manufacturer is entitled to a credit or refund of the tax paid on the part or accessory. The contract price of supplies purchased by any agency shall not in- clude an amount for the manufacturers' excise tax on automotive parts or acces- sories purchased for use, or after August 31, 1955 used, in the manufacture of any article. (b) The tax on automotive parts or accessories does not apply to tires, inner tubes, and automobile radio and televi- sion receivers. If a manufacturer of motor vehicles sells these articles in con- nection with the sale of a taxable motor vehicle, he may take a credit against the motor vehicle tax in the amount of the motor vehicle tax rate applied to his pur- chase price of the tires, inner tubes, and automobile radio and television receiv- ers. The contract price for supplies pur- chased by any agency shall not include an amount for the manufacturers' excise tax on motor vehicles and automotive parts or accessories to the extent that these credits are available to the manu- facturer. 1-11.102-2 Tires and tubes. (a) A tax at the indicated rates is im- posed on the following supplies, made wholly or in part of rubber, including synthetic and substitute rubber, sold by a manufacturer, producer, or importer: (1) Tires of the type used on high- way vehicles, which includes motor ve- hicles which are highway vehicles, and vehicles of the type used with motor ve- hicles which are highway vehicles-8 cents per pound; (2) Other tires, which include pneu- matic and solid tires, casings, hoops, strips, and bands of all kinds which are designed to fit the wheel of any type of vehicle, that is capable of transporting a person or burden-5 cents per pound; (3) Inner tubes, which include any type of air container for pneumatic tires-9 cents per pound on total weight, including air valves and stems; and (4) Tread rubber, which includes any material commonly or commercially known as tread rubber or camelback of a type used in retreading or recapping tires-3 cents per pound. An exemption exists for the sale of tread rubber or camelback by a manufacturer to a pur- chaser for use by that purchaser other than for recapping or retreading tires of the type used on highway vehicles. In addition, if tread rubber, upon which the tax has been paid, is sold for use or is used other than for recapping or retread- ing tires of the type used on highway vehicles, the manufacturer is entitled to a refund or credit of the tax, provided that the credit under paragraph (b) of this section 1-11.102-2 is not available. The contract price for supplies pur- chased by any agency will not include an amount for the manufacturers' excise tax on tread rubber to the extent that this exemption or refund or credit is available to the manufacturer. In determining weights of taxable tires under (1) and (2), metal rims or rim bases are excluded, but any other ma- terial or fastening device that forms a part of the tire is included. The tax imposed under (1) and (2) does not apply to tires which are more than 20 inches in diameter and not more than 134 inches in cross-section, if such tires are of all-rubber construction with fabric or metal reinforcement, nor does it apply to tires of extruded tiring with an inter- nal wire fastening agent. FEDERAL PROCUREMENT REGULATIONS 1104 (FPR CIRC. 1, Mar, 1959) SUBPART 1-11, 1 FEDERAL EXCISE TAXES (b) The exemption for sales for further manufacture does not apply to taxable tires and tubes (see section 1- 11.203). However, if tax-paid tires and tubes are sold in connection with the sale by a manufacturer of a taxable motor vehicle, a credit against the tax on the motor vehicle is allowed to the extent of the motor vehicle tax rate applied to the manufacturers' purchase price on the tires and tubes (see section 1-11.102– 1(b)). 1-11.102-3 Gasoline. (a) A tax of 3 cents per gallon is im- posed on gasoline sold by a producer or importer. Gasoline means all products commonly or commercially known as gasoline, including casing-head and nat- ural gasoline, but excluding kerosene, gas oil, or fuel oil, and also excluding any product taxable as a special motor fuel under section 4041 of the Internal Reve- nue Code (see section 1-11.105-5). The tax does not apply to the sale of gasoline to a producer, which is defined to include a refiner, compounder, blender, or dealer who sells gasoline exclusively to pro- ducers of gasoline. (b) The ultimate purchaser of gaso- line is entitled to a refund of 1 cent per gallon for gasoline not used as fuel in a highway vehicle: (1) Which, at the time of such use is registered, or is required to be reg- istered, for highway use under the laws of any State or foreign country; or (2) Which, if owned by the United States, is used on the highway. In accordance with agency procedures, necessary data shall be compiled, to the extent economically advantageous, to support a direct application to the In- ternal Revenue Service for refund. Such application shall be in accord with per- tinent requirements of the Internal Revenue Service. 1-11.102-4 Lubricating oils. (a) A tax at the indicated rates is im- posed upon the following classes of lubricating oils sold, other than to another manufacturer or producer for resale, by a manufacturer or producer (but not upon oil sold by an importer): (1) Cutting oils, which means oils sold for use in cutting and machining operations, including forging, drawings, rolling, shearing, punching, and stamp- ing on metals-3 cents per gallon; and (2) Other lubricating oils, which means all oils, regardless of origin, which are sold as lubricating oil or are suitable for use as a lubricant, not including products commonly known as grease- 6 cents per gallon. Certain products, 1-11.102-5 (a) other than those commonly known as grease, are not considered to be lubricat- ing oils, and accordingly are not subject to the tax. These include petrolatum, and fatty oils of vegetable, animal, fish, and marine origin which in their natural state are not sold as lubricating oils. (b) An exemption is available for lubricating oils sold by a manufacturer directly to a purchaser who uses the oil for nonlubricating purposes. In apply- ing this exemption, oils can be grouped into two classes: (1) Oils which are exempted if the manufacturer obtains an exemption cér- tificate from the purchaser in the form prescribed by the Treasury Regulations; and (2) Oils which are exempted with- out an exemption certificate. Oils of the second class include crude neatsfoot oil; electrical transformer insulating oil; white oil; and lubricating oils which are packaged in sealed containers of one gal- lon or less, labeled and sold for nonlubri- cating purposes. If, With the exception of oils which are packaged in sealed containers of one gal- lon or less, labeled and sold for nonlubri- cating purposes, oils of neither class may be sold tax-free to dealers for resale even though it is known that the oil will be used for nonlubricating purposes. however, oil upon which a tax has been paid is used for nonlubricating purposes, the manufacturer is entitled to a refund or credit, irrespective of whether the oil was sold directly to the consumer by the manufacturer or was sold through a dealer. A refund or credit is also allowed when lubricating oil, upon which the 6 cent per gallon tax has been paid, is used as a cutting oil taxable at 3 cents per gallon. When it is economically advan- tageous to do so, the exemption or refund or credit for oil sold for use or used for nonlubricating purposes, and the refund or credit for lubricating oil used as cut- ting oil, shall be utilized in accordance with agency procedures by a tax exclu- sive purchase or by adjustment of the contract price. 1-11.102-5 Refrigeration equipment. A tax at the indicated rates is imposed upon the following supplies (including parts or accessories sold therewith) sold by a manufacturer, producer, or im- porter: (a) Household type refrigerators, which include units not exceeding 14 cubic feet net storage space for single or multiple cabinet installations having, or designed for use with, a mechanical refrigerating unit operated by electricity, gas, kerosene, or gasoline; household type units for the quick freezing or FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 1, MAR. 1959) 1105 PART 1-11 FEDERAL, STATE, AND LOCAL TAXES 1-11,102-5 (a) frozen storage of foods operated by elec- tricity, gas, kerosene, or gasoline-5 percent; (b) Refrigerator components, which means cabinets, compressors, condensors, condensing units, evaporators, expansion units, absorbers, and controls for, or suitable for use as parts of or with, taxable household type refrigerators or quick freeze units, except when sold as a component part or accessory with the sale of complete refrigerators, refrigerat- ing or cooling apparatus, or quick freeze units-5 percent. Exemption from the tax is available on the sale of a refrigera- tor component for use (or for a single resale for use) as material in the manu- facture of, or as a component part of, any article, whether or not such article is subject to a manufacturers' excise tax. If, after August 31, 1955, a manufacturer uses a tax-paid refrigerator component in the manufacture of, or as a compo- nent part of, any article, such manufac- turer is entitled to a credit or refund of the tax paid on the refrigerator com- ponent. The contract price of supplies purchased by any agency shall not in- clude an amount for the manufacturers' excise tax on refrigerator components purchased for use, or after August 31, 1955 used, in the manufacture of any article; and (c) Self-contained units-10 percent. air-conditioning 1-11.102-6 Electric, gas, and oil ap- pliances. A tax of 5 percent is imposed upon the following household supplies (including parts or accessories sold therewith), whether or not used domestically, sold by a manufacturer, producer, or import- er: electric, gas, or oil water heaters; electric, gas, and oil appliances of the type used for cooking, warming, or keep- ing warm food or beverages for consump- tion on the premises; electric flatirons, air heaters (not including furnaces), im- mersion heaters, blankets, sheets and spreads, mixers, whippers, and juicers, belt-driven fans, exhaust blowers, door chimes, dehumidifiers, dishwashers, floor polishers and waxers, food choppers and grinders, hedge trimmers, ice cream freezers, mangles, pants pressers, and garbage disposal units; electric and gas clothes driers; and power lawn mowers. The tax is also imposed upon electric direct motor driven fans and air circu- lators not of the industrial type. 1-11.102-7 Electric light bulbs. A tax of 10 percent is imposed upon electric light bulbs and tubes, not subject to any other manufacturers' excise tax, sold by a manufacturer, producer, or importer. 1-11.102-8 Radio and television re- ceiving sets, phonographs and rec- ords, and musical instruments. A tax of 10 percent is imposed upon the following supplies (including, except as to musical instruments, parts and ac- cessories sold therewith) sold by a man- ufacturer, producer, or importer: (a) Radio and television receiving sets, automobile radio and television receiving sets, phonographs, and combinations of any of the foregoing, if such articles are of the entertainment type. The contract price of any of these supplies, not of the entertainment type, delivered to any agency after August 31, 1955, shall not include any amount for the manufac- turers' excise tax, irrespective of the date of the contract, if the contract price is subject to adjustment for changes in the contractor's Federal excise tax burden. The exemption of sales for further man- ufacture does not apply to automobile radio and television receivers (see section 1-11.203); however, if tax-paid receivers are sold in connection with the sale by a manufacturer of a taxable motor vehicle, a credit against the tax on the motor vehicle is allowed to the extent of the motor vehicle tax rate applied to the manufacturer's purchase price on the re- ceiver (see section 1-11.102-1(b)); and (b) Radio and television components, which means chassis, cabinets, tubes, speakers, amplifiers, power supply units, antennae of the built-in type, and pho- nograph mechanisms, which are suitable for use on or in connection with, or as a component part of, any taxable radio and television receiver or phonograph; and phonograph records. The tax on radio and television components and phono- graph records applies irrespective of whether or not they are of an entertain- ment type. Exemption from the tax is available as to components— (1) Which, prior to September 1, 1955, were sold for use as material in the manufacture of, or as a component of, an article subject to a manufacturers' excise tax; or (2) Which after August 31, 1955, are sold for use, or are actually used as ma- terial in the manufacture of, or as a com- ponent part of, any article, whether or not such article is subject to a manu- facturers' excise tax. A manufacturer using a tax-paid com- ponent within the scope of any of these exemptions, is entitled to a refund or credit of the tax paid on such component, This includes the use, after August 31, 1955, of a component in the manufac- ture of, or as a component part of, a nontaxable article, even though such component was purchased prior to Sep- tember 1, 1955. The contract price for FEDERAL PROCUREMENT REGULATIONS 1106 (FPR CIRC, 1, MAR, 1959) SUBPART 1-11.1 FEDERAL EXCISE TAXES supplies purchased by any agency shall not include an amount for the manufac- turers' excise tax on radio and television components if any of these exemptions or refunds or credits, are available to the manufacturer. 1-11.102-9 Sporting goods. A tax of 10 percent is imposed upon certain types of sporting equipment (in- cluding parts or accessories sold there- with) sold by a manufacturer, producer, or importer. 1-11.102-10 Photographic ment. equip- A tax at the indicated rates is im- posed upon the following supplies (in- cluding parts or accessories sold there- with) sold by a manufacturer, producer, or importer: (a) Cameras, not including X-ray cameras or cameras weighing more than four pounds exclusive of lens and acces- sories-10 percent. (b) Camera lenses, not including still camera lenses having a focal length of more than 120 millimeters or motion picture camera lenses having a focal length of more than 30 millimeters-10 percent. Exemption from the tax is available as to camera lenses- (1) Which, prior to September 1, 1955, were sold for use as material in the manufacture of, or as a component part of, an article subject to a manufacturers' excise tax; or (2) Which, after August 31, 1955, are sold for use or are actually used as material in the manufacture of, or as a component part of any article, whether or not such article is subject to a manu- facturers' excise tax. A manufacturer, using a tax-paid cam- era lens within the scope of any of these exemptions, is entitled to a refund or credit of the tax paid on such lens. This includes the use, after August 31, 1955, of a camera lens in the manufacture of, or as a component part of, a nontaxable article, even though such lens was pur- chased prior to September 1, 1955. contract price for supplies purchased by any executive agency shall not include an amount for the manufacturers' excise tax on camera lenses if any of these ex- emptions, refunds, or credits are avail- able to the manufacturer; The (c) Unexposed photographic film in rolls, including motion picture film—10 percent. This tax does not apply to X- ray film; unperforated microfilm; film more than 150 feet in length; or film more than 25 feet in length and more than 30 millimeters in width. A person who acquires unexposed film in a form not subject to tax and thereafter sells 1-11.102-14 such unexposed film in form and dimen- sions subject to tax is treated as a manu- facturer of the film so sold by him. The manufacturer of unexposed motion pic- ture film is entitled to a credit or refund (but not an exeinption) for film used or resold for use in making newsreel mo- tion picture films covering current news events for immediate release for public exhibition; and (d) Electric motion or still picture projectors of the household type_5 percent. 1-11.102-11 cartridges. Firearms, shells, and Firearms, A tax is imposed upon pistols and re- volvers at the rate of 10 percent, and other firearms, shells, and cartridges at the rate of 11 percent, sold by a manu- facturer, producer, or importer. In ad- dition to this manufacturers' excise tax, Chapter 53A of the Internal Revenue Code (which supersedes Ch. 25, I.R.C. 1939) imposes a transfer tax and a tax on the manufacture of machine guns and certain other firearms, except that trans- fer to, or manufacture for, the United States is specifically exempted from these taxes. 1–11.102-12 Business machines. A tax of 10 percent is imposed upon a wide variety of business machines (in- cluding parts or accessories sold there- with), not including cash registers of the type used in registering over-the-counter retail sales, sold by a manufacturer, pro- ducer, or importer. 1-11.102-13 Pens, mechanical pen- cils, and lighters. A tax of 10 percent is imposed upon fountain and ball point pens, mechanical pencils, and mechanical lighters for cig- arettes, cigars, and pipes, sold by a man- ufacturer, producer, or importer; except that this tax does not apply if the article also is subject to the retailers' excise tax on jewelry imposed by section 4001 of the Internal Revenue Code. If the manufac- turers' excise tax has been paid, but the article is further processed so as to sub- ject it to the retailers' excise tax, the retailer (but not the manufacturer who originally paid the tax) is entitled to a credit to the extent of the manufactur- ers' excise tax paid on the article. (See section 1-11.101-1.) 1-11.102-14 Matches. A tax of 2 cents per 1,000, not to ex- ceed 10 percent of the price for which sold, is imposed upon matches sold by a manufacturer, producer, or importer, ex- cept that the rate of 52 cents per 1,000 for fancy wooden matches or matches having a stained, dyed, or colored stick FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 1, MAR, 1959) 1107 PART 1-11 FEDERAL, STATE, AND LOCAL TAXES 1-11,102-14 or stem, whether packed in boxes or in bulk. 1-11.103 Excise taxes on facilities and services. Chapter 33 of the Internal Revenue Code (which supersedes Ch. 30, I.R.C. 1939), implemented by Treasury Regu- lation 42, imposes excise taxes on certain facilities and services, including commu- nications, and transportation of persons. In general, the tax is based on the amount paid for the service, and is im- posed upon the person paying for the service. As used throughout this sec- tion 1-11.103 the term "United States," when used in a geographical sense, means the States, the Territory of Ha- waii, and the District of Columbia. 1-11.103-1 Communications. A tax is imposed on amounts paid for the following facilities and services at the rates indicated; except that only one payment of tax is required on long dis- tance telephone or telegraph service, notwithstanding that lines or stations of more than one person are used in the transmission: (a) Local telephone service, which means any telephone service not other- wise taxable, excluding amounts paid for the installation of instruments, wires, poles, switchboards, apparatus, and equipment-10 percent; (b) Long distance telephone service, which means any telephone or radio telephone message or conversation for which the toll charge exceeds 24 cents and for which the charge is paid within the United States-10 percent; (c) Telegraph service, which means a telegraph, cable, or radio dispatch or message for which the charge is paid with in the United States-10 percent; (d) Leased wire, teletypewriter or talking circuit special service, not in- cluding any service used exclusively in rendering a service taxable as wire and equipment service under paragraph (e) of this section 1-11.103-1-10 percent. This tax applies irrespective of whether the wires or services are within a local exchange area; and and equipment service, (e) Wire which includes stock quotation and in- formation services, burglar or fire alarm services, and all other similar services— 8 percent. This tax applies irrespective of whether the wires or services are within a local exchange area. 1-11.103-2 Transportation of per- sons. (a) A tax of 10 percent is imposed upon amounts paid for the transporta- tion of persons by rail, motor vehicle, water, or air, including charges for seat- ing or sleeping accommodations incident to such transportation, as follows: (1) On amounts paid within the United States for taxable transportation as defined in paragraph (b); and (2) On amounts paid outside the United States for taxable transportation, as defined in paragraph (b), which both begins and ends in the United States. (b) Taxable transportation: (1) Includes transportation which begins in the United States, or in Canada or Mexico within 225 miles of the nearest point to the United States, and ends in the United States or in the aforemen- tioned 225-mile zone; (2) Includes transportation that be- gins in the United States or in the 225- mile zone and ends outside such area, transportation that begins outside the United States or the 225-mile zone and ends inside such area, and transportation that begins and ends outside the United States and the 225-mile zone, but only to the extent that such transportation is directly or indirectly from one port or station in the United States to another port or station in the United States. (Even though it is "taxable transporta- tion" it may not be subject to tax if the payment is made outside the United States, according to the limitation set forth in paragraph (a) (2) of this sec- tion 1-11.103–2; and (3) Irrespective of (b) (1) and (2), does not include any portion of transpor- tation which— (i) Is outside the United States; (ii) Is not, directly or indirectly, from the border of the United States or a port or station in the 225-mile zone to a port or station in the 225-mile zone; (iii) Begins either where the route of transportation leaves the United States or a port or station in the 225- mile zone, and ends either where the route enters the United States or a port or station in the 225-mile zone; and (iv) Passes through a point in ex- cess of 225 miles from the United States on an imaginary direct line between the beginning and ending points specified in (iii). (c) In determining taxable trans- portation, a round trip is considered to consist of transportation from the point of origin to the destination, and a sep- arate transportation thereafter. (d) The tax does not apply to (1) Any separable and itemized charges other than those for transporta- tion of a person, such as for an automo- bile, baggage, meals, hotel accommoda- tions, insurance, and the like; (2) Charges incident to the charter of a conveyance for the transportation of FEDERAL PROCUREMENT REGULATIONS 1108 (FPR CIRC, 1, mar, 1959) SUBPART 1-11.1 FEDERAL EXCISE TAXES persons, such as for parking, icing, sani- tation, layover, movement of equipment in deadhead service, dockage, and the like; or (3) Charges for transportation by motor vehicles having a seating capacity of less than 10 persons and not operated on an established line. 1-11.104 vehicles. Use tax on highway motor (a) A tax of $1.50 a year for each 1,000 pounds of taxable gross weight or frac- tion thereof is imposed upon the use, after June 30, 1956, of any highway motor vehicle which, together with semi- trailers and trailers customarily used in connection with a vehicle of this type, has a taxable gross weight in excess of 26,000 pounds. The full tax is due for any vehicle which is used on the public highways of the United States or Hawaii at any time during the month of July, irrespective whether the vehicle is later removed from highway use. If the first use of a taxable vehicle occurs after the end of July, the tax is computed propor- tionately from the first day of the month in which the vehicle is first used, through the end of the following June. For ex- ample, if a vehicle is placed in use during Supplies and services 1-11.105 August, 11/12 of the total tax is payable. No tax applies to vehicles, even though of a highway type, which are never used on the public highways during the tax- able year. (b) Taxable gross weight is the sum of- (1) The actual unloaded weight of the vehicle and any semitrailers and trailers customarily used with such a vehicle, all units fully equipped for serv- ice; and (2) The weight of the maximum load customarily carried by all units of a vehicle of this type. (c) The tax is payable by the person in whose name the vehicle is, or is re- quired to be, registered under the law of any State, or if owned by the United States, by the agency or instrumentality of the United States operating such ve- hicle. If a tax has been paid for a par- ticular vehicle, no further liability can be incurred in the same taxable year, even though there is a change of owner- ship of the vehicle. 1-11.105 Selective list list of supplies and services subject to Federal excise taxes. I.R.C. 1954 (26 U.S.C.) section Treasury Section of I.R.C. 1939 section regula- this sub- tion part 1-11.1 Air conditioning equipment. Appliances, electric, gas, and oil. 4111. 4121 3405(c) 46 1-11. 102-5 3406(a) (3) 46 1-11. 102-6 Automotive accessories. 4061 (b) 3403 (c) 46 1-11. 102-1 Binoculars, field and marine glasses- 4001 2400. 51 1-11. 101-1 Business machines. 4191 3406(a)(6). 46 1-11. 102-12 Cigarette lighters.. 4201 3408. 46 1-11. 102-13 Communications services and facilities. 4251 3465. 42 1-11. 103-1 Cutting oils. 4091 3413. 44 1-11. 102-4 Diesel fuel. 4041 (a) 2450 (a) 119 1-11. 101-5 Electric light bulbs.. 4131 3406(a)(10) .. 46 1-11. 102-7 Film 4171 3406 (a) (4). 46 1-11. 102-10 Firearms, shells, and cartridges. 4181. 3407, 2700. 46, 47 1-11. 102-11 Furs 4011. 2401.. 51 1-11. 101-2 Gasoline 4081 3412.. 44 1-11.102-3 Handbags. 4031 1651(a) 51 1-11. 101-4 Highway vehicles, use of 4481 1-11. 104 Lubricating oils. Jewelry and related items Luggage and handbags.. 4001 2400 51 1-11. 101-1 4091 3413 44 1-11. 102-4 4031_ 1651 (a) 51 1-11. 101-4 Motor vehicles and accessories. 4061_ 3403_ 46 1-11. 102-1 Musical instruments. 4151 3404 (d) 46 1-11. 102-8 Pens, mechanical pencils, and lighters. 4201_ 3408. 46 1-11, 102-13 Phonographs and records. 4141. 3404. 46 1-11. 102-8 Photographic equipment. 4171 3406 (a) (4) 46 1-11. 102-10 Pistols and revolvers. 4181. 2700 46, 47 1-11. 102-11 Radio and television receiving sets, parts and 4141. 3404. 46 1-11. 102-8 components. Refrigeration equipment. 4111. 3405 46 1-11. 102-5 Shells and cartridges. 4181_ 3407. 46 1-11. 102-11 Special fuels.. 4041. 2450 119 1-11. 101-5 Sporting goods. 4161. 3406(a) (4) 46 1-11. 102-9 Telephone and telegraph services. 4251. 3465. 42 1-11. 103-1 'Tires and tubes... 4071. 3400_. 46 1-11. 102-2 Toilet preparations. 4021.. 2402(a) 51 1-11. 101-3 - Transportation of persons. 4261. 3469_ 42 1-11: 103-2 Watches, clocks and other timepieces.. 4001_ 2400_ 51 1-11. 101-1 FEDERAL PROCUREMENT REGULATIONS (NEXT PAGE IS 1111) (FPR CIRC. 1, MAR, 1959) 1109 SUBPART 1-11, 2 EXEMPTIONS FROM FEDERAL EXCISE TAXES Subpart 1-11.2-Exemptions From Federal Excise Taxes 1-11.200 Scope of subpart. This subpart sets forth the applicabil- ity and scope of general exemptions, credits, and refunds from the Federal excise taxes outlined in Subpart 1-–11.1, and the policy governing when such exemptions, credits, and refunds are to be claimed. Particular exemptions re- stricted to a single tax are set forth in Subpart 1-11.1 in the discussion of each tax. 1-11.201 Supplies for exportation or shipment to a possession or to Puerto Rico. Exemption is available from the re- tailers' and manufacturers' excise taxes on the sale of supplies for export or for shipment to a possession of the United States, or to Puerto Rico. 1-11.201-1 Retailers' excise taxes. is Pursuant to section 4056 of the Inter- nal Revenue Code (which supersedes sec- tion 2406, I.R.C. 1939) and applicable Treasury Regulations, Regulations, exemption available from the retailers' excise taxes on sale of supplies for export or for ship- ment to a possession of the United States or Puerto Rico. This exemption shall be utilized, in accordance with agency pro- cedures, by purchasing on a tax-exclu- sive basis and furnishing the required proof of exportation or shipment to a possession or to Puerto Rico, if— (a) The purchase is substantial; and (b) Exportation or shipment to a pos- session or to Puerto Rico is intended to follow not more than 6 months after title passes to the Government. 1–11.201-2 Manufacturers' excise taxes. Pursuant to section 4225 of the In- ternal Revenue Code (which supersedes sections 3449 and 2705, I.R.C. 1939) and applicable Treasury Regulations, exemp- tion is available from the manufacturers' excise taxes on sales of supplies for ex- port or for shipment to a possession of the United States or to Puerto Rico. This exemption shall be obtained only when- (a) The purchase is substantial; and (b) Exportation or shipment to pos- session or to Puerto Rico is intended to follow not more than 6 months after title passes to the Government. 1-11, 203 (a) (1) This exemption is limited to sales by a manufacturer, and is not applicable to sales for export or shipment to a posses- sion or to Puerto Rico from the stock of a dealer who was not the manufacturer, producer, or importer. 1-11.202 Supplies and services for the exclusive use of the United States. By virtue of action taken by the Secre- tary of the Treasury, pursuant to section 4293 of the Internal Revenue Code, ex- emption is available, and shall be ob- tained from the following Federal excise taxes to the extent indicated: (a) Tax on communication services and facilities (see section 1-11.103-1) furnished directly to the United States (as distinguished from being furnished to a Government contractor) and paid for directly by the Government, which exemption is obtained without any ex- emption certificate; and (b) Tax on transportation of persons (see section 1-11.103-2) for transporta- tion furnished the United States upon a Government transportation request, which exemption if obtainable by use of such transportation request. 1-11.203 Supplies sold for further manufacture. (a) Pursuant to section 4220 of the Internal Revenue Code (which super- sedes section 3442, I.R.C. 1939) and ap- plicable Treasury Regulations, supplies (other than tires, inner tubes, and auto- mobile radios and television receivers) are exempt from manufacturers' excise taxes if sold for use by the vendee in the manufacture of, or as a component part of, another article; or for resale by the vendee for such further manufacture by his vendee, if the article is resold in due course. In applying this exemption, there are two classes of supplies: (1) Automobile parts or accessories, refrigerator components, radio or tele- vision components, and camera lenses, the sale of which is exempt irrespective of whether or not the article to be manu- factured is subject to a manufacturers' excise tax. The manufacturer is en- titled to a credit or refund for the amount of the tax paid on such parts, accessories, components, or lenses if this exemption has not been utilized and if such parts, accessories, components, or lenses upon which a manufacturers' ex- cise tax has been paid, are used in the manufacture of, or as a component part FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 1, MAR, 1959) 1111 PART 1-11 FEDERAL, STATE, AND LOCAL TAXES 1-11,203 (a) (1) of, any article (whether or not taxable) ; and (2) All other articles (other than tires, inner tubes, automobile radio and television receivers) subject to manufac- turers' excise tax, the sale of which is exempt only if the article to be manu- factured is subject to a manufacturers' excise tax. The manufacturer is entitled to a credit or refund of the amount of tax paid on any such article used for further manufacture if this exemption has not been utilized and if such article, upon which a manufacturers' excise tax has been paid, is used in the manufacture of, or as a component of, another article upon which a manufacturers' excise tax is subsequently paid, or which subse- quently is sold tax-free as a sale for further manufacture pursuant to section 4220 of the Internal Revenue Code. (b) These exemptions, credits, and re- funds under (a) (1) and (2) are obtain- able by the manufacturer without any action by the contracting officer. The contract price for supplies purchased by any executive agency shall not include an amount for any manufacturers' excise tax from which these exemptions, credits, or refunds are available. 1-11.204 Supplies for vessels and airplanes. Pursuant to section 4222 of the In- ternal Revenue Code (which supersedes sections 3451 and 2456 I.R.C. 1939) and applicable Treasury Regulations, exemp- tion is available from the manufacturers' excise taxes, and from the retailers' excise tax on special motor fuels imposed by section 4041(b) of the Internal Reve- nue Code (see section 1-11.101-5) on sales of supplies for use as sea stores, fuel supplies, ships' stores, or legitimate equipment necessary for the navigation, propulsion, and upkeep of vessels of war or military aircraft, including guided missiles and pilotless aircraft, owned or chartered by the United States. If sup- plies upon which a tax had been paid are sold for any of the exempt uses enumer- ated above, the manufacturer is entitled to a credit or refund of the tax paid, irrespective of whether the supplies are sold directly to the consumer by the manufacturer, or are sold through a dealer. When it is economically advan- tageous to do so, this exemption, credit, or refund shall be utilized, by purchase on a tax-exclusive basis and execution of the required exemption certificate, in accordance with executive agency pro- cedures. 1-11.205 Exemptions from other Federal taxes. Any executive agency that purchases supplies or services subject to a Federal excise tax, other than those specified in Chapters 31, 32, 33B, 33C, and 36D of the Internal Revenue Code which are out- lined in Subpart 1-11.1, shall prescribe rules to govern the utilization of any exemptions from such tax. 1-11.206 Tax exemption forms. Standard Government exemption forms acceptable to the Internal Revenue Service shall be used in accordance with agency procedures. FEDERAL PROCUREMENT REGULATIONS 1112 (FPR CIRC. 1, Mar, 1959) SUBPART 1-11.3 STATE AND LOCAL TAXES Subpart 1-11.3-State and Loca! Taxes • 1-11.301 Applicability. As a general rule, Government pur- chases are exempt from State and local taxes. This exemption shall be made use of to the fullest extent available, by means of purchase on a tax-exclusive basis and execution of an approved tax exemption certificate. Whenever there is any doubt as to the availability of such exemption, the matter shall be referred to the appropriate office of the executive agency concerned. 1-11.302 Tax exemption forms. Except when a different form is re- quired by a particular state or local tax jurisdiction, Standard Form 1094 (U.S. Government Tax Exemption Certificate) Revised shall be used in accordance with agency procedures. FEDERAL PROCUREMENT REGULATIONS 1-11.302 (NEXT PAGE IS 1115) (FPR CIRC, 1, MAR, 1959) 1113 SUBPART 1-11.4 CONTRACT CLAUSE Subpart 1-11.4-Contract Clause 1-11.401 Fixed-price type contracts. 1-11.401-1 Clause for advertised and certain negotiated contracts. The following clause shall be inserted in (a) all formally advertised contracts, and (b) may be used in negotiated con- tracts where appropriate. FEDERAL, STATE, AND LOCAL TAXES (a) As used throughout this clause, the term "tax inclusive date" means the date of negotiated contracts and the date set for the opening of bids for contracts entered into through formal advertising. As to ad- ditional supplies or services procured by modification to this contract, the term "tax inclusive date" means the date of such modification. (b) Except as may be otherwise provided in this contract, the contract price includes all Federal, State, and local taxes and duties in effect and applicable to this contract on the tax inclusive date, except taxes from which the Government, the Contractor, or the transactions or property covered by this contract are then exempt. Unless specifi- cally excluded, duties are included in the contract price. (c) (1) If the Contractor is required to pay or bear the burden (1) of any tax or duty, which either was not to be included in the contract price pursuant to the re- quirements of paragraph (b), or was specifi- cally excluded from the contract price by a provision of this contract; or (ii) of an in- crease in rate of any tax or duty, whether or not such tax or duty was excluded from the contract price; or of any interest or penalty thereon, the contract price shall be correspondingly increased: Provided, That the Contractor warrants in writing that no amount for such tax, duty or rate increase was included in the contract price as a con- tingency reserve or otherwise: And provided further, That liability for such tax, duty, rate increase, interest, or penalty was not incurred through the fault or negligence of the Contractor or its failure to follow in- structions of the Contracting Officer. (2) If the Contractor is not required to pay or bear the burden, or obtains a refund or drawback, in whole or in part, of any tax, duty, interest, or penalty which (i) was to be included in the contract price pur- suant to the requirements of paragraph (b), (ii) was included in the contract price, or (iii) was the basis of an increase in the contract price, the contract price shall be correspondingly decreased or the amount of such relief, refund, or drawback shall be paid to the Government, as directed by the Contracting Officer. The contract price also shall be correspondingly decreased if the Contractor through its fault or negligence or its failure to follow instructions of the Contracting Officer, is required to pay or bear the burden, or does not obtain a refund or drawback of any such tax, duty, interest, or penalty. Interest paid or credited to the Contractor incident to a refund of taxes shall inure to the benefit of the Government to the extent that such interest was earned 1-11,401-* | after the Contractor was paid or reimbursed by the Government for such taxes. (3) Invoices or vouchers covering any ad- justment of the contract price pursuant to this paragraph (c) shall set forth the amount thereof as a separate item and shall identify the particular tax involved. (4) Nothing in this paragraph (c) shall be applicable to social security taxes; net in- come taxes; excess profit taxes; capital stock taxes; unemployment compensation taxes; or any State and local taxes, except those levied on or measured by the contract or sales price of the services or completed sup- plies furnished under this contract, including gross income taxes, gross receipts taxes, sales and use taxes, excise taxes, or franchise or occupation taxes measured by sales or re- ceipts from sales. (5) No adjustment of less than $100 shall be made in the contract price pursuant to this paragraph. (d) Unless there does not exist any reason- able basis to sustain an exemption, the Gov- ernment agrees upon request of the Con- tractor, without further liability except as otherwise provided in this contract, to fur- nish evidence appropriate to establish ex- emption from (i) any Federal tax, which the Contractor warrants in writing was excluded from the contract price, or (ii) any State or local tax: Provided,, That evidence appro- priate to establish exemption from duties will be furnished, and Government bills of lading will be issued, only at the discretion of the Contracting Officer. In addition, the Con- tracting Officer may furnish evidence appro- priate to establish exemption from any tax that may, pursuant to this clause, give rise to either an increase or decrease in the contract price. (e) (1) The Contractor shall promptly notify the Contracting Officer of all matters pertaining to Federal, State, and local taxes and duties that reasonably may result in either an increase or decrease in the contract price. (2) Whenever an increase or decrease in the contract price may be required under this clause, the Contractor shall take action as directed by the Contracting Officer, and the contract price shall be equitably adjusted to cover the costs of such action, including any interest, penalty, and reasonable attorney's fees. (END OF PART) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 1, MAR. 1959) 1115 1 CONTENTS OF PART 1-12 LABOR Sec. PART 1-12-LABOR 1-12.000 Scope of part. Subpart 1-12.1—Basic Labor Policies 1-12.100 1-12.101 1-12.102 1-12.102-1 General. Labor relations. Overtime, extra-pay shifts, and multi-shift work. Definitions. 1-12.102-2 Policy. 1-12.102-3 1-12.102-4 Procedures. Approvals. 1-12.102-5 Other authorized overtime. 1-12.103 1-12.104 1-12.201 1-12.202 1-12.203 Federal and State labor require- ments. Meeting manpower require- ments. Subpart 1-12.2-Convict Labor Basic requirement. Applicability. Contract clause. Subpart 1-12.3-Eight-Hour Law of 1912 (Other Than Construction Contracts) 1-12.300 1-12.301 1-12.302 1-12.303 1-12.303-1 Scope of subpart. Statutory requirement. Applicability. Contract clauses. Clause for general use. 1-12.303-2 Clause for contracts with a State or political subdivision. Subpart 1-12.4-[Reserved] Subpart 1-12.5-[Reserved] Subpart 1-12.6-Walsh-Healey Public Contracts Act Statutory requirement. Applicability. 1-12.601 1-12.602 1-12.602-1 General. 1-12.602-2 1-12.603 1-12.604 Department of Labor regulations and interpretations. Responsibilities of contracting officers. Contract clause. Subpart 1-12.7-Fair Labor Standards Act of 1938 1-12.701 Basic statute. 1-12.702 Rulings on applicability or interpretation. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 1, MAR, 1959) i SUBPART 1-12, 1 BASIC LABOR POLICIES 1-12.000 Scope of part. This part deals with general policies regarding labor, so far as they relate to procurement; sets forth certain perti- nent labor laws and requirements, indi- cating in connection with each its appli- cability and any procedures thereunder; and prescribes the contract clauses with respect to each labor law or require- ment. Subpart 1-12.1-Basic Labor Policies 1-12.100 General. The policies and procedures stated in this Subpart 1-12.1 are recommendatory and are for the guidance of executive agencies. 1-12.101 Labor relations. (a) With respect to Government con- tract activities, procurement agencies should maintain and encourage the best possible relations with industry and la- bor in order that the Government may procure needed supplies and services without delay. All problems arising out of the Government contract labor rela- tions of private contractors, and all com- munications with labor organizations or Federal agencies relative thereto, shall be handled in accordance with agency procedures. (b) Procurement agencies should re- main impartial in, and should refrain from taking a position on, the merits of a dispute between labor and private management. No procuring activity should undertake the conciliation, medi- ation, or arbitration of a labor dispute. 1-12.102 Overtime, extra-pay shifts, and multi-shift work. 1–12.102-1 Definitions. As used in this section 1-12.102, the following terms shall have the meanings set forth: (a) "Normal work week” and “normal work day" mean, generally, a work week of 40 hours and a work day of 8 hours, respectively. In any area outside the United States, its possessions, Hawaii, and Puerto Rico, a work week longer than 40 hours, or a work day longer than 8 hours, will be considered normal if (1) such work week or work day does not exceed that which is normal for such area, as determined by local custom, tradition, or law, and (2) hours worked in excess of 40 in such work week, or 8 in such work day, are not compensated at a premium rate of pay. (b) "Overtime" means time worked by a contractor's employee in excess of the employee's normal work week or normal work day. 1-12, 102-3 (e) (c) "Shift premium" means the dif- ference between the compensation paid to an employee at the contractor's regu- lar rate of pay for the base or regular work shift and that paid at the regular rate of pay for extra-pay-shift work. (d) "Overtime premium" means the difference between the compensation paid to an employee at the contractor's regular rate of pay for the work period or shift involved and that paid for hours worked overtime. 1-12.102–2 Policy. Where the cost to the Government may be affected, contracts should be performed, so far as practicable, with- out the use of overtime, extra-pay shifts, or multi-shifts, and, in particular, with- out the use of overtime as a regular employment practice. Any required overtime, extra-pay shifts, and multi- shifts should be limited to the minimum needed for accomplishment of the spe- cific work. 1-12.102-3 Procedures. (a) To the extent practicable, invita- tions for bids and requests for proposals shall not specify delivery or performance schedules which may be reasonably an- ticipated to necessitate overtime, at Government expense. (b) In the negotiation of contracts in excess of $10,000, the contracting officer, consistent with the nature and size of the procurement, should use his best efforts (1) to ascertain the extent to which proposals and quotations are based on the payment of overtime pre- miums and shift premiums, and (2) to negotiate contract prices or estimated costs which are not based on the pay- ment of overtime premiums or shift premiums, taking into consideration the practicability of procurement from other sources of all or part of the requirement. (c) All contracts, other than firm fixed-price contracts or fixed-price con- tracts with escalation (which do not provide for any labor escalation), should provide that payment of overtime pre- miums and shift premiums shall be allowed, or considered in pricing, only to the extent approved in accordance with section 1-12.102-4, or as provided in section 1-12.102-5. (d) Overtime for which overtime pre- miums would be at Government expense should not be approved under a contract where the contractor is already obli- gated, without the right to additional compensation, to meet the required de- livery date. (e) Where overtime premiums or shift premiums are being paid at Government FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 1, MAR, 1959) 1 201 PART 1-12 LABOR 1–12,102–3 (e) expense in connection with the perform- ance of Government contracts, the con- tinued need therefor should be subject to periodic review in accordance with agency procedures. 1-12.102-4 Approvals. (a) In the three following situations, overtime premiums and shift premiums at Government expense may be consid- ered proper for approval when deter- mined in writing by the agency head, or his designee or designees, that approval: (1) Is necessary to meet delivery or performance schedules, and such schedules are determined to be extended to the maximum consistent with essen- tial program objectives; (2) Is necessary to make up for de- lays which are beyond the control and without the fault or negligence of the contractor and, in construction con- tracts, which result from unforeseeable causes; or (3) Is necessary to eliminate fore- seeable production bottlenecks of an ex- tended nature which cannot be elimi- nated in any other way. (b) Approvals should ordinarily be prospective, but may be retroactive where justified by the circumstances. (c) Such approvals may be for an in- dividual contract, project, or program, or for a plant, division, or company, as most practicable. 1-12.102-5 time. Other authorized over- (a) Approved overtime premiums or shift premiums may be paid for work, without the approval required by section 1-12.102-4: (1) When necessary to cope with emergencies, such as those resulting from accidents, natural disasters, breakdowns of production equipment, or occasional production bottlenecks of a sporadic nature; (2) In the performance of tests, in- dustrial processes, laboratory procedures, loading or unloading of transportation media, and operations in flight or afloat, which are continuous in nature and can- not reasonably be interrupted or other- wise completed; or (3) When lower overall cost to the Government will result. (b) In determining overtime or shift premium costs, consideration should be given to the cost of indirect labor em- ployees, such as those performing duties in connection with administration, pro- tection, transportation, maintenance, standby plant protection, operation of utilities, or accounting; or (c) The cost of such overtime premi- ums or shift premiums may be allowed, or considered in pricing (on the same basis as other indirect costs) to the ex- tent the amount thereof is reasonable and properly allocable to the work involved. 1-12.103 Federal and State labor re- quirements. Executive agencies should cooperate, and require contractors to cooperate, to the fullest extent possible, with Federal and State agencies responsible for en- forcing labor requirements with respect to such matters as safety, health and sanitation, maximum hours and mini- mum wages, equal pay for women, and child and convict labor. 1-12.104 Meeting manpower require- ments. It is the policy of executive agencies to cooperate with and to encourage con- tractors to utilize, to the fullest extent practicable, the United States Employ- ment Services (USES) and its affiliated local State Employment Service Offices in matters pertaining to meeting con- tractors' manpower (labor supply) re- quirements, including the recruitment of workers in all occupations and skills both from local labor market areas and through the Federal-State manpower clearance system to staff new or expand- ing plant facilities. Local State Em- ployment Service Offices are operated in every State and in the District of Co- lumbia, Hawaii, Puerto Rico, Guam, and the Virgin Islands. In addition to pro- viding recruitment assistance to contrac- tors who need and desire it, cooperation with the local State Employment Service Offices will further the national program of maintaining continuous assessment of manpower requirements and resources on a national and local basis. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 1, MAR, 1959) 1202 SUBPART 1-12. 2 CONVICT LABOR 1-12, 203 Subpart 1-12.2-Convict Labor 1-12.201 Basic requirement. Pursuant to the policy originally set forth in the Act of February 23, 1887 (18 U.S.C. 436), and in accordance with the requirements of Executive Order 325-A of May 18, 1905, all contracts entered into by any executive agency involving the employment of labor within the United States shall, unless otherwise provided by law, contain a clause prohibiting the employment of persons undergoing sen- tences of imprisonment at hard labor im- posed by State or municipal criminal courts. 1-12.202 Applicability. The requirement set forth in section 1-12.201 applies, except as stated in this section 1-12.202, to all contracts involv- ing the employment of labor within the United States. The requirement does not prohibit the employment of persons on parole or probation, or of persons who have been pardoned or who have served their terms. Furthermore, the require- ment does not apply to contracts: (a) Subject to the provisions of the Walsh-Healey Public Contracts Act (see Subpart 1-12.6) which contains its own requirement that "no convict labor will be employed by the contractor in the manufacture or production or furnishing of any of the materials, supplies, articles, or equipment included in such contract." (b) For the purchase of supplies or services from Federal Prison Industries, Inc. (c) For the purchase from any State prison of finished supplies which may be secured in the open market or from ex- isting stocks as distinguished from sup- plies requiring special fabrication. 1-12.203 Contract clause. The contract clause required is as fol- lows: CONVICT LABOR In connection with the performance of work under this contract, the Contractor agrees not to employ any person undergoing sentence of imprisonment at hard labor. FEDERAL PROCUREMENT REGULATIONS (NEXT PAGE IS 1205) (FPR CIRC, 1, Mar, 1959) 1 203 SUBPART 1-12.3 EIGHT-HOUR LAW OF 1912 (OTHER THAN CONSTRUCTION CONTRACTS) Subpart 1-12.3-Eight-Hour Law of 1912 (Other Than Construction Con- tracts) 1-12.300 Scope of subpart. This subpart deals with the require- ments of the Eight-Hour Law of 1912, as amended (40 U.S.C. 324–326), as appli- cable to contracts other than construc- tion contracts. 1-12.301 Statutory requirement. In accordance with the requirement of the Eight-Hour Law of 1912, as amended (40 U.S.C. 324-326), certain contracts entered into by any executive agency shall contain a clause to the effect that no laborer or mechanic doing any part of the work contemplated by the contract shall be required or permitted to work more than eight hours in any one calen- dar day upon such work, unless such laborer or mechanic is compensated for all hours worked in excess of eight hours in any one calendar day at not less than one and one-half times the basic rate of pay. 1-12.302 Applicability. The requirement set forth in section 1-12.301 applies, except as stated in this section 1-12.302, to all contracts which may require or involve the employment of laborers or mechanics either by a con- tractor or by any subcontractor. The requirement does not apply to the follow- ing kinds of contracts: (a) Contracts (or portions thereof) to be performed in a foreign country over which the United States has no direct legislative control, to the extent that such contracts (or portions thereof) may require or involve the employment of laborers or mechanics there. (b) Contracts with a State or political subdivision thereof (although the re- quirement does apply, and the contract must so provide, to a subcontract there- under with a private person or firm). (c) Contracts (or portions thereof) for supplies in connection with which any required services are merely incidental to the sale and do not require substantial employment of laborers or mechanics. (d) Contracts (or portions thereof) for materials or articles (other than ar- mor or armor plate) usually bought in the open market (although the require- ment does apply, and the contract must so provide, with respect to any contract involving the performance of any class of work which is ordinarily, and not merely occasionally or to a limited ex- tent, performed by the Government). 1-12, 303-2 (e) Contracts (or portions thereof) subject to the provisions of the Walsh- Healey Public Contracts Act (see Sub- part 1-12.6). 1-12.303 Contract clauses. 1-12.303-1 Clause for general use. Except for those kinds of contracts re- ferred to in section 1-12.303-2, the con- tract clause required is as follows: EIGHT-HOUR LAW OF 1912-OVERTIME COMPENSATION This contract, to the extent that it is of a character specified in the Eight-Hour Law of 1912, as amended (40 U.S. Code 324–326) and is not covered by the Walsh-Healey Pub- lic Contracts Act (41 U.S. Code 35-45), is subject to the following provisions and ex- ceptions of said Eight-Hour Law of 1912, as amended, and to all other provisions and exceptions of said Law: No laborer or mechanic doing any part of the work contemplated by this contract, in the employ of the Contractor or any sub- contractor contracting for any part of said work contemplated, shall be required or per- mitted to work more than eight hours in any one calendar day upon such work, except upon the condition that compensation is paid to such laborer or mechanic in accordance with the provisions of this clause. The wages of every laborer and mechanic em- ployed by the Contractor or any subcon- tractor engaged in the performance of this contract shall be computed on a basic day rate of eight hours per day; and work in ex- cess of eight hours per day is permitted only upon the condition that every such laborer and mechanic shall be compensated for all hours worked in excess of eight hours per day at not less than one and one-half times the basic rate of pay. For each violation of the requirements of this clause a penalty of five dollars shall be imposed for each laborer or mechanic for every calendar day in which such employee is required or permitted to labor more than eight hours upon said work without receiving compensation computed in accordance with this clause, and all penalties thus imposed shall be withheld for the use and benefit of the Government. 1-12.303-2 Clause for contracts with a State or political subdivision. In the case of contracts with a State or political subdivision thereof (see section 1–12.302(b)), the contract clause re- quired shall be the clause set forth in sec- tion 1-12.303-1, except that it shall be prefaced by the following provision: The Contractor agrees to insert the follow- ing clause in all subcontracts hereunder with private persons or firms. FEDERAL PROCUREMENT REGULATIONS (NEXT PAGE IS 1207) (FPR CIRC. 1, MAR, 1959) 1 205 • Subpart 1-12.4—[Reserved] 1 Subpart 1-12.5-[Reserved] (NEXT PAGE IS 1209) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 1, MAR, 1959) 1207 SUBPART 1-12.6 WALSH-HEALEY PUBLIC CONTRACTS ACT Subpart 1-12.6—Walsh-Healey Public Contracts Act 1-12.601 Statutory requirement. In accordance with the requirement of the Walsh-Healey Public Contracts Act (41 U.S.C. 35-45) and subject to section 1-12.602, all contracts entered into by any executive agency for the manufacture or furnishing of supplies in any amount ex- ceeding $10,000 (a) will be with manu- facturers or regular dealers, and (b) shall incorporate the representations and stipulations required by said Act pertain- ing to such matters as minimum wages, maximum hours, child labor, convict labor, and safe and sanitary working conditions. 1-12.602 Applicability. 1-12.602-1 General. The requirement set forth in section 1-12.601 applies to contracts for the man- ufacture or furnishing of "materials, sup- plies, articles, and equipment” which are to be performed within the United States, Hawaii, Puerto Rico, or Virgin Islands, and which exceed or may exceed $10,000 in amount. 1-12.602-2 Department of Labor regulations and interpretations. (a) Pursuant to the Walsh-Healey Act, the Secretary of Labor has issued detailed regulations and interpretations as to the coverage of said Act, and ex- emptions and procedures thereunder. These regulations and interpretations are compiled in a document entitled "Walsh-Healey Public Contracts Act, Rulings and Interpretations.” (b) Attention is directed to an opin- ion of the Department of Labor that contracts which are originally $10,000 or less, but are subsequently modified to increase the price to an amount in ex- cess of $10,000, are subject to the Walsh- Healey Act; and that contracts in an amount exceeding $10,000, which are 1-12,604 subsequently modified to a figure of $10,000 or less, are not subject to said Act with respect to work performed after such modification, if modification is effective by mutual agreement. 1-12.603 Responsibilities of contract- ing officers. Whenever the Walsh-Healey Act is ap- plicable, the contracting officer shall, pursuant to regulations or instructions issued by the Secretary of Labor and in accordance with procedures prescribed by each respective executive agency: (a) Inform prospective contractors of the possible applicability of minimum wage determinations; (b) Furnish to the contractor a poster (Form PC-13); (c) Furnish to the contractor a form letter (Form PC-12) explaining applica- tion of the Walsh-Healey Act and giving instructions for display of the poster; (d) Prepare and transmit to the De- partment of Labor a Notice of Award of Contract (Standard Form 99) immedi- ately on award of the contract; and (e) Report to the Department of La- bor any violation of the representations or stipulations required by the Walsh- Healey Act. 1-12.604 Contract clause. The following clause shall be used as required by this Subpart 1–12.6: WALSH-HEALEY PUBLIC CONTRACTS ACT · If this contract is for the manufacture or furnishing of materials, supplies, articles, or equipment in an amount which exceeds or may exceed $10,000 and is otherwise sub- ject to the Walsh-Healey Public Contracts Act, as amended (41 U.S. Code 35-45), there are hereby incorporated by reference all rep- resentations and stipulations required by said Act and regulations issued thereunder by the Secretary of Labor, such representa- tions and stipulations being subject to all applicable rulings and interpretations of the Secretary of Labor which are now or may hereafter be in effect. 17 (NEXT PAGE IS 1211) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 2, JUNE 1959) 1209 SUBPART 1-12.7 FAIR LABOR STANDARDS ACT OF 1938 Subpart 1-12.7-Fair Labor Standards 1-12.701 Act of 1938 Basic statute. The Fair Labor Standards Act of 1938 (29 U.S.C. 201-219) provides for the es- tablishment of minimum wage and max- imum hour standards, creates a wage and hour division in the Department of Labor for purposes of interpretation and en- forcement (including investigation and inspection of Government contractors), and prohibits oppressive child labor. Said Act applies to all employees, unless otherwise exempted, who are engaged in (a) interstate commerce or foreign com- merce, or (b) the production of goods for such commerce, or (c) any closely related process or occupation essential to such production. 1-12.702 Rulings on applicability or interpretation. Contractors or contractor employees who inquire concerning applicability or interpretation of the Fair Labor Stand- ards Act shall be advised that rulings concerning such matters fall within the jurisdiction of the Department of Labor, and shall be given the address of the appropriate regional office of the Wage and Hour and Public Contracts Divisions of the Department of Labor. 1-12, 702 (END OF PART) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 1, MAR, 1959) 1211 CONTENTS OF PART 1-14 INSPECTION AND ACCEPTANCE PART 1-14-INSPECTION AND ACCEPTANCE Scope of part. Responsibility for inspection. Sec. 1-14.105-2 Inspection at source. 1-14.105-3 Inspection at destination. 1-14.106 Inspection of small purchases ($2,500 or less). Sec. 1-14.000 1-14.107 Subpart 1-14.1-Inspection 1-14.100 Definitions. 1-14.108 1-14.101 General. 1-14.102 1-14.109 1-14.103 Use of Government inspection facilities. 1-14.103-1 General. 1-14.103-2 Inspection interchange interchange agree- ments.. 1-14.201 1-14.103-3 Inspection services available 1-14.202 from Federal agencies. 1-14.203 1-14.103-4 Furnishing inspection services. 1-14.204 1-14.103-5 Reimbursement for services. 1-14.205 Contractor responsibility. 1-14.206 Places of inspection. 1-14.104 1-14.105 L、 1-14.105-1 General. Rejection of nonconforming sup- plies or services. Government inspection of sup- plies under subcontracts. Inspection for foreign govern- ments. Subpart 1-14.2-Acceptance General. [Reserved] Point of acceptance. Responsibility for acceptance. Certificates of conformance. Acceptance of supplies or serv- içes not conforming with con- tract requirements. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 26, AUGUST 1962) i PART 1-14 INSPECTION AND ACCEPTANCE ட ୮ § 1-14.000 Scope of part. This part deals with inspection and acceptance under contracts for supplies or services (other than construction contracts). Subpart 1-14.1—Inspection § 1-14.100 Definitions. (a) "Inspection" means the examina- tion (including testing) of supplies and services (including, when appropriate, raw materials, components, and inter- mediate assemblies) to determine whether the supplies and services con- form to contract requirements. (b) "Testing" is an element of inspec- tion and generally denotes the deter- mination by technical means of the properties or elements of supplies, or components thereof, and involves the application of established scientific prin- ciples and procedures. § 1-14.101 General. (a) Inspection on behalf of the Gov- ernment shall be conducted in all cases prior to acceptance, except as permitted by § 1-14.205. Inspection shall be ac- complished by or under the direction or supervision of Government personnel. The contractor may be required under the terms of the contract to establish and maintain an acceptable inspection or quality control system (see § 1-14.104) to assure compliance with contract spec- ifications with a minimum of Govern- ment inspection. Except as otherwise provided in the contract, testing required to be performed by the contractor may be performed in the contractor's or sub- contractor's laboratory or any other lab- oratory acceptable to the Government. A manufacturer's certificate or other statement of quality or quantity may be considered in determining whether sup- plies or services are in conformity with the contract. In no event shall any contract preclude the Government from performing inspection. (b) The type and extent of inspection needed depend on the particular procure- ment. For example, when items which 1-14. 103–1 (a) would involve small losses in the event of defects or when knowledge of the con- tractor's reputation or past performance provides assurance that the supplies would be replaced or corrected without contest, and the cost of detailed inspec- tion is not justified, inspection may con- sist only of checks for identity, quantity, and shipping damage. 1-14.102 tion. Responsibility for inspec- Inspection, or the arrangement there- for, is the responsibility of the con- tracting activity. Where a contracting activity uses the inspection services of another Federal agency, the agency per- forming such inspection has primary in- spection cognizance, and its inspection determinations are binding on the con- tracting activity for which the inspection services are performed. In interdepart- mental procurements where Government inspection is to be made at source, it generally will be made by inspectors of the contracting agency; but this general rule does not alter inspection interchange agreements or preclude the use of in- spectors of another agency located at or servicing the contractor's plant. Where Government inspection at destination is required in interdepartmental procure- ments, the agency requiring the supplies may be requested to arrange for the in- spection. § 1-14.103 Use of Government inspec- tion facilities. § 1-14.103-1 General. By appropriate inspection agreements, executive agencies shall provide for the use of inspection services of other agen- cies when such use will assure the most economical and effective inspection con- sistent with the best interest of the Government. (a) Inspection services may be ar- ranged for on the basis of individual plants, geographic areas, specified con- tracts, or groups or classes of contracts or commodities. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 26, AUGUST 1962) 1401 PART 1-14 INSPECTION AND ACCEPTANCE 1-14, 103–1 (b) (b) Inspection agreements shall set forth the arrangements regarding reim- bursement, if any, for inspection services (see § 1-14.103-5) and shall include specific provisions for (1) use of the practices, records, and forms of the ac- tivity performing inspection, unless the use of others is mutually agreeable; (2) channels of communications; and (3) designation of source and delivery date of any Government inspection equip- ment to be supplied. § 1-14.103-2 Inspection interchange agreements. (a) Wherever there are multiple Gov- ernment inspection assignments in a supplier's plant, the agencies involved shall by an inspection interchange agree- ment provide for the interchange of in- spection services. Specific contracts may be exempted from interchange agree- ments if they are: (1) Contracts for research, devel- opment, testing, or experimental work involving inspection tasks that the con- tracting agency determines can be most effectively performed by its own inspec- tion activity; or (2) Production contracts which can be effectively serviced only by the con- tracting agency's inspectors because they have acquired special skills required to perform the unusual or highly technical tasks involved. (b) Inspection interchange agree- ments shall be designed to eliminate duplication, overlapping, or multiple as- signments of Government inspection ac- tivities in any one plant. (c) Agency procedures should permit detailed inspection interchange agree- ments to be initiated and completed at the operating level which is in a position to insure coordinated and effective im- plementation. Where operating level activities are unable to reach inspection interchange agreements or the propriety of exemptions is questioned and cannot be resolved, such matters shall be re- ferred independently by each operating level activity through channels to the head of its agency for resolution. § 1-14.103-3 Inspection services avail- able from Federal agencies. (a) General Services Administration. (1) Agencies may arrange with the nearest General Services Administration regional Quality Control Division for in- spection services (including sampling and laboratory, chemical, and physical testing) and advice required for the proper acceptance of purchased supplies and services. Requests which involve unusually large or continuing inspection. programs should be made to the General Services Administration, Federal Supply Service, Quality Control Division, Gen- eral Services Regional Office Building, Washington 25, D.C. Such inspection services and advice will be rendered to the maximum extent that current work- load permits and in accordance with the reimbursement policy outlined in § 1-14.103-5. Special attention will be given to assisting ordering offices in the inspection of supplies and services pro- cured under Federal Supply Schedule contracts. (2) If the General Services Admin- istration is unable to render the inspec- tion assistance requested, it will en- deavor to arrange for another Federal agency to provide the required services. (b) Other agencies. In addition to the General Services Administration, many Federal agencies have quality con- trol or inspection organizations which provide inspection services. Information as to the type of services available from these agencies, their policy on perform- ing services for other Federal agencies, and the making of arrangements for their services, is contained in the Direc- tory of U.S. Government Inspection Services and Testing Laboratories (see (c) of this § 1-14.103–3). (c) Directory of U.S. Government In- spection Services and Testing Labora- tories. The "Directory of U.S. Govern- ment Inspection Services and Testing Laboratories," issued by the General Services Administration, contains perti- nent information concerning the major inspection offices and testing laboratories FEDERAL PROCUREMENT REGULATIONS له 1402 (FPR CIRC. 26, AUGUST 1962) SUBPART 1-14. 1 INSPECTION L of the Federal Government. It should be used by all Federal agencies when requiring inspection services. The Direc- tory will be helpful in determining the facility best equipped, staffed, and geo- graphically located to perform the de- sired services most economically. Copies of the Directory are available to Federal agencies upon request to the General Services Administration Region 3, Re- production and Distribution Division, General Services Regional Office Build- ing, Washington 25, D.C. Copies of the Directory may be purchased from the Superintendent of Documents, U.S. Gov- ernment Printing Office, Washington 25, D.C. § 1-14.103-4 Furnishing inspection services. Executive agencies should, upon re- quest, provide inspection services to any Federal agency, any mixed ownership corporation (as defined in the Govern- ment Corporation Control Act), the Dis- trict of Columbia, the Senate, the House of Representatives, and the Architect of the Capitol and any activity under his direction. § 1-14.103-5 Reimbursement for serv- ices. (a) Any executive agency may supply, without reimbursement or transfer of funds therefor, services, work, materials, and equipment to another executive agency in connection with the inspec- tion of supplies being purchased by the latter agency. The determination whether or not to require monetary re- imbursement for inspection services rendered rests with the agency per- forming the services. Such determina- tions should be made in accordance with the following: (1) Agencies may, and should, to the maximum extent practicable, ex- change inspection services on a reim- bursement-in-kind basis without requir- ing cross billing or monetary reimburse- ment. 1—14, 104 (b) (2) Agencies may perform inspec- tion services of any value without re- quiring reimbursement where resident or itinerant inspectors are available in a manufacturing plant or nearby and where the additional work will not neces- sitate personnel increases. (3) Agencies should, generally, waive reimbursements of less than $100 and, in any event, should not seek reimburse- ment if the cost of the administrative procedures attendant to billing and col- lecting for inspection services would equal or exceed the cost of the services performed. (b) Whenever inspection services are performed for other than an executive agency, reimbursement therefor shall be in accordance with applicable laws and regulations. § 1-14.104 Contractor responsibility. (a) The standard inspection clause in § 1-7.101-5 (and in Standard Form 32, General Provisions (Supply Contract)) requires the contractor to maintain an inspection system acceptable to the Gov- ernment and records of all inspection work performed by the contractor. The contractor's inspection system should be such as to provide reasonable assurance that the supplies subject to inspection will conform to contract requirements and should include any quality control procedures necessary to this end. (b) Where quality control procedures are considered necessary (as may be the case, for example, when complex items are being purchased), a clause specifi- cally requiring the contractor to main- tain a quality control system acceptable to the Government shall be included in the contract unless the items are being purchased under specifications which in themselves contain adequate quality con- trol provisions. In addition, the contract shall specify the quality control require- ments to be complied with by the con- tractor, including control measures for J FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 26, AUGUST 1962) 1403 PART 1-14 INSPECTION AND ACCEPTANCE 1-14.104 (b) manufacturing processes and documen- tation pertinent to quality, testing and inspection, fabrication, and delivery. (c) Government inspection activities shall plan and conduct systematic eval- uation and verification of contractors' inspection systems, quality control sys- tems, and supplies, to the extent neces- sary to obtain maximum assurance of quality production by the contractor con- sistent with efficient use of manpower and facilities. In any case, however, the contractor shall be required to perform all examinations and tests called for by the contract requirements except those which are reserved for performance by the Government. § 1-14.105 Places of inspection. § 1-14.105-1 General. (a) Inspection of supplies and services shall be made at such times and places (including any stage and period of man- ufacture, and including subcontractors' plants) as are necessary to determine that the supplies and services conform to contract requirements. Each contract shall designate the place or places at which the Government intends to per- form inspection. Where the contract provides for inspection at source, the place or places of inspection may not be changed without the authorization of the contracting officer. (b) Where a contract provides for de- livery and acceptance at destination (see § 1-14.203) and the Government inspects the supplies for conformance with con- tract specifications at a place other than destination, the supplies shall not be re- inspected at destination for such conformance. However, such supplies should be examined at destination for damage in transit, quantity, and possible substitution or fraud. § 1-14.105-2 Inspection at source. Supplies and services shall be inspected at source where: (a) Inspection at any other point would require unecono would require uneconomical disassembly or destructive testing; (b) Considerable loss would result from the manufacture and shipment of unacceptable supplies or from the delay in making necessary corrections; (c) Special instruments, gauges, or fa- cilities required for inspection arè avail- able only at source; (d) Inspection at any other point would destroy or require the replacement of costly special packing and packaging; (e) A quality control system is re- quired by the contract or inspection during performance of the contract is essential; (f) Supplies requiring technical in- spection are destined for points of em- barkation for overseas shipment; or (g) It is otherwise determined to be in the best interest of the Government. § 1-14.105-3 Inspection at destination. Supplies and services shall be inspected at destination where: (a) Deliveries of supplies purchased "off the shelf" are made from a point other than that of manufacture; (b) Necessary testing equipment is lo- cated only at destination; are (c) Products being purchased processed under direct control of the National Institutes of Health or the Food and Drug Administration, Department of Health, Education, and Welfare; (d) Perishable subsistence supplies are purchased within the United States, ex- cept that perishable subsistence supplies destined for overseas shipment will normally be inspected for condition and quantity at points of embarkation; (e) Brand name products are pur- chased for authorized resale (through commissaries or similar facilities), ex- cept that where supplies are destined for direct overseas shipment, inspection (and acceptance) may be accomplished by the contracting officer or his au- thorized representative on the basis of a tally sheet evidencing receipt of ship- ment signed by the port transportation officer or other designated official at the transshipment point; or (f) It is otherwise determined to be in the best interest of the Government. FEDERAL PROCUREMENT REGULATIONS 1404 (FPR CIRC. 26, AUGUST 1962) SUBPART 1-14, 1 INSPECTION 1-14.108 L § 1-14.106 Inspection of small pur- chases ($2,500 or less). (a) This § 1-14.106 applies to all small purchases, including items described in Federal and military specifications, and qualified products. In determining the type and extent of Government inspec- tion to be required on small purchases, the smallness of possible losses and the likelihood of uncontested replacement of defective articles shall be considered. (b) Generally, inspection of small pur- chases shall be at destination. Pur- chasers, users, and installers may be considered inspectors for small purchase inspection purposes. (c) Unless detailed technical inspec- tion is necessary, inspection shall consist of examination of (1) type and kind; (2) quantity; (3) damage; (4) operability, if readily determinable; and (5) packag- ing and marking, if applicable. (d) Detailed technical inspection shall be performed if special specifications are involved or if defective supplies are likely to harm personnel or equipment. Such inspection may also be necessary for other reasons (e.g., where the use of defective supplies may cause significant loss in program time or significant in- crease in program costs). (e) Detailed technical inspection may be limited to those characteristics which are special or which are likely to cause harm. Where repetitive purchases are made of the same item from the same manufacturing source and there is good reason to rely upon the integrity of the manufacturer because of known safe- guards and a significant history of defect-free purchases, such inspection may be further limited to a check of occasional purchases. § 1-14.107 Rejection of nonconforming supplies or services. (a) Contractors ordinarily shall be given an opportunity to correct or replace nonconforming supplies or services if this can be done within the required delivery schedule. Unless the contract provides otherwise (as may be the case in some cost-reimbursement type contracts), such correction or replacement shall be without additional cost to the Govern- ment. The standard inspection clause in § 1-7.101-5 reserves to the Govern- ment the right to charge the contractor the cost of Government reinspection and retests because of prior rejection. (b) Notices of rejection of noncon- forming supplies or services shall be in writing if (1) the supplies have been de- livered to a point other than the con- tractor's plant; (2) the contractor per- sists in offering nonconforming supplies or services for acceptance; or (3) de- livery or performance is, or is likely to be, overdue without excusable cause. The reasons for rejection shall be stated. Since under certain circumstances ac- ceptance may be implied where timely notice of rejection is not furnished, no- tices of rejection should be furnished promptly to contractors. § 1-14.108 Government inspection of supplies under subcontracts. Government inspection of subcontract- ed supplies shall be made only when required in the interest of the Govern- ment. The primary purpose of subcon- tract inspection is to assist the Govern- ment inspector at the prime contractor's plant in determining the conformance of supplies with contract requirements. It does not relieve the prime contractor of any of his responsibilities under the contract. Supplies that do not qualify under the criteria in § 1-14.105-2 for Government inspection at source shall not be inspected by the Government at the subcontractor's plant. Supplies for which certificates, records, reports, and similar evidence of quality are avail- able at the prime contractor's plant shall not be Government inspected at the sub- contractor's plant except occasionally to verify such evidence. However, Govern- ment inspection shall be performed at a subcontractor's plant whenever the Gov- ernment contract requires. All oral and FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 26, AUGUST 1962) 1405 PART 1-14 INSPECTION AND ACCEPTANCE 1-14.108 written statements and contract provi- sions relating to the inspection of subcontracted supplies shall be so worded as not to (a) affect the contractual re- lationship between the prime contractor and the Government or between the prime contractor and the subcontractor, (b) establish a contractual relationship between the Government and the sub- contractor, or (c) constitute a waiver of the Government's right to inspect or re- Lject supplies. § 1-14.109 Inspection for foreign gov- ernments. Inspection will be performed only for friendly foreign governments or inter- national agencies and shall be adminis- tered in accordance with the foreign policy and security objectives of the United States. Such inspection will be provided only where consistent with or required by legislation, executive orders, or any agency policies concerning mutual security programs, setting forth foreign policy and security objectives. J FEDERAL PROCUREMENT REGULATIONS 1406 (FPR CIRC. 26, AUGUST 1962) SUBPART 1-14. 2 ACCEPTANCE L 1-14, 206 Subpart 1-14.2-Acceptance § 1-14.201 General. As used in Government contracts, "ac- ceptance" generally means the act of an authorized representative of the Gov- ernment by which the Government assents to ownership by it of existing and identified supplies, or approves specific services rendered, as partial or complete performance of the contract. Except as provided in § 1-14.206, and subject to other terms and conditions of the con- tract, the Government thereby acknowl- edges, among other things, that the supplies or services are in conformity with contract requirements, including those of quality, quantity, packaging, and marking. Depending upon the pro- visions of the contract, acceptance may be effected before delivery, at the time of delivery, or after delivery. However, supplies and services shall not be ac- cepted prior to inspection, except as per- mitted by § 1-14.205. Acceptance shall ordinarily be evidenced by execution of an acceptance certification on an inspec- Where tion or receiving report form. acceptance is accomplished at a point other than destination, supplies shall not be reinspected at destination for accept- ance purposes. However, such supplies should be examined at destination for damage in transit, quantity, and possible substitution or fraud. § 1-14.202 [Reserved] § 1-14.203 Point of acceptance. Each contract shall specify the point of acceptance. Contracts which pro- vide for delivery f.o.b. destination shall provide for acceptance at destination whether inspection is to occur at destina- tion or at source. Contracts which pro- vide for delivery f.o.b. origin shall ordinarily provide for acceptance (and inspection) at source. § 1-14.204 Responsibility for accept- ance. Acceptance is the responsibility of the contracting officer or his authorized representative. Where a contracting ac- tivity uses services of another Federal agency for the purpose of acceptance, the acceptance by the other agency is bind- ing on the activity for which the services are performed. § 1-14.205 Certificates of conformance. A contractor's certification that sup- plies or services comply with contract requirements may be considered a proper element incident to acceptance of sup- plies or services. Standard or commer- cial items, or supplies of a simple, non- critical nature, may be accepted solely on the basis of a contractor's certificate of conformance if: (a) The contracting officer or his au- thorized representative determines (1) that acceptance on that basis is in the best interest of the Government, and (2) that, because of knowledge of the supplier's reputation or past perform- ance, it is very likely that the supplies furnished will be acceptable and that any defective supplies would be replaced or corrected by the supplier without con- test; and (b) The contract (initially, or by amendment) (1) reserves to the Govern- ment the right after acceptance to in- spect the supplies within a reasonable time after delivery and to reject defec- tive items, and (2) imposes upon the contractor the obligation, in the event of such rejection, to promptly replace or correct the defective items or to reim- burse the Government therefor. § 1-14.206 Acceptance of supplies or services not conforming with con- tract requirements. Except as provided in this § 1-14.206, supplies or services tendered for accept- ance which do not conform with con- tract requirements shall be rejected (see § 1-14.107). However, if it is in the Government's best interest, for reasons of economy or the urgency of the re- quirement, acceptance of supplies or services which do not meet all contract requirements may occasionally be de- sirable. Prior to such acceptance, the FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 26, AUGUST 1962) 1407 PART 1-14 INSPECTION AND ACCEPTANCE 1-14, 206 contracting officer shall obtain the ap- proval of the requiring activity. If the nonconformity is a significant deviation from contract requirements, or if the contracting officer determines that a price reduction is appropriate, the ac- ceptance of nonconforming supplies or services shall be covered by an appropri- ate modification of the contract. A de- viation is significant if it adversely affects safety; durability; performance; or L interchangeability of parts or assem- blies; weight, where weight is a signifi- cant consideration; or any other basic objective of the specification. Where ac- ceptance of nonconforming supplies or services is to be at a reduction in price, the amount of the reduction shall be fair and reasonable (see paragraph (b) of the standard inspection clause in § 1-7.101- 5). (END OF PART) FEDERAL PROCUREMENT REGULATIONS 1408 (FPR CIRC. 26. AUGUST 1962) CONTENTS OF PART 1-16 PROCUREMENT FORMS Covenant fees. against contingent Subpart 1-16.5-[Reserved] Subpart 1-16.6— [Reserved] Subpart 1-16.7-[Reserved] Scope of part. PART 1-16-PROCUREMENT FORMS Sec. 1-16.000 Sec. 1-16.406 Subpart 1-16.1-Forms for Advertised Supply Contracts 1-16.100 Scope of subpart. 1-16.101 Forms prescribed. 1-16.102 Award documents. 1-16.103 Optional use. 1-16.800 1-16.104 Terms, conditions, and provi- 1-16.801 sions. 1-16.802 1-16.105 1-16.106 1-16.803 Incorporation of Standard Form 32 by reference. Die-cut stencils and reproducible masters. Subpart 1-16.2-Forms for Negotiated Supply 1-16.200 1-16.201 Contracts Scope of subpart. Request for Quotations (Stand- ard Form 18). 1-16.201-1 Form prescribed. 1-16.201-2 Small procurements ($2,500 or 1-16.201-3 less). Procurements in excess of $2,500. 1-16.201-4 Legal effect of quotations. 1-16.201-5 Reproduction and availability of form. Subpart 1-16.3-Purchase and Delivery Order Forms 1-16.300 Scope of subpart. 1-16.301 1-16.301-1 Order-invoice-voucher forms. Purchase Order-Invoice-Voucher (Standard Form 44). 1-16.301-2 Order-Invoice-Voucher (Stand- ard Forms 147 and 148). Subpart 1-16.4-Forms for Advertised Construction Contracts Scope of subpart. Required use. 1-16.400 1-16.401 Forms prescribed. 1-16.402 1-16.402-1 1-16.402-2 1-16.402-3 Contracts estimated not to ex- ceed $2,000. Contracts estimated to exceed $2,000 but not to exceed $10,- 000. Contracts estimated to exceeed $10,000. 1-16.402-4 Explanation of Standard Forms 19 and 19A. 1-16.403 1-16.404 1-16.405 Optional use. Terms, conditions, and provi- sions. Die-cut stencils and reproducible masters. Subpart 1-16.8-Miscellaneous Forms Scope of subpart. Bond forms. Bidder's Mailing List Application Ú.S. Government Architect-Engi- neer Questionnaire. 1-16.804 Report on procurement by civilian executive agencies. Subpart 1-16.9—Illustrations of Forms 1-16.900 Scope of subpart. 1-16.901 Standard forms. 1-16.901-18 Standard Form 18: Request for Quotations. 1-16.901-19 Standard Form 19: Invitation, Bid, and Award (Construction, Altera- tion or Repair). 1-16.901–19A Standard Form 19A: Labor Standards Provisions Applicable to Con- tracts in Excess of $2,000. 1-16.901-20 Standard Form 20: Invitation for Bids (Construction Contract). 1-16.901-21 Standard Form 21: Bid Form (Construction Contract). 1-16.901-22 Standard Form 22: Instruc- tions to Bidders (Construction Con- tract). 1-16.901-23 Standard Form 23: Construc- tion Contract. 1-16.901-23A Standard Form 23A: General Provisions (Construction Contract). 1-16.901-24 Standard Form 24: Bid Bond. 1-16.901-25 Standard Form 25: Perform- ance Bond. 1-16.901-25A Bond. 1-16.901-26 Standard Form 25A: Payment 26: Award Standard Form (Supply Contract). 1-16.901-27 Standard Form 27: Perform- ance Bond, Corporate Co-Surety Form. 1-16.901-27 A Standard Form 27A: Pay ment Bond, Corporate Co-Surety Form. 1-16.901-27B Standard Form 27B: Con- tinuation Sheet, Corporate Co-Surety Bond. 1-16.901-28 Standard Form 28: Affidavit of Individual Surety. 1-16.901-30 Standard Form 30: Invitation and Bid (Supply Contract). FEDERAL PROCUREMENT REGULATIONS i (FPR CIRC. 29, NOVEMBER 1962) CONTENTS OF PART 1-16 PROCUREMENT FORMS Sec. 1-16.901-31 Standard Form 31: Schedule (Supply Contract). 1-16.901-32 Standard Form 32: General Provisions (Supply Contract). 1-16.901-33 Standard Form 33: Invitation, Bid, and Award (Supply Contract). 1-16.901-34 Standard Form 34: Annual Bid Bond. 1-16.901-35 Standard Form 35: Annual Performance Bond. 1-16.901-36 Standard Form 36: Continua- tion Sheet (Supply Contract). Sec. 1-16.901-37 Standard Form 37: Report on Procurement by Civilian Executive Agen- cies. 1-16.901-129 Standard Form 129: Bidder's Mailing List Application. 1-16.901-251 Standard Form 251: U.S. Gov- ernment Architect-Engineer Question- naire. 1-16.902 [Reserved] 1-16.903 Department of Justice forms. 1-16.903-DJ1500 Form DJ-1500: Identical Bid Report for Procurement. FEDERAL PROCUREMENT REGULATIONS ii (FPR CIRC. 34, AUGUST 1963) PART 1-16 PROCUREMENT FORMS > 1-16.000 Scope of part. This part prescribes forms for use by executive agencies in connection with the procurement of supplies, nonpersonal services, and construction. Subpart 1-16.1-Forms for Advertised Supply Contracts 1-16.100 Scope of subpart. This subpart prescribes forms for use in procuring supplies by formal adver- tising. Illustrations of these forms are contained in Subpart 1-16.9. 1-16.101 Forms prescribed. The following standard forms are pre- scribed for use when entering into con- tracts for supplies, except as provided in section 1-16.103: (a) Award (Supply Contract) (Stand- ard Form 26, November 1949 edition). (b) Invitation and Bid (Supply Con- tract) (Standard Form 30, October 1957 edition.) Pending revision of this form, the provisions contained in § 1-2.201(a) (23), (a) (26), and (b) (13) shall be sub- stituted for paragraphs 4, 10, and 6, respectively, of the Terms and Condi- tions of the Invitation for Bids on the back of the form. (c) Schedule (Supply Contract) (Standard Form 31, November 1949 edi- tion). (d) General Provisions (Supply Con- tract) (Standard Form 32, September 1961 edition). (Pending publication of a new edition of this form, agencies shall substitute the clause contained in § 1-8.707 for clause 11 thereof; however, paragraph (e) of the clause may be modified under the circumstances and to the extent provided in § 1-8.700-2(b) (1).) (e) Invitation, Bid, and Award (Supply Contract) (Standard Form 33, October 1957 edition.) Pending revision of this form, the provisions contained in § 1- 2.201(a) (23), (a) (26), and (b) (13) shall be substituted for paragraphs 4, 10, and 1-16. 103 (a) (5) 6, respectively, of the Terms and Condi- tions of the Invitation for Bids on the back of the form. (f) Continuation Sheet (Supply Con- tract) (Standard Form 36, November 1949 edition). Invitations may be issued and bids re- ceived on either Standard Form 30 (with Standard Form 31 attached) or Stand- ard Form 33. 1-16.102 Award documents. When invitations for bids are issued on Standard Forms 30 and 31, award shall be made on Standard Form 26 or by other official written notice. When invitations are issued on Standard Form 33, award shall be made on Standard Form 33, on Standard Form 26, or by other official written notice. For ex- ample, award may be made on a purchase order form when award and related doc- umentation requirements (such as fur- nishing delivery instructions or provid- ing information copies of the award for required Government use) can thereby be accomplished simultaneously. 1-16.103 Optional use. (a) The forms prescribed in section 1-16.101 may, with appropriate adapta- tion (subject to section 1-1.009-2(d) of this chapter) be used, at the option of the agency, when entering into the fol- lowing contracts: (1) Contracts executed in foreign countries. (2) Contracts for nonpersonal serv- ices, including utility services. (3) Contracts for solid and liquid fuels and petroleum products. (4) Contracts for construction, al- teration, maintenance, or repair of ships, craft, boats, vessels, and other floating equipment, such as, but not limited to, floating dry docks, cranes and barges. (5) Contracts for indefinite quar tities which permit orders to be issued FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 32, JUNE 1963) 1601 PART 1-16 PROCUREMENT FOR MS 1-16, 103 (a) (5) against such contracts by ordering of- fices of more than one Federal agency. (b) The forms prescribed by section 1-16.101 may be used in negotiated pro- curement if appropriate changes are made in accordance with section 1- 1.009-2(d). For example, the words "and shall be publicly opened" may be lined out. 1-16.104 visions. Terms, conditions, and pro- (a) Additional terms, conditions, and provisions considered by an agency to be essential to its procurement and not inconsistent with those contained in the forms prescribed in this Subpart 1-16.1 may be incorporated in invitations for bids in which these forms are used. Each executive agency shall review pe- riodically such additional terms, condi- tions, and provisions which are in com- mon use in such agency with a view to standardization of those in general use and elimination of unnecessary addi- tions, and shall, from time to time, for- ward to the Administrator of General Services such additional terms, condi- tions, and provisions as are considered desirable for inclusion in the standard forms. (b) In the interest of establishing and maintaining uniformity in Government contracts to the greatest extent feasible, deviations from the forms prescribed by this Subpart 1-16.1 shall be kept to a minimum. Deviations may be author- ized in accordance with section 1-1.009 of this chapter. 1-16.105 Incorporation of Standard Form 32 by reference. Since Standard Form 32 is incorpo- rated by reference in the Invitation for Bids portion of Standard Forms 30 and 33, it is not necessary to attach Standard Form 32 each time invitations for bids are issued to concerns regularly doing business with the Government. How- ever, when a revised edition of Standard Form 32 is issued it is essential that agen- cies distribute copies thereof to all pro- spective bidders on their mailing lists, requesting that the form be retained for future reference. Additional copies of the form form must be made available promptly on request. If desired, a single copy of Standard Form 32 may accom- pany the invitation for bids. 1-16.106 Die-cut stencils and repro- ducible masters. (a) The use of die-cut stencils or re- producible masters for printing Standard Forms 26, 30, 31, 33, and 36, is authorized (subject to the regulations of the Con- gressional Joint Committee on Printing) in order to eliminate excessive typing or overprinting in providing the necessary number of copies. (b) The Terms and Conditions of the Invitation for Bids, which appear on the reverse of Standard Forms 30 and 33, are printed and stocked separately as Re- verse of Standard Forms 30 and 33. These Terms and Conditions shall be used when reproducing Standard Forms 30 or 33 from die-cut stencils or repro- ducible masters, thereby eliminating the need for reproducing these standard terms each time an invitation for bids is prepared. The form may be ordered in the same manner as other standard forms. FEDERAL PROCUREMENT REGULATIONS ( 1602 (FPR CIRC. 28, OCTOBER 1962) SUBPART 1-16, 4 FORMS FOR ADVERTISED CONSTRUCTION CONTRACTS Subpart 1-16.4-Forms for Advertised Construction Contracts 1-16.400 Scope of subpart. This subpart prescribes forms for use in procuring construction by formal ad- vertising. Illustrations of these forms are contained in Subpart 1-16.9. 1-16.401 Forms prescribed. The following standard forms are pre- scribed for use in accordance with this Subpart 1-16.4: (a) Invitation, Bid, and Award (Con- struction, Alteration or Repair) (Stand- ard Form 19, January 1959 edition). Pending revision of this form, agencies shall (1) substitute the clause contained in § 1-7.101-18 for clause 9 of the General Provisions on the reverse thereof; and (2) substitute the following small busi- ness representation for that in the Bid section of the form: "That he [ ] is, [ ] is not, a small business concern. (For this purpose, a small business con- cern is a business concern, including its affiliates, which (a) is independently owned and operated, (b) is not dominant in the field of operation in which it is bidding on Government contracts, and (c) had average annual receipts for the preceding three fiscal years not exceed- ing $7,500,000. For additional informa- tion see governing regulations of the Small Business Administration.)" (b) Labor Standard Provisions-Ap- plicable to Contracts in Excess of $2,000 (Standard Form 19A, January 1959 edition). (c) Invitation for Bids (Construction Contract) (Standard Form 20, January 1961 edition). (d) Bid Form (Construction Con- tract) (Standard Form 21, January 1961 edition). Pending revision of this form, agencies shall substitute "$7,500,000" for "$5,000,000" in the small business repre- sentation statement the reverse thereof. on (e) Instructions to Bidders (Construc- tion Contract) (Standard Form 22, Janu- ary 1961 edition). (Pending revision of 1–16.402—2 (a) this form, the provision contained in § 1-2.201(a) (23) shall be substituted for paragraph 7 of the form.) (f) Construction Contract (Standard Form 23, January 1961 edition). (g) General Provisions (Construction Contract) (Standard Form 23A, April 1961 edition). (Pending publication of a new edition of this form, agencies shall substitute the clause contained in § 1- 8.709-1 for clause 5 thereof; however, paragraph (e) of the clause may be modified under the circumstances and to the extent provided in the last sen- tence of § 1-8.700-2(b) (4).) 1-16.402 Required use. The forms prescribed by section 1- 16.401 shall be used for fixed price con- tracts, entered into pursuant to formal advertising, for construction (including alteration or repair) of public buildings or works, except for: contracts for the construction, alteration, or repair of vessels; and contracts for construction, alteration, or repair work in foreign countries. Determination as to the form or forms to be used in each instance shall be made in accordance with this section 1-16.402. 1-16.402-1 Contracts estimated not to exceed $2,000. Standard Form 19 shall be used for contracts estimated not to exceed $2,000. Standard Form 22 also may be used. 1-16.402-2 Contracts estimated to ex- ceed $2,000 but not to exceed $10,000. Standard Forms 19 and 19A shall be used for contracts estimated to exceed $2,000 but not to exceed $10,000. Stand- ard Form 22 also may be used. (a) The following language shall be inserted in the space provided in the Bid portion of Standard Form 19 prior to issuance of the invitation: The undersigned further agrees, if this bid exceeds $2,000, TO COMPLY with the Labor FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 29, NOVEMBER 1962) 1607 PART 1-16 PROCUREMENT FORMS 1–16.402–2 (a) Standards Provisions Applicable to Contracts in Excess of $2,000 (Standard Form 19A) in lieu of those in Provision 10 hereof; TO PAY not less than the minimum hourly rates of wages set forth in the specifications; and TO FURNISH a performance bond in an amount equal to percent and a payment bond in an amount equal to 50 percent of the contract price with surety or sureties acceptable to the Government. (b) In all cases where the provision set forth in section 1--16.402-2(a) is in- serted, the officer awarding the contract shall (1) determine the amount of the performance bond which he deems ade- quate for the protection of the United States; (2) insert the appropriate figure in the blank space provided therefor; and (3) include in the specifications the appropriate wage rate determination of the Secretary of Labor. It will be noted that both the provision and Standard Form 19A are clearly inapplicable unless the bid exceeds $2,000. 1-16.402-3 Contracts estimated to ex- ceed $10,000. Standard Forms 19A, 20, 21, 22, 23, and 23A shall be used for contracts esti- mated to exceed $10.000. 1-16.402-4 Explanation of Standard Forms 19 and 19A. (a) Standard Form 19 (Invitation, Bid, and Award) provides a single sheet form on which bids may be solicited, submitted, and accepted. The General Provisions on the reverse are adequate for contracts of $2,000 or less and become adequate for contracts in excess of that amount when Standard Form 19A is added. (b) Whenever the Government's esti- mate indicates that the low bid will, or may, exceed $2,000, the language pre- scribed in section 1-16.402-2(a) shall be inserted in the Bid portion of Standard Form 19; Standard Form 19A shall be attached; and the appropriate wage rate determination of the Secretary of Labor shall be incorporated in the specifica- tions. 1-16.403 Optional use. Use of the forms prescribed in section 1-16.401 for negotiated contracts is optional. However, in the interest of uniformity, it is recommended that these forms be used (within the areas outlined in section 1-16.402-1, 1-16.402-2, and 1-16.402-3) for contracts entered into on the basis of competitive bids but which are termed negotiated contracts because the requirements of formal ad- vertising are not fully met. When used for negotiated contracts, the forms will be adapted as required by agency pro- cedures (e.g., the requirement that bids be "sealed" and "publicly opened" may be lined out). 1-16.404 Terms, conditions, and pro- visions. (a) Additional terms, conditions, and provisions considered by any agency to be essential to its contractual relation- ships and not inconsistent with those contained in the forms prescribed in this Subpart 1-16.4 may be incorporated in invitations for bids in which these forms are used by so providing in invitations for bids, in the Alterations paragraph of Standard Form 23, in the schedule, or in the specifications, as appropriate, in accordance with agency implementing instructions. Each executive agency shall review periodically such additional terms, conditions, and provisions which are in common use in such agency with a view to standardization of those in general use and elimination of unneces- sary additions, and shall, from time to time, forward to the Administrator of General Services such additional terms, conditions, and provisions as are. con- sidered desirable for inclusion in the standard forms. (b) In the interest of establishing and maintaining uniformity in Government- contracts to the greatest extent feasible, deviations from the forms prescribed in this Subpart 1-16.4 shall be kept to a FEDERAL PROCUREMENT REGULATIONS 1608 (fpr Circ. 29, NOVEMBER 1962) SUBPART 1-16.4 FORMS FOR ADVERTISED CONSTRUCTION CONTRACTS 1-16.406 minimum. Deviations may be author- ized in accordance with section 1-1.009 of this chapter. When a deviation is authorized, changes shall be made in invitations for bids, in the Alterations paragraph of Standard Form 23, in the schedule, or in the specifications, as appropriate, in accordance with agency implementing instructions. (c) The language of section 1-16.404 (a) shall not be construed to authorize the use with Standard Form 19 of clauses which appear in Standard Form 23A and which were condensed or omitted in the development of Standard Form 19 in the interests of simplification and uniform- ity. Where such use is deemed essential, the matter shall be handled as a devia- tion as provided in section 1-16.404 (b). (d) Clause 3 (Disputes) of Standard Form 19 may be altered, by appropriate provision in addenda to the form, in the schedule, or in the specifications, as ap- propriate, in accordance with agency implementing instructions, to define “head of the Federal agency” or to pro- vide for an intermediate appeal board procedure. (e) During periods of national emer- gency, agencies may, with the prior ap- proval of the Administrator of General Services, amend paragraph (d) of Clause 5 (Termination for Default-Damages for Delay-Time Extensions) of Stand- ard Form 23A by deleting the words "unforeseeable causes" in the two places where they appear in the first sentence, and substituting therefor the words, "causes, other than normal weather,". 1-16.405 Die-cut stencils and repro- ducible masters. (a) The use of die-cut stencils or re- producible masters for printing Standard Forms 19, 20, and 21 is authorized (sub- ject to the regulations of the Congres- sional Joint Committee on Printing) in order to eliminate excessive typing or overprinting in providing the necessary number of copies. Additional wording required by any agency on any of its invitations for bids and bid forms may be preprinted on the die-cut stencils or reproducible masters, if desired. How- ever, the sequence and wording of the items appearing on the prescribed forms shall not be altered. which (b) The General Provisions appear on the reverse of Standard Form 19 are printed on paper suitable for re- production purposes, and stocked sepa- rately as Reverse of Standard Form 19. In order to simplify the reproduction process, this form shall be used when printing Standard Form 19 from die-cut stencils or reproducible masters, thereby eliminating the need for reproducing these standard terms each time an invi- tation for bids is prepared. It may be ordered in the same manner as other standard forms. (c) Agencies using die-cut stencils or reproducible masters for the face of Standard Form 21 are further authorized to use the following language in lieu of the language appearing at the bottom of the face of the form if it better suits their administrative requirements: and agrees that, upon written notice that a preliminary examination of the bids indi- cates that he will be the successful bidder, he will within calendar days (unless a longer period is allowed) after receipt of the prescribed forms, execute Standard Form 23, Construction Contract, and give perform- ance bond and payment bond on Government standard forms, if these forms are required, with good and sufficient sureties: Provided, That contract and bond forms executed by the bidder prior to award of the contract will become effective only if his bid actually is accepted within the time established herein. 1-16.406 Covenant against contingent fees. Whenever Standard Form 19 is used, in accordance with this Subpart 1-16.4, for formally advertised contracts, the requirement of section 1-1.503, for in- clusion of the Convenant against Con- tingent Fees clause, shall be inapplicable, (NEXT PAGE IS 1611) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 29, NOVEMBER 1962) 1609 Subpart 1-16.5-[Reserved] Subpart 1-16.6-[Reserved] Subpart 1-16.7—[Reserved] (NEXT PAGE IS 1613) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 1, MAR, 1959) 1611 # . SUBPART 1-16, 8 MISCELLANEOUS FORMS Subpart 1-16.8-Miscellaneous Forms 1-16.800 Scope of subpart. This subpart prescribes miscellaneous forms, other than procurement contract forms, for use in connection with the procurement of supplies and services. Illustrations of these forms are con- tained in Subpart 1-16.9. 1-16.801 Bond forms. (a) The following standard forms shall be used, except in foreign coun- tries, when a bid, performance, or pay- ment bond, or an individual surety is required: (1) Bid Bond (Standard Form 24, November 1950 edition). (2) Performance Bond (Standard Form 25, November 1950 edition). (3) Payment Bond (Standard Form 25A, November 1950 edition). (4) Performance Bond (Corporate Co-Surety) (Standard Form 27, Novem- ber 1950 edition). (5) Payment Bond (Corporate Cu- Surety) (Standard Form 27A, November 1950 edition). (6) Continuation Sheet (Corporate Co-Surety) (Standard Form 27B, No- vember 1950 edition). (7) Affidavit of (Standard Form edition). 28, Individual Surety November 1950 (8) Annual Bid Bond (Standard Form 34, November 1950 edition). (9) Annual Performance Bond (Standard Form 35, November 1950 edition). (b) The bond forms shall be used as indicated in the Instruction portion of each form and implementing agency regulations shall be consistent therewith. 1-16.802 Bidder's Mailing List Appli- cation. Standard Form 129 (Bidder's Mailing List Application) is prescribed for use in connection with the establishment and maintenance of bidders mailing lists in 1-16,804 (a) accordance with section 1-2.205. Sup- plemental information, where required, may be obtained in accordance with agency procedures. 1-16.803 U.S. Government Architect- Engineer Questionnaire. (a) The U.S. Government Architect- Engineer Questionnaire (Standard Form 251, June 1961 edition) is designed to provide for uniform presentation, by ar- chitectural and/or engineering firms, of information as to their professional qualifications. This form shall be used, in lieu of any other Government form, whenever an agency desires to obtain such information for use in contracting for architectural and/or engineering services related to construction, altera- tion, or repair of buildings, bridges, roads, or other kinds of real property. Services related to construction include master planning, engineering studies, investigations, development of the de- sign, preparation of plans and specifica- tions, and inspection and supervision of work performed during the construction period. (b) Use of the form prescribed in par- agraph (a) of this section is not required in the procurement of architectural and/or engineering services related to construction, alteration, repair, process- ing or assembling of vessels, aircraft, or other kinds of personal property. 1-16.804 Report on procurement by civilian executive agencies. (a) Agencies required to report. Each civilian executive agency shall report its procurement to the General Services Ad- ministration (1) for the agency as a whole and (2) for each bureau or com- parable major organizational unit of the agency. When procurement is per- formed by one agency for another, the agency doing the procurement shall re- port the transaction. Agencies nor- mally undertaking procurement, but having no reportable procurement dur- ing any report period, shall submit negative reports. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 16, JUNE 1961) 1613 PART 1-16 PROCUREMENT FORMS 1—16,804 (b) (b) Form prescribed. Standard Form 37, Report on Procurement by Civilian Executive Agencies (June 1961 edition), is prescribed for use when reporting pro- curement in accordance with this section. (c) Preparation of report. Except for the procurements excluded in para- graph (d) of this section, the report shall include the dollar amount of all types of commitments which obligate the Government to an expenditure of funds for property and services (includ- ing maintenance, repair and construc- tion of buildings, roads, etc.; and research and development). Instruc- tions for filling in Standard Form 37 are stated on the form (see § 1-16.901- 37). (d) Procurements to be excluded from the report. Exclude from the report procurements: (1) Which are $100 or less. (2) By use of imprest funds (petty cash) and credit cards. (3) At stations or offices for which total annual transactions, of the types covered by this report, are less than $2,500. (4) From Federal sources of supply, such as: District of Columbia Govern- ment, Federal Prison Industries, Inc., Government Printing Office, General Services Administration (stores depots, fuel yard, consolidated and special pur- chasing service, repair shops and furni- ture rehabilitation service, and excess property). (5) From educational and nonprofit institutions. (6) Of blind-made products under the Act of June 25, 1938 (41 U.S.C. 46-48). (7) By activities outside the United States, and from foreign contractors. (8) Of transportation and public utilities services. (9) Of land and easements; leasing of space; acquisition of property by fore- closure. (10) Under the Defense Production Act of 1950, as amended. (11) For price support, grants to farmers, or stabilization; of agricultural commodities for transfer to foreign gov- ernments or for foreign aid, relief, or rehabilitation; and under section 6 of the Farm Credit Act of 1937, as amended (12 U.S.C. 6407). Reports (e) Frequency and due date. shall be prepared semiannually to cover the periods January 1 through June 30, and July 1 through December 31, of each year, and shall be submitted in an origi- nal only, within 30 workdays after the close of the period. Reports shall be addressed to the General Services Ad- ministration, Office of Finance and Ad- ministration, General Services Building, Washington 25, D.C. Г 1 FEDERAL PROCUREMENT REGULATIONS U. S. GOVERNMENT PRINTING OFFICE: 1962 O - 652504 (37) 1614 (FPR CIRC, 27, SEPTEMBER 1962) SUBPART 1–16.9 ILLUSTRATIONS OF FORMS 1-16.903 Subpart 1-16.9-Illustrations of Forms 1-16.900 Scope of subpart. This subpart contains illustrations of forms used in procurement. 1-16.901 Standard forms. The standard forms are illustrated in this section to show their text, format, and arrangement and to provide a ready source of reference. The The subsection numbers in this section correspond with the standard form numbers. Thus, in subsection 33 of this section 1-16.901 ap- pears Standard Form 33. These forms may be inspected at General Services Administration regional offices and at most Government procurement activi- ties, and, generally, are available for sale from the Superintendent of Documents, Government Printing Office, Washing- ton 25, D.C. § 1-16.902 § 1-16.903 forms. [Reserved] Department of Justice Department of Justice forms are il- lustrated in this section in the same manner and for the same purpose as is stated in § 1-16.901 for standard forms. (NEXT PAGE IS 1617) FEDERAL PROCUREMENT REGUL REGULATIONS 1615 *? (FPR CIRC, 34, AUGUST 1963) PART 1-16 PROCUREMENT FORMS { 1-16.901-18 Standard Form 18: Request for Quotations. STANDARD FORM 18, MAY 1959 GENERAL SERVICES ADMINISTRATION FED. PROC. REG. (41 CFR) 1.16.201 ISSUED BY FOR INFORMATION CALL: 1-16.901-18 REQUEST NO. DATE ISSUED SHEET NO. REQUEST FOR QUOTATIONS THIS IS NOT AN ORDER NUMBER OF SHEETS 1 DELIVERY (Check REQUISITION NO./PURCHASE AUTHORITY NO. one F.0.B. DESTINA- TION REQUIRED DELIVERY DATE(S) OTHER (See Supplies or Services) Please furnish quotations in to the above office on or before the close of business (date) Supplies are of domestic origin unless otherwise indicated by quoter. The Government reserves the right to consider quotations or modifications thereof received after the date indicated should such action be in the interest of the Government. This is a request for information and quotations furnished are not offers. If you are unable to quote, please so indicate on this form and return it. This request does not commit the Government to pay any costs incurred in the preparation or the sub- mission of this quotation, or to procure or contract for supplies or services. DESTINATION (Consignee and address) TO: ୮ ITEM NO. L SUPPLIES OR SERVICES ୮ L QUANTITY SPECIMEN UNIT UNIT PRICE AMOUNT Prices quoted include applicable Federal, state, and local taxes. Discounts for prompt payment will be allowed as follows: Quoter Represents: (Check appropriate boxes) (1) That it % 10 calendar days; % 20 calendar days; % 30 calendar days. is, is not, a small business concem. Generally, a small business concem for the purpose of Government procurement is a concem that (1) is not dominant in its field of operation and, with its affiliates, employs fewer than 500 employees, or (2) is certified as a small business concern by the Small Business Administration. (See Code of Federal Regulations, Title 13, Part 121, as amended, which contains the detailed definition and related procedures.) If quoter is a small business concem and is not the manufacturer of the supplies quoted on, it also represents that all supplies quoted on will not, be manufactured or produced by a small business concem in the United States, its Territories, its possessions, or the Commonwealth of Puerto Rico. (2) That it is a regular dealer in, manufacturer of, the supplies quoted upon. (3) That it operates as an individual, — partnership, NAME OF QUOTER (Include address if different from above) will, corporation, incorporated in the State of SIGNATURE OF PERSON AUTHORIZED TO SIGN QUOTATION CATE TYPE OR PRINT SIGNER'S NAME AND TITLE TELEPHONE NO (NEXT PAGE IS 1619) FEDERAL PROCUREMENT REGULATIONS L (FPR CIRC, 2, JUNE 1959) 1617 ì SUBPART 1-16.9 ILLUSTRATIONS OF FORMS 1-16.901–19 1-16.901–19 Standard Form 19: Invitation, Bid, and Award (Construction, Alteration or Repair). (a) Page 1 of Standard Form 19. STANDARD FORM 19 JANUARY 1959 EDITION GEN. SERV. ADMIN. FED. PROC. REG. (41 CFR) 1.16.401 REFERENCE INVITATION, BID, AND AWARD (Construction, Alteration or Repair) INVITATION FOR BIDS ISSUING OFFICE DATE ISSUED: BID RECEIVING OFFICE (Include in correspondence) INFORMATION REGARDING BIDDING MATERIAL MAY BE OBTAINED FROM THE ISSUING OFFICE SEALED BIDS in covering work described in specifications, schedules, drawings and conditions entitled and dated as follows: will be received at the Bid Receiving Office until and then publicly opened. (Time) (Date) Sealed envelopes containing bids shall be addressed to the Bid Receiving Office and shall be marked to show: Bidder's Name and Address; Reference ; Time and Date of Opening; BID (This Section to be completed by Bidder) DATE BID SUBMITTED: The undersigned agrees, if this bid is accepted within. calendar days after date of opening, to complete all work specified in strict accord- ance with the above-identified documents and the General Provisions on the reverse hereof, within calendar days after receipt of notice to proceed, for the following amount including all applicable Federal, State, and local taxes. BIDDER REPRESENTS: (Check appropriate boxes) 1. That he is, is not, a small business concern. For this purpose, a small business concern is one that (a) is independently owned and operated, (b) is not dominant in its field of operation, and (c) with affiliates, had average annual receipts for the preceding three years of $5,000,000.00 or less. (See Code of Federal Regulations, Title 13, Part 121, as amended, for additional information.) 2. That he operates as an individual, partnership, orporation, incorporated in the State of SPECIMEN NAME AND ADDRESS OF BIDDER (Street, city, Star Type or print.) SIGNATURE OF PERSON AUTHORIZED TO SIGN THIS BID TYPE OR PRINT SIGNER'S NAME AND TITLE AWARD (This Section for Government only) DATE OF AWARD: The above Bid is accepted in the amount of $ You are directed to proceed with the work upon receipt of this Award. Notice to proceed will be issued upon receipt of acceptable payment and performance bonds. THE UNITED STATES OF AMERICA BY (Contracting Officer) (Title) (FPR CIRC, 2, JUNE 1959) (fpr ୮ L 1619 FEDERAL PROCUREMENT REGULATIONS PART 1-16 PROCUREMENT FORMS 1-16.901-19 (b) Page 2 of Standard Form 19. GENERAL PROVISIONS L 1. CHANGES AND CHANGED CONDITIONS.- (a) The Contracting Officer may, in writing, order changes in the drawings and specifications within the general scope of the contract. (b) The Contractor shall, before proceed- ing further, notify the Contracting Officer in writing of sub- surface or latent conditions differing materially from those indicated in this contract or unknown unusual physical con- ditions at the site. (c) If changes under (a) or conditions under (b) increase or decrease the cost of, or time required for, performing the work, upon assertion of a claim by the Contractor before final settlement of the contract, a written equitable adjust- ment shall be made; except that no adjustment under (b) shall be made unless the notice required therein was given or unless the Contracting Officer determines the facts justify its waiver. If the adjustment cannot be agreed upon, the dispute shall be decided pursuant to Clause 3. 2. TERMINATION FOR DEFAULT-DAMAGES FOR DELAY-TIME EX- TENSIONS.- (a) If the Contractor does not prosecute the work so as to insure completion, or fails to complete it, within the time specified, the Government may, by written notice to the Contractor, terminate his right to proceed. Thereafter, the Government may have the work completed and the Con- tractor shall be liable for any resulting excess cost to the Government. If the Government does not terminate the Contractor's right to proceed, he shall continue the work and shall be liable to the Government for any actual damages. occasioned by such delay unless liquidated damages are stipulated. (b) The Contractor's right to proceed shall not be termi- nated nor the Contractor charged with actual or liquidated damages under (a) above because of any delays in comple tion of the work due to causes other than normal weather, beyond his control and without his fault or negligence, in- cluding but not restricted to, acts of God, acts of the public enemy, acts of the Government (in either its sovereign or contractual capacity), acts of another contractor in the per- formance of a contract with the Government, fires, floods, epidemics, quarantine restrictions, strikes, freight embargoes, and unusually severe weather, or delays of subcontractors or suppliers due to causes beyond their control and without their fault or negligence: Provided. That the Contractor shall within 10 days from the beginning of any such delay, un- less the Contracting Officer shall grant a further period of time prior to the date of final settlement of the contract, notify the Contracting Officer in writing of the causes of delay. The Contracting Officer shall ascertain the facts and the extent of the delay and extend the time for completing the work when in his judgment the findings of fact justify such an extension, and his findings of fact shall be final and conclusive on the parties hereto, subject only to appeal as provided in Clause 3 hereof. 3. DISPUTES.- The Any dispute concerning a question of fact arising under this contract, not disposed of by agreement, shall be decided by the Contracting Officer, who shall reduce his decision to writing and furnish a signed copy to the Contractor. Such decision shall be final and conclusive unless, within 30 days from the date of receipt thereof, the Contractor mails or otherwise furnishes to the Contracting Officer a written ap- peal, addressed to the head of the Federal agency. Contractor shall be afforded an opportunity to be heard and to offer evidence. The decision of the head of the Federal agency or his authorized representative, shall be final and conclusive unless fraudulent, or capricious, or arbitrary, or so grossly erroneous as necessarily to imply bad faith, or not supported by substantial evidence. Pending final deci- sion of a dispute hereunder, the Contractor, shall proceed diligently with the performance of the contract and in ac- cordance with the Contracting Officer's decision. 4. RESPONSIBILITY OF CONTRACTOR.- At his own expense the Contractor shall: (a) obtain all re- quired licenses and permits; (b) provide competent superin- tendence; (c) take precautions necessary to protect persons or property against injury or damage and be responsible for any such injury or damage that occurs as a result of his fault or negligence; (d) perform the work without unneces- sarily interfering with other contractors' work or Govern- ment activities; (e) be responsible for all damage to work performed and materials delivered (including Government- furnished items), until completion and final acceptance. 5. MATERIALS AND WORKMANSHIP.- The work shall be under the general direction and subject to the inspection of the Contracting Officer or his duly au thorized representative who may require the Contractor to correct defective workmanship and materials without cost to the Government. 6. PAYMENTS.- Progress payments equal to 90 percent of the value of work performed may be made monthly on estimates approved by the Contracting Officer. Upon payment therefor, title to the property shall vest in the Government. The Contractor will notify the Government when all work is complete. Final payment will be made after final acceptance. 7. OFFICIALS NOT TO BENEFIT.- No Member of or Delegate to Congress, or Resident Com- missioner, shall be admitted to any share or part of this contract, or to any benefit that may arise therefrom; but this provision shall not be construed to extend to this contract if made wih a corporation for its general benefit. 8. BUY AMERICAN ACT.- The Contractor, subcontractors, material men, and suppliers must comply with the Buy American Act of March 3, 1933 (41 U.S.C. 10a-10d) and Executive Order 10582 of Decem- ber 17, 1954 (19 Fed. Reg. 8723). (In substance the above require use of domestic materials except as otherwise authorized by the Act and Executive Order.) 9. NONDISCRIMINATION IN EMPLOYMENT.- (a) In connection with the performance of work under this contract, the Contractor agrees not to discriminate against any employee or applicant for employment because of race, religion, color, or national origin. The aforesaid provision shall include, but not be limited to, the following: Employ- ment, upgrading, demotion, or transfer; recruitment or re- cruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, in- cluding apprenticeship. The Contractor agrees to post here- after in conspicuous places, available for employees and ap- plicants for employment, notices to be provided by the Contracting Officer setting forth the provisions of the non- discrimination clause (b) The Contractor further agrees to insert the foregoing provision in all subcontracts hereunder, except subcontracts for standard commercial supplies or raw materials. 10. LABOR STANDARDS PROVISIONS APPLICABLE TO CONTRACTS NOT IN EXCESS OF $2,000. (a) Eight-Hour Laws-Overtime Compensation. - The Eight- Hour Laws (40 U.S.C. 321-326) are applicable to this con- tract. (In substance they provide that laborers and me- chanics employed by the Contractor or his subcontractors shall be paid not less than time and a half for work in ex- cess of 8 hours a day. Violations are punishable as pre- scribed in 40 U.S.C. 322-324.) (b) Nonrebate of Wages.-The Regulations issued by the Secretary of Labor (29 CFR, Part 3) pursuant to the Anti- Kickback Act, as amended (40 U.S.Č. 276 (c), 18 U.S.C. 874), are applicable to this contract. (In substance they provide that no deductions may be made from wages ex- cept those required by law or permitted by the Regulations, that contractors and subcontractors shall preserve for 3 years after completion of the work payrolls which contain for each employee, his name, address, correct classification, rate of pay, daily and weekly number of hours worked, deductions made, and actual wages paid, and shall submit weekly a statement of compliance, the form of which is stated in the Regulations.) contracts. (c) Subcontractors-Termination. -The Contractor agrees to insert paragraphs (a) and (b) immediately above in all sub- The term "Contractor" as used in such para- graphs in any subcontract shall be deemed to refer to the subcontractor. Breach of the requirements of this Clause 10 may be grounds for the termination of this contract. 11. CONVICT LABOR.- In connection with the performance of work under this contract, the Contractor agrees not to employ any person undergoing sentence of imprisonment at hard labor. REGULATIONS FEDERAL PROCUREMENT 1620 (FPR CIRC. 2. JUNE 1959) SUBPART 1-16.9 ILLUSTRATIONS OF FORMS 1-16.901-19A 1-16.901-19A Standard Form 19A: Labor Standards Provisions Applicable to Contracts in Excess of $2,000. ཀ Г STANDARD FORM 19A JANUARY 1959 EDITION GENERAL SERVICES ADMINISTRATION FED. PROC. REG. (41 CFR) 1-16.401 LABOR STANDARDS PROVISIONS APPLICABLE TO CONTRACTS IN EXCESS OF $2,000 DAVIS-BACON ACT (40 U.S.C. 276a-a(?)) (a) All 'mechanics and laborers employed or working directly upon the site of the work will be paid uncon. ditionally and not less often than once a week, and with- out subsequent deduction or rebate on any account, (ex- cept such payroll deductions as are permitted by the Copeland Aci (Anti-Kickback) Regulations (29 CFR, Part 3)) the full amounts due at time of payment, com- puted at wage rates not less than those contained in the wage determination decision of the Secretary of Labor which is attached hereto and made a part hereof, regard. Jess of any contractual relationship which may be alleged to exist between the Contractor or subcontractor and such laborers and mechanics; and a copy of the wage determina. tion decision shall be kept posted by the Contractor at the site of the work in a prominent place where it can be easily seen by the workers. (b) In the event it is found by the Contracting Officer that any laborer or mechanic employed by the Contractor or any subcontractor directly on the site of the work covered by this contract has been or is being paid at a rate of wages less than the rate of wages required by para- graph (a) of this clause, the Contracting Officer may (1) by written notice to the Government Prime Contractor terminate his right to proceed with the work, or such part of the work as to which there has been a failure to pay said required wages, and (2) prosecute the work to com. pletion by contract or otherwise, whereupon such Con- tractor and his sureties shall be liable to the Government for any excess costs occasioned the Government thereby. (c) Paragraphs (a) and (b) of this clause shall apply to this contract to the extent that it is (1) a prime-con- tract with the Government subject to the Davis-Bacon Act or (2) a subcontract under such prime contract. 2. EIGHT-HOUR LAWS-OVERTIME COMPENSATION No laborer or mechanic doing any part of the work contemplated by this contract, in the employ of the Con- tractor or any subcontractor contracting for any part of said work contemplated, shall be required or permitted to work more than eight hours in any one calendar day upon such work, except upon the condition that compen- sation is paid to such laborer or n.echanic in accordance with the provisions of this clause. The wages of every laborer and mechanic employed by the Contractor or any subcontractor engaged in the performance of this contract shall be computed on a basic day rate of eight hours per day and work in excess of eight hours per day is permit. ted only upon the condition that every such laborer and mechanic shall be compensated for all hours worked in excess of eight hours per day at not less than one and one-half times the basic rate of pay. For each violation of the requirements of this clause a penalty of five dollars shall be imposed for each laborer or mechanic for every calendar day in which such employee is required or per- mitted to labor more than eight hours upon said work without receiving compensation computed in accordance with this clause, and all penalties thus imposed shall be withheld for the use and benefit of the Government: Pro- vided. That this stipulation shall be subject in all respects to the exceptions and provisions of the Eight-Hour Laws as set forth in 40 U.S.C. 321, 324, 325, 325a, and 326, which relate to hours of labor and compensation for over. time. 3. APPRENTICES Apprentices will be permitted to work only under a bona fide apprenticeship program registered with a State Apprenticeship Council which is recognized by the Federal Committee on Apprenticeship, U.S. Department of Labor: or if no such recognized Council exists in a State, under a program registered with the Bureau of Apprenticeship. U.S. Department of Labor. 4. PAYROLL RECORDS AND PAYROLLS (a) Payroll records will be maintained during the course of the work and preserved for a period of three years thereafter for all laborers and mechanics working at the site of the work. Such records will contain the name and address of each such employee, his correct classifica- tion, rate of pay, daily and weekly number of hours worked, deductions made and actual wages paid. The Contractor will make his employment records available for inspection by authorized representatives of the Contracting Officer and the U.S. Department of Labor, and will permit such representatives to interview employees during working hours on the job. (b) A certified copy of all payrolls will be submitted weekly to the Contracting Officer. The Government Prime Contractor will be responsible for the submission of certified copies of the payrolls of all subcontractors. The certification will affirm that the payrolls are correct and complete, that the wage rates contained therein are not less than the applicable rates contained in the wage de- termination decision of the Secretary of Labor attached to this contract, and that the classifications set forth for each laborer or mechanic conform with the work he performed. 5. COPELAND (ANTI-KICKBACK ACT)-NONRE- BATE OF WAGES The regulations of the Secretary of Labor applicable to Contractors and subcontractors (29 CFR, Part 3), made pursuant to the Copeland Act, as amended (40 U.S.C. 276c) and to aid in the enforcement of the Anti-Kick. back Act (18 U.S.C. 874) are made a part of this contract by reference. The Contractor will comply with these regulations and any amendments or modifications thereof and the Government Prime Contractor will be responsible for the submission of statements required of subcontractors thereunder. The foregoing shall apply except as the Sec· retary of Labor may specifically provide for reasonable limitations, variations, tolerances, and exemptions. 6. WITHHOLDING OF FUNDS TO ASSURE WAGE PAYMENT There may be withheld from the Contractor so much of the accrued payments or advances as may be considered necessary to pay laborers and mechanics employed by the Contractor or any subcontractor the full amount of wages required by this contract. In the event of failure to pay any laborer or mechanic all or part of the wages required by this contract, the Contracting Officer may take such action as may be necessary to cause the suspension, until such violations have ceased, of any further payment, ad- vance, or guarantee of funds to or for the Government Prime Contractor. 7. SUBCONTRACTS-TERMINATION * The Contractor agrees to insert Clauses 1 through 7 hereof in all subcontracts and further agrees that a breach of any of the requirements of these clauses may be grounds for termination of this contract. The term 'Contractor" as used in such clauses in any subcontract shall be deemed to refer to the subcontractor except in the phrase "Gov. ernment Prime Contractor." US GOVERNMENT PRINTING OFFICE 1959 OF -495544 (NEXT PAGE IS 1623) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 2, JUNE 1959) 1621 SUBPART 1-16. 9 ILLUSTRATIONS OF FORMS 1-16,901-20 § 1-16.901–20 Standard Form 20: Invitation for Bids (Construction Contract). STANDARD FORM 20 JANUARY 1961 EDITION GENERAL SERVICES ADMINISTRATION FED. PROC. REG. (41 CFR) 1-16.401 INVITATION FOR BIDS REFERENCE (CONSTRUCTION CONTRACT) NAME AND LOCATION OF PROJECT BY (Issuing office) Sealed bids in at DATE DEPARTMENT OR AGENCY for the work described herein will be received until and at that time publicly opened. Information regarding bidding material, bid guarantee, and bonds Description of work SPECIMEN 20-104 U.S. GOVERNMENT PRINTING OFFICE:1950-O-572728 (NEXT PAGE IS 1625) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 15, APRIL 1961) 1623 SUBPART 1-16.9 ILLUSTRATIONS OF FORMS § 1-16.901-21 Standard Form 21: Bid Form Standard Form 21: Bid Form (Construction Contract). (a) Page 1 of Standard Form 21. STANDARD FORM 21 JANUARY 1961 EDITION GENERAL SERVICES ADMINISTRATION REFERENCE FED. PROC. REG. (41 CFR) 1-16.401 BID FORM (CONSTRUCTION CONTRACT) Read the Instructions to Bidders (Standard Form 22) This form to be submitted in NAME AND LOCATION OF PROJECT DATE OF INVITATION NAME OF BIDDER (Type or print) TO: (Date) 1-16.901-21 In compliance with the above-dated invitation for bids, the undersigned hereby proposes to perform all work for in strict accordance with the General Provisions (Standard Form 23-A), Labor Standards Provisions Applicable to Contracts in Excess of $2,000 (Standard Form 19-A), specifications, schedules, drawings, and conditions, for the following amount(s) SPECIMEN The undersigned agrees that, upon written acceptance of this bid, mailed or otherwise furnished within calendar days ( calendar days unless a different period be inserted by the bidder) after the date of opening of bids, he will within calendar days (unless a longer period is allowed) after receipt of the prescribed forms, execute Standard Form 23, Construction Contract, and give performance and payment bonds on Government standard forms with good and sufficient surety. The undersigned agrees, if awarded the contract, to commence the work within calendar days after the date of receipt of notice to proceed, and to complete the work within calendar days after the date of receipt of notice to proceed. 21-106 (Continue on other side) FEDERAL PROCUREMENT REGULATIONS ך (FPR CIRC. 15, APRIL 1961) 1625 PART 1-16 PROCUREMENT FORMS L 1-16.901-21 (b) Page 2 of Standard Form 21. Receipt of Amendments: The undersigned acknowledges receipt of the following amendments of the invitation for bids, drawings, and/or specifications, etc. (Give number and date of each): SPECIMEN The bidder represents (Check appropriate boxes): (1) That he is, is not, a small business concern. (For this purpose, a small business concern is a business concern, including its affiliates, which (a) is independently owned and operated, (b) is not dominant in its field of operation, and (c) had average annual receipts for the preceding three fiscal years not exceeding $5,000,000. For additional information see governing regulations of the Small Business Administration.) (2) (a) That he has, has not, employed or retained any company or person (other than a full-time bona fide employee working solely for the bidder) to solicit or secure this contract, and (b) that he has, has not, paid or agreed to pay any company or person (other than a full-time bona fide employee working solely for the bidder) any fee, commission, percentage or brokerage fee, contingent upon or resulting from the award of this contract; and agrees to furnish information relating to (a) and (b) above as requested by the Contracting Officer. (For interpretation of the representation, including the term "bona fide employee," Federal Regulations, Title 41, Subpart 1-1.5.) see Code of (3) That he operates as an individual, partnership, joint venture, corporation, incorporated in State of Enclosed is bid guarantee, consisting of in the amount of NAME OF BIDDER (Type or print) BUSINESS ADDRESS (Type or print) BY (Signature in ink. Type or print name under signature) TITLE (Type or print) FULL NAME OF ALL PARTNERS (Type or print) DIRECTIONS FOR SUBMITTING BIDS Envelopes containing bids, guarantee, etc., must be sealed, marked, and addressed as follows: L CAUTION: Bids should not be qualified by exceptions to the bidding conditions. ✰U.S. GOVERNMENT PRINTING OFFICE : 1961-0-572728 FEDERAL PROCUREMENT REGULATIONS 1626 (FPR CIRC. 15, APRIL 1961) SUBPART 1-16, 9 ILLUSTRATIONS OF FORMS 1-16.901-22 § 1-16.901-22 Standard Form 22: Instructions to Bidders (Construction Contract). (a) Page 1 of Standard Form 22. STANDARD FORM 22 JANUARY 1961 EDITION GENERAL SERVICES ADMINISTRATION FED. PROC. REG. (41 CFR) 1-16.401 INSTRUCTIONS TO BIDDERS (CONSTRUCTION CONTRACT) 1. Explanations to Bidders. Any explanation de- sired by a bidder regarding the meaning or interpre- tation of the invitation for bids, drawings, specifica- tions, etc., must be requested in writing and with suf- ficient time allowed for a reply to reach bidders before the submission of their bids. Any interpreta- tion made will be in the form of an amendment of the invitation for bids, drawings, specifications, etc., and will be furnished to ail prospective bidders. Its receipt by the bidder must be acknowledged in the space provided on the Bid Form (Standard Form 21) or by letter or telegram received before the time set for opening of bids. Oral explanations or instructions given before the award of the contract will not be binding. 2. Conditions Affecting the Work. Bidders should visit the site and take such other steps as may be rea- sonably neccessary to ascertain the nature and location of the work, and the general and local conditions which can affect the work or the cost thereof. Failure to do so will not relieve bidders from responsibility for estimating properly the difficulty or cost of suc- cessfully performing the work. The Government will assume no responsibility for any understanding or rep- resentations concerning conditions made by any of its officers or agents prior to the execution of the contract, unless included in the invitation for bids, the specifica- tions, or related documents. 3. Bidder's Qualifications. Before a bid is con- sidered for award, the bidder may be requested by the Government to submit a statement regarding his pre- vious experience in performing comparable work, his business and technical organization, financial re- sources, and plant available to be used in performing the work. 4. Bid Guarantee. Failure to furnish a required bid guarantee in the proper form and amount, by the time set for opening of bids, may be cause for rejection of the bid. A bid guarantee shall be in the form of a firm com- mitment, such as a bid bond, postal money order, cer- tified check, cashier's check, irrevocable letter of credit or, in accordance with Treasury Department regula- tions, bonds or notes of the United States. Bid guar- antees, other than bid bonds, will be returned (a) to unsuccessful bidders as soon as practicable after the opening of bids, and (b) to the successful bidder upon execution of such further contractual documents and bonds as may be required by the bid as accepted. If the successful bidder withdraws his bid within the period specified therein for acceptance (sixty days if no period is specified) or, upon acceptance thereof by the Government, fails to enter into the contract and give bonds within the time specified (ten days if no period is specified) after the forms are presented to him, he shall be liable for any difference by which the cost of procuring the work exceeds the amount of his bid, and the bid guarantee shall be available toward offsetting such difference. 5. Preparation of Bids. (a) Bids shall be submitted on the forms furnished, or copies thereof, and must be manually signed. If erasures or other changes ap- pear on the forms, each erasure or change must be initialed by the person signing the bid. Unless spe- cifically authorized in the invitation for bids, tele- graphic bids will not be considered. (b) The bid form may provide for submission of a price or prices for one or more items, which may be lump sum bids, alternate prices, scheduled items re- sulting in a bid on a unit of construction or a com- bination thereof, etc. Where the bid form explicitly requires that the bidder bid on all items, failure to do so will disqualify the bid. When submission of a price on all items is not required, bidders should in- sert the words "no bid" in the space provided for any item on which no price is submitted. (c) Unless called for, alternate bids will not be considered. (d) Modifications of bids already submitted will be considered if received at the office designated in the invitation for bids by the time set for opening of bids. Telegraphic modifications will be considered, but should not reveal the amount of the original or re- vised bid. 6. Submission of Bids. Bids must be sealed, marked, and addressed as directed in the invitation for bids. Failure to do so may result in a premature opening of, or a failure to open, such bid. 22-103 FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 15, APRIL 1961) 1627 PART 1-16 PROCUREMENT FORMS 1-16.901-22 L ୮ (b) Page 2 of Standard Form 22. L 7. Late Bids and Modifications or Withdrawals. Bids and modifications or withdrawals thereof re- ceived at the office designated in the invitation for bids after the exact time set for opening of bids will not be considered unless received before award and·(a) they are submitted by mail (or by telegraph, if author- ized) and (b) it is determined by the Government that -late receipt was due solely to either (1) delay in the mails (or by the telegraph company, if telegraphic bids are authorized) for which the bidder was not respon- sible or (2) mishandling by the Government after re- ceipt at the Government installation. However, a modification which is received from an otherwise suc- cessful bidder and which makes the terms of the bid more-favorable to the Government will be considered at any time it is received and may thereafter be accepted. 8. Withdrawal of Bids. Bids may be withdrawn by written or telegraphic request received from bid- ders prior to the time set for opening of bids. 9. Public Opening of Bids. Bids will be publicly opened at the time set for opening in the invitation for bids. Their content will be made public for the information of bidders and others interested, who may be present either in person or by representative. 10. Award of Contract. (a) Award of contract will be made to that responsible bidder whose bid, conform- ing to the invitation for bids, is most advantageous to the Government, price and other factors considered. (b) The Government may, when in its interest, reject any or all bids or waive any informality in bids received. (c) The Government may accept any item or com- bination of items of a bid, unless precluded by the invitation for bids or the bidder includes in his bid a restrictive limitation. 11. Contract and Bonds. The bidder whose bid is accepted will, within the time estabished in the bid, enter into a written contract with the Government and, if required, furnish performance and payment bonds on Government standard forms in the amounts indicated in the invitation for bids or the specifications. * U.S. GOVERNMENT PRINTING OFFICE : 1960 OF-572728 FEDERAL PROCUREMENT REGULATIONS C : 628 (FPR CIRC. 15, APRIL 1961) SUBPART 1-16, 9 ILLUSTRATIONS OF FORMS § 1-16.901-23 Standard Form 23: Construction Contract. (a) Page 1 of Standard Form 23. STANDARD FORM 23 JANUARY 1961 EDITION GENERAL SERVICES ADMINISTRATION FED. PROC. REG. (41 CFR) 1–16.401 NAME AND ADDRESS OF CONTRACTOR DEPARTMENT OR AGENCY CONTRACT FOR (Work to be performed) PLACE CONSTRUCTION CONTRACT (See instructions on reverse) CONTRACT NO. DATE OF CONTRACT 1-16.901-23 CHECK APPROPRIATE BOX Individual Partnership Joint Venture Corporation, incorporated in the State of CONTRACT PRICE (Express in words and figures) ADMINISTRATIVE DATA (Optional) SPECIMEN The United States of America (hereinafter called the Government), represented by the Contracting Officer executing this contract, and the individual, partnership, joint venture, or corporation named above (hereinafter called the Contractor), mutually agree to perform this contract in strict accordance with the General Provisions (Standard Form 23-A), Labor Standards Provisions Applicable to Contracts in Excess of $2,000 (Standard Form 19-A), and, the following designated specifications, schedules, drawings, and conditions: WORK SHALL BE STARTED WORK SHALL BE COMPLETED FEDERAL PROCUREMENT REGULATIONS ך ل (FPR CIRC. 15, APRIL 1961) 1629 PART 1-16 PROCUREMENT FORMS L ୮ 1-16.901-23 (b) Page 2 of Standard Form 23. Alterations. The following alterations were made in this contract before it was signed by the parties hereto: SPECIMEN In witness whereof, the parties hereto have executed this contract as of the date entered on the first page hereof. THE UNITED STATES OF AMERICA CONTRACTOR By By (Official title) (Name of Contractor) (Signature) (Title) L INSTRUCTIONS 1. The full name and business address of the Contractor must be inserted in the space provided on the face of the form. The Contractor shall sign in the space provided above with his usual signature and typewrite or print his name under the signature. 2. An officer of a corporation, a member of a partnership, or an agent signing for the Contractor shall place his signature and title after the word "By" under the name of the Contractor. A contract executed by an attorney or agent on behalf of the Contractor shall be accompanied by two authenticated copies of his power of attorney or other evidence of his authority to act on behalf of the Contractor. FEDERAL • US GOVERNMENT PRINTING OFFICE: 1960 OF-572728-48 REGULATIONS PROCUREMENT 1630 (FPR CIRC. 15, APRIL 1961) SUBPART 1-16. 9 ILLUSTRATIONS OF FORMS * 1-16.901-23A § 1-16.901-23A Standard Form 23A: General Provisions (Construction Contract). (a) Page 1 of Standard Form 23A. STANDARD FORM 23-A APRIL 1961 EDITION GENERAL SERVICES ADMINISTRATION FED. PROC. REG. (41 CFR) 1-16,401 1. DEFINITIONS GENERAL PROVISIONS (CONSTRUCTION CONTRACT) (a) The term "head of the agency" or "Secretary" as used herein means the Secretary, the Under Secretary, any Assistant Secretary, or any other head or assistant head of the executive or military department or other Federal agency; and the term "his duly authorized representative" means any person or per- sons or board (other than the Contracting Officer) authorized to act for the head of the agency or the Secretary. (b) The term "Contracting Officer" as used herein means the person executing this contract on behalf of the Govern- ment and includes a duly appointed successor or authorized representative. 2. SPECIFICATIONS AND DRAWINGS The Contractor shall keep on the work a copy of the draw- ings and specifications and shall at all times give the Contracting Officer access thereto. Anything mentioned in the specifica- tions and not shown on the drawings, or shown on the draw- ings and not mentioned in the specifications, shall be of like effect as if shown or mentioned in both. In case of difference between drawings and specifications, the specifications shall govern. In case of discrepancy either in the figures, in the drawings, or in the specifications, the matter shall be promptly submitted to the Contracting Officer, who shall promptly make a determination in writing. Any adjustment by the Contrac- tor without such a determination shall be at his own risk and expense. The Contracting Officer shall furnish from time to time such detail drawings and other information as he may consider necessary, unless otherwise provided. 3. CHANGES scope. The Contracting Officer may, at any time, by written order, and without notice to the sureties, make changes in the draw- ings and/or specifications of this contract if within its general If such changes cause an increase or decrease in the Contractor's cost of, or time required for, performance of the contract, an equitable adjustment shall be made and the con- tract modified in writing accordingly. Any claim of the Contractor for adjustment under this clause must be asserted in writing within 30 days from the date of receipt by the Con- tractor of the notification of change unless the Contracting Officer grants a further period of time before the date of final payment under the contract. If the parties fail to agree upon the adjustment to be made, the dispute shall be determined as provided in Clause 6 of these General Provisions; but nothing provided in this clause shall excuse the Contractor from pro- ceeding with the prosecution of the work as changed. Except as otherwise provided in this contract, no charge for any extra work or material will be allowed. 4. CHANGED CONDITIONS The Contractor shall promptly, and before such conditions are disturbed, notify the Contracting Officer in writing of: (a) subsurface or latent physical conditions at the site differ- ing materially from those indicated in this contract, or (b) un- known physical conditions at the site, of an unusual nature, differing materially from those ordinarily encountered and generally recognized as inhering in work of the character pro- vided for in this contract. The Contracting Officer shall promptly investigate the conditions, and if he finds that such conditions do so materially differ and cause an increase or decrease in the Contractor's cost of, or the time required for, performance of this contract, an equitable adjustment shall be made and the contract modified in writing accordingly. Any claim of the Contractor for adjustment hereunder shall not be allowed unless he has given notice as above required; or unless 23-203 the Contracting Officer grants a further period of time before If the parties the date of final payment under the contract. fail to agree upon the adjustment to be made, the dispute shall be determined as provided in Clause 6 of these General Provisions. DEFAULT-DAMAGES 5. TERMINATION FOR DELAY-TIME EXTENSIONS FOR (a) If the Contractor refuses or fails to prosecute the work, or any separable part thereof, with such diligence as will insure its completion within the time specified in this contract, or any extension thereof, or fails to complete said work within such time, the Government may, by written notice to the Con- tractor, terminate his right to proceed with the work or such part of the work as to which there has been delay. In such event the Government may take over the work and prosecute the same to completion, by contract or otherwise, and may take possession of and utilize in completing the work such mate- rials, appliances, and plant as may be on the site of the work and necessary therefor. Whether or not the Contractor's right to proceed with the work is terminated, he and his sureties. shall be liable for any damage to the Government resulting from his refusal or failure to complete the work within the specified time. (b) If fixed and agreed liquidated damages are provided in the contract and if the Government so terminates the Con- tractor's right to proceed, the resulting damage will consist of such liquidated damages until such reasonable time as may be required for final completion of the work together with any increased costs occasioned the Government in completing the work. (c) If fixed and agreed liquidated damages are provided in the contract and if the Government does not so terminate the Contractor's right to proceed, the resulting damage will con- sist of such liquidated damages until the work is completed or accepted. (d) The Contractor's right to proceed shall not be so ter- minated nor the Contractor charged with resulting damage if: (1) The delay in the completion of the work arises from unforeseeable causes beyond the control and without the fault or negligence of the Contractor, including but not restricted to, acts of God, acts of the public enemy, acts of the Government in either its sovereign or contractual ca- pacity, acts of another contractor in the performance of a contract with the Government, fires, floods, epidemics, quar- antine restrictions, strikes, freight embargoes, unusually severe weather, or delays of subcontractors or suppliers aris- ing from unforeseeable causes beyond the control and with- out the fault or negligence of both the Contractor and such subcontractors or suppliers; and (2) The Contractor, within 10 days from the beginning of any such delay (unless the Contracting Officer grants a further period of time before the date of final payment under the contract), notifies the Contracting Officer in writing of the causes of delay. The Contracting Officer shall ascertain the facts and the extent of the delay and extend the time for completing the work when, in his judgment, the findings of fact justify such an ex- tension, and his findings of fact shall be final and conclusive on the parties, subject only to appeal as provided in Clause 6 of these General Provisions. (e) If, after notice of termination of the Contractor's right to proceed under the provisions of paragraph (a) of this clause, it is determined that the delay is excusable under the provisions of paragraph (d) of this clause, such notice of ter- c59-16-76418-1 FEDERAL PROCUREMENT REGULATIONS Г (FPR CIRC. 15, APRIL 1961) 1631 PART 1-16 PROCUREMENT FORMS L ୮ 1-16.901-23A (b) Page 2 of Standard Form 23A. L mination shall be deemed to have been issued pursuant to the clause of this contract entitled "Termination for Convenience of the Government," and the rights and obligations of the parties hereto shall in such event be governed by such clause. (This paragraph (e) applies only if this contract contains such termination clause.) (f) The rights and remedies of the Government provided in this clause are in addition to any other rights and remedies provided by law or under this contract. 6. DISPUTES (a) Except as otherwise provided in this contract, any dis- pute concerning a question of fact arising under this contract which is not disposed of by agreement shall be decided by the Contracting Officer, who shall reduce his decision to writing and mail or otherwise furnish a copy thereof to the Contractor. The decision of the Contracting Officer shall be final and con- clusive unless, within 30 days from the date of receipt of such copy, the Contractor mails or otherwise furnishes to the Con- tracting Officer a written appeal addressed to the head of the agency involved. The decision of the head of the agency or his duly authorized representative for the determination of such appeals shall be final and conclusive. This provision shall not be pleaded in any suit involving a question of fact arising under this contract as limiting judicial review of any such decision to cases where fraud by such official or his rep- resentative or board is alleged: Provided, however, that any such decision shall be final and conclusive unless the same is fraudulent or capricious or arbitrary or so grossly erroneous as necessarily to imply bad faith or is not supported by substan- tial evidence. In connection with any appeal proceeding under this clause, the Contractor shall be afforded an opportunity to be heard and to offer evidence in support of his appeal. Pend- ing final decision of a dispute hereunder, the Contractor shall proceed diligently with the performance of the contract and in accordance with the Contracting Officer's decision. (b) This Disputes clause does not preclude consideration of questions of law in connection with decisions provided for in paragraph (a) above. Nothing in this contract, however, shall be construed as making final the decision of any administrative official, representative, or board on a question of law. 7. PAYMENTS TO CONTRACTOR (a) The Government will pay the contract price as herein- after provided. (b) The Government will make progress payments monthly as the work proceeds, or at more frequent intervals as deter- mined by the Contracting Officer, on estimates approved by the Contracting Officer. If requested by the Contracting Officer, the Contractor shall furnish a breakdown of the total contract price showing the amount included therein for each principal category of the work, in such detail as requested, to provide a basis for determining progress payments. In the preparation of estimates the Contracting Officer, at his dis- cretion, may authorize material delivered on the site and pre- paratory work done to be taken into consideration. Material delivered to the Contractor at locations other than the site. may also be taken into consideration (1) if such consideration is specifically authorized by the contract and (2) if the Con- tractor furnishes satisfactory evidence that he has acquired title to such material and that it will be utilized on the work covered by this contract. (c) In making such progress payments, there shall be re- tained 10 percent of the estimated amount until final comple- tion and acceptance of the contract work. However, if the Contracting Officer, at any time after 50 percent of the work has been completed, finds that satisfactory progress is being made, he may authorize any of the remaining progress pay- ments to be made in full. Also, whenever the work is sub- stantially complete, the Contracting Officer, if he considers 2 the amount retained to be in excess of the amount adequate for the protection of the Government, at his discretion, may release to the Contractor all or a portion of such excess amount. Furthermore, on completion and acceptance of each separate building, public work, or other division of the contract, on which the price is stated separately in the contract, payment may be made therefor without retention of a percentage. (d) All material and work covered by progress payments made shall thereupon become the sole property of the Gov- ernment, but this provision shall not be construed as relieving the Contractor from the sole responsibility for all material and work upon which payments have been made or the restoration of any damaged work, or as waiving the right of the Government to require the fulfillment of all of the terms of the contract. (e) Upon completion and acceptance of all work, the amount due the Contractor under this contract shall be paid upon the presentation of a properly executed voucher and after the Contractor shall have furnished the Government with a release, if required, of all claims against the Govern- ment arising by virtue of this contract, other than claims in stated amounts as may be specifically excepted by the Con- tractor from the operation of the release. If the Contractor's claim to amounts payable under the contract has been assigned. under the Assignment of Claims Act of 1940, as amended (31 U.S.C. 203, 41 U.S.C. 15), a release may also be required of the assignee. 8. ASSIGNMENT OF CLAIMS (a) Pursuant to the provisions of the Assignment of Claims Act of 1940, as amended (31 U.S.C. 203, 41 U.S.C. 15), if this contract provides for payments aggregating $1,000 or more, claims for moneys due or to become due the Contractor from the Government under this contract may be assigned to a bank, trust company, or other financing institution, includ- ing any Federal lending agency, and may thereafter be further assigned and reassigned to any such institution. Any such assignment or reassignment shall cover all amounts payable under this contract and not already paid, and shall not be made to more than one party, except that any such assignment or reassignment may be made to one party as agent or trustee for two or more parties participating in such financing. Unless otherwise provided in this contract, payments to an assignee of any moneys due or to become due under this contract shall not, to the extent provided in said Act, as amended, be subject to reduction or setoff. (The preceding sentence applies only if this contract is made in time of war or national emergency as defined in said Act and is with the Department of Defense, the General Services Administration, the Atomic Energy Com- mission, the National Aeronautics and Space Administration, the Federal Aviation Agency, or any other department or agency of the United States designated by the President pur- suant to Clause 4 of the proviso of section 1 of the Assignment of Claims Act of 1940, as amended by the Act of May 15, 1951, 65 Stat. 41.) (b) In no event shall copies of this contract or of any plans, specifications, or other similar documents relating to work under this contract, if marked "Top Secret," "Secret," or "Confidential," be furnished to any assignee of any claim arising under this contract or to any other person not entitled to receive the same. However, a copy of any part or all of this contract so marked may be furnished, or any information contained therein may be disclosed, to such assignee upon the prior written authorization of the Contracting Officer. 9. MATERIAL AND WORKMANSHIP (a) Unless otherwise specifically provided in this contract, all equipment, material, and articles incorporated in the work covered by this contract are to be new and of the most suitable grade for the purpose intended. Unless otherwise specifically provided in this contract, reference to any equipment, mate- c59—16-76418-1 FEDERAL PROCUREMENT REGULATIONS 1632 (FPR CIRC, 15, APRIL 1961) SUBPART 1-16.9 ILLUSTRATIONS OF FORMS 1-16,901-23A ¡ (c) Page 3 of Standard Form 23A. rial, article, or patented process, by trade name, make, or catalog number, shall be regarded as establishing a standard of quality and shall not be construed as limiting competition, and the Contractor may, at his option, use any equipment, material, article, or process which, in the judgment of the Contracting Officer, is equal to that named. The Contractor shall furnish to the Contracting Officer for his approval the name of the manufacturer, the model number, and other iden- tifying data and information respecting the performance, capacity, nature, and rating of the machinery and mechanical and other equipment which the Contractor contemplates incor- porating in the work. When required by this contract or when called for by the Contracting Officer, the Contractor shall furnish the Contracting Officer for approval full infor- mation concerning the material or articles which he contem- plates incorporating in the work. When so directed, samples shall be submitted for approval at the Contractor's expense, with all shipping charges prepaid. Machinery, equipment, ma- terial, and articles installed or used without required approval shall be at the risk of subsequent rejection. (b) All work under this contract shall be performed in a skillful and workmanlike manner. The Contracting Officer may, in writing, require the Contractor to remove from the work any employee the Contracting Officer deems incompe- tent, careless, or otherwise objectionable. 10. INSPECTION AND ACCEPTANCE (a) Except as otherwise provided in this contract, inspec- tion and test by the Government of material and workman- ship required by this contract shall be made at reasonable times and at the site of the work, unless the Contracting Officer determines that such inspection or test of material which is to be incorporated in the work shall be made at the place of pro- duction, manufacture, or shipment of such material. To the extent specified by the Contracting Officer at the time of determining to make off-site inspection or test, such inspection or test shall be conclusive as to whether the material involved conforms to the contract requirements. Such off-site inspec- tion or test shall not relieve the Contractor of responsibility for damage to or loss of the material prior to acceptance, nor in any way affect the continuing rights of the Government after acceptance of the completed work under the terms of paragraph (f) of this clause, except as hereinabove provided. (b) The Contractor shall, without charge, replace any material or correct any workmanship found by the Govern- ment not to conform to the contract requirements, unless in the public interest the Government consents to accept such material or workmanship with an appropriate adjustment in contract price. The Contractor shall promptly segregate and remove rejected material from the premises. (c) If the Contractor does not promptly replace rejected material or correct rejected workmanship, the Government (1) may, by contract or otherwise, replace such material or correct such workmanship and charge the cost thereof to the Contractor, or (2) may terminate the Contractor's right to proceed in accordance with Clause 5 of these General Provisions. (d) The Contractor shall furnish promptly, without addi- tional charge, all facilities, labor, and material reasonably needed for performing such safe and convenient inspection and test as may be required by the Contracting Officer. All inspection and test by the Government shall be performed in such manner as not unnecessarily to delay the work. Special, full size, and performance tests shall be performed as described in this contract. The Contractor shall be charged with any additional cost of inspection when material and workmanship are not ready at the time specified by the Contractor for its inspection. (e) Should it be considered necessary or advisable by the Government at any time before acceptance of the entire work to make an examination of work already completed, by remov- ing or tearing out same, the Contractor shall, on request, promptly furnish all necessary facilities, labor, and material. If such work is found to be defective or nonconforming in any material respect, due to the fault of the Contractor or his subcontractors, he shall defray all the expenses of such exami- nation and of satisfactory reconstruction. If, however, such work is found to meet the requirements of the contract, an equitable adjustment shall be made in the contract price to compensate the Contractor for the additional services involved in such examination and reconstruction and, if completion of the work has been delayed thereby, he shall, in addition, be granted a suitable extension of time. (f) Unless otherwise provided in this contract, acceptance by the Government shall be made as promptly as practicable after completion and inspection of all work required by this contract. Acceptance shall be final and conclusive except as regards latent defects, fraud, or such gross mistakes as may amount to fraud, or as regards the Government's rights under any warranty or guarantee. 11. SUPERINTENDENCE BY CONTRACTOR The Contractor shall give his personal superintendence to the work or have a competent foreman or superintendent, sat- isfactory to the Contracting Officer, on the work at all times. during progress, with authority to act for him. 12. PERMITS AND RESPONSIBILITIES The Contractor shall, without additional expense to the Gov- ernment, be responsible for obtaining any necessary licenses. and permits, and for complying with any applicable Federal. State, and municipal laws, codes, and regulations, in connec- tion with the prosecution of the work. He shall be similarly responsible for all damages to persons or property that occur as a result of his fault or negligence. He shall take proper safety and health precautions to protect the work, the workers, the public, and the property of others. He shall also be re- sponsible for all materials delivered and work performed until completion and acceptance of the entire construction work, except for any completed unit of construction thereof which theretofore may have been accepted. 13. CONDITIONS AFFECTING THE WORK The Contractor shall be responsible for having taken steps reasonably necessary to ascertain the nature and location of the work, and the general and local conditions which can affect the work or the cost thereof. Any failure by the Contractor to do so will not relieve him from responsibility for successfully performing the work without additional expense to the Gov- ernment. The Government assumes no responsibility for any understanding or representations concerning conditions made. by any of its officers or agents prior to the execution of this contract, unless such understanding or representations by the Government are expressly stated in the contract. 14. OTHER CONTRACTS The Government may undertake or award other contracts for additional work, and the Contractor shall fully cooperate with such other contractors and Government employees and carefully fit his own work to such additional work as may be directed by the Contracting Officer. The Contractor shall not commit or permit any act which will interfere with the per- formance of work by any other contractor or by Government employees. 15. PATENT INDEMNITY Except as otherwise provided, the Contractor agrees to indemnify the Government and its officers, agents, and em- ployees against liability, including costs and expenses, for infringement upon any Letters Patent of the United States (except Letters Patent issued upon an application which is now FEDERAL 3 PROCUREMENT REGULATIONS c59-16-76418-1 ୮ (FPR CIRC. 15, APRIL 1961) 1633 PART 1-16 PROCUREMENT FORMS 1-16.901-23A ୮ L (d) Page 4 of Standard Form 23A. or may hereafter be, for reasons of national security, ordered by the Government to be kept secret or otherwise withheld from issue) arising out of the performance of this contract or out of the use or disposal by or for the account of the Government of supplies furnished or construction work per- formed hereunder. 16. ADDITIONAL BOND SECURITY If any surety upon any bond furnished in connection with this contract becomes unacceptable to the Government, or if any such surety fails to furnish reports as to his financial condi- tion from time to time as requested by the Government, the Contractor shall promptly furnish such additional security as may be required from time to time to protect the interests of the Government and of persons supplying labor or materials in the prosecution of the work contemplated by this contract. 17. COVENANT AGAINST CONTINGENT FEES The Contractor warrants that no person or selling agency has been employed or retained to solicit or secure this contract upon an agreement or understanding for a commission, per- centage, brokerage, or contingent fee, excepting bona fide employees or bona fide established commercial or selling agen- cies maintained by the Contractor for the purpose of securing business. For breach or violation of this warranty the Gov- ernment shall have the right to annul this contract without liability or in its discretion to deduct from the contract price or consideration, or otherwise recover, the full amount of such commission, percentage, brokerage, or contingent fee. 18. OFFICIALS NOT TO BENEFIT No Member of Congress or resident Commissioner shall be admitted to any share or part of this contract, or to any benefit that may arise therefrom; but this provision shall not be con- strued to extend to this contract if made with a corporation for its general benefit, 19. BUY AMERICAN (a) Agreement. In accordance with the Buy American Act (41 U.S.C. 10a-10d) and Executive Order 10582, De- cember 17, 1954 (3 CFR Supp.), the Contractor agrees that only domestic construction material will be used (by the Con- tractor, subcontractors, materialmen, and suppliers) in the performance of this contract, except for nondomestic material listed in the contract. (b) Domestic construction material. "Construction mate- rial" means any article, material, or supply brought to the construction site for incorporation in the building or work. An unmanufactured construction material is a "domestic con- struction material" if it has been mined or produced in the United States. A manufactured construction material is a "domestic construction material" if it has been manufactured in the United States and if the cost of its components which have been mined, produced, or manufactured in the United States exceeds 50 percent of the cost of all its components. "Component" means any article, material, or supply directly incorporated in a construction material. (c) Domestic component. A component shall be consid- ered to have been "mined, produced, or manufactured in the United States" (regardless of its source in fact) if the article, material, or supply in which it is incorporated was manufac- tured in the United States and the component is of a class or kind determined by the Government to be not mined, pro- duced, or manufactured in the United States in sufficient and reasonably available commercial quantities and of a satisfac- tory quality. 20. CONVICT LABOR In connection with the performance of work under this contract, the Contractor agrees not to employ any person undergoing sentence of imprisonment at hard labor. 21. NONDISCRIMINATION IN EMPLOYMENT In connection with the performance of work under this contract, the Contractor agrees as follows: (a) The Contractor will not discriminate against any em- ployee or applicant for employment because of race, creed, color, or national origin. The Contractor will take affirmative action to ensure that applicants are employed, and that em- ployees are treated during employment, without regard to their race, creed, color, or national origin. Such action shall include, but not be limited to, the following: employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including appren- ticeship. The Contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided by the Contracting Officer setting forth the provisions of this Nondiscrimination clause. (b) The Contractor will, in all solicitations or advertise- ments for employees placed by or on behalf of the Contractor, state that all qualified applicants will receive consideration for employment without regard to race, creed, color, or national origin. (c) The Contractor will send to each labor union or rep- resentative of workers with which he has a collective- bargaining agreement or other contract or understanding, a notice, to be provided by the agency Contracting Officer, ad- vising the said labor union or workers' representative of the Contractor's commitments under this Nondiscrimination clause, and shall post copies of the notice in conspicuous places avail- able to employees and applicants for employment. (d) The Contractor will comply with all provisions of Executive Order No. 10925 of March 6, 1961, and of the rules, regulations, and relevant orders of the President's Com- mittee on Equal Employment Opportunity created thereby. (e) The Contractor will furnish all information and reports required by Executive Order No. 10925 of March 6, 1961, and by the rules, regulations, and orders of the said Com- mittee, or pursuant thereto, and will permit access to his books, records, and accounts by the contracting agency and the Committee for purposes of investigation to ascertain compliance with such rules, regulations, and orders. (f) In the event of the Contractor's noncompliance with the Nondiscrimination clause of this contract or with any of the said rules, regulations, or orders, this contract may be canceled in whole or in part and the Contractor may be de- clared ineligible for further Government contracts in accord- ance with procedures authorized in Executive Order No. 10925 of March 6, 1961, and such other sanctions may be imposed and remedies invoked as provided in the said Executive order or by rule, regulation, or order of the President's Committee on Equal Employment Opportunity, or as otherwise provided by law. (g) The Contractor will include the provisions of the fore- going paragraphs (a) through (f) in every subcontract or purchase order unless exempted by rules, regulations, or orders of the President's Committee on Equal Employment Opportunity issued pursuant to section 303 of Executive Order No. 10925 of March 6, 1961, so that such provisions will be binding upon each subcontractor or vendor. The Contractor will take such action with respect to any subcontract or pur- chase order as the contracting agency may direct as a means of enforcing such provisions, including sanctions for non- compliance: Provided, however, that ir. the event the Con- tractor becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction by the contracting agency, the Contractor may request the United States to enter into such litigation to protect the interests of the United States. U.S. GOVERNMENT PRINTING OFFICE c59-16-76418-1 FEDERAL PROCUREMENT REGULATIONS 1634 (FPR CIRC. 15, 15, APRIL 1961) SUBPART 1-16, 9 ILLUSTRATIONS OF FORMS 1-16.901-24 Standard Form 24: Bid Bond. (a) Page 1 of Standard Form 24. STANDARD FORM 24 NOVEMBER 1950 EDITION GENERAL SERVICES ADMINISTRATION BID BOND FED. PROC. REG. (41 CFR) 1-16.801 (See Instructions on Reverse) PRINCIPAL SURETY PENAL SUM OF BOND (express in words and figures) 1-16,901- 24 DATE BOND EXECUTED DATE OF BID KNOW ALL MEN BY THESE PRESENTS, That we, the PRINCIPAL and SURETY above named, are held and firmly bound unto the United States of America, hereinafter called the Government, in the penal sum of the amount stated above, for the payment of which sum well and truly to be made, we bind ourselves, our heirs, executors, administrators, and successors, jointly and severally, firmly by these presents. THE CONDITION OF THIS OBLIGATION IS SUCH, that whereas the principal has submitted the accompanying bid, dated as shown above, for NOW THEREFORE, if the principal shall not withdraw said bid within the period specified therein after the opening of the same, or, if no period be specified, within sixty (60) days after said opening, and shall within the period speci- fied therefor, or, if no period be specified, within ten (10) days after the prescribed forms are presented to him for signature, execute such further contractual documents, if any, as may be required by the terms of the bid as accepted, and give bonds with good and sufficient surety or sureties, as may be required, for the faithful performance and proper fulfillment of the resulting contract, and for the protection of all persons supplying labor and material in the prosecu tion of the work provided for in such contract, or in the event of the withdrawal of said bid within the period specified, or the failure to enter into such contract and give such bonds within the time specified, if the principal shall pay the Government the difference between the amount specified in said bid and the amount for which the Government may procure the required work, supplies, and services, if the latter amount be in excess of the former, then the above obli- gation shall be void and of no effect, otherwise to remain in full force and virtue. ÎN WITNESS WHEREOF, the above-bounden parties have executed this instrument under their several seals on the date indicated above, the name and corporate seal of each corporate party being hereto affixed and these presents duly signed by its undersigned representative, pursuan to authority of its governing body. In Presence of: 1. 2. 3. WITNESS as to ECIMEN as to as to 4. TRESS 1. as to 2. Attest Attest: STANDARD form 24 NOVEMBER 1950 EDITION FEDERAL INDIVIDUAL PRINCIPAL [SEAL) [SEAL] [SEAL) [SEALI as to INDIVIDUAL SURETY [SEAL] as to CORPORATE PRINCIPAL BUSINESS ADDRESS BY TITLE CORPORATE SURETY BUSINESS ADDRESS BY TITLE PROCUREMENT {SEAL) AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL 16-62910-1 REGULATIONS (FPR CIRC, 2, JUNE 1959) 1635 PART 1-16 PROCUREMENT FORMS L 1-16.901–24 (b) Page 2 of Standard Form 24. per thousand. The rate of premium on this bond is Total amount of premium charged, $. (The above must be filled in by corporate surety) CERTIFICATE AS TO CORPORATE PRINCIPAL I, certify that I am the of the corporation named as principal in the within bond; that secretary of said who signed the said bond on behalf of the principal, was then corporation; that I know his signature, and his signature thereto is genuine; and that said bond was duly signed, sealed, and attested for and in behalf of said corporation by authority of its governing body. [ CORPORATE SEAL L INSTRUCTIONS 1. This form shall be used for construction work or the furnishing of supplies or services whenever a bid bond is required. There shall be no deviation from this form except as authorized by the General Services Administration. 2. The surety on the bond may be any corporation authorized by the Secretary of the Treasury to act as surety, or two responsible individual sureties. Where individual sureties are used, this bond must be accompanied by a completed Affidavit of Individual Surety for each individual surety (Standard Form 28). name/and 3. The name, including full Christian name and business or residence address of each individual party to the bond shall be inserted in the space provided therefor, and each such party shall sign the bond with his usual signature on the line opposite the serall seal, and if signed in Maine or New Hampshire, an adhesive seal shall be affixed opposite the signature. 4. If the principals are partners, their individual names shall appear in the space provided therefor, with the recital that they are partners composing a firm, naming it, and all the members of the firm shall execute the bond as individuals. 5. If the principal or surety is a corporation, the name of the State in which incorporated shall be inserted in the space provided therefor, and said instrument shall be executed and attested under the corporate seal as indicated in the form. If the corporation has no corporate seal the fact shall be stated, in which case a scroll or adhesive seal shall appear following the corporate name. 6. The official character and authority of the person or persons executing the bond for the principal, if a corporation, shall be certified by the secretary or assistant secretary, according to the form herein pro- vided. In lieu of such certificate there may be attached to the bond copies of so much of the records of the corporation as will show the official character and authority of the officer signing, duly certified by the secretary or assistant secretary, under the corporate seal, to be true copies. 7. The date of this bond must not be prior to the date of the instrument in connection with which it is given. U. S. GOVERNMENT PRINTING OFFICE: 1957 O -423114 16-62910-1 FEDERAL PROCUREMENT REGULATIONS 1636 (FPR CIRC, 2, JUNE 1959) SUBPART 1-16.9 ILLUSTRATIONS OF FORMS I 1-16.901-25 Standard Form 25: Performance Bond. (a) Page 1 of Standard Form 25. STANDARD FORM 25 NOVEMBER 1950 EDITION GENERAL SERVICES ADMINISTRATION FED. PROC. REG. (41 CFR) 1-16.801 PRINCIPAL SURETY PENAL SUM OF BOND (express in words and figures) 1-16.901-25 DATE BOND EXECUTED PERFORMANCE BOND (See Instructions on Reverse) CONTRACT NO. DATE OF CONTRACT KNOW ALL MEN BY THESE PRESENTS, That we, the PRINCIPAL and SURETY above named, are held and firmly bound unto the United States of America, hereinafter called the Government, in the penal sum of the amount stated above, for the payment of which sum well and truly to be made, we bind ourselves, our heirs, executors, administrators, and successors, jointly and severally, firmly by these presents. THE CONDITION OF THIS OBLIGATION IS SUCH, that whereas the principal entered into a certain contract with the Government, numbered and dated as shown above and hereto attached; NOW THEREFORE, if the principal shall well and truly perform and fulfill all the undertakings, covenants, terms, conditions, and agreements of said contract during the original term of said contract and any extensions thereof that may be granted by the Government, with or without notice to the surety, and during the life of any guaranty required under the contract, and shall also well and truly perform and fulfill all the undertakings, covenants, terms, conditions, and agreements of any and all duly authorized modifications of said contract that may hereafter be made, notice of which modifications to the surety being hereby waived, then, this obligation to be void; otherwise to remain in full force and virtue. IN WITNESS WHEREOF, the above-bounden parties have executed this instrument under their several seals on the date indicated above, the name and corporate seal of each corporate party being hereto affixed and these presents duly signed by its undersigned representative, pursuant to authority of its governing body. In Presence of: 1. 2. 3. 4. 1. 2. Attest: Attest: STANDARD form 25 NOVEMBER 1950 EDITION WITNESS SPECIME FEDERAL as to as to as to INDIVIDUAL PRINCIPAL ..[SEAL] -[SEAL) [SEAL] as to [SEAL] INDIVIDUAL SURETY as to [SEAL] as to CORPORATE PRINCIPAL BUSINESS ADDRESS BY TITLE CORPORATE SURETY BUSINESS ADDRESS BY TITLE REGULATIONS PROCUREMENT - [SEAL) AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL 16-30441-2 ך لم (fpr circ. 2, JUNE 1959) 1637 PART 1-16 PROCUREMENT FORMS 1-16.901-25 L ୮ (b) Page 2 of Standard Form 25. per thousand. The rate of premium on this bond is Total amount of premium charged, $....... (The above must be filled in by corporate surety) CERTIFICATE AS TO CORPORATE PRINCIPAL certify that I am the I, of the corporation named as principal in the within bond; that secretary of said who signed the said bond on behalf of the principal, was then corporation; that I know his signature, and his signature thereto is genuine; and that said bond was duly signed, sealed, and attested for and in behalf of said corporation by authority of its governing body. INSTRUCTIONS ECIMEN CORPORATE SEAL 1. This form shall be used for construction work or the furnishing of supplies or services, whenever a performance bond is required. There shall be no deviation from this form except as authorized by the General Services Administration. any 2. The surety on the bond may be any fon authorized by the Secretary of the Treasury to act as surety, or two responsible individual saretes Where individual sureties are used, this bond must be accompanied by a completed Affidavit of Individual Surety for each individual surety (Standard Form 28). 3. The name, including full Christian an and business or residence address of each individual party to the bond shall be inserted in the space provided therefor, and each such party shall sign the bond with his usual signature on the line opposite the scroll seal, and if signed in Maine or New Hamp- shire, an adhesive seal shall be affixed opposite the signature. 4. If the principals are partners, their individual names shall appear in the space provided therefor, with the recital that they are partners composing a firm, naming it, and all the members of the firm shall execute the bond as individuals. 5. If the principal or surety is a corporation, the name of the State in which incorporated shall be inserted in the space provided therefor, and said instrument shall be executed and attested under the cor- porate seal as indicated in the form. If the corporation has no corporate seal the fact shall be stated, in which case a scroll or adhesive seal shall appear following the corporate name. 6. The official character and authority of the person or persons executing the bond for the principal, if a corporation, shall be certified by the secretary or assistant secretary, according to the form herein provided. In lieu of such certificate there may be attached to the bond copies of so much of the records of the corporation as will show the official character and authority of the officer signing, duly certified by the secretary or assistant secretary, under the corporate seal, to be true copies. 7. The date of this bond must not be prior to the date of the instrument in connection with which it is given. L U. S. GOVERNMENT PRINTING OFFICE: 1955--364530 FEDERAL PROCUREMENT REGULATIONS 16-30441-2 1638 (FPR CIRC, 2, JUNE 1959) SUBPART 1-16.9 ILLUSTRATIONS OF FORMS 1-16.901-25A 1-16.901–25A Standard Form 25A: Payment Bond. (a) Page 1 of Standard Form 25A. STANDARD FORM 25A NOVEMBER 1950 EDITION GENERAL SERVICES ADMINISTRATION FED. PROC. REG. (41 CFR) 1-16.801 PRINCIPAL SURETY PENAL SUM OF BOND (express in words and figures) PAYMENT BOND (See Instructions on Reverse) DATE BOND EXECUTED CONTRACT NO. DATE OF CONTRACT KNOW ALL MEN BY THESE PRESENTS, That we, the PRINCIPAL and SURETY above named, are held and firmly bound unto the United States of America, hereinafter called the Government, in the penal sum of the amount stated above, for the payment of which sum well and truly to be made, we bind ourselves, our heirs, executors, administrators, and successors, jointly and severally, firmly by these presents. THE CONDITION OF THIS OBLIGATION IS SUCH, that whereas the principal entered into a certain contract with the Government, numbered and dated as shown above and hereto attached; NOW THEREFORE, if the principal shall promptly make payment to all persons supplying labor and material in the prosecution of the work provided for in said contract, and any and all duly authorized modifications of said contract that may hereafter be made, notice of which modifications to the surety being hereby waived, then this obligation to be void; otherwise to remain in full force and virtue. IN WITNESS WHEREOF, the above-bounden parties have executed this instrument under their several seals on the date indicated above, the name and corporate seal of each corporate party being hereto affixed and these presents duly signed by its undersigned representative, pursuant to authority of its governing body. In Presence of: 1. 2. 3. 4. 1. 2. Attest: Attest: STANDARD form 25A NOVEMBER 1950 EDITION WITNESS SPECIMEN INDIVIDUAL PRINCIPAL Is to {SEAL} as to {SEAL) as to {SEAL] as to [SEAL} INDIVIDUAL SURETY as to [SEAL] as to [SEAL} CORPORATE PRINCIPAL BUSINESS ADDRESS BY TITLE CORPORATE SURETY BUSINESS ADDRESS BY TITLE FEDERAL PROCUREMENT REGULATIONS AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL 16–49503-2 ୮ (fpr circ, 2, JUNE 1939) 1639 PART 1-16 PROCUREMENT FORMS 1-16.901-23A ୮ ட (b) Page 2 of Standard Form 25A. per thousand. The rate of premium on this bond is Total amount of premium charged, $. (The above must be filled in by corporate surety) CERTIFICATE AS TO CORPORATE PRINCIPAL certify that I am the secretary I, of the corporation named as principal in the within bond; that of said who signed the said bond on behalf of the principal, was then corporation; that I know his signature, and his signature thereto is genuine; and that said bond was duly signed, sealed, and attested for and in behalf of said corporation by authority of its governing body. MEN INSTRUCTIONS CORPORATE SEAL [cc 1 1. This form, for the protection of persons supplying labor and material, shall be used whenever a pay- ment bond is required under the act of August 24, 1985, 49 Stat. 793, as amended (40 U. S. C. 270a-270e). It may also be used in any other case in which a payment bond is to be required. There shall be no deviation from this form except as authorized the General Services Administration. any corporation 2. The surety on the bond may be any corporation authorized by the Secretary of the Treasury to act as surety, or two responsible individuaKsureties. Where individual sureties are used, this bond must be accompanied by a completed Affidavit of Individual Surety for each individual surety (Standard Form 28). 3. The name, including full Christian name, and business or residence address of each individual party to the bond shall be inserted in the space provided therefor, and each such party shall sign the bond with his usual signature on the line opposite the scroll seal, and if signed in Maine or New Hampshire, an adhesive seal shall be affixed opposite the signature. 4. If the principals are partners, their individual names shall appear in the space provided therefor, with the recital that they are partners composing a firm, naming it, and all the members of the firm shall execute the bond as individuals. 5. If the principal or surety is a corporation, the name of the State in which incorporated shall be inserted in the space provided therefor, and said instrument shall be executed and attested under the cor- porate seal as indicated in the form. If the corporation has no corporate seal the fact shall be stated, in which case a scroll or adhesive seal shall appear following the corporate name. 6. The official character and authority of the person or persons executing the bond for the principal, if a corporation, shall be certified by the secretary or assistant secretary, according to the form herein provided. In lieu of such certificate there may be attached to the bond copies of so much of the records of the corporation as will show the official character and authority of the officer signing, duly certified by the secretary or assistant secretary, under the corporate seal, to be true copies. 7. The date of this bond must not be prior to the date of the instrument in connection with which it is given. L 16-49503-2 U. S. GOVERNMENT PRINTING OFFICE : 1952-O-211250 FEDERAL PROCUREMENT REGULATIONS 1640 (FPR CIRC. 2, JUNE 1959) SUBPART 1-16. 9 1-16.9 ILLUSTRATIONS ILLUSTRATIONS OF FORMS 1-16.901-26 Standard Form 26: Award (Supply Contract). .STANDARD FORM 26 NOVEMBER 1949 EDITION GENERAL SERVICES ADMINISTRATION FED. PROC. REG. (41 CFR) 1-16.101 DATE OF AWARD TO (Contractor and address) INVOICE FOR PAYMENT SHOULD BE MAILED TO AWARD (SUPPLY CONTRACT) INVITATION NO. ISSUED BY CONTRACT NO. 1-16.901-26 PAGE NO. NUMBER OF PAGES OF AWARD. ORDER NO. (If any) 1 PAYMENT WILL BE MADE BY Your bid on the above numbered Invitation for Bids is hereby accepted as to the items enumerated below with the additions or changes made by you, which additions or changes are set forth in full below. ITEM NO. SUPPLIES OR SERVICES QUANTITY (Number of UNIT units) UNIT PRICE SPECIMEN This Award consummates the contract, which consists of the following documents, including any Continuation Sheets thereto: (a) the Government's Invitation for Bids and your Bid, (b) the Schedule, (c) the General Provisions, and (d) the Government's Award. No further contractual document is necessary. UNITED STATES OF AMERICA BY Standard Form 26 Nov. 1949 Edition TOTAL AMOUNT AMOUNT CONTRACTING OFFICER U. 8. COVERKNERY PRINTING OFFICE 16-60880-1 (NEXT PAGE IS 1643) FEDERAL PROCUREMENT REGULATIONS ך (FPR CIRC. 2, JUNE 1959) 1641 > SUBPART 1-16. 9 ILLUSTRATIONS OF FORMS 1-16.901-27 1-16.901-27 Standard Form 27: Performance Bond, Corporate Co-Surety Form. (a) Page 1 of Standard Form 27. STANDARD FORM 27 NOVEMBER 1950 EDITION GENERAL SERVICES ADMINISTRATION FED. PROC. REG. (41 CFR) 1-16.801 PERFORMANCE BOND CORPORATE CO-SURETY FORM (See Instructions on Last Page) DATE BOND EXECUTED 77 PRINCIPAL PENAL SUM OF BOND (express in words and figures) CONTRACT NO. DATE OF CONTRACT KNOW ALL MEN BY THESE PRESENTS, That we, the PRINCIPAL above named, and the Corporations hereinafter designated as SURETY A to SURETY , inclusive, as SURETIES, are held and firmly bound unto the United States of America, hereinafter called the Government, in the penal sum of the amount stated above, for the payment of which sum well and truly to be made, we bind ourselves, our heirs, executors, administrators, and successors, jointly and sev- erally, firmly by these presents: Provided, That we the sureties bind ourselves in such sum "jointly and severally" as well as "severally" only for the purpose of allowing a joint action or actions against any or all of us, and for all other purposes each surety binds itself, jointly and severally with the principal, for the payment of such sum only as is set forth opposite its name in the following schedule: SURETY NAME AND STATE OF INCORPORATION LIMIT OF LIABILITY J K A B C D E F G H STANDARD FORM 27 NOVEMBER 1950 EDITION SPECIME FEDERAL PROCUREMENT REGULATIONS 16-47532-2 (fpr circ, 2, JUNE 1959) 1643 PART 1-16 PROCUREMENT FORMS 1-16.901-27 ୮ L (b) Page 2 of Standard Form 27. THE CONDITION OF THIS OBLIGATION IS SUCH, that whereas the principal entered into a certain contract with the Government, numbered and dated as shown above and hereto attached; NOW THEREFORE, if the principal shall well and truly perform and fulfill all the undertakings, covenants, terms, conditions, and agreements of said contract during the original term of said contract and any extensions thereof that may be granted by the Government, with or without notice to the sureties, and during the life of any guaranty required under the contract, and shall also well and truly perform and fulfill all the undertakings, covenants, terms, conditions, and agreements of any and all duly authorized modifications of said contract, that may hereafter be made, notice of which modifications to the sureties being hereby waived, then, this obligation to be void; otherwise to remain in full force and virtue. IN WITNESS WHEREOF, the above-bounden parties have executed this instrument under their several seals on the date indicated above, the name and corporate seal of each corporate party being hereto affixed and these presents duly signed by its undersigned representative, pursuant to authority of its governing body. Lo In Presence of: WITNESS 1. 2. 3. 4. Attest: Attest: as to as to INDIVIDUAL PRINCIPAL [SEAL] [SEAL] [SEAL] [SEAL] MPORATE PRINCIPAL BUSINESS ADDRESS SPECIMEN BY TITLE CORPORATE SURETY TITLE CORPORATE SURETY Attest: BY TITLE CORPORATE SURETY Attest: BY TITLE 2 FEDERAL PROCUREMENT REGULATIONS AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL 16-47332-2 1644 (FPR CIRC. 2, JUNE 1959) SUBPART 1-16, 9 ILLUSTRATIONS OF FORMS (c) Page 3 of Standard Form 27. Attest: CORPORATE SURETY BY TITLE CORPORATE SURETY Attest: BY Attest: Attest: Attest: TITLE CORPORATE SURETY BY TITLE SPECIMEN BY ORPORATE SURETY TITLE CORPORATE SURETY Attest: BY TITLE CORPORATE SURETY Attest: BY TITLE CORPORATE SURETY Attest: ül FEDERAL TITLE 3 PROCUREMENT REGULATIONS 1-16.901-27 AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL 10-47532-2 (FPR CIRC, 2, JUNE 1959) 1645 PART 1-16 PROCUREMENT FORMS 1-16.901-27 L (d) Page 4 of Standard Form 27. The rate of premium on this bond is Total amount of premium charged, S....... (The above must be filled in by corporate surety) per thousand. CERTIFICATE AS TO CORPORATE PRINCIPAL certify that I am the secretary I, of the corporation named as principal in the within bond; that of said who signed the said bond on behalf of the principal, was then corporation; that I know his signature, and his signature thereto is genuine; and that said bond was duly signed, sealed, and attested for and in behalf of said corporation by authority of its governing body. ME CORPORATE SEAL INSTRUCTIONS Kor 1. This form shall be used for construction work or the furnishing of supplies or services whenever a performance bond is required and two or more corporate sureties authorized by the Secretary of the Treas- ury to act as surety, each limiting its ability to portion only of the total penalty, are to execute the bond. There shall be no deviation from this form except as authorized by the General Services Administration. 2. The letter, such as B, F, pr, applicable to the last surety listed in the schedule, must be inserted in the space indicated in the body of the bond. In cases involving only two sureties the word "to" following "Surety A" should be changed to "and" by interlineation, and the word "inclusive" should be stricken. When more than 11 sureties are to execute the bond, attach Standard Form 27B, Continuation Sheet, and identify sureties beginning with "L" on the first sheet. 3. The name, including full Christian name, and residence of each individual party to the bond shall be inserted in the space provided therefor, and each such party shall sign the bond with his usual signature on the line opposite the scroll seal, and if signed in Maine or New Hampshire, au adhesive seal shall be affixed opposite the signature. 4. If the principals are partners, their individual names shall appear in the space provided therefor, with the recital that they are partners composing a firm, naming it, and all the members of the firma shall execute the bond as individuals. 5. The name of the State in which each surety is incorporated and the State of incorporation of the principal, if a corporation, shall be inserted in the appropriate place in the bond, and said instrument shall be executed and attested under the corporate seal as indicated in the form. If the corporation has no corporate seal the fact shall be stated, in which case a scroll or adhesive seal shall appear following the corporate name. 6. The official character and authority of the person or persons executing the bond for the principal, if a corporation, shall be certified by the secretary or assistant secretary, according to the form set forth above. In lieu of such certificate there may be attached to the bond copies of so much of the records of the cor- poration as will show the official character and authority of the officer signing, duly certified by the secretary or assistant secretary, under the corporate seal, to be true copies. 7. The date of this bond must not be prior to the date of the instrument in connection with which it is given. L U. S. GOVERNMENT PRINTING OFFICE 16-47532-4 FEDERAL PROCUREMENT REGULATIONS 1646 (fpr circ. 2, JUNE 1959) SUBPART 1-16, 9 ILLUSTRATIONS OF FORMS 1-16.901-27A 1-16.901-27A Standard Form 27A: Payment Bond, Corporate Co-Surety Form. (a) Page 1 of Standard Form 27A. STANDARD FORM 27A NOVEMBER 1950 EDITION GENERAL. SERVICES ADMINISTRATION FED. PROC. REG. (41 CFR) 1-16.801 PAYMENT BOND CORPORATE CO-SURETY FORM (See Instructions on Last Page) DATE BOND EXECUTED PRINCIPAL PENAL SUM OF BOND (express in words and figures) CONTRACT NO. DATE OF CONTRACT KNOW ALL MEN BY THESE PRESENTS, That we, the PRINCIPAL above named, and the Corporations hereinafter designated as SURETY A to SURETY inclusive, as SURETIES, are held and firmly bound unto the United States of America, hereinafter called the Government, in the pen al sum of the amount stated above, for the payment of which sum well and truly to be made, we bind ourselves, our heirs, executors, administrators, and successors, jointly and sev- erally, firmly by these presents: Provided, That we the sureties bind ourselves in such sum “jointly and severally” as well as “severally" only for the purpose of allowing a joint action or actions against any or all of us, and for all other purposes each surety binds itself, jointly and severally with the principal, for the payment of such sum only as is set forth opposite its name in the following schedule: SURETY K A B C D E F G H CD 4 4 -- STANDARD FORM 27A NOVEMBER 1950 EDITION NAME AND STATE OF INCORPORATION SPECIME LIMIT OF LIABILITY FEDERAL PROCUREMENT REGULATIONS 16--63284-8 لم ך (FPR CIRC. 2, JUNE 1959) 1647 PART 1-16 PROCUREMENT FORMS ୮ ୮ L 1-16,901-27A (b) Page 2 of Standard Form 27A. THE CONDITION OF THIS OBLIGATION IS SUCH, that whereas the principal entered into a certain contract with the Government, numbered and dated as shown above and hereto attached; NOW THEREFORE, if the principal shall promptly make payment to all persons supplying labor and material in the prosecution of the work provided for in said contract, and any and all duly authorized modifications of said contract that may hereafter be made, notice of which modifications to the sureties being hereby waived, then this obligation to be void; otherwise to remain in full force and virtue. IN WITNESS WHEREOF, the above-bounden parties have executed this instrument under their several seals on the date indicated above, the name and corporate seal of each corporate party being hereto affixed and these presents duly signed by its undersigned representative, pursuant to authority of its governing body. In Presence of: WITNESS 1. 2. 3. 4. Attest: Attest: as to as to INDIVIDUAL PRINCIPAL [SEAL) [SEAL) 88 [SEAL) as [SEAL) CORPONTE PRINCIPAL BUSINESS ADDRESS SPECIA BY TITLE CORPORATE SURETY TITLE CORPORATE SURETY Attest: BY TITLE CORPORATE SURETY Attest: BY TITLE FEDERAL PROCUREMENT REGULATIONS AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL 16-63284-1 1648 (FPR CIRC, 2, JUNE 1959) SUBPART 1-16, 9 ILLUSTRATIONS OF FORMS 1-16,901-27A (c) Page 3 of Standard Form 27A. Attest: CORPORATE SURETY BY TITLE CORPORATE SURETY Attest: BY Attest: Attest: Attest: TITLE CORPORATE SURETY BY TITLE CORPORATE SURETY SPECIME CORPORATE SURETY BY TITLE CORPORATE SURETY Attest: BY TITLE CORPORATE SURETY Attest: BY TITLE CORPORATE SURETY Attest: BY TITLE 3 FEDERAL PROCUREMENT REGULATIONS AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL F (FPR CIRC. 2, JUNE 1959) 1649 PART 1-16 PROCUREMENT FORMS 1-16,901-27A L ୮ (d) Page 4 of Standard Form 27A. per thousand. The rate of premium on this bond is Total amount of premium charged, $. (The above must be filled in by corporate surety) CERTIFICATE AS TO CORPORATE PRINCIPAL certify that I am the secretary I, of the corporation named as principal in the within bond; that of said who signed the said bond on behalf of the principal, was then corporation; that I know his signature, and his signature thereto is genuine; and that said bond was duly signed, sealed, and attested for and in behalf of said corporation by authority of its governing body. CORPORATE SEAL INSTRUCTIONS 1. This form, for the protection of persone supplying labor and material for construction work, shall be used whenever a payment bond under the act of August 24, 1935, 49 Stat.793, as amended (40 U. S. C. 270a-270e), is required and two or more corporate sureties authorized by the Secretary of the Treasury to act as surety, each limiting its liability to a portion only of the total penalty, are to execute the bond. It may also be used in any other case in which a payment bond is to be required. There shall be no deviation from this form except as authorized by the General Services Administration. 2. The letter, such as B, F, or applicable to the last surety listed in the schedule, must be inserted in the space indicated in the body of the bond. In cases involving only two sureties the word "to" following "Surety A” should be changed and by interline ation, and the word "inclusive" should be stricken. execute the bond, attach Standard Form 27B, Continuation Sheet, and the first sheet. When more than 11 sureties are identify sureties beginning with 3. The name, including full Christian name, and residence of each individual party to the bond shall be inserted in the space provided therefor, and each such party shall sign the bond with his usual signature on the line opposite the scroll seal, and if signed in Maine or New Hampshire, an adhesive seal shall be affixed opposite the signature. 4. If the principals are partners, their individual names shall appear in the space provided therefor, with the recital that they are partners composing a firm, naming it, and all the members of the firm shall execute the bond as individuals. 5. The name of the State in which each surety is incorporated and the State of incorporation of the principal, if a corporation, shall be inserted in the appropriate place in the bond, and said instrument shall be executed and attested under the corporate seal as indicated in the form. If the corporation has no corporate seal the fact shall be stated, in which case a scroll or adhesive seal shall appear following the corporate name. 6. The official character and authority of the person or persons executing the bond for the principal, if a corporation, shall be certified by the secretary or assistant secretary, according to the form set forth above. In lieu of such certificate there may be attached to the bond copies of so much of the records of the cor- poration as will show the official character and authority of the officer signing, duly certified by the secretary or assistant secretary, under the corporate seal, to be true copies. 7. The date of this bond must not be prior to the date of the instrument in connection with which it is given. L U. S. GOVERNMENT PRINTING OFFICE 16-63284-1 FEDERAL PROCUREMENT REGULATIONS 1650 (FPR CIRC. 2, JUNE 1959) SUBPART 1-16.9 ILLUSTRATIONS OF FORMS 1-16.901-27B 1-16.901–27B Standard Form 27B: Continuation Sheet, Corporate Co-Surety Bond. (a) Page 1 of Standard Form 27B. STANDARD FORM 278 NOVEMBER 1950 EDITION GENERAL SERVICES ADMINISTRATION FED. PROC. REG. (41 CFR) 1-16.801 CONTINUATION SHEET CORPORATE CO-SURETY BOND Bond of (“Performance”—“Payment") under Contract No. (Name of Principal must be filled in) dated (Must be filled in) CONTINUATION OF PAGE 1 SURETY NAME AND STATE OF INCORPORATION LIMIT OF LIABILITY Attest: Attest: STANDARD FORM 27B NOVEMBER 1950 EDITION SPECIMEN FEDERAL CONTINUATION OF PAGE 3 CORPORATE SURETY BY TITLE CORPORATE SURETY BY TITLE PROCUREMENT REGULATIONS AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL 5-51-1493 ך (FPR CIRC, 2, JUNE 1959) 1651 PART 1-16 PROCUREMENT FORMS ୮ L 1-16.901-27B L (b) Page 2 of Standard Form 27B. Attest: CORPORATE SURETY BY TITLE CORPORATE SURETY Attest: BY Attest: Attest: Attest: TITLE CORPORATE SURETY BY TITLE CORPORATE SURETY CORPORATE SURETY SPECIME BY TITLE CORPORATE SURETY Attest: BY Attest: TITLE CORPORATE SURETY BY TITLE CORPORATE SURETY Attest: BY TITLE 3 FEDERAL PROCUREMENT REGULATIONS AFFIX CORPORATE SEAL AFFIX, CORPORATE SEAL AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL 5-31-1493 1632 (FPR CIRC. 2, JUNE 1959) SUBPART 1-16. 9 ILLUSTRATIONS OF FORMS 1-16.901-28 Standard Form 28: Affidavit of Individual Surety. (a) Page 1 of Standard Form 28. STANDARD FORM 28 NOVEMBER 1950 EDITION GENERAL SERVICES ADMINISTRATION FED. PROC. REG. (41 CFR) 1-16.801 AFFIDAVIT OF INDIVIDUAL SURETY (See Instructions on Reverse) STATE OF COUNTY OF SS: 1-16,901- 28 I, the person whose signature appears below as surety, being duly sworn, depose and say that I am one of the sureties to the attached bond; that I am a citizen of the United States, and of full age and legally competent; that I am not a partner in the business of the principal on the bond or bonds on which I appear or may appear as surety; that the information herein below furnished is true and correct. This affidavit is made to induce the United States of America to accept me as surety on the attached bond. MY NAME (first, middle, last) MY ADDRESS (street and number, city and State) TYPE AND DURATION OF MY OCCUPATION NAME OF MY EMPLOYER MY BUSINESS ADDRESS (street and number, city and State) AMOUNT I AM WORTH IN REAL ESTATE AND PERSONAL PROPERTY OVER AND ABOVE (1) ALL MY DEBTS AND LIABILITIES OWING AND INCURRED. (2) ANY PROPERTY EXEMPT FROM EXECUTION, (3) ANY PECUNIARY IN- TEREST I HAVE IN THE BUSINESS OF THE PRINCIPAL ON SAID BOND, AND (4) ANY INTEREST I HAVE IN ANY SO-CALLED COMMUNITY PROPERTY LOCATION AND DESCRIPTION OF REAL ESTAte of which I AM SOLE OWNER'IN FEE SIMPLE (not exempt from seizure and sale under any bomestead law, community or marriage law, or upon attachment, execution, or judicial process) FAIR VALUE OF SUCH REAL ESTATE ÉCIME ASSESSED VALUE OF SUCH REAL ESTATE FOR TAXATION PURPOSES ALL MORTGAGES OR OTHER ENCUMBRANCES AGAINST ABOVE REAL ESTATE. THERE BEING NO OTHERS (if none, so state) MY LIABILITIES OWING AND INCURRED DO NOT EXCEED THE AMOUNT OF THE ABOVE PERSONAL PROPERty consisTS OF THE FOLLOWING AMOUNT I AM WORTH, OVER AND ABOVE JUST DEBTS AND LIABILITIES, IN PERSONAL PROPERTY SUBJECT TO EXECUTION AND SALE, THIS AMOUNT BEING ADDITIONAL TO THE REAL ESTATE ABOVE DESCRIBED ALL OTHER BONDS ON WHICH I AM SURETY (state character and amount of each bond; if none, so state) MY SIGNATURE as sureETY Subscribed and sworn to before me this date at (Signature) STANDARD FORM 28 NOVEMBER 1950 EDITION OFFICIAL SEAL (Title of official administering oath) (Date) 16-63324-1 FEDERAL PROCUREMENT REGULATIONS ୮ (FPR CIRC. 2, JUNE 1959) 1633 PART 1-16 PROCUREMENT FORMS 1-16.901-28 L ୮ (b) Page 2 of Standard Form 28. CERTIFICATE OF SUFFICIENCY I HEREBY CERTIFY, That the surety named herein is personally known to me; that, in my judgment, said surety is responsible, and qualified to act as such; and that, to the best of my knowledge and belief, the facts stated by said surety in the foregoing affidavit are true. NAME (typewritten) OFFICIAL TITLE ADDRESS SIGNATURE INSTRUCTIONS 1. This form shall be used whenever sureties on bonds to be executed in connection with Government contracts are individual sureties. There shall be no deviation from this form except as authorized by the General Services Administration. 2. A firm, as such, will not be accepted as a surety, nor a partner for copartners or for a firm of which he is a member. Stockholders of a corporate principal may be accepted as sureties provided their qualifi- cations as such are independent of their stock holdings therein. Sureties, if individuals, shall be citizens of the United States, except that sureties on bonds executed in any foreign country, the Canal Zone, Puerto Rico, Hawaii, Alaska, Guam, or any possession of the United States, for the performance of contracts entered into in these places, need not be citizens of the United States, but if not citizens of the United States shall be domiciled in the place where the contract is to be performed 3. The individual surety shall justify, undef bath a sum not less than the penalty of the bond, according to the form appearing on the face hereof before United States commissioner, a clerk of a United States court, a notary public, or some other officer having authority to administer oaths generally. If the officer has an official seal, it shall be affixed, otherwise the proper certificate as to his official character shall be furnished. Where citizenship is not required, as provided in paragraph 2 of these instructions, the affidavit may be amended accordingly. 4. The certificate of sufficiency shall be signed by an officer of a bank or trust company, a judge or clerk of a court of record, a United States district attorney or commissioner, a postmaster, a collector or deputy collector of internal revenue, or any other officer of the United States acceptable to the department or estab- lishment concerned. Further certificates as to the financial qualification of the sureties may be required from time to time. Such certificates must be based on the personal investigation of the certifying officers at the time of the making thereof, and not upon prior certificates. L U. 8. GOVERNMENT PRINTING OFFICE 16-63324-1 FEDERAL PROCUREMENT REGULATIONS 1654 (fpr circ. 2, JUNE 1959) SUBPART 1-16, 9 ILLUSTRATIONS OF FORMS 1-16.901-30 1-16.901-30 Standard Form 30: Invitation and Bid (Supply Contract). (a) Page 1 of Standard Form 30. STANDARD FORM 30 OCTOBER 1957 EDITION GENERAL SERVICES ADMINISTRATION FED. PROC. REG. (41 CFR) 1-16.101 ISSUED BY INVITATION AND BID (SUPPLY CONTRACT) DEPARTMENT ADDRESS DATE ISSUED Sealed bids in INVITATION FOR BIDS INVITATION NO. subject to (1) the Terms and Conditions of the Invitation for Bids, F .edition), which are incor- (2) the attached Schedule, (3) General Provisions (Standard Form 32, porated herein by reference, and (4) such other contract provisions and specifications as are attached or incorporated by reference in the Schedule, will be received at the above office until. described in the attached Schedule. o'clock. m., Time, (date) and at that time publicly opened, for furnishing the supplies or services General information and instructions to bidders are contained in the terms and conditions on the reverse hereof. BID DATE OF BID In compliance with the above, the undersigned offers and agrees, if this Bid be accepted within SPECIMEN calendar days (60 calendar days unless a different period be inserted by The bidder from the date of the opening, to furnish any or all of the items upon which prices are quoted, at the pro the time specified in the attached Schedule. Opposite each item, delivered at the designated point(s) within BIDDER REPRESENTS: (Check appropriate boxes) (1) That he is, is not, a small business cent definition on reverse hereof.) If bidder is small busi- ness concern and is not the manufacturer of the supplies bid upon, he also represents that all supplies to be fur- nished hereunder will, will not, be manufactured or produced by a small business concern in the United States, its Territories, its possessions, or the Common- wealth of Puerto Rico. (2) That he is a regular dealer in, manufacturer of, the supplies bid upon. (3) (a) That he has, has not, employed or retained any company or person (other than a full-time bona fide employee working solely for the bidder) to solicit or secure this contract, and (b) that he ☐ has, ☐ has not, paid or agreed to pay to any company or person (other than a full-time bona fide employee working solely for the bidder) any fee, commission, percentage or broker- age fee, contingent upon or resulting from the award of this contract; and agrees to furnish information re- lating to (a) and (b) above as requested by the Con- tracting Officer. (For interpretation of the representation, including the term "bona fide employee," see Code of Fed- eral Regulations, Title 44, Part 150.) TYPE OF BUSINESS (Check appropriate box) Individual Partnership FULL NAME OF BIDDER (Type or print) BUSINESS ADDRESS OF BIDDER (Streef, city, zone, and State. Type or print) TELEPHONE NO. SIGNATURE OF PERSON AUTHORIZED TO SIGN UD TYPE OR PRINT SIGNER'S NAME AND TITLE Corporation J INCORPORATED IN THE STATE OF (Complete, if corporation) FEDERAL PROCUREMENT REGULATIONS 1633 (FPR CIRC. 2, JUNE 1959) PART 1-16 PROCUREMENT FORMS 1-16.901-30 - ୮ ட L (a) Page 2 of Standard Form 30. TERMS AND CONDITIONS OF THE INVITATION FOR BIDS 1. PREPARATION OF BIDS.-(a) Bidders are expected to examine the drawings, specifications, Schedule, and all in- structions. Failure to do so will be at the bidder's risk. (b) Each bidder shall furnish the information required by the bid form. The bidder shall print or type his name on the Schedule and each Continuation Sheet thereof on which he makes an entry. Erasures or other changes must be initialed by the person signing the bid. Bids signed by an agent must be accompanied by evidence of his authority. (c) Unit price for each unit bid on shall be shown and such price shall include packing unless otherwise specified. A total shall be entered in the Amount column of the Sched- ule for each item bid on. In case of error in extension of price, the unit price will govern. (d) Alternate bids will not be considered unless author- ized by the Invitation. (e) When not otherwise specified, bidder must definitely state time of proposed delivery. (f) Time, if stated as a number of days, will include Sundays and holidays. 2. SUBMISSION OF BIDS.—(a) Bids and modifications thereof shall be enclosed in sealed envelopes addressed to the issuing office, with the name and address of the bidder, the date and hour of opening, and the invitation number on the face of the envelope. Telegraphic bids will not be considered unless authorized by the Invitation; however, bids may be modified by telegraphic notice provided such notice is received prior to the time set for the opening of the bids. (b) Samples of items, when required, must be submitted within the time specified, and unless otherwise specified by the Government, at no expense to the Government. If not destroyed by testing, samples will be returned at bidder's request and expense, unless otherwise specified by the Invitation. (c) In the event no bid is to be submitted, do not return the Invitation unless otherwise specified. However, a letter or post card should be sent to the issuing office advising whether future Invitations for the type of supplies or services covered by this Invitation are desired. 3. WITHDRAWAL OF BIDS.-Bids may be withdrawn by written or telegraphic notice (see 4 below). 4. LATE BIDS.-Bids and modifications or withdrawals thereof received after the time set for opening will not be considered, unless they are received before the award is made, and it is determined by the Government that failure to arrive on time was due solely to delay in the mails for which the bidder was not responsible. 5. GOVERNMENT-FURNISHED PROPERTY.No material, labor, or facilities will be furnished by the Government unless otherwise provided for in the Invitation. 6. LABOR INFORMATION.-Attention is invited to the possibility that wage determinations may have been made under the Walsh-Healey Public Contracts Act providing minimum wages for employees engaged in the manufacture for sale to the Government of the supplies covered by this Invitation for Bids. Information in this connection, as well as general information as to the requirements of the Act concerning overtime payment, child labor, safety and health provisions, etc., may be obtained from the Wage and Hour and Public Contracts Divisions, Department of Labor, Washington 25, D. C. Requests for information should state the Invitation number, the issuing agency and the supplies covered. 7. DISCOUNTS.—(a) Prompt-payment discounts will be included in the evaluation of bids, provided the period of the offered discount is sufficient to permit payment within such period in the regular course of business under the delivery, inspection, and payment provisions of the Invi- tation and Bid. (b) In connection with any discount offered, time will be computed from date of delivery of the supplies to carrier when delivery and acceptance are at point of origin, or from date of delivery at destination or port of embarkation when delivery and acceptance are at either of those points, or from date correct invoice or voucher is received in the office specified by the Government if the latter date is later than the date of delivery. Payment is deemed to be made, for the purpose of earning the discount, on the date of mailing of the Government check. 8. AWARD OF CONTRACT.—(a) The contract will be awarded to that responsible bidder whose bid, conforming to the Invitation for Bids, will be most advantageous to the Government, price and other factors considered. (b) The Government reserves the right to reject any or all bids and to waive informalities and minor irregularities in bids received. (c) The Government may accept any item or group of items of any bid, unless the bidder qualifies his bid by spe- cific limitations. UNLESS OTHERWISE PROVIDED IN THE SCHEDULE, BIDS MAY BE SUBMITTED FOR ANY QUANTITIES LESS THAN THOSE SPECIFIED; AND THE GOVERNMENT RESERVES THE RIGHT TO MAKE AN AWARD ON ANY ITEM FOR A QUAN- TITY LESS THAN THE QUANTITY BID UPON AT THE UNIT PRICES OFFERED UNLESS THE BIDDER SPECIFIES OTHERWISE IN HIS BID. (d) A written award mailed (or otherwise furnished) to the successful bidder within the time for acceptance specified in the bid shall be deemed to result in a binding contract without further action by either party. 9. SELLER'S INVOICES.-Invoices shall be prepared and submitted in quadruplicate unless otherwise specified. In- voices shall contain the following information: Contract and order number (if any), item numbers, description of supplies or services, sizes, quantities, unit prices, and ex- tended totals. Bill of lading number and weight of ship- ment will be shown for shipments made on Government bills of lading. 10. DEFINITION OF SMALL BUSINESS.-Generally, a small business concern for the purpose of Government procure- ment is a concern that (1) is not dominant in its field of operation and, with its affiliates, employs fewer than 500 employees, or (2) is certified as a small business concern by Small Business Administration. (See Code of Federal Regulations, Title 13, Part 103, as amended, which contains the detailed definition and related procedures.) 2 16-60682-5 U. S. GOVERNMENT PRINTING OFFICE FEDERAL PROCUREMENT REGULATIONS 1636 (FPR CIRC. 2, JUNE 1959) SUBPART 1-16.9 ILLUSTRATIONS OF FORMS 1-16.901-31 Standard Form 31: Schedule (Supply Contract). STANDARD FORM 31 NOVEMBER 1949 EDITION GENERAL SERVICES ADMINISTRATION FED. PROC. REG. (41 CFR) 1.16.101 REQUISITION NUMBER OR OTHER PURCHASE AUTHORITY SCHEDULE (SUPPLY CONTRACT) INVITATION NO. ACCOUNTING AND APPROPRIATION DATA 1-16,901-31 PAGE NO. NUMBER OF PAGES OF SCHEDULE 7 1 The supplies or services to be furnished, the specifications, the discounts, the time and place of delivery, and any other special terms and conditions applicable to the Invitation for Bids, are set forth below. DISCOUNTS WILL BE ALLOWED BY BIDDER FOR PROMPT PAYMENT AS FOLLOWS: ITEM NO. NAME OF BIDDER PERCENT, 10 CALENDAR DAYS: PERCENT, 20 CALENDAR DAYS; SUPPLIES OR SERVICES PERCENT, 30 CALENDAR DAYS. QUANTITY (Number of UNIT UNIT PRICE Units) SPECIMEN Standard Form 81 Nov, 1949 Edition U. S. GOVERNMENT PRINTING OFFICE 66-16-60679-1 AMOUNT (NEXT PAGE IS 1659) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 2, JUNE 1959) 1657 SUBPART 1-16.9 ILLUSTRATIONS OF FORMS 1-16.901-32 § 1-16.901-32 Standard Form 32: General Provisions (Supply Contract). (a) Page 1 of Standard Form 32. Standard Form 32 SEPTEMBER 1961 EDITION GENERAL SERVICES ADMINISTRATION FED. PROC. REG. (41 CFR) 1-16.101 1. DEFINITIONS GENERAL PROVISIONS (Supply Contract) As used throughout this contract, the following terms shall have the meanings set forth below: (a) The term "head of the agency" or "Secretary" means the Secretary, the Under Secretary, any Assistant Secretary, or any other head or assistant head of the executive or military department or other Federal agency; and the term "his duly au- thorized representative" means any person or per- sons or board (other than the Contracting Officer) authorized to act for the head of the agency or the Secretary. (b) The term "Contracting Officer" means the person executing this contract on behalf of the Government, and any other officer or civilian employee who is a properly designated Contracting Officer; and the term includes, except as otherwise provided in this contract, the authorized representative of a Con- tracting Officer acting within the limits of his authority. (c) Except as otherwise provided in this contract, the term "subcontracts" includes purchase orders under this contract. 2. CHANGES The Contracting Officer may at any time, by a written order, and without notice to the sureties, make changes, within the general scope of this contract, in any one or more of the following: (i) Drawings, designs, or specifications, where the supplies to be furnished are to be specially manu- factured for the Government in accordance therewith; (ii) method of shipment or packing; and (iii) place of delivery. If any such change causes an increase or decrease in the cost of, or the time required for, the performance of any part of the work under this contract, whether changed or not changed by any such order, an equitable adjustment shall be made in the contract price or delivery schedule, or both, and the contract shall be modified in writing accord- ingly. Any claim by the Contractor for adjustment under this clause must be asserted within 30 days from the date of receipt by the Contractor of the notification of change: Provided, however, That the Contracting Officer, if he decides that the facts justify such action, may receive and act upon any such claim asserted at any time prior to final payment under this contract. Where the cost of property made obsolete or excess as a result of a change is included in the Contractor's claim for adjustment, the Con- tracting Officer shall have the right to prescribe the man- ner of disposition of such property. Failure to agree to any adjustment shall be a dispute concerning a question of fact within the meaning of the clause of this contract entitled "Disputes." However, nothing in this clause shall excuse the Contractor from proceeding with the contract as changed. 3. EXTRAS Except as otherwise provided in this contract, no pay- ment for extras shall be made unless such extras and the price therefor have been authorized in writing by the Con- tracting Officer. 4. VARIATION IN QUANTITY No variation in the quantity of any item called for by this contract will be accepted unless such variation has been caused by conditions of loading, shipping, or packing, or allowances in manufacturing processes, and then only to the extent, if any, specified elsewhere in this contract. Standard Form 32 SEPTEMBER 1961 EDITION 5. INSPECTION (a) All supplies (which term throughout this clause in- cludes without limitation raw materials, components, inter- mediate assemblies, and end products) shall be subject to inspection and test by the Government, to the extent prac- ticable at all times and places including the period of man- ufacture, and in any event prior to acceptance. (b) In case any supplies or lots of supplies are defective in material or workmanship or otherwise not in conformity with the requirements of this contract, the Government shall have the right either to reject them (with or without in- structions as to their disposition) or to require their cor- rection. Supplies or lots of supplies which have been rejected or required to be corrected shall be removed or, if permitted or required by the Contracting Officer, corrected in place by and at the expense of the Contractor promptly after notice, and shall not thereafter be tendered for ac- ceptance unless the former rejection or requirement of cor- rection is disclosed. If the Contractor fails promptly to re- move such supplies or lots of supplies which are required to be removed, or promptly to replace or correct such supplies or lots of supplies, the Government either (i) may by contract or otherwise replace or correct such supplies and charge to the Contractor the cost occasioned the Govern- ment thereby, or (ii) may terminate this contract for de- fault as provided in the clause of this contract entitled "Default." Unless the Contractor corrects or replaces such supplies within the delivery schedule, the Contracting Officer may require the delivery of such supplies at a reduc- tion in price which is equitable under the circumstances. Failure to agree to such reduction of price shall be a dis- pute concerning a question of fact within the meaning of the clause of this contract entitled "Disputes." (c) If any inspection or test is made by the Government on the premises of the Contractor or a subcontractor, the Contractor without additional charge shall provide all rea- sonable facilities and assistance for the safety and conveni- ence of the Government inspectors in the performance of their duties. If Government inspection or test is made at a point other than the premises of the Contractor or a sub- contractor, it shall be at the expense of the Government except as otherwise provided in this contract: Provided, That in case of rejection the Government shall not be liable for any reduction in value of samples used in connection with such inspection or test. All inspections and tests by the Government shall be performed in such a manner as not to unduly delay the work. The Government reserves the right to charge to the Contractor any additional cost of Government inspection and test when supplies are not ready at the time such inspection and test is requested by the Contractor or when reinspection or retest is necessitated by prior rejection. Acceptance or rejection of the supplies shall be made as promptly as practicable after delivery, except as otherwise provided in this contract; but failure to inspect and accept or reject supplies shall neither relieve the Contractor from responsibility for such supplies as are not in accordance with the contract requirements nor im- pose liability on the Government therefor. (d) The inspection and test by the Government of any supplies or lots thereof does not relieve the Contractor from any responsibility regarding defects or other failures to meet the contract requirements which may be discovered prior to acceptance. Except as otherwise provided in this 82-105 FEDERAL PROCUREMENT REGULATIONS لم (FPR CIRC. 21, OCTOBER 1961) 1659 PART 1-16 PROCUREMENT FORMS 1-16.901-32 L (b) Page 2 of Standard Form 32. contract, acceptance shall be conclusive except as regards latent defects, fraud, or such gross mistakes as amount to fraud. (e) The Contractor shall provide and maintain an in- spection system acceptable to the Government covering the supplies hereunder. Records of all inspection work by the Contractor shall be kept complete and available to the Gov- ernment during the performance of this contract and for such longer period as may be specified elsewhere in this contract. 6. RESPONSibility for Supplies Except as otherwise provided in this contract, (i) the Contractor shall be responsible for the supplies covered by this contract until they are delivered at the designated delivery point, regardless of the point of inspection; (ii) after delivery to the Government at the designated point and prior to acceptance by the Government or rejection and giving notice thereof by the Government, the Govern- ment shall be responsible for the loss or destruction of or damage to the supplies only if such loss, destruction, or damage results from the negligence of officers, agents, or employees of the Government acting within the scope of their employment; and (iii) the Contractor shall bear all risks as to rejected supplies after notice of rejection, except that the Government shall be responsible for the loss, or destruction of, or damage to the supplies only if such loss, destruction or damage results from the gross negligence of officers, agents, or employees of the Government acting within the scope of their employment. 7. PAYMENTS The Contractor shall be paid, upon the submission of proper invoices or vouchers, the prices stipulated herein for supplies delivered and accepted or services rendered and accepted, less deductions, if any, as herein provided. Un- less otherwise specified, payment will be made on partial deliveries accepted by the Government when the amount due on such deliveries so warrants; or, when requested by the Contractor, payment for accepted partial deliveries shall be made whenever such payment would equal or ex- ceed either $1,000 or 50 percent of the total amount of this contract. 8. ASSIGNMENT OF CLAIMS (a) Pursuant to the provisions of the Assignment of Claims Act of 1940, as amended (31 U.S.C. 203, 41 U.S.C. 15), if this contract provides for payments aggregating $1,000 or more, claims for moneys due or to become due the Contractor from the Government under this contract may be assigned to a bank, trust company, or other financing institution, including any Federal lending agency, and may thereafter be further assigned and reassigned to any such institution. Any such assignment or reassignment shall cover all amounts payable under this contract and not al- ready paid, and shall not be made to more than one party, except that any such assignment or reassignment may be made to one party as agent or trustee for two or more parties participating in such financing. Unless otherwise provided in this contract, payments to an assignee of any moneys due or to become due under this contract shall not, to the extent provided in said Act, as amended, be subject to reduction or setoff. (The preceding sentence applies only if this contract is made in time of war or national emergency as defined in said Act and is with the Depart- ment of Defense, the General Services Administration, the Atomic Energy Commission, the National Aeronautics and Space Administration, the Federal Aviation Agency, or any other department or agency of the United States designated by the President pursuant to Clause 4 of the proviso of sec- tion 1 of the Assignment of Claims Act of 1940, as amended by the Act of May 15, 1951, 65 Stat. 41.) (b) In no event shall copies of this contract or of any plans, specifications, or other similar documents relating to work under this contract, if marked "Top Secret," "Secret," or "Confidential," be furnished to any assignee of any claim 2 arising under this contract or to any other person not en- titled to receive the same. However, a copy of any part or all of this contract so marked may be furnished, or any in- formation contained therein may be disclosed, to such as- signee upon the prior written authorization of the Con- tracting Officer. 9. ADDITIONAL BOND Security If any surety upon any bond furnished in connection with this contract becomes unacceptable to the Government, or if any such surety fails to furnish reports as to his financial condition from time to time as requested by the Government, the Contractor shall promptly furnish such additional security as may be required from time to time. to protect the interests of the Government and of persons supplying labor or materials in the prosecution of the work contemplated by this contract. 10. EXAMINATION OF Records (The following clause is applicable if the amount of this contract exceeds $2,500 and was entered into by means of negotiation, but is not applicable if this contract was entered into by means of formal advertising.) (a) The Contractor agrees that the Comptroller Gen- eral of the United States or any of his duly authorized representatives shall, until the expiration of three years after final payment under this contract, have access to and the right to examine any directly pertinent books, documents, papers, and records of the Contractor involving transactions related to this contract. (b) The Contractor further agrees to include in all his subcontracts hereunder a provision to the effect that the subcontractor agrees that the Comptroller General of the United States or any of his duly authorized representa- tives shall, until the expiration of three years after final payment under the subcontract, have access to and the right to examine any directly pertinent books, documents, papers, and records of such subcontractor, involving trans- actions related to the subcontract. The term "subcon- tract” as used in this clause excludes (i) purchase orders not exceeding $2,500 and (ii) subcontracts or purchase orders for public utility services at rates established for uniform applicability to the general public. 11. DEFAULT (a) The Government may, subject to the provisions of paragraph (c) below, by written notice of default to the Contractor, terminate the whole or any part of this contract in any one of the following circumstances: (i) if the Contractor fails to make delivery of the sup- plies or to perform the services within the time specified herein or any extension thereof; or (ii) if the Contractor fails to perform any of the other provisions of this contract, or so fails to make progress as to endanger performance of this contract in accord- ance with its terms, and in either of these two circum- stances does not cure such failure within a period of 10 days (or such longer period as the Contracting Of- ficer may authorize in writing) after receipt of notice from the Contracting Officer specifying such failure. (b) In the event the Government terminates this con- tract in whole or in part as provided in paragraph (a) of this clause, the Government may procure, upon such terms and in such manner as the Contracting Officer may deem appropriate, supplies or services similar to those so ter- minated, and the Contractor shall be liable to the Govern- ment for any excess costs for such similar supplies or services: Provided, That the Contractor shall continue the performance of this contract to the extent not terminated under the provisions of this clause. (c) Except with respect to defaults of subcontractors, the Contractor shall not be liable for any excess costs if the failure to perform the contract arises out of causes beyond the control and without the fault or negligence of the Con- tractor. Such causes may include, but are not restricted to, acts of God or of the public enemy, acts of the Gov- ernment in either its sovereign or contractual capacity, L FEDERAL PROCUREMENT REGULATIONS 1660 (FPR CIRC. 21, OCTOBER 1961) SUBPART 1-16, 9 ILLUSTRATION OF FORMS (c) Page 3 of Standard Form 32. 1-16,901–32 Standard Form 32 SEPTEMBER 1961 EDITION fires, floods,, epidemics, quarantine restrictions, strikes, freight embargoes, and unusually severe weather; but in every case the failure to perform must be beyond the con- trol and without the fault or negligence of the Contractor. If the failure to perform is caused by the default of a subcontractor, and if such default arises out of causes beyond the control of both the Contractor and subcontrac- tor, and without the fault or negligence of either of them, the Contractor shall not be liable for any excess costs for failure to perform, unless the supplies or services to be fur- nished by the subcontractor were obtainable from other sources in sufficient time to permit the Contractor to meet the required delivery schedule. (d) If this contract is terminated as provided in para- graph (a) of this clause, the Government, in addition to any other rights provided in this clause, may require the Contractor to transfer title and deliver to the Government, in the manner and to the extent directed by the Contracting Officer, (i) any completed supplies, and (ii) such partially completed supplies and materials, parts, tools, dies, jigs, fixtures, plans, drawings, information, and contract rights (hereinafter called "manufacturing materials") as the Contractor has specifically produced or specifically acquired for the performance of such part of this contract as has been terminated; and the Contractor shall, upon direction. of the Contracting Officer, protect and preserve property in possession of the Contractor in which the Government has an interest. Payment for completed supplies delivered to and accepted by the Government shall be at the contract price. Payment for manufacturing materials delivered to and accepted by the Government and for the protection and preservation of property shall be in an amount agreed upon by the Contractor and Contracting Officer; failure to agree to such amount shall be a dispute concerning a ques- tion of fact within the meaning of the clause of this con- tract entitled "Disputes." (e) If, after notice of termination of this contract under the provisions of paragraph (a) of this clause, it is deter- mined that the failure to perform this contract is due to causes beyond the control and without the fault or negli- gence of the Contractor or subcontractor pursuant to the provisions of paragraph (c) of this clause, such notice of default shall be deemed to have been issued pursuant to the clause of this contract entitled "Termination for Con- venience of the Government," and the rights and obliga- tions of the parties hereto shall in such event be governed by such clause. (Except as otherwise provided in this contract, this paragraph (e) applies only if this contract contains such clause.) (f) The rights and remedies of the Government pro- vided in this clause shall not be exclusive and are in addi- tion to any other rights and remedies provided by law or under this contract. 12. DISPUTES (a) Except as otherwise provided in this contract, any dispute concerning a question of fact arising under this contract which is not disposed of by agreement shall be decided by the Contracting Officer, who shall reduce his decision to writing and mail or otherwise furnish a copy thereof to the Contractor. The decision of the Contracting Officer shall be final and conclusive unless, within 30 days from the date of receipt of such copy, the Con- tractor mails or otherwise furnishes to the Contracting Officer a written appeal addressed to the Secretary. The decision of the Secretary or his duly authorized repre- sentative for the determination of such appeals shall be final and conclusive unless determined by a court of com- petent jurisdiction to have been fraudulent, or capricious, or arbitrary, or so grossly erroneous as necessarily to im- ply bad faith, or not supported by substantial evidence. In connection with any appeal proceeding under this clause, the Contractor shall be afforded an opportunity to be heard Standard Form 32 SEPTEMBER 1961 EDITION 3 and to offer evidence in support of its appeal. Pending final decision of a dispute hereunder, the Contractor shall proceed diligently with the performance of the contract and in accordance with the Contracting Officer's decision. (b) This "Disputes" clause does not preclude considera- tion of law questions in connection with decisions provided for in paragraph (a) above: Provided, That nothing in this contract shall be construed as making final the de- cision of any administrative official, representative, or board on a question of law. 13. NOTICE AND ASSISTANCE REGARDING PATENT INFRINGEMENT The provisions of this clause shall be applicable only if the amount of this contract exceeds $5,000. (a) The Contractor shall report to the Contracting Offi- cer, promptly and in reasonable written detail, each notice. or claim of patent infringement based on the performance of this contract of which the Contractor has knowledge. (b) In the event of litigation against the Government on account of any claim of patent infringement arising out of the performance of this contract or out of the use of any supplies furnished or work or service performed hereunder, the Contractor shall furnish to the Government, upon request, all evidence and information in possession of the Contractor pertaining to such litigation. Such evi- dence and information shall be furnished at the expense of the Government except in those cases in which the Con- tractor has agreed to indemnify the Government against the claim being asserted. 14. BUY AMERICAN ACT (a) In acquiring end products, the Buy American Act (41 U.S. Code 10 a-d) provides that the Government give preference to domestic source end products. For the pur- pose of this clause: (i) "components" means those articles, materials, and supplies, which are directly incorporated in the end products; (ii) "end products" means those articles, materials, and supplies, which are to be acquired under this contract for public use; and (iii) a "domestic source end product" means (A) an unmanufactured end product which has been mined or produced in the United States and (B) an end product manufactured in the United States if the cost of the com- ponents thereof which are mined, produced, or manufac- tured in the United States exceeds 50 percent of the cost of all its components. For the purposes of this (a) (iii) (B), components of foreign origin of the same type or kind as the products referred to in (b) (ii) or (iii) of this clause shall be treated as components mined, produced, or manu- factured in the United States. (b) The Contractor agrees that there will be delivered under this contract only domestic source end products, except end products: (i) which are for use outside the United States; (ii) which the Government determines are not mined, produced, or manufactured in the United States in suffi- cient and reasonably available commercial quantities and of a satisfactory quality; (iii) as to which the Secretary determines the domestic preference to be inconsistent with the public interest; or (iv) as to which the Secretary determines the cost to the Government to be unreasonable. (The foregoing requirements are administered in accord- ance with Executive Order No. 10582, dated December 17, 1954.) 15. CONVICT LABOR In connection with the performance of work under this contract, the Contractor agrees not to employ any person undergoing sentence of imprisonment at hard labor. 16. EIGHT-HOUR LAW OF 1912-Overtime COMPENSATION This contract, to the extent that it is of a character spec- FEDERAL PROCUREMENT REGULATIONS (FPR Circ. 21, OCTOBER 1961) 1661 PART 1-16 PROCUREMENT FORMS 1-16.901-32 L ୮ L (d) Page 4 of Standard Form 32. ified in the Eight-Hour Law of 1912, as amended (40 U.S. Code 324-326) and is not covered by the Walsh-Healey Public Contracts Act (41 U.S. Code 35-45), is subject to the following provisions and exceptions of said Eight- Hour Law of 1912, as amended; and to all other provisions and exceptions of said Law: No laborer or mechanic doing any part of the work con- templated by this contract, in the employ of the Con- tractor or any subcontractor contracting for any part of said work contemplated, shall be required or permitted to work more than eight hours in any one calendar day upon such work, except upon the condition that compen- sation is paid to such laborer or mechanic in accordance with the provisions of this clause. The wages of every laborer and mechanic employed by the Contractor or any subcontractor engaged in the performance of this con- tract shall be computed on a basic day rate of eight hours per day; and work in excess of eight hours per day is permitted only upon the condition that every such laborer and mechanic shall be compensated for all hours worked in excess of eight hours per day at not less than one and one-half times the basic rate of pay. For each violation of the requirements of this clause a penalty of five dollars shall be imposed for each laborer or me- chanic for every calendar day in which such employee is required or permitted to labor more than eight hours upon said work without receiving compensation com- puted in accordance with this clause, and all penalties thus imposed shall be withheld for the use and benefit of the Government. 17. WALSH-HEALEY PUBLIC CONTRACTS ACT If this contract is for the manufacture or furnishing of materials, supplies, articles, or equipment in an amount which exceeds or may exceed $10,000 and is otherwise subject to the Walsh-Healey Public Contracts Act, as amended (41 U.S. Code 35-45), there are hereby incor- porated by reference all representations and stipulations required by said Act and regulations issued thereunder by the Secretary of Labor, such representations and stipula- tions being subject to all applicable rulings and interpreta- tions of the Secretary of Labor which are now or may hereafter be in effect. 18. NONDISCRIMINATION IN EMPLOYMENT (The following clause is applicable unless this con- tract is exempt under the rules and regulations of the President's Committee on Equal Employment Opportunity issued pursuant to Executive Order No. 10925 of March 6, 1961 (26 FR 1977).) In connection with the performance of work under this contract, the Contractor agrees as follows: (a) The Contractor will not discriminate against any employee or applicant for employment because of race, creed, color, or national origin. The Contractor will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, with- out regard to their race, creed, color, or national origin. Such action shall include, but not be limited to, the follow- ing: employment, upgrading, demotion or transfer; re- cruitment or recruitment advertising; layoff or termina- tion; rates of pay or other forms of compensation; and selection for training, including apprenticeship. The Con- tractor agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided by the Contracting Officer setting forth the provi- sions of this Nondiscrimination clause. (b) The Contractor will, in all solicitations or advertise- ments for employees placed by or on behalf of the Contrac- tor, state that all qualified applicants will receive consid- eration for employment without regard to race, creed, color, or national origin. (c) The Contractor will send to each labor union or rep- resentative of workers with which he has a collective- bargaining agreement or other contract or understanding, a notice, to be provided by the agency Contracting Officer, advising the said labor union or workers' representative of the Contractor's commitments under this Nondiscrimina- tion clause, and shall post copies of the notice in conspic- uous places available to employees and applicants for employment. (d) The Contractor will comply with all provisions of Executive Order No. 10925 of March 6, 1961, and of the rules, regulations, and relevant orders of the President's Committee on Equal Employment Opportunity created thereby. (e) The Contractor will furnish all information and re- ports required by Executive Order No. 10925 of March 6, 1961, and by the rules, regulations, and orders of the said Committee, or pursuant thereto, and will permit access to his books, records, and accounts by the contracting agency and the Committee for purposes of investigation to ascer- tain compliance with such rules, regulations, and orders. (f) In the event of the Contractor's noncompliance with the Nondiscrimination clause of this contract or with any of the said rules, regulations, or orders, this contract may be canceled in whole or in part and the Contractor may be declared ineligible for further Government contracts in accordance with procedures authorized in Executive Order No. 10925 of March 6, 1961, and such other sanctions may be imposed and remedies invoked as provided in the said Executive order or by rule, regulation, or order of the President's Committee on Equal Employment Opportunity, or as otherwise provided by law. (g) The Contractor will include the provisions of the foregoing paragraphs (a) through (f) in every subcon- tract or purchase order unless exempted by rules, regula- tions, or orders of the President's Committee on Equal Em- ployment Opportunity issued pursuant to section 303 of Executive Order No. 10925 of March 6, 1961, so that such provisions will be binding upon each subcontractor or ven- dor. The Contractor will take such action with respect to any subcontract or purchase order as the contracting agency may direct as a means of enforcing such provisions, including sanctions for noncompliance: Provided, however, that in the event the Contractor becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction by the contracting agency, the Contractor may request the United States to enter into such litigation to protect the interests of the United States. 19. OFFICIALS NOT TO BENEFIT No member of or delegate to Congress, or resident com- missioner, shall be admitted to any share or part of this contract, or to any benefit that may arise therefrom; but this provision shall not be construed to extend to this con- tract if made with a corporation for its general benefit. 20. COVENANT AGAINST CONTINGENT FEES The Contractor warrants that no person or selling agency has been employed or retained to solicit or secure this con- tract upon an agreement or understanding for a commis- sion, percentage, brokerage, or contingent fee, excepting bona fide employees or bona fide established commercial or selling agencies maintained by the Contractor for the purpose of securing business. For breach or violation of this warranty the Government shall have the right to an- nul this contract without liability or in its discretion to de- duct from the contract price or consideration, or otherwise recover, the full amount of such commission, percentage, brokerage, or contingent fee. 21. UTILIZATION OF SMALL BUSINESS CONCERNS (a) It is the policy of the Government as declared by the Congress that a fair proportion of the purchases and contracts for supplies and services for the Government be placed with small business concerns. (b) The Contractor agrees to accomplish the maximum amount of subcontracting to small business concerns that the Contractor finds to be consistent with the efficient per- formance of this contract. ✩U.S. GOVERNMENT PRINTING OFFICE : 1961-0-605176 4 FEDERAL PROCUREMENT REGULATIONS 1662 (fpr Circ. 21, OCTOBER 1961) SUBPART 1-16, 9 ILLUSTRATION OF FORMS 1-16,901-33 1-16.901-33 Standard Form 33: Invitation, Bid, and Award (Supply Contract). (a) Page 1 of Standard Form 33. STANDARD FORM 33 OCTOBER 1957 EDITION GENERAL SERVICES ADMINISTRATION FED. PROC. REG. (41 CFR) 1-16.101 ISSUED BY CONTRACT NO. INVITATION, BID, AND AWARD (SUPPLY CONTRACT) PAGE NUMBER NO. OF PAGES 1 ORDER NO. (!f any) ADDRESS INVITATION FOR BIDS DATE ISSUED Sealed bids in -? | INVITATION NO. 1 subject to (1) the Terms and Conditions of the Invitation for Bids, (2) the accom- panying Schedule, (3) General Provisions (Standard Form 32, edition), which are incorporated herein by reference, and (4) such other contract provisions and specifications as are attached or incorporated by reference in the Schedule, will be received at the above office until o'clock Time, (date) and at that time publicly opened, for furnishing the supplies or services described in the accompanying Schedule, for delivery f. o. b. m., General information and instructions to bidders are contained in the terms and conditions on the reverse hereof. ITEM NO. SUPPLIES OR SERVICES SCHEDULE QUANTITY (No. of units) UNIT UNIT PRICE AMOUNT SPECIMEN BID DATE OF BID In compliance with the above, the undersigned offers and agrees, if this Bid be accepted within calendar days (60 calendar days unless a different period be inserted by the bidder) from the date of opening, to furnish any or all of the items upon which prices are quoted, at the price set opposite each item, delivered at the designated point(s) within the time specified in the Schedule. Discounts will be allowed for prompt payment as follows: percent, 10 calendar days; BIDDER REPRESENTS: (Check appropriate boxes) percent, 20 calendar days; percent, 30 calendar days. (1) That he is, ☐ is not, a small business concern. (See definition on reverse børeof.) If bidder is a small business concern and is not the manufacturer of the supplies bid upon, he also represents that all supplies to be furnished hereunder will, will not, be manufactured or produced by a small business concern in the United States, its Ter- ritories, its possessions, or the Commonwealth of Puerto Rico. (2) That he is a □ regular dealer in, manufacturer of, the supplies bid upon. (3) (a) That he has, has not, employed or retained any company or person (other than a full-time bona fide employee working solely for the bidder) to solicit or secure this contract, and (b) that he has, has not, paid or agreed to pay any company or person (other than a full-time bona fide employee working solely for the bidder) any fee, commission, percentage or brokerage fee, contingent upon or resulting from the award of this contract; and agrees to furnish information relating to (a) and (b) above as requested by the Contracting Officer. (For interpretation of the representation, including the term "bona fide employee," see Code of Federal Regulations, Tille 44, Part 150.) (4) He operates as an □ individual, □ partnership, □ corporation, incorporated in the State of NAME AND ADDRESS OF BIDDER (Street, city, zone, and State. Type or print) SIGNATURE OF PERSON AUTHORIZED TO SIGN BID TYPE OR PRINT SIGNER'S NAME AND TITLE AWARD DATE OF AWARD ACCEPTED AS TO ITEMS NUMBERED AMOUNT UNITED STATES OF AMERICA BY SUBMIT INVOICE FOR PAYMENT TO PAYMENT WILL BE MADE BY Contracting Officer. ACCOUNTING AND APPROPRIATION DATA Award will be made on this Form, or on Standard Form 26, or by other official written notice. 16-60682-5 FEDERAL PROCUREMENT REGULATIONS ୮ ך (FPR CIRC, 2, JUNE 1959) 1663 PART 1-16 PROCUREMENT FORMS 1-16,901-33 ୮ L L (b) Page 2 of Standard Form 33. TERMS AND CONDITIONS OF THE INVITATION FOR BIDS 1. PREPARATION OF BIDS.— (a) Bidders are expected to examine the drawings, specifications, Schedule, and all in- structions. Failure to do so will be at the bidder's risk. (b) Each bidder shall furnish the information required by the bid form. The bidder shall print or type his name on the Schedule and each Continuation Sheet thereof on which he makes an entry. Erasures or other changes must be initialed by the person signing the bid. Bids signed by an agent must be accompanied by evidence of his authority. (c) Unit price for each unit bid on shall be shown and such price shall include packing unless otherwise specified. A total shall be entered in the Amount column of the Sched- ule for each item bid on. In case of error in extension of price, the unit price will govern. (d) Alternate bids will not be considered unless author- ized by the Invitation. (e) When not otherwise specified, bidder must definitely state time of proposed delivery. (/) Time, if stated as a number of days, will include Sundays and holidays. 2. SUBMISSION OF BIDS.-(u) Bids and modifications thereof shall be enclosed in sealed envelopes addressed to the issuing office, with the name and address of the bidder, the date and hour of opening, and the invitation number on the face of the envelope. Telegraphic bids will not be considered unless authorized by the Invitation; however, bids may be modified by telegraphic notice provided such notice is received prior to the time set for the opening of the bids. (b) Samples u ems, when required, must be submitted within the time specified, and unless otherwise specified by the Government, at no expense to the Government. If not destroyed by testing, samples will be returned 'at bidder's request and expense, unless otherwise specified by the Invitation. (c) In the event no bid is to be submitted, do not return the Invitation unless otherwise specified. However, a letter or post card should be sent to the issuing office advising whether future Invitations for the type of supplies or services covered by this Invitation are desired. 3. WITHDRAWAL OF BIDS.—Bids may be withdrawn by written or telegraphic notice (see 4 below). 4. LATE BIDS.—Bids and modifications or withdrawals thereof received after the time set for opening will not be considered, unless they are received before the award is made, and it is determined by the Government that failure to arrive on time was due solely to delay in the mails for which the bidder was not responsible. 5. GOVERNMENT-FURNISHED PROPERTY.-No material, labor, or facilities will be furnished by the Government unless otherwise provided for in the Invitation. 6. LABOR INFORMATION.-Attention is invited to the possibility that wage determinations may have been made under the Walsh-Healey Public Contracts Act providing minimum wages for employees engaged in the manufacture for sale to the Government of the supplies covered by this Invitation for Bids. Information in this connection, as well as general information as to the requirements of the 2 Act concerning overtime payment, child labor, safety and health provisions, etc., may be obtained from the Wage and Hour and Public Contracts Divisions, Department of Labor, Washington 25, D. C. Requests for information should state the Invitation number, the issuing agency and the supplies covered. 7. DISCOUNTS.— (a) Prompt-payment discounts will be included in the evaluation of bids, provided the period of the offered discount is sufficient to permit payment within such period in the regular course of business under the delivery, inspection, and payment provisions of the Invi- tation and Bid. (b) In connection with any discount offered, time will be computed from date of delivery of the supplies to carrier when delivery and acceptance are at point of origin, or from date of delivery at destination or port of embarkation when delivery and acceptance are at either of those points, or from date correct invoice or voucher is received in the office specified by the Government if the latter date is later than the date of delivery. Payment is deemed to be made, for the purpose of earning the discount, on the date of mail- ing of the Government check. 8. -AWARD OF CONTRACT.-(a) The contract will be awarded to that responsible bidder whose bid, conforming to the Invitation for Bids, will be most advantageous to the Government, price and other factors considered. (b) The Government reserves the right to reject any or all bids and to waive informalities and minor irregularities in bids received. (c) The Government may accept any item or group of items of any bid, unless the bidder qualifies his bid by spe- cific limitations. UNLESS OTHERWISE PROVIDED IN THE SCHEDULE, BIDS MAY BE SUBMITTED FOR ANY QUANTITIES LESS THAN THOSE SPECIFIED; AND THE GOVERNMENT RESERVES THE RIGHT TO MAKE AN AWARD ON ANY ITEM FOR A QUAN- TITY LESS THAN THE QUANTITY BID UPON AT THE UNIT PRICES OFFERED UNLESS THE BIDDER SPECIFIES OTHERWISE IN HIS BID. (d) A written award mailed (or otherwise furnished) to the successful bidder within the time for acceptance specified in the bid shall be deemed to result in a binding contract without further action by either party. 9. SELLER'S INVOICES.—Invoices shall be prepared and submitted in quadruplicate unless otherwise specified. Invoices shall contain the following information: Contract and order number (if any), item numbers, description of supplies or services, sizes, quantities, unit prices, and ex- tended totals. Bill of lading number and weight of ship- ment will be shown for shipments made on Government bills of lading. 10. DEFINITION OF SMALL BUSINESS.—Generally, a small business concern for the purpose of Government procure- ment is a concern that (1) is not dominant in its field of operation and, with its affiliates, employs fewer than 500 employees, or (2) is certified as a small business concern by Small Business Administration. (See Code of Federal Regulations, Title 13, Part 103, as amended, which contains the detailed definition and related procedures.) U. S. GOVERNMENT PRINTING OFFICE · 1957 0¬A48918. FEDERAL PROCUREMENT REGULATIONS 1664 (FPR CIRC, 2, JUNE 1959) SUBPART 1-16. 9 ILLUSTRATION OF FORMS 1-16.901-34 1-16.901-34 Standard Form 34: Annual Bid Bond. (a) Page 1 of Standard Form 34. STANDARD FORM 34 NOVEMBER 1950 EDITION GENERAL SERVICES ADMINISTRATION FED. PROC. REG. (41 CFR) 1-16.801 DATE BOND EXECUTED ANNUAL BID BOND (See Instructions on Reverse) PRINCIPAL SURETY DEPARTMENT OR AGENCY TO WHICH BIDS ARE TO BE submitteD BIDS TO BE SUBMITTED DUR- ING FISCAL YEAR ENDING June 30, 19 KNOW ALL MEN BY THESE PRESENTS, That we, the PRINCIPAL and SURETY above named, are held and firmly bound unto the United States of America, hereinafter called the Government, in such penal sum or sums, as shall be sufficient to indemnify the Government in case of the default of the said principal as hereinafter set forth, for the payment of which sum or sums well and truly to be made, we bind ourselves, our heirs, executors, administrators, and successors, jointly and severally, firmly by these presents. THE CONDITION OF THIS OBLIGATION IS SUCH, that whereas the principal contemplates submitting bids from time to time during the fiscal year above shown to the department or agency named above for furnishing supplies or services to the Government and desires that all such bids submitted for opening during said fiscal year be covered by a single bond instead of by a separate bid bond for each bid: NOW THEREFORE, if the principal shall not withdraw any such bid within the period specified therein after the opening of the same, or, if no period be specified, within sixty (60) days after said opening, and shall within the period specified therefore, or, if no period be specified, within ten (10) days after the prescribed forms are presented to him for signature, execute such further contractual documents, if any, as may be required by the terms of the bid as accepted, and give bond with good and sufficient surety or sureties, as may be required, for the faithful performance and proper fulfillment of the resulting contract, or in the event of the withdrawal of any bid within the period specified, or the failure to enter into such contract and give such bond within the time specified, if the principal shall pay the Govern- ment the difference between the amount specified in said bid and the amount for which the Government may procure the required supplies and services, if the latter amount be in excess of the former, then the above obligation shall be void and of no effect, otherwise to remain in full force and virtue. IN WITNESS WHEREOF, the above-bounden parties have executed this instrument under their several seals on the date indicated above, the name and corporate seal of each corporate party being hereto affixed and these presents duly signed by its undersigned representative, pursuant to authority of its governing body. In Presence of: 1. 2. 3. 4. 1. 2. Attest: Attest: STANDARD FORM 34 NOVEMBER 1950 EDITION WITNESS SPECIMEN INDIVIDUAL PRINCIPAL as to [SEAL) as to [SEAL] as to [SEAL] as to [SEAL] INDIVIDUAL SURETY as to [SEAL] as to CORPORATE PRINCIPAL BUSINESS ADDRESS BY TITLE CORPORATE SURETY BUSINESS ADDRESS BY TITLE FEDERAL PROCUREMENT REGULATIONS . [SEAL) AFFIX CORPORATE SEAL AFFIX CORPORATE SFA! 16-18875-2 ୮ (fpr circ1663 CIRC. 2, JUNE 1959) PART 1-16 PROCUREMENT FORMS L 1-16.901-34 (b) Page 2 of Standard Form 34. Total amount of premium charged, $.. (The above must be filled in by corporate surety) CERTIFICATE AS TO CORPORATE PRINCIPAL I, certify that I am the secretary of the corporation named as principal in the within bond; that of said who signed the said bond on behalf of the principal, was then corporation; that I know his signature, and his signature thereto is genuine; and that said bond was duly signed, sealed, and attested for and in behalf of said corporation by authority of its governing body. CORPORATE SEAL ما INSTRUCTIONS 1. This form may be used in connection with the procurement of supplies or services in lieu of Stand- ard Form 24 (Bid Bond). There shall be no deviation from this form except as authorized by the General Services Administration. 2. The surety on the bond may be any corporation authorized by the Secretary of the Treasury to act as surety, or two responsible individual sureties. Where individual sureties are used, this bond must be accompanied by a completed Affidavit of Individual Surety for each individual surety (Standard Form 28). 3. The name, including full Christian name, and business or residence address of each individual party to the bond shall be inserted in the space provided therefor, and each such party shall sign the bond with his usual signature on the line opposite the scroll seal, and if signed in Maine or New Hamp- shire, an adhesive seal shall be affixed opposite the signature. 4. If the principals are partners, their individual names shall appear in the space provided therefor, with the recital that they are partners composing a firm, naming it, and all the members of the firm shall execute the bond as individuals. 5. If the principal or surety is a corporation, the name of the State in which incorporated shall be inserted in the space provided therefor, and said instrument shall be executed and attested under the corporate seal as indicated in the form. If the corporation has no corporate seal the fact shall be stated, in which case a scroll or adhesive seal shall appear following the corporate name. 6. The official character and authority of the person or persons executing the bond for the principal, if a corporation, shall be certified by the secretary or assistant secretary, according to the form herein provided. In lieu of such certificate there may be attached to the bond copies of so much of the records of the corporation as will show the official character and authority of the officer signing, duly certified by the secretary or assistant secretary, under the corporate seal, to be true copies. U. S. COVERNMENT PRINTING OFFICE 16—15875-2 FEDERAL PROCUREMENT REGULATIONS 1666 (FPR CIRC. 2, JUNE 1959) SUBPART 1-16. 9 ILLUSTRATION OF FORMS > 1-16.901-35 Standard Form 35: Annual Performance Bond. 1-16.901-35 (a) Page 1 of Standard Form 35. STANDARD FORM 35 NOVEMBER 1950 EDITION GENERAL SERVICES ADMINISTRATION. FED. PROC. REG. (41 CFR) 1-16.801 PRINCIPAL DATE BOND EXECUTED ANNUAL PERFORMANCE BOND (See Instructions on Reverse) SURETY PENAL SUM OF BOND (express in words and figures) DEPARTMENT OR AGENCY REPRESENTING THE GOVERNMENT FISCAL YEAR ENDING June 30, 19 KNOW ALL MEN BY THESE PRESENTS, That we, the PRINCIPAL and SURETY above named, are held and firmly bound unto the United States of America, hereinafter called the Government, in the penal sum of the amount stated above, for the payment of which sum well and truly to be made, we bind ourselves, our heirs, executors, administrators, and successors, jointly and severally, firmly by these presents. THE CONDITION OF THIS OBLIGATION IS SUCH, that whereas the principal contemplates entering into contracts, from time to time during the fiscal year above shown, with the Government, represented by the department or agency shown above, for furnishing supplies or services to the Government, and desires that all such contracts be covered by one bond instead of by separate performance bond for each contract: NOW THEREFORE, if the principal shall well and truly perform and fulfill all the undertakings, covenants, terms, conditions, and agreements of any and all such contracts so entered into during the original term thereof and any extensions that may be granted by the Government, with or without notice to the surety, and during the life of any guaranty required under the contracts, and shall also well and truly perform and fulfill all the undertakings, covenants, terms, conditions, and agreements of any and all duly authorized modifications of such contracts that may hereafter be made, notice of which modifications to the surety being hereby waived, then this obligation to be void; otherwise to remain in full force and virtue. IN WITNESS WHEREOF, the above-bounden parties have executed this instrument under their several seals on the date indicated above, the name and corporate seal of each corporate party being hereto affixed and these presents duly signed by its undersigned representative, pursuant to authority of its governing body. In Presence of: WITNESS 1. 2. 3. 4. WITNESS SCIMEN INDIVIDUAL PRINCIPAL [SEAL] as to (SEAL) as to [SEAL) as to [SEAL) as to INDIVIDUAL SURETY {SEAL) as to 1. 2. Attest: Attest: STANDARD FORM 35 NOVEMBER 1950 EDITION as to CORPORATE PRINCIPAL BUSINESS ADDRESS BY TITLE CORPORATE SURETY BUSINESS ADDRESS BY TITLE FEDERAL PROCUREMENT REGULATIONS [SEAL] AFFIX CORPORATE SEAL AFFIX CORPORATE SEAL 16-63314-1 (FPR CIRC. 2, JUNE 1959) 1667 PART 1-16 PROCUREMENT FORMS 1-16.901-35 ୮ (b) Page 2 of Standard Form 35. I, The rate of premium on this bond is Total amount of premium charged, $.. per thousand. (The above must be filled in by corporate surety) CERTIFICATE AS TO CORPORATE PRINCIPAL certify that I am the secretary of the corporation named as principal in the within bond; that of said who signed the said bond on behalf of the principal, was then corporation; that I know his signature, and his signature thereto is genuine; and that said bond was duly signed, sealed, and attested for and in behalf of said corporation by authority of its governing body. INSTRUCTIONS N CORPORATE SEAL 1. This form may be used in connection with the procurement of supplies or services in lieu of Stand- ard Form 25 (Performance Bond). There shall be no deviation from this form except as authorized by the General Services Administration. 2. The surety on the bond may be any corporation authorized by the Secretary of the Treasury to act as surety, or two responsible individual sureties. Where indvidual sureties are used, this bond must be accompanied by a completed Affidavit of Individual Surety for each individual surety (Standard Form 28). 3. The name, including full Christian name and business or residence address of each individual party to the bond shall be inserted in the space provided therefor, and each such party shall sign the bond with his usual signature on the line opposite the scroll seal, and if signed in Maine or New Hampshire, an adhesive seal shall be affixed opposite the signature 4. If the principals are partners, their individual names shall appear in the space provided therefor, with the recital that they are partners composing a firm, naming it, and all the members of the firm shall execute the bond as individuals. 5. If the principal or surety is a corporation, the name of the State in which incorporated shall be inserted in the space provided therefor, and said instrument shall be executed and attested under the cor- porate seal as indicated in the form. If the corporation has no corporate seal the fact shall be stated, in which case a scroll or adhesive seal shall appear following the corporate name. 6. The official character and authority of the person or persons executing the bond for the principal, if a corporation, shall be certified by the secretary or assistant secretary, according to the form herein provided. In lieu of such certificate there may be attached to the bond copies of so much of the records of the corporation as will show the official character and authority of the officer signing, duly certified by the secretary or assistant secretary, under the corporate seal, to be true copies. L 1668 U. S. GOVERNMENT PRINTING OFFICE 16-63314-1 FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 2, JUNE 1959) SUBPART 1-16. 9 ILLUSTRATION OF FORMS 1-16.901-36 1-16.901-36 Standard Form 36: Continuation Sheet (Supply Contract). STANDARD FORM 36 NOVEMBER 1949 EDITION GENERAL SERVICES ADMINISTRATION FED. PROC. REG. (41 CFR) 1-16.10r CONTINUATION SHEET (SUPPLY CONTRACT) CONTRACT, ORDER, OR INVITATION NO. (As applicable) PAGE NO. ITEM NO. NAME OF BIDDER OR CONTRACTOR Standard Form 36 Nov. 1949 Edition SUPPLIES OR SERVICES SPECIMEN QUANTITY (Number of UNIT UNIT PRICE AMOUNT unita) U. S. GOVERNMENT PRINTING OFFICE : 1952~O-206193 1660678-1 (NEXT PAGE IS 1671) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 6, FEB. 1960) 1669 SUBPART 1-16. 9 ILLUSTRATIONS OF FORMS 1-16.901-37 1-16.901-37 Agencies. Standard Form 37: Report on Procurement by Civilian Executive (a) Page 1 of Standard Form 37. STANDARD FORM 37 JUNE 1961 EDITION GENERAL SERVICES ADMIN. F.P.R. (41 CFR) 1-16.804 REPORT ON PROCUREMENT BY CIVILIAN EXECUTIVE AGENCIES (See Instructions on reverse) PERIOD COVERED JANUARY 1 THROUGH JUNE 30, 19 JULY 1 THROUGH DECEMBER 31. 19. REPORTING AGENCY (Bureau, Office) REFER QUESTIONS TO (Name) 1. TOTAL (2+7) PROCUREMENTS REPORTED (a) TITLE 2. PROCUREMENTS OF MORE THA: $100 AWARDED BY REPORTING AGENCY (3+4) 3. FORMALLY ADVERTISED 4. NEGOTIATED (5+6) 7. REMARKS 5. SMALL BUSINESS SET ASIDES 6. OTHER NEGOTIATED PROCUREMENTS OF MORE THAN $100 FROM ESTABLISHED SOURCE. TELEPHONE NO. TOTAL (c)(d) (b) (c) NET DOLLAR AMOUNT PROCURED (Omit cents) SIZE OF BUSINESS CONCERN SMALL (d) OTHER SPECIMEN APPROVED BY (Signature) TITLE DATE FEDERAL PROCUREMENT REGULATIONS ل (FPR CIRC, 16, JUNE 1961) 1671 PART 1-16 PROCUREMENT FORMS L 1-16.901-37 A. B. C. D. (b) Page 2 of Standard Form 37. Procurements to be Reported. 1. GENERAL INSTRUCTIONS Except as otherwise provided herein, the report shall include the dollar amount of all types of com- mitments which obligate the Government to an expenditure of funds for property and services (includ- ing maintenance, repair and construction of buildings, roads, etc.; and research and development). Procurements to be Excluded. Exclude procurements: (1) Which are $100 or less. (2) By use of imprest funds (petty cash) and credit cards. (3) At stations or offices for which total annual transactions, of the types covered by this report, are less than $2,500. (4) From Federal sources of supply, such as: District of Columbia Government, Federal Prison Industries, Inc., Government Printing Office, General Services Administration (stores depots, fuel yard, consolidated and special purchasing service, repair shops and furniture rehabilita- tion service, and excess property). (5) From educational and nonprofit institutions. (6) Of blind-made products under the Act of June 25, 1938 (41 U. S. C. 46-48). (7) By activities outside the United States, and from foreign contractors. (8) Of transportation and public utilities services. (9) Of land and easements; leasing of space; acquisition of property by foreclosure. 10) Under the Defense Production Act of 1950, as amended. (11) For price support, grants to farmers stabilization; of agricultural commodities for trans- labilization; of agricultural commodities for trans- fer to foreign governments or for foreign aid, relief, or rehabilitation; and under section 6 of the Farm Credit Act of 1937, as amended 2U.S. C. 6407). Net Dollar Amount Procured. Lopesti "Net Dollar Amount Procured" means the cost to the Government of the property or services procured. In most instances, this is the obligation incurred. he obligation incurred. (When property is ex- changed or sold in connection with a transaction, the exchange or sale amount shall not be deducted from the purchase price.) To the extent practicable, cancellations, amendments, modifications, change orders, and supplemental agreements shall be reported. Definition of Small Business Concern. "Small Business Concern" means any firm which meet the criteria established by Title 13, Chapter 1, Part 121 of the Code of Federal Regulations. II. LINE ENTRIES Line 3. Enter the dollar amount of reportable contracts awarded by the reporting agency which involved formal solicitation of bids, public opening of bids, and award, in conformance with the invitation for bids. Line 5. Line 6. Enter the dollar amount of reportable contracts awarded by the reporting agency under "Small Business Restricted Advertising" procedures (FPR Subpart 1-1.7), and as a result of other small business set-asides. Enter the dollar amount of reportable contracts awarded by the reporting agency not included on Lines 3 and 5. Line 7. Enter the dollar amount of procurements under contracts which have been entered into by another agency, from non-Federal established sources of supply including purchase orders placed with commercial suppliers under Federal Supply Schedule contracts, GSA local service contracts, Military Petroleum Supply Agency contracts, District of Columbia contracts, and other indefi- nite quantity contracts. L REMARKS: Include information on transactions having a significant influence on the small business share of total procurement. FEDERAL PROCUREMENT REGULATIONS 1672 (FPR CIRC, 16, JUNE 1961) SUBPART 1-16, 9 ILLUSTRATIONS OF FORMS 1-16.901-129 1-16.901-129 Standard Form 129: Bidder's Mailing List Application. (a) Page 1 of Standard Form 129. • STANDARD FORM 129 AUGUST 1952 GENERAL SERVICES ADMINISTRATION FED. PROC. REG. (41 CFR) 1.16.802 INITIAL APPLICATION REVISION BIDDER'S MAILING LIST APPLICATION All answers should be typed or printed. See reverse for information and instructions. TO: 1. NAME OF APPLICANT 3. ADDRESS OF MAIN BUSINESS OFFICE 5. TYPE OF ORGANIZATION (Check one) ☐ INDIVIDUAL PARTNERSHIP CORPORATION DATE OF THIS APPLICATION 2. ADDRESS TO WHICH BIDDING FORMS ARE TO BE MAILED 4. HOW LONG IN PRESENT BUSINESS 6. IF INCORPORATED, INDICATE IN WHICH STATE (B) VICE PRESIDENT 7. NAMES OF OFFICERS, MEMBERS OR OWNERS OF CONCERN, PARTNERSHIP, ETC. (A) PRESIDENT (C) SECRETARY (E) OWNERS OR PARTNERS (D) TREASURER CIMEN & AFFILIATED CONCERNS (Name, location, and in detail, controlling interest ka pach) 9. PERSONS OR CONCERNS AUTHORIZED TO SIGN BIDS AND CONTRACTS IN YOUR NAME (If agent, so specify) NAME 10. PERSONS TO CONTACT ON MATTERS CONCERNING BIDS AND CONTRACTS (If agent, so specify) NAME OFFICIAL CAPACITY OFFICIAL CAPACITY TELEPHONE NO. 11. INDICATE CLASSES OF EQUIPMENT, SUPPLIES, MATERIAL. AND/OR SERVICES ON WHICH YOU DESIRE TO BID (Use attached list, if any) 12. CATEGORY (See definitions on the reverse of this form and check below the category which applies to the applicant) (A) MANUFACTURER OR PRODUCER (B) REGULAR DEALER (Type 1) 13. NUMBER OF PERSONS NOW EMPLOYED 14. FLOOR SPACE (Square feet) MANUFACTURING WAREHOUSE (C) REGULAR DEALER (Type 2) (D) SERVICE ESTABLISHMENT 15. NET WORTH DATE AMOUNT 16. THIS SPACE FOR USE BY THE GOVERNMENT 17. I certify that the information supplied herein (including all pages attached) is correct and that neither the applicant nor any person (or concern) in any connection with the applicant as a principal or officer, so far as is known, is now debarred or otherwise declared ineligible by any agency of the Federal Government from bidding for furnishing materials, supplies or services to the Government or any agency thereof. SIGNATURE OF PERSON AUTHORIZED TO SIGN THIS APPLICATION 18. NAME AND TITLE OF PERSON SIGNING (Please type or print) 16—67416-1 FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 16, JUNE 1961) 1673 PART 1-16 PROCUREMENT FORMS 1-16.901-129 (b) Page 2 of Standard Form 129. INFORMATION AND INSTRUCTIONS Persons or concerns wishing to be added to a particular agency's bidder's mailing list for supplies or services shall file this properly completed and certified Bidder's Mailing List Application, together with such other lists as may be attached to the application form, with each procurement office of the Federal agency with which they desire to do business. The application shall be submitted and signed by the principal as distinguished from an agent, however constituted. After placement on the bidder's mailing list of an agency, a supplier's failure to respond (sub- mission of bid, or notice in writing that you are unable to bid on that particular trans- action but wish to remain on the active bidder's mailing list for that particular item) to Invitations for Bids will be understood by the agency to indicate lack of interest and concurrence in the removal of the supplier's name from the purchasing activity's bidder's mailing list for the items concerned. CATEGORY DEFINITIONS (See Item No. 12) A. MANUFACTURER OR PRODUCER means a person (or concern) owning, operating, or maintaining a factory or establishment that produces, on the premises, the materials, supplies, articles, or equipment of the general character of those listed in item No. 11. B. REGULAR DEALER (Type 1) means a person (or concern) who owns, operates, or main- tains a store, warehouse, or other establishment in which the materials, supplies, articles, or equipment of the general character listed in item No. 11 are bought, kept in stock, and sold to the public in the usual course of business. C. REGULAR DEALER (Type 2) in the case of supplies of particular kinds (at present, petro- leum, lumber and timber products, coal, machine tools, raw cotton, green coffee, or hay, grain, feed, and straw) "REGULAR DEALER" means a person (or concern) satis- fying the requirements of article 101 (b) of the regulations, as amended from time to time, prescribed by the Secretary of Labor under the Walsh-Healey Public Contracts Act (41 U. S. Code 35-45). D. SERVICE ESTABLISHMENT means a concern (or person) which owns, operates, or main- tains any type of business which is principally engaged in the furnishing of nonpersonal serv- ices, such as (but not limited to) repairing, cleaning, redecorating, or rental of personal property, including the furnishing of necessary repair parts or other supplies as part of the services performed. U. S. GOVERNMENT PRINTING OFFICE 16-67416-1 SPECIME FEDERAL PROCUREMENT REGULATIONS 1674 (FPR CIRC. 16, JUNE 1961) SUBPART 1-16. 9 ILLUSTRATIONS OF FORMS FEDERAL REGULATIONS PROCUREMENT STANDARD FORM 25: JUNE 1961 GENERAL SERVICES ADMINISTRATION FED. PROC. REG. (41 CFR) 1-16-803 FIRM NAME U. S. GOVERNMENT ARCHITECT ENGINEER QUESTIONNAIRE → FORMER FIRM NAME(S) IF ANY. AND YEAR(S) ESTABLISHED 6. PRESENT BRANCH OFFICE(S) ADDRESS 7. PRINCIPALS OF FIRM NAMES 9. A. ARCHITECTS B. LANDSCAPE ARCHITECTS C. CIVIL ENGINEERS 10. See explanatory notes DATE (Month, day, and year) on page 9. 2. A. YEAR ESTABLISHED B. STATE 3. TYPE OF ORGANI. ZATION (Check one) INDIVIDUAL PARTNERSHIP HOME OFFICE BUSINESS ADDRESS AND TELEPHONE NO. CORPORATION JOINT VENTURE B. TELEPHONE NO. C. NAME OF PERSON IN CHARGE ASSOCIATE MEMBERS OF FIRM NAMES OTHER (Explain in item 22) 1-16.901-251 Standard Form 251: U.S. Government Architect-Engineer Questionnaire. (a) Page 1 of Standard Form. KEY PERSONNEL OF STRUCTURAL ENGINEERS SPECIMEN (Names) G. ELECTRICAL ENGINEERS (Indicate Specialty) nocate Specialty) H. PLANNERS (Indicate Specialty as Site, City, Town, Community, etc.) MECHANICAL ENGINEERS (Indicate Specialty) OTHER KEY PERSONNEL (Indicate Specialty) NUMBER OF PERSONNEL IN YOUR PRESENT ORGANIZATION * a LOCATED AT ARCH. PRINCIPALS & KEY PERSONNEL' ENG. OTHER (2) (3) b OTHER PERSONNEL TOTALS ARCH. ENGINEERS MEN (4) (5)MECH. [(6)ELEC. |(7)CIVIL |(8)OTHER (9) DRAFTS- SPEC. ESTIMA. INSPEC. SURVEY. BALANCE WRITERS TORS TORS ORS (10) (11) (12) (13) (14) (15) A. HOME OFFICE 8 TOTALS MAXIMUM NO. YE AR C. NORMAL STRENGTH 11 NUMBER OF PERSONNEL IN YOUR ORGANIZATION DURING LAST 5 YEARS (Total of items 7 and 9) 1 BRANCH OFFICE IN L 1-16.901-25 1 (FPR CIRC, 16, JUNE 1961) 1675 676 PART 1-16 PROCUREMENT FORMS FEDERAL PROCUREMENT REGULATIONS L 12. h NAME OF FIRM OR INDIVIDUAL AND ADDRESS OUTSIDE ASSOCIATES AND CONSULTANTS USUALLY EMPLOYED BY YOUR FIRM (Furnish a separate completed questionnaire for each firm or individual listed below but see note c, page 9) CATEGORY b NAME OF FIRM OR INDIVIDUAL AND ADDRESS ARCHITECTS 8. LANDSCAPE ARCHITECTS CIVIL ENGINEERS a CATEGORY MECHANICAL ENGINEERS G. ELECTRICAL ENGINEERS H. PLANNERS ESTIMATORS ㄱ ​1-16.901-251 (b) Page 2 of Standard Form. SANITARY ENGINEERS 13. INDICATE IN ORDER OF PRECEDENCE, USING 2." "3.″ ETC. by the printed general categories are to be listed separatel MEN OFFER CONSULT VARFIGNATIONS NE TYPES QE PROJECTS TS IN WHICH YOUR FIRM SPECIALIZES (Work specialties not sufficiently identified rovided) STRUCTURAL ENGINEERS ACOUSTICS • SOUND SUPPRESSION AIRFIELD FACILITIES HOSPITALS HOUSING AIR COND. · REFRIG. • VENT. BRIDGES INDUSTRIAL BUILDINGS IRRIGATION OR DRAINAGE CHANNEL IMPROVEMENTS CHEMICAL FACILITIES COMMUNICATIONS COMMERCIAL BUILDINGS EARTH FILL DAM WORK ELECTRONIC FACILITIES HARBOR FACILITIES HIGHWAYS LABORATORIES MANUAL S MASTER PLANNING • SITE DEVELOP. MILITARY STANDARD DESIGN • MISSILES FACILITIES FUELS NUCLEAR FACILITIES PETROLEUM FACILITIES POWER HEATING PLANTS |||| │ PUBLIC BUILDINGS SURVEYS AND REPORTS UTILITIES WATER. SEWAGE INDICATE THE SCOPE OF SERVICES PROVIDED BY YOUR FIRM WITHOUT USE OF OUTSIDE ASSOCIATES OR CONSULTANTS ON TYPES OF PROJECTS INDICATED IN ITEM 19 (i.e. Architec- tural, Mechanical, Electrical, Structural, etc.) STANDARD FORM 251 JUNE 1961 ~ 1676 (FPR CIRC, 16, JUNE 1961) 656 SUBPART 1-16, 9 ILLUSTRATIONS OF FORMS CIRC. 16, JUNE 15. A. NAME (Last-first-middle initial) PERSONAL HISTORY STATEMENT OF PRINCIPALS AND ASSOCIATES WITHIN YOUR FIRM (Furnish complete data but keep to essentials) D. NAME (Last-first-middle initial) DATE OF BIRTH (Month-day-year) YEARS OF EXPERIENCE AS PRINCIPAL IN THIS FIRM AS PRINCIPAL OTHER THAN IN OTHER FIRMS PRINCIPAL DATE OF BIRTH (Month-day-year) YEARS OF EXPERIENCE AS PRINCIPAL IN THIS FIRM AS PRINCIPAL OTHER THAN IN OTHER FIRMS PRINCIPAL EDUCATION (College, degree, year. specialization) EDUCATION (College, degree, year, specialization MEMBERSHIP IN PROFESSIONAL ORGANIZATIONS REGISTRATION (Type, year, State) B. NAME (Last-first-middle initial) MEMBERSHIP IN PROFESSIONAL ORGANIZATIONS REGISTRATION (Type, year, State) (c) Page 3 of Standard Form. AS PRINCIPAL OTHER THAN IN OTHER FIRMS PRINCIPAL DATE OF BIRTH (Month-day-year) YEARS OF EXPERIENCE] EDUCATION (College, degree, year, E. NAME (Last-first-middle initial) AS PRINCIPAL IN THIS FIRM AS PRINCIPAL OTHER THAN DATE OF BIRI Month-day-year) specialization) MEMBERSHIP IN PROFESSIONAL ORGANIZATIONS IN OTHER FIRMS PRINCIPAL SPECIMEN YEARS OF EXPERIENCE AS PRINCIPAL IN THIS FIRM degree, year, specialization) MEMBERSHIP IN PROFESSIONAL ORGANIZATIONS REGISTRATION (Type, year, State) F. NAME (Last-first-middle initial) YEARS OF EXPERIENCE AS PRINCIPAL IN THIS FIRM AS PRINCIPAL OTHER THAN IN OTHER FIRMS PRINCIPAL DATE OF BIRTH (Month-day-year) YEARS OF EXPERIENCE AS PRINCIPAL IN THIS FIRM AS PRINCIPAL OTHER THAN IN OTHER FIRMS PRINCIPAL REGISTRATION (Type, year, State) C. NAME (Last-first-middle initial) DATE OF BIRTH (Month-day-year) EDUCATION (College, degree, year, specialization) MEMBERSHIP IN PROFESSIONAL ORGANIZATIONS REGISTRATION (Type, year, STANDARD FORM 251 JUNE 1961 State) EDUCATION (College, degree, year, specialization) MEMBERSHIP IN PROFESSIONAL ORGANIZATIONS REGISTRATION (Type, year, State) 1-16,901–251 FEDERAL 1677 PROCUREMENT 1961) (FPR ㅂㅇ ​REGULATIONS PART 1-16 PROCUREMENT FORMS FEDERAL PROCUREMENT REGULATIONS ך 15. CONTINUED G. NAME (Last-first-middle initial) DATE OF BIRTH (Month-day-year) PERSONAL HISTORY STATEMENT OF PRINCIPALS AND ASSOCIATES WITHIN YOUR FIRM (Furnish complete data but keep to essentials) J. NAME (Last-first-middle initial) ㄱ ​YEARS AS PRINCIPAL IN THIS FIRM AS PRINCIPAL OTHER THAN IN OTHER FIRMS PRINCIPAL DATE OF BIRTH (Month-day-year) YEARS OF EXPERIENCE AS PRINCIPAL IN THIS FIRM AS PRINCIPAL OTHER THAN IN OTHER FIRMS PRINCIPAL OF EXPERIENCE EDUCATION (College, degree, year, specialization) MEMBERSHIP IN PROFESSIONAL ORGANIZATIONS REGISTRATION (Type, year, State) EDUCATION (College, degree, year, specialization) MEMBERSHIP IN PROFESSIONAL ORGANIZATIONS REGISTRATION (Type, year, State) 1-16.901–251 (d) Page 4 of Standard Form. AS PRINCIPAL OTHER THAN IN OTHER FIRMS PRINCIPAL H. NAME (Last-first-middle initial) DATE OF BIRTH (Month-day-year) K NAME (Last-first-middle initial) YEARS OF EXPERIENCE AS PRINCIPAL IN THIS FIRM AS PRINCIPAL OTHER THAN IN OTHER FIRMS PRINCIPAL DATE OF BIRTH (Month day year) AS PRINCIPAL YEARS OF IN THIS FIRM EDUCATION (College, degree, year, specialization) MEMBERSHIP IN PROFESSIONAL ORGANIZATIONS EDUCATIONNIC SPECIMEN EXPERIENCE year, specialization MEMBERSHIP IN PROFESSIONAL ORGANIZATIONS REGISTRATION (Type, year, State) 1. NAME (Last-first-middle initial) REGISTRATION (Type, year, State) L. NAME (Last-first-middle initial) DATE OF BIRTH (Month-day-year) YEARS OF EXPERIENCE. AS PRINCIPAL IN THIS FIRM AS PRINCIPAL OTHER THAN IN OTHER FIRMS|PRINCIPAL DATE OF BIRTH (Month-day- year) YEARS OF EXPERIENCE, AS PRINCIPAL IN THIS FIRM AS PRINCIPAL OTHER THAN IN OTHER FIRMS PRINCIPAL EDUCATION (College, degree, year specialization) EDUCATION (College, degree, year, specialization) MEMBERSHIP IN PROFESSIONAL ORGANIZATIONS REGISTRATION (Type, year, State) STANDARD FORM 251 JUNE 1961 MEMBERSHIP IN PROFESSIONAL ORGANIZATIONS REGISTRATION (Type, year, State) 1678 (FPR CIRC, 16, JUNE 1961) SUBPART 1-16, 9 ILLUSTRATIONS OF FORMS FEDERAL 16. NAME AND ADDRESS OF OWNER ESTIMATED CONSTRUCTION COST PERCENT COMPLETED DESIGN FIELD SUPY. PRESENT ACTIVITIES ON WHICH YOUR FIRM IS DESIGNATED ARCHITECT OR ENGINEER OF RECORD NAME AND TYPE OF PROJECT PROCUREMENT REGULATIONS LOCATION SPECIMEN TOTAL NUMBER OF PRESENT PROJECTS: STANDARD FORM 251 JUNE 1961 L (e) Page 5 of Standard Form. TOTAL ESTIMATED CONSTRUCTION COST: 5 1-16,901-251 (FPR CIRC, 16, JUNE 1961) 670 1679 PART 1-16 PROCUREMENT FORMS FEDERAL L 17. NAME OF PROJECT AND PHASE OF WORK PROCUREMENT REGULATIONS PRESENT ACTIVITIES ON WHICH YOUR FIRM IS ASSOCIATED WITH OTHERS LOCATION (Indicate phase of work for which your firm is responsible) OWNER ESTIMATED CONSTRUCTION COST OF ENTIRE PROJECT WORK FOR WHICH YOUR FIRM IS RESPONSIBLE PERCENT OF ENTIRE PROJECT COMPLETED DESIGN FIELD SUPV, 7 FIRM ASSOCIATED SPECIMEN WITH 1-16.901- 25 1 (f) Page 6 of Standard Form. TOTAL ESTIMATED CONSTRUCTION COST OF WORK FOR WHICH YOUR FIRM IS RESPONSIBLE: TOTAL NUMBER OF PRESENT PROJECTS: STANDARD FORM 251 JUNE 1961 6 1680 (FPR CIRC, 16, JUNE 1961) SUBPART 1-16, 9 ILLUSTRATIONS OF FORMS FEDERAL 18. PROCUREMENT REGULATIONS NAME AND ADDRESS OF OWNER COMPLETED WORK ON WHICH YOUR FIRM WAS DESIGNATED ARCHITECT OR ENGINEER OF RECORD DURING THE LAST 10 YEARS NAME AND TYPE OF PROJECT LOCATION YEAR YOUR WORK COM. PLETED SPECIMEN TOTAL NUMBER OF COMPLETED PROJECTS: STANDARD FORM 251 JUNE 1961 L ESTIMATED CONSTRUCTION COST CON. STRUCTED (Yes of No) (g) Page 7 of Standard Form. TOTAL ESTIMATED CONSTRUCTION COST: 1-16,901 – 25 1 (FPR CIRC. 16, JUNE 1961) 1681 PART 1-16 PROCUREMENT FORMS FEDERAL L 19. PROCUREMENT REGULATIONS YEAR ESTIMATED CONSTRUCTION COST OF YOUR WORK COM- ENTIRE PROJECT PLETED WORK FOR WHICH YOUR FIRM WAS RESPONSIBLE CON. STRICTED (Yes or No) COMPLETED WORK ON WHICH YOUR FIRM WAS ASSOCIATED WITH OTHER FIRMS DURING THE LAST 10 YEARS (Indicate phase of work for which your firm was responsible) NAME OF PROJECT AND PHASE OF WORK LOCATION OWNER SPECIMEN ㄱ ​FIRM ASSOCIATED WITH 1-16.901-251 (h) Page 8 of Standard Form. TOTAL ESTIMATED CONSTRUCTION COST OF WORK FOR WHICH YOUR FIRM WAS RESPONSIBLE: TOTAL NUMBER OF COMPLETED PROJECTS: STANDARD FORM 251 JUNE 1961 .8 1682 (FPR CIRC. 16, JUNE 1961) SUBPART 1-16. 9 ILLUSTRATIONS OF FORMS GSA WASH DC 6 2.9 FEDERAL PROCUREMENT REGULATIONS 1683 YES NO (i) Page 9 of Standard Form. 20. EXHIBITS OF COMPLETED WORK Unless specifically requested, submission of photographs is optional. Where submitted, furnish one exterior and one interior photograph of five examples of completed architectural work that are listed in items 18 and 19. (Photographs of models, renderings, sketches, etc., are NOT desired.) Size of photographs not to exceed 8½"x11". On the back of each photograph give the following information: (1) Name of your firm; (2) Name and address of client; (3) Type of structure; (4) Location of structure; (5) Cost of specific structure. Photographs of electrical or mechanical facilities and other components of a decided engineering character are not necessary. CURRENT STATUS (Check one, DEGREE OF CLEARANCE DATE OF CLEARANCE CLEARED BY E. HAVE PRINCIPALS BEEN CLEAREDY 22. IN THE EVENT SPACES PROVIDED ON THE FORM ARE NOT SUFFICIENT FOR ENTRIES, OR IF YOU WISH TO FURNISH ADDITIONAL INFORMATION, IT MAY BE INSERTED HERE, ON THE REVERSE OF THIS PAGE. OR ON SEPARATE SHEETS, WITH APPROPRIATE REFERENCES. 21. SECURITY CLEARANCE (See Note d) ACTIVE 23. INACTIVE NONE SPECIMEN PURPOSE OF SUBMITTING THIS QUESTIONNAIRE (Check A or B, 'not both) A. I/We wish to be considered for architectural or engineering services in connection with the or boxes) of construction projects for Federal Agencies. design, inspection, supervision (check applicable box B. This completed questionnaire is submitted as evidence of employment as outside associate or consultant. (See item 12.) As of this date: NAME OF FIRM OR INDIVIDUAL SUBMITTING QUESTIONNAIRE NAME OF FIRM ASSOCIATED WITH the foregoing is a true statement of facts. TYPE NAME AND TITLE OF PERSON SIGNING SIGNATURE (NEXT PAGE IS 1685) (a) Form is to be completed by typewriter. Completed forms may be reproduced in any quantity deemed necessary to meet distribution requirements. NOTES: (b) It will be to a firm's advantage to maintain its experience record on a current basis. This may be accomplished by periodically forwarding current data. (c) It is NOT necessary for individuals or firms who check item 23B to fur- nish separate questionnaires for their outside associates and consul- tants. (d) Item 21 is for consideration only with respect to classified projects. JUNE STANDARD FORM 251 1961 9 1-16,901–251 (FPR CIRC, 34, AUGUST 1963) PART 1-16 ILLUSTRATION OF FORMS FEDERAL PROCUREMENT REGULATIONS (END OF PART) FILE NO. AGENCY NO. FORM DJ.1500 (6-12-61} 11500-101 1. ISSUING AGENCY (Name and location) 2. INVITATION NUMBER 3. BID OPENING DATE MONTH 4. PROPERTY OR SERVICE (Describe), L ITEM NO. 46. 4c. FEDERAL STOCK NO. OF ITEM OR BRIEF IDENTIFICATION -5. QUANTITY (No. of units) 11. NAME AND TITLE OF PERSON COMPLETING REPORT IDENTICAL BID REPORT FOR PROCUREMENT BIDDER'S NAME CITY AND STATE PARENT COMPANY (If any) 5. 7. E.I. NUMBER 7. 8. BIDDER'S 8. STATUS REGULAR DEALER MANUFACTURER 9. PROMPT PAYMENT 9. DISCOUNT 4d. UNIT NO. OF BIDDERS 4f. Oa. 10b. 10c. ACTION CODE AWARD UNIT PRICE TOTAL AMOUNT 5. 6. 7. MANUFACTURER 8. PRICE BASIS 10d. [108 AWARDS SPECIME NAME MOUNT PAGE OF GES U.S. DEPARTMENT OF JUSTICE ANTITRUST DIVISION REGULAR DEALER MANUFACTURER 9. TOTAL AMOUNT 10d. 106. 106. PRICE BASIS AWARDO 10c UNIT PRICE TI 108. PRICE BASIS Bid Report for Procurement. § 1-16.903-DJ1500 Form DJ-1500: Identical 1-16.903-DJ1500 (FPR CIRC, 34, AUGUST 1963) 1685 CONTENTS OF PART 1-17 EXTRAORDINARY CONTRACTUAL ACTIONS TO FACILITATE THE NATIONAL DEFENSE L ୮ PART 1-17-EXTRAORDINARY CON- TRACTUAL ACTIONS TO FACILITATE THE NATIONAL DEFENSE Sec. 1-17.207-2 Form of requests. 1-17.207-3 Preliminary record of requests. 1-17.207-4 Facts and evidence. ך Г Sec. 1-17.000 Scope of part. 1-17.101 1-17.102 Subpart 1-17.1-General Authority. General policy. 1-17.103 Types of actions. 1-17.104 Definitions. 1-17.105 Reports. 1-17.208 1-17.208-1 1-17.208-2 1-17.208-3 1-17.208-4 Processing cases. Investigation. Interagency coordination. Disposition. Records. Subpart 1-17.3-Residual Powers Subpart 1-17.2-Requests for Contractual Adjustment 1-17.200 Scope of subpart. 1-17.201 [Reserved.] 1-17.202 [Reserved.] 1-17.203 [Reserved.] 1-17.204 Standards for deciding cases. 1-17.300 Scope of subpart. 1-17.301 Statutory limitation on delega- tion of authority. 1-17.302 1-17.303 1-17.304 Standards for powers. Procedures. Records. Subpart 1-17.4-Records of Requests and Dispositions using residual 1-17.204-1 General. 1-17.400 Scope of subpart. 1-17.204-2 Amendments without considera- tion. 1-17.401 1-17.402 Final records. 1-17.204-3 Mistakes. 1-17.403 1-17.204-4 Informal commitments. 1-17.205 Limitations upon exercise of authority. 1-17.205-1 General limitations. 1-17.500 1-17.205-2 Additional limitations below sec- 1-17.501 retarial level. 1-17.206 Contractual requirements. L 1-17.207 Requests by contractors. 1-17.502 1-17.207-1 Filing requests. Preliminary records. Sample format for preliminary and final records. Subpart 1-17.5-Act and Executive Order Scope of subpart. The Act of August 28, 1958 (Pub- lic Law 85-804; 50 U.S.C. 1431- 1435). Executive Order No. 10789 of No- vember 14, 1958. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 30, DECEMBER 1962) i PART 1-17 EXTRAORDINARY CONTRACTUAL ACTIONS L L TO FACILITATE THE NATIONAL DEFENSE § 1-17.000 Scope of part. As distinguished from the normal principles and procedures set forth in the other parts of the FPR, this part establishes uniform regulations for en- tering into and amending or modifying contracts to facilitate the national de- fense under the extraordinary, emer- gency authority granted by the Act of August 28, 1958, Public Law 85-804 (50 U.S.C. 1431-1435), set forth in § 1-17.501, hereinafter referred to in this Part 1-17 as "the Act," and Executive Order No. 10789 of November 14, 1958 (3 CFR, 1958 Supp., pp. 72–74), as amended by Execu- tive Order No. 11051 of October 2, 1962, set forth in § 1-17.502, hereinafter re- ferred to in this Part 1-17 as "the Execu- tive Order." Subpart 1-17.1-General § 1-17.101 Authority. (a) The Act empowers the President to authorize departments and agencies exercising functions in connection with the national defense to enter into con- tracts or into amendments or modifica- tions of contracts and to make advance payments, without regard to other pro- visions of law relating to the making, performance, amendment, or modifica- tion of contracts, whenever he deems that such action would facilitate the national defense. (Similar authority was formerly contained in Title II of the First War Powers Act, 1941, which, as extended, expired June 30, 1958.) (b) The Executive Order authorizes the head of each agency named therein to delegate the authority conferred upon him thereby to any other officials within his agency, and to confer on any such officials the power to make further dele- gations of such authority within their respective organizations. However, under the Act and the Executive Order, author- ity to approve actions obligating the United States in an amount in excess of $50,000 may not be delegated below the secretarial level, as defined in § 1-17.104 (b). § 1-17.102 General policy. 1-17. 104 (b) (a) Authority conferred by the Act shall be delegated in a manner which will best serve the interests of the na- tional defense and, at the same time, re- tain control over the exercise of the au- thority at a level within the agency which is high enough to insure uniformity of action. (b) The authority conferred by the Act shall not be utilized so as to en- courage carelessness and laxity on the part of persons engaged in the defense effort nor be relied upon where other adequate legal authority exists. (c) The actions authorized under the Act shall be processed as expeditiously as practicable consistent with the care, re- straint, and exercise of sound judgment, appropriate to such extraordinary au- thority. § 1-17.103 Types of actions. The following three types of actions may be taken by or pursuant to the di- rection of an approving authority under the Act: (a) Contractual adjustments such as amendments without consideration, cor- rection of mistakes, and formalization of informal commitments (see Subpart 1-17.2). (b) Making advance payments (to be made pursuant to agency procedures). (c) Exercise of of "residual powers," which refers to all other authority under the Act (see Subpart 1-17.3). § 1-17.104 Definitions. As used in this Part 1-17, the following terms have the meanings set forth: (a) "Approving authority" means an official or a contract adjustment board having authority to approve actions un- der the Act. This authority is dis- tinguished from authority to take ap- propriate contractual action pursuant to such approval. (b) "Secretarial level" means an offi- cial at or above the level of an assistant head of an agency or his deputy, and a contract adjustment board. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 30, DECEMBER 1962) 1701 PART 1-17 EXTRAORDINARY CONTRACTUAL ACTIONS TO FACILITATE THE NATIONAL DEFENSE L 1-17. 104 (c) (c) “Defense contract" means an agreement of any kind (whether in the form of a letter of intent, purchase order, or otherwise) for property or services necessary, appropriate, or convenient for the national defense. § 1-17.105 Reports. (a) The Act and the Executive Order provide that each agency shall, by March 15 of each year, submit to the Congress a report of all actions taken within the agency under the authority of the Act during the preceding calendar year. (b) The report shall show the infor- mation set forth in (1) below for all ac- tions approved, and in (2) below for all actions denied. In addition, for each approved action which involves actual or potential cost to the Government in ex- cess of $50,000, the report shall show: name of contractor, actual cost or esti- mated potential cost, description of prop- erty or services involved, and a statement Lety or services involved, and a of the circumstances justifying the action. (1) For actions approved: (i) The total number of actions, total dollar amount requested, and total dollar amount approved; and (ii) By type of action (amend- ments without consideration, correction of mistakes, formalization of informal commitments, and such other actions as appropriate), the number of actions, dol- lar amount requested, and dollar amount approved. (2) For actions denied: (i) The total number of actions and total dollar amount requested; and (ii) By type of action, the number of actions and dollar amount requested. (c) The report should omit any infor- mation which is classified "Confidential" or higher. (d) A report is not required if no ac- tion (either approving or denying relief) was taken under the authority during the year. FEDERAL PROCUREMENT REGULATIONS 1702 (FPR CIRC. 30, DECEMBER 1962) SUBPART 1-17, 2 REQUESTS FOR CONTRACTUAL ADJUSTMENT L ୮ Subpart 1-17.2-Requests for Contractual Adjustment § 1-17.200 Scope of subpart. This subpart sets forth standards and procedures for the disposition of requests for contractual adjustment under the Act. § 1-17.201 [Reserved] § 1-17.202 [Reserved] § 1-17.203 [Reserved] § 1-17.204 cases. § 1-17.204-1 Standards for deciding General. The mere fact that losses occur under a defense contract is not, by itself, a suf- ficient basis for the exercise of the au- thority conferred by the Act. Whether, in a particular case, appropriate action such as amendment without considera- tion, correction of a mistake or ambiguity in a contract, or formalization of an in- formal commitment, will facilitate the national defense is a matter of sound judgment to be made on the basis of all the facts of such case. Although it is ob- viously impossible to predict or enumer- ate all the types of cases with respect to which action may be appropriate, ex- amples of certain cases or types of cases where action may be proper are set forth in §§ 1-17.204-2 through 1-17.204–4. Even if all of the factors contained in any of the examples are present, other factors or considerations in a particular case may warrant denial of the request. These examples are not intended to ex- clude other cases where an approving authority determines that the circum- stances warrant action. § 1-17.204-2 Amendments without con- sideration. (a) Where an actual or threatened loss under a defense contract, however caused, will impair the productive ability of a contractor whose continued per- formance on any defense contract or whose continued operation as a source 1-17.204-4 of supply is found to be essential to the national defense, the contract may be adjusted but only to the extent necessary to avoid such an impairment of the con- tractor's productive ability. (b) Where a contractor suffers a loss (not merely a diminution of anticipated profits) on a defense contract as a result of Government action, the character of the Government action will generally determine whether any adjustment in the contract will be made and its extent. Where the Government action is directed primarily at the contractor and is taken by the Government in its capacity as the other contracting party, the contract may be adjusted if fairness so requires; thus, where such Government action, although not creating any liability on its part, increases the cost of perform- ance, considerations of fairness may make appropriate some adjustment of the contract. § 1-17.204-3 Mistakes. (a) A defense contract may be amended or modified to correct or miti- gate the effect of a mistake. The follow- ing are examples: (1) A mistake or ambiguity which consists of the failure to express, or to express clearly, in a written contract the agreement as both parties understood it. (2) A mistake on the part of the con- tractor which is so obvious that it was or should have been apparent to the contracting officer. (3) A mutual mistake as to a ma- terial fact. (b) Amending defense contracts to correct mistakes with the least possible delay normally will facilitate the na- tional defense by expediting the procure- ment program and by giving contractors proper assurance that such mistakes will be corrected expeditiously and fairly. § 1-17.204-4 Informal commitments. Informal commitments may be formal- ized under certain circumstances to permit payment to persons who have FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 30, DECEMBER 1962) 1703 PART 1-17 EXTRAORDINARY CONTRACTUAL ACTIONS TO FACILITATE THE NATIONAL DEFENSE 1-17.204–4 L taken action without a formal defense contract; for example, where any person, pursuant to written or oral instructions from an official of an agency and relying in good faith upon the apparent au- thority of the official to issue such in- structions, has arranged to furnish or has furnished property or services to the agency or to a defense contractor or sub- contractor without formal contractual coverage for such property or services. Formalization of commitments under such circumstances normally will facili- tate the national defense by assuring such persons that they will be treated fairly and paid expeditiously. § 1-17.205 Limitations upon exercise of authority. § 1-17.205-1 General limitations. (a) The Act is not authority for: (1) The use of the cost-plus-a- percentage-of-cost system of con- tracting; (2) The making of any contract in violation of existing law relating to limi- tation of profit or fees; (3) The negotiation of purchases of or contracts for property or services re- quired by law to be procured by formal advertising and competitive bidding; or (4) The waiver of any bid, payment, performance or other bond required by law. (b) No contracts, amendments, or modifications shall be entered into under authority of the Act: (1) Unless a finding is made that the action will facilitate the national defense; (2) Unless other legal authority within the agency concerned is deemed to be lacking or inadequate; and (3) Except within the limits of the amounts appropriated and the statutory contract authorization. (c) No contract shall be amended or modified: (1) Unless the request therefor has been filed before all obligations (includ- ing final payment) under the contract have been discharged; and (2) If the contract was negotiated under section 302(c) (14) of the Federal Property and Administrative Services Act of 1949 (41 U.S.C. 252(c) (14)) or under 10 U.S.C. 2304(a) (15), to increase the contract price to an amount higher than the lowest rejected bid of any re- sponsible bidder. (d) No informal commitment shall be formalized: (1) Unless a request for payment has been filed within six months after arranging to furnish or furnishing prop- erty or services in reliance upon the commitment; and (2) Unless it is found that at the time the commitment was made it was impracticable to use normal procure- ment procedures. § 1-17.205-2 Additional limitations be- low secretarial level. The exercise of authority by officials below the secretarial level shall be sub- to ject the following additional limitations: (a) The action shall not deal with or directly affect any matter which has been submitted to the General Account- ing Office. (b) The action shall not obligate the Government in an amount in excess of $50,000. (c) The action shall not release a con- tractor from performance of an obligation- (1) Priced in excess of $50,000; or (2) Where reprocurement is con- templated, unless the approving author- ity finds that the estimated actual or potential increase in cost to the Govern- ment will not exceed $50,000. (d) The action shall not involve the disposal of Government surplus property. (e) Mistakes shall not be corrected by action obligating the Government in an amount in excess of $500 unless notice of the mistake was given to the contracting officer before completion of the contrac- tor's work or the effective date of con- tract termination. FEDERAL PROCUREMENT REGULATIONS 1704 (FPR CIRC. 30, DECEMBER 1962) SUBPART 1-17. 2 REQUESTS FOR CONTRACTUAL ADJUSTMENT 1 L L (f) The correction of a contract be- cause of a mistake in its making shall not result in increasing the original contract price above the next lowest responsive bid of a responsible bidder in the case of a formally advertised procurement, or the amount of the next lowest responsive proposal (at the time of award) of a responsible offeror considered in the case of a negotiated procurement. § 1-17.206 Contractual requirements. Every contract entered into or amend- ed or modified pursuant to this Part 1-17 shall contain: (a) A citation of the Act and the Ex- ecutive Order; (b) A brief statement of the circum- stances justifying the action; (c) A recital of the finding that the action will facilitate the national de- fense; (d) The contract clause entitled "Covenant Against Contingent Fees,” as set forth in § 1-1.503; (e) A contract clause in accordance with the examination of records require- ments of section 3(b) of the Act (for fixed-price type contracts, the clause set forth in § 1-7.101-10), unless (1) the contract is for purchases authorized to be made outside the United States under the Foreign Assistance Act of 1961, and (2) pursuant to Executive Order No. 10784 of October 1, 1958 (3 CFR, 1958 Supp., p. 69), as amended by Executive Order No. 10845 of October 12, 1959 (3 CFR, 1959 Supp., p. 133), it is deter- mined by the agency that inclusion of such clause or compliance therewith (if included) would be impracticable; · (f) The contract clause entitled "Non- discrimination in Employment," as set forth in § 1-7.101-18, where the clause is applicable under the rules and regu- lations of the President's Committee on Equal Employment Opportunity issued pursuant to Executive Order No. 10925 of March 6, 1961 (3 CFR, 1961 Supp., pp. 86-92); (g) The contract clause entitled "As- signment of Claims," as set forth in § 1-7.101-8; 1-17.207-2 (d) (h) If otherwise applicable, the con- tract clause entitled "Walsh-Healey Public Contracts Act," as set forth in § 1-12.604; the contract clauses entitled "Davis-Bacon Act" and "Copeland (Anti- Kickback) Act-Nonrebate of Wages,” as set forth in Standard Form 19A (see § 1-16.901-19A); and the contract clause entitled "Work Hours Act of 1962- Overtime Compensation," as provided in FPR Notice No. 3, dated September 20, 1962. (i) Where an indemnification agree- ment is authorized under the Act, a con- tract clause providing that the Govern- ment's obligation under the agreement is expressly conditioned upon and sub- ject to the availability of appropriated funds from which payment can be made; and (j) Any other clauses which are ap- propriate to the particular procurement or required by law or regulation. § 1-17.207 Requests by contractors. § 1-17.207-1 Filing requests. Any person seeking an adjustment un- der the standards set forth in § 1-17.204 (hereinafter referred to in this subpart as the "contractor") may file a request in duplicate with the cognizant contract- ing officer or his duly authorized repre- sentative. If such filing is impracti- cable, requests will be deemed to be properly filed if filed with the agency head. § 1-17.207-2 Form of requests. The contractor's request shall nor- mally consist of a letter to the contract- ing officer stating: (a) The precise adjustment requested; (b) The essential facts summarized in chronological narrative form; (c) The contractor's conclusions based on such facts and showing, in terms of the standards set forth in § 1-17.204, why the contractor considers himself en- titled to the adjustment requested; (d) Whether all obligations have been discharged under the contracts in- volved; FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 30, DECEMBER 1962) 1705 PART 1-17 EXTRAORDINARY CONTRACTUAL ACTIONS TO FACILITATE THE NATIONAL DEFENSE L ୮ 1-17.207-2(e) (e) Whether final payment has been made under the contracts involved; (f) Whether any proceeds from the request will be subject to any assign- ment or other transfer, and to whom; and (g) Whether the contractor has sought the same, or a similar or related, adjust- ment from the General Accounting Of- fice or any other part of the Government, or anticipates doing so. § 1-17.207-3 quests. Preliminary record of re- At the time the contractor's request is filed, a preliminary record thereof, as described in Subpart 1-17.4, shall be prepared. § 1-17.207-4 Facts and evidence. (a) General. The contracting officer or an approving authority shall, where considered appropriate, request the con- tractor to furnish additional facts and evidence, as described in this paragraph (a), and, in addition, where applicable, as described in (b), (c), (d), or (e) of this § 1-17.207-4. (In complying with such requests, the contractor may also submit other statements and evidence which he may consider helpful to the case.): (1) If written contracts are in- volved, a brief description of the con- tracts, indicating the dates of execution and amendments thereto, the items be- ing procured, the price or prices and delivery schedules and revisions thereof, and such other special contractual pro- visions as may be relevant to the request; (2) A history of performance indi- cating when work under the contracts or commitments was begun, the progress made to the present, an exact statement of the contractor's remaining obliga- tions, and the contractor's expectations regarding completion thereof; (3) A statement of payments re- ceived, payments due, and payments yet to be received or to become due, in- Lcluding cluding advance and progress payments, and amounts withheld by the Govern- ment, and information as to other obligations of the Government, if any, which are yet to be performed under the contract; (4) A statement giving a detailed analysis of the monetary elements of the request including precisely how the actual or estimated dollar amount of the request was arrived at, the effect of ap- proval or denial on the contractor's profits before Federal income taxes, and whether the costs for which reimburse- ment is requested have been included as a part of his gross costs in statutory re- negotiation proceedings, together with the contractor's renegotiation status for the relevant years; (5) If a written contract is involved, a statement of the contractor's under- standing of why the subject matter of the request cannot now, and could not at the time it arose, be disposed of under the terms of the contract itself; (6) The best evidence available to the contractor in support of any facts al- leged by the contractor, including con- temporaneous memoranda, correspond- ence, affidavits, and any other material tending to establish matters of fact; (7) Relevant financial statements, cost analyses, or other such data, pref- erably certified by a certified public ac- countant, including such additional fi- nancial data as are necessary to explain fully and to support the monetary ele- ments of the request for adjustment; (8) A list of persons (within the agency, in the employ of the contractor, or otherwise connected with the con- tract) who have some factual knowledge of the subject matter, including where possible the name, office or title, address, and telephone number of each such person; (9) A statement and evidence of steps taken to mitigate loss and reduce claims to a minimum; and (10) Such other statements or evi- dence as may be requested by the con- tracting officer. FEDERAL PROCUREMENT REGULATIONS 1706 (FPR CIRC. 30, DECEMBER 1962) SUBPART 1-17. 2 REQUESTS FOR CONTRACTUAL L ADJUSTMENT (b) Amendments without considera- tion under § 1-17.204-2(a). In addition to the facts and evidence listed in § 1- 17.207-4(a), where a request involves possible amendment without considera- tion and essentiality to the national de- fense is a factor, the contractor shall be asked to furnish such of the following as is deemed appropriate to the request: (1) A statement and evidence of the contractor's original breakdown of esti- mated costs, including contingency al- lowances and profit; (2) A statement and evidence of the contractor's present estimate of total costs under the contracts involved if en- abled to complete them, broken down as between costs accrued to date of request and run-out costs, and as between costs for which the contractor has made pay- ment and those for which he is indebted at the time of the request; (3) A statement and evidence of the contractor's estimate of the final con- tract price of the contracts involved giving effect to all escalation, changes, extras, and the like, known or contem- plated by the contractor; (4) A statement of any claims known or contemplated by the contrac- tor against the Government involving the contracts in question, other than those stated in response to § 1-17.207- 4(b) (3); (5) An estimate of the contractor's total profit or loss under the contracts involved if enabled to complete at the estimated final contract price (see § 1-17.207-4(b)(3)), broken down be- tween profit or loss to date and run-out profit or loss; (6) An estimate of the contractor's total profits or losses from other Govern- ment business, and all other sources, during the period from the date of the first contract involved to the estimated date of completion of all the contracts involved; (7) A statement of the amount of any tax refunds and an estimate of those anticipated during or for the period from the date of the first con- 1-17.207-4 (b) (14) tract involved through the estimated completion date of all the contracts involved; (8) A statement in detail as to ef- forts the contractor has made to obtain funds from commercial sources to en- able him to complete performance of the contracts involved; (9) A statement of the minimum amount necessary as an amendment without consideration to enable the con- tractor to complete performance of the contracts involved, and the detailed basis for that amount; (10) An estimate of the time re- quired to complete each contract if the request is granted; (11) A statement of the factors which have caused the loss under the contracts involved; (12) A statement as to the course of events anticipated if the request is denied; (13) Balance sheets, preferably certified by a certified public account- ant, (i) as of the end of the contractor's fiscal year first preceding the date of the first contract, (ii) as of the end of each subsequent fiscal year, (iii) as of the date of the request, and (iv) projected as of the date of completion of all the con- tracts involved assuming the contractor is enabled to complete the contracts at the final prices estimated pursuant to § 1-17.207-4(b) (3), together with in- come statements for annual periods sub- sequent to the date of the first balance sheet. Balance sheets and income state- ments should be both consolidated and by affiliates, and should show all trans- actions between the contractor and his affiliates, stockholders, and partners, in- cluding loans to the contractor guar- anteed by any stockholder or partner; and (14) A list of all salaries, bonuses, and all other forms of compensation of the principal officers or partners and of all dividends and other withdrawals, and all payments to stockholders in any form since the date of the first contract involved. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 30, DECEMBER 1962) 1707 PART 1-17 EXTRAORDINARY CONTRACTUAL ACTIONS TO FACILITATE THE NATIONAL DEFENSE 1-17.207-4 (c) ~ (c) Amendments without considera- tion under § 1-17.204-2(b). In addition to the facts and evidence listed in § 1-17.207-4(a), where a request involves possible amendment without considera- tion because of Government action, and essentiality to the national defense is not a factor, the contractor shall be asked to furnish such of the following as is deemed appropriate to the request: L (1) A clear statement of the precise Government action which the contractor considers caused a loss under the con- tract, with evidence to support each es- sential fact; (2) A statement and evidence of the contractor's original breakdown of esti- mated costs, including contingency allowances, and profit; (3) The estimated total loss suf- fered under the contract, with detailed supporting analysis; and (4) The estimated loss resulting from the Government action, with de- tailed supporting analysis. (d) Correction of mistakes under § 1-17.204-3. In addition to the facts and evidence listed in § 1-17.207-4(a), where a request involves possible correc- tion of a mistake, the contractor shall be asked to furnish such of the following as is deemed appropriate to the request: (1) A statement and evidence of the precise mistake or error that was made, the ambiguity that exists, or the mis- understanding that arose, showing of what it consisted and how it occurred, and the intention of the parties; (2) A statement explaining when the mistake was discovered, when notice of mistake was given to the contracting officer, and whether given before comple- tion of work under, or the effective date of termination of, the contract; (3) An estimate of loss or profit un- der the contract with detailed support- ing analysis; and (4) An estimate of the increase in cost to the Government resulting from the adjustment requested, with detailed supporting analysis. (e) Formalization of informal com- mitments under § 1-17.204-4. In addi- tion to the facts and evidence listed in § 1-17.207-4(a), where a request involves possible formalization of an informal commitment, the contractor shall be asked to furnish such of the following as is deemed appropriate to the request: (1) Copies of any written instruc- tions or assurances, or a statement under oath as to any oral instructions or as- surances made to the contractor, with identification of the Government official making such statement; (2) A statement as to when the property or services were furnished or arranged to be furnished, and to whom; (3) Evidence that the contractor re- lied upon the instructions or assurances, with a full description of the circum- stances which led him so to rely, and that the contractor intended, at the time of performing the work, to be com- pensated directly for it by the Govern- ment and did not anticipate recovery of the costs in some other way; (4) A cost breakdown supporting the amount claimed as a fair compensa- tion for the work performed; and (5) A statement and evidence of why it was impracticable to provide for the work performed in an appropriate contractual instrument. § 1-17.208 Processing cases, All cases shall be processed in accord- ance with the general policy set forth in § 1-17.102(c). § 1-17.208-1 Investigation. A thorough investigation shall be made of all facts and issues relevant to each case. Facts and evidence shall be ob- tained from contractor and Government personnel, and shall include signed statements of material facts within the knowledge of individuals where docu- mentary evidence is lacking, and audits where considered necessary to establish financial or cost facts. FEDERAL PROCUREMENT REGULATIONS 1708 (FPR CIRC, 30, DECEMBER 1962) SUBPART 1-17. 2 REQUESTS FOR CONTRACTUAL ADJUSTMENT ■ § 1–17.208–2 Interagency coordination. Where a case involves matters of in- terest to more than one agency of the Government, such agencies should main- tain liaison with each other for the pur- pose of determining whether joint action may be taken under the circumstances. § 1-17.208-3 Disposition. (a) In each case, the approving au- thority (if a contract adjustment board, the Chairman), whether approving or denying the request, shall sign a Memo- randum of Decision which shall be dated and shall contain the following: (1) The name and address of the contractor, the contract identification, and the nature of the request; (2) The decision reached and the actual cost or estimated potential cost, if any, of the decision; (3) A concise description of the property or services involved; (4) A statement of the circum- stances justifying the decision; and (5) If some adjustment action is approved, a statement in substantially the following form: "I find that the ac- 1-17.208—4 (e) tion authorized herein will facilitate the national defense.” (b) Where the Memorandum of De- cision contains information which is classified "Confidential" or higher, such information shall be identified in the Memorandum. In lieu of including classified information in the Memoran- dum, such information may be set forth in a separate classified document which is referenced in the Memorandum. § 1-17.208-4 Records. The following shall be retained in the agency files with respect to each request processed: (a) The Memorandum of Decision re- quired in § 1–17.208–3; (b) The contractor's request; (c) Memoranda, correspondence, affi- davits, statements, and all other docu- ments containing information acquired in connection with the request; (d) A copy of the contractual docu- ment implementing any approved con- tractual action; and (e) The final record prepared in ac- cordance with § 1-17.402. (NEXT PAGE IS 1711) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 30, DECEMBER 1962) 1709 SUBPART 1-17. 3 RESIDUAL POWERS 1-17.304 ட ୮ Subpart 1-17.3-Residual Powers § 1-17.300 Scope of subpart. This subpart prescribes the standards and procedures for the exercise of resid- ual powers under the Act. The term "residual powers" as used in this subpart includes all the authority under the Act except that which is covered by Subpart 1-17.2 and the authority to make ad- vance payments. § 1-17.301 Statutory limitation on dele- gation of authority. Authority to approve actions obligating the United States in an amount in excess of $50,000 under the residual powers of the Act shall not be delegated below the secretarial level. § 1-17.302 Standards for using residual powers. Subject to the limitations contained in § 1-17.205-1, the residual powers may be used in accordance with the policies set forth in § 1-17.102 where such use is deemed necessary and appropriate. § 1-17.303 Procedures. (a) With respect to each proposal for the exercise of residual powers, the ap- proving authority shall sign a memoran- dum containing information substan- tially as set forth in § 1-17.208-3. (b) Every contract entered into or amended or modified under the residual powers shall comply with the provisions of § 1-17.206. § 1-17.304 Records. A copy of each memorandum required by § 1-17.303(a) shall be retained in the agency files. (NEXT PAGE IS 1713) FEDERAL PROCUREMENT REGULATIONS ך (FPR CIRC. 30, DECEMBER 1962) 1711 SUBPART 1-17. 4 RECORDS OF REQUESTS AND DISPOSITIONS 1-17.401 (n) L. Subpart 1-17.4-Records of Requests and Dispositions § 1-17.400 Scope of subpart. In order that adequate records of ac- tions taken pursuant to the Act may be maintained, § 1–17.207-3 requires the preparation of a preliminary record when each request is filed for any adjust- ment under the standards set forth in § 1-17.204, and § 1-17.208-4 requires the preparation of a final record indicating the disposition of the request. This sub- part describes in detail the information which should be included in these rec- ords. A suggested format for the rec- ords is shown in § 1-17.403. It is designed so that the information required for the preliminary and final record with re- spect to each request may be combined on the same form. § 1-17.401 Preliminary records. Each preliminary record prepared pursuant to § 1-17.207-3 should con- tain the following information: (a) Type of record. The fact that the record is a preliminary record should be indicated. (b) Date of contractor's request. The date on the face of the contractor's re- quest for adjustment should be inserted. (c) Date received by Government. The date the request for adjustment is received in any Government office to which the contractor may properly sub- mit his request should be inserted. (d) Name and address of contractor. The full and correct name and address of the contractor filing the request should be inserted. If the contractor is a small business, this fact should be indicated. (e) Name and address of contractor's representative, if any. If a particular named person (employee, attorney, etc.) is the point of contact with the contrac- tor, his full name and address should be inserted. (f) Cognizant contracting officer or office. The contracting officer adminis- tering the contract for which an adjust- ment was requested or, if none, the con- tracting officer or office cognizant of the request should be inserted. (g) Procuring activity. The name of the procuring activity with jurisdiction over the contracting officer or office re- ferred to in (f) above should be inserted. (h) Property or service involved. A brief description of the item being pro- cured or services being rendered should be inserted. (i) Extent of performance as of date of request. A brief indication, as of the date of the request, of the degree of completion of the contract should be in- serted; for example, 50 percent com- pleted, or performance not yet begun. If work is completed, indicate date of completion and whether final payment has been made. (j) Contract number and date. The identifying numbers and dates of the contracts for which an adjustment is requested should be inserted. If there is no contract, then the word "None" should be inserted. If the question arises under a letter of intent, then that fact and the date of such letter should be inserted. (k) Advertised or negotiated. Whether the contract was entered into pursuant to advertising or negotiation should be indicated. If negotiated, the specific authority should be indicated, e.g., "Neg. 302(c)(14) of FPAS Act" (Federal Property and Administrative Services Act of 1949). (1) Type of contract. The type of contract involved (see Subpart 1-3.4) should be inserted, e.g., "FFP" (firm fixed price), "CPFF" (cost-plus-a-fixed- fee), or "T&M" (time and materials). (m) Category of case. Whether the request involves an amendment without consideration, a mistake, or an informal commitment should be indicated. If the case involves two or more categories, each should be indicated; however, the most significant category involved should be listed first. (n) Amount or description of request. If the request is expressed in dollars, as FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 30, DECEMBER 1962) 1713 PART 1-17 EXTRAORDINARY CONTRACTUAL ACTIONS L TO FACILITATE THE NATIONAL DEFENSE 1-17.401(n) a change in price, then that fact should be inserted as follows: "$5,250 increase" or “$5,250 decrease." If the request seeks an adjustment which cannot be expressed in monetary terms, then some brief description of it should be inserted, such as "Cancellation" or "Modification of Terms." The fact that an adjustment is not easily expressed in dollar terms should not deter an estimate if such an estimate is made by the contractor in his request. (0) Date this record signed. The date on which the record is signed should be inserted. (p) Signature. The record should be signed by an authorized representative of the reporting authority. § 1-17.402 Final records. Each final record prepared pursuant to § 1-17.208-4 should contain the infor- mation listed in (b) through (p) of § 1-17.401 and, in addition, should con- tain the following information: (a) Type of record. The fact that the record is a final record should be indicated. (b) Action below secretarial level. The disposition of the case, the office which took action, and the date thereof should be inserted. The disposition should be indicated as: "withdrawn," "denied," "approved," or "forwarded." If the request was approved in whole or in part, the dollar amount or nature of the action should be indicated in a man- ner similar to that described in § 1-17.401 (m). Where the request is denied or approved, the date should correspond to the date of the Memorandum of Deci- sion issued in accordance with § 1-17.208-3. (c) Action at secretarial level. The disposition of the case at secretarial level and the date thereof should be indicated in a manner similar to that described in § 1-17.402(b). FEDERAL PROCUREMENT REGULATIONS 1714 (FPR CIRC, 30, DECEMBER 1962) SUBPART 1-17. 4 RECORDS OF REQUESTS AND ୮ ㄱ ​DISPOSITIONS (d) Implementation and date. The nature of the contractual document or correspondence which implements the decision of the approving authority should be indicated as follows: "amend- ment," "new contract," or "letter of denial." 1-17.403 § 1-17.403 Sample format for prelim- inary and final records. The following is a suggested format for the preliminary and final records de- scribed in §§ 1-17.401 and 1-17.402: PRELIMINARY DATE OF REQUEST CONTRACTOR'S NAME AND ADDRESS RECORD OF REQUEST FOR ADJUSTMENT PUBLIC LAW 85-804 NAME AND ADDRESS OF CONTRACTOR'S REPRESENTATIVE. IF ANY COGNIZANT CONTRACTING OFFICER OR OFFICE PROPERTY OR SERVICE INVOLVED PROCURING ACTIVITY FINAL DATE RECEIVED BY GOVERN. MENT SMALL BUSINESS CONTRACT NUMBER DATE CATEGORY OF CASE ACTION BELOW SECRETARIAL LEVEL EXTENT OF PERFORMANCE AS OF DATE OF REQUEST ADVERTISED OF TYPE OF CONTRACT SCRIPTION OF REQUEST SPECIMEN ACTION AT SECRETARIAL LEVEL (INCLUDES CAB) DATE IMPLEMENTATION ADDITIONAL DATA OR REMARKS DATE THIS RECORD SIGNED SIGNATURE L DATE DATE (NEXT PAGE IS 1717) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 30, DECEMBER 1962) 1715 I SUBPART 1-17.5 ACT AND EXECUTIVE ORDER L 1-17.501 Subpart 1-17.5—Act and Executive § 1-17.500 Order Scope of subpart. This subpart sets forth in full the Act and the Executive Order. § 1-17.501 The Act of August 28, 1958 (Public Law 85-804; 50 U.S.C. 1431-1435). The Act is as follows: Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the President may authorize any department or agency of the Government which exercises functions in connection with the national defense, acting in accordance with regula- tions prescribed by the President for the protection of the Government, to enter into contracts or into amendments or modifica- tions of contracts heretofore or hereafter made and to make advance payments thereon, without regard to other provisions of law relating to the making, performance, amendment, or modification of contracts, whenever he deems that such action would facilitate the national defense. The au- thority conferred by this section shall not be utilized to obligate the United States in an amount in excess of $50,000 without ap- proval by an official at or above the level of an Assistant Secretary or his Deputy, or an assistant head or his deputy, of such department or agency, or by a Contract Ad- justment Board established therein. SEC. 2. Nothing in this Act shall be construed to constitute authorization here- under for- (a) The use of the cost-plus-a-per- centage-of-cost system of contracting; (b) Any contract in violation of exist- ing law relating to limitation of profits; (c) The negotiation of purchases of or contracts for property or services required by law to be procured by formal advertising and competitive bidding; (d) The waiver of any bid, payment, performance, or other bond required by law; (e) The amendment of a contract ne- gotiated under section 2304 (a) (15), title 10, United States Code, or under section 302 (c) (13)¹ of the Federal Property and Adminis- ¹ Section 302(c)(13) amended by Public Law 85-800 to read 302 (c) (14). trative Services Act of 1949, as amended (63 Stat. 377, 394), to increase the contract price to an amount higher than the lowest re- jected bid of any responsible bidder; or (f) The formalization of an informal commitment, unless it is found that at the time the commitment was made it was im- practicable to use normal procurement pro- cedures. SEC. 3. (a) All actions under the author- ity of this Act shall be made a matter of public record under regulations prescribed by the President and when deemed by him not to be detrimental to the national se- curity. (b) All contracts entered into, amend- ed, or modified pursuant to authority con- tained in this Act shall include a clause to the effect that the Comptroller General of the United States or any of his duly au- thorized representatives shall, until the ex- piration of three years after final payment, have access to and the right to examine any directly pertinent books, documents, papers, and records of the contractor or any of his subcontractors engaged in the performance of and involving transactions related to such contracts or subcontracts. SEC. 4. (a) Every department and agency acting under authority of this Act shall, by March 15 of each year, report to Congress all such actions taken by that department or agency during the preceding calendar year. With respect to actions which involve actual or potential cost to the United States in excess of $50,000, the report shall— (1) Name the contractor; (2) State the actual cost or esti- mated potential cost involved; (3) Describe the property or services involved; and (4) State further the circumstances justifying the action taken. With respect to (1), (2), (3), and (4), above, and under regulations prescribed by the President, there may be omitted any in- formation the disclosure of which would be detrimental to the national security. (b) The Clerk of the House and the Secretary of the Senate shall cause to be published in the Congressional Record all reports submitted pursuant to this section. SEC. 5. This Act shall be effective only during a national emergency declared by Congress or the President and for six months after the termination thereof or until such earlier time as Congress, by concurrent reso- lution, may designate. L FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 30, DECEMBER 1962) 1717 PART 1-17 EXTRAORDINARY CONTRACTUAL ACTIONS Lo TO FACILITATE THE NATIONAL DEFENSE 1-17.502 § 1-17.502 Executive Order No. 10789 of November 14, 1958.* The Executive Order is as follows: AUTHORIZING AGENCIES OF THE GOVERNMENT TO EXERCISE CERTAIN CONTRACTING AUTHOR- ITY IN CONNECTION WITH NATIONAL DE- FENSE FUNCTIONS AND PRESCRIBING Regula- TIONS GOVERNING THE EXERCISE OF SUCH AUTHORITY By virtue of the authority vested in me by the act of August 28, 1958, 72 Stat. 972, hereinafter called the act, and as President of the United States, and in view of the existing national emergency declared by Proclamation No. 2914 of December 16, 1950, and deeming that such action will facilitate the national defense, it is hereby ordered as follows: PART I—DEPARTMENT OF DEFENSE Under such regulations, which shall be uniform to the extent practicable, as may be prescribed or approved by the Secretary of Defense: 1. The Department of Defense is author- ized, within the limits of the amounts ap- propriated and the contract authorization provided therefor, to enter into contracts and into amendments or modifications of contracts heretofore or hereafter made, and to make advance payments thereon, without regard to the provisions of law relating to the making, performance, amendment, or modification of contracts, whenever, in the judgment of the Secretary of Defense, the Secretary of the Army, the Secretary of the Navy, or the Secretary of the Air Force, or the duly authorized representative of any such Secretary, the national defense will be facilitated thereby. 2. The Secretaries of Defense, the Army, the Navy, and the Air Force, respectively, may exercise the authority herein conferred and, in their discretion and by their direc- tion, may delegate such authority to any other military or civilian officers or officials of their respective departments, and may confer upon any such military or civilian officers or officials the power to make further delegations of such authority within their respective commands or organizations: Pro- vided, that the authority herein conferred shall not be utilized to obligate the United States in an amount in excess of $50,000 2 As amended by Executive Order No. 11051 of October 2, 1962. without approval by an official at or above the level of an Assistant Secretary or his Deputy, or by a departmental Contract Ad- justment Board. 3. The contracts hereby authorized to be made shall include agreements of all kinds (whether in the form of letters of in- tent, purchase orders, or otherwise) for all types and kinds of property or services neces- sary, appropriate, or convenient for the national defense, or for the invention, de- velopment, or production of, or research concerning, any such property or services, including, but not limited to, aircraft, mis- siles, buildings, vessels, arms, armament, equipment or supplies of any kind, or any portion thereof, including plans, spare parts and equipment therefor, materials, supplies, facilities, utilities, machinery, machine tools, and any other equipment without any re- striction of any kind as to type, character, location, or form. 4. The Department of Defense may by agreement modify or amend or settle claims under contracts heretofore or hereafter made, may make advance payments upon such contracts of any portion of the contract price, and may enter into agreements with contractors or obligors modifying or releas- ing accrued obligations of any sort, including accrued liquidated damages or liability un- der surety or other bonds. Amendments or modifications of contracts may be with or without consideration and may be utilized to accomplish the same things as any original contract could have accomplished hereunder, irrespective of the time or circumstances of the making, or the form, or the contract amended or modified, or of the amending or modifying contract, and irrespective of rights which may have accrued under the contract or the amendments or modifica- tions thereof. 5. Proper records of all actions taken under the authority of the act shall be main- tained within the Department of Defense. The Secretaries of Defense, the Army, the Navy, and the Air Force shall make such records available for public inspection except to the extent that they, or their duly au- thorized representatives, may respectively deem the disclosure of information therein to be detrimental to the national security. 6. The Department of Defense shall, by March 15 of each year, report to the Con- gress all actions taken within that depart- ment under the authority of the act during the preceding calendar year. With respect to actions which involve actual or potential FEDERAL PROCUREMENT REGULATIONS 1718 (FPR CIRC. 30, DECEMBER 1962) SUBPART 1-17.5 ACT AND EXECUTIVE ORDER " ୮ L cost to the United States in excess of $50,000, the report shall (except as the disclosure of such information may be deemed to be detri- mental to the national security) - (a) name the contractor; (b) state the actual cost or estimated potential cost involved; (c) describe the property or services involved; and (d) state further the circumstances justifying the action taken. 7. There shall be no discrimination in any act performed hereunder against any person on the ground of race, religion, color, or national origin, and all contracts entered into, amended, or modified hereunder shall contain such nondiscrimination provision as otherwise may be required by statute or Executive order. 8. No claim against the United States arising under any purchase or contract made under the authority of the act and this order shall be assigned except in accordance with the Assignment of Claims Act of 1940 (54 Stat. 1029), as amended. 9. Advance payments shall be made hereunder only upon obtaining adequate security. 10. Every contract entered into, amended, or modified pursuant to this order shall contain a warranty by the contractor in substantially the following terms: "The Contractor warrants that no person or selling agency has been employed or retained to solicit or secure this con- tract upon an agreement or understanding for a commission, percentage, brokerage, or contingent fee, except bona-fide employees or bona-filde established commercial or sell- ing agencies maintained by the Contractor for the purpose of securing business. For breach or violation of this warranty the Gov- ernment shall have the right to annul this contract without liability or, in its dis- cretion, to deduct from the contract price or consideration, or otherwise recover, the full amount of such commission, percentage, brokerage, or contingent fee." 11. All contracts entered into, amended, or modified pursuant to authority of this order shall include a clause to the effect that the Comptroller General of the United States or any of his duly authorized representa- tives shall, until the expiration of three years after final payment, have access to and the right to examine any directly pertinent books, documents, papers, and records of the contractor or any of his subcontractors en- gaged in the performance of, and involving in the of, and 1-17.502 transactions related to, such contracts or subcontracts. 12. Nothing herein contained shall be construed to constitute authorization here- under for- (a) the use of the cost-plus-a-per- centage-of-cost system of contracting; (b) any contract in violation of exist- ing law relating to limitation of profits or fees; (c) the negotiation of purchases of or contracts for property or services required by law to be procured by formal advertising and competitive bidding; (d) the waiver of any bid, payment, performance, or other bond required by law; (e) the amendment of a contract negotiated under section 2304(a)(15) of title 10 of the United States Code to increase the contract price to an amount higher than the lowest rejected bid of any responsible bidder; or (f) the formalization of an informal commitment, unless the Secretary of De- fense, the Secretary of the Army, the Secre- tary of the Navy, or the Secretary of the Air Force, or the duly authorized representative of any such Secretary, finds that at the time the commitment was made it was impracti- cable to use normal procurement procedures. 13. The provisions of the Walsh-Healey Act (49 Stat. 2036), as amended, the Davis- Bacon Act (49 Stat. 1011), as amended, the Copeland Act (48 Stat. 948), as amended, and the Eight Hour Law (37 Stat. 137), as amended, if otherwise applicable, shall apply to contracts made and performed under the authority of this order. 14. Nothing herein contained shall prej- udice anything heretofore done under Exec- utive Order No. 9001 of December 27, 1941, or Executive Order No. 10210 of February 2, 1951, or any amendments or extensions thereof, or the continuance in force of any action heretofore taken under those orders or any amendments or extensions thereof. 15. Nothing herein contained shall prej- udice any other authority which the Depart- ment of Defense may have to enter into, amend, or modify contracts, and to make advance payments. PART II-EXTENSION OF PROVISIONS OF PARAGRAPHS 1-14 21. Subject to the limitations and regu- lations contained in paragraphs 1 to 14, in- clusive, hereof, and under any regulations prescribed by him in pursuance of the pro- visions of paragraph 22 hereof, the head of FEDERAL PROCUREMENT REGULATIONS ך (FPR CIRC. 30, DECEMBER 1962) 1719 PART 1-17 EXTRAORDINARY CONTRACTUAL ACTIONS TO FACILITATE THE NATIONAL DEFENSE r 1-17.502 3 each of the following-named agencies is authorized to perform or exercise as to his agency, independently of any any Secretary referred to in the said paragraphs 1 to 14, all the functions and authority vested by those paragraphs in the Secretaries men- tioned therein: Department of the Treasury Department of the Interior Department of Agriculture Department of Commerce Atomic Enegry Commission General Services Administration National Aeronautics and Space Administration Federal Aviation Agency Tennessee Valley Authority Government Printing Office 22. The head of each agency named in paragraph 21 hereof is authorized to pre- scribe regulations governing the carrying out 3 Executive Order No. 11051 of October 2, 1962, deleted the Office of Civil and Defense of the functions and authority vested with respect to his agency by the provisions of paragraph 21 hereof. Such regulations shall, to the extent practicable, be uniform with the regulations prescribed or approved by the Secretary of Defense under the provisions of Part I of this order. 23. Nothing contained herein shall prej- udice any other authority which any agency named in paragraph 21 hereof may have to enter into, amend, or modify contracts and to make advance payments. 24. Nothing contained in this Part shall constitute authorization thereunder for the amendment of a contract negotiated under section 302 (c) (14) of the Federal Property and Administrative Services Act of 1949 (63 Stat. 394), as amended by section 2(b) of the act of August 28, 1958, 72 Stat. 966, to in- crease the contract price to an amount higher than the lowest rejected bid of any responsible bidder. DWIGHT D. EISENHOWER (END OF PART) → ✰ U. S. GOVERNMENT PRINTING OFFICE: 1963 O 652507 (58) - FEDERAL PROCUREMENT REGULATIONS 1720 (FPR CIRC. 30, DECEMBER 1962) J GENERAL SERVICES ADMINISTRATION FPR CIRCULAR NO. 1 Washington 25, D. C. FEDERAL PROCUREMENT REGULATIONS March 27, 1959 FPR Circulars. This is the first of a series of "FPR Circulars" which will be used. to transmit, from time to time, new or revised Federal Procurement Regulations mate- rial prescribed by the Administrator of General Services under the Federal Property and Administrative Services Act of 1949. Each circular will identify material transmitted (both generally and by specific page number), summarize major additions or revisions, specify applicable effective dates, and will include filing instructions and notes. FPR Circulars may also contain procurement policies and procedures which are effective for less than six months, are instituted on an experimental basis, or require such expedited publication that their preparation in FPR form would not then be practicable. 1. Material Transmitted. Attached are the following portions of FPR material: Part 1-1 (including Subparts 1-1.0, 1-1.2, 1-1.3, 1-1.5, 1-1.6, 1-1.7, and 1-1.9); section 1-2.302; Part 1-3 (including Subparts 1-3.1, 1-3.2, 1-3.3, 1-3.4, 1-3.6, and 1-3.8); Subpart 1-7.1; Part 1-11; Part 1-12 (including Subparts 1-12.1, 1-12.2, 1-12.3, 1-12.6, and 1-12.7); and Part 1-16 (including Subparts 1-16.1, 1-16.3, 1-16.4, and 1-16.8). Not all sections are now included within these parts and subparts. 2. Summary of Additions or Revisions. This is the first portion of the FPR mate- rial to be published in loose-leaf form. The subject matter embraces: the regulation system, definitions, general policies (including methods and sources of procurement; specifications, standards, and purchase descriptions; responsibility of prospective con- tractors; priorities, allocations, and allotments; and use of liquidated damages pro- visions), contingent fees, debarred and ineligible bidders, small business concerns, and antitrust violations. This material also includes policies and procedures concerning: submission of bids; procurement by negotiation; supply contract clauses; Federal, State, and local taxes; labor; and procurement standard forms. 3. Effective Dates. The transmitted FPR material represents (1) a codification of regulations previously prescribed by the Administrator of General Services, which either have been in effect or which, by their terms, have not yet become effective; and (2) new regulatory material not heretofore issued. Accordingly, the effective dates of portions of this material will vary as follows: (a) These portions are effective immediately: Subpart 1-1.0. Subpart 1-1.5. Subpart 1-1.6. Subpart 1-1.7. Part 1-3, excluding Subpart 1-3.6, where agencies negotiate contracts under Delegation of Authority 363, March 10, 1959 (24 F. R. 1921, 2096). Subpart 1-11.4. Subpart 1-16.1. Subpart 1-16.8. (b) These portions are effective June 1, 1959: Section 1-1.307. Section 1-1.310. Section 1-1.315. Subpart 1-2.3. Subpart 1-16.4. (c) These portions are effective September 15, 1959: Subpart 1-1.2. Subpart 1-1.3, except for sections indicated in (b) above. Subpart 1-1.9. Part 1-3, except as indicated in (a) above. Subpart 1-7.1. Part 1-11, except Subpart 1-11.4. Part 1-12. Subpart 1-16.3. Bureau of Governuren Edwards mittson. EDWARD K. MILLS, JR. Acting Administrator -2- DEPOSITED BY THE UNITED STATES OF AMERICA Filing Instructions and Notes Remove Pages None Insert Pages i - Foreword iii-iv - Introduction V Table of Parts - vii-viii - Contents of Part 1-1 101-136 i - Contents of Part 1-2 201-202 i - Contents of Part 1-3 301-335 i - Contents of Part 1-7 701-705 i - Contents of Part 1-11 1101-1115 i - Contents of Part 1-12 1201-1211 i - Contents of Part 1-16 1601-1613 (a) On each page appears the number and date (month and year) of the FPR Cir- cular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of pages indicate where additions or revisions were made in the text. or < or < or < - Line on which change begins. Line on which change ends. - Line on which change both begins and ends. (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, re- spectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: SUBPART CHAPTER PART 1 1 1 1 1 SECTION 1 3. 603-2 1 1 SUBSECTION GENERAL SERVICES ADMINISTRATION Washington 25, D. C. FPR CIRCULAR NO. 2 June 23, 1959 FEDERAL PROCUREMENT REGULATIONS 1. Material Transmitted. The attached pages contain revisions to sections 1-1. 307-1, 1-1.606, 1-12.604, 1-16. 100, 1-16.400, 1-16. 404-1, 1-16. 800, and 1-16. 801, and new Subparts 1-16. 2 and 1-16.9. 2. Summary of Additions or Revisions. (a) Section 1-1. 307-1 is revised to clarify the fact that construction is excluded from the applicability of instructions concerning purchase descriptions (section 1-1.307). (b) Sections 1-16. 100, 1-16. 400, and 1-16. 800 are revised to include a cross- reference to illustrations of the forms in the new Subpart 1-16. 9. (c) New Subpart 1-16. 2 prescribes a standard Request for Quotations form and conditions for its use. This form will serve to standardize the forms and methods used when soliciting written quotations to obtain price, delivery, and other infor- mation from suppliers. In making small purchases, use of the new form and related policy will also facilitate withdrawal, amendment, or cancellation of purchase orders which have not been accepted by the supplier. (d) Unavailability of new and revised construction forms prescribed by Subpart 1-16. 4, because of unexpected printing difficulties, has made necessary an exten- sion of the effective date of the subpart, as shown in section 3(d) below. (e) Subpart 1-16.9 is added to provide illustrations of forms used in procure- ment. It will be noted that the forms illustrated contain a reference, in the upper left-hand corner of the first page, to the section of the FPR prescribing them. Printed forms now available contain references to former prescribing regulations issued by GSA. Reprintings of these forms will contain the new reference; however, present forms may continue to be used until exhausted or their use is otherwise terminated. (f) The remainder of the changes are minor or editorial in nature. 3. Effective Dates. 1-16. (a) The revisions to sections 1-1. 307, 1-1.606, 1-16. 100, 1-16. 400, 404-1, 1-16.800 and 1-16. 801 and the new Subpart 1-16. 9 are effective immediately. (b) The revision to section 1-12. 604 is effective September 15, 1959. (c) New Subpart 1-16. 2 is effective December 1, 1959, but may be complied with as soon as the form prescribed therein is available. (d) The effective date of Subpart 1-16. 4 is extended, with respect to new and revised forms prescribed therein, to October 1, 1959. The new and revised forms and related procedures may be put into use as soon as the forms are available. 4. Rescission of Certain GSA Regulations. (a) The following GSA regulations were rescinded March 17, 1959 (24 F. R. 1934): General Regulation 5, December 19, 1950, insofar as it applied to "procurement" as defined in FPR 1-1. 209. General Regulation 12, December 29, 1952, insofar as it applied to "procurement" as defined in FPR 1-1. 209. General Regulation 15, June 17, 1954, and Supplement No. 1, General Regulation 21, GSA Reg. 1-П-209.02. GSA Reg. 1-I-209.03b. GSA Reg. 1-I-214.00. August 19, 1954. January 30, 1959. (b) The following GSA regulations were rescinded June 1, 1959 (24 F. R. 1934): General Regulation 13, March 19, 1953, and Supplements No. 1, June 19, 1953, and No. 2, July 31, 1957. General Regulation 13, Revised, January 29, 1959. General Regulation 22, February 2, 1959. General Regulation 23, March 6, 1959. General Regulation 24, March 6, 1959. GSA Reg. 1-II-201.04. GSA Reg. 1-I-210.02. (c) The following GSA regulations are rescinded effective September 15, 1959 (24 F. R. 1934): GSA Reg. 1-II-211.00 GSA Reg. 1-I-217.00. Enarkein Fleets FRANKLIN FLOETE Administrator of General Services -2- DEPOSITED BY THE UNITED STATES OF AMERICA Remove Pages 111-112 127 Filing Instructions and Notes Insert Pages 111-112 1209 Contents of Part 1-16 1601-1603 1607-1609 127 1209 Contents of Part 1-16 1601-1603 1613 1607-1610 1613 1615-1669 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of pages indicate where addi- tions or revisions were made in the text. →or< →or →or< - Line on which change begins. Line on which change ends. - Line on which change both begins and ends. (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION 1 – 3. 603 — 2′ GENERAL SERVICES ADMINISTRATION FPR CIRCULAR NO. 3 Washington 25, D. C. July 24, 1959 FEDERAL PROCUREMENT REGULATIONS 1. Material Transmitted. The attached pages contain a new Subpart 1-6.2 and an amendment to section 1-16.404-1. 2. Summary of Additions or Revisions. (a) These regulations are intended to implement the policy of the Buy Ameri- can Act and Executive Order 10582 with respect to construction contracts (except small amount construction contracts executed on Standard Form 19). The regula- tions have been concurred in by the Director, Bureau of the Budget and the Special Assistant to the President serving as Chairman of his Council on Foreign Economic Policy. (b) Although not expressly named, the regulation applies to Hawaii because it is, as stated in the definition of United States, a "place subject to its jurisdiction. Upon its admission, Hawaii will of course be among "the States," as provided in this definition. (c) Nondomestic material offered by a bidder in addition to such material isted in the solicitation must qualify as to reasonableness of price when compared to available domestic material. For evaluation purposes, a differential will be added to the cost of offered additional nondomestic material. Bid solicitation terms provide that alternate domestic material may be offered to avoid bid rejection should the offered nondomestic material fail to qualify as to cost or for other reasons. (d) Bidders are apprised of circumstances under which nondomestic material may be offered. No mention is made of the "public interest" exception of the Act nor of the "national interest" or "national-security interests" exceptions of the Executive order. The freedom of agency heads to employ these exceptions is pre- served by the deviation provision of the regulation (section 1-6.203-3). Such freedom is likewise preserved by this provision with respect to selection of appropriate differentials. (e) Standard clauses are prescribed for inclusion in solicitations and con- tracts. This standard contract clause replaces the Buy American clause now in Standard Form 23A, General Provisions of the Construction Contract. 3. Effective Date. These regulations are effective November 15, 1959, but may be observed earlier. 4. Rescission of GSA Regulation. GSA Reg. 1-II-209.03(a) (Examination of Con- tractor's Records) is rescinded effective September 15, 1959. The material pre- viously was revised and codified in FPR 1-7.101-10. thankein levers FRANKLIN FLOETE Administrator of General Services UNIVERSITY OF MICHIGAN LIBRARIES Filing Instructions and Notes Remove Pages 1609-1610 Insert Pages Contents of Part 1-6 601-603 1609-1610 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of unchanged mate- rial on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. →or< >or← >or< - Line on which change begins. Line on which change ends. Line on which change both begins and ends. (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION TIC 3. 603 - 2 ་ US GENERAL SERVICES ADMINISTRATION Bureau of Government Washington 25, D. C. JK 1673 •A34 FEDERAL PROCUREMENT FPR CIRCULAR NO. 4 September 30, 1959 REGULATIONS 1. Material Transmitted. The attached pages contain revised section 1-3.604. 2. Summary of Additions or Revisions. Section 1-3.604 is revised to prescribe policies and procedures for making small purchases through the use of imprest funds. This section, as revised, replaces the procurement features of the Joint Regulation for Small Purchases Utilizing Imprest Funds issued jointly by the General Services Administration, the Depart- ment of the Treasury, and the General Accounting Office, which has been recently rescinded (24 F.R. 6861). Separate regulations have been issued by the Department of the Treasury and the General Accounting Office covering their respective areas of responsibility previously covered in the Joint Regulation. 3. Effective Date. Revised section 1-3.604, previously published in the Federal Register of August 22, 1959 (24 F.R. 6843), became effective September 1, 1959. Inaudin fars FRANKLIN FLOETE Administrator of General Services UNIV ME LIBRA Remove Pages Contents of Part 1-3 321-326 Filing Instructions and Notes Insert Pages Contents Contents of Part 1-3 321-326; 326.1-326.3 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of unchanged mate- rial on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. →or< →or →or< - Line on which change begins. Line on which change ends. - Line on which change both begins and ends. (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION ΤΟΝ - 3. 603- ટ GENERAL SERVICES ADMINISTRATION FPR CIRCULAR NO. 5 IN Washington 25, D. C. January 20, 1960 FEDERAL PROCUREMENT REGULATIONS 1. Material Transmitted. The attached pages contain a revised Table of Parts, revisions to sections 1-6. 201, 1-6. 202, and 1-16. 201-5, and new Subpart 1-7.6. 2. Summary of Additions or Revisions. (a) Sections 1-6. 201 and 1-6. 202 are amended to clarify the application of the Buy American Act to Panamanian material used in the Canal Zone. (b) Section 1-16. 201-5 is amended to omit the statement that Standard Form 18 is available in cut sheets and die-impressed stencils. (c) New Subpart 1-7.6 prescribes a clause entitled "Price Adjustment for Suspension, Delay, or Interruption of the Work" for use in fixed-price construction contracts. While agencies are free to decide whether a clause on this subject is to be included in a contract, this clause, and no other, must be used whenever an agency desires to provide for suspension of the work for the convenience of the Government, or to provide for administrative relief for unreasonable periods of Government delay, or both. The regulation, however, does not preclude, in lieu of the prescribed general clause, use of a contract clause providing for suspension of the work for limited, specific purposes. Prescription of the clause on this optional-use basis will provide agencies an opportunity to gain experience which will be helpful in future consideration of the clause for inclusion, on a mandatory basis, in Standard Form 23A, General Pro- visions (Construction Contracts). 3. Explanation of the Price Adjustment for Suspension, Delay, or Interruption of the Work Clause. Paragraph (a) vests in the contracting officer a privilege to suspend the work for the convenience of the Government. This provides a basis for suspending the work in addition to those in other contract clauses, such as the Changes clause of Standard Form 23A. Paragraph (b) provides for price adjustment for increased costs occasioned the contractor by certain Government-caused delay, whether flowing from a suspen- sion of work order or other circumstances. Any increase in the cost of perform- ance properly and directly related to the delay caused by the Government is allowable. However, adjustment is authorized under this clause only if the delay is: (a) For an unreasonable period of time; (b) Without the fault or negligence of the contractor; and (c) The result solely of an act, or failure to act, of the contracting officer in the administration of the contract, including an act or failure to act incident to changes or changed conditions. Where all of the foregoing are met, a price adjustment will be made if both of the following conditions are also met: (a) Notice has been given by the contractor to the contracting officer, ex- cept where a suspension order was issued, of the act or failure to act involved. No provision is contained in the clause whereby the contracting officer may waive a failure to comply with this notice requirement. However, this will not preclude adjustment where a notice of delay has been given by the contractor under another clause of the contract. (b) A claim is duly filed. The amount of the claim may include only costs attributable to the period of delay which is found to be unreasonable. The clause concerns price rather than time adjustment for delay and does not preclude adjustment of the time of performance under other appropriate clauses of the contract, such as Clause 5 (Termination for Default-Damages for Delay-Time Extensions). 4. Effective Dates. (a) The revisions of sections 1-6. 201, 1-6. 202, and 1-16. 201-5 are effec- tive immediately. (b) The new Subpart 1-7. 6 is effective July 1, 1960. tranden fouter FRANKLIN FLOETE Administrator of General Services -2- ROSITED BY THE UNITED STATES OF AMERICA Table of Parts Filing Instructions and Notes Remove Pages Insert Pages Table of Parts Contents of Part 1-6 601-603 Contents of Part 1-7 705 1603 Contents of Part 1-6 601-603 Contents of Part 1-7 705-709 1603 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of unchanged mate- rial on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. or →or< →or< - Line on which change begins. Line on which change ends. - Line on which change both begins and ends. (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION TION 3. 603- GENERAL SERVICES ADMINISTRATION FPR CIRCULAR NO. 6 丁 ​Washington 25, D. C. February 15, 1960 THE UNIVERSITY OF MICHIGAN FEDERAL PROCUREMENT REGULATIONS † 1:60 1. BunLUT GOV'T LIBRARY Material Transmitted. Attached are the following portions of FPR mate- rial: New Subpart 1-1. 11; new Part 1-2 (including Subparts 1-2. 1, 1-2. 2, 1-2.3, and 1-2. 4); and new sections 1-16. 802 and 1-16. 901-129. 2. Summary of Additions or Revisions. (a) New Subpart 1-1. 11 includes in the FPR instructions concerning use of qualified products lists formerly contained in Regulations of the GSA, Title 1 (GSA Reg. 1-II-201.03). Minor clarifying changes were made in the statement to be in- cluded in the invitation for bids and the word "Federal" was deleted from the pro- vision, thereby expanding it to cover any referenced qualified products list. (b) New Part 1-2 prescribes policies and regulations for procurement by means of formal advertising. (c) New sections 1-16. 802 and 1-16.901-129 prescribes in the FPR material concerning Standard Form 129, Bidder's Mailing List Application, formerly con- tained in Regulations of the GSA, Title 1 (GSA Reg. 1-I-206.00). ཉ་ Rescissions of GSA Regulations. General Regulation 20, November 25, 1958 GSA Reg. 1-II-201.03 GSA Reg. 1-II-206.00 FPR 1-2.302 4. Effective Dates. These regulations are effective July 1, 1960, but may be observed earlier. ееее зе FRANKLIN FLOETE Administrator of General Services FILING INSTRUCTIONS AND NOTES Remove Pages Contents of Part 1-1 135-136 Contents of Part 1-2 201-202 Contents of Part 1-16 1613 1669 Insert Pages Contents of Part 1-1 135-139 Contents of Part 1-2 201-222 Contents of Part 1-16 1613 1669-1672 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of unchanged mate- rial on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. >or< >or← →or< - Line on which change begins. Line on which change ends. Line on which change both begins and ends. (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION - 3. 603 2 GENERAL SERVICES ADMINISTRATION FPR CIRCULAR NO. 7 April 20, 1960 Washington 25, D. C. J 6 THE UNIVERSITY OF MICHIGAN FEDERAL PROCUREMENT REGULATIONS 5 1260 BUR. OF GOV'T, LIBRARY 1. Material Transmitted. The attached pages contain new section 1-1. 316. 2. Summary of Additions or Revisions. New section 1-1.316 prescribes. policy and procedure regarding requirements as to time for delivery or perform- ance in contracting for personal property or non-personal services. 3. Effective Date. New section 1-1.316 is effective August 15, 1960, but may be observed earlier. Fraukeie lee live еее FRANKLIN FLOETE ее Administrator of General Services FILING INSTRUCTIONS AND NOTES Remove Pages Contents of Part 1-1 117 Insert Pages Contents of Part 1-1 117-118.1 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of unchanged mate- rial on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. >or← →or← >or< - - Line on which change begins. Line on which change ends. Line on which change both begins and ends. (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION 3. 603 2 GENERAL SERVICES ADMINISTRATION FPR CIRCULAR NO. 8 Washington 25, D. C. FEDERAL PROCUREMENT April 25, 1960 THE UNIVERSITY, OF MICHIGAN REGULATIONS. 1960 BUR. OF GOV'T, LIBRARY, 1. Material Transmitted. The attached pages contain new section 1-2. 407-6. 2. Summary of Additions or Revisions. New section 1-2.407-6 prescribes revised rules for making contract awards when equal bids are received. 3. Effective Date. New section 1-2.407-6 is effective August 1, 1960, but may be observed earlier. 4. Rescission of GSA Regulations. GSA General Regulation No. 18, dated January 27, 1958, and GSA Reg. 1-II-210.03 are rescinded as of August 1, 1960. trouckee theate FRANKLIN FLOETE ده Administrator of General Services PURCHASED THROUGH DOC. EX. PROJECT FILING INSTRUCTIONS AND NOTES Remove Pages 125-126 Contents of Part 1-2 221-222 Contents of Part 1-7 Insert Pages 125-126 Contents of Part 1-2 221-223 Contents of Part 1-7 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of unchanged mate- rial on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. →or< →or← →or← Line on which change begins. Line on which change ends. - Line on which change both begins and ends. (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION 3. 603 — 2° THE UNIVERSITY GENERAL SERVICES ADMINISTRATION Washington 25, D. C. OF MICHIGAN JUL 2 1 1960 BUR. OF GOV'T LIBRARY FPR CIRCULAR NO. 9 June 3, 1960 FEDERAL PROCUREMENT REGULATIONS 1. Material Transmitted. Attached are the following portions of FPR mate- rial: New Subpart 1-1.10; new section 1-2.409; and revised sections 1-2.203-4 and 1-3.103. 2. Summary of Additions or Revisions. New Subpart 1-1.10 prescribes policies and procedures for publicizing procurement actions in the "Synopsis of U. S. Gov- ernment Proposed Procurement, Sales, and Contract Awards." The other changes are minor, editorial or technical in nature. 3. Effective Date. These regulations are effective September 1, 1960, but may be observed earlier. Kranken bever FRANKLIN FLOETE Administrator of General Services FILING INSTRUCTIONS AND NOTES Remove Pages Contents of Part 1-1 (vii-viii) 137 Contents of Part 1-2 (i) 205-206 223 301-302 Insert Pages Contents of Part 1-1 (vii-viii) 137-138.2 Contents of Part 1-2 (i) 205-206 223 301-302 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of unchanged mate- rial on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. >or< →or← →or← - Line on which change begins. Line on which change ends. - Line on which change both begins and ends. (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION 3. 603 – 2° THE UNIV GENERAL SERVICES ADMINISTRATION Washington 25, D. C. OF MICHIGAN SEP 14 1960 FPR CIRCULAR NO. 10 BUR. OF GOV'T, URRARY July 15, 1960 FEDERAL PROCUREMENT REGULATIONS 1. Material Transmitted. The attached pages contain new Part 1-15 (includ- ing Subparts 1-15.1, 1-15. 2, 1-15. 3, 1-15. 4 and 1-15. 6) and a revised Table of Parts. 2. Summary of Additions or Revisions. (a) New Part 1-15 prescribes general cost principles and procedures for the determination and allowance of costs in connection with the negotiation and ad- ministration of cost reinbursement type contracts, and contains guidelines for use, where appropriate, in the evaluation of costs in connection with certain negotiated fixed-price type contracts and contracts terminated for the convenience of the Government. (b) Subpart 1-15. 1 describes the applicability of Subparts 1-15. 2, 1-15. 3, 1-15. 4, and 1-15.6 to the various types of contracts and aspects of contract administration in connection with which cost principles and procedures are used. The use of these principles and procedures is permissive, except as regards Subpart 1-15.3 which prescribes the cost principles for cost-reimbursement type contracts for experimental, developmental, or research work with educational institutions. These latter principles are the same as those provided for Govern- ment-wide use by Circular A-21, September 10, 1958, issued by the Bureau of the Budget. Accordingly, the use of Subpart 1-15. 3 on a uniform Government-wide basis is required by section 1-15. 103. 3. Effective Date. These regulations are effective August 15, 1960, but may be observed earlier. Encueke Enonkline Fleets чи шкене FRANKLIN FLOETE Administrator of General Services FILING INSTRUCTIONS AND NOTES Remove Pages Table of Parts (v) Insert Pages Table of Parts (v) Contents of Parts 1-15 (i-ii) 1501-1544 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of unchanged mate- rial on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. or or or - Line on which change begins. Line on which change ends. Line on which change both begins and ends. (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION - 3. 6032- -2- THE UNIVERSITY GENERAL SERVICES ADMINISTRATION Washington 25, D. C. JK FEDERAL OF MICHIGAN OCT 18 1960 BUR. OF GOV'T. LIBRARY PROCUREMENT FPR CIRCULAR NO. 11 August 30, 1960 REGULATIONS 1. Material Transmitted. Attached are the following portions of FPR material: New Subpart 1-10. 1; new sections 1-2. 202-4, 1-2. 202-5, and 1-2. 404-4, and 1-2. 407-8; and revised sections 1-2. 201(a)(12), 1-2. 202-1(b)(11), 1-2.402(c), 1-2.404-2(f), and 1-16. 401(e). 2. Summary of Additions or Revisions. (a) New Subpart 1-10. 1 contains material relating to the requirement of bid guarantees in connection with construction contracts. Minimum and maximum limits upon the amounts that may be required are established, a new provision is prescribed for use in invitations for bids, and a limited degree of discretion is provided with respect to acceptance or rejection of bids which do not comply with the bid guarantee requirements of invitations for bids. This material has the ap- proval of the Comptroller General of the United States. (b) New section 1-2. 202-4 prescribes policy and procedure with respect to requirements for bidders to furnish bid samples in connection with the procure- ment of supply items by formal advertising. (c) New section 1-2. 202-5 prescribes policy and procedure concerning the use informally advertised procurements of requirements for bidders to furnish descriptive literature with their bids. (d) New section 1-2. 404-4 prescribes the rules which govern when bidders impose a restriction on the public disclosure of descriptive literature sub- mitted with their bids. (e) New section 1-2. 407-8 prescribes policy and procedures for handling protests against awards. (f) Sections 1-2. 201(a)(12) and 1-2. 404-2(f) are amended to conform to the new Subpart 1-10.1. (g) Section 1-2. 202-1(b)(11) is revised to include a cross-reference to new sections 1-2. 202-4 and 1-2. 202-5. Section 1-2. 402(c) is revised to include a cross-reference to new section 1-2. 404-4. (h) Revised section 1-16. 401(e) requires using agencies to amend the Instructions to Bidders (Construction Contract), Standard Form 22, to include revised provision as required by new Subpart 1-10. 1 and elsewhere in FPR. 3. Effective Date. These regulations are effective December 1, 1960, but may be observed earlier. < FRANKLIN FLOETE Administrator of General Services Remove Pages FILING INSTRUCTIONS AND NOTES Table of Parts (v) Contents of Part 1-2 (i) 203-206 215-218 223 1607-1608 Insert Pages Table of Parts (v) Contents of Part 1-2 (i) 203-206; 206.1-206.3 215-218 223-224 Contents of Part 1-10 (i) 1001-1002 1607-1608 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of unchanged mate- rial on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. or or or - - Line on which change begins. Line on which change ends. Line on which change both begins and ends. (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION 13. 603 — 2- OF MICHIGAN - BUREAU OF GOVERNMENT J 1673 X GENERAL SERVICES ADMINISTRATION Washington 25, D. C. NOV 9 1960 BUR. OF GOV'T, LIBRARY FPR CIRCULAR NO. 12 September 28, 1960 FEDERAL PROCUREMENT REGULATIONS 1. Material Transmitted. Attached are revised sections 1-2.406-3 and 1-2.406-4 of the FPR. 2. Summary of Additions or Revisions. The word "acceptable" is added in section 1-2.406-3(a)(2) to make it clear that the reference is to lower acceptable bids. Section 1-2.406-4, as revised, permits heads of executive agencies to make administrative determinations in certain mistake in bid cases where the mistake is alleged or disclosed after award. 3. Comptroller General Approval. Revised section 1-2.406-4 has been ap- proved by the Comptroller General of the United States. 4. Effective Date. These revised sections are effective immediately. Smukline Fluores ёшь FRANKLIN FLOETE Administrator of General Services FILING INSTRUCTIONS AND NOTES Remove Pages 217-220 Insert Pages 217-220; 220.1-220.2 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of unchanged mate- rial on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. or 30 or or - - Line on which change begins. Line on which change ends. Line on which change both begins and ends. (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION 3. 603 2- THE UNIVERSITY GENERAL SERVICES ADMINISTRATION Washington 25, D. C. FEDERAL PROCUREMENT OF MICHIGAN FPR CIRCULAR NO. JAN 18 1961 November 17, 1960 LIBRARY BUR. OF GOV'T. REGULATIONS : 1. Material Transmitted. The attached pages contain new Subpart 1-4. 6 and new section 1-7. 101-24. 2. Summary of Additions or Revisions. New Subpart 1-4. 6 and new section 1-7. 101-24 prescribe policies, procedures, and clauses for the procurement of livestock products in accordance with the provisions of the Humane Slaughter Act of 1958 (7 U.S. C. 1901-1906). 3. Effective Date. These regulations are effective February 1, 1961 but may be observed earlier. 4. Rescission of FPR Notice. FPR Notice No. 1, dated May 11, 1960 (on the same subject), is rescinded. } впаикёне ваше FRANKLIN FLOETE Administrator of General Services FILING INSTRUCTIONS AND NOTES Remove Pages Table of Parts (v) Contents of Part 1-7(i) 705 Insert Pages Table of Parts (v) Contents of Part 1-4(i) 401, 425-426 Contents of Part. 1-7(i) 705 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of unchanged mate- rial on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. or or or - Line on which change begins. - Line on which change ends. Line on which change both begins and ends. (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION 3. 6032- SUBSECTION GENERAL SERVICES ADMINISTRATION Washington 25, D. C. FPR CIRCULAR NO. 14 December 27, 1960 FEDERAL PROCUREMENT REGULATIONS 1. Material Transmitted. The attached pages contain new Subpart 1-5.9. 2. Summary of Additions or Revisions. New Subpart 1-5.9 prescribes policies and procedures for the use of Federal Supply Schedule contracts and General Serv- ices Administration stores stock by prime contractors in the performance of cost- reimbursement type contracts. 3. Effective Date. These regulations are effective April 1, 1961, but may be observed earlier. Crankine & leves FRANKLIN FLOETE ете Administrator of General Services THE UNIVERSITY OF MICHIGAN FEB 16 1961 BUR. OF GOV'T. LIBRARY FILING INSTRUCTIONS AND NOTES Remove Pages Table of Parts (v) Insert Pages Table of Parts (v) Contents of Part 1-5 (i) 501, 551-552 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of unchanged mate- rial on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. or or - or - Line on which change begins. Line on which change ends. Line on which change both begins and ends. (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION - 3. 6032- SUBSECTION : Ji 1609 GENERAL SERVICES ADMINISTRATION Washington 25, D. C. THE UN Of Mini MAY 23 1961FPR CIRCULAR NO. 15 BUR. OF GOV'T- LIBRARY April 12, 1961 FEDERAL PROCUREMENT REGULATIONS 1. Material Transmitted. The attached pages contain revisions to sections 1-1.503, 1-2.201, 1-7.101, 1-7.602 and 1-10.102; Subparts 1-16.1, 1-16.4, and 1-16.9. 2. Summary of Additions or Revisions. (a) The language of the Covenant against Contingent Fees in section 1-1.503 is revised to provide for recovery of fees, paid in violation of the covenant, by means other than by a deduction from the contract price. (b) Section 1-2.201(a)(23) is revised to delete the requirement for amend- ment of Standard Form 22, which amendment is unnecessary in view of publication of the new edition of the form. The revised section also makes a slight change in the language of the late bid provision specified for inclusion in Standard Forms 30 and 33. (c) Section 1-7. 101-18, Nondiscrimination in Employment, is revised to conform to section 301 of Executive Order No. 10925, dated March 6, 1961 (26 F.R. 1977). (d) The "suspension of work" clause prescribed in section 1-7.602-1 is amended to substitute the term "final payment" for "final settlement." A like change in this terminology has been made throughout the new edition of Standard Form 23A (see below). (e) The Bid Guarantee provision in section 1-10.102-4(a)(2) is revised expressly to provide that the guarantee shall be in the form of a firm commitment. Illustrative kinds of firm commitments are listed. (f) Section 1-16. 101(d) is amended to require substitution of the new Non- discrimination clause in §1-7. 101-18 for the present clause 18 of Standard Form 32. (g) Section 1-16.401 is revised to require substitution of the new Nondis- crimination clause in §1-7. 101-18 for clause 9 of Standard Form 19 and to prescribe new editions of the standard construction contract forms. These are: the January 1961 editions of Standard Forms 20, 21, 22, and 23 and the April 1961 edition of Standard Form 23A. (The January 1961 edition of Standard Form 23A, published in 26 F.R. 1050, but not distributed in loose-leaf form, is superseded by this April 1961 edition.) Section 1-16.402-3 is revised to provide for use of Standard Form 19A in contracts estimated to exceed $10,000 (see paragraph 3 (e)(1) below). Sec- tion 1-16.404-1 is deleted. (h) Sections 1-16.901-20 through 1-16.901-23A are revised to present specimens of the new editions of the standard construction contract forms. These new editions include changes (1) designed to reduce the need for supplementation by using agencies, (2) recommended on the basis of the operating experience of such agencies, or (3) made necessary by regulatory changes since the former editions were prescribed. The principal changes are set forth in the following paragraphs. 3. Explanation of Changes in Standard Forms. (a) Standard Form 20, Invitation for Bids (Construction Contract). Few changes have been made in this form. One of the changes is the omission of the note at the bottom of the March 1953 edition to facilitate continuance of the invitation, where necessary, on the reverse of the form or on succeeding pages. (b) Standard Form 21, Bid Form (Construction Contract). References have been included to Standard Form 19A, Labor Standards Provisions Applicable to Contracts in Excess of $2, 000, and Standard Form 23A, General Provisions (Construction Contract), to emphasize that the bid is subject to the provisions contained therein. In addition, the bidder's representations on the reverse of the form have been revised to conform to current regulations. (c) Standard Form 22, Instructions to Bidders (Construction Contract). (1) The statement immediately below the title on the March 1953 edi- tion, which reads "These instructions are not to be incorporated in the contract, has been omitted. The quoted sentence improperly suggested that the instructions were not effective after the bidding period. (2) Instruction No. 2, Conditions Affecting the Work, has been en- larged to state that bidders should visit the site and, in addition, take such other steps as may be reasonably necessary to ascertain conditions which may affect performance of the contract. (3) Instruction No. 4, Bid Guarantee, has been revised to substitute the provision prescribed in the revised section 1-10.102-4 (a) (2) of the Federal Procurement Regulations, as transmitted by this Circular. (4) Instruction No. 5, Preparation of Bids, as changed, provides in paragraph (b) that where the bid form explicitly requires the bidder to bid on all items, failure to do so will disqualify the bid. (5) Instruction No. 7, Late Bids and Modifications or Withdrawals, has been revised to substitute the provision prescribed in the revised section 1-2.201(a)(23) of the Federal Procurement Regulations, as transmitted by this Circular. -2- DEPOSITED BY THE UNITED STATES OF AMERICA (6) Instruction No. 10 of the March 1953 edition, Bidders Interested in More Than One Bid, which prohibited submission of more than one bid by the same firm, has been omitted. There are a number of situations under which a firm properly may submit more than one bid (see 39 Comp. Gen. 892). (d) Standard Form 23, Construction Contract. This form has been revised to state more clearly that the Government as well as the contractor agrees to perform the contract. In addition, as in the Bid Form (SF 21), references have been included to SF 19A and SF 23A. (e) Standard Form 23A, General Provisions (Construction Contract). (1) Clauses 20 through 26 of the 1953 edition, the labor standards provisions, have been omitted from this form. It is intended that Standard Form 19A be used for this purpose in conjunction with SF 23A. SF 19A contains all the governing labor standards provisions applicable to construction contracts which would involve use of SF 23A (as well as certain small amount contracts involving use of SF 19). It is believed that this use of SF 19A will simplify the execution and administration of construction contracts. (2) Clause 1, Definitions. For the term "head of the department" there have been substituted "head of the agency" and "Secretary," which have been defined. This will permit use by Government agencies of whichever term an agency deems most suitable in its operations. (3) Clause 3, Changes. Reference to the "cost of performance" has been substituted for the reference to "the amount due under this contract" in the second sentence. This change conforms the language of Clauses 3 and 4. In both instances, an equitable adjustment in the contract price is to be made if the cost of performance is increased or decreased. It is to be observed that the change in cost is the occurrence that necessitates an equitable adjustment and is not to be con- strued to exclude profit from the adjustment. In addition, the term "final payment" has been substituted for "final settlement" in this, as in other clauses, including Clause 4. It is considered that the date of final payment is a readily understandable term and a date that can be precisely established. (4) Clause 5, Termination for Default-Damages for Delay-Time Ex- tensions. This clause has been redrafted for easier understanding. Paragraph (d) provides that delays of a subcontractor or supplier, to be excusable, must be un- foreseeable, beyond the control and without the fault or negligence of both the con- tractor and the subcontractor or supplier. Paragraphs (e) and (f) have been added to the clause. Paragraph (e) is ineffective unless a Termination for Convenience of the Government clause is included elsewhere in the contract. Steps are being taken to develop a standard clause of this kind. Pending promulgation, however, agencies may use their own. (5) Clause 6, Disputes. The Disputes clause has been revised, pri- marily, to conform to the requirements of the Wunderlich Law (41U.S.C. 321-322). (This clause differs from that in the superseded January 1961 edition in that it incorporates certain technical changes.) -3- (6) Clause 7, Payments to Contractors. This clause has been en- larged to provide for (1) submission by the contractor of a breakdown of the contract price for purposes of determining progress payments, (2) payment for certain material delivered at locations other than the site, and (3) payment, when the work is substantially completed, of amounts retained in excess of the Government's needs. (7) Clause 8, Assignment of Claims. This clause, based on the Assignment of Claims Act of 1940, as amended, has been added to the form. It should be noted that the clause includes a "no set-off" provision, which may be nullified, however, by action of the agency. (8) Clause 9, Material and Workmanship. This clause has been re- vised principally for greater clarity. "Material" and "workmanship" are treated in separate paragraphs; also, information to be supplied concerning machinery and equipment is more explicitly set out. Work is to be performed "in a skillful and workmanlike manner, a term which is believed more meaningful than the term "first class" used in the former edition of this clause. (9) Clause 10, Inspection and Acceptance. This clause has been re- arranged for easier reading. An attempt has been made to clarify the extent to which off-site inspection by the Government will be final and conclusive upon the Government. Paragraph (b) establishes a basis for acceptance of material or work- manship which does not conform to contract requirements, with an appropriate ad- justment in contract price, when such acceptance is in the public interest. Para- graph (e) provides for an equitable adjustment in the contract price instead of pay- ment of the contractor's costs plus 15 percent. This change has been made to eli- minate a possible violation of the cost-plus-a-percentage-of-cost system of con- tracting. Paragraph (f) provides for acceptance promptly after completion and inspection of the work and sets forth the extent to which such acceptance is con- clusive upon the Government. (10) Clause 12, Permits and Responsibilities. This clause includes a requirement for complying with Federal, State and municipal laws, codes and regulations applicable to the work. It introduces a requirement that the contractor take proper safety and health precautions. (11) Clause 13, Provisions Affecting the Work. This clause is not in the current edition. It is the contractual counterpart of Instruction No. 2 of SF 22, Instructions to Bidders (Construction Contract). (12) Clause 19, Buy American. This clause is the same as that pre- scribed in FPR 1-6.205. (13) Clause 21, Nondiscrimination in Employment. This clause is the same as that prescribed in FPR 1-7. 101-18. 4. Effective Date. The material transmitted herewith is effective July 1, 1961, but may be observed earlier. в. John H. More JOHN L. MOORE Administrator of General Services -4- FILING INSTRUCTIONS AND NOTES Remove Pages 121-122 203-204 705 709 1001-1002 Contents of Part 1-16 (i) 1601-1602 1607-1610 1623-1634 Insert Pages 121-122.1 203-204 705-706 709 1001-1002 Contents of Part 1-16 (i) 1601-1602 1607-1609 1623-1634 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of unchanged mate- rial on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. or or or Line on which change begins. Line on which change ends. - Line on which change both begins and ends. (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates tne subsection. For example: CHAPTER PART SUBPART SECTION 13. 603 2 603-2 SUBSECTION THE UNIVERSITY + સ TH J 1673 OF MICHIGAN AUG 16 1961 GENERAL SERVICES ADMINISTRATION Washington 25, D. C. BUR. OF GOV'T LIBRARY FPR CIRCULAR NO. 16 June 28, 1961 FEDERAL PROCUREMENT REGULATIONS 1. Material Transmitted. The attached pages contain new sections 1-16. 803, 1-16.804, 1-16.901-37, and 1-16.901-251. 2. Summary of Additions or Revisions. (a) New section 1-16. 803 prescribes the new U. S. Government Architect- Engineer Questionnaire, Standard Form 251, for use by Government agencies in obtaining information as to the professional qualifications of architectural and/or engineering firms. (b) New section 1-16. 901-251 includes an illustration of the U. S. Govern- ment Architect-Engineer Questionnaire (June 1961). (c) New section 1-16. 804 prescribes reporting requirements and a form for use by civilian executive agencies in reporting procurements. This is a revi- sion of, and transfer to, the FPR of similar reporting instructions previously con- tained in GSA Regulations 1-II-212. 02. In addition to other changes designed to make the report more mean- ingful, the reporting requirements and forms have been simplified to reduce the administrative burden. Small procurements of $100 or less in amount, and data on the number of transactions, need no longer be reported. (d) New section 1-16.901-37 includes an illustration of revised SF 37, Report on Procurement by Civilian Executive Agencies (June 1961 edition). 3. Rescission of GSA Regulations. GSA Reg. 1-II-212.00 and Exhibits 28 and 28a, Appendix A, are hereby rescinded. 4. Effective Dates. (a) New sections 1-16.803 and 1-16. 901-251 are effective December 1, 1961, but may be observed as soon as the form prescribed therein is available. (b) The initial report under new sections 1-16.804 and 1-16. 901-37 shall cover the period July 1 through December 31, 1961. BERNARD L. BOUTIN Acting Administrator of General Services Remove Pages FILING INSTRUCTIONS AND NOTES Insert Pages Contents of Part 1-16(i) 1613 1671-1672 Contents of Part 1-16(i)(ii) 1613-1614 1671-1683 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed, deleted, or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of un- changed material on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. LJ جا or or or or Line on which change begins. Line on which change ends. Line on which change both begins and ends. Opposite a blank space, indicates deletion of a division of material (section, sub- section, or paragraph). (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION ON 13. 603 — 2- 1678 THE UNIVERSITY OF MICHIGAN ل Aジ ​А GENERAL SERVICES ADMINISTRATION Washington 25, D. C. AUG 17 1961 BUR. OF GOV'T LIBRARY FPR CIRCULAR NO. 16 June 28, 1961 FEDERAL PROCUREMENT REGULATIONS 1. Material Transmitted. The attached pages contain new sections 1-16.803, 1-16.804, 1-16.901-37, and 1-16. 901-251. 2. Summary of Additions or Revisions. (a) New section 1-16. 803 prescribes the new U. S. Government Architect- Engineer Questionnaire, Standard Form 251, for use by Government agencies in obtaining information as to the professional qualifications of architectural and/or engineering firms. (b) New section 1-16. 901-251 includes an illustration of the U. S. Govern- ment Architect-Engineer Questionnaire (June 1961). (c) New section 1-16. 804 prescribes reporting requirements and a form for use by civilian executive agencies in reporting procurements. This is a revi- sion of, and transfer to, the FPR of similar reporting instructions previously con- tained in GSA Regulations 1-II-212.02. In addition to other changes designed to make the report more mean- ingful, the reporting requirements and forms have been simplified to reduce the administrative burden. Small procurements of $100 or less in amount, and data on the number of transactions, need no longer be reported. (d) New section 1-16.901-37 includes an illustration of revised SF 37, Report on Procurement by Civilian Executive Agencies (June 1961 edition). 3. Rescission of GSA Regulations. GSA Reg. 1-II-212. 00 and Exhibits 28 and 28a, Appendix A, are hereby rescinded. 4. Effective Dates. (a) New sections 1-16.803 and 1-16. 901-251 are effective December 1, 1961, but may be observed as soon as the form prescribed therein is available. (b) The initial report under new sections 1-16. 804 and 1-16. 901-37 shall cover the period July 1 through December 31, 1961. BERNARD L. BOUTIN Acting Administrator of General Services PURCHASED THROUGH DOC. EX. PROJECT Remove Pages FILING INSTRUCTIONS AND NOTES Contents of Part 1-16(i) 1613 1671-1672 Insert Pages Contents of Part 1-16(i)(ii) 1613-1614 1671-1683 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed, deleted, or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of un- changed material on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. يا or or or or L Line on which change begins. Line on which change ends. Line on which change both begins and ends. Opposite a blank space, indicates deletion of a division of material (section, sub- section, or paragraph). (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION 1 3. 6032- . THE UNIVERSITY OF MICHIGAN SEP 21 1961 BUR. OF GOV'T LIBRARY GENERAL SERVICES ADMINISTRATION Washington 25, D. C. FPR CIRCULAR NO. 17 July 12, 1961 FEDERAL PROCUREMENT REGULATIONS Material Transmitted. Attached are the following portions of FPR mate- rial: revised sections 1-1. 1003-2 and 1-1. 1003-3. 2. Summary of Additions or Revisions. (a) Revised section 1-1. 1003-2 amends the requirements for publicizing proposed procurement actions in the "Synopsis of U. S. Government Proposed Pro- curement, Sales and Contract Award" by reducing the scope of authorized ex- emptions from the publicizing requirements. As revised, the FPR exemptions are essentially the same as those in S. 836 "a bill to amend the Small Business Act and for other purposes. (b) Revised section 1-1. 1003-3 clarifies the requirements for publicizing research and development projects in the Synopsis. 3. Effective Date. These regulations are effective August 31, 1961, but may be observed earlier. завант L. More JOHN L. MOORE Administrator of General Services For sale by the Superintendent of Documents, U. S. Government Printing Office, Washington 25, D. C. Subscription Price: $2.25; 75 cents additional for foreign mailing. Single copies vary in price PURCHASED THROUGH DOC. EX. PROJECT Remove Pages 137-138 FILING INSTRUCTIONS AND NOTES Insert Pages 137-138 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed, deleted, or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of un- changed material on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. or ◄ L or or or 711 Line on which change begins. Line on which change ends. -Line on which change both begins and ends. Opposite a blank space, indicates deletion of a division of material (section, sub- section, or paragraph). (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION 13. 603 — 2– OF MICHIGAN JK .A34 THE UNIVERSITY SEP 20 1961 BUR. OF GOV'T LIBRARY GENERAL SERVICES ADMINISTRATION Washington 25, D. C. FPR CIRCULAR NO. 18 July 21, 1961 FEDERAL PROCUREMENT REGULATIONS 1. Material Transmitted. Attached are the following portions of FPR mate- rial: new section 1-1. 710; new Subpart 1-1. 8; revised sections 1-2. 206, 1-2. 407-6, 1-3. 201, and 1-7. 101-21; and new sections 1-7. 101-25 and 1-7.101-26. 2. Summary of Additions or Revisions. (a) New section 1-1. 710 prescribes policies and procedures for a small business and labor surplus area subcontracting program. (b) New Subpart 1-1. 8 prescribes uniform procurement policies and pro- cedures for aiding persistent or substantial labor surplus areas. (c) Revised section 1-2. 206 includes a reference to new Subpart 1-1.8. (d) Revised section 1-2. 407-6 prescribes additional priority categories for use in the event of equal low bids. (e) Revised section 1-3. 201 authorizes negotiation of purchases and con- tracts pursuant to 41 U.S. C. 252(c)(1) to aid labor surplus areas pursuant to a determination and finding by the Administrator of General Services that such pur- chases and contracts are necessary in the public interest. (f) Revised section 1-7. 101-21 and new sections 1-7. 101-25 and 1-7. 101- 26 include references to the clauses "Utilization of Concerns in Labor Surplus Areas," "Utilization of Small Business Concerns," and "Small Business and Labor Surplus Area Subcontracting Program. " 3. Effective Date. These regulations are effective September 1, 1961, but may be observed earlier. John L. Moore давит JOHN L. MOORE Administrator of General Services For sale by the Superintendent of Documents, U. S. Government Printing Office, Washington 25, D. C. Subscription Price: $3.25; $1.00 additional for foreign mailing. Single copies vary in price FILING INSTRUCTIONS AND NOTES Remove Pages Contents of Part 1-1(vii)(viii) 133 Contents of Part 1-2(i) 207-208 221-222 303-304 Contents of Part 1-7(i) 705-706 Insert Pages Contents of Part 1-1(vii)(viii)(ix) 133-134; 134. 1-134. 10 Contents of Part 1-2(i) 207-208 221-222 303-304; 304. 1 Contents of Part 1-7(i) 705-706 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide. a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed, deleted, or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of un- changed material on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. L or or F7 Line on which change begins. Line on which change ends. or Line on which change both begins and ends. or Opposite a blank space, indicates deletion of a division of material (section, sub- section, or paragraph). (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates tne subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION 3. 603 2′ J THE UNIVERSITY GENERAL SERVICES ADMINISTRATION Washington 25, D. C. OF MICHIGAN NOV 8 1961 BUR. OF GOV'T. LIBRARY FPR CIRCULAR NO. 19 September 19, 1961 FEDERAL PROCUREMENT REGULATIONS 1. Material Transmitted. The attached pages contain revised sections 1-1.307-4 through 1-1. 307-8, 1-2.406-3 and 1-2. 406-4; and new section 1-3. 104. 2. Summary of Additions or Revisions. (a) Revised sections 1-1. 307-4 through 1-1. 307-8 prescribe revised policies and procedures for the use of brand name or equal purchase descriptions in the procurement of supplies. (b) Sections 1-2. 406-3 and 1-2. 406-4 are amended to clarify the extent of the authority therein provided for administrative handling of mistake in bid cases. (c) New section 1-3. 104 is added to provide authority in negotiated pro- curement for administrative handling of mistakes in proposals alleged after award. 3. Major Changes in Use of Brand Name or Equal Purchase Descriptions. (a) Under the new "Brand Name or Equal" clause in section 1-1. 307-6(a), the furnishing of descriptive material with bids offering "equal" products is no longer mandatory and bids may not be rejected for failure to furnish descriptive material. Contracting officers may determine the acceptability of "equal" products on the basis of any information available, including information not identified in the bids. However, bidders are cautioned that the purchasing activity is not responsible for locating or securing any information not identified in bids and reasonably avail- able to the purchasing activity, and that if such bidders wish to assure that the pur- chasing activity will have the necessary information to determine that the products offered are acceptable, they must furnish or identify such information when sub- mitting their bids. (b) Where the description of an end item being purchased contains a "brand name or equal" purchase description of a component part, or of an accessory related to the end item, and it is determined that application of the brand name or equal clause to such component part or accessory would be impracticable, revised regulation provides that the brand name or equal clause shall not be made applicable to such component part or accessory. the (c) The revised regulations (1-1. 307-6(c)) provide also that bidders who offer brand name products referenced in a "brand name or equal" purchase descrip- tion shall not be required to furnish bid samples of such products. 4. Effective Date. Sections 1-1.307-4 through 1-1. 307-8 are effective December 1, 1961, but may be observed earlier. Sections 1-2. 406-3, 1-2. 406-4, and 1-3. 104 are effective immediately. Говка в. Точе John JOHN L. MOORE Administrator of General Services FILING INSTRUCTIONS AND NOTES Remove Pages 111-114 219-220 Contents of Part 1-3(i) 301-302 Insert Pages 111-114; 114. 1-114. 2 219-220 Contents of Part 1-3(i) 301-302 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed, deleted, or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of un- changed material on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. or L or or or 57 11 Line on which change begins. Line on which change ends. Line on which change both begins and ends. Opposite a blank space, indicates deletion of a division of material (section, sub- section, or paragraph). (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION 13. 603 2 OF MICHIGAN ГК 167. THE UNIVERSITY DEC 5 1961 BUR. OF GOV'T. LIBRARY GENERAL SERVICES ADMINISTRATION Washington 25, D. C. FPR CIRCULAR NO. 20 September 26, 1961 FEDERAL PROCUREMENT REGULATIONS 1. Material Transmitted. The attached pages contain revised sections 1-1.700 through 1-1.709, and 1-1. 801-1. In addition, a reprint of page 207 is pro- vided with a corrected columnar arrangement. 2. Summary of Additions or Revisions. Sections 1-1. 700 through 1-1.709 are reorganized and expanded in order to provide improved small business policies and proçedures. Section 1-1. 801-1 is revised to effect a minor editorial correction. In addition to a number of language revisions in sections 1-1.700 through 1-1. 709 which have been made for clarification purposes, the following changes are significant: (a) To make the general statement of small business policy more mean- ingful, specific small business policies have been added. (b) Additional definitions have been included, largely to reflect SBA size standards and related terms. (c) The procedures for setting aside procurements for small business concerns have been revised to give preference to small business concerns which also qualify as labor surplus area concerns. (d) Unilateral set-asides for small business by the procurement agency have been authorized if no SBA representative is available to enter into joint set-asides. (e) An alternate simplified Notice of Partial Small Business Set-Aside for inclusion in invitations for bids or requests for proposals has been added. (f) Specific provisions for handling "all or none" bids have been included in the long-form Notice of Partial Small Business Set-Aside. (g) Procedures for determining a concern's status as a small business concern have been added. (h) Procedures for processing certificates of competency have been amended to exclude small purchases and to increase the time for processing such certificates from 10 to 15 days. 3. Effective Date. These regulations are effective December 31, 1961, but may be observed earlier. John L. Moore John JOHN L. MOORE Administrator of General Services FILING INSTRUCTIONS AND NOTES Remove Pages Insert Pages Contents of Part 1-1(vii)(viii)(ix) 129-132 134. 1-134. 2 207-208 Contents of Part 1-1(vii)(viii)(ix) 129-132; 132. 1-132. 12 134. 1-134. 2 207-208 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed, deleted, or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of un- changed material on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. L ↑ ↑ or or or or ↓ ↓ Line on which change begins. Line on which change ends. Line on which change both begins and ends. Opposite a blank space, indicates deletion of a division of material (section, sub- section, or paragraph). (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION 1- 3. 603 — 2- THE UNIVERSITY, OF MICHIGAN THE OF MICHIGAN GENERAL SERVICES ADMINISTRATION JAN 2 Washington 25, D. C. BUR. OF GOV'T LIBRARY JAN 2 1962 BUSINESS ADMINISTRATION LODA FPR CIRCULAR NO. 21 October 13, 1961 FEDERAL PROCUREMENT PROCUREMENT REGULATIONS 1. Material Transmitted. The attached pages contain revisions of sections 1-2. 201, 1-7. 101-1, 1-7. 101-8, 1-7. 101-18, 1-16. 101(d), and 1-16. 901-32. 2. Summary of Additions or Revisions. (a) Section 1-2. 201(a)(24) is added to include a provision in invitations for bids to advise bidders of exemptions available under the rules and regulations of the President's Committee on Equal Employment Opportunity. (b) Section 1-7. 101-1 is revised to define in paragraph (a) of the Defini- tions clause, the term "head of the agency" in addition to "Secretary. " (c) Section 1-7. 101-8 is revised (1) to permit agencies affected to either include or exclude the "no setoff" provision and (2) to include specific reference to NASA and FAA. (d) Section 1-7. 101-18 is revised to add language concerning the applica- bility of the Nondiscrimination in Employment clause in contracts. (e) Section 1-16. 101(d) is revised to prescribe the September 1961 edition of Standard Form 32 and to delete the second sentence, which had applicability only during an interim period pending the issuance of a new edition of Standard Form 32. (f) Section 1-16. 901-32 is revised to include an illustration of the Septem- ber 1961 edition of Standard Form 32. 3. Explanation of changes in Standard Form 32, General Provisions (Supply Contract) September 1961 edition. (a) Clause 1, Definitions. The term "head of the agency" has been added and defined. This will enable use by Government agencies of either the term "Sec- retary" or "head of the agency," whichever is deemed more suitable. (b) Clause 8, Assignment of Claims. This clause has been revised to substitute, in the third sentence of paragraph (a), the words "Unless otherwise provided in this contract. . . . "for "Notwithstanding any provision of this con- tract. . . ." This will permit more flexibility in the use of the "no setoff" pro- vision by the agencies named. Also, specific references to NASA and FAA were included. (c) Clause 10, Examination of Records. This clause was revised to change $1,000 to $2,500 in the introductory language and in paragraph (b). This revision makes the clause printed in the form consistent with an earlier similar revision of the clause prescribed in FPR 1-7. 101-10. (d) Clause 18, Nondiscrimination in Employment. This clause has been revised to conform to section 301 of Executive Order No. 10925 and to FPR 1-7. 101-18. A prefix to the clause was added to indicate, generally, the circum- stances under which the clause is applicable. 4. Effective Date. These regulations are effective February 1, 1962, but may be observed earlier. The September 1961 edition of Standard Form 32 may be used as soon as available from General Services Administration stores depots, which should be not later than January 2, 1962. The October 1957 edition of Stand- ard Form 32 will not be issued from GSA stores depots after stocks of the Septem- ber 1961 edition of the form are received. -2- John K. Mone JOHN L. MOORE Administrator of General Services GSA WASH DC 62-47 27 DEPOSITET. GY THE FILING INSTRUCTIONS AND NOTES BNDED STATE- Remove Pages 203-204 701-706 1601-1602 1659-1662 Insert Pages 203-204 701-706; 706.1 1601-1602 1659-1662 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed, deleted, or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of un- changed material on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. حا or← or or or tt L. Line on which change begins. -Line on which change ends. -Line on which change both begins and ends. Opposite a blank space, indicates deletion of a division of material (section, sub- section, or paragraph). (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION 3. 6032- ГК 1613 THE UNIVERSITY OF MICHIGAN JAN 2 1082 BUR. OF GOV'T LIBRARY GENERAL SERVICES ADMINISTRATION Washington 25, D. C. THE CITY OF MICHIGAN JAN 2 1962 LIBRADY BUSINESS ADMINISTRATION PR CIRCULAR NO. 22 November 7, 1961 FEDERAL PROCUREMENT REGULATIONS 1. Material Transmitted. Attached is new Subpart 1-5.3. 2. Summary of Additions or Revisions. New Subpart 1-5.3 contains material regarding the use of excess personal property as the first source of supply. It highlights and incorporates into the Federal Procurement Regulations the policy which is set forth in subsection 301.02, Chapter II, Title 1, Personal Property Management, Regulations of the General Services Administration. The new sub- part also incorporates other material currently contained in subsection 102. 01, Chapter I, Title 1, in Part 3, Chapter III, Title 1, and in section 2, General Serv- ices Administration Circular No. 184, August 11, 1959. None of the material in Title 1, Personal Property Management, Regulations of the General Services Administration, is modified or superseded by the new subpart. Issuance of Sub- part 1-5.3 expands upon the policy statement with respect to excess stocks currently contained in FPR section 1-1. 302-1(a). 3. Effective Date. These regulations are effective immediately. BERNARD L. BOUTIN Acting Administrator of General Services For sale by the Superintendent of Documents, U. S. Government Printing Office, Washington 25, D. C. Subscription Price: $2.25; 75 cents additional for foreign mailing. Single copies vary in price FILING INSTRUCTIONS AND NOTES Remove Pages Contents of Part 1-5 (i) 501 Insert Pages Contents of Part 1-5 (i) 501 511-513 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed, deleted, or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of un- changed material on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. or Lor or or L Line on which change begins. -Line on which change ends. Line on which change both begins and ends. Opposite a blank space, indicates deletion of a division of material (section, sub- section, or paragraph). (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION 13. 603 2 THE UNIVERSITY 150 OF MICHIGAN GENERAL SERVICES ADMINISTRATION MAR 12 1962 FPR CIRCULAR NO. 23 Washington 25, D. C. BUR. OF GOV'T. LIBRARY January 17, 1962 FEDERAL PROCUREMENT PROCUREMENT REGULATIONS 1. Material Transmitted. The attached pages contain revised sections 1-1.710, 1-1. 805, 1-2. 407-6, 1-3. 000, 1-3. 102, 1-7. 101-21, 1-7. 101-25, 1-7. 101- 26; a new Subpart 1-3.9, and a new section 1-7. 101-27. 2. Summary of Background. Public Law 87-305, approved September 26, 1961, amends the Small Business Act in several respects. It includes a require- ment that the Administrator of the Small Business Administration, the Secretary of Defense, and the Administrator of General Services cooperatively develop within 90 days a small business subcontracting program. In addition, it requires that the Secretary of Defense and the Administrator of General Services promulgate regu- lations to implement this program and that such regulations should have the prior concurrence of SBA. Following the enactment of P. L. 87-305, representatives of the three agencies developed a number of principles as the basis for the required small busi- ness subcontracting program. These principles were reviewed with other procure- ment agencies and thereafter formally adopted by the three agencies named in the statute. In order to implement these principles, the attached regulation was devel- oped cooperatively with SBA and DOD and has received the formal concurrence of SBA, as required by P. L. 87-305. 3. Summary of Additions or Revisions. Section 1-1. 710 has been revised and enlarged as follows: (a) The small business subcontracting program procedures and the labor surplus area subcontracting program procedures are set forth separately in sec- tions 1-1.710 and 1-1. 805, respectively. (b) Section 1-1.710-1(a) contains a modified statement of policy which provides, consistent with P. L. 87-305, that it is the Government's policy to enable small business concerns to be considered fairly as subcontractors and suppliers under Government procurement contracts and that prime contractors and subcon- tractors having small business subcontracting programs will consult through the appropriate procuring agency with the Small Business Administration when requested by SBA. (c) Section 1-1. 710-2 has been revised to eliminate the duplication between this section and the contract clause in section 1-1.710-3(b). This section now sets. forth a brief and general description of the small business subcontracting program. (d) Section 1-1.710-3(b) has been modified to provide for the use of the Small Business Subcontracting Program clause in contracts which exceed $500,000 N rather than in contracts which exceed $1,000,000 as previously had been pre- scribed. In addition, the provision that the clause shall not be included in contracts for construction, alteration, or repair of buildings, bridges, roads, or other kinds of real property has been deleted. (e) Section 1-1.710-3(b) has been further modified to make the following changes in the Small Business Subcontracting Program clause: bidders lists. Par. (a)(3) now includes a provision regarding the management of long Par. (a)(4) has been expanded to include a requirement regarding the maintenance of records showing four items of information with respect to the letting of any subcontract exceeding $10, 000. Par. (a)(5) now requires the contractor to notify the contracting officer before soliciting bids or quotations on any subcontract (including purchase orders) in excess of $10,000 if no small business concern is to be solicited and the con- tracting officer's consent to the subcontract is required. Par. (a)(7) now provides for cooperation with the contracting officer in any studies and surveys of the contractor's subcontracting procedures and practices. Par. (b) now provides that the same definition of a small business con- cern will be employed with respect to subcontracts as is set forth in section 1-1. 701 of the FPR for prime contracts. Par. (c) The definition of a labor surplus area concern has been deleted and this paragraph now provides for termination of the contract in the event of failure to comply with the small business subcontracting program requirement. Par. (d) has been modified to provide for the use of a Small Business Subcontracting Program clause in subcontracts which exceed $500, 000 rather than in subcontracts which exceed $1,000,000 as previously had been prescribed. (f) Section 1-1.710-4(b) has been added and provides that each procuring agency shall assist the Small Business Administration to obtain such reasonably obtainable information and records concerning the subcontracting of its prime con- tractors and its subcontractors, having contracts which contain the Small Business Subcontracting Program clause, as the Small Business Administration may deem necessary. (g) Section 1-1.710-4(c) has been added and provides that subcontracting records maintained by Government offices shall be made available for review, as requested by SBA. (h) Section 1-1. 805 now contains the labor surplus area subcontracting program procedures which were previously set forth together with the small busi- ness subcontracting program procedures in section 1-1. 710. (i) Section 1-1. 805-2 now sets forth a brief and general description of the labor surplus area subcontracting program. -2- SHED BY THE TES OF AMERIC (j) Section 1-1. 805-3 sets forth the required labor surplus area clauses and provides for the use of the Labor Surplus Area Subcontracting Program clause in contracts which exceed $500,000 rather than in contracts which exceed $1,000,000 as previously had been prescribed. This clause previously was combined in section 1-1.710 with the Small Business Subcontracting Program clause. The definition of a small business concern has not been included in the clause as it appears in this section. In addition the clause provides for the use of a Labor Surplus Area Sub- contracting Program clause in subcontracts which exceed $500,000 rather than in subcontracts which exceed $1,000,000 as previously had been prescribed. (k) Section 1-1.805-4 provides for the review of the adequacy of a con- tractor's Labor Surplus Area Subcontracting Program. (1) Section 1-2.407-6(b) now provides that if the application of the priori- ties in section 1-2. 407-6(a) results in two or more bidders being eligible for award, the award shall be made to the bidder who will make the most extensive use of small business subcontractors. (m) Section 1-3. 102(n) has been modified to include, among the factors to be considered in negotiated contracts, consideration of subcontracting, with exten- sive use of small business subcontractors being considered a favorable factor. (n) Subpart 1-3.9 has been added regarding subcontracting policies and procedures and prescribes policies and procedures for the evaluation, review and approval of a contractor's make-or-buy program. This material was added due to the importance of the relationship between contractor make-or-buy decisions and the small business subcontracting program. In this connection two sections are particularly significant. Section 1-3. 902-1(g) provides that the procuring activity shall invite the advice and counsel of the SBA before agreeing to a make-or-buy program. Section 1-3.902-2 imposes limitations regarding the approval of pro- posed "make" items where small business quotes prices which meet the require- ments of this section. (0) Section 1-7. 101 has been modified due to the separation of the small business and labor surplus area subcontracting program procedures. These modi- fications include editorial changes in sections 1-7. 101-21, 25 and 26 and the addi- tion of a new section 1-7. 101-27. 4. Effective Date. These regulations are effective immediately. -3- Ктол BERNARD L. BOUTIN نا Administrator of General Services FILING INSTRUCTIONS AND NOTES Remove Pages Contents of Part 1-1 (vii)(viii)(ix) 132. 11-132. 12; 133-134 134.7-134. 10 221-222 Contents of Part 1-3 (i) 301-302 335 Contents of Part 1-7 (i) 706.1 Insert Pages Contents of Part 1-1 (vii)(viii)(ix) 132. 11-132. 12; 133-134 134. 7-134. 11 221-222 Contents of Part 1-3 (i)(ii) 301-302 335; 337-340 Contents of Part 1-7 (i) 706.1 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed, deleted, or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of un- changed material on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. یا 1 or ◄ or or or Line on which change begins. Line on which change ends. Line on which change both begins and ends. Opposite a blank space, indicates deletion of a division of material (section, sub- section, or paragraph). (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION 13. 603 — 2- GENERAL SERVICES ADMINISTRATION FPR CIRCULAR NO. 24 Washington 25, D. C. July 18, 1962 FEDERAL PROCUREMENT REGULATIONS 1. Material Transmitted. and revisions to sections 1-3.215(a), and 1-3. 404-3(c). The attached pages contain revised Subpart 1-1. 10 1-1.603(c), 1-1.804-2, 1-1. 807(b), 1-2. 201(a)(24), 2. Summary of Additions or Revisions. (a) Revised Subpart 1-1. 10 amends the requirements for publicizing pro- posed procurement actions in the Department of Commerce publication "Commerce Business Daily, Synopsis of U. S. Government Proposed Procurement, Sales and Contract Awards." This revised regulation was developed jointly with the Depart- ment of Commerce. It prescribes procedures, applicable to all agencies engaged in procurement of property or services in the United States, for publicizing pro- posed procurement actions in the Synopsis pursuant to Public Law 87-305, approved September 26, 1961. (b) Section 1-1. 603(c) is revised to add the Federal Civil Defense Act of 1950 and the Area Redevelopment Act of 1961 to the list of statutes contained therein. (c) Section 1-1.804-2 is revised to amend paragraph (e), Identification of Areas of Performance, of the long-form "Notice of Labor Surplus Area Set Aside" set forth in section 1-1. 804-2(c). This revision makes the paragraph consistent with paragraph (c) contained in the short-form notice (section 1-1.804-2(b)). (d) Section 1-1. 807(b) is revised to provide for the submission of negative reports by agencies having no labor surplus area preference procurements to report. (e) Section 1-2. 201(a)(24) is amended to indicate the contracts to which the Nondiscrimination in Employment clause is not applicable under the rules and reg- ulations of the President's Committee on Equal Employment Opportunity. (f) Section 1-3. 215(a) is revised to reference the Foreign Assistance Act of 1961 in lieu of the Mutual Security Act. (g) Section 1-3. 404-3(c) is revised to set forth the statutory limitations on fixed fees in connection with cost-plus-a-fixed-fee contracts, as contained in sec- tion 304(b) of the Federal Property and Administrative Services Act of 1949, as amended. 3. Effective Date. These regulations are effective October 1, 1962, but may be observed earlier, BERNARD L. BOUTIN Administrator of General Services PURCHASED THROUGH DOC. EX. PROJECT For sale by the Superintendent of Documents, U.S. Government Printing Office, Washington 25, D.C. Price $3.25 Domestic; $1.00 additional for Foreign mailing, single copy varies. FILING INSTRUCTIONS AND NOTES Remove Pages 125-127 134.7 - 134.8 134.11 137 138.2 - 203 - 204 307 - 308 313 314 Insert Pages 125 - 128 134.7 134. 8 - 134.11 134. 12 - 137 138.2 203 - 204 307 - 308 313 314.1 - (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed, deleted, or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of un- changed material on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. or ୮ ட Lor די Line on which change begins. Line on which change ends. or Line on which change both begins and ends. or Opposite a blank space, indicates deletion of a division of material (section, sub- section, or paragraph). (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION ON 13. 603 2- BUREAU OF GOVERNMENT THE UNIVERSITY OF MICHIGAN OCT 1 1992 GENERAL SERVICES ADMINISTRATION FPR CIRCULAR NO. 25 BUR. OF GOV'T. LIBRARY July 25, 1962 Washington 25, D. C. FEDERAL PROCUREMENT REGULATIONS 1. Material Transmitted. The attached pages contain revisions to sections 1-7. 101-11, 1-16. 101, and 1-16. 401, and new section 1-16. 404-1. 2. Summary of Additions or Revisions. (a) Section 1-7.101-11 is revised to include a revision of paragraph (e) of the Default clause contained therein. (b) Section 1-16. 101 is revised to prescribe the substitution of the revised Default clause for clause 11 of the September 1961 edition of Standard Form 32. (c) Section 1-16. 401 is revised to prescribe a change to the April 1961 edition of Standard Form 23A. (d) Section 1-16.404-1 is added to revise paragraph (e) of the Termination for Default--Damages for Delay--Time Extensions clause set forth as clause 5 of Standard Form 23A. 3. Explanation of Changes. The revision of the default clauses in Standard Forms 32 and 23A is intended to preclude further decisions adverse to the Govern- ment similar to the decision in the Court of Claims case of Klein v. United States (285 F. 2d 778, Jan. 18, 1961). In that case the Government issued a default termi- nation notice, but subsequently concluded that the contractor was not in default and attempted to treat the termination as a "convenience" termination under the "termi- nation for the convenience of the Government" clause. The Court concluded that the Government did not have the right under the language of the then current default clause to convert the termination for default to one for convenience of the Govern- ment and, accordingly, that the Government had breached the contract. The revised clauses provide specifically, where the Government has issued a notice of termina- tion for default and such notice subsequently is found to have been issued erroneously, (1) that such termination will become a termination for convenience of the Govern- ment if the contract contains a "convenience" termination clause, and (2) that an equitable adjustment will be made to compensate the contractor for the erroneous termination if the contract does not contain such a "convenience" clause. Thus, administrative settlement procedures and related measures of compensation are provided in the contract whenever a termination for default is later determined to be erroneous. 4. Effective Date. These regulations are effective October 15, 1962, but may be observed earlier. Lamass son B. 13. Anot फ LAWSON B. KNOTT, JR. Acting Administrator of General Services PURCHASED THROUGH DOC. EX. PROJECT FILING INSTRUCTIONS AND NOTES Remove Pages 705-706 Contents of Part 1-16(i)(ii) 1601-1602 1607-1609 Insert Pages 705-706 Contents of Part 1-16(i)(ii) 1601-1602 1607-1610 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed, deleted, or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of un- changed material on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. or Lor Lj or or F7 Line on which change begins. -Line on which change ends. Line on which change both begins and ends. Opposite a blank space, indicates deletion of a division of material (section, sub- section, or paragraph). (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION - - 3. 603- 2 THE UNIVERSITY ت GENERAL SERVICES ADMINISTRATION Washington 25, D. C. OF MICHIGAN OCT 1 1962 BUR. OF GOV'T. LIBRARY FPR CIRCULAR NO. 26 July 27, 1962 FEDERAL PROCUREMENT REGULATIONS 1. Material Transmitted. The attached pages contain new Part 1-14. 2. Summary of Additions or Revisions. New Part 1-14 prescribes policies and procedures for inspection and acceptance under contracts for supplies or serv- ices (other than construction contracts). 3. Rescission of GSA Regulations. GSA Reg. 1-VI, Part 4, except Section 406.00 thereof, is hereby rescinded. 4. Effective Date. These regulations are effective October 1, 1962, but may be observed earlier. Raween 13. Frid LAWSON B. KNOTT, JR. Acting Administrator of General Services PURCHASED THROUGH DOC. EX. PROJECT FILING INSTRUCTIONS AND NOTES Remove Pages Table of Parts (v) Insert Pages Table of Parts (v) Contents of Part 1-14(i) 1401-1408 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed, deleted, or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of un- changed material on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. ד or or◄ or or Line on which change begins. Line on which change ends. Line on which change both begins and ends. Opposite a blank space, indicates deletion of a division of material (section, sub- section, or paragraph). (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION •1 — 3. 603 2° * > OF MICHIGAN THE UNIVERSITY NOV 30 1962 BUR. OF GOV'T. LIBRARY GENERAL SERVICES ADMINISTRATION Washington 25, D. C. FPR CIRCULAR NO. 27 September 28, 1962 FEDERAL PROCUREMENT REGULATIONS 1. Material Transmitted. The attached pages contain revised sections 1-1.701-1, 1-1.706-5, 1-1.706-6, 1-1. 804-2, 1-3. 211, 1-3. 604-5, 1-16. 401, and 1-16.804. 2. Summary of Additions or Revisions. (a) Section 1-1.701-1, definition of small business concerns for Govern- ment procurement, is revised to include in the FPR the following revisions and additions to reflect current small business size standards: (1) Subparagraph 1-1.701-1(a)(2)(i) prescribes a revised small busi- ness definition for the construction industry which increases the average annual receipts standard from $5, 000, 000 to $7,500,000. (2) Subparagraphs 1-1.701-1(a)(2)(vii) through (xii) prescribe specific small business definitions for the custodial and janitorial services industry, rubber footwear industry, tire and inner tube industry, small arms industry, small arms ammunition industry, and hydraulic dredging industry. (3) Paragraph 1-1.701-1(a)(3), concerning labor surplus area small business concerns, is deleted. This deletion reflects the rescission by SBA of its previous regulation which allowed firms located in areas of substantial labor sur- plus to have an additional number of employees, or additional annual receipts, and still qualify as small business concerns. (4) Paragraph 1-1. 701-1(c) is added to include specific small business size standards for Government subcontractors. Except for subcontracts under $2,500 (where the size standard is uniformly 500 employees or less), the small business size standards for Government subcontractors are based, generally, on the same criteria as are used for Government prime contractors. In this connec- tion, special note should be taken of the effective dates set forth in paragraph 4 of this Circular. (b) Paragraphs 1-1.706-5(c), 1-1.706-6(c) and (d), and 1-1.804-2(b) and (c) are revised to modify the various procurement set-aside notices and delete therefrom references to the size differentials for small businesses located in sub- stantial labor surplus areas. (c) Paragraph 1-3. 211(c), concerning reporting of negotiated contracts for experimental, developmental and research work, is included in the FPR text for purposes of more convenient reference. ! ! (d) Section 1-3. 604-5 is revised to increase the dollar limitation from $50 to $100 when making small purchases under imprest fund procedures, except under emergency conditions where the limitation for any one transaction is $250. The increased limitation was developed jointly with representatives of the Bureau of the Budget, General Accounting Office, and Treasury Department and published in Treasury Department Circular No. 1030, Revised, June 1, 1962. (e) Paragraphs 1-16. 401(a) and (d) are revised to provide interim instruc- tions for amending the small business representations and small business defini- tions in Standard Forms 19 and 21, pending development and publication of revised editions of these forms. (f) Paragraph 1-16. 804(e) is revised to change the address to which reports on procurement by civilian agencies are to be sent. 3. Rescission of FPR Circular. FPR Circular No. 1A, dated June 23, 1959, is superseded by revised section 1-3. 211(c). 4. Effective Dates. These regulations are effective immediately, except as otherwise provided below: (a) Deletion of section 1-1.701-1(a)(3), and related revisions in sections 1-1.706-5, 1-1.706-6, and 1-1. 804-2, are effective October 8, 1962. However, pending deletion of $1-1.701-1(a)(3) on October 8, 1962, the 25% differential for firms located in areas of substantial labor surplus is not applicable to subcontractors. (b) The definition of small business subcontractors that are non-manufac- turers (see section 1-1. 701-1(b) and (c)) is not applicable until January 2, 1963. (c) The definition of small business subcontractors in the aircraft equip- ment industry (see sections 1-1.701(a)(2)(iv) and 1-1.701-1(c)) is not applicable until January 2, 1963. - (d) Until January 2, 1963; any concern included in paragraphs (b) and (c) above will be considered a small business concern if, including its affiliates, its number of employees does not exceed 500 persons. Baal BERNARD L. BOUTIN Administrator of General Services DEPOSITED BY THE CAYTED STATES OF Remove Pages 129-130 132. 5-132. 10 134. 3-134. 4 134.7-134.8 305-306 L 323-324 1607-1608: 1613-1614 FILING INSTRUCTIONS AND NOTES Insert Pages 129-130.1 132. 5-132. 10 134. 3-134. 4 134.7-134. 8 305-306. 1 323-324 1607-1608 1613-1614 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed, deleted, or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of un- changed material on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. or Lor←→ ΟΙ or or F7 1 Line on which change begins. Line on which change ends. Line on which change both begins and ends. Opposite a blank space, indicates deletion of a division of material (section, sub- section, or paragraph). (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION -1 13. 6032- OF MICHIGAN jk 1673 A34 THE UNIVERSITY GENERAL SERVICES ADMINISTRATIONEC 7 1962 Washington 25, D. C. BUR. OF GOV'T. LIBRARY FPR CIRCULAR NO. 28 October 23, 1962 FEDERAL PROCUREMENT REGULATIONS 1. Material Transmitted. The attached pages contain revisions to section 1-2. 201, and to Subparts 1-2. 3, 1-16. 1, and 1-16. 4. 2. Summary of Additions or Revisions. (a) Section 1-2. 201(a)(23) is amended to prescribe a revised late bid pro- vision which is to be substituted for paragraph 7 of Standard Form 22, and for para- graph 4 on the back of Standard Forms 30 and 33, pending formal revision of those forms. The provision reflects the revised rules for considering late bids contained in Subpart 1-2. 3. (b) New section 1-2. 201(a)(25) prescribes a statement for inclusion in invitations for bids which cautions bidders that the revised rules for considering late bids apply. (c) New section 1-2. 201(b)(12) provides for the inclusion in invitations for bids of any requirements for preproduction samples or tests, together with a state- ment reserving to the Government the rights to waive the requirements in certain cases. (d) New section 1-2. 201(b)(13) prescribes a revised "Labor Information" paragraph which is to be substituted for paragraph 6 of the Terms and Conditions of the Invitation for Bids on the back of Standard Forms 30 and 33, pending formal revision of those forms. (e) Subpart 1-2.3 (Submission of bids) is amended to prescribe revised rules concerning late bids. Under the revised rules, late bids, modifications, and withdrawals, submitted by mail ordinarily will be considered only if timely mailed by registered mail or by certified mail for which the bidder obtained (at the time of mailing) an original Receipt for Certified Mail bearing an official, dated, post office stamp (postmark). (f) Sections 1-16. 101(b) and 1-16. 101(e) are amended to require substitu- tion of the provisions in sections 1-2. 201(a)(23) and 1-2. 201(b)(13) for paragraphs 4 and, respectively, on the back of Standard Forms 30 and 33. (g) Section 1-16.401(e) is amended to require substitution of the provision in section 1-2. 201(a)(23) for paragraph 7 of Standard Form 22. 3. Effective Date. These regulations are effective January 2, 1963, but may be observed earlier. শ BERNARD L. BOUTIN Administrator of General Services For sale by the Superintendent of Documents, U. S. Government Printing Office, Washington 25, D. C. Subscription Price: $4. 25; $1. 25 additional for foreign mailing. FILING INSTRUCTIONS AND NOTES Remove Pages Insert Pages 203-204.1 203-204 211-213 211-213 1601-1602 1607-1608 1601-1602 1607-1608 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed, deleted, or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of un- changed material on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. or ། Lor or or Line on which change begins. Line on which change ends. Line on which change both begins and ends. Opposite a blank space, indicates deletion of a division of material (section, sub- section, or paragraph). (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION 13. 603 است OF MICHIGAN ! GENERAL SERVICES ADMINISTRATION Washington 25, D. C. THE UNIVERSITY FEB 11 1930 BUR. OF GOV'T. LIBRARY FPR CIRCULAR NO. 29 November 16, 1962 FEDERAL PROCUREMENT PROCUREMENT REGULATIONS 1. Material Transmitted. The attached pages contain Part 1-8 which is a new part that includes material which is new except for the fixed-price construction con- tract default clauses and most of the fixed-price supply contract default clause, new sections 1-7. 101-28, 1-7. 602-2, and 1-7. 602-3, and revisions of sections 1-7. 101- 11, 1-7. 601, 1-16. 101, 1-16. 401, and 1-16. 404. 2. Summary of Additions or Revisions. The basic change is the addition of Part 1-8, Termination of Contracts. The other changes are subsidiary and re- lated thereto. More specifically: (a) Section 1-7. 101-11 is revised because of the transfer of the default clause from that section to new section 1-8.707. (b) Section 1-7. 101-28 is added to provide a cross reference to the fixed- price supply contract termination for convenience clauses in new Part 1-8. (c) Section 1-7. 601 is revised by the expansion of section 1-7. 601-1 to pro- vide cross references to the fixed-price construction contract default clauses in new Part 1-8. (d) Sections 1-7. 602-2 and 1-7. 602-3 are added to provide cross references to the fixed-price construction contract termination for convenience clauses in new Part 1-8. (e) Part 1-8 sets forth policies and procedures relating to the termination of contracts for the convenience of the Government or for the default of the con- tractor, and sets forth policies and procedures relating to the settlement of claims arising therefrom. It contains a revision of paragraph (d) of the default clause for fixed-price supply contracts (set forth in section 1-8.707). That paragraph (d) is revised by adding a sentence which relates to the policy stated in section 1-8. 602-2 (c) and which provides a means to protect the Government from liability for lien rights against completed supplies and manufacturing materials which are delivered to the Government, as directed by the contracting officer, after termination of the contract. (f) Section 1-16. 101 is revised to change the cross references in paragraph (d) thereof. (g) Section 1-16. 401 is revised in paragraph (g) thereof because of the in- clusion of the Standard Form 23A default clause in new Part 1-8. (h) Section 1-16. 404 is revised by the deletion of section 1-16. 404-1 which ! is no longer required because of the revision to section 1-16. 401. For sale by the Superintendent of Documents, U. S. Government Printing Office, Washington 25, D. C. Subscription Price: $4. 25; $1. 25 additional for foreign mailing. 3. Formats of Forms. The formats of forms set forth in sections 1-8.802, 1-8.803, and 1-8. 804 have not been approved by the Bureau of the Budget as forms and are provided for guidance of agencies in implementing this regulation. 4. Effective Date. These regulations are effective March 1, 1963, but may be observed earlier. BERNARD L. BOUTIN Administrator of General Services t FILING INSTRUCTIONS AND NOTES L Remove Pages Table of Parts (v) Contents of Part 1-7(i) 703-706 V709 Contents of Part 1-16(i)(ii) 1601-1602 V1607-1610 - کیا سا Insert Pages Table of Parts (v) Contents of Part 1-7(i) 703-706 709 Contents of Part 1-8(i)(ii)(iii) 801-898. 17 Contents of Part 1-16(i)(ii) -1601-1602 1607-1609 C (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed, deleted, or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of un- changed material on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. or Lor LJ 1 1 or or ↑ ↑ LJ Line on which change begins. Line on which change ends. Line on which change both begins and ends. Opposite a blank space, indicates deletion of a division of material (section, sub- section, or paragraph). (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION 3. 603-2 THE UNIVERSITY さん ​1673 Ази GENERAL SERVICES ADMINISTRATION Washington 25, D. C. OF MICHIGANFPR CIRCULAR NO. 30 FEB 21 1893 December 20, 1962 BUR. OF GOV'T LIBRARY FEDERAL PROCUREMENT REGULATIONS 1. Material Transmitted. The attached pages contain new Part 1-17. 2. Summary of Additions or Revisions. New Part 1-17 prescribes policies and procedures for entering into and amending contracts to facilitate the national defense under the extraordinary, emergency authority granted by the Act of August 28, 1958 (Public Law 85-804), set forth in § 1-17. 501, and Executive Order No. 10789 of November 14, 1958, as amended by Executive Order No. 11051 of October 2, 1962, set forth in § 1-17.502. Consistent with paragraph 22 of Executive Order No. 10789, these regula- tions were developed in cooperation with the Department of Defense and the execu- tive agencies named in paragraph 21 of Executive Order No. 10789. 3. Effective Date. These regulations are effective February 15, 1963, but may be observed earlier. BERNARD L. BOUTIN Administrator of General Services For sale by the Superintendent of Documents, U. S. Government Printing Office, Washington 25, D. C. Subscription Price: $4. 25; $1. 25 additional for foreign mailing. FILING INSTRUCTIONS AND NOTES : Remove Pages ✓ Table of Parts (v) Insert Pages L Table of Parts (v) ✓ Contents of Part 1-17 (i) 1701-1720 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed, deleted, or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of un- changed material on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. or Lor or or L. Line on which change begins. Line on which change ends. -Line on which change both begins and ends. Opposite a blank space, indicates deletion of a division of material (section, sub- section, or paragraph). (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART 1 SECTION SUBSECTION 13. 603 2 THE UNIVERSITY JK GENERAL SERVICES ADMINISTRATION Washington 25, D. C. OF MICHIGAN MAY 29 102 FPR CIRCULAR NO. 31 BUR. OF GOV'T: LIBRARY March 25, 1963 FEDERAL PROCUREMENT REGULATIONS 1. Material Transmitted. Attached are revised sections 1-1. 204, 1-1.800, and 1-2. 407-6. 2. Summary of Additions or Revisions. (a) Section 1-1. 204 is amended to revise the definition of the term "head of the agency" so as to recognize that an executive agency may have more than one assistant chief official, and that a military department may have more than one Assistant Secretary. (b) Section 1-1. 800 has been revised to include a reference to Amendment No. 1 of Defense Manpower Policy No. 4 (Revised). (c) Paragraph (a) of section 1-2.407-6 has been revised to make actual production in labor surplus areas the deciding factor in the award of contracts for shelf-type items where equal low bids are received, in lieu of favoring dealers who merely have sales outlets in labor surplus areas. This revision implements Amendment No. 1 of Defense Manpower Policy No. 4 which was published in the Federal Register on December 29, 1962. 3. Effective Date. These regulations are effective March 29, 1963. Ramess прив LAWSON B. KNOTT, JR. Acting Administrator of General Services For sale by the Superintendent of Documents, U. S. Government Printing Office, Washington 25, D. C. Subscription Price: $4. 25; $1. 25 additional for foreign mailing. FILING INSTRUCTIONS AND NOTES Remove Pages 107-108 134. 1-134. 2 221-222 Insert Pages 107-108. 1 134. 1-134, 2 221-222 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed, deleted, or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of un- changed material on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. or Lor or or Line on which change begins. Line on which change ends. Line on which change both begins and ends. Opposite a blank space, indicates deletion of a division of material (section, sub- section, or paragraph). (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION 3. 603-2 THE UNIVERSITY GENERAL SERVICES ADMINISTRATION Washington 25, D. C. OF MICHIGAN AUG 28 1963 BUR. OF GOV'T. LIBRARY FPR CIRCULAR NO. 32 June 19, 1963 FEDERAL PROCUREMENT REGULATIONS 1. Material Transmitted. The attached pages contain revisions to Sections 1-1.701-1, 1-1.701-5, 1-1.701-6, 1-1.703-1, 1-1.703-2, 1-1.704, 1-1.706-5, 1-1.706-6, 1-1.804-2, 1-2.201, and 1-16.101. 2. Summary of Additions or Revisions. (a) Sections 1-1.701-1, 1-1.701-5, 1-1.701-6, 1-1.703-1, and 1-1.703-2 are amended to include revised definitions of small business concerns as recently issued by the Small Business Administration (28 F. R. 3323 - 3326, dated April 5, 1963 and 28 F. R. 5232, dated May 25, 1963). These revised definitions establish F.R. specific industry size standards. The Small Business Administration has an- nounced that the use of Small Business Certificates will be discontinued. (b) A caption is added for Section 1-1.704 to establish a uniform number for use by agencies incidental to implementing and supplementing this aspect of Subpart 1-1.7. (c) Paragraphs 1-1.706-5(c), 1-1.706-6(c), 1-1.706-6(d), and section 1-1.804-2 are amended to reflect the revised definition of small business in the various set-aside notices. (d) Paragraphs 1-2.201(a), 1-16. 101(b), and 1-16. 101(e) are amended to prescribe interim modifications of Standard Forms 30 and 33 to reflect the revised definition of small business. 3. Effective Date. These regulations are effective July 1, 1963. ། BERNARD L. BOUTIN Administrator of General Services For sale by the Superintendent of Documents, U. S. Government Printing Office, Washington 25, D. C. Subscription Price: $4. 25; $1. 25 additional for foreign mailing. Remove Pages FILING INSTRUCTIONS AND NOTES Contents of Part 1-1 (vii)(viii) Pages 129-130.1 Pages 131-132.2 Insert Pages Contents of Part 1-1 (vii)(viii) Pages 129-130.3 Pages 131-132.2 Pages 132.5-132.10 Pages 134.3-134. 4 Pages 132.5-132.10 Pages 134.3-134.4 Pages 134.7-134.8 Pages 203-204.1 Pages 1601-1602 Pages 134.7-134.8 Pages 203-204.1 Pages 1601-1602 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed, deleted, or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of un- changed material on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. حا or ◄ or or or Line on which change begins. Line on which change ends. Line on which change both begins and ends. Opposite a blank space, indicates deletion of a division of material (section, sub- section, or paragraph). (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION } 13. 603 — 2 THE MICHIGAN OF UNIVERSITY GENERAL SERVICES ADMINISTRATION Washington 25, D. C. SEP 9 1PR CIRCULAR NO. 33 1 BUR. OF GOV'T. LIBRARY July 2, 1963 FEDERAL PROCUREMENT REGULATIONS 1. Material Transmitted. The attached pages contain new Subpart 1-2.5. 2. Summary of Additions or Revisions. New Subpart 1-2.5 prescribes two- step formal advertising policies and procedures for use by agencies on an optional basis. This method of procurement was initially developed by the Department of Defense. The Comptroller General has held that it is a legal method of procure- ment by formal advertising (40 Comp. Gen. 35). 3. Effective Date. These regulations are effective immediately. BERNARD L. BOUTIN Administrator of General Services For sale by the Superintendent of Documents, U. S. Government Printing Office, Washington 25, D. C. Subscription Price: $4.25; $1.25 additional for foreign mailing. FILING INSTRUCTIONS AND NOTES Remove Pages Contents of Part 1-2 (i) Pages 223-224 Insert Pages Contents of Part 1-2 (i) Pages 223-227 L (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed, deleted, or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of un- changed material on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. or◄ ➤ or or- or T Line on which change begins. Line on which change ends. Line on which change both begins and ends. Opposite a blank space, indicates deletion of a division of material (section, sub- section, or paragraph). (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION 603 i ! ГК ERSITY GENERAL SERVICES ADMINISTRATION Washington 25, D. C. THE OF MICHIGAN OCT SUR. OF GOVT. FPR CIRCULAR NO. 34 July 26, 1963 FEDERAL PROCUREMENT REGULATIONS 1. Material Transmitted. The attached pages contain revisions to sections 1-1.315-3(b), 1-1.901, and 1-1.902; new Subpart 1-1. 16; and new sections 1-2.201 (a)(27), 1-16.903, and 1-16.903-DJ1500. 2. Summary of Additions or Revisions. (a) Section 1-1.315-3(b) is amended to indicate that a rate of liquidated damages must be stipulated in invitations for bids in order to make operative the liquidated damages provisions referred to in that section. (b) Section 1-1.901 is amended to more accurately paraphrase section 302(d) of the Federal Property and Administrative Services Act of 1949, and to in- dicate that the reports required by Subpart 1-1.9 do not satisfy the requirement in new Subpart 1-1. 16 for reporting identical bids to the Attorney General. (c) Section 1-1.902 is amended to (1) require that reports of possible anti- trust violations to the Attorney General include a copy of each suspect bid and (2) revise the definition of the term "suspect bids." (d) New Subpart 1-1. 16 prescribes procedures for the submission of identical bid reports to the Attorney General, as required by Executive Order No. 10936, with respect to identical bids which are received in connection with the procurement of personal property or non-personal services. Similar procedures previously were prescribed in GSA General Regulation No. 26. (e) New section 1-2.201(a)(27) provides, in accordance with new Subpart 1-1.16, that invitations for bids include a provision requiring bidders to furnish information concerning parent company relationship and employer identification number. (f) New section 1-16.903 is added to provide for the illustration of Depart- ment of Justice Forms. (g) New section 1-16.903-DJ1500 is added to illustrate Form DJ-1500, Identi- cal Bid Report for Procurement. For sale by the Superintendent of Documents, U. S. Government Printing Office, Washington 25, D. C. Subscription Price: $4.25; $1.25 additional for foreign mailing. 3. Rescission of GSA Regulations. GSA General Regulation No. 26, dated June 21, 1961, insofar as it applies to "procurement" as defined in FPR 1-1. 209, is rescinded. 4. Effective Date. These regulations are effective September 3, 1963, but may be observed earlier. BERNARD L. BOUTIN Administrator of General Services DEPOSITED BY THE UNITED UTATES OF AMERICA FILING INSTRUCTIONS AND NOTES Remove Pages Contents of Part 1-1 (ix) Insert Pages Pages 117-118.1 Pages 135-136 Page 139 Page 141 Pages 203-204.1 Contents of Part 1-16 (i-ii) Page 1615 Contents of Part 1-1 ix - Pages 117-118.2 Pages 135-136 Page 139 Page 141 Pages 175 - 177 Pages 203 204.1 - } Page 1683 Page 1685 Contents of Part 1-16 (i-ii) Page 1615 2 Page 1683 Page 1685 Ellia Fld (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed, deleted, or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of un- changed material on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. or← Lor or◄ or Line on which change begins. Line on which change ends. Line on which change both begins and ends. Opposite a blank space, indicates deletion of a division of material (section, sub- section, or paragraph). (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION TION 13. 2- 603 THE UNIVERSITY GENERAL SERVICES ADMINISTRATION Washington 25, D. C. JK OF MICHIGAN OCT 3 1983 BUR. OF GOV'T, LIBRARY FPR CIRCULAR NO. 35 2 August 12, 1963 FEDERAL PROCUREMENT REGULATIONS 1. Material Transmitted. The attached pages contain revisions to sections 1-1.1003-3, 1-1.1003-7, and 1-1. 1004; and new section 1-1.1005. 2. Summary of Additions or Revisions. (a) Section 1-1. 1003-3 is revised to clarify the requirements for including information in the Commerce Business Daily regarding the Government's interests in research and development. (b) Section 1-1. 1003-7 is amended as follows: (1) Section 1-1.1003-7(a)(2) is amended to show the current Chicago mailing address of the Administrative Service Office, U. S. Department of Commerce. (2) Section 1-1.1003-7(b) is revised to require that agencies code proposed procurements in the synopses messages which are sent to the Chicago office of the Department of Commerce. The purpose of the coding is to enable the Department of Commerce to group the procurements in the Commerce Business Daily by classes of supplies or services. In addition, minor changes have been made in order to clarify the instructions for preparing synopses messages. (c) Section 1-1. 1004 is revised to provide for the coding of contract awards in synopses messages. The requirement for showing the quantity, unit, and dollar amount for the individual items in an award is made optional in the case of items of $25,000 or less. For sale by the Superintendent of Documents, U. S. Government Printing Office, Washington 25, D. C. Subscription Price: $4. 25; $1. 25 additional for foreign mailing. (d) New section 1-1.1005 prescribes the classification codes to be used in coding synopses messages. The codes for services, including construction and experimental, developmental, test, and research work, are contained in section 1-1.1005-1. The codes for supplies and equipment are set forth in section 1-1. 1005-2. 3. Effective Date. These regulations are effective September 15, 1963, but may be observed earlier. Damen 13. Hroty J LAWSON B. KNOTT, JR. Acting Administrator of General Service's DEPOSITED BY THE UNITED STATES OF AMERICA FILING INSTRUCTIONS AND NOTES Insert Pages Remove Pages Contents of Part 1-1 (ix) Pages 137 - 138.2 Contents of Part 1-1 (ix) Pages 137 138.4 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed, deleted, or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of un- changed material on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. or Line on which change begins. or Line on which change ends. or Line on which change both begins and ends. or Opposite a blank space, indicates deletion of a division of material (section, sub- section, or paragraph). (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION ON 13. 603 - 2 603. OF THE MICHIGAN UNIVERSITY GENERAL SERVICES ADMINISTRATION Washington 25, D. C. OCT BUR. OF GOVT. LIBRARY FPR CIRCULAR NO. 36 August 16, 1963 FEDERAL PROCUREMENT REGULATIONS 1. Material Transmitted. The attached pages contain new section 1-1.317 and amended section 1-2. 201. 2. Summary of Additions or Revisions. (a) Section 1-1.317 contains a Certification of Noncollusion and requires that the certification be included in all (1) invitations for bids and (2) requests for proposals or quotations, other than for small purchases made in accordance with Subpart 1-3.6 and other than request for technical proposals in connection with two- step formal advertising, involving firm fixed-price contracts and fixed-price contracts with escalation. By its terms, the certification does not apply to a foreign bidder or offeror submitting a bid or proposal for a contract which requires performance or delivery outside the United States, its possessions, and Puerto Rico. (b) The amendment to section 1-2.201 adds the Certification of Noncollusion to the list of information to be included in invitations for bids. 3. Effective Date. These regulations are effective November 15, 1963, but may be observed earlier. B.Zno son on B. LAWSON B. KNOTT, JR. Acting Administrator of General Services For sale by the Superintendent of Documents, U. S. Government Printing Office, Washington 25, D. C. Subscription Price: $4.25; $1.25 additional for foreign mailing. FILING INSTRUCTIONS AND NOTES Remove Pages Contents of Part 1-1 (vii)(viii) Pages 118.1 - 118.2 Page 204.1 Insert Pages Contents of Part 1-1 (vii)(viii) Pages 118.1 - 118.3 Page 204. 1 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed, deleted, or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of un- changed material on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. or ← L ‣ or or or Line on which change begins. Line on which change ends. Line on which change both begins and ends. Opposite a blank space, indicates deletion of a division of material (section, sub- section, or paragraph). (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION ION 3. 603 - THE UNIVERSITY OF MICHIGAN NOV 12 1980 GENERAL SERVICES ADMINISTRATION JK BUR. OF GOV'T. LIBRARY 1613 Washington, D. C. 20405 FPR CIRCULAR NO. 37 September 30, 1963 FEDERAL PROCUREMENT REGULATIONS 1. Material Transmitted. The attached pages contain revisions of and addi- tions to section 1-1. 701-1. 2. Summary of Revisions and Additions. (a) Paragraph 1-1.701-1(h) is amended to include the specific industry employment size standard for the purpose of Government procurement for Census classification code 1925 which covers guided missiles and space vehicles, com- pletely assembled. (b) Paragraph 1-1.701-1(i) is added to include small business size stand- ards for research, development and testing concerns. 3. Effective Date. These regulations are effective immediately. 3 BERNARD L. BOUTIN Administrator of General Services For sale by the Superintendent of Documents, U. S. Government Printing Office, Washington 25, D. C. Subscription Price: $4.25; $1.25 additional for foreign mailing. Remove Pages - 130.1 130.3 131 - 132 FILING INSTRUCTIONS AND NOTES Insert Pages 130.1 - 130.3 - 131 132 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed, deleted, or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of un- changed material on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. or L or Line on which change begins. Line on which change ends. or Line on which change both begins and ends. or Opposite a blank space, indicates deletion of a division of material (section, sub- section, or paragraph). (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION 3. 603 THE UNIVERSITY OF MICHIGAN MAR 1 1003 GENERAL SERVICES ADMINISTRATION BUR. OF GOV'T. LIBRARY FPR CIRCULAR NO. 38 JK Washington, D. C. 20405 January 29, 1964 FEDERAL PROCUREMENT PROCUREMENT REGULATIONS 1. Material Transmitted. The attached pages contain a revision to section 1-5.901(b). 2. Summary of Additions or Revisions. Paragraph (b) of section 1-5.901 is amended to provide for exceptions to the requirement stated therein upon specific authorization by the Administrator of General Services. 3. Exception Authorized for Purchase of Security Cabinets. An exception to the requirements of section 1-5.901(b), as amended by this FPR circular, has been authorized by the Administrator of General Services in General Services Administration Circular No. 327, dated January 29, 1964, which advises Federal agencies that fixed-price prime contractors and their subcontractors, and sub- contractors under cost-type contracts, who need the use of security cabinets for the protection of security classified information may, subject to the conditions described in the circular, purchase such cabinets under Federal Supply Schedule contracts. 4. Effective Date. These regulations are effective immediately. BERNARD L. BOUTIN Administrator of General Services For sale by the Superintendent of Documents, U. S. Government Printing Office, Washington 25, D. C. Subscription Price: $4.25; $1.25 additional for foreign mailing. Remove Pages 551-552 FILING INSTRUCTIONS AND NOTES Insert Pages 551-552 (a) On each page appears the number and date (month and year) of the FPR Circular which transmitted it. (b) Retention of FPR Circulars and removed pages will provide a history of FPR issuances and facilitate determining which regulations and contract clauses were in effect at particular times. (c) Arrows printed in the margin of a page indicate material changed, deleted, or added by the FPR Circular cited at the bottom of that page. Where insertion of new material results in shifting of un- changed material on following pages, no arrows will appear on such pages but the FPR Circular transmitting such new pages will be cited at the bottom of each page. حا or Line on which change begins. Line on which change ends. or or Line on which change both begins and ends. or Opposite a blank space, indicates deletion of a division of material (section, sub- section, or paragraph). (d) In the numbering system, all FPR material is preceded by digit 1-. This simply means that it is the first chapter in Title 41 of the Code of Federal Regulations. It has no other significance. The digit(s) before the decimal point indicates the part; the digits after the decimal point indicate, without separation, the subpart and section, respectively, the latter always in two digits; and the digit(s) after the dash indicates the subsection. For example: CHAPTER PART SUBPART SECTION SUBSECTION 13. 603 2 GENERAL SERVICES ADMINISTRATION FPR NOTICE NO. 1 "} Washington 25, D. C. May 11, 1960 FEDERAL PROCUREMENT PROCUREMENT REGULATIONS FPR Notices. This is the first of a series of numbered "FPR Notices" which will transmit, from time to time, material pertaining to procurement policies and procedures which is of an informational nature, is effective for less than six months, is instituted on an experimental basis, or requires such expedited publication that preparation in FPR form would not then be practicable. HUMANE SLAUGHTER OF LIVESTOCK 1. General. This Notice informs Federal agencies of the provisions and re- quirements of Public Law 85-765 (Humane Slaughter Act of 1958, 72 Stat. 862; 7 U.S.C. 1901-1906). 2. Background. Public Law 85-765 declares the policy of the United States to be that the slaughtering of livestock and the handling of livestock in connection with slaughter shall be carried out only by humane methods. That Law requires that this public policy shall be taken into consideration by all agencies of the Federal Government in connection with all procurement and price support programs and operations. 3. Procurement Restrictions. (a) Section 3 of Public Law 85-765 requires that after June 30, 1960, no agency or instrumentality of the United States "shall contract for or procure any livestock products produced or processed by any slaughter er or processor which in any of its plants or in any plants of any slaughterer or processor with which it is affiliated slaughters or handles in connection with slaughter livestock by any methods other than methods designated and approved by the Secretary of Agriculture," pur- suant to section 4 of the Law. (b) Section 3 further provides that after June 30, 1960, each supplier from which any livestock products are procured by any agency of the Federal Government shall be required by such agency to make a statement of eligibility to supply live- stock products slaughtered by methods approved by the Secretary of Agriculture. Such statement of eligibility must also provide that if the statement is false the maker thereof shall be subject to prosecution under 18 U.S.C. 287. (c) The requirements stated in (a) and (b) of this paragraph shall be incor- porated by every Federal agency in all contracts executed after June 30, 1960, for the procurement of livestock products. Uniform regulations on this subject will be PURCHASED THROUGH DOC. EX. PROJECT issued in the Federal Procurement Regulations, but if such regulations are not issued before June 30, 1960, each Federal agency has the individual responsibility of implementing the provisions of Public Law 85-765. 4. Department of Agriculture Regulations. The Department of Agriculture, pursuant to section 4(b) of Public Law 85-765, has designated and published methods of humane slaughter of livestock in Chapter 1 of Title 9, Code of Federal Regula- tions, Subchapter K, Part 180. These regulations appeared at 24 Fed. Reg. 1549 and 24 Fed. Reg. 6434. The Department of Agriculture, pursuant to section 4(c) of the Public Law, is developing regulations to provide suitable means of identifying carcasses of certain animals which have been slaughtered in accordance with the public policy of the Law, set forth in paragraph 2 above. The Department of Agri- culture proposes to issue such regulations by June 30, 1960. 5. Exception. Public Law 85-765, in order to protect freedom of religion, exempts "ritual slaughter", as defined in section 2(b) of the Law, from the pro- visions of the Law. 6. Effective Date. This Notice is effective immediately and will remain in effect until superseded by an appropriate FPR Circular. Enqueterre Quers FRANKLIN FLOETE Administrator of General Services GSA WASH DC 60-12687 THE U ་ GENERAL SERVICES ADMINISTRATION OF M: MAR 1 Washington, D. C. 20405 BUR. OF GOVT. LIBRARY FPR NOTICE NO. 7 February 4, 1964 REGULATIONS FEDERAL · PROCUREMENT PRESIDENT'S COMMITTEE ON EQUAL EMPLOYMENT OPPORTUNITY The representation and the procedure set forth in this notice have been approved by the President's Committee on Equal Employment Opportunity as an implementation of section 60-1.6(b)(1), Title 41, CFR, of the Committee's Rules and Regulations, as amended September 7, 1963 (28 F. R. 9812). 1. Representation. The bidder (or offeror) represents that he [ ] has, [ ] has not, participated in a previous contract or subcontract subject to either the Equal Opportunity Clause herein or the clause originally contained in Section 301 of Executive Order No. 10925; that he [ ] has, [] has not, filed all required com- pliance reports; and that representations indicating submission of required com- pliance reports, signed by proposed subcontractors, will be obtained prior to sub- contract awards. (The above representation need not be submitted in connection with contracts or subcontracts which are exempt from the clause.) 2. Procedure. Outstanding invitations for bids or requests for proposals shall be amended to include the above representation. Where time does not permit such amendment, or where bids or proposals have already been received, and the low bidder or offeror represents that he has participated in a previous contract subject to the Equal Opportunity Clause or the clause originally contained in Section 301 of Executive Order No. 10925, he should be requested to advise whether all required compliance reports have been filed by him and by his subcontractors. In any case where a bidder or offeror indicates that such reports have not been filed, award should be withheld, pending the receipt of a representation from the bidder or offeror that he has submitted all required compliance reports and that he will not make awards to proposed subcontractors until he has obtained signed state- ments from them that they have submitted required compliance reports, unless the circumstances in the particular case will not permit the award to be withheld. The file should be documented to show the basis upon which it was determined to make the award to the bidder or offeror without submission by him of the representation. This should not be interpreted to permit award to concerns known to be in estab- lished violation. 3. Effective Date. This Notice is effective immediately and will remain in effect until it is superseded by an FPR Circular implementing the Rules and Regu- lations of the President's Committee. Such a circular will be promulgated in the near future. JK BERNARD L. BOUTIN Administrator of General Services PURCHASED THROUGH GSA DC 64-10894 DOC. EX. PROJECT GENERAL SERVICES ADMINISTRATION Washington, D. C. 20405 FEDERAL PROCUREMENT 1. General. LATE BIDS FPR NOTICE NO. 8 February 12, 1964 REGULATIONS MAR 112000 BUR. OF GOVT. LIBRARY (a) This Notice prescribes interim procedures for determining the time of mailing of late bids mailed by registered mail and of late bids for which a post- marked Receipt for Certified Mail was obtained. (b) The Post Office Department, by notice published in the Federal Reg- ister of January 15, 1964 (29 F.R. 344), announced that, effective February 1, 1964, the hour designation would no longer be shown in postmarks, but that, upon request by senders of registered and certified mail, post offices will endorse the mailing receipts to show the time of mailing. Pending formal revision of the Fed- eral Procurement Regulations (FPR), the procedures set forth in paragraphs 2, 3, and 4 of this Notice shall be followed. 2. Modification of Invitation for Bids Provision. The provision entitled "Late bids and modifications or withdrawals" in section 1-2.201(a)(23) of the FPR, with paragraph (b) thereof changed to read as follows, shall be included in all invita- tions for bids issued after March 15, 1964, but should be included in invitations as soon as practicable: (b) Bidders using certified mail are cautioned to obtain a Receipt for Certified Mail showing a legible, dated postmark and to retain such receipt against the chance that it will be required as evidence that a late bid was timely mailed. (c) The time of mailing of late bids submitted by registered or certified mail shall be deemed to be the last minute of the date shown in the postmark on the registered mail receipt or registered mail wrapper or on the Receipt for Certified Mail unless the bidder furnishes evidence from the post office station of mailing which establishes an earlier time. In the case of certified mail, the only accept- able evidence is as follows: (1) where the Receipt for Certified Mail identifies the post office station of mailing, evidence furnished by the bidder which establishes that the business day of that station ended at an earlier time, in which case the time of mailing shall be deemed to be the last minute of the business day of that station; or (2) an entry in ink on the Receipt for Certified Mail showing the time of mailing and the initials of the postal employee receiving the item and making the entry, with appropriate written verification of such entry from the post office station of mailing, in which case the time of mailing shall be the time shown in the entry. If the postmark on the original Receipt for Certified Mail does not show a date, the bid shall not be considered. 3. Rules for Determining Time of Mailing. (a) The time of mailing of a late bid received in response to an invitation for bids which contains the provision set forth in section 1-2. 201(a)(23) of the FPR, PURCHASED THROUGH DOC, EX PROJECT without modification as provided in paragraph 2 of this Notice, shall be determined in accordance with present section 1-2.303-3 of the FPR. (b) The time of mailing of a late bid received in response to an invitation for bids which contains the provision set forth in section 1-2.201(a)(23) of the FPR, as modified pursuant to paragraph 2 of this Notice, shall be determined in accord- ance with (1) or (2) below, as applicable. (1) Registered Mail. The time of mailing of a late bid mailed by registered mail may be determined by the date in the postmark on the registered mail receipt or registered mail wrapper. The time of mailing shall be deemed to be the last minute of the date shown in such postmark unless the bidder furnishes evidence from the post office station of mailing which establishes an earlier time. Such evidence, if appropriately verified in writing by the post office station of mailing, may consist of an entry in ink on the registered mail receipt showing the time of mailing and the initials of the postal employee receiving the item and making the entry. If the postmark does not show a date, the bid shall be deemed to have been mailed too late unless the bidder furnishes evidence from the post office station of mailing which establishes timely mailing. (2) Certified Mail. The time of mailing of a late bid mailed by certi- fied mail for which a postmarked Receipt for Certified Mail was obtained shall be deemed to be the last minute of the date shown in the postmark on such receipt, except where (i) the Receipt for Certified Mail identifies the post office station of mailing and the bidder furnishes evidence from such station that the business day of that station ended at an earlier time, in which case the time of mailing shall be deemed to be the last minute of the business day of that station; or (ii) an entry in ink on the Receipt for Certified Mail, showing the time of mailing and the initials of the postal employee receiving the item and making the entry, is appropriately verified in writing by the post office station of mailing, in which case the time of mailing shall be the time shown in the entry. If the postmark does not show a date, the bid shall be deemed to have been mailed too late. 4. Notification to Late Bidders. (a) Where a late bid is received in response to an invitation for bids which contains the provision set forth in section 1-2. 201(a)(23) of the FPR, without modification as provided in paragraph 2 of this Notice, and a notice to the bidder is required by section 1-2.303-6 of the FPR, the language of the notice shall be substantially as set forth in said section 1-2.303-6. (b) Where a late bid is received in response to an invitation for bids which contains the provision set forth in section 1-2.201(a)(23) of the FPR, as modified pursuant to paragraph 2 of this Notice, and a notice to the bidder is required by section 1-2.303-6 of the FPR, the language of the notice shall be substantially as follows: Your bid in response to Invitation for Bids No. dated was received after the time for open- ing specified in the Invitation. Accordingly, your bid will not be considered for award unless (1) there is received from you by (date) clear and convincing evidence from the post office station of mailing which establishes the date (and time, if -2- possible) that the bid was deposited with that station, and (2) it is determined by the Government that late receipt was due solely to a delay in the mail for which you are not responsible. In the case of certified mail, the original postmarked Receipt for Certified Mail must be furnished and is the only evidence acceptable under (1) above, except that, where the Receipt for Certified Mail identifies the post office station of mailing, evidence from such station of its closing time or written verification by such station of an approved time entry on the receipt are also acceptable. 5. Effective Date. This Notice is effective immediately and will remain in effect until superseded by an appropriate FPR Circular. Ramess مـ con B. 13.7 Fast of. LAWSON B. KNOTT, JR. Acting Administrator of General Services -3- OF THE MICHIGAN UNIVERSITY GENERAL SERVICES ADMINISTRATION MAY 26 19 FPR NOTICE NO. 9 BUR. OF GOV'T. LIBRARY April 24, 1964 REGULATIONS Washington, D. C. 20405 FEDERAL PROCUREMENT PUBLIC POLICY AGAINST DISCRIMINATION ON THE BASIS OF AGE The policy of the Government regarding discrimination on the basis of age is set forth in Executive Order No. 11141 of February 12, 1964 (29 F. R. 2477). 1. Policy. The policy stated by the President in Executive Order No. 11141 is as follows: ". . . it is the policy of the Executive Branch of the Government that (1) contractors and subcontractors engaged in the performance of Federal contracts shall not, in connection with the employment, advancement, or discharge of employees, or in connection with the terms, conditions, or privileges of their employment, discriminate against persons because of their age except upon the basis of a bona fide occupational qualification, retirement plan, or statutory requirement, and (2) that contractors and subcontractors, or persons acting on their behalf, shall not specify, in solicitations or advertisements for employees to work on Government contracts, a maximum age limit for such employment unless the specified maximum age limit is based upon a bona fide occupational qualifica- tion, retirement plan, or statutory requirement." 2. Implementation. This Notice constitutes, on an interim basis, the imple- mentation in the Federal Procurement Regulations which is required by the Execu- tive order. Subsequently, the Federal Procurement Regulations will be amended to include the policy in Subpart 1-12. 10 of the regulations. Additional implementa - tion in the form of contract clauses is not required. However, a brochure setting forth the policy is being developed by the Department of Labor and will be made available to departments and agencies for distribution to bidders and offerors. 3. Handling of Complaints. In the event that letters or other representations are received regarding a concern's compliance with the foregoing public policy against discrimination on the basis of age, the matter should be handled on the basis of a communication directed to the concern involved (letter, if appropriate) which sets forth the policy, indicates that the concern's compliance with the policy has been questioned, and requests that the concern review its compliance and, if necessary, take appropriate measures to comply with the policy. 4. Effective Date. This Notice is effective immediately and will remain in effect until superseded by an appropriate FPR Circular. BERNARD L. BOUTIN Administrator of General Services PURCHASED THROUGH GSA DC 64-15467 DOC. EX. PROJECT CONTENTS OF PART 1-15 CONTRACT COST PRINCIPLES AND PROCEDURES Γ Sec. 1-15.000 1-15.101 1-15.102 1-15.103 1-15.104 1-15.105 1-15.106 1-15.107 Scope of part. Subpart 1-15.1—Applicability Scope of subpart. Cost-reimbursement supply and research contracts with con- cerns other than educational institutions. Cost-reimbursement Sec. Manufacturing and production engineering costs. 1-15.205-21 1-15.205-22 1-15.205-23 1-15.205-24 1-15.205-25 Material costs. Organization costs. Other business expenses. Overtime, extra-pay shift and multi-shift premiums. 1-15.205-26 Patent costs. research 1-15.205-27 contracts with educational institutions. Cost-reimbursement construc- tion contracts. [Reserved.] Use of cost principles for fixed- price type contracts. Advance understandings particular cost items. on Subpart 1-15.2-Principles and Procedures for Use in Cost-Reimbursement Type Supply and Research Contracts With Commercial Organi- zations Basic considerations. Composition of total cost. Indirect costs. Application of principles and procedures. Compensation Pension plans. 1-15.205-28 Plant protection costs. 1-15.205-29 Plant reconversion costs. 1-15.205-30 1-15.205-31 Precontract costs. Professional service costs—legal, accounting, engineering, and other. 1-15.205-32 Profits and losses on disposition 1-15.205-33 1-15.205-34 1-15.205-35 of plant, equipment, or other capital assets. Recruiting costs. Rental costs (including sale and leaseback of facilities). Research and development costs. 1-15.205-36 Royalties and other costs for use of patents. Service and warranty costs. Severance pay. 1-15.205-40 Special tooling costs. 1-15.205-41 1-15.205-42 1-15.205-43 1-15.205-44 1-15.205-45 1-15.205-46 Taxes. Termination costs. Trade, business, technical, and professional activity costs. Training and educational costs. Transportation costs. Travel costs. Subpart 1-15.3-Principles for Determining Ap- plicable Costs Under Research Contracts With Educational Institutions 1-15.201 1-15.201-1 1-15.201-2 Factors affecting allowability of costs. 1-15.205-37 Selling costs. 1-15.205-38 1-15.201-3 Definition of reasonableness. 1-15.205-39 1-15.201-4 Definition of allocability. 1-15.201-5 Credits. 1-15.202 Direct costs. 1-15.203 1-15.204 1-15.205 Selected costs. 1-15.205-1 Advertising costs. 1-15.205-2 Bad debts. 1-15.205-3 Bidding costs. 1-15.205-4 Bonding costs. 1-15.205-5 Civil defense costs. 1-15.205-6 for personal services. 1-15.301 General. 1-15.205-7 Contingencies. 1-15.302 Definitions. 1-15.205-8 Contributions and donations. 1-15.303 Direct costs. 1-15.205-9 Depreciation. 1-15.304 1-15.205-10 Employee morale, health, and 1-15.305 1-15.205-11 welfare costs and credits. Entertainment costs. 1-15.306 1-15.306-1 1-15.205-12 Excess facility costs. 1-15.306-2 1-15.205-13 Fines and penalties. 1-15.306-3 Indirect costs. Applicable costs. Determination of indirect costs. General. Apportionment. Allocation. 1-15.205-14 Food service and dormitory 1-15.306-4 Overhead determinations ac- costs and credits. 1-15.205-15 Fringe benefits. ceptable under special cir- cumstances. Insurance and indemnification. Interest and other financial costs. 1-15.205-16 1-15.205-17 1-15.205-18 Labor relations costs. 1-15.205-19 Losses on other contracts. L1-15.205-20 Maintenance and repair costs. 1-15.307-2 1-15.307-3 items of cost. Purpose and applicability. Costs applicable to instruction. Allowable costs. and unallowable 1-15.307 General standards for selected 1-15.307-1 FEDERAL PROCUREMENT REGULATIONS ୮ (FPR CIRC, 10, JULY 1960) i ما CONTENTS OF PART 1-15 CONTRACT COST PRINCIPLES AND PROCEDURES Sec. Subpart 1-15.4—Construction Contracts 1-15.401 1-15.402 1-15.403 Definition of construction con- tract. General basis for determination of costs. Examples of items of allowable costs. Sec. 1-15.406 Cost interpretation of pension and retirement plans. Subpart 1-15.5-[Reserved] Subpart 1-15.6-Guidelines for Application in the Negotiation and Administration of Fixed- Price Type Contracts and in the Negotiation of Termination Settlements Scope of subpart. Definition of fixed-price type contracts. 1-15.600 1-15.404 Examples of items of unallow- able costs. 1-15.601 1-15.405 Examples of subjects requiring special considerations. 1-15.602 1-15.603 Cost principles and their use. Basic considerations. REGULATIONS FEDERAL PROCUREMENT ୮ ii (FPR CIRC. 10, JULY 1960) PART 1-15 CONTRACT COST PRINCIPLES AND PROCEDURES 1-15.104 (a) § 1-15.000 Scope of part. This part contains general cost prin- ciples and procedures for the determina- tion and allowance of costs in connection with the negotiation and administration of cost-reimbursement type contracts and contains guidelines for use, where appropriate, in the evaluation of costs in connection with certain negotiated fixed-price type contracts and contracts terminated for the convenience of the Government. Subpart 1-15.1-Applicability § 1-15.101 Scope of subpart. This subpart describes the applicability of succeeding subparts of this part to the various types of contracts in con- nection with which cost principles and procedures are used, and the need for advance understandings. § 1-15.102 Cost-reimbursement supply and research contracts with concerns other than educational institutions. This category includes all cost-reim- bursement type contracts (see § 1-3.404) for supplies, services, or experimental, developmental, or research work (other than with educational institutions, as to which § 1-15.103 applies), except that it does not include construction contracts (see § 1-15.104) or facilities contracts. The cost principles and procedures set forth in Subpart 1-15.2 may be incor- porated by reference in cost-reimburse- ment supply and research contracts with other than educational institutions as the basis- (a) For determination of reimbursable costs under such contracts, including cost-reimbursement type subcontracts thereunder, and the cost-reimbursement portion of time-and-materials contracts (§ 1-3.405-1); (b) For the negotiation of overhead rates; and (c) For the determination of costs of terminated cost-reimbursement type contracts, and for settlement of such L contracts by determination. § 1-15.103 Cost-reimbursement research contracts with educational institu- tions. (a) This category includes all cost- reimbursement (see type contracts § 1-3.404) for experimental, develop- mental, or research work with educa- tional institutions. The cost principles and procedures set forth in Subpart 1-15.3 are the same as those provided, together with related policy guides, for Government-wide use by Circular No. A-21, September 10, 1958, issued by the Bureau of the Budget, and accordingly shall be incorporated (by reference, if desired) in cost-reimbursement research contracts with educational institutions as the basis- (1) For determination of reimburs- able costs under cost-reimbursement type contracts, including cost-reimburse- ment type subcontracts thereunder; (2) For the negotiation of overhead rates; and (3) For the determination of costs of terminated cost-reimbursement type contracts, and for settlement of such contracts by determination. (b) In addition, Subpart 1-15.3 is to be used in determining allowable costs of research and development performed by educational institutions under grants. § 1-15.104 Cost-reimbursement con- struction contracts. 1 This category includes all cost-reim- bursement type contracts for the con- struction, alteration, or repair of buildings, bridges, roads, or other kinds of real property. It also includes cost- reimbursement type contracts for archi- tect-engineer services related to such construction. It does not include con- tracts for vessels, aircraft, or other kinds of personal property. The cost princi- ples and procedures set forth in Subpart 1-15.4 may be incorporated by reference in cost-reimbursement construction con- tracts as the basis- (a) For determination of reimbursable costs under cost-reimbursement type FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 10, JULY 1960) 1501 PART 1-15 CONTRACT COST PRINCIPLES AND PROCEDURES L 1-15.104 (a) contracts, including cost-reimbursement type subcontracts thereunder; (b) For the negotiation of overhead rates; and (c) For the determination of costs of terminated cost-reimbursement type contracts, and for settlement of such contracts by determination. § 1-15.105 [Reserved] § 1-15.106 Use of cost principles for fixed-price type contracts. Subpart 1-15.6 provides guidance for the use of Subparts 1-15.2, 1-15.3, and 1-15.4 where appropriate, in the evalua- tion of costs in connection with the negotiation of certain fixed-price type contracts and termination settlements. § 1-15.107 Advance understandings on particular cost items. The extent of allowability of the se- lected items of cost covered in Subparts 1-15.2, 1–15.3, and 1-15.4 has been stated to apply broadly to many accounting systems in varying contract situations. Thus, as to any given contract, the reasonableness and allocability of cer- tain items of cost may be difficult to de- termine, particularly in connection with firms or separate divisions thereof which may not be subject to effective competi- tive restraints. In order to avoid possible subsequent disallowance or dispute based on unreasonableness or nonallocability, it is important that prospective con- tractors, particularly those whose work is predominantly or substantially with the Government, seek agreement with the Government in advance of the incur- rence of special or unusual costs in categories where reasonableness or allo- cability are difficult to determine. Such agreement may also be initiated by con- tracting officers when appropriate. Any such agreement should be incorporated in cost-reimbursement type contracts, or made a part of the contract file in the case of negotiated fixed-price type con- tracts, and should govern the cost treat- ment covered thereby throughout the performance of the contract. But the absence of such an advance agreement on any element of cost will not, in itself, serve to make that element either allow- able or unallowable. Examples of costs on which advance agreements may be particularly important are: (a) Compensation for personal serv- ices; (b) Use charge for fully depreciated assets; (c) Deferred maintenance costs; (d) Pre-contract costs; (e) Research and development costs; (f) Royalties; (g) Selling and distribution costs; and (h) Travel costs, as related to special or mass personnel movement. FEDERAL PROCUREMENT REGULATIONS 1502 (FPR CIRC. 10, JULY 1960) SUBPART 1-15.2 PRINCIPLES AND PROCEDURES FOR USE IN COST-REIMBURSEMENT TYPE SUPPLY AND RESEARCH CONTRACTS WITH COMMERCIAL ORGANIZATIONS 1-15, 201—5 Subpart 1-15.2-Principles and Pro- cedures for Use in Cost-Reimburse- ment Type Supply and Research Contracts With Commercial Organi- zations § 1-15.201 Basic considerations. § 1-15.201-1 Composition of total cost. The total cost of a contract is the sum of the allowable direct and indirect costs allocable to the contract, incurred or to be incurred, less any allocable credits. In ascertaining what constitutes costs, any generally accepted method of deter- mining or estimating costs that is equi- table under the circumstances may be used, including standard costs properly adjusted for applicable variances. § 1-15.201-2 Factors affecting allow- ability of costs. Factors to be considered in determin- ing the allowability of individual items of cost include (a) reasonableness, (b) allocability, (c) application of those gen- erally accepted accounting principles and practices appropriate to the particular circumstances, and (d) any limitations or exclusions set forth in this Subpart 1-15.2, or otherwise included in the contract as to types or amounts of cost items. § 1-15.201-3 Definition of reasonable- ness. A cost is reasonable if, in its nature or amount, it does not exceed that which would be incurred by an ordinarily pru- dent person in the conduct of competi- tive business. The question of the rea- sonableness of specific costs must be scrutinized with particular care in con- nection with firms or separate divisions thereof which may not be subject to ef- fective competitive restraints. What is reasonable depends upon a variety of considerations and circumstances in- volving both the nature and amount of the cost in question. In determining the reasonableness of a given cost, con- sideration shall be given to: (a) Whether the cost is of a type gen- erally recognized as ordinary and neces- sary for the conduct of the contractor's business or the performance of the contract; (b) The restraints or requirements im- posed by such factors as generally ac- cepted sound business practices, arm's length bargaining, Federal and State laws and regulations, and contract terms and specifications; (c) The action that a prudent business man would take in the circumstances, considering his responsibilities to the owners of the business, his employees, his customers, the Government, and the public at large; and (d) Significant deviations from the established practices of the contractor which may unjustifiably increase the contract costs. § 1-15.201-4 Definition of allocability. A cost is allocable if it is assignable or chargeable to a particular cost ob- jective, such as a contract, product, product line, process, or class of cus- tomer or activity, in accordance with the relative benefits received or other equi- table relationship. Subject to the fore- going, a cost is allocable to a Govern- ment contract if it: (a) Is incurred specifically for the contract; (b) Benefits both the contract and other work, or both Government work and other work, and can be distributed to them in reasonable proportion to the benefits received; or (c) Is necessary to the overall opera- tion of the business, although a direct relationship to any particular cost ob- jective cannot be shown. § 1-15.201-5 Credits. The applicable portion of any income, rebate, allowance, and other credit re- lating to any allowable cost, received by FEDERAL PROCUREMENT REGULATIONS (fpr Circ. 10, JULY 1960) 1503 PART 1-15 CONTRACT COST PRINCIPLES AND PROCEDURES 1-15, 201-5 or accruing to the contractor, shall be credited to the Government either as a cost reduction or by cash refund, as appropriate. § 1-15.202 Direct costs. (a) A direct cost is any cost which can be identified specifically with a partic- ular cost objective. Direct costs are not limited to items which are incorporated in the end product as material or labor. Costs identified specifically with the con- tract are direct costs of the contract and are to be charged directly thereto. Costs identified specifically with other work of the contractor are direct costs of that work and are not to be charged to the contract directly or indirectly. When items ordinarily chargeable as indirect costs are charged to Government work as direct costs, the cost of like items applicable to other work of the contrac- tor must be eliminated from indirect costs allocated to Government work. (b) This definition shall be applied to all items of cost of significant amount unless the contractor demonstrates that the application of any different cur- rent practice achieves substantially the same results. Direct cost items of minor amount may be distributed as indirect costs as provided in § 1-15.203. § 1-15.203 Indirect costs. (a) An indirect cost is one which, be- cause of its incurrence for common or joint objectives, is not readily subject to treatment as a direct cost. Minor direct cost items may be considered to be in- direct costs for reasons of practicality. After direct costs have been determined and charged directly to the contract or other work as appropriate, indirect costs are those remaining to be allocated to the several classes of work. (b) Indirect costs shall be accumulated by logical cost groupings with due con- sideration of the reasons for incurring the costs. Each grouping should be de- termined so as to permit distribution of the grouping on the basis of the benefits Laccruing to the several cost objectives. Commonly, manufacturing overhead, selling expenses, and general and admin- istrative expenses, are separately grouped. Similarly, the particular case may require subdivisions of these group- ings, e.g., building occupancy costs might be separable from those of personnel ad- ministration within the manufacturing overhead group. The number and com- position of the groupings should be gov- erned by practical considerations and should be such as not to complicate un- duly the allocation where substantially the same results are achieved through less precise methods. (c) Each cost grouping shall be dis- tributed to the appropriate cost objec- tives. This necessitates the selection of a distribution base common to all cost objectives to which the grouping is to be allocated. The base should be se- lected so as to permit allocation of the grouping on the basis of the benefits accruing to the several cost objectives. This principle for selection is not to be applied so rigidly as to complicate unduly the allocation where substantially the same results are achieved through less precise methods. (d) The method of allocation of in- direct costs must be based on the par- ticular circumstances involved. The method shall be in accord with those gen- erally accepted accounting principles which are applicable in the circum- stances. The contractor's established practices, if in accord with such account- ing principles, shall generally be accept- able. However, the methods used by the contractor may require reexamination when: (1) Any substantial difference oc- curs between the cost patterns of work under the contract and other work of the contractor; or (2) Any significant change occurs in the nature of the business, the extent of subcontracting, fixed asset improve- ment programs, the inventories, the volume of sales and production, manu- facturing processes, the contractor's FEDERAL PROCUREMENT REGULATIONS 1504 (FPR CIRC, 10, JULY 1960) SUBPART 1-15, 2 PRINCIPLES AND PROCEDURES FOR USE IN COST-REIMBURSEMENT TYPE SUPPLY AND RESEARCH CONTRACTS WITH COMMERCIAL ORGANIZATIONS L products, or other relevant circum- stances. (e) A base period for allocation of in- direct costs is the period during which such costs are incurred and accumulated for distribution to work performed in that period. Normally, the base period will be the contractor's fiscal year; how- ever, use of a shorter period may be ap- propriate in case of (1) contracts whose performance involves only a minor por- tion of the fiscal year, or (2) where it is general practice in the industry to use a shorter period. In any event the base period or periods shall be so selected as to avoid inequities in the allocation of costs. When the contract is performed over an extended period of time, as many such base periods will be used as will be re- quired to represent the period of contract performance. § 1-15.204 Application of principles and procedures. (a) Costs shall be allowed to the ex- tent that they are reasonable (see § 1-15.201-3), allocable (see § 1-15.201- 4), and determined to be allowable in view of the other factors set forth in §§ 1-15.201-2 and 1-15.205. These cri- teria apply to all of the selected items of cost which follow, notwithstanding that particular guidance is provided in con- nection with certair specific items for emphasis or clarity. (b) Costs incurred as reimbursements to a subcontractor under a cost-reim- bursement type subcontract of any tier above the first fixed-price subcontract are allowable to the extent that allow- ance is consistent with the subpart of this Part 1-15 which is appropriate to the subcontract involved. Thus, if the subcontract is for supplies, such costs are allowable to the extent that the sub- contractor's costs would be allowable if this Subpart 1-15.2 were incorporated in the subcontract; if the subcontract is for construction, such costs are allow- Lable to the extent that the subcontrac- 1-15, 205-1(a)(3)(ii) tor's costs would be allowable if Subpart 1-15.4 were incorporated in the subcon- tract. (c) Selected items of cost are treated in § 1-15.205. However, § 1-15.205 does not cover every element of cost and every situation that might arise in a particular case. Failure to treat any item of cost in § 1-15.205 is not intended to imply that it is either allowable or unallowable. With respect to all items, whether or not specifically covered, determination of al- lowability shall be based on the princi- ples and standards set forth in this subpart and, where appropriate, the treatment of similar or related selected items. § 1-15.205 Selected costs. § 1-15.205-1 Advertising costs. (a) Advertising costs mean the costs of advertising media and corollary ad- ministrative costs. Advertising media include magazines, newspapers, radio and television programs, direct mail, trade papers, outdoor advertising, dealer cards and window displays, conventions, exhibits, free goods and samples, and the like. The following advertising costs are allowable: (1) Advertising in trade and techni- cal journals, provided such advertising does not offer specific products or serv- ices for sale but is placed in journals which are valuable for dissemination of technical information within the con- tractor's industry; (2) Help-wanted advertising, as set forth in § 1-15.205-33, when considered in conjunction with all other recruit- ment costs; (3) Costs of participation in ex- hibits- (i) Upon invitation of the Gov- ernment, or (ii) Which exhibits are for the purpose of disseminating technical in- formation within the contractor's in- dustry; however, such costs are not al- lowable under this (ii) if the exhibit ← FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 10, JULY 1960) 1505 PART 1-15 CONTRACT COST PRINCIPLES AND PROCEDURES 1—15. 205—1(a)(3)(ii) offers specific products or services for sale; (4) Advertising for the exclusive purpose of obtaining scarce materials, plant, or equipment, or disposing of scrap or surplus materials, in connection with the contract. (b) Except as provided above, all other advertising costs are unallowable. § 1-15.205-2 Bad debts. Bad debts, including losses (whether actual or estimated) arising from uncol- lectible customers' accounts and other claims, related collection costs, and re- lated legal costs, are unallowable. § 1-15.205-3 Bidding costs. Bidding costs are the costs of prepar- ing bids or proposals on potential Gov- ernment and non-Government contracts or projects, including the development of engineering data and cost data neces- sary to support the contractor's bids or proposals. Bidding costs of the current accounting period of both successful and unsuccessful bids and proposals nor- mally will be treated as allowable indi- rect costs, in which event no bidding costs of past accounting periods shall be allowable in the current period to the Government contract. However, if the contractor's established practice is to treat bidding costs by some other method, the results obtained may be ac- cepted only if found to be reasonable and equitable. § 1-15.205-4 Bonding costs. (a) Bonding costs arise when the Government requires assurance against financial loss to itself or others by rea- son of the act or default of the contrac- tor. They arise also in instances where the contractor requires similar assur- ance. Included are such bonds as bid, performance, payment, advance pay- ment, infringement, and fidelity bonds. (b) Costs of bonding required pur- suant to the terms of the contract are Lallowable. (c) Costs of bonding required by the contractor in the general conduct of his business are allowable to the extent that such bonding is in accordance with sound business practice and the rates and premiums are reasonable under the circumstances. § 1-15.205-5 Civil defense costs. (a) Civil defense costs are those in- curred in planning for, and the protec- tion of life and property against, the possible effects of enemy attack. Rea- sonable costs of civil defense measures (including costs in excess of normal plant protection costs, first-aid training and supplies, fire fighting training and equipment, posting of additional exit no- tices and directions, and other approved civil defense measures) undertaken on the contractor's premises pursuant to suggestions or requirements of civil de- fense authorities are allowable when al- located to all work of the contractor. (b) Costs of capital assets under (a) above are allowable through deprecia- tion in accordance with § 1-15.205-9. (c) Contributions to local civil de- fense funds and projects are unallow- able. § 1-15.205-6 Compensation for per- sonal services. (a) General. (1) Compensation for personal serv- ices includes all remuneration paid cur- rently or accrued, in whatever form and whether paid immediately or deferred, for services rendered by employees to the contractor during the period of con- tract performance. It includes, but is not limited to, salaries, wages, directors' and executive committee members' fees, bonuses (including stock bonuses), in- centive awards, employee stock options, employee insurance, fringe benefits, and contributions to pension, annuity, and management employee incentive com- pensation plans. Except as otherwise specifically provided in this § 1-15.205-6, FEDERAL PROCUREMENT REGULATIONS 1506 (FPR CIRC. 10, JULY 1960) SUBPART 1-15, 2 PRINCIPLES AND PROCEDURES FOR USE IN COST-REIMBURSEMENT TYPE SUPPLY AND RESEARCH CONTRACTS WITH COMMERCIAL ORGANIZATIONS such costs are allowable to the extent that the total compensation of individ- ual employees is reasonable for the serv- ices rendered and they are not in excess of those costs which are allowable by the Internal Revenue Code and regula- tions thereunder. (2) Compensation is reasonable to the extent that the total amount paid or accrued is commensurate with com-. pensation paid under the contractor's es- tablished policy and conforms generally to compensation paid by other firms of the same size, in the same industry, or in the same geographic area, for similar services. In the administration of this principle, it is recognized that not every compensation case need be subjected in detail to the above tests. Such tests need be applied only to those cases in which a general review reveals amounts or types of compensation which appear unreasonable or otherwise out of line. However, certain conditions give rise to the need for special consideration and possible limitation as to allowability for contract cost purposes where amounts appear excessive. Among such condi- tions are the following: (i) Compensation to owners of closely held corporations, partners, sole proprietors, or members of the immedi- ate families thereof, or to persons who are contractually committed to acquire a substantial financial interest in the contractor's enterprise. Determination should be made that such compensation is reasonable for the actual personal services rendered rather than a distri- bution of profits. (ii) Any change in a contractor's compensation policy resulting in a sub- stantial increase in the contractor's level of compensation, particularly when it was concurrent with an increase in the ratio of Government contracts to other business, or any change in the treatment of allowability of specific types of com- pensation due to changes in Government L policy. 1-15, 205-6(d) (iii) The contractor's business is such that his compensation levels are not subject to the restraints normally occur- ring in the conduct of competitive business. (3) Compensation in lieu of salary for services rendered by partners and sole proprietors will be allowed to the extent that it is reasonable and does not constitute a distribution of profits. (4) In addition to the general re- quirements set forth in (1) through (3) above, certain forms of compensation are subject to further requirements as speci- fied in (b) through (i) below. (b) Salaries and wages. Salaries and wages for current services include gross compensation paid to employees in the form of cash, products, or services, and are allowable. However, premiums for overtime, extra-pay shifts, and multi- shift work are allowable to the extent ap- proved pursuant to § 1-12.102-4 or per- mitted pursuant to § 1-12.102-5. (c) Cash bonuses and incentive com- pensation. Incentive compensation for management employees, cash bonuses, suggestion awards, safety awards, and incentive compensation based on pro- duction, cost reduction, or efficient per- formance, are allowable to the extent that the overall compensation is de- termined to be reasonable and such costs are paid or accrued pursuant to an agree- ment entered into in good faith between the contractor and the employees before the services were rendered, or pursuant to an established plan followed by the contractor so consistently as to imply, in effect, an agreement to make such pay- ment. (But see § 1-15.107.) Bonuses, awards, and incentive compensation when any of them are deferred are al- lowable to the extent provided in (f) below. (d) Bonuses and incentive compensa- tion paid in stock. Costs of bonuses and incentive compensation paid in the stock of the contractor or of an affiliate are allowable to the extent set forth in (c) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 10, JULY 1960) 1507 PART 1-15 CONTRACT COST PRINCIPLES AND حا PROCEDURES 1-15, 205-6(d) above (including the incorporation of the principles of (f) below for deferred bonuses and incentive compensation), subject to the following additional requirements: (1) Valuation placed on the stock transferred shall be the fair market value at the time of transfer, determined upon the most objective basis available; and (2) Accruals for the cost of stock prior to the issuance of such stock to the employees shall be subject to adjustment according to the possibilities that the employees will not receive such stock and their interest in the accruals will be forfeited. Such costs otherwise allowable are sub- ject to adjustment according to the principles set forth in (f) (3) below. (But see § 1-15.107.) (e) Stock options. The cost of op- tions to employees to purchase stock of the contractor or of an affiliate is unallowable. (f) Deferred compensation. (1) As used herein, deferred com- pensation includes all remuneration, in whatever form, for which the employee is not paid until after the lapse of a stated period of years or the occurrence of other events as provided in the plans, except that it does not include normal end of accounting period accruals. It includes (i) contributions to pension, an- nuity, stock bonus, and profit sharing plans, (ii) contributions to disability, withdrawal, insurance, survivorship, and similar benefit plans, and (iii) other de- ferred compensation, whether paid in cash or in stock. (2) Deferred compensation is allow- able to the extent that (i) except for past service pension and retirement costs, it is for services rendered during the con- tract period; (ii) it is, together with all other compensation paid to the em- ployee, reasonable in amount; (iii) it is paid pursuant to an agreement entered into in good faith between the contractor and employees before the services are rendered, or pursuant to an established plan followed by the contractor so con- sistently as to imply, in effect, an agree- ment to make such payments; and (iv) for a plan which is subject to approval by the Internal Revenue Service, it falls within the criteria and standards of the Internal Revenue Code and the regula- tions of the Internal Revenue Service. (But see § 1-15. 107.) (3) In determining the cost of de- ferred compensation allowable under the contract, appropriate adjustments shall be made for credits or gains, including those arising out of both normal and abnormal employee turnover, or any other contingencies that can result in a forfeiture by employees of such deferred compensation. Adjustments shall be made only for forfeitures which directly or indirectly inure to the benefit of the contractor; forfeitures which inure to the benefit of other employees covered by a deferred compensation plan with no reduction in the contractor's costs will not normally give rise to adjustment in contract costs. Adjustments for normal employee turnover shall be based on the contractor's experience and on foresee- able prospects, and shall be reflected in the amount of cost currently allowable. Such adjustments will be unnecessary to the extent that the contractor can dem- onstrate that its contributions take into account normal forfeitures. Adjust- ments for possible future abnormal for- feitures shall be effected according to the following rules: (i) Abnormal forfeitures that are foreseeable and which can be currently evaluated with reasonable accuracy, by actuarial or other sound computation, shall be reflected by an adjustment of current costs otherwise allowable; and (ii) Abnormal forfeitures, not within (i) above, may be made the sub- ject of agreement between the Govern- ment and the contractor either as to an equitable adjustment or a method of de- termining such adjustment. Г (4) In determining whether de- ferred compensation is for services ren- dered during the contract period or is d FEDERAL PROCUREMENT REGULATIONS 1508 (FPR CIRC, 10, JULY 1960) SUBPART 1-15, 2 PRINCIPLES AND PROCEDURES FOR USE IN COST-REIMBURSEMENT TYPE SUPPLY AND RESEARCH CONTRACTS WITH COMMERCIAL ORGANIZATIONS for future services, consideration shall be given to conditions imposed upon eventual payment, such as, requirements of continued employment, consultation after retirement, and covenants not to compete. (g) Fringe benefits. Fringe benefits are allowances and services provided by the contractor to its employees as com- pensation in addition to regular wages and salaries. Costs of fringe benefits, such as pay for vacations, holidays, sick leave, military leave, employee insurance, and supplemental employment benefit plans are allowable to the extent re- quired by law, employer-employee agree- ment, or an established policy of the contractor. (h) Severance pay. See § 1-15.205-39. (i) Training and education expenses. See § 1-15.205-44. § 1-15.205-7 Contingencies. (a) A contingency is a possible future event or condition arising from presently known or unknown causes, the outcome of which is indeterminable at a present time. (b) In historical costing, contingencies are not normally present since such cost- ing deals with costs which have been in- curred and recorded on the contractor's books. Accordingly, contingencies are generally unallowable for historical cost- ing purposes. However, in some cases, as for example, terminations, a contin- gency factor may be recognized which is applicable to a past period to give recog- nition to minor unsettled factors in the interest of expeditious settlement. (c) In connection with estimates of future costs, contingencies fall into two categories: (1) Those which may arise from presently known and existing conditions, the effects of which are foreseeable with- in reasonable limits of accuracy; e.g., anticipated costs of rejects and defec- tive work; in such situations where they Lexist, contingencies of this category are 1-15, 205-9(b) (2) to be included in the estimates of future cost so as to provide the best estimate of performance costs; and (2) Those which may arise from presently known or unknown conditions, the effect of which cannot be measured so precisely as to provide equitable re- sults to the contractor and to the Gov- ernment; e 3., results of pending litiga- tion, and other general business risks. Contingencies of this category are to be excluded from cost estimates under the several items of cost, but should be dis- closed separately, including the basis upon which the contingency is computed in order to facilitate the negotiation of appropriate contractual coverage (see, for example, §§ 1-15.205-16, 1-15.205-20, and 1-15.205-39). § 1-15.205-8 Contributions and dona- tions. Contributions and donations are un- allowable. § 1-15.205-9 Depreciation. (a) Depreciation is a charge to cur- rent operations which distributes the cost of a tangible capital asset, less esti- mated residual value, over the estimated useful life of the asset in a systematic and logical manner. It does not involve a process of valuation. Useful life has reference to the prospective period of economic usefulness in the particular contractor's operations as distinguished from physical life. (b) Normal depreciation on a con- tractor's plant, equipment, and other capital facilities is an allowable element of contract cost; provided that the amount thereof is computed: (1) Upon the property cost basis used by the contractor for Federal in- come tax purposes (see section 167 of the Internal Revenue Code of 1954); or (2) In the case of nonprofit or tax- exempt organizations, upon a property cost basis which could have been used by the contractor for Federal income tax FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 10, JULY 1960) 1509 PART 1-15 CONTRACT COST PRINCIPLES AND PROCEDURES Г 1–15. 205–9 (b) (2) purposes, had such organizations been subject to the payment of income tax; and in either case (3) By the consistent application to the assets concerned of any generally accepted accounting method, and sub- ject to the limitations of the Internal Revenue Code of 1954, as amended, in- cluding- (i) The straight line method; (ii) The declining balance meth- od, using a rate not exceeding twice the rate which would have been used had the annual allowance been computed under the method described in (i) above; (iii) The sum of the years-digits method; and (iv) Any other consistent method productive of an annual allowance which, when added to all allowances for the period commencing with the use of the property and including the current year, does not, during the first two-thirds of the useful life of the property, exceed the total of such allowances which would have been used had such allow- ances been computed under the method described in (ii) above. (c) Depreciation should usually be al- located to the contract and other work as an indirect cost. The amount of de- preciation allowed in any accounting period may, consistent with the basic objectives set forth in (a) above, vary with volume of production or use of multi-shift operations. (d) Depreciation on idle or excess fa- cilities shall not be allowed except on such facilities as are reasonably neces- sary for standby purposes. use (e) No depreciation, rental, or charge shall be allowed on the contrac- tor's assets which have been fully depre- ciated when a substantial portion of such depreciation was on a basis that repre- sented, in effect, a recovery thereof as a charge against Government contracts or subcontracts. Otherwise, a reasonable use charge may be agreed upon and al- lowed. (But see § 1-15.107.) In deter- mining this charge, consideration should L be given to cost, total estimated useful life at time of negotiation, and effect of any increased maintenance charges or decreased efficiency due to age. § 1-15.205-10 Employee morale, health, and welfare costs and credits. Reasonable costs of health and welfare activities, such as house publications, health or first-aid clinics, recreational activities, and employee counseling serv- ices, incurred, in accordance with the contractor's established practice or cus- tom in the industry or area, for the im- provement of working conditions, em- ployer-employee relations, employee morale, and employee performance, are allowable. Income generated from any of these activities shall be credited to the costs thereof unless such income has been irrevocably set over to employee welfare organizations. § 1-15.205-11 Entertainment costs. Costs of amusement, diversion, social activities and incidental costs relating thereto, such as meals, lodging, rentals, transportation, and gratuities, are un- allowable (but see §§ 1-15.205-10 and 1-15.205-42). § 1-15.205-12 Excess facility costs. Costs of maintaining, repairing, and housing idle and excess contractor- owned facilities, except those reasonably necessary for standby purposes, are un- allowable. Any costs of excess plant capacity reserved for defense mobiliza- tion production which are to be paid for by the Government should be the subject of a separate contract. § 1-15.205-13 Fines and penalties. Costs of fines and penalties resulting from violations of, or failure of the con- tractor to comply with, Federal, State, and local laws and regulations are unal- lowable except when incurred as a re- sult of compliance with specific provi- sions of the contract, or instructions in writing from the contracting officer. FEDERAL PROCUREMENT REGULATIONS 1510 (FPR CIRC, 10, JULY 1960) SUBPART 1-15, 2 PRINCIPLES AND PROCEDURES FOR USE IN COST-REIMBURSEMENT TYPE SUPPLY AND RESEARCH CONTRACTS WITH COMMERCIAL ORGANIZATIONS § 1-15.205-14 Food service and dormi- tory costs and credits. Food and dormitory services include operating or furnishing facilities for cafeterias, dining rooms, canteens, lunch wagons, vending machines, living ac- commodations or similar types of serv- ices for the contractor's employees at or near the contractor's facilities. Reason- able losses from the operation of such services are allowable if they are allo- Profits cated to all activities served. (except profits irrevocably set over to an employee welfare organization of the contractor in amounts reasonably useful for the benefit of the employees at the site or sites of contract performance) ac- cruing to the contractor from the opera- tion of these services, whether operated by the contractor or by a concessionaire, shall be treated as a credit, and allocated to all activities served. § 1–15.205–15 Fringe benefits. (See § 1-15.205–6(g)). § 1-15.205-16 fication. Insurance and indemni- (a) Insurance includes insurance which the contractor is required to carry, or which is approved, under the terms of the contract, and any other insurance which the contractor maintains in con- nection with the general conduct of his business. (1) Costs of insurance required or approved, and maintained, pursuant to the contract, are allowable. (2) Costs of other insurance main- tained by the contractor in connection with the general conduct of his business are allowable subject to the following limitations: (i) Types and extent of coverage shall be in accordance with sound busi- ness practice and the rates and premiums shall be reasonable under the circum- stances; (ii) Costs allowed for business ↳ interruption or other similar insurance 1-15, 205-16(a)(3)(ii) shall be limited to exclude coverage of Frofit; (iii) Costs of insurance or of any provision for a reserve covering the risk of loss of or damage to Government property are allowable only to the extent that the contractor is liable for such loss or damage and such insurance or re- serve does not cover loss or damage which results from willful misconduct or lack of good faith on the part of any of the contractor's directors or officers, or other equivalent representatives, who has supervision or direction of (A) all or substantially all of the contractor's business, or (B) all or substantially all of the contractor's operations at any one plant or separate location in which the contract is being performed, or (C) a separate and complete industrial opera- tion in connection with the performance of the contract; (iv) Provisions for a reserve under an approved self-insurance pro- gram are allowable to the extent that the types of coverage, extent of coverage, and the rates and premiums would have been allowed had insurance been pur- chased to cover the risks; and (v) Costs of insurance on the lives of officers, partners, or proprietors are allowable only to the extent that the insurance represents additional compen- sation (see § 1-15.205-6). (3) Actual losses which could have been covered by permissible insurance (through an approved self-insurance program or otherwise) are unallowable unless expressly provided for in the con- tract, except: (i) Costs incurred because of losses not covered under nominal de- ductible insurance coverage provided in keeping with sound business practice, are allowable; and (ii) Minor losses not covered by insurance, such as spoilage, breakage, and disappearance of small hand tools, which occur in the ordinary course of doing business, are allowable. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 10, JULY 1960) 1511 PART 1-15 CONTRACT COST PRINCIPLES AND PROCEDURES له 1-15, 205-16 (b) (b) Indemnification includes securing the contractor against liabilities to third persons and any other loss or damage, not compensated by insurance or other- wise. The Government is obligated to indemnify the contractor only to the extent expressly provided for in the con- tract, except as provided in (a) (3) above. § 1-15.205-17 Interest and other finan- cial costs. Interest on borrowings (however rep- resented), bond discounts, costs of fi- nancing and refinancing operations, legal and professional fees paid in con- nection with the preparation of prospec- tuses, costs of preparation and issuance of stock rights, and costs related thereto, are unallowable except for interest as- sessed by State or local taxing author- ities under the conditions set forth in § 1-15.205-41. (But see § 1-15.205-24.) § 1-15.205-18 Labor relations costs. Costs incurred in maintaining satis- factory relations between the contractor and its employees, including costs of shop stewards, labor management com- mittees, employee publications, and other related activities, are allowable. § 1-15.205-19 Losses on other contracts. An excess of costs over income under any other contract (including the con- tractor's contributed portion under cost- sharing contracts), whether such other contract is of a supply, research and de- velopment, or other nature, is unallow- able. § 1-15.205-20 Maintenance and repair costs. (a) Costs necessary for the upkeep of property (including Government prop- erty unless otherwise provided for), which neither add to the permanent value of the property nor appreciably prolong its intended life, but keep it in an efficient operating condition, are to be treated as follows (but see § 1-15.205- 9): (1) Normal maintenance and repair L costs are allowable; (2) Extraordinary maintenance and repair costs are allowable, provided such are allocated to the periods to which applicable for purposes of determining contract costs. (But see § 1-15.107.) (b) Expenditures for plant and equip- ment, including rehabilitation thereof, which, according to generally accepted accounting principles as applied under the contractor's established policy, should be capitalized and subjected to depreciation, are allowable only on a depreciation basis. § 1-15.205-21 Manufacturing and pro- duction engineering costs. Costs of manufacturing and produc- tion engineering, including engineering activities in connection with the follow- ing, are allowable: (a) Current manufacturing processes such as motion and time study, methods analysis, job analysis, and tool design and improvement; and (b) Current production problems, such as materials analysis for production suit- ability and component design for pur- poses of simplifying production. § 1-15.205-22 Material costs. (a) Material costs include the costs of such items as raw materials, parts, subassemblies, components, and manu- facturing supplies, whether purchased outside or manufactured by the con- tractor, and may include such collateral items as inbound transportation and intransit insurance. In computing ma- terial costs consideration will be given to reasonable overruns, spoilage, or de- fective work (concerning correction of defective work, see the provisions of the contract relating to inspection and cor- rection of defective work). These costs are allowable subject, however, to the provisions of (b) through (e) below. (b) Costs of material shall be suitably adjusted for applicable portions of in- come and other credits, including avail- able trade discounts, refunds, rebates, allowances, and cash discounts, and credits for scrap and salvage and ma- terial returned to vendors. Such income FEDERAL PROCUREMENT REGULATIONS لم 1512 (FPR CIRC, 10, JULY 1960) SUBPART 1-15, 2 PRINCIPLES AND PROCEDURES FOR 1-15.205-26 USE IN COST-REIMBURSEMENT TYPE SUPPLY AND RESEARCH CONTRACTS WITH COMMERCIAL ORGANIZATIONS Г and other credits shall either be credited directly to the cost of the material in- volved or be allocated (as credits) to indirect costs. the costs. However, where contractor can demonstrate that failure to take cash discounts was due to reason- able circumstances, such lost discounts need not be so credited. (c) Reasonable adjustments arising from differences between periodic physi- cal inventories and book inventories may be included in arriving at costs, provided such adjustments relate to the period of performance of the contract. (d) When the materials are purchased specifically for and identifiable solely with performance under a contract, the actual purchase cost thereof should be charged to the contract. If material is issued from stores, any generally recog- nized method of pricing such material is acceptable if that method is consistently applied and the results are equitable. When estimates of material costs to be incurred in the future are required, either current market price or antici- pated acquisition cost may be used, but the basis of pricing must be disclosed. (e) Charges for materials, services, and supplies sold or transferred between plants, divisions, or organizations, under a common control, ordinarily shall be al- lowable to the extent of the lower of cost to the transferor or current market price. However, a departure from this basis is permissible where (1) the item is regu-. larly manufactured and sold by the con- tractor through commercial channels, and (2) it is the contractor's long-estab- lished practice to price inter-organiza- tion transfers at other than cost for commercial work; provided that the charge to the contract is not in excess of the transferor's sales price to its most favored customer for the same item in like quantity, or the current market Lprice, whichever is lower. § 1-15.205-23 Organization costs. Expenditures, such as incorporation fees, attorneys' fees, accountants' fees, brokers' fees, fees to promoters and or- ganizers, in connection with (1) organ- ization or reorganization of a business, or (2) raising capital, are unallowable. § 1-15.205-24 Other business expenses. Included in this item are such recur- ring expenses as registry and transfer charges resulting from changes in owner- ship of securities issued by the con- tractor, cost of shareholders' meetings, normal proxy solicitations, preparation and publication of reports to sharehold- ers, preparation and submission of re- quired reports and forms to taxing and other regulatory bodies; and incidental costs of directors and committee meet- ings. The above and similar costs are allowable when allocated on an equitable basis. § 1-15.205-25 Overtime, extra-pay shift and multi-shift premiums. Premiums for overtime, extra-pay shift, and multi-shift work are allowable to the extent approved pursuant to § 1-12.102-4, or permitted pursuant to § 1-12.102-5. § 1-15.205-26 Patent costs. Costs of preparing disclosures, reports, and other documents required by the contract and of searching the art to the extent necessary to make such invention disclosures, are allowable. In accord- ance with the clauses of the contract re- lating to patents, costs of preparing documents and any other patent costs, in connection with the filing of a patent application where title is conveyed to the Government, are allowable. § 1-15.205-36.) (See 7 FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 10, JULY 1960) 1513 PART 1-15 CONTRACT COST PRINCIPLES AND L PROCEDURES 1-15.205-27 § 1-15.205-27 Pension plans. (See § 1-15.205-6.) § 1-15.205-28 Plant protection costs. Costs of items such as (a) wages, uni- forms, and equipment of personnel en- gaged in plant protection, (b) deprecia- tion on plant protection capital assets, and (c) necessary expenses to comply with security requirements, are allowable. § 1-15.205-29 Plant reconversion costs. Plant reconversion costs are those in- curred in the restoration or rehabilita- tion of the contractor's facilities to ap- proximately the same condition existing immediately prior to the commencement of the contract work, fair wear and tear excepted. Reconversion costs are un- allowable except for the cost of remov- ing Government property and the res- toration or rehabilitation costs caused by such removal. However, in special cir- cumstances where equity so dictates, ad- ditional costs may be allowed to the ex- tent agreed upon before the costs are incurred. Whenever Whenever such costs are given consideration, care should be ex- ercised to avoid duplication through al- lowance as contingencies, as additional profit or fee, or in other contracts. § 1-15.205-30 Precontract costs. Precontract costs are those incurred prior to the effective date of the contract directly pursuant to the negotiation and in anticipation of the award of the con- tract where such incurrence is necessary to comply with the proposed contract delivery schedule. Such costs are allow- able to the extent that they would have been allowable if incurred after the date of the contract (but see § 1-15.107). § 1-15.205-31 Professional service costs-legal, accounting, engineer- ing, and other. (a) Costs of professional services ren- dered by the members of a particular profession who are not employees of the contractor are allowable, subject to (b) and (c) below, when reasonable in rela- tion to the services rendered and when not contingent upon recovery of the costs from the Government (but see § 1-15.205-23). (b) Factors to be considered in deter- mining the allowability of costs in a par- ticular case include: (1) The past pattern of such costs, particularly in the years prior to the award of Government contracts; (2) The impact of impact of Government contracts on the contractor's business (i.e., what new problems have arisen); (3) The nature and scope of mana- gerial services expected of the contrac- tor's own organizations; of (4) Whether the proportion Government work to the contractor's total business is such as to influence the contractor in favor of incurring the cost, particularly where the services rendered are not of a continuing nature and have little relationship to work under Gov- ernment contracts; and (5) Whether retainer fees are rea- sonably supported by evidence of bona fide services available or rendered. (c) Costs of legal, accounting, and consulting services, and related costs, in- curred in connection with organization and reorganization, defense of antitrust suits, and the prosecution of claims against the Government, are unallow- able. Costs of legal, accounting, and consulting services, and related costs, in- curred in connection with patent in- fringement litigation, are unallowable unless otherwise provided for in the con- tract. § 1-15.205–32 Profits and losses on dis- position of plant, equipment, or other capital assets. Profits or losses of any nature arising from the sale or exchange of plant, equipment, or other capital assets, in- cluding sale or exchange of either short or long term investments, shall be ex- cluded in computing contract costs (but see § 1-15.205-9 (b) as to basis for depre- ciation). FEDERAL PROCUREMENT REGULATIONS 1514 (FPR CIRC. 10, JULY 1960) SUBPART 1-15.2 PRINCIPLES AND PROCEDURES FOR § 1-15.205-33 Recruiting costs. USE IN COST-REIMBURSEMENT TYPE SUPPLY AND RESEARCH CONTRACTS WITH COMMERCIAL ORGANIZATIONS Costs of "help wanted" advertising, operating costs of an employment office necessary to secure and maintain an ade- quate labor force, costs of operating an aptitude and educational testing pro- gram, travel costs of employees while engaged in recruiting personnel, and travel costs of applicants for interviews for prospective employment are allowa- ble. Where the contractor uses employ- ment agencies, costs not in excess of standard commercial rates for such serv- ices are also allowable. Costs of special benefits or emoluments offered to pro- spective employees beyond the standard practices in the industry are unallow- able. § 1-15.205-34 Rental costs (including sale and leaseback of facilities). (a) Rental costs of land, building, and equipment and other personal property are allowable if the rates are reasonable in light of such factors as rental costs of comparable facilities and market con- ditions in the area, the type, life expect- ancy, condition, and value of the facili- ties leased, options available, and other provisions of the rental agreement. Ap- plication of these factors, in situations where rentals are extensively used, may involve among other considerations, comparison of rental costs with the amount which the contractor would have received had it owned the facilities. (b) Charges in the nature of rent be- tween plants, divisions, or organizations under common control are allowable to the extent such charges do not exceed the normal costs of ownership, such as depreciation, taxes, insurance, and main- tenance; provided that no part of such costs shall duplicate any other allowed costs. (c) Unless otherwise specifically pro- vided in the contract, rental costs speci- fied in sale and leaseback agreements, incurred by contractors through selling ↳ plant facilities to investment organiza- 1-15.205-35 (c) tions, such as insurance companies, or to private investors, and concurrently leasing back the same facilities, are al- lowable only to the extent that such rentals do not exceed the amount which the contractor would have received had it retained legal title to the facilities. (d) The allowability of rental costs un- der unexpired leases in connection with terminations is treated in § 1-15.205- 42(e). § 1-15.205-35 ment costs. Research and develop- (a) Basic research, for the purpose of this Subpart 1-15.2, is that type of re- search which is directed toward increase of knowledge in science. In such re- search, the primary aim of the investi- gator is a fuller knowledge or under- standing of the subject under study, rather than any practical application thereof. Applied research, for the pur- pose of this Subpart 1-15.2, consists of that type of effort which (1) normally follows basic research, but may not be severable from the related basic re- search, (2) attempts to determine and expand the potentialities of new scien- tific discoveries or improvements in tech- nology, materials, processes, methods, devices, and techniques, and (3) at- tempts to "advance the state of the art." Applied research does not include any such efforts when their principal aim is the design, development, or test of spe- cific articles or services to be offered for sale, which are within the definition of the term development as hereinafter provided. (b) “Development" is the systematic use of scientific knowledge which is di- rected toward the production of, or im- provements in, useful products to meet specific performance requirements, but exclusive of manufacturing and produc- tion engineering. (c) A contractor's independent re- search and development is that research and development which is not sponsored FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 10, JULY 1960) 1515 PART 1-15 CONTRACT COST PRINCIPLES AND L PROCEDURES 1—15, 205–35 (c) by a contract, grant, or other arrange- ment. (d) A contractor's costs of independ- ent research as defined in (a) and (c) above shall be allowable as indirect costs (subject to (h) below), provided they are allocated to all work of the contractor. (e) Costs of contractor's independent development, as defined in (b) and (c) above (subject to (h) below), are allow- able to the extent that such development is related to the product lines for which the Government has contracts, provided the costs are reasonable in amount and are allocated as indirect costs to all work of the contractor on such product lines. In cases where a contractor's normal course of business does not involve pro- duction work, the cost of independent development is allowable to the extent that such development is related and allocated as an indirect cost to the field of effort of Government research and development contracts. (f) Independent research and devel- opment costs shall include an amount for the absorption of their appropriate share of indirect and administrative costs, unless the contractor, in accord- ance with its accounting practices con- sistently applied, treats such costs otherwise. (g) Research and development costs (including amounts capitalized), regard- less of their nature, which were incurred in accounting periods prior to the award of a particular contract, are unallowable except where allowable as precontract costs (see § 1-15.205-30). (h) The reasonableness of expendi- tures for independent research and de- velopment should be determined in light of all pertinent considerations such as previous contractor research and devel- opment activity, cost of past programs and changes in science and technology. Such expenditures should be pursuant to a broad planned program, which is rea- sonable in scope and well managed. Such expenditures (especially for devel- opment) should be scrutinized with great care in connection with contractors whose work is predominantly or substan- tially with the Government. Advance agreements as described in § 1-15.107 are particularly important in this situation. In recognition that cost sharing of the contractor's independent research and development program may provide mo- tivation for more efficient accomplish- ment of such program, it is desirable in some cases that the Government bear less than an allocable share of the total cost of the program. Under these cir- cumstances, the following are among the approaches which may be used as the basis for agreement: (1) Review of the contractor's proposed independent re- search and development program and agreement to accept the allocable costs of specific projects; (2) agreement on a maximum dollar limitation of costs, an allocable portion of which will be ac- cepted by the Government; (3) an agree- ment to accept the allocable share of a percentage of the contractor's planned research and development program. § 1-15.205-36 Royalties and other costs for use of patents. (a) Royalties on a patent or amorti- zation of the cost of acquiring by pur- chase a patent or rights thereto, necessary for the proper performance of the contract and applicable to contract products or processes, are allowable unless: (1) The Government has a license or the right to free use of the patent; (2) The patent has been adjudicated to be invalid, or has been administra- tively determined to be invalid; (3) The patent is considered to be unenforceable; or (4) The patent is expired. (b) Special care should be exercised in determining reasonableness where the royalties may have been arrived at as a result of less than arm's length bargain- ing; e.g.: (1) Royalties paid to persons, in- cluding corporations, affiliated with the contractor; REGULATIONS FEDERAL PROCUREMENT 1516 (FPR CIRC. 10, JULY 1960) SUBPART 1-15.2 PRINCIPLES AND PROCEDURES FOR USE IN COST-REIMBURSEMENT TYPE SUPPLY AND RESEARCH CONTRACTS WITH COMMERCIAL ORGANIZATIONS Г (2) Royalties paid to unaffiliated parties, including corporations, under an agreement entered into in contempla- tion that a Government contract would be awarded; or (3) Royalties paid under an agree- ment entered into after the award of the contract. (c) In any case involving a patent formerly owned by the contractor, the amount of royalty allowed should not ex- ceed the cost which would have been allowed had the contractor retained title thereto. (d) See § 1-15.107, regarding advance understandings. § 1-15.205-37 Selling costs. (a) Selling costs arise in the market- ing of the contractor's products and in- clude costs of sales promotions, negotiation, liaison between Government representatives and contractor's person- nel, and other related activities. (b) Selling costs are allowable to the extent they are reasonable and are al- locable to Government business (but see §§ 1-15.107 and 1-15.205-1). Allocabil- ity of selling costs will be determined in the light of reasonable benefit to the Government arising from such activities as technical, consulting, demonstration, and other services which are for pur- poses such as application or adaptation of the contractor's products to Govern- ment use. (c) Notwithstanding (b) above, sales- men's or agents' compensation, fees, commissions, percentages, or brokerage fees, which are contingent upon the award of contracts, are allowable only when paid to bona fide employees or bona fide established commercial or selling agencies maintained by the contractor for the purpose of securing business. § 1-15.205-38 Service Service and warranty costs. Such costs include those arising from fulfillment of any contractual obligation : 1-15, 205–39 (b) (2) of a contractor to provide services, such as installation, training, correcting de- fects in the products, replacing defective parts, making refunds in the case of in- adequate performance, etc. When not inconsistent with the terms of the con- tract, such service and warranty costs are allowable. However, care should be exercised to avoid duplication of the al- lowance as an element of both estimated product cost and risk. § 1-15.205-39 Severance pay. (a) Severance pay, also commonly re- ferred to as dismissal wages, is a pay- ment in addition to regular salaries and wages, by contractors to workers whose employment is being terminated. Costs of severance pay are allowable only to the extent that, in each case, it is required by (1) law, (2) employer- employee agreement, (3) established policy that constitutes, in effect, an im- plied agreement on the contractor's part, or (4) circumstance of the particular employment. (b) Costs of severance payments are divided into two categories as follows: (1) Actual normal turnover sever- ance payments shall be allocated to all work performed in the contractor's plant; or, where the contractor provides for accrual of pay for normal severances such method will be acceptable if the amount of the accrual is reasonable in light of payments actually made for normal severances over a representative past period, and if amounts accrued are allocated to all work performed in the contractor's plant; and (2) Abnormal or mass severance pay is of such a conjectural nature that measurement of costs by means of an accrual will not achieve equity to both parties. Thus accruals for this purpose are not allowable. However, the Gov- ernment recognizes its obligation to par- ticipate, to the extent of its fair share, in any specific payment. Thus, allow- ability will be considered on a case-by- case basis in the event of occurrence. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 10, JULY 1960) 1517 PART 1-15 CONTRACT COST PRINCIPLES AND 1-15, 205–40 PROCEDURES ▷ § 1-15.205-40 Special tooling costs. The term "special tooling" means all. jigs, dies, fixtures, molds, patterns, spe- cial taps, special gauges, special test equipment, other special equipment and manufacturing aids, and replacements thereof, acquired or manufactured by the contractor for use in the perform- ance of a contract, which are of such a specialized nature that, without sub- stantial modification or alteration, their use is limited to the production of such supplies or parts thereof, or the performance of such services, as are peculiar to the needs of the Government. The term does not include: (a) Items of tooling or equipment acquired by the contractor prior to the contract, or re- placements thereof, whether or not altered or adapted for use in the per- formance of the contract, (b) consum- able small tools, or (c) general or special machine tools, or similar capital items. The cost of special tooling, when ac- quired for and its usefulness is limited to one or more Government contracts, is allowable and shall be allocated to the specific Government contract or con- tracts for which acquired. § 1-15.205-41 Taxes. (a) Taxes are certain charges levied by Federal, State, or local governments. They do not include fines and penalties except as otherwise provided herein. In general, taxes (including State and local income taxes) which the contractor is required to pay and which are paid or accrued in accordance with generally accepted accounting principles are al- lowable, except for: (1) Federal income and excess prof- its taxes; (2) Taxes in connection with fi- nancing, refinancing, or refunding operations (see § 1-15.205–17); (3) Taxes from which exemptions are available to the contractor directly or available to the contractor based on an exemption afforded the Government except when the contracting officer de- termines that the administrative burden incident to obtaining the exemption out- weighs the corresponding benefits accru- ing to the Government; and (4) Special assessments on land which represent capital improvements. (b) Taxes otherwise allowable under (a) above, but upon which a claim of illegality or erroneous assessment exists, are allowable; Provided, That the con- tractor prior to payment of such taxes: (1) Promptly requests instructions from the contracting officer concerning such taxes; and (2) Takes all action directed by the contracting officer arising out of (b) (1) above or an independent decision of the Government as to the existence of a claim of illegality or erroneous assess- ment, including cooperation with and for the benefit of the Government to (i) de- termine the legality of such assessment or, (ii), secure a refund of such taxes. Reasonable costs of any such action undertaken by the contractor at the di- rection or with the concurrence of the contracting officer are allowable. Inter- est and penalties incurred by a con- tractor by reason of the nonpayment of any tax at the direction of the con- tracting officer or by reason of the failure of the contracting officer to assure timely direction after prompt request therefor, are also allowable. (c) Any refund of taxes, interest, or penalties, and any payment to the con- tractor of interest thereon, attributable to taxes, interest, or penalties which were allowed as contract costs, shall be credited or paid to the Government in the manner directed by the Government, provided any interest actually paid or credited to a contractor incident to a refund of tax, interest, or penalty shall be paid or credited to the Government only to the extent that such interest ac- crued over the period during which the contractor had been reimbursed by the Government for the taxes, interest, or penalties. REGULATIONS FEDERAL PROCUREMENT 1518 (FPR CIRC, 10, JULY 1960) SUBPART 1-15.2 PRINCIPLES AND PROCEDURES FOR ~ § 1 USE IN COST-REIMBURSEMENT TYPE SUPPLY AND RESEARCH CONTRACTS WITH COMMERCIAL ORGANIZATIONS § 1-15.205-42 Termination costs. Contract terminations generally give rise to the incurrence of costs, or the need for special treatment of costs, which would not have arisen had the contract not been terminated. Cost principles covering these items are set forth below. They are to be used in con- junction with the remainder of this sub- part in termination situations. (a) Common items: The cost of items reasonably usable on the contractor's other work shall not be allowable unless the contractor submits evidence that it could not retain such items at cost with- out sustaining a loss. In deciding whether such items are reasonably us- able on other work of the contractor, the contracting officer should consider the contractor's plans and orders for cur- rent and scheduled production. Con- temporaneous purchases of common items by the contractor shall be re- garded as evidence that such items are reasonably usable on the contractor's other work. Any acceptance of common items as allocable to the terminated por- tion of the contract should be limited to the extent that the quantities of such items on hand, in transit, and on order are in excess of the reasonable quantita- tive requirements of other work. (b) Costs continuing after termina- tion: If, in a particular case, despite all reasonable efforts by the contractor, cer- tain costs cannot be discontinued im- mediately after the effective date of termination, such costs are generally allowable within the limitations set forth in this subpart, except that any such costs continuing after termination due to the negligent or willful failure of the contractor to discontinue such shall be considered unallowable. costs (c) Initial costs, including starting load and preparatory costs, are allow- able. subject to the following: ( ༣ ༔ Starting load costs are costs of a non-recurring nature arising in the early stages of production and not fully Lacsorbed because of the termination. 1—15.205~42(d)(1) Such costs may include the cost of labor and material, and related overhead at- tributable to such factors as: (i) Excessive spoilage resulting from inexperienced labor, (ii) Idle time and subnormal pro- duction occasioned by testing and chang- ing methods of processing, (iii) Employee training, and (iv) Unfamiliarity or lack of ex- perience with the product, materials, manufacturing processes and techniques. (2) Preparatory costs are costs in- curred in preparing to perform the ter- minated contract, including costs of initial plant rearrangement and altera- tions, management and personnel or- ganization, production planning and similar activities, but excluding special machinery and equipment and starting load costs. (3) If initial costs are claimed and have not been segregated on the con- tractor's books, segregation for settle- ment purposes shall be made from cost reports and schedules which reflect the high unit cost incurred during the early stages of the contract. (4) When the settlement proposal is on the inventory basis, initial costs should normally be allocated on the basis of total end items called for by the con- tract immediately prior to termination; however, if the contract includes end items of a diverse nature, some other equitable basis may be used, such as machine or labor hours. (5) When initial costs are included in the settlement proposal as a direct charge, such costs shall not also be in- cluded in overhead. (6) Initial costs attributable to only one contract shall not be allocated to other contracts. (d) Loss of useful value of special tooling, special machinery and equip- ment is generally allowable: Provided— (1) Such special tooling, machinery or equipment is not reasonably capable of use in the other work of the contrac- tor; FEDERAL PROCUREMENT REGULATIONS (FPR CIRC. 10, JULY 1960) 1519 PART 1-15 CONTRACT COST PRINCIPLES AND PROCEDURES 1—15.205~42(d) (2) (2) The interest of the Government is protected by transfer of title or by other means deemed appropriate by the contracting officer; and (3) The loss of useful value as to any one terminated contract is limited to that portion of the acquisition cost which bears the same ratio to the total acquisition cost as the terminated por- tion of the contract bears to the entire terminated contract and other Govern- ment contracts for which the special tooling, special machinery and equip- ment was acquired. (e) Rental costs under unexpired leases are generally allowable where clearly shown to have been reasonably necessary for the performance of the terminated contract, less the residual value of such leases, if- (1) The amount of such rental claimed does not exceed the reasonable use value of the property leased for the period of the contract and such further period as may be reasonable; and (2) The contractor makes all rea- sonable efforts to terminate, assign, set- tle, or otherwise reduce the cost of such lease. There also may ke included the' cost of alterations of such leased prop- erty, provided, such alterations were necessary for the performance of the contract, and of reasonable restoration required by the provisions of the lease. (f) Settlement expenses including the following are generally allowable: (1) Accounting, legal, clerical, and similar costs reasonably necessary for- (i) The preparation and presen- tation to contracting officers of settle- ment claims and supporting data with respect to the terminated portion of the contract, and (ii) The termination and settle- ment of subcontracts; and (2) Reasonable costs for the stor- age, transportation, protection, and dis- position of property acquired or pro- Lduced for the contract. (g) Subcontractor claims, including the allocable portion of claims which are common to the contract and to other work of the contractor, are generally al- lowable. § 1-15.205-43 Trade, business, techni- cal, and professional activity costs. (a) Memberships. This category in- cludes costs of memberships in trade, business, technical, and professional or- ganizations. Such costs are allowable. (b) Subscriptions. This item includes cost of subscriptions to trade, business, professional, or technical periodicals. Such costs are allowable. (c) Meetings and conferences. This item includes cost of meals, transporta- tion, rental of facilities for meetings, and costs incidental thereto, when the primary purpose of the incurrence of such costs is the dissemination of tech- nical information or stimulation of pro- duction. Such costs are allowable. § 1-15.205-44 Training and educational costs. (a) Costs of preparation and mainte- nance of a program of instruction at noncollege level, designed to increase the vocational effectiveness of bona fide em- ployees, including training materials, textbooks, salaries or wages of trainees (excluding overtime compensation which might arise therefrom), and (1) Salaries of the director of train- ing and staff when the training program is conducted by the contractor; or (2) Tuition and fees when the train- ing is in an institution not operated by the contractor; are allowable. (b) Costs of part-time education, at an under-graduate or post-graduate college level, related to the job require- ments of bona fide employees, including only: (1) Training materials; (2) Textbooks; (3) Fees charged by the educational institution; FEDERAL PROCUREMENT REGULATIONS 1520 (FPR CIRC. 10, JULY 1960) SUBPART 1-15. 2 PRINCIPLES AND PROCEDURES FOR Γ USE IN COST-REIMBURSEMENT TYPE SUPPLY AND RESEARCH CONTRACTS WITH COMMERCIAL ORGANIZATIONS (4) Tuition charged by the educa- tional institution, or in lieu of tuition, instructors' salaries and the related share of indirect cost of the educational institution to the extent that the sum thereof is not in excess of the tuition which would have been paid to the par- ticipating educational institution; and (5) Straight-time compensation of each employee for time spent attending classes during working hours not in ex- cess of 156 hours per year where circum- stances do not permit the operation of classes or attendance at classes after regular working hours; are allowable. (c) Costs of tuition, fees, training materials and textbooks (but not sub- sistence, salary, or any other emolu- ments) in connection with fulltime scientific and engineering education at a postgraduate (but not undergraduate) college level related to the job require- ments of bona fide employees for a total period not to exceed one school year for each employee so trained, are allowable. In unusual cases where required by mili- tary technology, the period may be extended. (d) Maintenance expense, and normal depreciation or fair rental, on facilities owned or leased by the contractor for training purposes are allowable to the extent set forth in §§ 1-15.205-20, 1-15.205-9, and 1-15.205-34, respectively. (e) Grants to educational or training institutions, including the donation of facilities or other properties, scholar- ships, or fellowships, are considered con- tributions and are unallowable. § 1-15.205-45 Transportation costs. Transportation costs include freight, Lexpress, cartage, and postage charges 1-15, 205-46 (e) relating either to goods purchased, in process, or delivered. These costs are allowable. When such costs can readily be identified with the items involved, they may be directly costed as transpor- tation costs or added to the cost of such items (see § 1-15.205-22). Where iden- tification with the materials received cannot readily be made, inbound trans- portation costs may be charged to the appropriate indirect cost accounts if the contractor follows a consistent, equi- table procedure in this respect. Cut- bound freight, if reimbursable under the terms of the contract, shall be treated as a direct cost. § 1-15.205–46 Travel costs. (a) Travel costs include costs of trans- portation, lodging, subsistence, and inci- dental expenses, incurred by contractor personnel in a travel status while on offi- cial company business. (b) Travel costs may be based upon actual costs incurred, or on a per diem or mileage basis in lieu of actual costs, or on a combination of the two, provided the method used does not result in an un- reasonable charge. (c) Travel costs incurred in the nor- mal course of over-all administration of the business are allowable and shall be treated as indirect costs. (d) Travel costs directly attributable to specific contract performance are al- lowable and may be charged to the con- tract in accordance with the principle of direct costing (see § 1–15.202). (e) Necessary, reasonable costs of family movements and personnel move- ments of a special or mass nature are allowable, subject to allocation on the basis of work or time period benefited when appropriate. (But see § 1-15.107.) (NEXT PAGE IS 1523) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 10, JULY 1960) 1521 SUBPART 1-15.3 PRINCIPLES FOR DETERMINING APPLI– CABLE COSTS UNDER RESEARCH CONTRACTS WITH EDUCATIONAL INSTITUTIONS 1-15.302(f) ୮ Subpart 1-15.3-Principles for Deter- mining Applicable Costs Under Re- search Contracts With Educational Institutions § 1-15.301 General. (a) It is the intent of these principles to provide executive agencies and edu- cational institutions with a common basis for determining the allowable costs of re- search sponsored by the Federal Govern- ment. Application of these principles should enable such agencies and institu- tions to identify the allowable direct costs of such research, plus the allocable por- tion of the allowable indirect costs, less applicable credits. The tests of allowa- bility of costs applied in these principles are reasonableness and allocability under consistently applied generally accepted cost accounting principles and practices; however, these provisions are subject to any limitations as to types or amounts of costs set forth in the research agree- ment. (b) These principles do not attempt to identify the circumstances or dictate the extent of agency and institution par- ticipation in the financing of a particular research and development project, but. rather are confined to the subject of cost determination. Arrangements concern- ing financial participation are properly the subject of negotiation between the contracting officer and the educational institution concerned. (c) These principles should be applied to all Government sponsored research at an educational institution, including re- search conducted at locations other than the main campus of the institution. (d) A negotiated fixed amount in lieu of indirect costs may be appropriate in certain instances for off-campus or seg- regated research projects where (1) research agreements are charged directly for the cost of many of their adminis- trative or housekeeping services, or (2) the cost of benefits derived from an in- stitution's indirect services cannot be readily determined by use of apportion- ment or allocation bases normally em- ployed, or (3) the costs of apportioning and allocating expenses to research agreements are excessive. The negoti- ated amount should not exceed a con- servative estimate of anticipation in- direct costs. § 1-15.302 Definitions. As used in this subpart, the following terms have the meanings stated below: (a) "Research agreements" are agree- ments to perform Federally sponsored research through grants, cost-reimburse- ment type contracts, cost-reimbursement type subcontracts, and fixed-price con- tracts and subcontracts for research. (b) "Apportionment" is the process by which the indirect costs of the institution are assigned to (1) instruction and re- search, and (2) other institutional activities. (c) "Allocation" is the process by which the indirect costs apportioned to instruction and research are distributed to research agreements. (d) "Sponsoring agency" means the Federal agency for which the institution is performing research. Its use in this document does not imply a change in concept or intent for those agencies that have traditionally used a grant rather than a contractual instrument. (e) "Original complement” means the complement of equipment initially placed in buildings to perform the func- tions currently being performed in such buildings. If a permanent change in the function of a building takes place, a re- determination of the original comple- ment of equipment may be made at that time to establish a new original complement. (f) "Other institutional activities” means all organized activities of an in- stitution not directly related to the in- struction and research functions, such FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 10, JULY 1960) 1523 PART 1-15 CONTRACT COST PRINCIPLES AND PROCEDURES F 1-15.302 (f) as residence halls, dining halls, student hospitals, student unions, intercollegiate athletics, book stores, faculty housing, student apartments, guest houses, chapels, theaters, public museums, finan- cial campaigns, and other similar activities or auxiliary enterprises. Also included under this definition is any category of cost treated as "unallow- able," Provided, Such category of cost identifies a function or activity to which a portion of the institution's general overhead expenses are properly allocable. § 1-15.303 Direct costs. Direct costs are those identified as having been specifically incurred to per- form a particular research agreement. The general types of direct costs are: (a) Direct salaries and wages, includ- ing employee benefit expenses and pen- sion plan costs (see § 1-15.307) to the extent that they are consistently treated by the educational institution as a direct rather than an indirect cost, are those applicable directly to the performance of a research agreement. Such salaries and wages should be charged at the ac- tual rates paid by the institution. Where professional staff paid on a salary basis work directly part time on a research agreement, current and reasonable esti- mates of time spent may be used in the absence of actual time records; (b) Direct material costs, including raw materials, purchased or supplied from stock, which are directly consumed or expended in the performance of a research agreement, or are otherwise applicable directly to a research agree- ment; and (c) Other direct costs, including other expenses related directly to a particular research agreement or project, including abnormal utility consumption. This may include services purchased from in- stitution service operations, Provided, Such are consistently treated as direct rather than indirect costs and are priced under a recognized method of costing or pricing designed to recover only ac- Ltual costs and conforming to generally accepted cost accounting practices con- sistently followed by the institution. Purchases of equipment will be included under this heading only to the extent expressly provided for in the research agreement or approved pursuant to such agreement. § 1-15.304 Indirect costs. Indirect costs are those which, because of their incurrence for common or joint objectives, are not readily subject to treatment as direct costs of research agreements or other activities. The gen- eral types of indirect costs are: (a) General administration and gen- eral expenses are those incurred for the general executive and administrative offices of educational institutions and other expenses of a general character which do not relate solely to any specific division of the institution. Employee benefit expenses and pension plan costs may be included in this category to the extent that they are consistently treated by the educational institution as an in- direct rather than a direct cost; (b) Research administration expenses are those which apply to research ad- ministered in whole or in part by a sep- arate organization or an identifiable administrative unit. Examples of work relating to research which is sometimes performed under such organizational ar- rangement are: contract administration, security, purchasing, personnel admin- istration, and editing and publishing of research data; (c) Operation and maintenance ex- penses are those incurred for operating and maintaining the institution's physi- cal plant. They include expenses nor- mally incurred by the institution for administration or supervision of the physical plant; janitorial service; repairs and ordinary or normal alterations of buildings, furniture, and equipment; care and maintenance of grounds; utili- ties; and other expenses customarily associated with the operation, mainte- nance, preservation, and protection of the physical plant; FEDERAL PROCUREMENT REGULATIONS 1524 (FPR CIRC, 10, JULY 1960) SUBPART 1-15, 3 PRINCIPLES FOR DETERMINING APPLI– CABLE COSTS UNDER RESEARCH CONTRACTS WITH EDUCATIONAL INSTITUTIONS ୮ (d) Library expenses are those in- curred for direct operation of the li- brary plus a use allowance for library books. The use allowance shall not exceed eight cents per volume per year; (e) Use allowance is a means of com- pensation for the use of buildings, capi- tal improvements, and equipment over and above the expenses for operation and maintenance when depreciation or other equivalent costs are not consid- ered. The use allowance for buildings and improvements shall be computed at an annual rate not to exceed 2 percent of acquisition cost. The use allowance for equipment shall be computed at an annual rate not exceeding 63 percent of acquisition cost of usable equipment in those cases where the institution maintains current records with respect to such equipment on hand. Where the institution's records reflect only the cost (actual or estimated) of the original complement of equipment, the use al- lowance shall be computed at an annual rate not exceeding 10 percent of such cost. In those cases where no equip- ment records are maintained, the insti- tution will justify a reasonable estimate of the acquisition cost of usable equip- ment which may be used to compute the use allowance at an annual rate not exceeding 6 percent of such estimate. Computation of the use allowance shall exclude the portion of the cost of build- ings and equipment paid for out of Federal funds and the cost of grounds; and (f) Indirect department expenses are those incurred for departmental admin- istration, such as salaries of deans or heads of colleges, schools, departments or divisions, and related secretarial and other administrative expenses. § 1-15.305 Applicable costs. (a) The cost of a research agreement is comprised of the allowable direct costs incident to its performance, plus the Lallocable portion of the allowable indi- rect costs of the applicable credits. 1-15.306-1(c) institution, less (b) When any types of expense ordi- narily treated as indirect costs are charged to a research agreement as di- rect costs, the costs of similar items applicable to other activities of the insti- tution must be eliminated from indirect costs allocable to the research agree- ment. (c) Where a particular understanding has been reached regarding specific items of cost to be reimbursed, the re- search agreement should clearly state such understanding. (d) Section 1-15.307 provides stand- ards to be applied in determining the allowability of certain items of cost and also identifies certain types of expendi- tures which relate solely to instruction and therefore do not enter into the costs of research agreements, either as direct costs or indirect costs; such costs of instruction shall be excluded from the computations provided herein. § 1-15.306 Determination of indirect costs. § 1-15.306-1 General. (a) In determining the indirect costs applicable to Federally sponsored re- search agreements, the allowable indirect costs should first be apportioned equi- tably between (1) instruction and research activity and (2) other insti- tutional activities, as provided in § 1- 15.306-2. (b) The amounts of indirect costs ap- portioned to instruction and research should then be allocated in an equitable manner to research agreements, as pro- vided in § 1-15.306-3. (c) Actual conditions must be taken into account in determining the most suitable method or methods to be used in the apportionment and allocation of indirect costs. The objective should be the selection of a method or methods which will distribute the indirect costs FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 10, JULY 1960) 1525 PART 1-15 CONTRACT COST PRINCIPLES AND PROCEDURES L 1—15, 306–1(C) in a fair and equitable manner to the Government research and development work and other work of the institution, giving due consideration to the nature and extent of the use of the institution's facilities by research personnel, aca- demic staff, students and other person- nel or activities, and to the materiality of the amounts involved. The methods used should conform with generally ac- cepted cost accounting practices, provide uniformity of treatment for like cost ele- ments, be applied consistently, and pro- duce equitable results. Any significant change, such as in the nature or extent of Government work or other activities sponsored or conducted by the institu- tion, may require reconsideration of the methods previously in use to determine whether they continue to be equitable. § 1-15.306-2 Apportionment. Where indirect costs relate to research, instruction, and other activities, such indirect costs shall be apportioned as be- tween instruction and research activities, and other institutional activities as de- fined in § 1-15.302(f). The apportion- ment shall be made as follows: (a) General administration and gen- eral expenses, on the basis of total expen- ditures; if more appropriate in the cir- cumstances, however, other bases may be used; (b) Operation and maintenance of the physical plant, if not separately costed, on the basis of total square or cubic foot- age of the buildings; and (c) Other types of indirect costs nor- mally do not require apportionment; where they do, an equitable basis for making the apportionment should be selected. § 1-15.306–3 Allocation. (a) After determination of the total amount of indirect costs applicable to instruction and research activities, such indirect costs shall in turn be allocated between instruction activities and re- search agreements as described in (b), L、 (c), (d), and (e) below. (b) The following criteria should be used with such appropriate modifications as will under the circumstances produce reasonably equitable allocation of the in- direct costs associated with research agreements: (1) General administration and gen- eral expenses should normally be allo- cated on the basis of total expenditures (exclusive of capital expenditures and use allowances) if equitable, direct sal- aries and wages, or other bases appro- priate in the circumstances; (2) Research administration ex- penses should be allocated to (i) appli- cable research agreements and (ii) other research benefiting therefrom on the basis of records reflecting the proportion fairly applicable to each or, in the ab- sence of such records, on the basis of a reasonable estimate; (3) Operation and maintenance ex- penses should be allocated on a basis that gives primary emphasis to space utiliza- tion. The amount allocated may be de- veloped as follows: (i) Where actual space and re.. lated cost records are or can readily be maintained without significant change in the accounting practices, the amount allocated to research agreements should be based on such data; (ii) Where the space and related cost records maintained are not sufficient for purposes of (i) above, a reasonable estimate of the proportion the proportion of total space assigned to research agreements normally will suffice, and this proportion of operation and maintenance expense should be allocated to research agree- ments. Where it can be established that the cost of maintaining space assigned to research varies significantly from the cost of maintaining other space, appro- priate weighting factors may be used to give effect to such variations; (iii) Where more definitive infor- mation is not available, either of the following simplified techniques for de- termining space may be used, as most appropriate— FEDERAL PROCUREMENT REGULATIONS 1526 (FPR CIRC. 10, JULY 1960) SUBPART 1-15.3 PRINCIPLES FOR DETERMINING APPLI— CABLE COSTS UNDER RESEARCH CONTRACTS WITH EDUCATIONAL INSTITUTIONS L (A) Reduce the total space identified with instruction and research by the amount of space occupied by undergraduate students, including ap- propriate portions of classrooms and access and related space. Reduce by the same proportion the amount of mainte- nance and operation expense that has been apportioned to instruction and re- search, and then allocate to research agreements on the basis of the relation- ship that direct salaries and wages of research agreements bears to direct sala- ries and wages of instruction and re- search; or (B) Prepare a reasonable esti- mate of the average gross space assigned per research worker, and extend to the equivalent annual number of research workers under reseach agreements. The resulting product should then be related to total space assigned to instruction and research in order to obtain the propor- tion of space utilized for research agree- ments. The resulting proportion should then be applied to operation and main- tenance expense to obtain the amount allocable to research agreements; or (C) Where it can be demon- strated that an area or volume of space basis of allocation is impractical or in- equitable, other bases may be used pro- vided consideration is given to the use of facilities by research personnel and others, including students; (4) Library expenses should nor- mally be allocated to research agree- ments on the basis of population including students and other users. Where appropriate, consideration may be given to weighting segments of the population figures as necessary to pro- duce equitable results; (5) Use allowance for buildings and equipment should, if depreciation or other equivalent costs are not considered, be computed in accordance with § 1.15.- 304(e). The cost of buildings and equip- ment used by "other institutional activi- ties" (as defined in § 1-15.302(f)) should 1-15.306-3 (d) be excluded from any computation of use allowances. If available records permit, use allowances may be specifi- cally allocated in whole or in part to research agreements. In the absence of such usable records, use allowance may be allocated to research agreements on the same basis as that used for allocating operation and maintenance expenses; and (6) Indirect departmental expenses; the salaries and wages of departmental heads and their offices, including the al- located portion of deans of schools and their offices, which jointly benefit both research agreements and other activities should be allocated between research agreements administered or supervised by the department and other work of the department on any equitable basis, pos- sibly direct salaries and wages, total di- rect expenditures, or approximate time SO devoted. Where equitable results would be obtained, the distribution may be made on a composite base which would include all schools and departments. (c) Indirect costs allocated to re- search agreements normally should be treated as a common pool. The costs in such common pool should then be dis- tributed to individual research agree- ments benefiting therefrom on a single rate basis. This rate will be the per- centage which the indirect cost pool is of direct salaries and wages of the ap- plicable research agreements. If appro- priate, total direct expenditures may be used rather than salaries and wages. (d) It is recognized that in certain cases, due to the nature of the work, the facilities or personnel involved, or other considerations, the application of a single indirect expense rate on research agree- ments may produce inequitable results to the institution or to the Government. In such cases, it may be necessary to de- velop two or more indirect expense rates by means of: (1) Appropriate adjust- ment to the basic indirect expense rate developed through use of the common REGULATIONS FEDERAL PROCUREMENT (FPR CIRC. 10, JULY 1960) 1527 PART 1-15 CONTRACT COST PRINCIPLES AND PROCEDURES 1—15, 306–3 (d) pool, or (2) segregation of the indirect expenses allocated to research agree- ments into two or more indirect expense pools. In the latter case, the costs in each such pool will be distributed to the specific research agreements benefiting therefrom on the basis of direct wages and salaries or total direct expenditures, as appropriate. Examples of conditions which may justify the development of two or more pools of indirect expense are: (1) Where the nature of a particu- lar type of overhead cost requires a dif- ferent basis of allocation to produce equitable results; (2) Where a research agreement or group of agreements or the facility in which such agreement(s) is performed provides its own services to a significant degree, as may be in the case of a hos- pital or a segregated or off-campus facility; (3) Where a research agreement re- quires significantly different degrees of indirect services from the institution. For example, such conditions may exist where: (i) Significant amounts of Gov- ernment-owned facilities or equipment are provided in lieu of that normally furnished by the institution, (ii) a re- search agreement requires an unusual amount of power or other utilities, (iii) the cost of a special library provided in lieu of regular library services is reim- bursed by the Government, or (iv) con- struction constitutes a significant portion of the work; and (4) Where it is appropriate to asso- ciate certain costs more directly with the activities benefited, such as where the research work is performed on one campus of a multicampus university. (e) Where research is separately ad- ministered, in whole or in part, or sepa- rate services are provided in lieu of those services normally provided by the institution, the cost of the normal in- titutional administration or other serv- ices replaced thereby shall be excluded from allocation to such research. § 1-15.306-4 Overhead determinations acceptable under special circum- stances. (a) Indirect costs may be claimed at a rate which is anticipated to be less than that which would otherwise be al- lowable with provisions made in the re- search agreement for adjustment if actual costs subsequently proved to be less than the claimed rate. (b) The degree of preciseness required in the computation of indirect costs will be influenced by considerations such as the materiality of the amounts involved, the size of the educational institution, and the aggregate dollar volume of Gov- ernment-sponsored research at the in- stitution. Generally, where the total direct cost of Government-sponsored research and development work at an institution does not exceed $250,000 in ` a year, the use of abbreviated procedures in the determination of allowable in- direct costs may be acceptable when the results obtained are equitable. For ex- ample, educational institutions which have a relatively small dollar volume of Government-sponsored research may compute allowable indirect expenses on the basis of data available in the insti- tution's financial reports. One permis- sible method in such cases would contemplate the use of a single indirect expense pool composed of: (1) General and administrative ex- penses, exclusive of unallowable costs (see § 1-15.307), but inclusive of allo- cable salaries and expenses of deans of schools and department heads; (2) Operation and maintenance ex- penses; and (3) Library expenses. The indirect expense pool should then be allocated to research agreements and other activities of the institution on any equitable basis, possibly total expendi- tures (exclusive of capital expenditures). § 1-15.307 General standards for se- lected items of cost. REGULATIONS FEDERAL PROCUREMENT 1528 (FPR CIRC, 10, JULY 1960) SUBPART 1-15.3 PRINCIPLES FOR DETERMINING APPLI— حا CABLE COSTS UNDER RESEARCH CONTRACTS WITH EDUCATIONAL INSTITUTIONS § 1-15.307-1 Purpose and applicability. (a) This § 1-15.307 provides standards to be applied to the extent deemed prac- ticable in determining the allowability of certain items of cost. These standards should apply irrespective of whether a particular item of cost is properly treated as direct cost or indirect cost. Failure to mention a particular item of cost in the standards should not imply that it is either allowable or unallow- able; rather, determination as to allow- ability in such case should be based on the treatment or standards provided for similar or related items of cost. (b) In case of discrepancy between the provisions of a specific research agree- ment and the applicable standards, the provisions of the research agreement should govern. § 1-15.307-2 Costs applicable to instruc- tion. Except as specifically noted, the fol- lowing types of costs apply only to in- struction and therefore do not enter into the costs of research agreements, either as direct costs or indirect costs, unless specific provision is made therefor in the research agreement: (a) Commencement and convocation costs; (b) Sabbatical leave costs, including leave of absence to employees for per- formance of graduate work or sabbatical study, travel, or research; (c) Scholarships, fellowships, tuition, and other forms of student aid costs. However, in certain cases such costs may be allocable in part to research agreements under the conditions set forth in $1-15.307–3 (ii); and (d) Student services costs, including such activities as deans of students, ad- ministration of student affairs, registrar, placement offices, student advisers, stu- dent health and infirmary services, and such other activities as are identifiable with student services. However, in the case of students actually engaged in work 1-15.307-3(d) under research agreements, a proportion of student service costs measured by the relationship between hours of work by students on such research work and total student hours including all research time may be allowed as a part of research ad- ministration expenses. § 1-15.307-3 Allowable and unallowable costs. (a) Advertising costs include the cost of advertising media and related tech- nical and administrative costs. Only the following advertising costs are allowable: (1) Help wanted advertising, and (2) other advertising necessary for the per- formance of the research agreement to the extent authorized. losses (b) Bad debts including (whether actual or estimated) arising from uncollectible accounts and other claims, related collection costs, and re- lated legal costs are unallowable. (c) Capital expenditures are unallow- able except as provided for in the re- search agreement. This includes costs of books, equipment and buildings, as well as repairs which materially increase the value or useful life of such equipment or buildings. (d) Civil defense costs are those in- curred in planning for, and the protec- tion of life and property against, the possible effects of enemy attack. Rea- sonable costs of civil defense measures (including costs in excess of normal plant protection costs, first aid training and supplies, fire-fighting training, posting of additional exit notices and directions, and other approved civil defense meas- ures) undertaken on the institution's premises pursuant to suggestions or re- quirements of civil defense authorities are allowable when apportioned to all activities of the institution. Capital ex- penditures for civil defense purposes shall not be allowed, but a use allow- ance may be permitted in accordance with provisions set forth elsewhere. Costs of local civil defense projects not FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 10, JULY 1960) 1529 PART 1-15 CONTRACT COST PRINCIPLES AND PROCEDURES 1~15.307—3 (d) on the institution's premises are unallowable. (e) Communication costs including telephone services, local and long dis- tance telephone calls, telegrams, radio- grams, postage, and the like are allow- able. (f) Compensation for personal serv- ices: Each institution shall maintain control over its salary and wage rates according to its established policy con- sistently applied: Provided, however, That the excess of salary and wage rates paid to personnel working on Govern- ment research agreements over salary and wage rates paid to personnel work- ing on the institution's departmental re- search or other research will not be allowed unless specifically provided in the agreement or approved by the con- tracting officer. This principle does not prohibit the charging of the full salary of any temporary employee in whose favor a salary differential exists solely by virtue of the nature of his employment in accordance with the regular prac- tice of the institution concerned. Fac- ulty members shall be considered as em- ployed for the period represented by the sum of all semesters and other periods during which they are required to work under the practice of the institution con- cerned. (Example: Professor of X in- stitution is required to work two semes- ters of 42 months each, or a total of nine months out of the academic year. His compensation is $5,400.00. During the summer months, July, August, and September, he works full time on Gov- ernment research projects in the institu- tion laboratory. Unless the established practice of the institution relating to summer compensation, not based on Government contract experience, would result in a different computation, his compensation for that period, chargeable by the institution to the Government re- search agreement, will be $1,800.00, com- puted as follows: ($5,400.00÷9 $600.00; $600.00 multiplied by 3=$1,800.00)). (g) Contingency provisions to provide L for events the occurrence of which can- not be foretold with certainty as to time, intensity, or with an assurance of their happening, are unallowable. (h) Deans of faculty and graduate schools, or their equivalents, including their staffs and related expenses are allowable. (i) Employee morale, health, and wel- fare costs and credits, such as house publications, health or first aid clinics and/or infirmaries, recreational activi- ties, and employees' counseling services, incurred in accordance with the institu- tion's established practice or custom for the improvement of working conditions, employer-employee relations, employee morale, and employee performance, are allowable. Such costs shall be equitably apportioned to all activities of the in- stitution. Income generated from any of these activities shall be credited to the. cost thereof unless such income has been irrevocably set over to employee welfare organization. (j) Entertainment costs including costs of amusement, social activities, en- tertainment, and incidental costs relat- ing thereto, such as meals, lodging, rentals, transportation, and gratuities, are unallowable. (k) Equipment and other facilities: The cost of equipment or other facili- ties, including books purchased specifi- cally for use on the project, are allow- able where such purchases are approved by the sponsoring agency concerned or provided for by the terms of the research agreement. (1) Fines and penalties: Costs result- ing from violations of, or failure of the institution to comply with, Federal, State, and local laws and regulations are unallowable except when incurred as a result of compliance with specific pro- visions of the research agreement, or in- structions in writing from the contract- ing officer. (m) Insurance and indemnification: (1) Insurance includes those types of insurance which the institution is re- quired to carry, or which is approved, FEDERAL PROCUREMENT REGULATIONS 1530 (FPR CIRC, 10, JULY 1960) SUBPART 1-15.3 PRINCIPLES FOR DETERMINING APPLI– له CABLE COSTS UNDER RESEARCH CONTRACTS WITH EDUCATIONAL INSTITUTIONS under the terms of the research agree- ment, and any other insurance which the institution maintains in the general con- duct of its activities. Indemnification includes securing the institution against liabilities to third persons and other losses not compensated by insurance or otherwise. (2) Costs of insurance required or approved, and maintained, pursuant to the research agreement, are allowable. (3) Costs of other insurance main- tained by the institution in connection with the general conduct of its activities, are allowable subject to the following limitations: (i) Types and extent and cost of coverage shall be in accordance with sound institutional practice; (ii) Costs of insurance or of any contributions to any reserve covering the risk of loss of or damage to Government- owned property are unallowable except to the extent that the Government shall, have required or approved such costs; (iii) Contributions to a reserve for an approved self-insurance program are allowable to the extent that the types of coverage, extent of coverage, and the rates and premiums would have been al- lowed had insurance been purchased to cover the risks; (iv) Costs of insurance on the lives of officers or trustees are unallow- able except where such insurance is part of an employee plan which is not unduly restricted; and (v) Actual losses which could have been covered by permissible insurance (through an approved self-insurance program or otherwise) are unallowable unless expressly provided for in the re- search agreement except: (A) Costs in- curred because of losses not covered under nominal deductible insurance coverage provided in keeping with sound business practice are allowable; and (B) minor losses not covered by insurance, such as spoilage, breakage, and disap- pearance of small hand tools, which 1-15.307-3 (s) occur in the ordinary course of doing business, are allowable. (n) Interest costs for interest on bor- rowed capital or temporary use of en- dowment funds, however represented, are unallowable. (0) Investment counsel and staff costs are unallowable. (p) Labor relations costs incurred in maintaining satisfactory relations be- tween the institution and its employees, including costs of labor management committees, employees' publications, and other related activities are allowable. (q) Losses on other research agree- ments or contracts: Any excess of costs over income under any other research agreement or contract of any nature is unallowable. This includes, but is not limited to, the institution's contributed portion by reason of cost-sharing agree- ments or any under-recoveries through negotiation of flat amounts for overhead. (r) Maintenance and repair costs necessary for the upkeep of property (in- cluding Government property unless otherwise provided for) which neither add to the permanent value of the prop- erty nor appreciably prolong its intended life but keep it in an efficient operation condition, are allowable. (s) Material costs of purchased ma- terials, supplies, and fabricated parts directly or indirectly related to the research agreement are allowable. Pur- chases made specifically for the research agreement should be charged thereto at their actual prices after deducting all cash discounts, trade discounts, rebates, and allowances received by the institu- tion. Withdrawals from general stores or stockrooms should be charged at their cost under any recognized method of pricing stores withdrawals conforming to sound accounting practices consist- ently followed by the institution. In- coming transportation charges are proper part of material cost. Direct material cost should include only the materials and supplies actually used for a. FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 10, JULY 1960) 1531 PART 1-15 CONTRACT COST PRINCIPLES AND PROCEDURES 1-15.307-3 (s) the performance of the research agree- ment, and due credit should be given for any excess materials retained, or re- turned to vendors. Due credit should be given for all proceeds or value received for any scrap resulting from work under the research agreement. Where Govern- ment-donated or furnished material is used in performing the research agree- ment, such material will be used with- out charge. (t) Memberships, subscriptions, and professional activity costs: (1) Membership costs of the insti- tution's membership in civic, business, technical, and professional organiza- tions are allowable. (2) Subscription costs of the insti- tution's subscriptions to civic, business, professional, and technical periodicals are allowable, excepting those obtained for the library for which a use allowance is made. (3) Meetings and conferences: This item includes cost of meals, transporta- tion, rental of facilities for meetings, and costs incidental thereto, when the primary purpose of the incurrence of such costs is the dissemination of techni- cal information. Such costs are allowable. (u) Patent costs: Costs of preparing disclosures, reports, and other documents required by the research agreement and of searching the art to the extent neces- sary to make such invention disclosures, are allowable. In accordance with the clauses of the research agreement relat- ing to patents, costs of preparing docu- ments and any other patent costs, in connection with the filing of a patent ap- plication where title is conveyed to the Government, are allowable. (See also (ff) below.) (v) Pension plan costs are allowable if in accordance with the established pol-. icies of the institution, provided such policies meet the test of reasonableness and the methods of cost allocation are not discriminatory, and provided appro- priate adjustments are made for credits Lor gains arising out of normal and ab- normal employee turnover or any other contingencies that can result in for- feitures by employees which inure to the benefit of the institution. (w) Plant security costs including wages, uniforms, and equipment of per- sonnel engaged in plant protection, and necessary expenses to comply with Gov- ernment security requirements, are allowable. (x) Preresearch agreement costs are those which are incurred prior to the effective date of the research agreement whether or not they would have been allowable thereunder if incurred after such date. Such costs are unallowable unless specifically set forth and identi- fied in the research agreement. (y) Professional service costs-legal, accounting, engineering, and other. (1) Costs of professional services rendered by the members of a particular profession who are not employees of the institution are allowable, subject to (2) and (3) below, when reasonable in rela- tion to the services rendered and when not contingent upon recovery of the costs from the Government. Retainer fees to be allowable must be reasonably sup- ported by evidence of services rendered. (2) Factors to be considered in de- termining the allowability of costs in a particular case include: (i) The past pattern of such costs, particularly in the years prior to the award of Government research agree- ments; (ii) The impact of Government research agreements on the institution's total activity; (iii) The nature and scope of managerial services expected of the in- stitution's own organization; and (iv) Whether the proportion of Government work to the institution's total activity is such as to influence the institution in favor of incurring the cost, particularly where the services rendered are not of a continuing nature and have little relationship to work under Govern- ment research agreements. FEDERAL PROCUREMENT REGULATIONS 1532 (FPR CIRC, 10, JULY 1960) SUBPART 1-15.3 PRINCIPLES FOR DETERMINING APPLI— CABLE COSTS UNDER RESEARCH CONTRACTS WITH EDUCATIONAL INSTITUTIONS (3) Costs of legal, accounting, and consulting services, and related costs, incurred in connection with organization and reorganization, and the prosecution of claims against the Government, are unallowable. Costs of legal, accounting, and consulting services, and related costs, incurred in connection with patent in- fringement litigation, are unallowable unless otherwise provided for in the research agreement. (z) Profits and losses on disposition of plant, equipment, or capital assets: Profits or losses of any nature arising from the sale or exchange of plant, equipment, or other capital assets, in- cluding sale or exchange of either short- or long-term investments, shall be ex- cluded in computing research agreement costs. (aa) Proposal costs are the costs of preparing bids or proposals on potential Government and non-Government re- search agreements or projects, including the development of engineering data and cost data necessary to support the insti- tution's bids or proposals. Proposal costs of the current accounting period of both successful and unsuccessful bids and pro- posals normally should be treated as in- direct costs and allocated currently to all activities of the institution, and no proposal costs of past accounting periods shall be allocable in the current period to the Government research agreement. However, the institution's established practices may be to treat proposal costs by some other recognized method. Re- gardless of the method used, the results obtained may be accepted only if found to be reasonable and equitable. (bb) Public information services costs such as news releases pertaining to spe- cific research or scientific accomplish- ment are unallowable unless specifically authorized by the sponsoring agency. (cc) Rearrangement and alteration costs: Ordinary or normal rearrange- ment and alteration costs are allowable. Special arrangement and alteration costs 1-15.307–3 (gg) incurred specifically for the project are allowable when such work has been ap- proved in advance by the sponsoring agency concerned. (dd) Reconversion costs are those in- curred in the restoration or rehabilita- tion of the institution's facilities to approximately the same condition exist- ing immediately prior to commencement of Government research agreement work, fair wear and tear excepted. Reconver- sion costs are allowable, only to the ex- tent of the cost of removing Government property and the restoration or rehabili- tation costs caused by such removal. (ee) Recruiting costs such as "help wanted" advertising, operating costs of an employment office necessary to se- cure and maintain an adequate staff, travel costs of employees while engaged in recruiting personnel, and travel costs of applicants for interviews for prospec- tive employment, are allowable. Where the institution uses employment agen- cies, costs not in excess of standard commercial rates for such services are also allowable. Costs of special bene- fits or emoluments offered to prospective employees beyond recognized practices for recruiting such personnel unallowable. are (ff) Royalties and other costs for use of patents: Royalties on a patent or amortization of the cost of acquiring a patent or invention or rights thereto, necessary for the proper performance of the research agreement and applicable to tasks or processes thereunder, are allowable unless: (1) The Government has a license or the right to free use of the patent; (2) The patent has been adjudi- cated to be invalid or has been admin- istratively determined to be invalid; (3) The patent is considered to be unenforceable; or (4) The patent has expired. (gg) Severance pay is a payment, in addition to regular salaries and wages, ما FEDERAL PROCUREMENT REGULATIONS 7 (FPR CIRC. 10, JULY 1960) 1533 PART 1-15 CONTRACT COST PRINCIPLES AND L PROCEDURES 1—15, 307–3 (g g) by institutions to employees whose serv- ices have been terminated. Severance pay is allowable as a cost only to the extent that it is required by law, employer-employee agreement, estab- lished policy that constitutes in effect an implied agreement on the institution's part, or circumstances of the particular employment. Severance payments are divided into two categories as follows: (1) Those due to normal, recurring turnover: The actual costs of such sev- erance payments shall be regarded as expense applicable to the current fiscal year and equitably apportioned to the institution's activities during that pe- riod; and (2) Those due to abnormal or mass terminations: Abnormal or mass sever- ance pay is of such a conjectural nature' that measurement of cost by means of an accrual will not achieve equity to both parties. Thus accruals for this purpose are not allowable. However, the Gov- ernment recognizes its obligation to par- ticipate, to the extent of its fair share, in any specific payment. Thus, allow- ability will be considered on a case-by- case basis. (hh) Special services costs, such as general public relations activities, cata- logs, and alumni activities, are unallow- able. (ii) Staff benefits are allowances and services provided by the institution to its employees as compensation in addition tɔ regular wages and salaries. Costs of such staff benefits are allowable and in- clude vacations, holidays, sick leave, mil- itary leave, employee insurance, social security taxes, and workmen's compen- sation insurance. The payment of tui- tion or remission of tuition for employ- ees and their families are allowable to the extent that such payments or re- missions are made under established policies consistently applied. (jj) Taxes: In general, taxes which the institution is required to pay and which are paid or accrued in accordance with generally accepted accounting principles, and payments made to local governments in lieu of taxes which are commensurate with the local govern- ment services received are allowable, ex- cept for: (1) Taxes from which exemptions are available to the institution directly or which are available to the institution based on an exemption afforded the Gov- ernment and in the latter case when the sponsoring agency makes available the necessary exemption certificates; and (2) Special assessments on land which represent capital improvements. Any refund of taxes, interest, or penal- ties, and any payment to the institution of interest thereon, attributable to taxes, interest, or penalties which were allowed as research agreement costs, shall be credited or paid to the Government in the manner directed by the Government provided any interest actually paid or credited to an institution incident to a refund of tax, interest, and penalty shall be paid or credited to the Government only to the extent that such interest accrued over the period during which the institution had been reimbursed by the Government for the taxes, interest, and penalties. (kk) Transportation costs: Trans- portation costs include freight, express, cartage, and postage charges relating either to goods purchased, in process, or delivered. These costs are allowable. When such costs can readily be identi- fied with the items involved, they may be direct costed as transportation costs or added to the cost of such items. Where identification with the materials re- ceived cannot readily be made, inbound transportation costs may be charged to the appropriate indirect cost accounts if the institution follows a consistent, equitable procedure in this respect. Outbound freight, if reimbursable under the terms of the research agreement, should be treated as a direct cost. (11) Travel costs: (1) Travel costs consist of trans- portation, lodging subsistence, and inci- dental expenses. FEDERAL PROCUREMENT REGULATIONS ୮ 1534 (FPR CIRC, 10, JULY 1960) SUBPART 1-15.3 PRINCIPLES FOR DETERMINING APPLI— CABLE COSTS UNDER RESEARCH CONTRACTS WITH EDUCATIONAL INSTITUTIONS F ୮ (2) Travel costs incurred by institu- tion personnel in a travel status while on specific research business are allowable. (3) Travel costs incurred in the normal course of over-all administration of the institution and applicable to the entire institution are allowable. Such costs shall be equitably apportioned to all work of the institution. (4) Subsistence and lodging, includ- ing tips or similar incidental costs, are allowable either on an actual or per diem basis. The basis selected shall apply to an entire trip and not selected days of the trip. (5) Costs of personnel movement of a special or mass nature are allowable only when authorized or approved in writing by the sponsoring agency or its authorized representative. (mm) Termination costs: (1) Contract termination generally gives rise to the incurrence of costs or to the need for special treatment of costs, which would not have arisen had the contract not been terminated. Items peculiar to termination are set forth below. They are to be used in conjunc- tion with all other provisions of this subpart in the case of contract termi- nation. (2) The cost of common items of material reasonably usable on the insti- tution's other work shall not be allowable unless the institution submits evidence that it could not retain such items at cost without sustaining a loss. In de- ciding whether such items are reason- ably usable on other work of the insti- tution, consideration should be given to the institution's plans and orders for current and scheduled work. Contem- poraneous purchases of common items by the institution shall be regarded as evidence that such items are reasonably usable on the institution's other work. Any acceptance of common items as allowable to the terminated portion of the contract should be limited to the ex- 1-15.307-3(mm)(5) (i) tent that the quantities of such items on hand, in transit, and on order are in excess of the reasonable quantitative re- quirements of other work. (3) If in a particular case, despite all reasonable efforts by the institution, certain costs cannot be discontinued im- mediately after the effective date of ter- mination, such costs are generally allow- able within the limitations set forth in this part, except that any such costs continuing after termination due to the negligent or willful failure of the insti- tution to discontinue such costs shall be considered unacceptable. (4) Loss of useful value of special tooling, and special machinery and equipment is generally allowable, Pro- vided, (i) Such special tooling, machin- ery, or equipment is not reasonably capable of use in the other work of the institution; (ii) The interest of the Govern- ment is protected by transfer of title or by other means deemed appropriate by the contracting officer; and (iii) The loss of useful value as to any one terminated contract is limited to that portion of the acquisition cost which bears the same ratio to the total acquisition cost as the terminated por- tion of the contract bears the entire ter- minated contract and other Government contracts for which the special tooling, special machinery, and equipment was acquired. (5) Rental costs under unexpired leases are generally allowable where clearly shown to have been reasonably necessary for the performance of the terminated cost, less the residual value of such leases, if: (i) The amount of such rental claimed does not exceed the reasonable use value of the property leased for the period of the contract and such further period as may be reasonable, and FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 10, JULY 1960) 1535 PART 1-15 CONTRACT COST PRINCIPLES AND PROCEDURES F 1—15.307–3 (mm)(5)(ii) (ii) The institution makes all reasonable efforts to terminate, assign, settle, or otherwise reduce the cost of such lease. There also may included be the cost of alterations of such leased property, Provided, Such alterations were necessary for the performance of the contract, and of reasonable restoration required by the provisions of the lease. (6) Settlement expenses including the following are generally allowable: (i) Accounting, legal, clerical, and similar costs reasonably necessary for (A) The preparation and pre- sentation to contracting officers of set- tlement claims and supporting data with respect to the terminated portion of the contract; and (B) The termination and set- tlement of subcontracts; and (ii) Reasonable costs for the storage, transportation, protection, and disposition of property acquired or pro- duced for the contract. (7) Subcontractor claims, including the allocable portion of claims which are common to the contract and to other work of the contractor, are generally allowable. L FEDERAL PROCUREMENT REGULATIONS 1536 (FPR CIRC. 10, JULY 1960) SUBPART 1-15, 4 CONSTRUCTION CONTRACTS L 1-15.404 (b) Subpart 1-15.4—Construction Contracts § 1-15.401 Definition of construction contract. The term "construction contract" as used in this subpart means any contract for the construction, alteration, or repair of buildings, bridges, roads, or other kinds of real property. It does not in- clude a contract for the manufacturing, producing, furnishing, construction, al- teration, repair, processing or assembling of vessels, aircraft, or other kinds of per- sonal property, regardless of the terms of any such contract as to payment or title. § 1-15.402 General basis for determina- tion of costs. The total cost of a cost-reimbursement · type contract for construction or for ar- chitect-engineer services related to con- struction is the sum of the allowable costs incident to the performance of the contract, less applicable income and other credits. The tests used in deter- mining the allowability of costs also in- clude (a) reasonableness and (b) any limitations as to types or amounts of cost items set forth in this Subpart 1–15.4 or otherwise included in the contract. Failure to mention any item of cost in this subpart is not intended to imply that it is either allowable or not allow- able. Income and other credits arising out of operations under the contract, where the related cost was reimbursed or accepted as an allowable cost, will be credited to the Government. § 1-15.403 Examples of items of allow- able costs. Subject to the requirements of § 1-15.402 with respect to the general basis for determining allowability of costs, the following items of cost are considered allowable within the limita- tions indicated: (a) Bonds and insurance, including self-insurance, to the extent authorized by the contracting officer; (b) Camp operations (but see § 1-15.- 404 (h)); (c) Freight, transportation, and ma- terial handling; (d) Land and structures, temporary use thereof; (e) Materials and supplies, including inspection, storage, salvage, and other usual expenses incident to the procure- ment and use thereof; (f) Patents, purchased designs, and royalty payments, to the extent author- ized by the contracting officer; (g) Plant and equipment, purchase or rental thereof; (h) Recruiting of personnel (includ- ing "help wanted" advertising); (i) Restoration and cleanup of site and facilities, as directed by the con- tracting officer; (j) Structures and facilities of a tem- porary nature; (k) Subcontracts; (1) Taxes, fees or charges, except those imposed upon, by reason of, or measured by the contractor's fee; (m) Traveling expenses, to the extent authorized by the contracting officer; (n) Utility services, such as communi- cation, power, gas, and water: (0) Vacation, holiday and severance pay, sick leave and military leave, to the extent required by law or specifically pro- vided for elsewhere in the contract: (p) Wages and salaries; and (q) Pension and retirement plans in accordance with the interpretation set forth in § 1-15.406 and group health, ac- cident and life insurance plans (but see § 1-15.404 (b), (d) and (m)). § 1-15.404 Examples of items of un- allowable costs. The following items of costs are con- sidered unallowable, except as indicated and then only subject to the require- ments of § 1-15.402: (a) Advertising (including advertising in trade or technical journals), except "help wanted" advertising; (b) Central office expenses of the con- tractor, such as supplies, equipment, حا FEDERAL PROCUREMENT REGULATIONS 7 (FPR CIRC, 10, JULY 1960) 1537 PART 1-15 CONTRACT COST PRINCIPLES AND L PROCEDURES 1-15.404 (b) rent, or any other expenses incident to its maintenance and operation, except to the extent authorized by the contracting officer; (c) Commissions and bonuses (under whatever name) in connection with ob- taining or negotiating for a Government contract; (d) Compensation and traveling ex- penses of any officer or employee in the central office organization of the con- tractor, except to the extent authorized by the contracting officer; (e) Contingency reserves; (f) Contributions and donations; (g) Dividend payments; (h) Entertainment, except for on-site recreational activities for for the con- tractor's employees as authorized by the contracting officer; (i) Interest on borrowings (however represented), bond discount and pense, and financial charges; ex- (j) Legal, accounting and consulting fees and related expenses, except to the extent authorized by the contracting officer; (k) Losses on other contracts; (1) Memberships in trade, business, and professional organizations; (m) Premiums for insurance on the lives of directors, officers, proprietors, or other persons, where the contractor is the beneficiary directly or indirectly; (n) Storage of contract records after completion of contract operations, ir- respective of contractual or statutory re- quirements regarding the preservation of records; and (0) Taxes, fees, or charges imposed upon, by reason of, or measured by the contractor's fee. § 1-15.405 Examples of subjects requir- ing special considerations. The following examples are illustrative of subjects affecting cost which may re- quire special consideration: (a) Costs incurred incidental to work covered by the contract but prior to the execution of the contract, with specific identification of the types thereof and the period involved; (b) Government-furnished property, general nature and extent; (c) Indirect cost basis (1) actual, (2) negotiated rate or amount, or (3) other; (d) Insurance; (e) Intracompany and intercompany transactions; (f) Liability to third persons; (g) Operation of restaurants and cafe- terias; (h) Overtime compensation (see § 1- 12.102); (i) Patents, purchased designs, and royalty payments; (j) Personnel movement of a special cr mass nature; (k) Plant facilities fully depreciated or amortized on the contractor's books of account or acquired without cost (pos- sible compensation for utilization in the form of a use or rental charge); (1) Rearrangement or relocation of facilities or plant sites; (m) Research programs of a general nature; (n) Security measures of a special nature; (0) Sharing of cost of research proj- ects of the type which an educational other nonprofit institution might undertake as a part of its own educa- tional or research program; Cr (p) Subcontracting, nature and ex- tent thereof and relation to fee or profit; (q) Subsistence and housing of em- ployees; (r) Termination expenses; (s) Tooling and equipment; (t) Traveling expenses of a special or unusual nature; and (u) Wages or salaries of partners or sole proprietors. § 1-15.406 Cost interpretation of pen- sion and retirement plans. (See § 1-15.403(q).) (a) Costs of pension and retirement plans, including reasonable incidental benefits, such as disability, withdrawal, insurance or survivorship allowances which are deductible from taxable in- ← FEDERAL PROCUREMENT REGULATIONS 1538 (FPR CIRC, 10, JULY 1960) SUBPART 1-15. 4 CONSTRUCTION CONTRACTS Г come in accordance with the Internal Revenue Code and the regulations of the Internal Revenue Service, are allowable except to the extent they are determined to be unreasonable or unallowable under any other provision of this cost interpre- tation. Costs of such plans established by nonprofit or other organizations not subject to payment of Federal income taxes are also allowable except to the extent they are determined to be un- reasonable or unallowable under any other provision of this cost inter- pretation. (b) Pension or retirement plans of a contractor which are subject to approval of the Internal Revenue Service must have been so approved before costs under the plans may be accepted as charges to Government contracts. Many plans of nonprofit or other tax exempt organizations are also reviewed and ap- proved by the Internal Revenue Serv- ice-when not so reviewed and approved, each such plan will be reviewed, and approved or disapproved, by the pro- curing activity concerned, using, inso- far as applicable, the criteria and standards of the Internal Revenue Code and the regulations of the Internal Rev- enue Service. In any case where the Internal Revenue Service withdraws ap- proval of a plan, approval of amounts allocated to contract costs will be with- drawn accordingly. (c) The approval of a pension or re- tirement plan by the Internal Revenue Service will, as a general rule, be the only approval required by the procuring ac- tivity; however, the right is reserved to require submission of any plan for con- sideration by the procuring activity and to disapprove such plan in its entirety or any feature thereof whenever the cir- cumstances in a particular case are deemed to warrant such action. (d) Approval of a pension or retire- ment plan by the Internal Revenue Serv- ice or by the procuring activity does not imply that the cost thereof for any par- ticular year will be allowable for appor- tionment to contract costs, except to the extent costs for that year meet all other requirements of the Internal Revenue Service as a deduction for income tax purposes, and are acceptable under the provisions of this cost interpretation and other provisions of this Part 1-15. 1-15,406 (i) (e) Pension and retirement costs con- stitute a part of the total compensation by a contractor to any individual covered by the plan, and accordingly, are sub- ject to the provisions of this Part 1-15 with respect to reasonableness of the total compensation paid to the individ- ual for the services rendered. (f) Where contributions to pension or retirement plans are based on profits, Provided. That provisions of the In- ternal Revenue Code and regulations of the Internal Revenue Service have been met, the amount allowable for appor- tionment to contracts in any one year shall be the amount contributed to the pension trust (s) for that year, but not to exceed 15 percent of the total compensa- tion otherwise paid or accrued in that year to the individuals covered under the plan(s). (g) The allowability of costs of lump sum purchases of annuities or of peri- odic cash payments made to provide pen- sion or retirement benefits for retiring or retired employees, other than incurred under approved pension or retirement plans, will be subject to consideration on an individual case basis. (h) Credits which became available or are foreseeable must be taken into ac- count in an equitable manner in deter- mining pension and retirement costs subject to apportionment to a particular contract. In some instances, this may require adjustments to costs in anticipa- tion of the realization of credits. For example, such action would normally be appropriate where contractors' organiza- tions are substantially expanded for the performance of Government contracts and there is a reasonable expectation that, upon completion of the contracts, the services of practically all or a large number of the additional employees will be terminated with the result that con- tractors will benefit from contributions made on behalf of these employees, be- cause such personnel will not acquire vested rights under the terms of the plan. (i) In any current or future contract no cost allowance will be made which would duplicate, in whole or in part, an allowance previously made under a prior contract. (NEXT PAGE IS 1541) I FEDERAL PROCUREMENT REGULATIONS لهـ (FPR CIRC, 10, JULY 1960) 1539 ↑ Subpart 1-15.5-[Reserved] (NEXT PAGE IS 1543) FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 10, JULY 1960) 1541 វ SUBPART 1-15.6 GUIDELINES FOR APPLICATION IN THE NEGOTIATION AND ADMINISTRATION OF FIXED-PRICE TYPE CONTRACTS AND IN THE NEGOTIATION OF TERMINATION SETTLEMENTS Subpart 1-15.6-Guidelines for Ap- plication in the Negotiation and Administration of Fixed-Price Type Contracts and in the Negotiation of Termination Settlements § 1-15.600 Scope of subpart. This subpart provides guidance for the use of Subparts 1-15.2, 1-15.3, and 1–15.4 in (a) the evaluation of costs in pricing of negotiated fixed-price type contracts and subcontracts in those instances where such evaluation is required to es- tablish prices for such contracts and (b) the negotiation of termination settlements. § 1-15.601 Definition of fixed-price type contracts. "Fixed-price type" contracts include, for purpose of this subpart, the following: (a) Firm fixed-price contracts; (b) Fixed-price contracts with esca- lation; (c) Fixed-price contracts providing for the redetermination of price; (d) Fixed-price incentive contracts; (e) Non-cost-reimbursable portion of time and materials contracts; (f) Labor-hour contracts. § 1-15.602 Basic considerations. (a) Under fixed-price type contracts, the negotiated price is the basis for pay- ment to a contractor whereas allowable costs are the basis for reimbursement under cost-reimbursement type con- tracts. Accordingly, the policies and procedures of Subpart 1-3.8 are appli- cable in the negotiation of fixed-price type contracts. Cost and accounting data may provide guides for ascertaining fair compensation but are not rigid measures of it. Other types of data, cri- teria, or standards may furnish reliable guides to fair compensation. The ability 1-15,602 (b) (2) to apply standards of business judgment as distinct from strict accounting prin- ciples is at the heart of a negotiated price or settlement. (b) Among the different types of fixed-price type contracts, the need for consideration of costs varies consider- ably as indicated below: (1) Retrospective pricing and settle- ments. In negotiating firm fixed prices or settlements for work which has been completed at the time of negotiation (e.g., final negotiations under fixed-price incentive contracts, redetermination of price after completion of the work, or negotiation of a settlement agreement under a contract terminated for the con- venience of the Government), the treat- ment of costs is a major factor in arriving at the amount of the price or settlement. However, even in these situ- ations, the finally agreed price or settle- ment may represent something other than the sum total of acceptable costs plus profit, since the final price accepted by each party does not necessarily reflect agreement on the evaluation of each ele- ment of cost, but rather a final resolution of all issues in the negotiation process. (2) Forward pricing. The extent to which costs influence forward pricing varies greatly from case to case. In negotiations covering future work, actual costs cannot be known and the impor- tance of cost estimates depends on the circumstances. The contracting officer must consider all the factors affecting the reasonableness of the total proposed price, such as the technical, production, or financial risk assumed, the complexity of work, the extent of competitive pric- ing, and the contractor's record for effi- ciency, economy, and ingenuity, as well as available cost estimates. He must be free to bargain for a total price which equitably distributes the risks between the contractor and the Government and provides incentives for efficiency and cost reduction. In negotiating such a price, FEDERAL PROCUREMENT REGULATIONS (FPR CIRC, 10, JULY 1960) 1543 PART 1-15 CONTRACT COST PRINCIPLES AND PROCEDURES 1—15,602 (b) (2)' Thus, it is not possible to identify the treatment of specific cost elements since the bar- gaining is on a total price basis. while cost data is often a valuable aid, it will not control negotiation of prices for work to be performed, or a target price under an incentive contract. § 1-15.603 Cost principles and their use. (a) When, pursuant to § 1-15.602, costs are to be considered in the negotia- tion of fixed-price type contracts, the appropriate subpart of this Part 1-15 may be used as a guide in the evaluation of cost data required to establish a fair and reasonable price in conjunction with other pertinent considerations as set forth more fully in Subpart 1-3.8. (b) In retrospective pricing, whenever an occasion arises in which acceptability of a specific item of cost becomes an is- sue, the appropriate part of this Part 1-15 will serve as a guide for the con- tracting officer in his conduct of L negotiations. (c) In applying this Part 1-15 to fixed-price contracts, contracting officers will (1) not be expected to negotiate agreement on every individual element of cost; and (2) be expected to use their judgment as to the degree of detail in which they consider the individual ele- ments of cost in arriving at their evaluation of total cost, where such evaluation is appropriate. However, the negotiation record should fully substan- tiate and justify the reasoning leading to any negotiated price. (d) In order to permit the proper evaluation of cost data submitted by con- tractors for use in negotiating prices, it may be necessary to obtain breakdowns or account analyses in respect to some cost items, particularly those whose treatment may be dependent upon spe- cial circumstances as stated in these principles. Contractors will be expected to be responsive to reasonable requests for data of this kind. (END OF PART) FEDERAL PROCUREMENT REGULATIONS ✩U.S. GOVERNMENT PRINTING OFFICE: 1960 - 572502 (3) 1544 (FPR CIRC, 10, JULY 1960) UNIVERSITY OF MICHIGAN PRESSBOARD CENDINU COVER No GR 129S GR-1295 MEA HASTINGS MINNE BY CTURING COMPAN TAUKS. DO NOT REMOVE OR MUTILATE CARD 3 9015 03079 6604 DYCKNIGA : 1. { : ! ..