CLAUSE I.114 - [DEAR 970.5244-1 CONTRACTOR PURCHASING SYSTEM (DEC 2000)
(includes modifications in final rule dated 1/18/01)
(DEVIATION)]{.underline}

\(a\) General. The contractor shall develop, implement, and maintain
formal policies, practices, and procedures to be used in the award of
subcontracts consistent with this clause and 48 CFR 970.44. The
contractor\'s purchasing system and methods shall be fully documented,
consistently applied, and acceptable to DOE in accordance with 48 CFR
970.4401-1. The contractor shall maintain file documentation which is
appropriate to the value of the purchase and is adequate to establish
the propriety of the transaction and the price paid. The contractor\'s
purchasing performance will be evaluated against such performance
criteria and measures as may be set forth elsewhere in this contract.
DOE reserves the right at any time to require that the contractor submit
for approval any or all purchases under this contract. The contractor
shall not purchase any item or service the purchase of which is
expressly prohibited by the written direction of DOE and shall use such
special and directed sources as may be expressly required by the DOE
contracting officer. DOE will conduct periodic appraisals of the
contractor\'s management of all facets of the purchasing function,
including the contractor\'s compliance with its approved system and
methods. Such appraisals will be performed through the conduct of
Contractor Purchasing System Reviews in accordance with 48 CFR subpart
44.3, ***or, when approved by the contracting officer, through the
contractor\'s participation in the conduct of the [Balanced Scorecard
performance]{.underline} measurement and performance management
system.*** The contractor\'s approved purchasing system and methods
shall include the requirements set forth in paragraphs (b) through (y)
of this clause.

\(b\) Acquisition of utility services. Utility services shall be
acquired in accordance with the requirements of 48 CFR 970.41.

\(c\) Acquisition of Real Property. Real property shall be acquired in
accordance with 48 CFR Subpart 917.74.

\(d\) Advance Notice of Proposed Subcontract Awards. Advance notice
shall be provided in accordance with 48 CFR 970.4401-3.

\(e\) Audit of Subcontractors.

\(1\) The contractor shall provide for:

> \(i\) periodic post-award audit of cost-reimbursement subcontractors
> at all tiers, and
>
> \(ii\) audits, where necessary, to provide a valid basis for pre-award
> or cost or price analysis.
>
> \(2\) Responsibility for determining the costs allowable under each
> cost-reimbursement subcontract remains with the contractor or next
> higher-tier subcontractor. The contractor shall provide, in
> appropriate cases, for the timely involvement of the contractor and
> the DOE contracting officer in resolution of subcontract cost
> allowability.
>
> \(3\) Where audits of subcontractors at any tier are required,
> arrangements may be made to have the cognizant Federal agency perform
> the audit of the subcontract. These arrangements shall be made
> administratively between DOE and the other agency involved and shall
> provide for the cognizant agency to audit in an appropriate manner in
> light of the magnitude and nature of the subcontract. In no case,
> however, shall these arrangements preclude determination by the DOE
> contracting officer of the allowability or unallowability of
> subcontractor costs claimed for reimbursement by the contractor.
>
> \(4\) Allowable costs for cost reimbursable subcontracts are to be
> determined in accordance with the cost principles of 48 CFR Part 31,
> appropriate for the type of organization to which the subcontract is
> to be awarded, as supplemented by 48 CFR Part 931. Allowable costs in
> the purchase or transfer from contractor-affiliated sources shall be
> determined in accordance with 48 CFR 970.4402-3 and 48 CFR
> 970.3102-3-21(b).

\(f\) Bonds and Insurance.

> \(1\) The contractor shall require performance bonds in penal amounts
> as set forth in 48 CFR 28.102-2(a) for all fixed priced and
> unit-priced construction subcontracts in excess of \$100,000. The
> contractor shall consider the use of performance bonds in fixed price
> nonconstruction subcontracts, where appropriate.
>
> \(2\) For fixed-price, unit-priced and cost reimbursement construction
> subcontracts in excess of \$100,000 a payment bond shall be obtained
> on Standard Form 25A modified to name the contractor as well as the
> United States of America as obligees. The penal amounts shall be
> determined in accordance with 48 CFR 28.102-2(b).
>
> \(3\) For fixed-price, unit-priced and cost-reimbursement construction
> subcontracts, greater than \$25,000, but not greater than \$100,000,
> the contractor shall select two or more of the payment protections at
> 48 CFR 28.102-1(b), giving particular consideration to the inclusion
> of an irrevocable letter of credit as one of the selected
> alternatives.
>
> \(4\) A subcontractor may have more than one acceptable surety in both
> construction and other subcontracts, provided that in no case will the
> liability of any one surety exceed the maximum penal sum for which it
> is qualified for any one obligation. For subcontracts other than
> construction, a co-surety (two or more sureties together) may reinsure
> amounts in excess of their individual capacity, with each surety
> having the required underwriting capacity that appears on the list of
> acceptable corporate sureties.

\(g\) Buy American. The contractor shall comply with the provisions of
the Buy American Act as reflected in 48 CFR 52.225-1 (May 2002), as
amended by AL 2002-06 and 48 CFR 52.225-9 (May 2002), as amended by AL
2002-06. The contractor shall forward determinations of nonavailability
of individual items to the DOE contracting officer for approval. Items
in excess of \$100,000 require the prior concurrence of the Head of
Contracting Activity. If, however, the contractor has an approved
purchasing system, the Head of the Contracting Activity may authorize
the contractor to make determinations of nonavailability for individual
items valued at \$100,000 or less.

\(h\) Construction and Architect-Engineer Subcontracts.

(1) Independent Estimates. A detailed, independent estimate of costs
    shall be prepared for all construction work to be subcontracted.

> \(2\) Specifications. Specifications for construction shall be
> prepared in accordance with the DOE publication entitled "General
> Design Criteria Manual."

\(3\) Prevention of Conflict of Interest.

> \(i\) The contractor shall not award a subcontract for construction to
> the architect-engineer firm or an affiliate that prepared the design.
> This prohibition does not preclude the award of a "turnkey"
> subcontract so long as the subcontractor assumes all liability for
> defects in design and construction and consequential damages.
>
> \(ii\) The contractor shall not award both a cost-reimbursement
> subcontract and a fixed-price subcontract for construction or
> architect-engineer services or any combination thereof to the same
> firm where those subcontracts will be performed at the same site.
>
> \(iii\) The contractor shall not employ the construction subcontractor
> or an affiliate to inspect the firm\'s work. The contractor shall
> assure that the working relationships of the construction
> subcontractor and the subcontractor inspecting its work and the
> authority of the inspector are clearly defined.

\(i\) Contractor-Affiliated Sources. Equipment, materials, supplies, or
services from a contractor-affiliated source shall be purchased or
transferred in accordance with 48 CFR 970.4402-3.

\(j\) Contractor-Subcontractor Relationship. The obligations of the
contractor under paragraph (a) of this clause, including the development
of the purchasing system and methods, and purchases made pursuant
thereto, shall not relieve the contractor of any obligation under this
contract (including, among other things, the obligation to properly
supervise, administer, and coordinate the work of subcontractors).
Subcontracts shall be in the name of the contractor, and shall not bind
or purport to bind the Government.

\(k\) Government Property. Identification, inspection, maintenance,
protection, and disposition of Government property shall conform with
the policies and principles of 48 CFR Part 45, 48 CFR 945, the Federal
Property Management Regulations 41 CFR Chapter 101, the DOE Property
Management Regulations 41 CFR Chapter 109, and their contracts.

\(l\) Indemnification. Except for Price-Anderson Nuclear Hazards
Indemnity, no subcontractor may be indemnified except with the prior
approval of the Senior Procurement Executive.

\(m\) Leasing of Motor Vehicles. Contractors shall comply with 48 CFR
8.11 and 48 CFR 908.11.

\(n\) Make-or-Buy Plans. Acquisition of property and services shall be
obtained on a least-cost basis, consistent with the requirements of the
"Make-or-Buy Plan" clause of this contract and the contractor\'s
approved make-or-buy plan.

\(o\) Management, Acquisition and Use of Information Resources.
Requirements for automatic data processing resources and
telecommunications facilities, services, and equipment, shall be
reviewed and approved in accordance with applicable DOE Orders and
regulations regarding information resources.

\(p\) Priorities, Allocations and Allotments. Priorities, allocations
and allotments shall be extended to appropriate subcontracts in
accordance with the clause or clauses of this contract dealing with
priorities and allocations.

\(q\) Purchase of Special Items. Purchase of the following items shall
be in accordance with the following provisions of 48 CFR 908.71 and the
Federal Property Management Regulations, 41 CFR Chapter 101:

\(1\) Motor vehicles\--48 CFR 908.7101

\(2\) Aircraft\--48 CFR 908.7102

\(3\) Security Cabinets\--48 CFR 908.7106

\(4\) Alcohol\--48 CFR 908.7107

\(5\) Helium\--48 CFR 908.7108

\(6\) Fuels and packaged petroleum products\--48 CFR 908.7109

\(7\) Coal\--48 CFR 908.7110

\(8\) Arms and Ammunition\--48 CFR 908.7111

\(9\) Heavy Water\--48 CFR 908.7121(a)

\(10\) Precious Metals\--48 CFR 908.7121(b)

\(11\) Lithium\--48 CFR 908.7121(c)

> \(12\) Products and services of the blind and severely
> handicapped\--41 CFR 101-26.701
>
> \(13\) Products made in Federal penal and correctional
> institutions\--41 CFR 101-26.702

\(r\) Purchase vs. Lease Determinations. Contractors shall determine
whether required equipment and property should be purchased or leased,
and establish appropriate thresholds for application of lease vs.
purchase determinations. Such determinations shall be made:

\(1\) at time of original acquisition;

\(2\) when lease renewals are being considered; and

\(3\) at other times as circumstances warrant.

\(s\) Quality Assurance. Contractors shall provide no less protection
for the Government in its subcontracts than is provided in the prime
contract.

\(t\) Setoff of Assigned Subcontractor Proceeds. Where a subcontractor
has been permitted to assign payments to a financial institution, the
assignment shall treat any right of setoff in accordance with 48 CFR
932.803.

\(u\) Strategic and Critical Materials. The contractor may use strategic
and critical materials in the National Defense Stockpile.

\(v\) Termination. When subcontracts are terminated as a result of the
termination of all or a portion of this contract, the contractor shall
settle with subcontractors in conformity with the policies and
principles relating to settlement of prime contracts in 48 CFR Subparts
49.1, 49.2 and 49.3. When subcontracts are terminated for reasons other
than termination of this contract, the contractor shall settle such
subcontracts in general conformity with the policies and principles in
48 CFR Subparts 49.1, 49.2, 49.3 and 49.4. Each such termination shall
be documented and consistent with the terms of this contract.
Terminations which require approval by the Government shall be supported
by accounting data and other information as may be directed by the
contracting officer.

\(w\) Unclassified Controlled Nuclear Information. Subcontracts
involving unclassified uncontrolled nuclear information shall be treated
in accordance with 10 CFR part 1017.

\(x\) Subcontract Flowdown Requirements. In addition to terms and
conditions that are included in the prime contract which direct
application of such terms and conditions in appropriate subcontracts,
the contractor shall include the following clauses in subcontracts, as
applicable:

\(1\) Davis-Bacon clauses prescribed in 48 CFR 22.407.

\(2\) Foreign Travel clause prescribed in 48 CFR 952.247-70.

> \(3\) Counterintelligence clause prescribed in 48 CFR 970.0404-4(a).

\(4\) Service Contract Act clauses prescribed in 48 CFR 22.1006.

\(5\) State and local taxes clause prescribed in 48 CFR 970.2904-1.

\(6\) Cost or pricing data clauses prescribed in 48 CFR 970.1504-3-1(b).

(y) Legal Services. Contractor purchases of litigation and other legal
    services are subject to the requirements in 10 CFR part 719 and the
    requirements of this clause.