**The Department of Health and Human Services**

**Acquisition Regulation (HHSAR)**

**12/20/2006**

**CHAPTER 3\--HEALTH AND HUMAN SERVICES**

1\. The authority citation for 48 CFR Chapter 3, parts 301 through 370
continues to read as follows: Authority**:** 40 U.S.C. 486.

**Table of Contents**

[SUBCHAPTER A\--GENERAL 2](#subchapter-a--general)

[PART 301\--HHS ACQUISITION REGULATION SYSTEM
3](#part-301--hhs-acquisition-regulation-system)

[PART 302\--DEFINITIONS OF WORDS AND TERMS
12](#part-302--definitions-of-words-and-terms)

[PART 303\--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF
INTEREST
14](#part-303--improper-business-practices-and-personal-conflicts-of-interest)

[PART 304\--ADMINISTRATIVE MATTERS
15](#part-304--administrative-matters)

[SUBCHAPTER B---COMPETITION AND ACQUISITION PLANNING
19](#subchapter-bcompetition-and-acquisition-planning)

[PART 305\--PUBLICIZING CONTRACT ACTIONS
21](#part-305--publicizing-contract-actions)

[PART 306\--COMPETITION REQUIREMENTS
22](#part-306--competition-requirements)

[PART 307\--ACQUISITION PLANNING 25](#part-307--acquisition-planning)

[PART 309\--CONTRACTOR QUALIFICATIONS
38](#part-309--contractor-qualifications)

[SUBCHAPTER C---CONTRACTING METHODS AND CONTRACT TYPES
41](#subchapter-ccontracting-methods-and-contract-types)

[PART 311---DESCRIBING AGENCY NEEDS
43](#part-311describing-agency-needs)

[PART 312---ACQUISITION OF COMMERCIAL ITEMS
43](#part-312acquisition-of-commercial-items)

[PART 313\--SIMPLIFIED ACQUISITION PROCEDURES
43](#part-313--simplified-acquisition-procedures)

[PART 314\--SEALED BIDDING 44](#part-314--sealed-bidding)

[PART 315\--CONTRACTING BY NEGOTIATION
45](#part-315--contracting-by-negotiation)

[PART 316\--TYPES OF CONTRACTS 68](#part-316--types-of-contracts)

[PART 317\--SPECIAL CONTRACTING METHODS
70](#part-317--special-contracting-methods)

[SUBCHAPTER D---SOCIOECONOMIC PROGRAMS
71](#subchapter-dsocioeconomic-programs)

[PART 319\--SMALL BUSINESS PROGRAMS
72](#part-319--small-business-programs)

[PART 323---ENVIRONMENT, ENERGY AND WATER EFFICIENCY, RENEWABLE ENERGY
TECHNOLOGIES, OCCUPATIONAL SAFETY, AND DRUG-FREE WORKPLACE
73](#__RefHeading___Toc185239041)

[PART 324\--PROTECTION OF PRIVACY AND FREEDOM OF INFORMATION
74](#part-324--protection-of-privacy-and-freedom-of-information)

[SUBCHAPTER E\--GENERAL CONTRACTING REQUIREMENTS
77](#subchapter-e--general-contracting-requirements)

[PART 328\--BONDS AND INSURANCE 78](#part-328--bonds-and-insurance)

[PART 330\--COST ACCOUNTING STANDARDS
79](#part-330--cost-accounting-standards)

[PART 332\--CONTRACT FINANCING 79](#part-332--contract-financing)

[PART 333\--PROTESTS, DISPUTES, AND APPEALS
82](#part-333--protests-disputes-and-appeals)

[SUBCHAPTER F---SPECIAL CATEGORIES OF CONTRACTING
87](#subchapter-fspecial-categories-of-contracting)

[PART 335\--RESEARCH AND DEVELOPMENT CONTRACTING
88](#part-335--research-and-development-contracting)

[PART 339---ACQUISITION OF INFORMATION TECHNOLOGY
90](#part-339acquisition-of-information-technology)

[SUBCHAPTER G\--CONTRACT MANAGEMENT
90](#subchapter-g--contract-management)

[PART 342\--CONTRACT ADMINISTRATION
91](#part-342--contract-administration)

[SUBCHAPTER H---CLAUSES AND FORMS 96](#subchapter-hclauses-and-forms)

[PART 352\--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
97](#part-352--solicitation-provisions-and-contract-clauses)

[PART 353\--FORMS 125](#part-353--forms)

[SUBCHAPTER T\--HHS SUPPLEMENTATIONS
125](#subchapter-t--hhs-supplementations)

[PART 370\--SPECIAL PROGRAMS AFFECTING ACQUISITION
126](#part-370--special-programs-affecting-acquisition)

# SUBCHAPTER A\--GENERAL

[PART 301\--HHS ACQUISITION REGULATION SYSTEM
3](#part-301--hhs-acquisition-regulation-system)

[Subpart 301.1\--Purpose, Authority, Issuance
3](#subpart-301.1--purpose-authority-issuance)

[Section 301.101 Purpose. 3](#section-301.101-purpose.)

[Section 301.103 Authority. 4](#section-301.103-authority.)

[Section 301.106 OMB approval under the Paperwork Reduction Act.
4](#section-301.106-omb-approval-under-the-paperwork-reduction-act.)

[Subpart 301.2\--Administration 4](#subpart-301.2--administration)

[Section 301.270 Executive Committee for Acquisition.
4](#section-301.270-executive-committee-for-acquisition.)

[Subpart 301.4\--Deviations from the FAR
5](#subpart-301.4--deviations-from-the-far)

[Section 301.403 Individual deviations.
5](#section-301.403-individual-deviations.)

[Section 301.404 Class deviations.
5](#section-301.404-class-deviations.)

[Section 301.470 Procedure. 5](#section-301.470-procedure.)

[Subpart 301.6\--Career Development, Contracting Authority, and
Responsibilities
6](#subpart-301.6--career-development-contracting-authority-and-responsibilities)

[Section 301.602 Contracting officers.
6](#section-301.602-contracting-officers.)

[301.602-3 Ratification of unauthorized commitments.
6](#ratification-of-unauthorized-commitments.)

[Section 301.603 Selection, appointment, and termination of appointment
of Contracting Officers/Contract Specialists
7](#section-301.603-selection-appointment-and-termination-of-appointment-of-contracting-officerscontract-specialists)

[301.603-1 General 7](#general)

[301.603-2 Selection. 8](#selection.)

[301.603-3 Appointment. 8](#appointment.)

[301.603-4 Termination. 8](#termination.)

[301.603-70 Delegation of contracting officer responsibilities.
8](#delegation-of-contracting-officer-responsibilities.)

[301.603--71 Waivers to warrant standards
9](#__RefHeading___Toc185238466)

[301.603--72 Training and certification requirements for Contracting
Officers/Contract Specialists
9](#training-and-certification-requirements-for-contracting-officerscontract-specialists)

[301.603-73 Earned value training requirement for Contracting
Officers/Contract Specialists who administer and IT contract.
10](#earned-value-training-requirement-for-contracting-officerscontract-specialists-who-administer-and-it-contract.)

[301.603--74 Training policy exception 10](#training-policy-exception)

[301.603--75 Training requirement for purchase cardholders, Approving
Officials (AOs), and Agency/Organization Program Coordinators (A/OPCs)
10](#training-requirement-for-purchase-cardholders-approving-officials-aos-and-agencyorganization-program-coordinators-aopcs)

[301.603--76 Requirement for certification retention and maintaining
currency of acquisition knowledge and skills for Contracting
Officers/Contract Specialists and purchasing agents
12](#requirement-for-certification-retention-and-maintaining-currency-of-acquisition-knowledge-and-skills-for-contracting-officerscontract-specialists-and-purchasing-agents)

[PART 302\--DEFINITIONS OF WORDS AND TERMS
13](#part-302--definitions-of-words-and-terms)

[Subpart 302.1\--Definitions 13](#subpart-302.1--definitions)

[Section 302.101 Definitions. 13](#section-302.101-definitions.)

[Subpart 302.2\--Definitions clause
14](#subpart-302.2--definitions-clause)

[Section 302.201 Contract clause. 14](#section-302.201-contract-clause.)

[PART 303\--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF
INTEREST
14](#part-303--improper-business-practices-and-personal-conflicts-of-interest)

[Subpart 303.1\--Safeguards 14](#subpart-303.1--safeguards)

[Section 303.101 Standards of conduct.
14](#section-303.101-standards-of-conduct.)

[303.101-3 Agency regulations. 14](#agency-regulations.)

[303.104-7 Violations or possible violations of the Procurement
Integrity Act.
14](#violations-or-possible-violations-of-the-procurement-integrity-act.)

[Subpart 303.2\--Contractor Gratuities to Government Personnel
15](#subpart-303.2--contractor-gratuities-to-government-personnel)

[Section 303.203 Reporting suspected violations of the Gratuities
clause.
15](#section-303.203-reporting-suspected-violations-of-the-gratuities-clause.)

[Subpart 303.3\--Reports of Suspected Antitrust Violations
15](#subpart-303.3--reports-of-suspected-antitrust-violations)

[Section 303.303 Reporting suspected antitrust violations.
15](#section-303.303-reporting-suspected-antitrust-violations.)

[Subpart 303.4\--Contingent Fees 15](#subpart-303.4--contingent-fees)

[Section 303.405 Misrepresentations or violations of the Covenant
against Contingent Fees.
15](#section-303.405-misrepresentations-or-violations-of-the-covenant-against-contingent-fees.)

[Subpart 303.6\--Contracts with Government Employees or Organizations
Owned or Controlled by Them
16](#subpart-303.6--contracts-with-government-employees-or-organizations-owned-or-controlled-by-them)

[Section 303.602 Exceptions 16](#section-303.602-exceptions)

[Subpart 303.7\--Voiding and Rescinding Contracts
16](#subpart-303.7--voiding-and-rescinding-contracts)

[Section 303.704 Policy 16](#section-303.704-policy)

[PART 304\--ADMINISTRATIVE MATTERS
16](#part-304--administrative-matters)

[Subpart 304.6\--Contracting Reporting
16](#subpart-304.6--contracting-reporting)

[Section 304.602 Federal Procurement Data System (FPDS).
16](#section-304.602-federal-procurement-data-system-fpds.)

[Subpart 304.7\--Acquisition Instrument Identification Numbering System
16](#subpart-304.7--acquisition-instrument-identification-numbering-system)

[Section 304.7000 Scope of subpart.
16](#section-304.7000-scope-of-subpart.)

[Section 304.7001 Numbering acquisitions.
17](#section-304.7001-numbering-acquisitions.)

[Subpart 304.71\--Review and Approval of Proposed Contract Awards
19](#subpart-304.71--review-and-approval-of-proposed-contract-awards)

[Section 304.7100 Policy. 19](#section-304.7100-policy.)

[Section 304.7101 Procedures. 19](#section-304.7101-procedures.)

[Subpart 304.8\--Government Contract Files
19](#subpart-304.8--government-contract-files)

[Section 304.804-70 Contract closeout audits.
19](#section-304.804-70-contract-closeout-audits.)

## PART 301\--HHS ACQUISITION REGULATION SYSTEM 

### Subpart 301.1\--Purpose, Authority, Issuance 

#### Section 301.101 Purpose. 

\(a\) The Department of Health and Human Services Acquisition Regulation
(HHSAR) is issued to establish uniform acquisition policies and
procedures for the Department of Health and Human Services (HHS) which
conform to the [[Federal Acquisition Regulation
(FAR)]{.underline}](http://www.acquisition.gov/comp/far/loadmainre.html)
System.

\(b\) The HHSAR implements
[[FAR]{.underline}](http://www.acquisition.gov/comp/far/loadmainre.html)
policies and procedures and provides additional policies and procedures
that supplement the
[[FAR]{.underline}](http://www.acquisition.gov/comp/far/loadmainre.html)
to satisfy the needs of HHS.\
c) The HHSAR contains all formal departmental policies and procedures
that govern the acquisition process or otherwise control contracting
relationships between the Department\'s contracting offices and
contractors.

#### Section 301.103 Authority. 

\(b\) The HHSAR is prescribed by the Assistant Secretary for
Administration and Management under the authority of [[5 U.S.C.
301]{.underline}](http://www4.law.cornell.edu/uscode/5/301.html) and
section [[205(c) of the Federal Property and Administrative
Services]{.underline} [Act of
1949]{.underline}](http://epw.senate.gov/fpasa49.pdf), as amended ([[40
U.S.C.
486(c)]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode40&STEMMER=en&WORDS=486+&COLOUR=Red&STYLE=s&URL=/uscode/40/486.html),
as delegated by the Secretary.

\(c\) The HHSAR is issued in the [[Code of Federal Regulations
(CFR)]{.underline}](http://www.access.gpo.gov/nara/cfr/cfr-table-search.html)
as [[Chapter 3 of Title 48,]{.underline} [Department of Health and Human
Services Acquisition
Regulation]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_02/48cfrv4_02.html).
It may be referenced as \"[[48 CFR]{.underline} [Chapter
3]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_02/48cfrv4_02.html).\"

#### Section 301.106 OMB approval under the Paperwork Reduction Act. 

\(a\) The following OMB control numbers apply to the information
collection and recordkeeping requirements contained in this chapter:

> OMB control
>
> HHSAR segment No.
>
> [315.4]{.underline}\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...
> 0990-0139\
> [324.70]{.underline}\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....
> 0990-0136\
> [342.7101]{.underline}\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...
> 0990-0131\
> [352.224-70]{.underline}\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...
> 0990-0137\
> [352.224-70]{.underline}\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...
> 0990-0136\
> [352.233-70]{.underline}\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...
> 0990-0133\
> [352.270-1]{.underline}\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....
> 0990-0129\
> [352.270-2]{.underline}\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....
> 0990-0129\
> [352.270-3]{.underline}\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....
> 0990-0129\
> [352.270-5]{.underline}\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....
> 0990-0130\
> [352.270-8]{.underline}\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....
> 0990-0128\
> [352.270-9]{.underline}\...\...\...\...\...\...\...\...\...\...\...\...\...\...\.....
> 0990-0128\
> [370.1]{.underline}\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....
> 0990-0129\
> [370.2]{.underline}\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\...\....
> 0990-0129

\(b\) The OMB control number \"OMB No. 0990-0115\" is to be included in
the upper right corner of the first page of all solicitations, purchase
orders, and contracts issued by departmental contracting activities. The
number represents approval of the HHS acquisition process and covers
recordkeeping and reporting requirements which are unique to individual
acquisitions (e.g., requirements contained in specifications, statements
of work, etc.).

### Subpart 301.2\--Administration 

#### Section 301.270 Executive Committee for Acquisition. 

\(a\) The Deputy Assistant Secretary for Acquisition Management and
Policy has established the Executive Committee for Acquisition (ECA) to
assist and facilitate the planning and development of departmental
acquisition policies and procedures and to assist in responding to other
agencies and organizations concerning policies and procedures impacting
the Federal acquisition process.

\(b\) The ECA consists of members and alternates from the Division of
Acquisition Policy (DAP), Agency for Healthcare Research and Quality,
Centers for Medicare & Medicaid Services, Program Support Center,
Centers for Disease Control and Prevention, Food and Drug
Administration, Health Resources and Services Administration, Indian
Health Service, National Institutes of Health, and Substance Abuse and
Mental Health Services Administration. The ECA is chaired by the
Director, Division of Acquisition Policy (DAP). All meetings will be
held at the call of the Chair, and all activities will be carried out
under the direction of the Chair.

\(c\) The purposes of the ECA are to:

\(1\) Advise and assist the Chair on major acquisition policy matters;

\(2\) Review and evaluate the overall effectiveness of existing policies
and procedures and the impact of new acquisition policies, procedures,
and regulations on current acquisition policies and procedures.

\(d\) The Chair will periodically issue a list of current members and
alternates, including each person's name, title, organization, address,
telephone number, and e-mail address. ECA members are responsible for
apprising the Chair of any changes to the list.

### Subpart 301.4\--Deviations from the FAR 

#### Section 301.403 Individual deviations. 

Requests for individual deviations to either the
[[FAR]{.underline}](http://www.acquisition.gov/comp/far/loadmainre.html)
or HHSAR shall be prepared in accordance with
[301.470](#section-301.470-procedure.) and forwarded to the Deputy
Assistant Secretary for Acquisition Management and Policy (DASAMP).

#### Section 301.404 Class deviations.

Requests for class deviations to either the
[FAR](http://www.acquisition.gov/comp/far/loadmainre.html) or HHSAR
shall be prepared in accordance with
[301.470](#section-301.470-procedure.) and forwarded to the Deputy
Assistant Secretary for Acquisition Management and Policy (DASAMP).

#### Section 301.470 Procedure. 

\(a\) Deviation requests shall be prepared in memorandum form and
forwarded through the Head of the Contracting Activity (HCA) to the
Director, Division of Acquisition Policy. A deviation may be requested
verbally in an exigency situation; however, the request must be
confirmed in writing as soon as possible.

\(b\) A deviation request shall clearly and precisely set forth the:

\(1\) Nature of the needed deviation;

\(2\) Identification of the
[[FAR]{.underline}](http://www.acquisition.gov/comp/far/loadmainre.html)
or HHSAR citation from which the deviation is needed;

\(3\) Circumstances under which the deviation would be used;

\(4\) Intended effect of the deviation;

\(5\) Period or applicability;

\(6\) Reasons which will contribute to complete understanding and
support of the requested deviation. A copy of pertinent background
papers such as a contractor\'s request should accompany the deviation
request; and

\(7\) Suggested wording for the deviation (if applicable).

### Subpart 301.6\--Career Development, Contracting Authority, and Responsibilities 

#### Section 301.602 Contracting officers. 

##### 301.602-3 Ratification of unauthorized commitments. 

\(b\) Policy.

\(1\) The Government is not bound by agreements or contractual
commitments made to prospective contractors by persons to whom
contracting authority has not been delegated. However, execution of
otherwise proper contracts made by individuals without contracting
authority, or by contracting officers in excess of the limits of their
delegated authority, may be later ratified. The ratification must be in
the form of a written document clearly stating that ratification of a
previously unauthorized act is intended and must be signed by the head
of the contracting activity (HCA).

\(2\) The HCA is the official authorized to ratify an unauthorized
commitment (but see paragraph (b) (3) of this section).

\(3\) Ratification authority for actions up to \$100,000 may be
re-delegated by the HCA to the chief of the contracting office (CCO). No
other redelegations are authorized.

\(c\) Limitations.

\(5\) The concurrence of legal counsel concerning the payment issue is
optional.

\(e\) *Procedures.*

\(1\) The individual who made the unauthorized contractual commitment
shall furnish the reviewing Contracting Officer all records and
documents concerning the commitment and a complete written statement of
facts, including, a description of the requirement, the estimated or
agreed upon price, the funds citation, an explanation of why the
contracting office was not used and why the proposed contractor was
selected, a list of other sources considered, and a statement as to
whether the contractor has commenced work.

\(2\) The Contracting Officer will review the submitted material and
prepare it for ratification if it is determined that the commitment is
ratifiable. The Contracting Officer shall forward the ratification
document and the submitted material to the HCA or CCO with any comments
or information which should be considered in evaluation of the request
for ratification. If legal review is desirable, the HCA or CCO will
coordinate the request for ratification with the Office of General
Counsel, Business and Administrative Law Division.

\(3\) If ratification is authorized by the HCA or CCO, the file will be
returned, along with the ratification document, to the contracting
officer for issuance of a purchase order or contract, as appropriate.

#### Section 301.603 Selection, appointment, and termination of appointment of Contracting Officers/Contract Specialists

##### 301.603-1 General

\(a\) The appointment, selection, and termination of appointment of
Contracting Officers/Contract Specialists shall be made by the HCA. This
authority is not delegable. The procedures for the selection and
appointment of Contracting Officers/Contract Specialists shall apply to
anyone seeking a Contracting Officer warrant. OPDIV procedures shall be
followed in the appointment and termination of Contracting
Officers/Contract Specialists in offices that have Contracting
Officers/Contract Specialists with dual signature warrants.

\(b\) [[Standard Form
(SF)1402]{.underline}](http://www.gsa.gov/Portal/formslibrary.jsp?type=doc&view=(ByNumber_R)&doc=26356DA22CA38F7B85256A1F005F1C89&title=Certificate+of+Appointment&category=Standard+Forms),
''Certificate of Appointment,'' shall be used to appoint personnel in
the 1102 series as Contracting Officers. It shall also be used for
personnel in any other series who will obligate the Government to the
expenditure of funds in excess of the micro-purchase threshold. The [[SF
1402]{.underline}](http://www.gsa.gov/Portal/formslibrary.jsp?type=doc&view=(ByNumber_R)&doc=26356DA22CA38F7B85256A1F005F1C89&title=Certificate+of+Appointment&category=Standard+Forms)
shall indicate the Contracting Officer's warrant level and threshold and
any other limitations. The HCA may determine an alternate appointment
document for appointments at or below the micropurchase threshold level.
Contracting Officer warrants will be issued to civil service personnel
only. A delegation of procurement authority shall be set forth in a
memorandum that describes the spending limits and authority. Changes to
appointments shall be made by issuing a new appointment document. Each
appointment document shall be prepared and maintained in accordance with
[[FAR]{.underline}
[1.603--1]{.underline}](http://www.acquisition.gov/far/current/html/Subpart 1_6.html)
and shall state the limits of the individual's authority.

\(c\) An individual must be certified at the appropriate level as a
prerequisite to being appointed as a Contracting Officer with authority
to obligate funds in excess of the micro-purchase threshold (see
[[301.603--72]{.underline}](http://www.knownet.hhs.gov/acquisition/hhsar/%23301.603–72_Training_and_certification_requirements_for_Contracting_Officers/Contract_Specialists)).
The HCA will determine and require training for individuals appointed as
Contracting Officers/Contract Specialists at dollar levels below the
micropurchase threshold. Individuals selected for Contracting Officer
warrant authority must meet the education, training, and experience
requirements that are established for the warrant level. An individual
shall be appointed as a Contracting Officer only in instances where a
valid organizational need is demonstrated. Factors to be considered in
assessing the need for an appointment of a Contracting Officer include
volume of actions, complexity of work, and structure of the
organization.

\(d\) Contracting Officers (GS--1102's) shall not sign contracts or
modifications to contracts which will result in the total amount of the
contract exceeding their delegated warrant authority (as specified on
the SF--1402). This includes Indefinite Delivery Indefinite Quantity
(IDIQ) contracts. However, orders placed against an IDIQ may be issued
by Contracting Officers up to their delegated authority provided that
each order is separate and distinct.

\(e\) Employees delegated warrant authority are the only individuals
legally authorized to bind the Government by executing contracts or
signing determinations and findings required by the FAR. The amount
specified on the warrant shall cover the estimated maximum contract
amount, including all option periods. For example, an employee with a
\$500,000 Contracting Officer Certificate of Appointment may not award a
contract for a base year of \$300,000 if the contract includes a
one-year option for an additional \$300,000. In this case, the total
contract amount, including options, exceeds the amount stipulated in the
warrant. If a warrant is limited to \$500,000 (for example), the holder
may not sign a contract for more than that amount, even if the
additional amount is subject to the availability of funds. Contracting
Officers with higher warrant levels may sign the action when
modifications to orders and contracts make the total amount of the
contract exceed the Contracting Officer's warrant limitation.

##### 301.603-2 Selection. 

When it has been determined that the appointment is in the best interest
of the OPDIV and/or Department and there is a demonstrated need for the
procurement authority requested, nominations for appointment of
Contracting Officers shall be submitted to the HCA through appropriate
organizational channels for review. The HCA is responsible for
appointing Contracting Officers in accordance with [[FAR
1.603]{.underline}](http://www.acquisition.gov/far/current/html/Subpart 1_6.html).
This authority is not delegable. The HCA will determine the
documentation required, consistent with [[FAR
1.603-2]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 1_6.html#wp10509270),
when the resulting appointment and authority will not exceed the
micropurchase threshold.

##### 301.603-3 Appointment. 

\(a\) Appointing officials must ensure that a warrant candidate meets
the experience and education/training requirements listed in
301.603--72.

\(b\) If it is essential to appoint an individual who does not fully
meet the certification requirements for the Contracting Officer
authority sought, an interim appointment may be granted by the HCA. HCAs
are responsible for ensuring that training requirements are met within
the specified time frame. Interim appointments may not exceed one year
in total, and shall not be granted unless the individual can meet the
certification requirements within one year from the date of appointment.
The HCA may extend an interim appointment by granting additional time to
complete the requirements of a permanent appointment. If the
certification requirements are not completed by the extended date, the
appointment will automatically terminate.

##### 301.603-4 Termination. 

Termination or revocation of Contracting Officer appointments shall be
accomplished in accordance with [[FAR
1.603-4]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 1_6.html#wp1050927).

##### 301.603-70 Delegation of contracting officer responsibilities. 

\(a\) A Contracting Officer's responsibilities which do not involve the
obligation or deobligation of funds or result in establishing or
modifying contractual provisions may be delegated by the Contracting
Officer by means of a written memorandum that clearly delineates the
delegation and its limits.

\(b\) Contracting Officers may designate individuals as ordering
officials to make purchases or place orders under blanket purchase
agreements, indefinite delivery contracts, or other preestablished
mechanisms. Ordering officials, including those under the National
Institutes of Health's (NIH) Delegated Acquisition Program (DELPRO), are
not Contracting Officers.

##### 301.603--71 Waivers to warrant standards 

There may be an unusual circumstance that requires delegation of a
warrant to an employee who does not meet the warrant standards in of the
HHS Contracting Officer Warrant Program. Any requests for waivers
requesting deviations from the requirements and policies of the HHS
Contracting Officer Warrant Program shall be sent in writing to the SPE
for approval. The SPE will either approve or disapprove in writing the
request for a waiver to the warrant standards. The SPE may grant waivers
on a case-by-case basis in unique situations only.

##### 301.603--72 Training and certification requirements for Contracting Officers/Contract Specialists

\(a\) Federal Acquisition Certification in Contracting (FAC--C)
certification is *not mandatory* for all GS-- 1102s; however, members of
the workforce issued new Contracting Officer (CO) warrants on or after
January 1, 2007, regardless of GS series, *must* be certified at an
appropriate level to support their warrant obligations, pursuant to
agency policy. *New* CO warrants are defined in [[OFPP Policy
Letter]{.underline}
[05--01]{.underline}](http://www.whitehouse.gov/omb/procurement/policy_letter_05-01.html)
as warrants issued to employees for the *first time* at a department or
agency. FAC--C certification does not apply to:

\(1\) Senior level officials responsible for delegating procurement
authority;

\(2\) Non-1102s whose warrants are generally used to procure emergency
goods and services; or

\(3\) Non-1102s whose warrants are so limited as to be outside the scope
of this program, as\
determined by the Chief Acquisition Officer (CAO).

\(b\) HHS requires a senior level FAC--C certification for any employee
issued an unlimited Contracting Officer's warrant on or after January 1,
2007.

\(c\) Achievement of the FAC--C is based on three requirements:
education, training, and experience, and the requirements are
cumulative, (i.e., a person must meet the requirements of each previous
certification level).

\(d\) FAC--C training requirements are as follows:

\(1\) FAC--C Level I:

> \(i\) CON 100 Shaping Smart Business Arrangements.
>
> \(ii\) CON 110 Mission Support Planning.
>
> \(iii\) CON 111 Mission Strategy Execution.
>
> \(iv\) CON 112 Mission Performance Assessment.
>
> \(v\) CON 120 Mission Focused Contracting.
>
> \(vi\) 1 Elective.

\(2\) FAC--C Level II:

> \(i\) CON 202 Intermediate Contracting.
>
> \(ii\) CON 204 Intermediate Contract Pricing.
>
> \(iii\) CON 210 Government Contract Law.
>
> \(iv\) 2 Electives.

\(3\) FAC--C Level III:

\(i\) CON 353 Advanced Business Solutions for Mission Support.

\(ii\) 2 Electives.

\(e\) Those conducting simplified acquisitions from \$2,500 to \$100,000
will need to be issued an HHS Simplified Acquisition Certificate.

Required training is as follows:

\(1\) HHS Simplified Acquisition Certificate A:

> \(ii\) Basic Simplified Acquisition Procedures/DAU's CON 237.
>
> \(iii\) Advanced Simplified Acquisition Procedures or Appropriations
> Law.

\(2\) HHS Simplified Acquisition Certificate B:

> \(i\) Basic Simplified Acquisition Procedures/DAU's CON 237.
>
> \(ii\) Advanced Simplified Acquisition Procedures or Appropriations
> Law.
>
> \(iii\) CON 100 (Shaping Smart Business Arrangements).
>
> \(iv\) CON 110 (Mission Support Planning).

\(f\) For additional information, see
*<http://www.knownet.hhs.gov/acquisition/careerhandbookver.1.0.doc>.*

##### 301.603-73 Earned value training requirement for Contracting Officers/Contract Specialists who administer and IT contract. 

All GS--1102s who administer an IT contract, regardless of dollar
threshold, are required to successfully complete the Department's
(offered through HHS University) one-day course entitled ''Early Warning
Project Management Systems Workshop,'' or an equivalent Earned Value
training course. Determination of course equivalency shall be made
jointly by the Office of Acquisition Management and Policy/ASAM and the
HHS Office of the Chief Information Officer.

##### 301.603--74 Training policy exception 

In the event there is an urgent requirement for a Contracting
Officer/Contract Specialist to award or administer an IT contract, and
the Earned Value training requirement has not been met, the HCA (not
delegable) may waive the training requirement and authorize the
individual to perform the job duties, provided that the individual
attends the next scheduled ''Early Warning Project Management System
Workshop'' course, or an equivalent Earned Value course.

##### 301.603--75 Training requirement for purchase cardholders, Approving Officials (AOs), and Agency/Organization Program Coordinators (A/OPCs)

Training requirements for purchase cardholders, AOs, and A/OPCs are
listed in the following table:

+---------+-----------------+------------------------------------------+
| **      | **Program**     | **Required Training**^b^                 |
| Authori |                 |                                          |
| ty^a^** | **Participant** |                                          |
+---------+-----------------+------------------------------------------+
| > Up to | Pr              | Basic purchase card course (HHS          |
| >       | ospective/newly | University 1-day course)                 |
| \$3,000 | appointed       |                                          |
|         | purchase        | Or an equivalent course that has been    |
|         | cardholders and | approved by the HHS Acquisition Training |
|         | Approving       | Coordinator prior to appointment.        |
|         | Officials       | Training will include green-purchasing   |
|         |                 | and Section 508 requirements.            |
+---------+-----------------+------------------------------------------+
|         | Purchase        | Yearly refresher purchase card training, |
|         | cardholders and | including green- purchasing training and |
|         | Approving       | Section 508 training.                    |
|         | Officials       |                                          |
+---------+-----------------+------------------------------------------+
| >       | Pr              | -   Basic purchase card course           |
| \$3,001 | ospective/newly |                                          |
| > to    | appointed       | -   Basic Simplified acquisition         |
| > \     | purchase        |     procedures/DAU's CON 237             |
| $25,000 | cardholders and |                                          |
|         | Approving       | -   Advanced simplified acquisition      |
|         | Officials       |     procedures or Appropriations Law     |
+---------+-----------------+------------------------------------------+
|         | Purchase        | Yearly refresher purchase card training, |
|         | cardholders and | including green- purchasing training and |
|         | Approving       | Section 508 training.                    |
|         | Officials       |                                          |
+---------+-----------------+------------------------------------------+
| > \     | Pr              | -   Basic purchase card course           |
| $25,001 | ospective/newly |                                          |
| > to    | appointed       | -   Basic Simplified acquisition         |
| > \$    | purchase        |     procedures/DAU's CON 237             |
| 100,000 | cardholders and |                                          |
|         | Approving       | -   Advanced simplified acquisition      |
|         | Officials       |     procedures or Appropriations Law     |
|         |                 |                                          |
|         |                 | -   CON 100 (Shaping Smart Business      |
|         |                 |     Arrangements)                        |
|         |                 |                                          |
|         |                 | -   CON 110 (Mission Support Planning)   |
+---------+-----------------+------------------------------------------+
|         | Purchase        | Yearly refresher purchase card training, |
|         | cardholders and | including green- purchasing training and |
|         | Approving       | Section 508 training.                    |
|         | Officials       |                                          |
+---------+-----------------+------------------------------------------+
| Not     | Pr              | -   Basic purchase card course           |
| app     | ospective/newly |                                          |
| licable | appointed       | -   Basic Simplified acquisition         |
|         | purchase        |     procedures/DAU's CON 237             |
|         | cardholders and |                                          |
|         | Approving       | -   Advanced simplified acquisition      |
|         | Officials       |     procedures or Appropriations Law     |
|         |                 |                                          |
|         |                 | -   CON 100 (Shaping Smart Business      |
|         |                 |     Arrangements)                        |
|         |                 |                                          |
|         |                 | -   CON 110 (Mission Support Planning)   |
+---------+-----------------+------------------------------------------+
|         | Agen            | Yearly refresher purchase card training, |
|         | cy/Organization | including green- purchasing training and |
|         | Program         | Section 508 training (attendance at      |
|         | Coordinators    | GSA's annual training conference         |
|         |                 | satisfies refresher training.            |
+---------+-----------------+------------------------------------------+

> ^a^ Cardholders and Approving Officials with authorized increases in
> DPA.
>
> ^b^ CON 237, CON 100, and CON 110 are available at the DAU through HHS
> University (see Web site at:
> [*[http://learning.hhs.gov]{.underline}*](http://learning.hhs.gov/)).

##### 301.603--76 Requirement for certification retention and maintaining currency of acquisition knowledge and skills for Contracting Officers/Contract Specialists and purchasing agents

To maintain a FAC--C, GS--1102s, including all warranted Contracting
Officers regardless of series, shall earn 80 continuous learning points
(CLPs) every two years beginning January 1, 2008. For GS-- 1105s and
GS--1106s, a minimum of forty (40) hours (or continuous learning points)
is required every two years after all mandatory training requirements
have been met. Certification will expire if the CLPs are not earned
every two years, and may result in a loss of warrant authority.

## PART 302\--DEFINITIONS OF WORDS AND TERMS 

### Subpart 302.1\--Definitions 

#### Section 302.101 Definitions. 

*Agency head* or *head of the Agency*, unless otherwise specified, means
the head of the Operating Division (OPDIV) for Agency for Healthcare
Research and Quality (AHRQ), Centers for Disease Control and Prevention
(CDC), Centers for Medicare & Medicaid Services (CMS), Food and Drug
Administration (FDA), Health Resources and Services Administration
(HRSA), Indian Health Service (IHS), National Institutes of Health
(NIH), Substance Abuse and Mental Health Services (SAMHSA), and the
Deputy Secretary for the Office of the Secretary (OS).

*Chief of the Contracting Office* (CCO) is typically a mid-level
management official, usually an office director, division director, or
branch chief, who manages and monitors the daily contract operations of
an OPDIV or major component of an OPDIV. The CCO is subordinate to the
Head of Contracting Activity (HCA), except where the HCA and CCO are the
same individual.

*Head of the contracting activity* (HCA)---

\(1\) Occupies designated organization positions as follows:

> *ASAM--OS*---Deputy Assistant Secretary for Acquisition Management and
> Policy *AHRQ*---Director, Division of Contracts Management

*CMS*---Director, Office of Acquisition and Grants Management

*PSC*---Director, Division of Acquisition Management

*CDC*---Director, Procurement and Grants Office

*FDA*---Director, Office of Acquisitions & Grant Services

*HRSA*---Director, Division of Procurement Management

*IHS*---Director, Division of Acquisition Policy

*NIH*---Director, Office of Acquisition Management and Policy

*SAMHSA*---Director, Division of Contracts Management

\(2\) Each HCA is responsible for conducting an effective and efficient
acquisition program. Adequate controls shall be established to assure
compliance with applicable laws, regulations, procedures, and the
dictates of good management practices. Periodic reviews shall be
conducted and evaluated by qualified personnel, preferably assigned to
positions other than in the contracting office being reviewed, to
determine the extent of adherence to prescribed policies and
regulations, and to detect a need for guidance and/or training.

\(3\) The heads of contracting activities may re-delegate their HCA
authorities to the extent that re-delegation is not prohibited by the
terms of their respective delegations of authority, by law, by the
Federal Acquisition Regulation, by the HHS Acquisition Regulation, or by
other regulations. However, HCA and other contracting approvals and
authorities shall not be re-delegated below the levels specified in the
HHS Acquisition Regulation or, in the absence of coverage in the HHS
Acquisition Regulation, the Federal Acquisition Regulation. To ensure
proper control of re-delegated acquisition authorities, HCAs shall
maintain a file containing successive delegations of HCA authority
through and including the Contracting Officer level. Personnel delegated
responsibility for acquisition functions must possess a level of
experience, training, and ability commensurate with the complexity and
magnitude of the acquisition actions involved.

*Project Officer* is a Federal employee who monitors contractor
performance and provides technical guidance to the Contract
Specialist/Contracting Officer. The Project Officer serves as the
Contract Specialist/Contracting Officer's authorized representative to
monitor specific aspects of the contract, thereby ensuring that the
contractor's performance meets the standards set forth in the contract,
the technical requirements under the contract are met by the delivery
date(s) and/or within the period of performance, and performance is
accomplished within the price or estimated cost stated in the contract.
A Project Officer is required to comply with HHS Project Management
Certification Program training requirements. The term ''Project
Officer'' is synonymous with Contracting Officer's Representative (COR)
and Contracting Officer's Technical Representative (COTR).

### Subpart 302.2\--Definitions clause 

#### Section 302.201 Contract clause. 

The FAR clause, Definitions, at
[[52.202-1]{.underline}](http://www.acquisition.gov/far/current/html/52_200_206.html)
shall be used as prescribed in [[FAR
2.201]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 2_2.html#wp1103935),
except as follows:

\(a\) In accordance with 52.202--1(a)(1), paragraph (a) at
[352.202-1]{.underline} shall be used in place of paragraph (a) of the
[[FAR]{.underline}](http://www.acquisition.gov/comp/far/loadmainre.html)
clause.

\(b\) In accordance with 52.202--1(a)(1), paragraph (h), or its
alternate, at [352.202-1]{.underline} shall be added to the end of the
[[FAR]{.underline}](http://www.acquisition.gov/comp/far/loadmainre.html)
clause. Use paragraph (h) when a fixed-priced contract is anticipated;
use the alternate to paragraph (h) when a cost-reimbursement contract is
anticipated. This is an authorized deviation.

## PART 303\--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST 

### Subpart 303.1\--Safeguards 

#### Section 303.101 Standards of conduct.

##### 303.101-3 Agency regulations. 

(a)(3) The Department of Health Human Services' Standards of Conduct are
prescribed in [[45 CFR]{.underline} [part
73]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_02/45cfr73_02.html).

##### 303.104-7 Violations or possible violations of the Procurement Integrity Act. 

\(a\)

\(1\) The contracting officer's determination that a reported violation
or possible violation of the statutory prohibitions has no impact on the
impending award or selection of a contractor must be submitted through
appropriate channels, along with supporting documentation, to the Head
of Contracting Activity (HCA) for review and approval of the
determination awarding a contract.

\(2\) The contracting officer's determination that a reported violation
or possible violation of the statutory prohibitions has an impact on the
pending award or selection of a contractor must be referred through
channels, along with all related information available, to the HCA (if
the HCA is an SES) or to another SES official designated by the OpDiv.
That individual will---

> \(i\) Refer the matter immediately to the Deputy Assistant Secretary
> for Acquisition Management and Policy (DASAMP), Assistant Secretary
> for Administration and Management, Office of the Secretary, for
> review, which may consult with the Office of General Counsel (OGC) and
> the Office of Inspector General (OIG), as appropriate; and
>
> \(ii\) Determine the action to be taken on the procurement in
> accordance with FAR 3.104--7(c) and (d). The HCA shall obtain the
> approval or concurrence of the OAMP before proceeding with the action.

\(b\) The individual in paragraph (a)(2) of this section acts as the
agency head designee with respect to actions taken under the FAR clause
52.203--10, Price or Fee Adjustment for Illegal or Improper Authority.

### Subpart 303.2\--Contractor Gratuities to Government Personnel 

#### Section 303.203 Reporting suspected violations of the Gratuities clause. 

Departmental personnel shall report suspected violations of the
Gratuities clause in accordance with subpart M, Reporting Violations, of
[[45 CFR part
73]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_02/45cfr73_02.html).
Refer to subpart B, Gifts from Outside Sources, ([[5]{.underline} [CFR
2635.201]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_02/5cfr2635_02.html))
for an explanation regarding what is prohibited and what is permitted.

### Subpart 303.3\--Reports of Suspected Antitrust Violations 

#### Section 303.303 Reporting suspected antitrust violations. 

\(h\) A copy of the agency report of suspected antitrust violations
submitted to the Attorney General by the HCA shall also be submitted to
the Director, Office of Acquisition Management and Policy.

### Subpart 303.4\--Contingent Fees 

#### Section 303.405 Misrepresentations or violations of the Covenant against Contingent Fees. 

\(a\) Reports shall be made promptly to the Contracting Officer.

\(b\) (4) Suspected fraudulent or criminal matters to be reported to the
Department of Justice shall be prepared in letter format and forwarded
through acquisition channels to the head of the contracting activity for
signature. The letter must contain all pertinent facts and background
information considered by the Contracting Officer and chief of the
contracting office that led to the decision that fraudulent or criminal
matters may be present. A copy of the signed letter shall be sent to the
Director, Office of Acquisition Management and Policy.

### Subpart 303.6\--Contracts with Government Employees or Organizations Owned or Controlled by Them

#### Section 303.602 Exceptions 

Approval of an exception to the policy stated in [[FAR
3.601]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 3_6.html#wp1076689)
shall be made by the HCA (not delegable).

### Subpart 303.7\--Voiding and Rescinding Contracts 

#### Section 303.704 Policy 

\(a\) For purposes of implementing [[FAR subpart
3.7]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 3_7.html#wp1079304),
the authorities granted to the ''agency head or designee'' shall be
exercised by the HCA (not delegable).

## PART 304\--ADMINISTRATIVE MATTERS 

### Subpart 304.6\--Contracting Reporting 

#### Section 304.602 Federal Procurement Data System (FPDS). 

The Departmental Contracts Information System (DCIS) represents the
Department's implementation of the FPDS-NG. All departmental contracting
activities are required to use the DCIS and follow the procedures stated
in the Enhanced Departmental Contracts Information System Manual,
available at
[*[http://dcis.hhs.gov]{.underline}*](http://dcis.hhs.gov/), and
amendments to the manual. The HCA (not delegable) shall ensure that all
required contract information is collected, submitted, and received into
the DCIS on or before the 15th of each month for all contracts and
contract modifications awarded in the previous month.

### Subpart 304.7\--Acquisition Instrument Identification Numbering System 

#### Section 304.7000 Scope of subpart. 

This subpart prescribes policy and procedures for assigning identifying
numbers to contracts and related instruments, including solicitation
documents, purchase orders, and delivery orders. The HCA (not delegable)
is responsible for establishing the numbering system within the OPDIV.

#### Section 304.7001 Numbering acquisitions. 

\(a\) Acquisitions which require numbering. The following acquisitions
shall be numbered in accordance with the system prescribed in paragraphs
(b), (c) and (d) of this section:

\(1\) Contracts, including letter contracts and task orders under basic
ordering agreements, which involve the payment of \$2,500 or more for
the acquisition of personal property or nonpersonal services. (The
number assigned to a letter contract shall be assigned to the
superseding definitized contract).

\(2\) Contracts which involve the payment of \$2,000 or more for
construction (including renovation or alteration).

\(3\) Contracts which involve more than one payment regardless of
amount.

\(4\) Requests for proposals and invitations for bids.

\(5\) Requests for quotations.

\(6\) Basic ordering agreements.

\(b\) Numbering system for contracts. All contracts which require
numbering (paragraphs (a)(1) through (3) of this section) shall be
assigned a number consisting of the following:

> \(1\) The three digit identification code of the Department (HHS);
>
> \(2\) A one digit alphabetic identification code of the servicing
> agency:
>
> O Office of the Secretary\
> P Program Support Center\
> M Centers for Medicare & Medicaid Services\
> F Food and Drug Administration\
> D Centers for Disease Control and Prevention\
> I Indian Health Service\
> S Substance Abuse and Mental Health Administration\
> N National Institutes of Health\
> H Health Resources and Services Administration\
> A Agency for Health Care Research & Quality
>
> \(3\) The three digit numeric identification code assigned by the
> Deputy Assistant Secretary for Acquisition Management and Policy
> (DASAMP) to the contracting office within the servicing agency;
>
> \(4\) A four digit fiscal year designation (e.g. 2005, 2006);
>
> \(5\) A five digit alphanumeric tracking number the content of which
> is determined by the contracting office within the servicing agency;
> and
>
> \(6\) A one digit code describing the type of contract action:\
> A Commercial Item Acquisition\
> C New Definitive Contract\
> P Purchase Using Simplified Acquisition\
> I Indefinite Delivery Contract (IDIQ)\
> O Basic Ordering Agreement (BOA)\
> B Blanket Purchase Agreement (BPA)\
> F Facilities Contract
>
> U Contracts placed with or through other Government departments, GSA
> contracts, or against mandatory source contracts such as the National
> Industries for the Blind (NIB), the National Industries for the
> Severely Handicapped (NISH), and the Federal Prison Industries
> (UNICOR)
>
> L Lease Agreement
>
> W Government-wide Acquisition Contract (GWAC)
>
> E Letter Contract
>
> G Federal Supply Schedule
>
> M Micropurchase

For example, the first contract for NIH, National Cancer Institute, for
fiscal year 2005 may be numbered HHSN261200500001C.

(c). Numbering system for orders. Order numbers will be assigned to
contracts with orders. The order number shall be up to a seventeen digit
number consisting of the following:\
(1) The three digit identification code of the Department (HHS);

> \(2\) A one digit numeric identification code of the servicing
> agency:\
> O Office of the Secretary\
> P Program Support Center\
> M Centers for Medicare & Medicaid Services\
> F Food and Drug Administration\
> D Centers for Disease Control and Prevention\
> I Indian Health Service\
> S Substance Abuse and Mental Health Administration\
> N National Institutes of Health\
> H Health Resources and Services Administration\
> A Agency for Health Care Research and Quality;
>
> \(3\) The three digit numeric identification code assigned by the
> Office of Acquisition Management and Policy (OAMP) to the contracting
> office within the servicing agency;
>
> \(4\) An alphanumeric tracking number, up to ten characters, the
> content of which is determined by the contracting office within the
> servicing agency.

\(d\) Numbering system for other acquisitions. The HCA is responsible
for developing a numbering system for the acquisitions other than
contracts listed in paragraphs, (a)(4) through (a)(6) of this section,
and any other types of acquisitions that may be used.

\(e\) *Assignment of identification codes.* Each contracting office of
the Department shall be assigned a three digit identification code by
the ASAM/OAMP. Requests for the assignment of codes for newly
established contracting offices shall be submitted by a headquarters
official from the new contracting office to the OAMP. A listing of the
contracting office identification codes currently in use is contained in
the Enhanced Departmental Contracts Information System Manual, available
at *[[http://dcis.hhs.gov]{.underline}](http://dcis.hhs.gov/).*

### Subpart 304.71\--Review and Approval of Proposed Contract Awards 

#### Section 304.7100 Policy. 

This subpart requires each HCA (not delegable) to establish review and
approval procedures for proposed contracts actions to ensure that:

\(a\) Contract awards are in conformance with law, established policies
and procedures, and sound business practices;

\(b\) Contractual documents properly reflect the mutual understanding of
the parties; and

\(c\) The contracting officer is informed of deficiencies and items of
questionable acceptability, and corrective action is taken.

#### Section 304.7101 Procedures. 

\(a\) All contractual documents, regardless of dollar value, are to be
reviewed by the contracting officer prior to award.

\(b\) The HCA is responsible for establishing review and approval
procedures and designating acquisition officials to serve as reviewers.
Each HCA is responsible for determining the criterion (criteria) to be
used in determining which contracts are to be reviewed, and that a
sampling of proposed contracts not included in the \"to be reviewed\"
group are reviewed and approved.

\(c\) Officials assigned responsibility for review and approval of
contract actions must possess qualifications in the field of acquisition
commensurate with the level of review performed, and, at a minimum,
possess those acquisition skills expected of a contracting officer.
However, if any official is to serve as the contracting officer and sign
the contractual document, the review and approval function shall be
performed by an appropriate official at least one level above.

### Subpart 304.8\--Government Contract Files 

#### Section 304.804-70 Contract closeout audits. 

\(a\) Contracting Officers shall rely, to the maximum extent possible,
on single audits to close physically completed cost-reimbursement
contracts with colleges and universities, hospitals, non-profit firms,
and State and local governments. In addition, where appropriate, a
sample of these contractors may be selected for audit, in accordance
with paragraph (b) of this section.

\(b\) Contracting officers shall request contract closeout audits on
physically completed, cost-reimbursement, for-profit contracts in
accordance with the following:

\(1\) The Office of the Inspector General (OIG) and ASAM's Deputy
Assistant Secretary for Acquisition Management and Policy in conjunction
with the OPDIV's cost advisory/audit focal point, determine which
contracts or contractors will be audited, which audit agency will
perform the audit, and the type and scope of closeout audit to be
performed. These decisions shall be based upon the needs of the
customer, risk analysis, return on investment, and the availability of
audit resources. When an audit is warranted prior to closing a contract,
the Contracting Officer shall submit the audit request to the OIG's
Office of Audit, via the OPDIV's cost advisory/audit focal point.

\(2\) Except where a contracting officer suspects misrepresentation or
fraud, contract closeout field audits shall not be requested if the cost
of performance is likely to exceed the potential cost recovery.
Contracts that are not selected for a field audit may be closed on the
basis of a desk review, subject to any later on-site audit findings. The
release executed by the contractor shall contain the following
statement: The Contractor agrees, pursuant to the clause in this
contract entitled \"Allowable Cost\" or \"Allowable Cost and Fixed Fee\"
(as appropriate), that the amount of any sustained audit exceptions
resulting from any audit made after final payment shall be refunded to
the Government.\"

# SUBCHAPTER B---COMPETITION AND ACQUISITION PLANNING

[PART 305\--PUBLICIZING CONTRACT ACTIONS
22](#part-305--publicizing-contract-actions)

[Subpart 305.2\--Synopsis of Proposed Contract Actions
22](#subpart-305.2--synopsis-of-proposed-contract-actions)

[Section 305.202 Exceptions. 22](#section-305.202-exceptions.)

[Subpart 305.3\--Synopses of Contract Awards
22](#subpart-305.3--synopses-of-contract-awards)

[Section 305.303 Announcement of contract awards
22](#section-305.303-announcement-of-contract-awards)

[Subpart 305.5\--Paid Advertisements
23](#subpart-305.5--paid-advertisements)

[Section 305.502 Authority. 23](#section-305.502-authority.)

[PART 306\--COMPETITION REQUIREMENTS
23](#part-306--competition-requirements)

[Subpart 306.2\--Full and Open Competition after Exclusion of Sources
23](#subpart-306.2--full-and-open-competition-after-exclusion-of-sources)

[Section 306.202 Establishing or maintaining alternative sources.
23](#section-306.202-establishing-or-maintaining-alternative-sources.)

[Subpart 306.3\--Other Than Full and Open Competition
23](#subpart-306.3--other-than-full-and-open-competition)

[Section 306.302 Circumstances permitting other than full and open
competition.
23](#section-306.302-circumstances-permitting-other-than-full-and-open-competition.)

[306.302-1 Only one responsible source and no other supplies or services
will satisfy agency requirements.
23](#only-one-responsible-source-and-no-other-supplies-or-services-will-satisfy-agency-requirements.)

[306.302-7 Public interest. 23](#public-interest.)

[Section 306.303 Justification. 23](#section-306.303-justification.)

[306.303-1 Requirements 23](#requirements)

[306.303-2 Content. 23](#content.)

[Section 306.304 Approval of the justification.
23](#section-306.304-approval-of-the-justification.)

[Subpart 306.5\--Competition Advocates
23](#subpart-306.5--competition-advocates)

[Section 306.501 Requirement. 23](#section-306.501-requirement.)

[Subpart 306.2\--Full and Open Competition after Exclusion of Sources
23](#subpart-306.2--full-and-open-competition-after-exclusion-of-sources-1)

[Section 306.202 Establishing or maintaining alternative sources.
23](#section-306.202-establishing-or-maintaining-alternative-sources.-1)

[Subpart 306.3\--Other than Full and Open Competition
24](#subpart-306.3--other-than-full-and-open-competition-1)

[Section 306.302 Circumstances permitting other than full and open
competition.
24](#section-306.302-circumstances-permitting-other-than-full-and-open-competition.-1)

[306.302-1 Only one responsible source and no other supplies or services
will satisfy agency requirements.
24](#only-one-responsible-source-and-no-other-supplies-or-services-will-satisfy-agency-requirements.-1)

[(a)(2)(iv) Follow-on contracts for the continuation of major research
and development studies on long-term social and health programs, major
research studies, or clinical trials may be deemed to be available only
from the original source when it is likely that award to any other
source would result in unacceptable delays in fulfilling the
Department's or OPDIV's requirements.
24](#a2iv-follow-on-contracts-for-the-continuation-of-major-research-and-development-studies-on-long-term-social-and-health-programs-major-research-studies-or-clinical-trials-may-be-deemed-to-be-available-only-from-the-original-source-when-it-is-likely-that-award-to-any-other-source-would-result-in-unacceptable-delays-in-fulfilling-the-departments-or-opdivs-requirements.)

[306.302-7 Public interest. 24](#public-interest.-1)

[Section 306.303 Justifications. 24](#section-306.303-justifications.)

[306.303-1 Requirements. 24](#requirements.)

[306.303-2 Content. 25](#content.-1)

[Section 306.304 Approval of the justification.
25](#section-306.304-approval-of-the-justification.-1)

[Subpart 306.5\--Competition Advocates
26](#subpart-306.5--competition-advocates-1)

[Section 306.501 Requirement. 26](#section-306.501-requirement.-1)

[PART 307\--ACQUISITION PLANNING 26](#part-307--acquisition-planning)

[Subpart 307.1\--Acquisition Planning 11/06/2006 NOTE: Interim HHSAR
Coverage on HHS Acquisition Plan (AP)
26](#subpart-307.1--acquisition-planning-11062006-note-interim-hhsar-coverage-on-hhs-acquisition-plan-ap)

[Section 307.104 General procedures.
26](#section-307.104-general-procedures.)

[Section 307.105 Contents of written acquisition plans.
27](#section-307.105-contents-of-written-acquisition-plans.)

[Section 307.170 Program training requirements.
27](#section-307.170-program-training-requirements.)

[307.170-1 Policy exceptions. 28](#policy-exceptions.)

[307.170-2 Training course prerequisites.
28](#training-course-prerequisites.)

[307.170--3 Earned value training requirement for IT program/project
managers and IT CORs/COTRs.
29](#earned-value-training-requirement-for-it-programproject-managers-and-it-corscotrs.)

[307.170--4 Required training in HHS' portfolio management tool.
29](#required-training-in-hhs-portfolio-management-tool.)

[307.170--5 Maintenance/refresher training requirement for
program/project managers and CORs/COTRs.
29](#maintenancerefresher-training-requirement-for-programproject-managers-and-corscotrs.)

[307.170--6 Warranting of Other Transaction Officers for Other
Transactions.
29](#warranting-of-other-transaction-officers-for-other-transactions.)

[307.170--7 Training Requirements for Other Transaction Officers.
30](#training-requirements-for-other-transaction-officers.)

[307.170--8 Appointment of an Other Transaction Officer Technical
Representative for an Other Transaction.
30](#appointment-of-an-other-transaction-officer-technical-representative-for-an-other-transaction.)

[307.170--9 Training requirement for an Other Transaction Officer
Technical Representative.
30](#training-requirement-for-an-other-transaction-officer-technical-representative.)

[Subpart 307.70\--Considerations in Selecting an Award Instrument
31](#subpart-307.70--considerations-in-selecting-an-award-instrument)

[Section 307.7000 Scope of subpart.
31](#section-307.7000-scope-of-subpart.)

[Section 307.7001 Distinction between acquisition and assistance.
31](#section-307.7001-distinction-between-acquisition-and-assistance.)

[Section 307.7002 Procedures. 32](#section-307.7002-procedures.)

[Subpart 307.71\--Requests for Contract
33](#subpart-307.71--requests-for-contract)

[Section 307.7100 Scope of subpart.
33](#section-307.7100-scope-of-subpart.)

[Section 307.7101 General. 33](#section-307.7101-general.)

[Section 307.7102 Procedures. 33](#section-307.7102-procedures.)

[Section 307.7103 Responsibilities.
33](#section-307.7103-responsibilities.)

[Section 307.7104 Transmittal. 34](#section-307.7104-transmittal.)

[Section 307.7105 Format and content.
34](#section-307.7105-format-and-content.)

[Section 307.7106 Statement of work.
37](#section-307.7106-statement-of-work.)

[Section 307.7107 Review. 39](#section-307.7107-review.)

[PART 309\--CONTRACTOR QUALIFICATIONS
39](#part-309--contractor-qualifications)

[Subpart 309.4\--Debarment, Suspension, and Ineligibility
39](#subpart-309.4--debarment-suspension-and-ineligibility)

[Section 309.403 Definitions. 39](#section-309.403-definitions.)

[Section 309.404 List of Parties Excluded from Federal Procurement and
Nonprocurement Programs.
39](#section-309.404-list-of-parties-excluded-from-federal-procurement-and-nonprocurement-programs.)

[Section 309.405 Effect of listing.
40](#section-309.405-effect-of-listing.)

[Section 309.406 Debarment. 40](#section-309.406-debarment.)

[309.406-3 Procedures. 40](#procedures.)

[Section 309.407 Suspension. 41](#section-309.407-suspension.)

[309.407-3 Procedures. 41](#procedures.-1)

[Section 309.470 Reporting of suspected causes for debarment or
suspension, or the taking of evasive actions.
41](#section-309.470-reporting-of-suspected-causes-for-debarment-or-suspension-or-the-taking-of-evasive-actions.)

[309.470-1 Situations where reports are required.
41](#situations-where-reports-are-required.)

[309.470-2 Contents of reports. 41](#contents-of-reports.)

## PART 305\--PUBLICIZING CONTRACT ACTIONS 

### Subpart 305.2\--Synopsis of Proposed Contract Actions 

#### Section 305.202 Exceptions. 

\(b\) When a contracting office believes that it has a situation where
advance notice is not appropriate or reasonable, it shall prepare a
memorandum citing all pertinent facts and details and send it, through
normal acquisition channels, to the Deputy Assistant Secretary for
Acquisition Management and Policy (DASAMP) requesting relief from
synopsizing. The DASAMP shall review the request and decide whether an
exception to synopsizing is appropriate or reasonable. If it is, the
DASAMP shall take the necessary coordinating actions required by [[FAR
5.202(b)]{.underline}](http://www.acquisition.gov/far/current/html/Subpart 5_2.html).
Whatever the decision is on the

(HHSAR) request, the DASAMP shall promptly notify the contracting office
when a determination has been made.

### Subpart 305.3\--Synopses of Contract Awards 

#### Section 305.303 Announcement of contract awards

\(a\) *Public Announcement*. Awards over \$3.5 million, not otherwise
exempt under FAR 5.303, shall be reported by the Contracting Officer to
the Office of the Assistant Secretary for Legislation (Congressional
Liaison), Room 406G, Hubert H. Humphrey Building. Notification shall be
accomplished by providing a copy of the contract or award document face
page to the referenced office prior to the day of award, or in
sufficient time to allow for an announcement to be made by 5 p.m.
Washington, DC time on the day of award. Notification may also be
accomplished by e-mailing a copy of the contract or award document face
page to *[[grantfax@hhs.gov]{.underline}](mailto:grantfax@hhs.gov),* or
faxing to (202) 205--2420.

### Subpart 305.5\--Paid Advertisements 

#### Section 305.502 Authority. 

The Contracting Officer may advertise or place notices in newspapers and
periodicals to announce that proposals are being sought.

## PART 306\--COMPETITION REQUIREMENTS 

### Subpart 306.2\--Full and Open Competition after Exclusion of Sources 

#### Section 306.202 Establishing or maintaining alternative sources.

### Subpart 306.3\--Other Than Full and Open Competition

#### Section 306.302 Circumstances permitting other than full and open competition.

##### 306.302-1 Only one responsible source and no other supplies or services will satisfy agency requirements.

##### 306.302-7 Public interest.

#### Section 306.303 Justification.

##### 306.303-1 Requirements

##### 306.303-2 Content.

#### Section 306.304 Approval of the justification.

### Subpart 306.5\--Competition Advocates

#### Section 306.501 Requirement.

Authority: [[5 U.S.C.
301]{.underline}](http://www4.law.cornell.edu/uscode/5/301.html); [[40
U.S.C.
486(c)]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode40&STEMMER=en&WORDS=486+&COLOUR=Red&STYLE=s&URL=/uscode/40/486.html).

### Subpart 306.2\--Full and Open Competition after Exclusion of Sources 

#### Section 306.202 Establishing or maintaining alternative sources.

###  

\(a\) The reference to the agency head in [[FAR 6.202
(a)]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 6_2.html#wp1086973)
shall mean the appropriate competition advocate cited in
[306.501]{.underline}.

(b)(1) The required determination and findings (D&F) shall be prepared
by the contracting officer based on the data provided by program
personnel, and shall be signed by the appropriate competition advocate.
The D&F signatory is not delegable.

### Subpart 306.3\--Other than Full and Open Competition 

#### Section 306.302 Circumstances permitting other than full and open competition. 

##### 306.302-1 Only one responsible source and no other supplies or services will satisfy agency requirements.

##### (a)(2)(iv) Follow-on contracts for the continuation of major research and development studies on long-term social and health programs, major research studies, or clinical trials may be deemed to be available only from the original source when it is likely that award to any other source would result in unacceptable delays in fulfilling the Department's or OPDIV's requirements. 

\(b\) *Application.* (5) When the head of the program office has
determined that only specified makes and models of technical equipment
or parts must be obtained to meet the activity's program responsibility
to test and evaluate certain kinds and types of products, and only one
source is available. (This criterion is limited to testing and
evaluation purposes only and may not be used for initial outfitting or
repetitive acquisitions. Project officers should support the use of this
criterion with citations from their agency's legislation and the
technical rationale for the item of equipment required.)

##### 306.302-7 Public interest. 

\(a\) Authority. (2) Agency head, in this instance, means the Secretary.

\(c\) Limitations. An \"approval package\" must be prepared by the
contracting officer and staffed through departmental acquisition
channels to the Secretary. The package shall include a determination and
findings for the Secretary to sign that contains all pertinent
information to support justification for exercising the exemption to
competition, and a letter for the Secretary to sign notifying Congress
of the determination to award a contract under the authority of [[41
U.S.C.
253(c)(7)]{.underline}](http://www4.law.cornell.edu/uscode/41/253.html).

#### Section 306.303 Justifications. 

##### 306.303-1 Requirements. 

(a)(1) The Program Office must provide a written justification whenever
it requests that certain goods or services be obtained without full and
open competition. The justification must explain why full and open
competition is not feasible and must be submitted with the requisition
or request for contract.

\(i\) Justifications in excess of the simplified acquisition threshold
shall be in the form of a separate, self-contained document, prepared in
accordance with [[FAR
6.303]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 6_3.html#wp1086841)
and [306.303]{.underline}, and called a ''JOFOC'' (Justification for
Other Than Full and Open Competition). Justifications at or below the
simplified acquisition threshold may be in the form of a paragraph or
paragraphs contained in the requisition or request for contract.

\(ii\) Justifications, whether over or under the simplified acquisition
threshold, shall fully describe what is to be acquired, offer reasons
which go beyond inconvenience, and explain why it is not feasible to
obtain competition. The justifications shall be supported by verifiable
facts rather than mere opinions. Documentation in the justification
should be sufficient to permit an individual with technical competence
in the area to follow the rationale.

\(iii\) Sole source justifications using the Federal Supply Schedule
shall include the content listed in [[FAR
6.303--2]{.underline}](http://www.acquisition.gov/far/current/html/Subpart 6_3.html).

\(b\) Preliminary arrangements or agreements with the proposed
contractor shall have no effect on the rationale used to support an
acquisition for other than full and open competition.

##### 306.303-2 Content. 

\(a\) (1) Each justification shall include the name of the program
office; the name, address, and phone number of the Project Officer; and
project identification, such as the authorizing program legislation, to
include citations or other internal program identification data such as
title, contract number, etc.

\(2\) The description may be in the form of a statement of work,
purchase description, or specification. A statement is to be included to
explain whether the acquisition is an entity in itself, whether it is
one in a series, or part of a related group of acquisitions.

\(c\) JOFOCs shall be signed by the Project Officer, the Project
Officer's immediate supervisor, the Contracting Officer, and the
approving official (if the approving official is not the Contracting
Officer).

#### Section 306.304 Approval of the justification. 

\(a\) (2) The competition advocates are listed in [306.501]{.underline}.
This authority is not delegable.

\(3\) The competition advocate shall exercise this approval authority,
except where the individual designated as the competition advocate does
not meet the requirements of [[FAR 6.304
(a)(3)(ii)]{.underline}](http://www.acquisition.gov/far/current/html/Subpart 6_3.html).
This authority is not delegable.\
(4) The senior procurement executive of the Department is the Deputy
Assistant Secretary for Acquisition Management and Policy. This
designation has been made pursuant to the [[OFPP Act]{.underline} [(41
U.S.C.
414(c)(2)(B)]{.underline}](http://www.law.cornell.edu/uscode/html/uscode41/usc_sec_41_00000414----000-.html).

\(c\) A class justification shall be processed the same as an individual
justification.

### Subpart 306.5\--Competition Advocates 

#### Section 306.501 Requirement. 

The Department's competition advocate is the Director, Strategic
Acquisition Service, Program Support Center (PSC). The competition
advocates for each of the Department's contracting activities are as
follows:

> *AHRQ*---Director, Office of Performance Accountability, Resources and
> Technology *CDC*---Chief Information Officer
>
> *CMS*---Chief Operating Officer
>
> *FDA*---Chief, Office of Shared Services
>
> *HRSA*---Associate Administrator, Office of Administration and
> Financial Management *IHS*---Director, Office of Management Services
>
> *NIH*---Senior Scientific Advisor for Extramural Research, Office of
> Extramural Research (R&D) and Senior Advisor to the Director (Other
> than R&D)\
> *PSC*---Director, Strategic Acquisition Service\
> *SAMHSA*---Executive Officer

## PART 307\--ACQUISITION PLANNING 

Authority: [[5 U.S.C.
301]{.underline}](http://www4.law.cornell.edu/uscode/5/301.html); [[40
U.S.C.
486(c)]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode40&STEMMER=en&WORDS=486+&COLOUR=Red&STYLE=s&URL=/uscode/40/486.html).

### Subpart 307.1\--Acquisition Planning 11/06/2006 NOTE: [Interim HHSAR Coverage on HHS Acquisition Plan (AP)](http://www.knownet.hhs.gov/acquisition/HHSARAPLanguage-Final.doc) 

#### Section 307.104 General procedures. 

\(a\) Each contracting activity shall prepare an Annual Acquisition Plan
(AAP). The AAP is a macro plan, containing a list of anticipated
contract actions over the simplified acquisition threshold and their
associated funding, as well as the aggregate planned dollars for
simplified acquisitions by quarter, developed for each fiscal year. The
AAP shall conform to reasonable budget expectations and shall be
reviewed at least quarterly and modified as appropriate. The HCA or the
CCO shall obtain this information from the program planning/budget
office of the contracting activity and use the AAP to provide necessary
reports and monitor the workload of the contracting office. For contract
actions, the plan shall contain, at a minimum:

\(1\) A brief description (descriptive title, perhaps one or two
sentences if necessary);

\(2\) Estimated award amount;

\(3\) Requested award date;

\(4\) Name and phone number of contact person (usually the Project
Officer);

\(5\) Other information required for OPDIV needs.

\(b\) Once the AAP is obtained from the program planning/budget office,
the Contracting Officer/ Contract Specialist shall initiate discussions
with the assigned Project Officer for each planned negotiated
acquisition over \$100,000 except for:\
(1) Acquisitions made under interagency agreements, and

\(2\) Contract modifications which exercise options, make changes
authorized by the Changes clause, or add funds to an incrementally
funded contract. (The HCA may prescribe procedures for contract actions
not covered by this subpart.)

\(c\) The purpose of the discussions between the Contracting and Project
Officers is to develop an individual acquisition planning schedule and
to address areas that will need to be covered in the request for
contract (RFC), including clearances, acquisition strategy, sources,
etc. The Project Officer must either have a statement of work (SOW)
ready at this time or must discuss in more detail the nature of the
services/supplies that will be required.

\(d\) Standard lead-times for processing various types of acquisitions
and deadlines for submission of acceptable RFCs (that is, RFCs which
include all required elements such as clearances, funding documents, and
an acceptable SOW) for award in a given fiscal year shall be established
by the HCA or designee not lower than the CCO.

\(e\) The outcome of the discussions referenced in paragraph (c) of this
section between the Project Officer and the Contracting Officer/Contract
Specialist will be an agreement concerning the dates of significant
transaction-specific acquisition milestones, including the date of
submission of the RFC to the Contracting Officer. This milestone
schedule document will be prepared with those dates and will be signed
by the Project Officer and the Contracting Officer. The milestones
cannot be revised except by mutual agreement of these same individuals.
If the planning schedule indicates the need to obtain approval of a
Justification for Other than Full and Open Competition, the HCA or CCO
must sign the milestone agreement. This document shall be retained in
the contract file. All other considerations that will affect the
acquisition (technical, business, management) shall be addressed in the
RFC (*see* [307.71]{.underline}).

#### Section 307.105 Contents of written acquisition plans. 

The written acquisition plan required by [[FAR
7.105]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 7_1.html#wp1098043)
must be contained in the request for contract, as specified in subpart
[307.71]{.underline}, and is the final product of the planning process.

#### Section 307.170 Program training requirements. 

\(a\) HHS will maintain a program for certifying employees before they
may be considered eligible for appointment as a program/project manager
or COR/COTR.

\(b\) All HHS program/project managers, alternate program/project
managers, CORs/COTRs, alternate CORs/COTRs, and at least fifty percent
of the HHS program personnel performing the function of technical
proposal evaluator on a technical evaluation team or panel for a
competitively solicited HHS contract, shall have successfully completed
the Department's ''Basic Project Officer'' course, or an equivalent
course, before assuming the duties of their designated role, or take the
next available class. This requirement applies to the initial technical
proposal evaluation and any subsequent technical evaluations that may be
required. (\*Peer and objective reviewers are excluded from these
requirements). Course equivalency for the ''Basic Project Officer''
course will be determined by the ASAM/OAMP. The Contracting Officer is
responsible for ensuring that the program/project manager, COR/COTR, and
proposal evaluators have successfully completed the required training.
Non-information technology (IT) program/project managers and non-IT
CORs/COTRs who have successfully completed the appropriate ''Basic
Project Officer'' course, or an equivalent course, are highly encouraged
to take the Department's one-day course entitled ''Early Warning Project
Management System Workshop,'' or an equivalent Earned Value course.
Program/Project managers and CORs/COTRs are highly encouraged to take
the Department's ''Writing Statements of Work'' course, or an equivalent
course. Peer and objective reviewers are excluded from these
requirements. (\*The peer review process pertains specifically to NIH in
the peer review of applications for grants and contracts. Applications
are evaluated by a peer review group composed of scientists from the
extramural research community.) All courses are offered through HHS
University.

##### 307.170-1 Policy exceptions. 

In the event there is an urgent requirement for a specific individual to
serve as a program/project manager and COR/COTR (or alternate
program/project manager and alternate COR/COTR) and that individual has
not successfully completed the prerequisite training course(s), the HCA
(not delegable) may waive the training requirement and authorize the
individual to perform the project duties, provided that:

\(a\) The individual first meets with the cognizant Contracting Officer
to review the HHS ''Project Officer's Contracting Handbook'' to discuss
the important aspects of the contracting-program office relationship as
appropriate to the circumstances; and

\(b\) The individual attends the next scheduled ''Basic Project
Officer'' course, or an equivalent course, and, for those current and
proposed IT program/project managers, as well as alternate IT program/
project managers and IT CORs/COTRs (as well as alternate CORs/COTRs)
assigned to HHS IT projects (including those designated as major or
tactical by HHS), the next ''Early Warning Project Management System
Workshop.''

##### 307.170-2 Training course prerequisites. 

\(a\) Project officers.

\(1\) Newly appointed project officers, and project officers with less
than three years experience and no previous related training, are
required to take the appropriate \"Basic Project Officer\" course. (The
grade level for project officers attending the course should be GS-7 and
above.) All project officers are encouraged to take the appropriate
\"Writing Statements of Work\" course.

\(2\) Project officers with more than three years experience, and
project officers with less than three years experience who have
successfully completed the appropriate basic course, are qualified (and
encouraged) to take the \"Advanced Project Officer\" course.

\(3\) Project Officers on HHS projects for which HHS or OMB requires an
Exhibit 300 \[under OMB Circular A--11, part 7\] must successfully
complete either HHS'' ''Early Warning Project Management System
Workshop'' or an equivalent Earned Value Management course (see
paragraph 307.170(c)). (1/10/2007 NOTICE - the citation referencing
307.170(c) is an error in the final rule as published and will be
corrected in a subsequent revision to the HHSAR)

\(4\) Additional information on prerequisites for attendance of these
courses may be found in the \"DHHS Acquisition Training and
Certification Program Handbook.\"

\(b\) Technical proposal evaluators. Technical proposal evaluators,
regardless of experience, are required to take the appropriate \"Basic
Project Officer\" course or its equivalent. Upon successful completion
of the basic course, it is recommended that they take the appropriate
\"Advanced Project Officer\" course. Peer and objective reviewers are
excluded from these requirements.

##### 307.170--3 Earned value training requirement for IT program/project managers and IT CORs/COTRs.

All current and proposed IT program/project managers, alternate IT
program/project managers, IT CORs/COTRs, and alternate CORs/COTRs
assigned to HHS IT projects, including those IT projects designated as
major or tactical, regardless of dollar threshold, must successfully
complete the Department's (offered through HHS University) one day
course entitled ''Early Warning Project Management System Workshop,'' or
an equivalent Earned Value training course. Course equivalency will be
determined jointly by the ASAM/OAMP and the HHS Office of the Chief
Information Officer.

##### 307.170--4 Required training in HHS' portfolio management tool. 

All current and proposed IT program/project managers, as well as
alternate IT program/project managers and IT CORs/COTRs (as well as
alternate IT CORs/COTRs), regardless of dollar threshold, must
successfully complete training in HHS' portfolio management tool
(contact the HHS Office of the Chief Information Officer for additional
information).

##### 307.170--5 Maintenance/refresher training requirement for program/project managers and CORs/COTRs.

Program/Project Managers and CORs/COTRs who monitor one or more
contracts are required to take 40 CLPs each year.

##### 307.170--6 Warranting of Other Transaction Officers for Other Transactions. 

\(a\) Other Transaction (OT) Officers shall possess the qualifications
necessary to ensure that OTs are in compliance with applicable laws and
regulations. The ASAM/OAMP will have the sole authority to warrant OT
Officers at HHS. To receive a warrant as an HHS OT Officer, the
individual must be a Contracting Officer, preferably with an unlimited
warrant, with a Federal Acquisition Certification in Contracting
(FAC--C) Level III, or a Level III or IV certified Grants Officer within
HHS. Nominations for appointment of OT Officers shall be submitted to
the Head of Contracting Activity in writing through appropriate
organizational channels for review. The nomination package shall include
the following:

\(1\) A completed Appendix A (''OT Officer's Warrant Application Form'')
of HHS Other Transaction Authority Guidebook;

\(2\) A recommendation from the employee's immediate supervisor
providing justification for the appointment of an HHS OT Officer;

\(3\) Current resume/OF 612/SF 171 and/or other documentation describing
the employee's experience, education, and training relevant to the
position for which warrant authority is being sought;\
(4) A copy of the employee's most recent performance appraisal;

\(5\) Type of work to be performed under the warrant, i.e., executing
OTs;

\(6\) A copy of the certificate issued under the HHS Acquisition
Certification Program indicating the employee's current certification
level and a copy of previous warrant certificate, if applicable; or a
copy of the certificate issued under the HHS Grants Certification
Program, if applicable; and

\(7\) Proof of successful completion of the ''Cooperative Agreements,
CRADAs & Other Transactions'' course taught by Federal Publications
Seminars, or an equivalent course.

\(b\) For additional information, see
[[*http://www.knownet.hhs.gov/acquisition/hhs*\_*epp*\_*postings/
HHSGuidebook1-OTAMarch2005.doc*]{.underline}](http://www.knownet.hhs.gov/acquisition/hhs_epp_postings/HHSGuidebook1-OTAMarch2005.doc)

##### 307.170--7 Training Requirements for Other Transaction Officers. 

OT Officers must successfully complete the ''Cooperative Agreements,
CRADAs & Other Transactions'' course, or an equivalent course, prior to
appointment as an OT Officer. Grants Officers who serve as OT Officers
are required to have successfully completed the following courses: CON
110 (''Mission Support Planning''); CON 111 (''Mission Strategy
Execution,''); CON 112 (''Mission Performance,'') or CON 120 (''Mission
Focused Contracting.''), or equivalent courses *prior* to being
appointed as an OT Officer. The HHS OTA Board will determine course
equivalency.

##### 307.170--8 Appointment of an Other Transaction Officer Technical Representative for an Other Transaction. 

The program office nominates the Other Transaction Officer Technical
Representative (OTR). The OT Officer prepares an OTR delegation
memorandum that describes the OTR's authority and assigns the OTR
specific responsibilities, with limitations of authority, in writing.
The OTR represents the OT Officer only to the extent delegated in the
written appointment and does not have the authority to change the terms
and conditions of the OT.

##### 307.170--9 Training requirement for an Other Transaction Officer Technical Representative. 

\(a\) Program personnel selected to serve as an OTR or an alternate OTR
assigned to an OT, and at least fifty percent of the technical
evaluators that review the initial and any subsequent proposals or
revisions thereof, shall successfully complete the Department's ''Basic
Project Officer'' course, or an equivalent course prior to being
appointed. Determination of course equivalency shall be made by the HHS
OTA Board.

\(b\) In addition to the Department's required ''Basic Project Officer''
course, the OTR or alternate OTR assigned to an OT, and at least fifty
percent of the technical evaluators that review the initial and any
subsequent proposals or revisions thereof, shall successfully complete
the ''Cooperative Agreements, CRADAs & Other Transactions'' course, or
an equivalent course, prior to being appointed and prior to assuming job
duties associated with the OT.

\(c\) Refresher training in the policies and procedures of awarding
cooperative agreements, CRADAs and OTs is required every three years.

### Subpart 307.70\--Considerations in Selecting an Award Instrument 

#### Section 307.7000 Scope of subpart. 

This subpart provides guidance on the appropriate selection of award
instruments consistent with [[31]{.underline} [U.S.C.
6301-6308]{.underline}](http://www4.law.cornell.edu/uscode/31/6301.html).
This subpart explains the use of the contract as the award instrument
for acquisition relationships, and the grant or cooperative agreement as
the instrument for assistance relationships. This subpart provides
guidance for determining whether to use the acquisition or assistance
process to fulfill program needs.

#### Section 307.7001 Distinction between acquisition and assistance. 

\(a\) [[31 U.S.C.
6301-6308]{.underline}](http://www4.law.cornell.edu/uscode/31/6301.html)
requires the use of contracts to acquire property or services for the
direct benefit or use of the Government and grants or cooperative
agreements to transfer money, property, services, or anything of value
to recipients to accomplish a public purpose of support or stimulation
authorized by Federal statute.

\(b\) A contract is to be used as the legal instrument to reflect a
relationship between the Federal Government and a recipient whenever:\
(1) The principal purpose of the instrument is the acquisition, by
purchase, lease, or barter, of property or services for the direct
benefit or use of the Federal Government; or\
(2) The Department determines in a specific instance that the use of a
type of contract is appropriate. That is, it is determined in a certain
situation that specific needs can be satisfied best by using the
acquisition process. However, this authority does not permit
circumventing the criteria for use of acquisition or assistance
instruments. Use of this authority is restricted to extraordinary
circumstances and only with the prior approval of the Deputy Assistant
Secretary for Acquisition Management and Policy (DASAMP).

\(c\) A grant or cooperative agreement is to be used as the legal
instrument to reflect a relationship between the Federal Government and
a recipient whenever the principal purpose of the relationship is the
transfer of money, property, services, or anything of value to the
recipient to accomplish a public purpose of support or stimulation
authorized by Federal statute.

\(1\) A grant is the legal instrument to be used when no substantial
involvement is anticipated between the Department and the recipient
during performance of the contemplated activity.\
(2) A cooperative agreement is the legal instrument to be used when
substantial involvement is anticipated between the Department and the
recipient during performance of the contemplated activity.

\(d\) As a general rule, contracts are to be used for the following
purposes:

\(1\) Evaluation (including research of an evaluative nature) of the
performance of Government programs or projects or grantee activity
initiated by the funding agency for its direct benefit or use.\
(2) Technical assistance rendered to the Government, or on behalf of the
Government, to any third party, including those receiving grants or
cooperative agreements.\
(3) Surveys, studies, and research which provide specific information
desired by the Government for its direct activities, or for
dissemination to the public.

\(4\) Consulting services or professional services of all kinds if
provided to the Government or, on behalf of the Government, to any third
party.\
(5) Training projects where the Government selects the individuals or
specific groups whose members are to be trained or specifies the content
of the curriculum (not applicable to fellowship awards.)

\(6\) Planning for Government use.

\(7\) Production of publications or audiovisual materials required
primarily for the conduct of the direct operations of the Government.\
(8) Design or development of items for Government use or pursuant to
agency definition or specifications.\
(9) Conferences conducted on behalf of the Government.

\(10\) Generation of management information or other data for Government
use.

#### Section 307.7002 Procedures. 

\(a\) OPDIV program officials should use existing budget and program
planning procedures to propose new activities and major changes in
ongoing programs. It is the responsibility of these program officials to
meet with the HCA and the principal grants management official, or their
designees, to distinguish the relationships and determine whether award
is to be made through the acquisition process or assistance process.
This determination should be made prior to the time when the annual
acquisition plan is reviewed and approved so that the plan will reflect
all known proposed contract actions. The cognizant contracting officer
will confirm the appropriateness of the use of the contract instrument
when reviewing the request for contract.

\(b\) Shifts from one award instrument to another must be fully
documented in the appropriate files to show a fundamental change in
program purpose that unequivocally justifies the rationale for the
shift.

\(c\) OPDIVs must ensure that the choice of instrument is determined in
accordance with [[31 U.S.C.]{.underline}
[6301-6308]{.underline}](http://www4.law.cornell.edu/uscode/31/6301.html)
and applicable departmental policies. If, however, there are major
individual transactions or programs which contain elements of both
acquisition and assistance in such a way that they cannot be
characterized as having a principal purpose of one or the other,
guidance should be obtained from the Director, Division of Acquisition
Policy (DAP), through normal channels, before proceeding with a
determination.

\(d\) Any public notice, program announcement, solicitation, or request
for applications or proposals must indicate whether the intended
relationship will be one of acquisition or assistance and specify the

### Subpart 307.71\--Requests for Contract 

#### Section 307.7100 Scope of subpart. 

This subpart prescribes the format and contents of the request for
contract (RFC) and provides procedures for its preparation and
submission.

#### Section 307.7101 General. 

The program office\'s preparation of the RFC and submission to the
contracting office completes the presolicitation phase f the acquisition
planning process and commences the solicitation phase. The RFC is the
formal document which initiates the preparation of the solicitation by
the contracting office and sets the acquisition process in motion. It is
the result of the planning by the project officer and contracting
officer and contains much of the pertinent information necessary for the
development of a sound, comprehensive solicitation.

#### Section 307.7102 Procedures. 

The program office should submit the RFC to the contracting office no
later than the date agreed to by the \[\[Page 4229\]\] contracting
officer and the project officer in the milestone schedule (see
[307.104(h)]{.underline}), unless a revised due date has been
established by mutual agreement.

#### Section 307.7103 Responsibilities. 

\(a\) It is the responsibility of the project officer to prepare the RFC
so that it complies with the requirements of this subpart and any OPDIV
guidance issued in accordance with this subpart.

\(b\) Prior to the submission of the RFC to the contracting office, the
head of the program office sponsoring the project shall review the RFC
to ensure that all required information is provided in the prescribed
format, and a technical review of the statement of work has been made.
The level and extent of the technical review is to be commensurate with
the estimated cost, importance, and complexity of the proposed
acquisition, and must be thorough enough to ensure that vague and
ambiguous language is eliminated, the statement of work is structured by
phases or tasks, if appropriate, and methods are available for assessing
the contractor\'s technical, cost, and delivery performance.

#### Section 307.7104 Transmittal. 

The RFC must be conveyed to the contracting office by use of a cover
memorandum. The cover memorandum must be signed by the head of the
sponsoring program office and include both a statement attesting to the
conclusiveness of the review described in [307.7103(b)]{.underline} and
a list identifying all attachments to the RFC.

#### Section 307.7105 Format and content. 

The Department is in the process of standardizing a format for the RFC.
In the interim, the information in paragraph (a) of this section must be
included. Paragraph (b) contains information that must also be included
if applicable.

\(a\) The RFC must include:

\(1\) Purpose of the contract. A brief, general description of the
requirement, including the citation of the legislation which authorizes
the program or project, and a statement as to the intended purpose/use
of the proposed contract.

\(2\) Period of performance. The number of months (or other time period)
required for total performance and, if applicable, for each phase of
work indicated in the statement of work, as well as the proposed
starting date.

\(3\) Estimated cost and funds citation. An estimate of the total cost
of the proposed contract and, if applicable, the estimate for each phase
indicated in the statement of work. The project officer must provide a
cost breakdown of all contributing cost factors, an estimate of the
technical staff hours, direct material, subcontracting, travel, etc.,
and may consult with contracting and cost advisory personnel in
developing this information. This section must include the certification
of funds availability for the proposed acquisition, along with the
appropriation and accounting information citations. When funds for the
proposed acquisition are not currently available for obligation but are
anticipated, a statement of intent to commit funds from the financial
management officer shall be included in lieu of the certification of
funds availability. (Contracts cannot be awarded unless funds are
available, but see [[FAR
32.703-2]{.underline}](http://www.acqnet.gov/far/current/html/Subpart_32_7.html#998201)).

\(4\) Specification, purchase description, or statement or work. A
description of the work to be performed that may be in the form of a
specification, purchase description, or statement of work. Guidance
concerning the statement of work and its contents is contained in
[307.7106]{.underline}. Use of the specification is primarily limited to
supply or service contracts where the material end item or service to be
delivered is well defined by the Government. To the maximum extent
possible, requirements should be defined as performance-based statements
of work that focus on outcomes or results. If the RFC for a service
contract is not utilizing a performance-based statement of work, with
associated measures and a quality surveillance plan, the rationale for
this determination must be documented. If a performance-based service
contract is utilized, the RFC must detail the performance standards that
must be met, the quality surveillance plan that will be implemented and
the performance incentives to be used, if applicable.

\(5\) Schedule of deliverables/reporting requirements. A description of
what is to be delivered, including, if applicable, technical and
financial progress reports and any final report, and the required date
of delivery for each deliverable. Reporting requirements should be
tailored to the instant acquisition and should not be unnecessarily
extensive or detailed. All delivery and reporting requirements shall
include the quantities, the place of delivery, and time of delivery.

\(6\) Sources for solicitation. A list of known potential sources by
name, size, type of ownership, and mailing address. The project officer
is encouraged to use trade and professional journals and publications
and conduct a thorough market research to identify new prospective
sources to supplement the list of known sources. Efforts to identify
set-aside possibilities, e.g., 8(a), HUBZone, veteran-owned,
service-disabled veteran-owned, and small business, and efforts to
identify sources such as small disadvantaged and women-owned small
businesses must be documented.

\(7\) Project officer and alternate. The project officer\'s name, title,
organization, mailing address, and telephone number, along with the same
data for the project officer\'s alternate, and a statement that these
individuals have completed the Department\'s project officer training
course (see [307.l70]{.underline})

\(b\) The RFC must include, if applicable to the acquisition:

\(1\) Background and need. The background, history, and necessity for
the proposed contract. This section is to include prior, present, and
planned efforts by the program office in the same or related areas, and
a description of efforts by other departmental activities and Federal
agencies in the same or related program areas, if known. In addition,
specific project information, such as the relevance or contribution to
overall program objectives, reasons for the need, priority, and project
overlap are to be provided.

\(2\) Reference materials. A list, by title and description, of study
reports, plans, drawings, and other data to be made available to
prospective offerors for use in preparation of proposals and/or the
contractor for use in performance of the contract. The project officer
must indicate whether this material is currently available or when it
will be available, and how it may be accessed by potential offerors.

\(3\) Technical evaluation criteria and instructions. Technical
evaluation criteria, which have been developed based on the requirements
of the specific project, and any instructions and information which will
assist in the preparation of prospective offerors\' technical proposals.
Evaluation factors may include understanding of the problem, technical
approach, experience, personnel, facilities, etc. Criteria areas
discussed in the statement of work and the relative order of importance
or weights assigned to each of these areas for technical evaluation
purposes must be identified.

\(4\) Special program clearances or approvals. The following special
program clearances or approvals should be reviewed for applicability to
each acquisition. Those which are applicable should be addressed during
the planning discussions between the Project Officer and Contracting
Officer/ Contract Specialist (see 307.104(c)) and immediate action
should be initiated by the Project Officer to obtain the necessary
clearances or approvals. The Contracting Officer/Contract Specialist
shall provide a comprehensive checklist of these and any OPDIV special
approvals, clearances, and requirements to the program office. If the
approval or clearance has been requested and is being processed at the
time of RFC submission, a footnote to this effect, including all
pertinent details, must be included in this section.

\(i\) *Commercial activities.* ([[OMB Circular No.
A-76]{.underline}](http://www.whitehouse.gov/omb/circulars/a076/a076.html)).
An RFC must contain a statement as to whether the proposed solicitation
is or is not to be used as part of an [[OMB Circular No.
A-76]{.underline}](http://www.whitehouse.gov/omb/circulars/a076/a076.html)
public-private cost comparison. (See [[OMB Circular No. A--76,
Performance of Commercial
Activities]{.underline}](http://www.whitehouse.gov/omb/circulars/a076/a076.html).)

\(ii\) Printing. The acquisition of printing and high volume duplicating
by contract is prohibited unless it is authorized by the Joint Committee
on Printing of the U.S. Congress. Procedures to be followed are
contained in the \"Government Printing and Binding Regulations\" and the
HHS Printing Management Manual and [[FAR subpart
8.8]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 8_8.html#wp1074995).

\(iii\) Paperwork Reduction Act. Under the **Paperwork Reduction Act of
1995**, a Federal agency shall not collect information or sponsor the
collection of information from ten or more persons (other than Federal
employees acting within the scope of their employment) unless, in
advance, the agency has submitted a request for Office of Management and
Budget (OMB) review, to the OMB, and the OMB has approved the proposed
collection of information. Procedures for the approval may be obtained
by contacting the OPDIV reports clearance officer. (See [[5 CFR part
1320]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_02/5cfr1320_02.html)).\
(iv) Publications. All projects that will result in contracts which
include publications development (print products, electronic bulletin
boards, posting on the internet) require review and approval by the
Office of the Assistant Secretary for Public Affairs (OASPA). Form
HHS-615, Publication Planning and Clearance Request, must be forwarded
to OASPA through the OPDIV public affairs officer. Publications are
defined in [[Chapter 5-00-15 of the Public Affairs Management
Manual]{.underline}](http://hhs.gov/hhsmanuals/public_affairs.pdf).

\(v\) Public affairs services. Projects for the acquisition of public
affairs services in excess of \$5,000 must be submitted to the Office of
the Assistant Secretary for Public Affairs (OASPA) for review and
approval on Form HHS-524, Request for Public Affairs Services Contract.

\(vi\) Audiovisual. All projects which will result in contracts which
include audiovisuals, regardless of the audio, video, or audiovisual
medium employed, require review and approval by the Office of the
Assistant Secretary for Public Affairs (OASPA). Form HHS-524A,
Publication Planning and Clearance Request, must be forwarded to OASPA
through the OPDIV public affairs officer. Audiovisuals are defined in
chapter 6-00-15 of the Public Affairs Management Manual.

\(vii\) Privacy Act ([[5 U.S.C.
552a]{.underline}](http://www4.law.cornell.edu/uscode/5/552.html)).
Whenever the Department contracts for the design, development,
operation, or maintenance of a system of records on individuals on
behalf of the Department to accomplish a departmental function, the
Privacy Act is applicable. The program official, after consultation with
the activity\'s Privacy Act Coordinator and the Office of General
Counsel, as necessary, shall include a statement in the request for
contract as to the applicability of the Act. Whenever an acquisition is
subject to the Act, the program official prepares a \"system notice\"
and has it published in the Federal Register. (See HHS Privacy Act
regulation, [[45 CFR part
5b]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_02/45cfr5b_02.html);
[[FAR subpart]{.underline}
[24.1]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 24_1.html#wp1074191)
and [subpart 324.1]{.underline}.)

\(viii\) Foreign research. All foreign research contract projects to be
conducted in a foreign country and financed by HHS funds (U.S. dollars)
must have clearance by the Department of State with respect to
consistency with foreign policy objectives. This clearance should be
obtained prior to negotiation. Procedures for obtaining this clearance
are set forth in the HHS General Administration\
Manual, Chapter 20-60.\
(5) Identification and disposition of data. Identification of the data
expected to be generated by the acquisition and an indication of whether
the data are to be delivered to the Department or to be retained by the
contractor is required. The project officer must also include
information relative to the use, maintenance, disclosure, and
disposition of data. The project officer must include a statement as to
whether or not another acquisition, based upon the data generated by the
proposed acquisition, is anticipated.

\(6\) Government property. If known, the type of Government property,
individual items, and quantities of Government property to be furnished
to, or allowed to be acquired by, the resultant contractor should be
indicated. The project officer must specify when the Government property
is to be made available.

\(7\) *Special terms and conditions.* Any suggested special terms and
conditions not already covered in the statement of work.\
(8) Justification for other than full and open competition. If the
proposed acquisition is to be awarded using other than full and open
competition, a justification prepared in accordance with
[[FAR]{.underline} [subpart
6.3]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 6_3.html#wp1086841)
and subpart [306.3]{.underline} is required.

#### Section 307.7106 Statement of work.

\(a\) *General.* A statement of work (SOW) describes the work or
services to be performed in reaching an end result without describing
the method that will be used unless the method of performance is
critical or required in order to obtain successful performance. The SOW
should be clear and concise and must completely define the
responsibilities of both the contractor and the Government. The SOW
should be worded to make more than one interpretation virtually
impossible.

\(b\) Term (level of effort) vs. completion work statement. Careful
distinctions must be drawn between term (level of effort) SOWs, which
essentially require the furnishing of technical effort and which may
include a report thereof, and completion type work statements, which
require development of tangible items designed to meet specific
performance and/or design characteristics. (See [[FAR]{.underline}
[16.306(d)]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 16_3.html#wp1077348)
for distinction). \[\[Page 4231\]\]

\(1\) Term (or level of effort). A term or level of effort type SOW is
appropriate for research where one seeks to discover the feasibility of
later development, or to gather general information. A term or level of
effort type SOW may only specify that some number of labor-hours be
expended on a particular course of research, or that a certain number of
tests be run, without reference to any intended conclusion.

\(2\) Completion. A completion type SOW is appropriate to development
work where the feasibility of producing an end item is already known. A
completion type SOW may describe what is to be achieved through the
contracted effort, such as development of new methods, new end items, or
other tangible results.

\(c\) Phasing. Individual research, development, or demonstration
projects frequently lie well beyond the present state of the art and
entail procedures and techniques of great complexity and difficulty.
Under these circumstances, a contractor, no matter how carefully
selected, may be unable to deliver the desired result. Moreover, the job
of evaluating the contractor\'s progress is often difficult. Such a
contract is frequently phased and often divided into stages of
accomplishment, each of which must be completed and approved before the
contractor may proceed to the next. Phasing makes it necessary to
develop methods and controls, including reporting requirements for each
phase of the contract and criteria for evaluation of the report
submitted, that will provide, at the earliest possible time, appropriate
data for making decisions relative to future phases. A phased contract
may include stages of accomplishment such as research, development, and
demonstration. Within each phase, there may be a number of tasks which
should be included in the SOW. When phases of work can be identified,
the SOW will provide for phasing and the request for proposals will
require the submission of proposed costs by phases. The resultant
contract will reflect costs by phases, require the contractor to
identify incurred costs by phases, establish delivery schedules by
phase, and require the written acceptance of each phase. The provisions
of the Limitation of Cost clause shall apply to the estimated cost of
each phase. Contractors shall not be allowed to incur costs for phases
which are dependent upon successful completion of earlier phases until
written acceptance of the prior work is obtained from the contracting
officer.

\(d\) *Elements of the SOW.* The elements of the SOW will vary with the
objective, complexity, size, and nature of the acquisition. In general,
it should include the following:

\(1\) *Purpose of the project.* This includes a general description of
the objectives of the project and the desired results.

\(2\) *Background information.* This includes a brief history of the
project and the importance of the project to the overall program
objectives.

\(3\) *A detailed description of the technical requirements.* The
statement of work should provide sufficient detail to accurately reflect
the Government's requirement. It should state what is to be done without
prescribing the method to be used and should include performance
standards. The statement of work may be broken down into tasks and
subtasks. The degree of breakout depends on the size and complexity of
the project. The statement of work should indicate whether the tasks are
sequential or concurrent.

\(4\) *Reference material.* All reference material to be used in the
conduct of the project that indicates how the work is to be carried out
must be identified. Applicability should be explained, and a statement
made as to where the material can be obtained.

\(5\) *Level of effort.* When a level of effort is required, the number
and type of personnel required should be stated. If known, the type and
degree of expertise should be specified.

\(6\) *Special requirements.* (as applicable). An unusual or special
contractual requirement, which would impact on contract performance,
should be included as a separate section.\
(7) *Deliverables reporting requirements.* All deliverables and/or
reports must be clearly and completely described. Include the timeframe
for completion, the format, and the number of copies.

#### Section 307.7107 Review. 

Upon receipt of the RFC, the contracting officer shall review its
contents to ensure that all pertinent information has been provided by
the program office and that it includes an acceptable SOW. If pertinent
information is missing or the SOW is inadequate, the contracting officer
shall obtain or clarify the information as soon as possible so that the
acquisition schedule can be met. If the program office delays furnishing
the information or clarification, the contracting officer should notify
the head of the sponsoring program office, in writing, of the possible
slippage in the acquisition schedule and the need for an expeditious
remedy. The contracting officer should also notify the chief of the
contracting office. A program office\'s or project officer\'s continued
failure to adhere to agreed on milestones should also be reported to the
head of the contracting activity.

## PART 309\--CONTRACTOR QUALIFICATIONS 

### Subpart 309.4\--Debarment, Suspension, and Ineligibility 

#### Section 309.403 Definitions. 

*Acquiring agency's head or designee,* as used in the
[[FAR]{.underline}](http://www.arnet.gov/far/current/html/FARMTOC.html),
shall mean, unless otherwise stated in this subpart, the head of the
contracting activity. Acting in the capacity of the acquiring agency's
head, the head of the contracting activity may make the required
justifications or determinations, and take the necessary actions,
specified in [[FAR 9.405, 9.406 and
9.407]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 9_4.html#wp1083280)
for his or her respective activity, but only after obtaining the written
approval of the debarring or suspending official, as the case may be.

*Debarring official* means the Assistant Secretary for Administration
and Management, or his/her designee.

*Initiating official* means either the contracting officer, the head of
the contracting activity, the Deputy Assistant Secretary for Acquisition
Management and Policy, or the Inspector General.

*Suspending official* means the Assistant Secretary for Administration
and Management, or his/her designee.

#### Section 309.404 List of Parties Excluded from Federal Procurement and Nonprocurement Programs. 

\(c\) The Office of Acquisition Management and Policy (OAMP) shall
perform the actions required by [[FAR
9.404(c]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 9_4.html#wp1083280)).\
(4) OAMP shall maintain all documentation submitted by the initiating
official recommending the debarment or suspension action and all
correspondence and other pertinent documentation generated during the
OAMP review.

#### Section 309.405 Effect of listing. 

\(a\) The head of the contracting activity (HCA) (not delegable) may,
with the written concurrence of the debarring or suspending official,
make the determinations referenced in [[FAR
9.405(a)]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 9_4.html#wp1083280),
regarding contracts for their respective activities.

\(1\) If a Contracting Officer considers it necessary to award a
contract, or consent to a subcontract with a debarred or suspended
contractor, the Contracting Officer shall prepare a determination,
including all pertinent documentation, and submit it through acquisition
channels to the head of the contracting activity. The documentation must
include the date by which approval is required and a compelling reason
for the proposed action. Compelling reasons for award of a contract or
consent to a subcontract with a debarred or suspended contractor
include:

> \(i\) The property or services to be acquired are available only from
> the listed contractor; or
>
> \(ii\) The urgency of the requirement dictates that the Department
> conduct business with the listed contractor.

\(2\) If the HCA decides to approve the requested action, he/she shall
request the concurrence of the debarring or suspending official and, if
given, shall inform the contracting officer in writing of the decision
within the required time period.

#### Section 309.406 Debarment. 

##### 309.406-3 Procedures. 

\(a\) *Investigation and referral.* When an apparent cause for debarment
becomes known, the initiating official shall prepare a report containing
the information required by [309.470-2]{.underline}, along with a
written recommendation, and forward it through appropriate channels to
the debarring official. Reports shall be forwarded in accordance with
[309.470-1]{.underline}. The debarring official, the Deputy Assistant
Secretary for Acquisition Management and Policy, shall initiate an
investigation.

\(b\) *Decision making process.* The debarring official shall review the
results of the investigation, if any, and make a written determination
whether or not debarment procedures are to be commenced. A copy of the
determination shall be promptly sent through appropriate channels to the
initiating official and the Contracting Officer. If it is determined
that debarment procedures shall commence, the debarring official shall
consult with the Office of General Counsel and then notify the
contractor in accordance with [[FAR
9.406-3(c)]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 9_4.html#wp1083280).
If the proposed action is not based on a conviction or judgment and the
contractor's submission in response to the notice raises a genuine
dispute over facts material to the proposed debarment, the debarring
official shall arrange for fact-finding hearings and take the necessary
action specified in [[FAR
9.406-3(b)(2)]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 9_4.html#wp1083280).
The debarring official shall also ensure that written findings of facts
are prepared, and shall base the debarment decisions on the facts as
found, after considering information and argument submitted by the
contractor and any other information in the administrative record. The
Office of the General Counsel shall represent the Department at any
fact-finding hearing and may present witnesses for HHS and question any
witnesses presented by the contractor.

#### Section 309.407 Suspension. 

##### 309.407-3 Procedures. 

\(a\) *Investigation and referral.* When an apparent cause for
suspension becomes known, the initiating official shall prepare a report
containing the information required by [309.470-2]{.underline} along
with a written recommendation and forward it through appropriate
channels to the suspending official. Reports shall be forwarded in
accordance with [309.470-1]{.underline}. The suspending official shall
initiate an investigation.

\(b\) *Decision making process.* The suspending official shall review
the results of the investigation, if any, and make a written
determination whether or not suspension should be imposed. A copy of
this determination shall be promptly sent through appropriate channels
to the initiating official and the Contracting Officer. If it is
determined that suspension shall be imposed, the suspending official
shall consult with the Office of General Counsel and then notify the
contractor in accordance with [[FAR]{.underline}
[9.407-3(c)]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 9_4.html#wp1083280).
If the action is not based on an indictment, and, subject to the
provisions of [[FAR 9.407-3(b)]{.underline}
[(2)]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 9_4.html#wp1083280),
the contractor's submission in response to the notice raises a genuine
dispute over facts material to the suspension, the suspending official
shall, after suspension has been imposed, arrange for fact-finding
hearings and take the necessary actions specified in [[FAR
9.407-3(b)(2)]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 9_4.html#wp1083280).

#### Section 309.470 Reporting of suspected causes for debarment or suspension, or the taking of evasive actions.

##### 309.470-1 Situations where reports are required. 

A report incorporating the information required by
[309.470-2]{.underline} shall be forwarded, in duplicate, by the
Contracting Officer through acquisition channels to OAMP when:

\(a\) A contractor has committed, or is suspected of having committed,
any of the acts described in [[FAR]{.underline}
[9.406-2]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 9_4.html#wp1083280)
or [[FAR
9.407-2]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 9_4.html#wp1083280);
or

\(b\) A contractor is suspected of attempting to evade the prohibitions
of debarment or suspension imposed under this subject, or any other
comparable regulation, by changes of address, multiple addresses,
formation of new companies, or by other devices.

##### 309.470-2 Contents of reports. 

Each report prepared under [309.470-1]{.underline} shall be coordinated
with the Office of the General Counsel and shall include the following
information, where available:\
(a) Name and address of contractor.

\(b\) Name of the principal officers, partners, owners, or managers.

\(c\) All known affiliates, subsidiaries, or parent firms, and the
nature of the affiliation.

\(d\) Description of the contract or contracts concerned, including the
contract number, and office identifying numbers or symbols, the amount
of each contract, the amount paid the contractor and the amount still
due, and the percentage of work completed and to be completed.

\(e\) The status of vouchers.

\(f\) Whether contract funds have been assigned pursuant to the
Assignment of Claims Act, as amended, ([[31 U.S.C.
3727]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode31&STEMMER=en&WORDS=3727+&COLOUR=Red&STYLE=s&URL=/uscode/31/3727.html),
[[41 U.S.C.
15]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode41&STEMMER=en&WORDS=15+&COLOUR=Red&STYLE=s&URL=/uscode/41/15.html)),
and, if so assigned, the name and address of the assignee and a copy of
the assignment.

\(g\) Whether any other contracts are outstanding with the contractor or
any affiliates, and, if so, the amount of the contracts, whether these
funds have \[\[Page 4233\]\] been assigned pursuant to the Assignment of
Claims Act, as amended, ([[31 U.S.C.
3727]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode31&STEMMER=en&WORDS=3727+&COLOUR=Red&STYLE=s&URL=/uscode/31/3727.html),
[[41 U.S.C.
15]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode41&STEMMER=en&WORDS=15+&COLOUR=Red&STYLE=s&URL=/uscode/41/15.html)),
and the amounts paid or due on the contracts.

\(h\) A complete summary of all available pertinent evidence.

\(i\) A recommendation as to the continuation of current contracts.

\(j\) An estimate of damages, if any, sustained by the Government as a
result of the action of the\
contractor, including an explanation of the method used in making the
estimate.\
(k) The comments and recommendations of the contracting officer and
statements regarding whether the contractor should be suspended or
debarred, whether any limitations should be applied to the action, and
the period of any proposed debarment.

\(l\) As an enclosure, a copy of the contract(s) or pertinent excerpts
therefrom, appropriate exhibits, testimony or statements of witnesses,
copies of assignments, and other relevant documentation or a written
summary of any information for which documentation is not available.

# SUBCHAPTER C---CONTRACTING METHODS AND CONTRACT TYPES

[PART 311---DESCRIBING AGENCY NEEDS
44](#part-311describing-agency-needs)

[Section 311.003 Defining Electronic Information Technology (EIT)
requirements.
44](#section-311.003-defining-electronic-information-technology-eit-requirements.)

[PART 312---ACQUISITION OF COMMERCIAL ITEMS
44](#part-312acquisition-of-commercial-items)

[Subpart 312.1---Acquisition of Commercial Items---General
44](#subpart-312.1acquisition-of-commercial-itemsgeneral)

[Section 312.101 Policy. 44](#section-312.101-policy.)

[PART 313\--SIMPLIFIED ACQUISITION PROCEDURES
44](#part-313--simplified-acquisition-procedures)

[Subpart 313.3\--Simplified Acquisition Methods.
44](#subpart-313.3--simplified-acquisition-methods.)

[Section 313.301 Government-wide commercial purchase card.
44](#section-313.301-government-wide-commercial-purchase-card.)

[Section 313.303 Blanket Purchase Agreements (BPAs).
45](#section-313.303-blanket-purchase-agreements-bpas.)

[313.303-5 Purchases under BPAs. 45](#purchases-under-bpas.)

[Section 313.305 Imprest funds and third party drafts.
45](#section-313.305-imprest-funds-and-third-party-drafts.)

[313.305-1 General. 45](#general.)

[Section 313.306 SF 44, Purchase Order\--Invoice\--Voucher.
45](#section-313.306-sf-44-purchase-order--invoice--voucher.)

[PART 314\--SEALED BIDDING 45](#part-314--sealed-bidding)

[Subpart 314.2\--Solicitation of Bids
45](#subpart-314.2--solicitation-of-bids)

[Section 314.202 General rules for solicitation of bids.
45](#section-314.202-general-rules-for-solicitation-of-bids.)

[314.202-7 Facsimile bids. 45](#facsimile-bids.)

[Subpart 314.4\--Opening of Bids and Award of Contract
45](#subpart-314.4--opening-of-bids-and-award-of-contract)

[Section 314.404 Rejection of bids.
45](#section-314.404-rejection-of-bids.)

[314.404-1 Cancellation of invitations after opening.
45](#cancellation-of-invitations-after-opening.)

[Section 314.407 Mistakes in bids.
46](#section-314.407-mistakes-in-bids.)

[314.407-3 Other mistakes disclosed before award.
46](#other-mistakes-disclosed-before-award.)

[314.407-4 Mistakes after award. 46](#mistakes-after-award.)

[PART 315\--CONTRACTING BY NEGOTIATION
46](#part-315--contracting-by-negotiation)

[Subpart 315.2\--Solicitation and Receipt of Proposals and Information
46](#subpart-315.2--solicitation-and-receipt-of-proposals-and-information)

[Section 315.204 Contract format. 46](#section-315.204-contract-format.)

[315.204--1 Uniform contract format. 46](#uniform-contract-format.)

[Section 315.208 Submission, modification, revision, and withdrawal of
proposals.
48](#section-315.208-submission-modification-revision-and-withdrawal-of-proposals.)

[Section 315.209 Solicitation provisions and contract clauses.
48](#section-315.209-solicitation-provisions-and-contract-clauses.)

[Subpart 315.3\--Source Selection 48](#subpart-315.3--source-selection)

[Section 315.305 Proposal evaluation.
48](#section-315.305-proposal-evaluation.)

[Section 315.306 Exchanges with offerors after receipt of proposals.
54](#section-315.306-exchanges-with-offerors-after-receipt-of-proposals.)

[Section 315.307 Proposal revisions.
54](#section-315.307-proposal-revisions.)

[Section 315.370 Finalization of details with the selected source.
54](#section-315.370-finalization-of-details-with-the-selected-source.)

[Section 315.371 Contract preparation and award.
55](#section-315.371-contract-preparation-and-award.)

[Section 315.372 Preparation of negotiation memorandum.
55](#section-315.372-preparation-of-negotiation-memorandum.)

[Subpart 315.4\--Contract Pricing 58](#subpart-315.4--contract-pricing)

[Section 315.404 Proposal analysis.
58](#section-315.404-proposal-analysis.)

[315.404-2 Information to support proposal analysis.
58](#information-to-support-proposal-analysis.)

[315.404-4 Profit. 58](#profit.)

[Subpart 315.6\--Unsolicited Proposals
68](#subpart-315.6--unsolicited-proposals)

[Section 315.605 Content of unsolicited proposals.
68](#section-315.605-content-of-unsolicited-proposals.)

[Section 315.606 Agency procedures.
68](#section-315.606-agency-procedures.)

[315.606-1 Receipt and initial review. 68](#receipt-and-initial-review.)

[Section 315.609 Limited use of data.
69](#section-315.609-limited-use-of-data.)

[PART 316\--TYPES OF CONTRACTS 69](#part-316--types-of-contracts)

[Subpart 316.3\--Cost-Reimbursement Contracts
69](#subpart-316.3--cost-reimbursement-contracts)

[Section 316.307 Contract clauses.
69](#section-316.307-contract-clauses.)

[Section 316.505 Ordering. 69](#section-316.505-ordering.)

[Subpart 316.6\--Time-and-Materials, Labor-Hour, and Letter Contracts
70](#subpart-316.6--time-and-materials-labor-hour-and-letter-contracts)

[Section 316.603 Letter contracts.
70](#section-316.603-letter-contracts.)

[316.603-3 Limitations. 70](#limitations.)

[316.603-70 Information to be furnished when requesting authority to
issue a letter contract.
70](#information-to-be-furnished-when-requesting-authority-to-issue-a-letter-contract.)

[316.603-71 Approval for modifications to letter contracts.
70](#approval-for-modifications-to-letter-contracts.)

[Subpart 316.7\--Agreements 71](#subpart-316.7--agreements)

[Section 316.770 Unauthorized types of agreements.
71](#section-316.770-unauthorized-types-of-agreements.)

[316.770-2 Memorandums of understanding.
71](#memorandums-of-understanding.)

[PART 317\--SPECIAL CONTRACTING METHODS
71](#part-317--special-contracting-methods)

[Subpart 317.2\--Options 71](#subpart-317.2--options)

[Section 317.201 Definitions. 71](#section-317.201-definitions.)

[Section 317.204 Contracts 71](#section-317.204-contracts)

[Subpart 317.71\--Supply and Service Acquisitions Under the Government
Employees Training Act
72](#subpart-317.71--supply-and-service-acquisitions-under-the-government-employees-training-act)

[317.7100 Scope of subpart. 72](#scope-of-subpart.)

[Section 317.7101 Applicable regulations.
72](#section-317.7101-applicable-regulations.)

[Section 317.7102 Acquisition of training.
72](#section-317.7102-acquisition-of-training.)

## PART 311---DESCRIBING AGENCY NEEDS 

#### Section 311.003 Defining Electronic Information Technology (EIT) requirements. 

HHS officials who are defining agency needs for EIT products and
services and performing market research to meet those needs can use the
Buy Accessible Wizard
([*[http://www.buyaccessible.gov]{.underline}*](http://www.buyaccessible.gov/))
managed by the General Services Administration to document EIT
requirements, identify the applicable Section 508 standards, and
document the market research.

## PART 3**1**2---ACQUISITION OF COMMERCIAL ITEMS 

### Subpart 312.1---Acquisition of Commercial Items---General 

#### Section 312.101 Policy. 

\(a\) It is HHS policy to maximize its buying power, reduce acquisition
administrative costs, and develop long-term, mutually beneficial, open
partnerships with best-in-class providers of products and services.
Accordingly, HHS has implemented a Strategic Sourcing Program under
which Indefinite-Delivery/ Indefinite-Quantity contracts (IDIQs) and
Blanket Purchase Agreements (BPAs), known as HHSwide Acquisition
Contracts (HWACs), are awarded to allow for savings for commercial items
and services across HHS and make the acquisition process more efficient.

\(b\) If consideration is being given to soliciting or acquiring a
product or service from a source other than HHS Contract Closeout IDIQs
or Strategic Sourcing BPAs when the category of the current requirement
(e.g. Lab Supplies, Events Management) is encompassed in the portfolio
of existing IDIQ or BPA categories a waiver request must be prepared and
approved in advance of a purchase or processing of a requirement.

\(c\) The instructions, including approval requirements, and waiver
form, are available at [*[http://dbh.]{.underline}*
*[ogam2000.com/HHS]{.underline}*](http://dbh.ogam2000.com/HHS_Strategic_Sourcing/Data_Collection/waiver.asp)[\_*Strategic*\_*Sourcing/Data*\_*Collection/waiver.asp
*]{.underline}The following links provide more detailed information
regarding the supplies, equipment, and services in each of the HWACs:
the HHS Acquisition Integration and Modernization Web site:
[*[http://intranet.hhs.gov/hwac/index.html]{.underline}*](http://intranet.hhs.gov/hwac/index.html)
and the HHS Strategic Sourcing Web
site:[*[http://intranet.hhs.gov/ssc/]{.underline}*](http://intranet.hhs.gov/ssc/).

## PART 313\--SIMPLIFIED ACQUISITION PROCEDURES 

### Subpart 313.3\--Simplified Acquisition Methods. 

#### Section 313.301 Government-wide commercial purchase card. 

\(b\) The Department has issued general guidance concerning the use of
government-wide commercial purchase cards, and has authorized the OPDIVs
to establish procedures for the use, administrative and management
controls, and training necessary to comply with [[FAR
13.301]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 13_3.html#wp1092057).

#### Section 313.303 Blanket Purchase Agreements (BPAs). 

##### 313.303-5 Purchases under BPAs. 

(e)(5) Delivery documents, invoices, etc., signed by the Government
employee receiving the item or service will be forwarded to the fiscal
office or other paying office as designated by the OPDIV. Payment will
be made on the basis of the signed document, invoice, etc. Contracting
offices will ensure that established procedures allowing for
availability of funds are in effect prior to placement of orders.

#### Section 313.305 Imprest funds and third party drafts. 

##### 313.305-1 General. 

Requests to establish imprest funds shall be made to the responsible
fiscal office. At larger activities where the cashier may not be
conveniently located near the purchasing office, a Class C Cashier may
be installed in the purchasing office. Documentation of cash purchases
shall be in accordance with instructions contained in the HHS Voucher
Audit Manual Part 1, Chapter 1-10.

#### Section 313.306 SF 44, Purchase Order\--Invoice\--Voucher. 

\(d\) Since the Standard Form (SF) 44 is an accountable form, a record
shall be maintained of serial numbers of the form, to whom issued, and
date issued. SF 44\'s shall be kept under lock and key to prevent
unauthorized use. A reservation of funds shall be established to cover
total anticipated expenditures prior to use of the SF 44.

## PART 314\--SEALED BIDDING 

### Subpart 314.2\--Solicitation of Bids 

#### Section 314.202 General rules for solicitation of bids. 

##### 314.202-7 Facsimile bids. 

\(c\) If the HCA (not delegable) has determined that the contracting
activity will allow use of facsimile bids and proposals, the HCA shall
prescribe internal procedures, in accordance with the FAR, to ensure
uniform processing and control.

### Subpart 314.4\--Opening of Bids and Award of Contract 

#### Section 314.404 Rejection of bids. 

##### 314.404-1 Cancellation of invitations after opening. 

\(c\) The HCA or CCO (not delegable) shall make the determinations
required to be made by the agency head in [[FAR
14.404-1]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 14_4.html#wp1090681).

#### Section 314.407 Mistakes in bids. 

##### 314.407-3 Other mistakes disclosed before award. 

\(e\) Authority has been delegated to the Departmental Protest Control
Officer, Office of Acquisition Management and Policy, to make
administrative determinations in connection with mistakes in bid alleged
after opening and before award. This authority may not be re-delegated.

\(f\) Each proposed determination shall have the concurrence of the
Chief, General Law Division, Office of General Counsel.

\(i\) Doubtful cases shall not be submitted by the Contracting Officer
directly to the Comptroller General, but, instead, shall be submitted to
the Departmental Protest Control Officer.

##### 314.407-4 Mistakes after award. 

\(c\) Authority has been delegated to the Departmental Protest Control
Officer to make administrative determinations in connection with
mistakes in bid alleged after award. This authority may not be
re-delegated.

\(d\) Each proposed determination shall have the concurrence of the
Chief, General Law Division, Office of General Counsel.

## PART 315\--CONTRACTING BY NEGOTIATION 

### Subpart 315.2\--Solicitation and Receipt of Proposals and Information 

#### Section 315.204 Contract format. 

##### 315.204--1 Uniform contract format. 

\(a\) When preparing solicitations and resulting contracts, Contracting
Officers/Contract Specialists are strongly encouraged to use as a guide
the HHS Solicitation/Contract Structure Document found at
*[[http://www.knownet.hhs.gov/acquisition/policy.htm]{.underline}](http://www.knownet.hhs.gov/acquisition/policy.htm).*

\(c\) Section M, Evaluation factors for award.

\(1\) General.

\(i\) The evaluation factors must be developed by the project officer
and submitted to the contracting officer in the request for contract
(RFC) for inclusion in the request for proposal (RFP). Development of
these factors and the assignment of the relative importance or weight to
each require the exercise of judgment on a case-by-case basis because
they must be tailored to the requirements of the individual acquisition.
Since the factors will serve as a standard against which all proposals
will be evaluated, it is imperative that they be chosen carefully to
emphasize those considered to be critical in the selection of a
contractor.

\(ii\) The finalized evaluation factors cannot be changed except by a
formal amendment to the RFP issued by the contracting officer. No
factors other than those set forth in the RFP shall be used in the
evaluation of proposals.

\(2\) Review of evaluation factors.

\(i\) The evaluation factors should be reviewed by the contracting
officer in terms of the work statement. This review is not intended to
dictate technical requirements to the program office or project officer,
but rather to ensure that the evaluation factors are clear, concise, and
fair so that all potential offerors are fully aware of the bases for
proposal evaluation and are given an equal opportunity to compete.

\(ii\) The project officer and the contracting officer should then
review the evaluation factors together to ascertain the following:

\(A\) The factors are described in sufficient detail to provide the
offerors (and evaluators) with a total understanding of the factors to
be involved in the evaluation process;

\(B\) The factors address the key programmatic concerns which the
offerors must be aware of in preparing proposals;

\(C\) The factors are specifically applicable to the instant acquisition
and are not merely restatements of factors from previous acquisitions
which are not relevant to this acquisition; and

\(D\) The factors are selected to represent only the significant areas
of importance which must be emphasized rather than a multitude of
factors. (All factors tend to lose importance if too many are included.
Using too many factors will prove as detrimental as using too few.)

\(3\) Examples of topics that form a basis for evaluation factors.
Typical examples of topics that form a basis for the development of
evaluation factors are listed in the following paragraphs. These
examples are intended to assist in the development of actual evaluation
factors for a specific acquisition and should only be used if they are
applicable to that acquisition. They are not to be construed as actual
examples of evaluation factors to be included in the RFP.

\(i\) Understanding of the problem and statement of work:

\(ii\) Method of accomplishing the objectives and intent of the
statement of work;

\(iii\) Soundness of the scientific or technical approach for executing
the requirements of the statement of work (to include, when applicable,
preliminary layouts, sketches, diagrams, other graphic representations,
calculations, curves, and other data necessary for presentation,
substantiation, justification, or understanding of the approach);

\(iv\) Special technical factors, such as experience or pertinent novel
ideas in the specific branch of science or technology involved;

\(v\) Feasibility and/or practicality of successfully accomplishing the
requirements (to include a statement and discussion of anticipated major
difficulties and problem areas and recommended approaches for their
resolution);

\(vi\) Availability of required special research, test, and other
equipment or facilities;

\(vii\) Managerial capability (ability to achieve delivery or
performance requirements as demonstrated by the proposed use of
management and other personnel resources, and to successfully manage the
project, including subcontractor and/or consultant efforts, if
applicable, as evidenced by the management plan and demonstrated by
previous experience);

\(viii\) Availability, qualifications, experience, education, and
competence of professional, technical, and other personnel, to include
proposed subcontractors and consultants (as evidenced by resumes,
endorsements, and explanations of previous efforts);

\(ix\) Soundness of the proposed staff time or labor hours, propriety of
personnel classifications (professional, technical, others), necessity
for type and quantity of material and facilities proposed, validity of
proposed subcontracting, and necessity of proposed travel;

\(x\) Quality of offeror\'s past performance on recent projects of
similar size and scope; and

\(xi\) Extent of proposed participation of small disadvantaged business
concerns in performance of the contract.

#### Section 315.208 Submission, modification, revision, and withdrawal of proposals. 

\(b\) When the head of the contracting activity (HCA) for a health
agency determines that certain classes of biomedical or behavioral
research and development acquisitions should be subject to conditions
other than those specified in [[FAR
52.215-1(c)(3)]{.underline}](http://www.acquisition.gov/comp/far/current/html/52_215.html#wp1144408),
the HCA may authorize the use of the provision at
[352.215-70]{.underline} in addition to the provision at [[FAR
52.215-1]{.underline}](http://www.acquisition.gov/comp/far/current/html/52_215.html#wp1144408).
This is an authorized deviation. \[\[Page 4235\]\]

\(2\) When the provision at [352.215-70]{.underline} is included in the
solicitation and a proposal is received after the exact time specified
for receipt, the contracting officer, with the assistance of cost and
technical personnel, shall make a written determination as to whether
the proposal meets the requirements of the provision at
[352.215-70]{.underline} and, therefore, can be considered.

#### Section 315.209 Solicitation provisions and contract clauses. 

\(a\) Paragraph (e) of the provision at [352.215-1]{.underline} shall be
used in place of that specified at [[FAR 52.215-1]{.underline}
(e)](http://www.acquisition.gov/comp/far/current/html/52_215.html#wp1144408).
This is an authorized deviation.

### Subpart 315.3\--Source Selection 

#### Section 315.305 Proposal evaluation. 

(a)(1) *Cost or price evaluation.*

\(i\) The Contracting Officer shall evaluate business proposals in
accordance with the requirements set forth in [[FAR
15.404]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 15_4.html#wp1208365).
The extent of cost or price analysis in each case depends on the
contract type, the amount of the proposal, the technical complexity, and
related cost or price. The Project Officer shall be requested to analyze
the following elements, if applicable, to determine if they are
necessary and reasonable for efficient contract performance:

\(A\) The number of labor hours proposed for the various labor
categories and the mix in relation to the technical requirements;

> \(B\) Types, numbers and hours/days of proposed consultants;

\(C\) The kinds and quantities of material, equipment, supplies, and
services;

> \(D\) Kinds and quantities of information technology;
>
> \(E\) Logic of proposed subcontracting; and

\(F\) Travel proposed, including number of trips, locations, purpose,
and travelers.

\(ii\) The Project Officer shall provide written comments, including the
rationale for any exceptions to the elements. The Project Officer's
comments shall be used for negotiations or to support award without
discussions. The Contracting Officer should also request assistance of a
cost/price analyst, when necessary. The Contracting Officer's
negotiation memorandum must include the rationale used in

determining that the price or cost is fair and reasonable.

\(2\) Past performance evaluation. When evaluating past performance, the
contracting officer is responsible for conducting reference checks to
obtain information concerning the performance history of offerors. The
contracting officer may require the assistance of the project officer as
well as other Government technical personnel in performing this
function.

\(3\) Technical evaluation.

\(i\) Technical evaluation plan.

\(A\) A technical evaluation plan may be required by the contracting
officer, at his/her discretion, when an acquisition is sufficiently
complex as to warrant a formal plan.\
(B) The technical evaluation plan should include at least the following:

\(1\) A list of recommended technical evaluation panel members, their
organizations, a list of their major consulting clients (if applicable),
their qualifications, and curricula vitae (if applicable);

\(2\) A justification for using non-Government technical evaluation
panel members. (Justification is not required if non-Government
evaluators will be used in accordance with standard contracting activity
procedures or policies);

\(3\) A statement that there is no apparent or actual conflict of
interest regarding any recommended panel member;\
(4) A copy of each rating sheet, approved by the contracting officer, to
be used to assure consistency with the evaluation criteria; and

\(5\) A brief description of the general evaluation approach.

\(C\) The technical evaluation plan must be signed by an official within
the program office in a position at least one level above the project
officer, or in accordance with contracting activity\
procedures.\
(D) The technical evaluation plan shall be submitted to the Contracting
Officer for review and approval before the solicitation is issued. The
Contracting Officer shall make sure that the significant factors and
subfactors relating to the evaluation are reflected in the evaluation
criteria when conducting the review of the plan.

\(ii\) Technical evaluation panel.

> \(A\) General.

\(1\) A technical evaluation panel is required for all acquisitions
subject to this subpart which are expected to exceed \$500,000 and in
which technical evaluation is considered a key element in the award
decision. The contracting officer has the discretion to require a
technical evaluation panel for acquisitions not exceeding \$500,000
based on the complexity of the acquisition.

\(2\) The technical evaluation process requires careful consideration
regarding the size, composition, expertise, and function of the
technical evaluation panel. The efforts of the panel can result in the
success or failure of the acquisition.

> \(B\) Role of the project officer.

\(1\) The Project Officer is the Contracting Officer's technical
representative for the acquisition action. The Project Officer may be a
voting member of the technical evaluation panel, and may also serve as
the chairperson of the panel, unless prohibited by law or contracting
activity procedures.

(*2*) The Project Officer is responsible for recommending panel members
who are knowledgeable in the technical aspects of the acquisition and
capable of identifying strengths and weaknesses in the proposals
received. Government employees serving as panel members must be selected
in accordance with the requirements set forth in [307.170]{.underline}.

(*3*) The Project Officer shall ensure that persons possessing expertise
and experience in addressing issues relative to sex, race, national
origin, and handicapped discrimination are included as panel members for
acquisitions in which such issues are applicable.

(*4*) The Project Officer shall submit the list of recommended panel
members to an official within the project office in a position at least
one level higher. This official will review the list and select the
chairperson.

(*5*) The Project Officer shall arrange for adequate and secure working
space for the panel.

\(C\) Role of the contracting officer.

\(1\) The term \"contracting officer,\" as used in this subpart, may be
the contracting officer or his/her designated representative within the
contracting office.\
(2) The contracting officer shall not serve as a member of the technical
evaluation panel but should be available to:

\(i\) Address the initial meeting of the technical evaluation panel;

\(ii\) Provide assistance to the evaluators as required; and

\(iii\) Ensure that the scores adequately reflect the written technical
report comments.

\(D\) Conflict of interest.

\(1\) If a panel member has an actual or apparent conflict of interest
related to a proposal \[\[Page 4236\]\] under evaluation, he/she shall
be removed from the panel and replaced with another evaluator. If a
suitable replacement is not available, the panel shall perform the
review without a replacement.

\(2\) For the purposes of this subpart, conflicts of interest are
defined in the [[Standards of]{.underline} [Ethical Conduct for
Employees of the Executive Branch (5 CFR part
2635)]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_03/5cfr2635_03.html),
[[Supplemental Standards]{.underline} [of Ethical Conduct for Employees
of the Department of Health and Human Services (5 CFR part]{.underline}
[5501)]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_03/5cfr5501_03.html),
and the [[Procurement Integrity
Act]{.underline}](http://www4.law.cornell.edu/uscode/41/423.html). For
outside evaluators serving on the technical evaluation panel, see
paragraph (a)(3)(ii)(F) of this section.

\(E\) Continuity of evaluation process.

(*1*) The technical evaluation panel shall evaluate all original
proposals, make recommendations to the chairperson regarding strengths
and weaknesses of proposals, and, if required by the Contracting
Officer, assist the Contracting Officer during communications and
discussions, and review supplemental, revised and/or final proposal
revisions. To the extent possible, the same evaluators should be
available throughout the entire evaluation and selection process to
ensure continuity and consistency in the treatment of proposals. The
following are examples of circumstances when it would not be necessary
for the technical evaluation panel to evaluate revised proposals
submitted during the acquisition:

\(i\) The answers to questions do not have a substantial impact on the
proposal;

\(ii\) Final proposal revisions are not materially different from the
original proposals; or

\(iii\) The rankings of the offerors are not affected because the
revisions to the proposals are relatively minor.

\(2\) The chairperson, with the concurrence of the contracting officer,
may decide not to have the panel evaluate the revised proposals.
Whenever this decision is made, it must be fully documented by the
chairperson and approved by the contracting officer.

\(3\) When technical evaluation panel meetings are considered necessary
by the contracting officer, the attendance of evaluators is mandatory.
When the chairperson determines that an evaluator\'s failure to attend
the meetings is prejudicial to the evaluation, the chairperson shall
remove and/or replace the individual after discussing the situation with
the contracting officer and obtaining his/her concurrence and the
approval of the official responsible for appointing the panel members.

(*4*) When continuity of the evaluation process is not possible, and
either new evaluators are selected or the size of the evaluation panel
is reduced, all proposals shall be reviewed by each panel member at the
current stage of the acquisition (i.e., initial proposal, final proposal
revisions, etc.). Also, guidance should be provided concerning what to
do if an unusually large number of proposals are received, including how
to determine what constitutes an unusually large number of proposals.

> \(F\) Use of outside evaluators.

\(1\) The National Institutes of Health (NIH) and the Substance Abuse
and Mental Health Services Administration (SAMHSA) are required to have
a peer review of research and development contracts in accordance with
Public Law 93-352 as amended by Public Law 94-63; [[42 U.S.C. 289
a]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode42&STEMMER=en&WORDS=289+&COLOUR=Red&STYLE=s&URL=/uscode/42/289.html)
and [[42 U.S.C.
290aa-3]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode42&STEMMER=en&WORDS=290+&COLOUR=Red&STYLE=s&URL=/uscode/42/290.html)
respectively. This legislation requires peer review of projects and
proposals, and not more than one-fourth of the members of a peer review
group may be officers or employees of the United States. NIH and SAMHSA
are therefore exempt from the provisions of
[315.305(a)(3)(ii)]{.underline} to the extent that [[42 U.S.C. 289
a]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode42&STEMMER=en&WORDS=289+&COLOUR=Red&STYLE=s&URL=/uscode/42/289.html)
and
[[290aa-3]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode42&STEMMER=en&WORDS=290+&COLOUR=Red&STYLE=s&URL=/uscode/42/290.html)
apply. Conflicts of interest are addressed at [[42 CFR part]{.underline}
[52h]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_02/42cfr52h_02.html).
Other agencies subject to statutory scientific peer review requirements
are also exempt from the requirements of paragraph (a)(3)(ii) of this
section to the extent that these requirements are inconsistent with
their legislative requirements.

(*2*) Decisions to disclose proposals to evaluators outside of the
Government shall be made by the official responsible for appointing
panel members in accordance with operating division procedures. The
avoidance of organization conflict of interest and competitive
relationships must be taken into consideration when making the decision
to use outside evaluators.

(*3*) When it is determined to disclose a solicited proposal outside the
Government for evaluation purposes, the following or similar conditions
shall be included in the written agreement with evaluator(s) prior to
disclosure:

> **Conditions for Evaluating Proposals**
>
> The evaluator agrees to use the data (trade secrets, business data,
> and technical data) contained in the proposal for evaluation purposes
> only. The foregoing requirement does not apply to data obtained from
> another source without restriction. Any notice or legend placed on the
> proposal by either the Department or the submitter of the proposal
> shall be applied to any reproduction or abstract provided to the
> evaluator or made by the evaluator. Upon completion of the evaluation,
> the evaluator shall return to the Government the furnished copy of the
> proposal or abstract, and all copies thereof, to the Departmental
> office which initially furnished the proposal for evaluation. Unless
> authorized by the Department's initiating office, the evaluator shall
> not contact the submitter of the proposal concerning any aspects of
> its contents. The evaluator's employees and subcontractors shall abide
> by these conditions.

\(iii\) Receipt of proposals.

\(A\) After the closing date set by the solicitation for the receipt of
proposals, the contracting officer will use a transmittal memorandum to
forward the technical proposals to the project officer or chairperson
for evaluation. The business proposals will be retained by the
contracting officer for evaluation.

\(B\) The transmittal memorandum shall include at least the following:

\(1\) A list of the names of the organizations submitting proposals;

\(2\) A reference to the need to preserve the integrity of the source
selection\
process;\
(3) A statement that only the contracting officer is to conduct
discussions.

\(4\) A requirement for a technical evaluation report in accordance with
paragraph (a)(3)(vi) of this section; and

\(5\) The establishment of a date for receipt of the technical
evaluation report.

\(iv\) Convening the technical evaluation panel.

\(A\) Normally, the technical evaluation panel will convene to evaluate
the proposals. However, there may be situations when the contracting
officer determines that it is not feasible for the panel to convene.
Whenever this decision is made, care must be taken to assure that the
technical review is closely monitored to produce acceptable results.

\(B\) When a panel is convened, the chairperson is responsible for the
control of the technical proposals provided to him/her by the
contracting officer for use during the evaluation process. The
chairperson will generally distribute the technical proposals prior to
the initial panel meeting and will establish procedures for securing the
proposals whenever they are not being evaluated to insure their
confidentiality. After the evaluation is complete, all proposals must be
returned to the contracting officer by the chairperson.

\(C\) The contracting officer shall address the initial meeting of the
panel and state the basic rules for conducting \[\[Page 4237\]\] the
evaluation. The contracting officer shall provide written guidance to
the panel if he/she is unable to attend the initial panel meeting. The
guidance should include:

\(1\) Explanation of conflicts of interest;

\(2\) The necessity to read and understand the solicitation, especially
the statement of work and evaluation criteria, prior to reading the
proposals;

\(3\) The need for evaluators to restrict the review to only the
solicitation and the\
contents of the technical proposals;\
(4) The need for each evaluator to review all the proposals;

\(5\) The need to watch for ambiguities, inconsistencies, errors, and
deficiencies\
which should be surfaced during the evaluation process;\
(6) An explanation of the evaluation process and what will be expected
of the\
evaluators throughout the process;\
(7) The need for the evaluators to be aware of the requirement to have
complete written documentation of the individual strengths and
weaknesses which affect the scoring of the proposals; and

\(8\) An instruction directing the evaluators that, until the award is
made, information concerning the acquisition must not be disclosed to
any person not directly involved in the evaluation process.

\(v\) Rating and ranking of proposals. The evaluators will individually
read each proposal, describe tentative strengths and weaknesses, and
independently develop preliminary scores in relation to each evaluation
factor set forth in the solicitation. After this has been accomplished,
the evaluators shall discuss in detail the individual strengths and
weakness described by each evaluator and, if possible, arrive at a
common understanding of the major strengths and weaknesses and the
potential for correcting each offeror\'s weakness(es). Each evaluator
will score each proposal, and then the technical evaluation panel will
collectively rank the proposals. Generally, ranking will be determined
by adding the numerical scores assigned to the evaluation factors and
finding the average for each offeror. The evaluators should then
identify whether each proposal is acceptable or unacceptable.
Predetermined cutoff scores shall not be employed.

\(vi\) Technical evaluation report. A technical evaluation report shall
be prepared and furnished to the contracting officer by the chairperson
and maintained as a permanent record in the contract file. The report
must reflect the ranking of the proposals and identify each proposal as
acceptable or unacceptable. The report must also include a narrative
evaluation specifying the strengths and weaknesses of each proposal, a
copy of each signed rating sheet, and any reservations, qualifications,
or areas to be addressed that might bear upon the selection of sources
for negotiation and award. Concrete technical reasons supporting a
determination of unacceptability with regard to any proposal must be
included. The report should also include specific points and questions
which are to be raised in discussions or negotiations.

#### Section 315.306 Exchanges with offerors after receipt of proposals. 

\(d\) Exchanges with offerors after establishment of the competitive
range. The contracting officer and project officer should discuss the
uncertainties and/or deficiencies that are included in the technical
evaluation report for each proposal in the competitive range. Technical
questions should be developed by the project officer and/or the
technical evaluation panel and should be included in the technical
evaluation report. The management, past performance and cost or price
questions should be prepared by the contracting officer with assistance
from the project officer and/or panel as required. The method of
requesting offerors in the competitive range to submit the additional
information will vary depending on the complexity of the questions, the
extent of additional information requested, the time needed to analyze
the responses, and the time frame for making the award. However, to the
extent practicable, all questions and answers should be in writing. Each
offeror in the competitive range shall be given an equitable period of
time for preparation of responses to questions to the extent
practicable. The questions should be developed so as to disclose the
ambiguities, uncertainties, and deficiencies of the offeror.

#### Section 315.307 Proposal revisions. 

\(b\) Final proposal revisions are subject to a final evaluation of
price or cost and other salient factors by the contracting officer and
project officer with assistance from a cost/price analyst, and an
evaluation of technical factors by the technical evaluation panel, as
necessary. Proposals may be technically rescored and reranked by the
technical evaluation panel and a technical evaluation report prepared.
To the extent practicable, the evaluation shall be performed by the same
evaluators who reviewed the original proposals. A final evaluation of
past performance will be made by the contracting officer and project
officer. The technical evaluation panel may be involved in the final
evaluation of past performance if the panel is comprised solely of
Government personnel.

#### Section 315.370 Finalization of details with the selected source. 

\(a\) After selection of the successful proposal, finalization of
details with the selected offeror may be conducted if deemed necessary.
However, no factor which could have any effect on the selection process
may be introduced after the common cutoff date for receipt of final
proposal revisions. The finalization process shall not in any way
prejudice the competitive interest or rights of the unsuccessful
offerors. Finalization of details with the selected offeror shall be
restricted to definitizing the final agreement on terms and conditions,
assuming none of these factors were involved in the selection process.

\(b\) Caution must be exercised by the contracting officer to insure
that the finalization process is not used to change the requirements
contained in the solicitation, nor to make any other changes which would
impact on the source selection decision. Whenever a material change
occurs in the requirements, the competition must be reopened and all
offerors submitting final proposal revisions must be given an
opportunity to resubmit proposals based on the revised requirements.
Whenever there is a question as to whether a change is material, the
contracting officer should obtain the advice of technical personnel and
legal counsel before reopening the competition. Significant changes in
the offeror\'s cost proposal may also necessitate a reopening of
competition if the changes alter the factors involved in the original
selection process.

\(c\) Should finalization details beyond those specified in paragraph
(a) of this section be required for any reason, discussions must be
reopened with all offerors submitting final proposal revisions.

\(d\) Upon finalization of details, the contracting officer should
obtain a confirmation letter from the successful offeror which includes
any revisions to the technical proposal, the agreed to price or cost,
and, as applicable, a certificate of current cost or pricing data.

#### Section 315.371 Contract preparation and award. 

\(a\) After details have been finalized with the selected offeror, the
Contracting Officer shall:

\(1\) Prepare the negotiation memorandum in accordance with
[315.372]{.underline};

\(2\) Prepare the contract containing all agreed to terms and conditions
and clauses required by law or regulation;\
(3) Include in the contract file the pertinent documents referenced in
[[FAR
4.803]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 4_8.html#wp1108947);
and

\(4\) Obtain the appropriate approval of the proposed contract award(s)
in accordance with subpart [304.71]{.underline} and contracting activity
procedures.

\(b\) After receiving the required approvals, the contract should be
transmitted to the prospective contractor for signature. The prospective
contractor must be informed that the contract is not effective until
accepted by the contracting officer.

\(c\) The contract shall not be issued until the finance office
certifies that the funds are available for obligation.

#### Section 315.372 Preparation of negotiation memorandum. 

The negotiation memorandum or summary of negotiations is a complete
record of all actions leading to award of a contract and is prepared by
the Contracting Officer/Contract Specialist to support the source
selection decision discussed in [[FAR
15.308]{.underline}](http://www.acquisition.gov/far/current/html/Subpart 15_3.html#wp1088953).
It should be in sufficient detail to explain and support the rationale,
judgments, and authorities upon which all actions were predicated. The
memorandum will document the negotiation process and reflect the
negotiator's actions, skills, and judgments in concluding a satisfactory
agreement for the Government. The negotiation memorandum shall address
each item listed below. If an item is not applicable, it shall be so
stated in the memorandum. Information already contained in the contract
file may be referenced rather than reiterated.

\(a\) *Description of articles and services and period of performance.*
A description of articles and services, quantity, unit price, total
contract amount, and period of contract performance should be set forth.

\(b\) Acquisition planning. Summarize or reference any acquisition
planning activities that have taken place.

\(c\) Synopsis of acquisition. A statement as to whether the acquisition
has or has not been publicized in accordance with [[FAR Subpart
5.2]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 5_2.html#wp1107980).
A brief statement of explanation should be included with reference to
the specific basis for exemption under the FAR, if applicable.

\(d\) Contract type. Provide sufficient detail to support the type of
contractual instrument recommended for the acquisition. If the contract
is a cost-sharing type, explain the essential cost-sharing features.

\(e\) Extent of competition. The extent to which full and open
competition was solicited and obtained must be discussed. The discussion
shall include the date of solicitation, sources solicited, and
solicitation results. If a late proposal was received, discuss whether
or not the late proposal was evaluated and the rationale for the
decision.

\(f\) Technical evaluation. Summarize or reference the results presented
in the technical evaluation report.

\(g\) Business evaluation. Summarize or reference results presented in
the business report.

\(h\) Past performance. Summarize or reference results of past
performance evaluation and reference checks.

\(i\) Competitive range (if applicable). Describe how the competitive
range was determined and state the offerors who were included in the
competitive range and the ones who were not.

\(j\) Cost breakdown and analysis. Include a complete cost breakdown
together with the negotiator\'s analysis of the estimated cost by
individual cost elements. The negotiator\'s analysis should contain
information such as:

\(1\) A comparison of cost factors proposed in the instant case with
actual factors used in earlier contracts, using the same cost centers of
the same supplier or cost centers of other sources having recent
contracts for the same or similar item.\
(2) Any pertinent Government-conducted audit of the proposed
contractor\'s record of any pertinent cost advisory report.\
(3) Any pertinent technical evaluation inputs as to necessity,
allocability and reasonableness of labor, material and other direct
expenses.\
(4) Any other pertinent information to fully support the basis for and
rationale of the cost analysis.

\(5\) If the contract is an incentive type, discuss all elements of
profit and fee structure.

\(6\) A justification of the reasonableness of the contractor\'s
proposed profit or fixed fee considering the requirements of [[FAR
15.404-4]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 15_4.html#wp1208365)
and [HHSAR 315.404-4]{.underline}.

\(k\) Cost realism. Describe the cost realism analysis performed on
proposals.

\(l\) Government-furnished property and Government-provided facilities.
With respect to Government-furnished or Government-provided facilities,
equipment, tooling, or other property, include the following:

\(1\) Where no property is to be provided, a statement to that effect.

\(2\) Where property is to be provided, a full description, the
estimated dollar value, the basis of price comparison with competitors,
and the basis of rental charge, if rental is involved.

\(3\) Where the furnishing of any property or the extent has not been
determined and is left open for future resolution, a detailed
explanation.

\(m\) Negotiations. Include a statement as to the date and place
negotiations were conducted, and identify members of both the Government
and contractor negotiating teams by area of responsibility. Include
negotiation details relative to the statement of work, terms and
conditions, and special provisions. The results of cost or price
negotiations must include the information required by [[FAR]{.underline}
[31.109]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 31_1.html#wp1089547)
and
[[15.406-3]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 15_4.html#wp1208365).
In addition, if cost or pricing data was required to be submitted, the
negotiation record must also contain the extent to which the contracting
officer relied upon the factual cost or pricing data submitted and used
in negotiating the cost or price.

\(n\) Other considerations. Include coverage of areas such as:

\(1\) Financial data with respect to a contractor\'s capacity and
stability.

\(2\) Determination of contractor responsibility.

\(3\) Details as to why the method of payment, such as progress payment,
advance payment, etc., is necessary. Also cite any required D & F\'s.

\(4\) Information with respect to obtaining of a certificate of current
cost or pricing data.

\(5\) Other required special approvals.

\(6\) If the contract represents an extension of previous work, the
status of funds and performance under the prior contract(s) should be
reflected. Also, a determination should be made that the Government has
obtained enough actual or potential value from the work previously
performed to warrant continuation with the same contractor. (Project
officer should furnish the necessary information.)

\(7\) If the contract was awarded by full and open competition, state
where the unsuccessful offerors\' proposals are filed.\
(8) State that equal opportunity provisions of the proposed contract
have been explained to the contractor, and it is aware of its
responsibilities. Also state whether or not a clearance is required.
\[\[Page 4239\]\]

\(9\) If the contract is for services, a statement must be made, in
accordance with [[FAR
37.103]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 37_1.html#wp1082880),
that the services to be acquired are nonpersonal in nature.\
(o) Terms and conditions. Identify the general and special clauses and
conditions that are contained in the contract, such as option
arrangements, incremental funding, anticipatory costs, deviations from
standard clauses, etc. The basis and rationale for inclusion of any
special terms and conditions must be stated and, where applicable, the
document which granted approval for its use identified.

\(p\) Recommendation. A brief statement setting forth the
recommendations for award.

\(q\) Signature. The memorandum must be signed by the contract
negotiator who prepared the memorandum.

### Subpart 315.4\--Contract Pricing 

#### Section 315.404 Proposal analysis. 

##### 315.404-2 Information to support proposal analysis. 

(a)(2) When some or all information sufficient to determine the
reasonableness of the proposed cost or price is already available or can
be obtained by phone from the cognizant audit agency, contracting
officers may request less-than-complete field pricing support
(specifying in the request the information needed) or may waive in
writing the requirement for audit and field pricing support by
documenting the file to indicate what information is to be used instead
of the audit report and the field pricing report.

\(3\) When initiating audit and field pricing support, the contracting
officer shall do so by sending a request to the cognizant administrative
contracting officer (ACO), with an information copy to the cognizant
audit office. When field pricing support is not available, the
contracting officer shall initiate an audit by sending, in accordance
with agency procedures, two (2) copies of the request to the OIG Office
of Audits\' Regional Audit Director. In both cases, the contracting
officer shall, in the request:

\(i\) Prescribe the extent of the support needed;

> \(ii\) State the specific areas for which input is required;

\(iii\) Include the information necessary to perform the review (such as
the offeror\'s proposal and the applicable portions of the solicitation,
particularly those describing requirements and delivery schedules);

\(iv\) Provide the complete address of the location of the offeror\'s
financial records that support the proposal;

\(v\) Identify the office having audit responsibility if other than the
HHS Regional Audit Office; and

\(vi\) Specify a due date for receipt of a verbal report to be followed
by a written audit report. (If the time available is not adequate to
permit satisfactory coverage of the proposal, the auditor shall so
advise the contracting officer and indicate the additional time needed.)
One copy of the audit request letter that was submitted to the Regional
Audit Director and a complete copy of the contract price proposal shall
be submitted to OIG/OA/DAC. Whenever, an audit review has been conducted
by the Office of Audits, two (2) copies of the memorandum of negotiation
shall be forwarded to OIG/OA/DAC by the contracting officer.

##### 315.404-4 Profit. 

\(b\) *Policy.*

\(1\) The structured approach for determining profit or fee (hereafter
called profit) provides a technique for establishing a profit objective
for negotiation. A profit objective is that part of the estimated
contract price objective or value which, in the judgment of the
Contracting Officer, constitutes an appropriate amount of profit for the
acquisition being considered. This technique allows for consideration of
the profit factors described in paragraph (d) of this section. The
Contracting Officer's analysis of these factors is based on available
information such as proposals, audit data, assessment reports, preaward
surveys, etc. The structured approach provides a basis for documenting
the profit objective. Any significant departure from this objective
shall be explained. The amount of documentation depends on the dollar
value and complexity of the proposed acquisition. The profit objective
is a part of the overall negotiation objective and is directly related
to the cost objective and any proposed sharing arrangement. The profit
objective should be negotiated at the same time as the other cost items.
The profit objective should be negotiated as a whole and not as
individual profit factors.

\(ii\) The profit analysis factors in [[FAR
15.404-4(d)]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 15_4.html#wp1208365)
shall be used in lieu of the structured approach in the following
circumstances. Factors considered inapplicable to the acquisition shall
be excluded from the profit objective. Documentation shall be provided
which includes the profit factor breakdown.

\(A\) Contracts not expected to exceed \$100,000;

\(B\) Architect-engineer contracts;

\(C\) Management contracts for operations and/or maintenance of
Government facilities;

\(D\) Construction contracts;

\(E\) Contracts primarily requiring delivery of material supplies by
subcontractors;

\(F\) Termination settlements; and

\(G\) Cost-plus-award-fee contracts (However, contracting officers may
find it advantageous to perform a structured profit analysis as an aid
in arriving at an appropriate fee arrangement). Other exceptions may be
made in the negotiation of contracts having unusual pricing situations,
but shall be justified in writing by the contracting officer in
situations where the structured approach is determined to be unsuitable.

\(c\) *Contracting Officer responsibilities.* The Contracting Officer
shall develop the profit objective. This objective shall realistically
reflect the total overall task to be performed and the requirements
placed on the contractor. The Contracting Officer shall not begin to
develop the profit objective until a thorough review of proposed
contract work has been made; a review of all available knowledge
regarding the contractor pursuant to [[FAR subpart
9.1]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 9_1.html#wp1084058),
including audit data, preaward survey reports and financial statements,
as appropriate, has been conducted; and an analysis of the contractor's
cost estimate and comparison with the Government's estimate or
projection of cost has been made.

\(d\) Profit\--analysis factors

\(1\) Common factors. The following factors shall be considered in all
cases in which profit is to be negotiated. The weight ranges listed
after each factor shall be used in all instances where the structured
approach is used.

> Profit factors Weight ranges (%)

Contractor effort:

Material acquisition\...\...\...\...\...\.... 1 to 5

Direct labor\...\...\...\...\...\...\...\...\...\..... 4 to 15

> Overhead\...\...\...\...\...\...\...\...\...\...\..... 4 to 9

General management (G&A)\.... 4 to 8 \[\[Page 4240\]\]

Other costs\...\...\...\...\...\...\...\...\...\...\... 1 to 5

Other factors:

> Cost risk\...\...\...\...\...\...\...\...\...\...\...\.... 0 to 7\
> Investment\...\...\...\...\...\...\...\...\...\...\... -2 to +2\
> Performance\...\...\...\...\...\...\...\...\..... -1 to +1\
> Socioeconomic programs\...\.... -.5 to +.5\
> Special situations\...\...\...\...\...\....
>
> \(i\) The Contracting Officer shall measure ''Contractor Effort'' by
> assigning a profit percentage within the designated weight range to
> each element of contract cost. The categories listed are for reference
> purposes only, but are broad and basic enough to provide guidance to
> other elements of cost. Facilities capital cost of money is not to be
> included. A total dollar profit shall be computed for ''Contractor
> Effort.''
>
> \(ii\) The Contracting Officer shall use the total dollar profit for
> the ''Contractor Effort'' to calculate specific profit dollars for
> ''Other Factors''---cost risk, investment, performance, socioeconomic
> programs, and special situations. The Contracting Officer shall
> multiply the total dollar profit for the ''Contractor Effort'' by the
> weight assigned to each of the elements in the ''Other Factors''
> category. Facilities capital cost of money is not included. Form
> HHS--674, Structured Approach Profit/Fee Objective, should be used.
> Form HHS--674 is illustrated in [353.370--674]{.underline}.
>
> \(iii\) In making a judgment of the value of each factor, the
> contracting officer should be governed by the definition, description,
> and purpose of the factors together with considerations for evaluating
> them.\
> (iv) The structured approach was designed for arriving at profit
> objectives for other than nonprofit organizations. However, the
> structured approach can be used for nonprofit organizations if
> appropriate adjustments are made. The Contracting Officer shall use
> the modified structured approach in paragraph (d)(1)(iv)(B) of this
> section to establish profit objectives for nonprofit organizations.
>
> \(A\) For purposes of this section, nonprofit organizations are
> defined as those business entities organized and operated exclusively
> for charitable, scientific, or educational purposes, no part of the
> net earnings of which inure to the benefit of any private shareholder
> or individual, and which are exempt from Federal income taxation under
> Section 501 of the Internal Revenue Code.
>
> \(B\) For contracts with nonprofit organizations where profit is
> involved, an adjustment of up to 3 percentage points will be
> subtracted from the total profit objective percentage. In developing
> this adjustment, it will be necessary to consider the following
> factors;

\(1\) Tax position benefits;

\(2\) Granting of financing through advance payments; and

\(3\) Other pertinent factors which may work to either the advantage or
disadvantage of the contractor in its position as a nonprofit
organization.

\(4\) Contractor effort. Contractor effort is a measure of how much the
contractor is expected to contribute to the overall effort necessary to
meet the contract performance requirement in an efficient manner. This
factor, which is apart from the contractor\'s responsibility for
contract performance, takes into account what resources are necessary
and what the contractor must do to accomplish a conversion of ideas and
material into the final service or product called for in the contract.
This is a recognition that within a given performance output, or within
a given sales dollar figure, necessary efforts on the part of individual
contractors can vary widely in both value and quantity, and that the
profit objective should reflect the extent and nature of the
contractor\'s contribution to total performance. A major consideration,
particularly in connection with experimental, developmental, or research
work, is the difficulty or complexity of the work to be performed, and
the unusual demands of the contract, such as whether the project
involves a new approach unrelated to existing technology and/or
equipment or only refinements to these items. The evaluation of this
factor requires an analysis of the cost content of the proposed contract
as follows:

> \(i\) Material acquisition. (Subcontracted items, purchased parts, and
> other material.) Analysis of these cost items shall include an
> evaluation of the managerial and technical effort necessary to obtain
> the required subcontracted items, purchased parts, material or
> services. The contracting officer shall determine whether the
> contractor will obtain the items or services by routine order from
> readily available sources or by detailed subcontracts for which the
> prime contractor will be required to develop complex specifications.
> Consideration shall also be given to the managerial and technical
> efforts necessary for the prime contractor to select subcontractors
> and to perform subcontract administration functions. In application of
> this criterion, it should be recognized that the contribution of the
> prime contractor to its purchasing program may be substantial.
> Normally, the lowest unadjusted weight for direct material is 2
> percent. A weighting of less than 2 percent would be appropriate only
> in unusual circumstances when there is a minimal contribution by the
> contractor.
>
> \(ii\) Direct labor. (Professional, service, manufacturing and other
> labor). Analysis of the various labor categories of the cost content
> of the contract should include evaluation of the comparative quality
> and quantity of professional and semiprofessional talents,
> manufacturing and service skills, and experience to be employed. In
> evaluating professional and semiprofessional labor for the purpose of
> assigning profit dollars, consideration should be given to the amount
> of notable scientific talent or unusual or scarce talent needed in
> contrast to nonprofessional effort. The assessment should consider the
> contribution this talent will provide toward the achievement of
> contract objectives. Since nonprofessional labor is relatively
> plentiful and rather easily obtained by the contractor and is less
> critical to the successful performance of contract objectives, it
> cannot be weighted nearly as high as professional or semiprofessional
> labor. Service contract labor should be evaluated in a like manner by
> assigning higher weights to engineering or professional type skills
> required for contract performance. Similarly, the variety of
> manufacturing and other categories of labor skills required and the
> contractor\'s manpower resources for meeting these requirements should
> be considered. For purposes of evaluation, categories of labor (i.e.,
> quality control, receiving and inspection, etc.) which do not fall
> within the definition for professional, service or manufacturing labor
> may be categorized as appropriate. However, the same evaluation
> considerations as outlined in this paragraph will be applied.

\(iii\) Overhead and general management (G&A).

> \(A\) Analysis of these overhead items of cost should include the
> evaluation of the makeup of these expenses and how much they
> contribute to contract performance. To the extent practicable,
> analysis should include a determination of the amount of labor within
> these overhead pools and how this labor should be treated if it were
> considered as direct labor under \[\[Page 4241\]\] the contract. The
> allocable labor elements should be given the same profit
> considerations that they would receive if they were treated as direct
> labor. The other elements of these overhead pools should be evaluated
> to determine whether they are routine expenses, such as utilities and
> maintenance, and hence given lesser profit consideration, or whether
> they are significant contributing elements. The composite of the
> individual determinations in relation to the elements of the overhead
> pools will be the profit consideration given the pools as a whole. The
> procedure for assigning relative values to these overhead expenses
> differs from the method used in assigning values of the direct labor.
> The upper and lower limits assignable to the direct labor are
> absolute. In the case of overhead expenses, individual expenses may be
> assigned values outside the range as long as the composite ratio is
> within the range.
>
> \(B\) It is not necessary that the contractor\'s accounting system
> break down overhead expenses within the classifications of research
> overhead, other overhead pools, and general administrative expenses,
> unless dictated otherwise by Cost Accounting Standards (CAS). The
> contractor whose accounting system reflects only one overhead rate on
> all direct labor need not change its system (if CAS exempt) to
> correspond with these classifications. The contracting officer, in an
> evaluation of such a contractor\'s overhead rate, could break out the
> applicable sections of the composite rate which could be classified as
> research overhead, other overhead pools, and general and
> administrative expenses, and follow the appropriate evaluation
> technique.
>
> \(C\) Management problems surface in various degrees and the
> management expertise exercised to solve them should be considered as
> an element of profit. For example, a contract for a new program for
> research or an item which is on the cutting edge of the state of the
> art will cause more problems and require more managerial time and
> abilities of a higher order than a follow-on contract. If new
> contracts create more problems and require a higher profit weight,
> follow-ons should be adjusted downward because many of the problems
> should have been solved. In any event, an evaluation should be made of
> the underlying managerial effort involved on a case-by-case basis.
>
> \(D\) It may not be necessary for the contracting officer to make a
> separate profit evaluation of overhead expenses in connection with
> each acquisition action for substantially the same project with the
> same contractor. Where an analysis of the profit weight to be assigned
> to the overhead pool has been made, that weight assigned may be used
> for future acquisitions with the same contractor until there is a
> change in the cost composition of the overhead pool or the contract
> circumstances, or the factors discussed in paragraph (d)(2)(iii)(C) of
> this section are involved.
>
> \(iv\) Other costs. Analysis of this factor should include all other
> direct costs associated with contractor performance (e.g., travel and
> relocation, direct support, and consultants). Analysis of these items
> of cost should include, the significance of the cost of contract
> performance, nature of the cost, and how much they contribute to
> contract performance. Normally, travel costs require minimal
> administrative effort by the contractor and, therefore, usually
> receive a weight no greater than 1%. Also, the contractor may
> designate individuals as \"consultants\" but in reality these
> individuals may be obtained by the contractor to supplement its
> workforce in the performance of routine duties required by contract.
> These costs would normally receive a minimum weight. However, there
> will be instances when the contractor may be required to locate and
> obtain the services of consultants having expertise in fields such as
> medicine or human services. In these instances, the contractor will be
> required to expend greater managerial and technical effort to obtain
> these services and, consequently, the costs should receive a much
> greater weight.

\(3\) Other factors:

> \(i\) Contract cost risk. The contract type employed basically
> determines the degree of cost risk assumed by the contractor. For
> example, where a portion of the risk has been shifted to the
> Government through cost-reimbursement provisions, unusual contingency
> provisions, or other risk-reducing measures, the amount of profit
> should be less than where the contractor assumes all the risk.
>
> \(A\) In developing the prenegotiation profit objective, the
> contracting officer will need to consider the type of contract
> anticipated to be negotiated and the contractor risk associated
> therewith when selecting the position in the weight range for profit
> that is appropriate for the risk to be borne by the contractor. This
> factor should be one of the most important in arriving at
> prenegotiation profit objective. Evaluation of this risk requires a
> determination of the degree of cost responsibility the contractor
> assumes; the reliability of the cost estimates in relation to the task
> assumed; and the complexity of the task assumed by the contractor.
> This factor is specifically limited to the risk of contract costs.
> Thus, risks on the part of the contractor such as reputation, losing a
> commercial market, risk of losing potential profits in other fields,
> or any risk which falls on the contracting office, such as the risk of
> not acquiring a satisfactory report, are not within the scope of this
> factor.
>
> \(B\) The first and basic determination of the degree of cost
> responsibility assumed by the contractor is related to the sharing of
> total risk of contract cost by the Government and the contractor
> through the selection of contract type. The extremes are a
> cost-plus-a-fixed-fee contract requiring the contractor to use its
> best efforts to perform a task and a firm fixed-price contract for a
> service or a complex item. A cost-plus-a-fixed-fee contract would
> reflect a minimum assumption of cost responsibility, whereas a
> firm-fixed-price contract would reflect a complete assumption of cost
> responsibility. Where proper contract selection has been made, the
> regard for risk by contract type would usually fall into the following
> percentage ranges:
>
> Percent

Cost-reimbursement type contracts\...\...\...\...\....0-3\
Fixed-price type contracts\...\...\...\...\...\...\...\...\...\....2-7

> \(C\) The second determination is that of the reliability of the cost
> estimates. Sound price negotiation requires well-defined contract
> objectives and reliable cost estimates. Prior experience assists the
> contractor in preparing reliable cost estimates on new acquisitions
> for similar related efforts. An excessive cost estimate reduces the
> possibility that the cost of performance will exceed the contract
> price, thereby reducing the contractor\'s assumption of contract cost
> risk.
>
> \(D\) The third determination is that of the difficulty of the
> contractor\'s task. The contractor\'s task can be difficult or easy,
> regardless of the type of contract.
>
> \(E\) Contractors are likely to assume greater cost risk only if
> contracting officers objectively analyze the risk incident to proposed
> contracts and are willing to compensate contractors for it. Generally,
> a cost-plus-fixed fee contract will not justify a reward for risk in
> excess of 0.5 percent, nor will a firm fixed-price contract justify a
> reward of less than the minimum in the structured approach. Where
> proper contract-type selection has been made, the reward for risk, by
> contract type, will usually fall into the following percentage ranges:

\(1\) Type of contract and percentage ranges for profit objectives
developed by using the structured approach for \[\[Page 4242\]\]
research and development and manufacturing contracts:

> Percent
>
> Cost-Plus-fixed fee\...\...\...\...\...\...\...\...\...\.... 0 to 0.5\
> Cost-plus-incentive fee: With cost incentive
> only\...\...\...\...\...\...\....1 to 2
>
> With multiple incentives\...\...\...\...\...\...\.... 1.5 to 3
>
> Fixed-price-incentive: With cost incentive
> only\...\...\...\...\...\...\..... 2 to 4
>
> With multiple incentives\...\...\...\...\...\...\.... 3 to 5
>
> Prospective price redetermination\.... 3 to 5
>
> Firm fixed-price\...\...\...\...\...\...\...\...\...\...\..... 5 to 7

\(2\) Type of contract and percentage ranges for profit objectives
developed by using the structured approach for service contracts:

> Percent

Cost-plus-fixed-fee\...\...\...\...\...\...\... 0 to 0.5\
Cost-plus-incentive fee\...\...\...\..... 1 to 2\
Fixed-price incentive\...\...\...\...\...\... 2 to 3\
Firm fixed-price\...\...\...\...\...\...\...\...\... 3 to 4

> \(F\) These ranges may not be appropriate for all acquisitions. For
> instance, a fixed-price ­incentive contract that is closely priced with
> a low ceiling price and high incentive share may be tantamount to a
> firm fixed-price contract. In this situation, the contracting officer
> may determine that a basis exists for high confidence in the
> reasonableness of the estimate and that little opportunity exists for
> cost reduction without extraordinary efforts. On the other hand, a
> contract with a high ceiling and low incentive formula can be
> considered to contain cost-plus incentive-fee contract features. In
> this situation, the contracting officer may determine that the
> Government is retaining much of the contract cost responsibility and
> that the risk assumed by the contractor is minimal. Similarly, if a
> cost-plus­ incentive-fee contract includes an unlimited downward
> (negative) fee adjustment on cost control, it could be comparable to a
> fixed-price-incentive contract. In such a pricing environment, the
> contracting officer may determine that the Government has transferred
> a greater amount of cost responsibility to the contractor than is
> typical under a normal cost-plus-incentive-fee contract.
>
> \(G\) The contractor\'s subcontracting program may have a significant
> impact on the contractor\'s acceptance or risk under a contract form.
> It could cause risk to increase or decrease in terms of both cost and
> performance. This consideration should be a part of the contracting
> officer\'s overall evaluation in selecting a factor to apply for cost
> risk. It may be determined, for instance, that the prime contractor
> has effectively transferred real cost risk to a subcontractor and the
> contract cost risk evaluation may, as a result, be below the range
> which would otherwise apply for the contract type being proposed. The
> contract cost risk evaluation should not be lowered, however, merely
> on the basis that a substantial portion of the contract costs
> represents subcontracts without any substantial transfer of
> contractor\'s risk.
>
> \(H\) In making a contract cost risk evaluation in an acquisition
> action that involves definitization of a letter contract, unpriced
> change orders, and unpriced orders under basic ordering agreements,
> consideration should be given to the effect on total contract cost
> risk as a result of having partial performance before definitization.
> Under some circumstances it may be reasoned that the total amount of
> cost risk has been effectively reduced. Under other circumstances it
> may be apparent that the contractor\'s cost risk remained
> substantially unchanged. To be equitable, the determination of profit
> weight for application to the total of all recognized costs, both
> those incurred and those yet to be expended must be made with
> consideration to all attendant circumstances\--not just the portion of
> costs incurred or percentage of work completed prior to
> definitization.
>
> \(I\) Time and material and labor hour contracts will be considered to
> be cost-plus-a-fixed-fee contracts for the purpose of establishing
> profit weights unless otherwise exempt under paragraph (b)(1)(ii) of
> this section in the evaluation of the contractor\'s assumption of
> contract cost risk.
>
> \(ii\) Investment. HHS encourages its contractors to perform their
> contracts with the minimum of financial, facilities, or other
> assistance from the Government. As such, it is the purpose of this
> factor to encourage the contractor to acquire and use its own
> resources to the maximum extent possible. The evaluation of this
> factor should include an analysis of the following:
>
> \(A\) Facilities. (Including equipment). To evaluate how this factor
> contributes to the profit objective requires knowledge of the level of
> facilities utilization needed for contract performance, the source and
> financing of the required facilities, and the overall cost
> effectiveness of the facilities offered. Contractors who furnish their
> own facilities which significantly contribute to lower total contract
> costs should be provided with additional profit. On the other hand,
> contractors who rely on the Government to provide or finance needed
> facilities should receive a corresponding reduction in profit. Cases
> between these examples should be evaluated on their merits with either
> positive or negative adjustments, as appropriate, in profit being
> made. However, where a highly facilitized contractor is to perform a
> contract which does not benefit from this facilitization or where a
> contractor\'s use of its facilities has a minimum cost impact on the
> contract, profit need not be adjusted. When applicable, the
> prospective contractor\'s computation of facilities capital cost of
> money for pricing purposed under CAS 414 can help the contracting
> officer identify the level of facilities investment to be employed in
> contract performance. (B) Payments. In analyzing this factor,
> consideration should be given to the frequency of payments by the
> Government to the contractor. The key to this weighting is to give
> proper consideration to the impact the contract will have on the
> contractor\'s cash flow. Generally, negative consideration should be
> given for advance payments and payments more frequent than monthly
> with maximum reduction being given as the contractor\'s working
> capital approaches zero. Positive consideration should be given for
> payments less frequent than monthly with additional consideration
> given for a capital turn-over rate on the contract which is less than
> the contractor\'s or the industry\'s normal capital turn-over rate.
>
> \(iii\) Performance. (Cost-control and other past accomplishments.)
> The contractor\'s past performance should be evaluated in such areas
> as quality of service or product, meeting performance schedules,
> efficiency in cost control (including need for and reasonableness of
> cost incurred), accuracy and reliability of previous cost estimates,
> degree of cooperation by the contractor (both business and technical),
> timely processing of changes and compliance with other contractual
> provisions, and management of subcontract programs. Where a contractor
> has consistently achieved excellent results in these areas in
> comparison with other contractors in similar circumstances, this
> performance merits a proportionately greater opportunity for profit.
> Conversely, a poor record in this regard should be reflected in
> determining what constitutes a fair and reasonable profit.
>
> \(iv\) Federal socioeconomic programs*.* This factor, which may apply
> to special circumstances or particular acquisitions, relates to the
> extent of a contractor's successful participation in Government
> sponsored programs such as small business, small disadvantaged
> business, women-owned small business, service disabled veterans,
> handicapped sheltered workshops, and energy conservation efforts. The
> contractor's policies and procedures which energetically support
> Government socioeconomic programs and achieve successful results
> should be given positive considerations. Conversely, failure or
> unwillingness on the part of the contractor to support Government
> socioeconomic programs should be viewed as evidence of poor
> performance for the purpose of establishing a profit objective.

\(v\) Special situations

> \(A\) Inventive and developmental contributions. The extent and nature
> of contractor-initiated and financed independent development should be
> considered in developing the profit objective, provided that the
> contracting officer has made a determination that the effort will
> benefit the contract. The importance of the development in furthering
> health and human services purposes, the demonstrable initiative in
> determining the need and application of the development, the extent of
> the contractor\'s cost risk, and whether the development cost was
> recovered directly or indirectly from Government sources should be
> weighed. (B) Unusual pricing agreements. Occasionally, unusual
> contract pricing arrangements are made with the contractor wherein it
> agrees to cost ceilings, e.g., a ceiling on overhead rates for
> conditions other than those discussed at [[FAR
> 42.707]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 42_7.html#wp1084577).
> In these circumstances, the contractor should receive favorable
> consideration in developing the profit objective. (C) Negative
> factors. Special situations need not be limited to those which only
> increase profit levels. A negative consideration may be appropriate
> when the contractor is expected to obtain spin-off-benefits as a
> direct result of the contract (e.g., products or services with
> commercial application).

\(4\) Facilities capital cost of money. When facilities capital cost of
money (cost of capital committed to facilities) is included as an item
of cost in the contractor\'s proposal, a reduction in the profit
objective shall be made in an amount equal to the amount of facilities
capital cost of money allowed in accordance with the Facilities Capital
Cost-of Money Cost Principal. If the contractor does not propose this
cost, a provision must be inserted in the contract that facilities
capital cost of money is not an allowable cost.

### Subpart 315.6\--Unsolicited Proposals 

#### Section 315.605 Content of unsolicited proposals. 

\(d\) Certification by offeror\--To ensure against contacts between
Department employees and prospective offerors which would exceed the
limits of advance guidance set forth in [[FAR
15.604]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 15_6.html#wp1104869)
resulting in an unfair advantage to an offeror, the contracting officer
shall ensure that the following certification is furnished to the
prospective offeror and the executed certification is included as part
of the resultant unsolicited proposal:

> Unsolicited Proposal
>
> Certification by Offeror
>
> This is to certify, to the best of my knowledge and belief, that:
>
> \(a\) This proposal has not been prepared under Government
> supervision.
>
> \(b\) The methods and approaches stated in the proposal were developed
> by this offeror.
>
> \(c\) Any contact with employees of the Department of Health and Human
> Services has been within the limits of appropriate advance guidance
> set forth in [[FAR
> 15.604]{.underline}](http://www.arnet.gov/far/current/html/Subpart_15_6.html#1046478).
>
> \(d\) No prior commitments were received from departmental employees
> regarding acceptance of this proposal.
>
> Date:\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\--
>
> Organization:\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\--
>
> Name:\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\--
>
> Title:\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\-\--

(This certification shall be signed by a responsible official of the
proposing organization or a person authorized to contractually obligate
the organization.)

#### Section 315.606 Agency procedures. 

\(a\) The HCA is responsible for establishing procedures to comply with
[[FAR
15.606(a)]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 15_6.html#wp1104869).

\(b\) The HCA or the HCA's designee shall be the point of contact for
coordinating the receipt and handling of unsolicited proposals.

##### 315.606-1 Receipt and initial review. 

\(d\) An unsolicited proposal shall not be refused consideration merely
because it was initially submitted as a grant application. However,
contracts shall not be awarded on the basis of unsolicited proposals
which have been rejected for grant support on the grounds that they lack
scientific merit.

#### Section 315.609 Limited use of data. 

The legend, Use and Disclosure of Data, prescribed in FAR 15.609(a) is
to be used by the offeror to restrict the use of data for evaluation
purposes only. However, data contained within the unsolicited proposal
may have to be disclosed as a result of a request submitted pursuant to
the Freedom of Information Act. Because of this possibility, the
following notice shall be provided to all prospective offerors of
unsolicited proposals:

> The Government will attempt to comply with the \"Use and Disclosure of
> Data\" legend. However, the Government may not be able to withhold a
> record (data, document, etc.) nor deny access to a record requested by
> an individual (the public) when an obligation is imposed on the
> Government under the Freedom of Information Act, [[5 U.S.C.
> 552]{.underline}](http://www4.law.cornell.edu/uscode/5/552.html), as
> amended. The Government determination to withhold or disclose a record
> will be based upon the particular circumstances involving the record
> in question and whether the record may be exempted from disclosure
> under the Freedom of Information Act. Records which the offeror
> considers to be trade secrets and commercial or financial information
> and privileged or confidential must be identified by the offeror as
> indicated in the referenced legend.

## PART 316\--TYPES OF CONTRACTS 

### Subpart 316.3\--Cost-Reimbursement Contracts 

#### Section 316.307 Contract clauses. 

\(a\) If the contract is with a hospital (profit or nonprofit) for
research and development, modify the \"Allowable Cost and Payment\"
clause at [[FAR
52.216-7]{.underline}](http://www.acquisition.gov/comp/far/current/html/52_216.html#wp1114751)
by deleting from paragraph (a) the words \"Subpart 31.2 of the Federal
Acquisition Regulation (FAR)\" and substituting \"[[45 CFR Part
74]{.underline} [Appendix
E]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_02/45cfr74_02.html).\"

\(j\) The contracting officer shall insert the clause at
[352.216-72]{.underline}, Additional Cost Principles, in all
solicitations and resultant cost-reimbursement contracts.

#### Section 316.505 Ordering. 

(b)(5) The Department's task-order and delivery-order ombudsman is the
Director, Strategic Acquisition Service, Program Support Center (PSC).
The task-order and delivery-order ombudsmen for each of the Department's
contracting activities are as follows:

AHRQ---Director, Office of Performance Accountability, Resources and
Technology\
CDC---Chief Information Officer\
CMS---Chief Operating Officer\
FDA---Director, Office of Acquisitions and Grants Services\
HRSA---Associate Administrator, Office of Administration and Financial
Management\
Indian Health Service---Director, Office of Management Services\
NIH---Senior Scientific Advisor for Extramural Research, Office of
Extramural Research (R&D) and Senior Advisor to the Director (Other than
R&D) PSC---Director, Strategic Acquisition Service SAMHSA---Executive
Officer

### Subpart 316.6\--Time-and-Materials, Labor-Hour, and Letter Contracts 

#### Section 316.603 Letter contracts. 

##### 316.603-3 Limitations. 

An official one level above the Contracting Officer shall make the
written determination.

##### 316.603-70 Information to be furnished when requesting authority to issue a letter contract. 

The following information should be included by the contracting officer
in any memorandum requesting approval to issue a letter contract:

\(a\) Name and address of proposed contractor.

\(b\) Location where contract is to be performed.

\(c\) Contract number, including modification number, if possible.

\(d\) Brief description of work and services to be performed.

\(e\) Performance or delivery schedule.

\(f\) Amount of letter contract.

\(g\) Estimated total amount of definitized contract.

\(h\) Type of definitive contract to be executed (fixed price,
cost-reimbursement, etc.)

\(i\) Statement of the necessity and advantage to the Government of the
use of the proposed letter contract.

\(j\) Statement of percentage of the estimated cost that the obligation
of funds represents. In rare instances where the obligation represents
50 percent or more of the proposed estimated cost of the acquisition, a
justification for that obligation must be included which would indicate
the basis and necessity for the obligation (e.g., the contractor
requires a large initial outlay of funds for major subcontract awards or
an extensive purchase of materials to meet an urgent delivery
requirement). In every case, documentation must assure that the amount
to be obligated is not in excess of an amount reasonably required to
perform the work.

\(k\) Period of effectiveness of a proposed letter contract. If more
than 180 days, complete justification must be given.\
(l) Statement of any substantive matters that need to be resolved.

##### 316.603-71 Approval for modifications to letter contracts. 

All letter contract modifications (amendments) must be approved one
level above the contracting officer. Request for authority to issue
letter contract modifications shall be processed in the same manner as
requests for authority to issue letter contracts and shall include the
following:\
(a) Name and address of the contractor.

\(b\) Description of work and services.

\(c\) Date original request was approved and indicate approving
official.

\(d\) Letter contract number and date issued.

\(e\) Complete justification as to why the letter contract cannot be
definitized at this time.

\(f\) Complete justification as to why the level of funding must be
increased.

\(g\) Complete justification as to why the period of effectiveness is
increased beyond 180 days, if applicable.\
(h) If the funding of the letter contract is to be increased to more
than 50 percent of the estimated cost of the acquisition, the
information required by [316.603-70(j)]{.underline} must be included.

### Subpart 316.7\--Agreements 

#### Section 316.770 Unauthorized types of agreements. 

##### 316.770-2 Memorandums of understanding. 

A \"memorandum of understanding\" is an unauthorized agreement, usually
drafted during the course of negotiations, to modify mandatory
[[FAR]{.underline}](http://aolsearch.aol.com/aol/search?query=HHS+General+Administration+Manual)
and HHSAR provisions in such a manner as to make them more acceptable to
a prospective contractor. It may be used to bind the contracting officer
in attempting to exercise rights given the Government under the
contract, or may contain other matters directly contrary to the language
of the solicitation or prospective contractual document. Use of

memorandums of understanding is not authorized. Any change in a
solicitation or contract shall be made by amendment or modification to
that document. When a change to a prescribed contract clause is
considered necessary, a deviation shall be requested.

## PART 317\--SPECIAL CONTRACTING METHODS 

### Subpart 317.2\--Options 

#### Section 317.201 Definitions. 

An option must:

\(a\) Identify the supplies or services as a discrete option quantity in
addition to the basic quantity of supplies or services to be delivered
under the initial contract award;\
(b) Establish a price or specify a method of calculation which will make
the price certain;

\(c\) Be agreed to and included in the initial contract award; and

\(d\) Permit the Government the right to exercise the option
unilaterally.

#### Section 317.204 Contracts 

\(e\) The total of the basic and option periods shall not exceed 10
years in the case of services and the total of the basic and option
quantities shall not exceed the requirement for 5 years in the case of
supplies. These limitations do not apply to information technology
contracts. However, statutes applicable to various classes of contracts
may place additional restrictions on the length of contracts.

### Subpart 317.71\--Supply and Service Acquisitions Under the Government Employees Training Act

#### 317.7100 Scope of subpart. 

This subpart provides alternate methods for obtaining training under the
Government Employees Training Act (GETA), [[5 U.S.C. Chapter
41]{.underline}](http://www4.law.cornell.edu/uscode/html/uscode05/usc_sup_01_5_10_III_20_C_30_41.html).

#### Section 317.7101 Applicable regulations. 

Basic policy, standards, and delegations of authority to approve
training are contained in HHS Personnel Manual Instruction 410-1.

#### Section 317.7102 Acquisition of training. 

\(a\) Off-the-shelf training, whether for individuals or for groups of
employees, shall be acquired under the GETA by officials delegated
authority in HHS Transmittal 95.5, Personnel Manual (3/30/95).

\(b\) Training must be acquired through the contracting office if there
are costs for training course development or for modification of
off-the-shelf training courses.

# SUBCHAPTER D---SOCIOECONOMIC PROGRAMS

[PART 319\--SMALL BUSINESS PROGRAMS
73](#part-319--small-business-programs)

[Subpart 319.2\--Policies 73](#subpart-319.2--policies)

[Section 319.201 General policy. 73](#section-319.201-general-policy.)

[Subpart 319.5\--Set-Asides for Small Business
73](#subpart-319.5--set-asides-for-small-business)

[Section 319.501 General. 73](#section-319.501-general.)

[Section 319.506 Withdrawing or modifying set-asides.
74](#section-319.506-withdrawing-or-modifying-set-asides.)

[Subpart 319.7\--Subcontracting with Small Business, Small Disadvantaged
Business and Women-Owned Small Business Concerns
74](#subpart-319.7--subcontracting-with-small-business-small-disadvantaged-business-and-women-owned-small-business-concerns)

[Section 319.705 Responsibilities of the contracting officer under the
subcontracting assistance program.
74](#section-319.705-responsibilities-of-the-contracting-officer-under-the-subcontracting-assistance-program.)

[319.705-5 Awards involving subcontracting plans.
74](#awards-involving-subcontracting-plans.)

[PART 323---ENVIRONMENT, ENERGY AND WATER EFFICIENCY, RENEWABLE ENERGY
TECHNOLOGIES, OCCUPATIONAL SAFETY, AND DRUG-FREE WORKPLACE
74](#part-323environment-energy-and-water-efficiency-renewable-energy-technologies-occupational-safety-and-drug-free-workplace)

[Subpart 323.70\--Safety and Health
74](#subpart-323.70--safety-and-health)

[Section 323.7000 Scope of subpart.
74](#section-323.7000-scope-of-subpart.)

[Section 323.7001 Policy. 74](#section-323.7001-policy.)

[Section 323.7002 Actions required.
74](#section-323.7002-actions-required.)

[PART 324\--PROTECTION OF PRIVACY AND FREEDOM OF INFORMATION
75](#part-324--protection-of-privacy-and-freedom-of-information)

[Subpart 324.1\--Protection of Individual Privacy
75](#subpart-324.1--protection-of-individual-privacy)

[Section 324.000 Scope of subpart.
75](#section-324.000-scope-of-subpart.)

[Section 324.102 General. 75](#section-324.102-general.)

[Section 324.103 Procedures. 76](#section-324.103-procedures.)

[Subpart 324.2\--Freedom of Information Act
77](#subpart-324.2--freedom-of-information-act)

[Section 324.203 Policy. 77](#section-324.203-policy.)

[Subpart 324.70\--Confidentiality of Information
77](#subpart-324.70--confidentiality-of-information)

[Section 324.7001 General. 77](#section-324.7001-general.)

[Section 324.7002 Policy. 77](#section-324.7002-policy.)

[Section 324.7003 Applicability. 78](#section-324.7003-applicability.)

[Section 324.7004 Required clause.
78](#section-324.7004-required-clause.)

## PART 319\--SMALL BUSINESS PROGRAMS 

### Subpart 319.2\--Policies 

#### Section 319.201 General policy. 

\(d\) The functional management responsibilities for the Department\'s
Small Business Program, (small, HUBZone, small disadvantaged, and
women-owned small business programs) are delegated to the Director of
the Office of Small and Disadvantaged Business Utilization (OSDBU).

\(e\) (1) The Department's Small Business Program shall be carried out
by appointed small business specialists (SBS) co-located within the
OPDIVs. Appointments, and termination of appointments, shall be made in
writing by the Director, Office of Small and Disadvantaged Business
Utilization (OSDBU). The Director, OSDBU, will exercise full management
authority over small business specialists.

\(2\) One or more qualified SBS shall be appointed in the following
activities: Agency for Healthcare Research and Quality (AHRQ), Centers
for Medicare & Medicaid Services (CMS), Substance Abuse and Mental
Health Services Administration (SAMHSA), Food and Drug Administration
(FDA), Health Resources and Services Administration (HRSA), Indian
Health Service (IHS), National Institutes of Health (NIH), Centers for
Disease Control (CDC), Program Support Center (PSC), and the Office of
the Secretary (OS).

### Subpart 319.5\--Set-Asides for Small Business 

#### Section 319.501 General. 

\(e\) Subsequent to the Contracting Officer's recommendation on [[Form
HHS
653]{.underline}](http://www.knownet.hhs.gov/smallbus/_private/hhs-653.pdf),
Small Business Set-Aside Review Form, the SBS shall review each proposed
acquisition strategy and either concur or non-concur with the
Contracting Officer's recommendation. The Small Business
Administration's Procurement Center Representative (SBA/PCR) shall also
review the acquisition strategy and either concur or non-concur with the
Contracting Officer's recommendation. If the Contracting Officer
disapproves the SBS's and/or the SBA PCR's set-aside recommendation, the
reasons must be documented on the [[Form HHS
653]{.underline}](http://www.knownet.hhs.gov/smallbus/_private/hhs-653.pdf),
and the form placed in the contract file. The Contracting Officer will
make the final determination as to whether the proposed acquisition will
be set-aside or not.

#### Section 319.506 Withdrawing or modifying set-asides. 

\(d\) Immediately upon notice from the contracting officer, the SBS
shall provide telephone notification regarding all set-aside withdrawals
to the OSDBU Director.

### Subpart 319.7\--Subcontracting with Small Business, Small Disadvantaged Business and Women-Owned Small Business Concerns

#### Section 319.705 Responsibilities of the contracting officer under the subcontracting assistance program. 

##### 319.705-5 Awards involving subcontracting plans. 

\(a\) (3) The SBA PCR shall be allowed a period of one to five working
days to review the contract award package, depending upon the
circumstances and complexity of the individual acquisition.

## PART 323---ENVIRONMENT, ENERGY AND WATER EFFICIENCY, RENEWABLE ENERGY TECHNOLOGIES, OCCUPATIONAL SAFETY, AND DRUG-FREE WORKPLACE

### Subpart 323.70\--Safety and Health 

#### Section 323.7000 Scope of subpart. 

This subpart prescribes the use of a safety and health clause in
contracts involving hazardous materials or operations, and provides
procedures for administering safety and health provisions.

#### Section 323.7001 Policy. 

Various statutes and regulations (e.g. Walsh-Healy Act; [[Service
Contract
Act]{.underline}](http://www.acquisition.gov/far/current/html/Subpart 22_10.html))
require adherence to minimum safety and health standards by contractors
engaged in potentially hazardous work. The guidance contained in [[FAR
subpart
23.3]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 23_3.html#wp1092304)
shall be used for hazardous materials as the primary reference. When the
guidance is judged insufficient or does not meet the safety and health
situation in the instant acquisition, this subpart shall be followed.

#### Section 323.7002 Actions required. 

\(a\) Contracting activities. Contracting activities shall use the
clause set forth in [352.223-70]{.underline}, or a clause reading
substantially the same, in prospective contracts and subcontracts
involving hazardous materials or operations for the following:

\(1\) Services or products;

\(2\) Research, development, or test projects;

\(3\) Transportation of hazardous materials; and

\(4\) Construction, including construction of facilities on the
contractor\'s premises.

\(b\) Safety officers. OPDIV safety officers shall advise and assist
initiators of acquisition requests and\
contracting officers in:\
(1) Determining whether safety and health provisions should be included
in a prospective contract;

\(2\) Evaluating a prospective contractor\'s safety and health programs;
and

\(3\) Conducting post-award reviews and surveillance to the extent
deemed necessary.

\(c\) Initiators. Initiators of acquisition requests for items described
in paragraph (a) of this section shall:

\(1\) During the preparation of a request for contract, and in the
solicitation, ensure that hazardous materials and operations to be used
in the performance of the contract are clearly identified; and

\(2\) During the period of performance:

> \(ii\) Cooperate with the safety officer in conducting review and
> surveillance activities.

## PART 324\--PROTECTION OF PRIVACY AND FREEDOM OF INFORMATION 

### Subpart 324.1\--Protection of Individual Privacy 

#### Section 324.000 Scope of subpart. 

This part prescribes policies and procedures that apply requirements of
the Privacy Act of 1974 ([[5
U.S.]{.underline}](http://www.law.cornell.edu/uscode/5/usc_sec_05_00000552---a000-.html)
[C.]{.underline}
[[552a]{.underline}](http://www.law.cornell.edu/uscode/5/usc_sec_05_00000552---a000-.html))
(the Act) and [[OMB Circular A--130, Revised, November 30,
2000]{.underline}](http://www.whitehouse.gov/omb/circulars/a130/a130trans4.html),
to Government contracts and cites the Freedom of Information Act ([[5
U.S.C.
552]{.underline}](http://www.law.cornell.edu/uscode/5/usc_sec_05_00000552----000-.html),
as amended).

#### Section 324.102 General. 

\(a\) It is the Department\'s policy to protect the privacy of
individuals to the maximum possible extent while permitting the exchange
of records required to fulfill the Department\'s administrative and
program responsibilities and its responsibilities for disclosing records
to which the general public is entitled under the Freedom of Information
Act ([[5 U.S.C.
552]{.underline}](http://www4.law.cornell.edu/uscode/5/552.html)). The
Privacy Act of 1974 and the Department\'s implementation under [[45 CFR
Part
5b]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_02/45cfr5b_02.html)
apply \"when an agency provides by a contract for the operation by or on
behalf of the agency of a system of records to accomplish any agency
function\* \* \*\" The key factor is whether a departmental function is
involved. Therefore, the Privacy Act requirements apply to a
departmental contract when, under the contract, the contractor must
maintain or operate a system of records to accomplish a departmental
function.

\(e\) The program official, and, as necessary, the official designated
as the activity\'s Privacy Act Coordinator and the Office of General
Counsel, shall determine the applicability of the Act to each proposed
acquisition. The program official is required to include a statement in
the request for contract indicating whether the Privacy Act is or is not
applicable to the proposed acquisition.

\(f\) Whenever the contracting officer is informed that the Privacy Act
is not applicable, but the resultant contract will involve the
collection of individually identifiable personal data by the contractor,
the contracting officer shall include provisions to protect the
confidentiality of the records and the privacy of individuals identified
in the records (see subpart [324.70]{.underline}).

#### Section 324.103 Procedures. 

\(a\) All requests for contract shall be reviewed by the contracting
officer to determine whether the Privacy Act requirements are
applicable. The Privacy Act requirements are applicable when the
contract will require the contractor to design, develop, or operate any
Privacy Act system of records on individuals to accomplish an agency
function. When applicable, the contracting officer shall include the
solicitation notification and contract clause required by [[FAR
24.104]{.underline}](http://www.acquisition.gov/far/current/html/Subpart 24_1.html#wp1074210)
in the solicitation, and the contract clause in the resultant contract.
In addition, the contracting officer shall ensure that the solicitation
notification, contract clause, and other pertinent information specified
in this subpart are included in any contract modification which results
in the Privacy Act requirements becoming applicable to a contract.

\(b\) (1) The Contracting Officer shall identify in the contract work
statement the system(s) of records to which the Privacy Act and the
implementing regulations are applicable.

\(2\) The Contracting Officer shall include the clause specified in
[[352.270--11]{.underline}](http://www.knownet.hhs.gov/acquisition/hhsar/%23352.270–11_Privacy_Act)
in Section H of any RFP or resulting contract to notify the contractor
that it and its employees are subject to criminal penalties for
violations of the Act ([[5 U.S.C.
552a(i)]{.underline}](http://www4.law.cornell.edu/uscode/5/552.html)) to
the same extent as HHS employees. The clause also requires that the
contractor ensure that each of its employees knows the prescribed rules
of conduct and each contractor employee is aware that he/she is subject
to criminal penalties for violations of the Act. These provisions also
apply to all subcontracts awarded under the contract which require the
design, development or operation of a system of records. The Contracting
Officer shall send the contractor a copy of [[45 CFR Part
5b]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_02/45cfr5b_02.html),
which includes the rules of conduct and other Privacy Act requirements.

\(c\) The Contracting Officer shall specify in the contract work
statement and award the disposition to be made of the system(s) of
records upon completion of contract performance. The contract work
statement may require the contractor to destroy the records, remove
personal identifiers, or turn the records over to the Contracting
Officer. If there is a legitimate need for a contractor to keep copies
of the records after completion of a contract, the contractor must take
measures, as approved by the Contracting Officer, to keep the records
confidential and protect the individuals' privacy.

\(d\) Whenever an acquisition is determined to be subject to the Privacy
Act requirements, a \"system notice,\" prepared by the program official
and describing the Department\'s intent to establish a new system of
records on individuals, to make modifications to an existing system, or
to disclose information in regard to an existing system, is required to
be published in the Federal Register. A copy of the \"system notice\"
shall be attached to the request for contract or purchase request. If a
\"system notice\" is not attached, the contracting officer shall inquire
about its status and shall obtain a copy from the program official for
inclusion in the contract file. If a \"system notice\" has not been
published in the Federal Register, the contracting officer may proceed
with the acquisition but shall not award the contract until the \"system
notice\" is published, and publication is verified by the contracting
officer.

### Subpart 324.2\--Freedom of Information Act 

#### Section 324.203 Policy. 

\(a\) The Department\'s regulation implementing the Freedom of
Information Act (FOIA), [[5 U.S.C.
552]{.underline}](http://www4.law.cornell.edu/uscode/5/552.html), as
amended, is set forth in [[45 CFR Part
5]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_02/45cfr5_02.html).

\(b\) The Contracting Officer, upon receiving a Freedom of Information
Act (FOIA) request, shall follow Department and OPDIV procedures. As
necessary, actions should be coordinated with the cognizant Freedom of
Information (FOI) Officer and the General Law Division of the Office of
General Counsel. The Contracting Officer must remember that only the FOI
Officer has the authority to release or deny release of records. While
the Contracting Officer should be familiar with the entire FOIA
regulation in [[45 CFR Part
5]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_02/45cfr5_02.html),
particular attention should be focused on §§
[[5.65]{.underline}](http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/cfr_2002/octqtr/45cfr5.65.htm)
and
[[5.66]{.underline}](http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/cfr_2002/octqtr/45cfr5.66.htm);
also of interest are §§
[[5.32]{.underline}](http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/cfr_2002/octqtr/45cfr5.32.htm),
[[5.33]{.underline}](http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/cfr_2002/octqtr/45cfr5.33.htm),
and
[[5.35]{.underline}](http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/cfr_2002/octqtr/45cfr5.35.htm)

### Subpart 324.70\--Confidentiality of Information 

#### Section 324.7001 General. 

In performance of certain HHS contracts, it is necessary for the
contractor to generate data, or be furnished data by the Government,
which is about individuals, organizations, or Federal programs. This
subpart and the accompanying contract clause require contractors to
prudently handle disclosure of certain types of information not subject
to the Privacy Act or the HHS human subject regulations set forth in
[[45 CFR part
46]{.underline}](http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/cfr_2002/octqtr/45cfr5.35.htm).
This subpart and contract clause address the kinds of data to be
generated by the contractor and/or data to be furnished by the
Government that are considered confidential and how it should be
treated.

#### Section 324.7002 Policy. 

It is the policy of HHS to protect personal interests of individuals,
corporate interests of non­governmental organizations, and the capacity
of the Government to provide public services when information from or
about individuals, organizations, or Federal agencies is provided to or
obtained by contractors in performance of HHS contracts. This protection
depends on the contractor\'s recognition and proper handling of the
information. As a result, the \"Confidentiality of Information\"
contract clause was developed.

#### Section 324.7003 Applicability. 

\(a\) The \"Confidentiality of Information\" clause, set forth in
[352.224-70]{.underline}, should be used in \[\[Page 4247\]\]
solicitations and resultant contracts whenever the need exists to keep
information confidential. Examples of situations where the clause may be
appropriate include:

\(1\) Studies performed by the contractor which generate information or
involve Government-furnished information that is personally
identifiable, such as medical records, vital statistics, surveys, and
questionnaires;

\(2\) Contracts which involve the use of salary structures, wage
schedules, proprietary plans or processes, or confidential financial
information of organizations other than the contractor\'s; and\
(3) Studies or research which may result in preliminary or invalidated
findings which, upon disclosure to the public, might create erroneous
conclusions which, if acted upon, could threaten public health or
safety.

\(b\) With regard to protecting individuals, this subpart and contract
clause are not meant to regulate or control the method of selecting
subjects and performing studies or experiments involving them. These
matters are dealt with in the HHS regulation entitled \"Protection of
Human Subjects,\" [[45 CFR Part
46]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_02/45cfr46_02.html).
If a system of records under contract, or portions thereof, is
determined to be subject to the requirements of the Privacy Act, in
accordance with [[FAR
24.1]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 24_1.html#wp1074191)
and [324.1]{.underline} and Title [[45 CFR part
5b]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_02/45cfr5b_02.html),
the procedures cited in those references are applicable and the Privacy
Act contract clause shall be included in the contract. If the contract
also involves confidential information, as described in this section,
which is not subject to the Privacy Act, the contract shall include the
\"Confidentiality of Information\" clause in addition to the Privacy Act
clause.

#### Section 324.7004 Required clause. 

The clause set forth in [352.224-70]{.underline} shall be included in
any RFP and resultant contract(s) where it has been determined that
confidentiality of information provisions may apply. Any RFP announcing
the intent to include this clause in any resultant contract(s) shall
indicate, as specifically as possible, the types of data which would be
covered and requirements for handling the data.

# SUBCHAPTER E\--GENERAL CONTRACTING REQUIREMENTS 

[PART 328\--BONDS AND INSURANCE 79](#part-328--bonds-and-insurance)

[Subpart 328.3\--Insurance 79](#subpart-328.3--insurance)

[Section 328.301 Policy. 79](#section-328.301-policy.)

[Section 328.311 Solicitation provision and contract clause on liability
insurance under cost-reimbursement contracts.
80](#section-328.311-solicitation-provision-and-contract-clause-on-liability-insurance-under-cost-reimbursement-contracts.)

[328.311-2 Agency solicitation provisions and contract clauses.
80](#agency-solicitation-provisions-and-contract-clauses.)

[PART 330\--COST ACCOUNTING STANDARDS
80](#part-330--cost-accounting-standards)

[Subpart 330.2\--CAS Program Requirements
80](#subpart-330.2--cas-program-requirements)

[Section 330.201 Contract requirements.
80](#section-330.201-contract-requirements.)

[330.201-5 Waiver. 80](#waiver.)

[PART 332\--CONTRACT FINANCING 80](#part-332--contract-financing)

[Subpart 332.4\--Advance Payments for Non-Commercial Items
80](#subpart-332.4--advance-payments-for-non-commercial-items)

[Section 332.402 General. 80](#section-332.402-general.)

[Section 332.403 Applicability. 80](#section-332.403-applicability.)

[Section 332.407 Interest. 80](#section-332.407-interest.)

[Section 332.409 Contracting officer action.
81](#section-332.409-contracting-officer-action.)

[332.409-1 Recommendation for approval.
81](#recommendation-for-approval.)

[Subpart 332.5\--Progress Payments Based on Cost
81](#subpart-332.5--progress-payments-based-on-cost)

[Section 332.501 General. 81](#section-332.501-general.)

[332.501-2 Unusual progress payments. 81](#unusual-progress-payments.)

[Subpart 332.7\--Contract Funding 81](#subpart-332.7--contract-funding)

[Subpart 332.9\--Prompt Payment 81](#subpart-332.9--prompt-payment)

[Section 332.702 Policy. 81](#section-332.702-policy.)

[Section 332.703 Contract funding requirements.
82](#section-332.703-contract-funding-requirements.)

[332.703-1 General. 82](#general.-1)

[Section 332.704 Limitation of cost or funds.
82](#section-332.704-limitation-of-cost-or-funds.)

[PART 333\--PROTESTS, DISPUTES, AND APPEALS
83](#part-333--protests-disputes-and-appeals)

[Subpart 333.1\--Protests 83](#subpart-333.1--protests)

[Section 333.102 General. 83](#section-333.102-general.)

[Section 333.103 Protests to the agency.
83](#section-333.103-protests-to-the-agency.)

[Section 333.104 Protests to GAO. 84](#section-333.104-protests-to-gao.)

[Subpart 333.2\--Disputes and Appeals
85](#subpart-333.2--disputes-and-appeals)

[Section 333.203 Applicability. 85](#section-333.203-applicability.)

[Section 333.209 Suspected fraudulent claims.
86](#section-333.209-suspected-fraudulent-claims.)

[Section 333.211 Contracting officer\'s decision.
86](#section-333.211-contracting-officers-decision.)

[Section 333.212 Contracting officer\'s duties upon appeal.
86](#section-333.212-contracting-officers-duties-upon-appeal.)

[333.212-70 Formats. 87](#formats.)

[Section 333.213 Obligation to continue performance.
88](#section-333.213-obligation-to-continue-performance.)

[333.215-70 Additional Contract Clause 88](#additional-contract-clause)

## PART 328\--BONDS AND INSURANCE 

### Subpart 328.3\--Insurance 

#### Section 328.301 Policy. 

It is Department policy to limit the Government\'s reimbursement of its
contractors\' liability to third persons for claims not covered by
insurance in cost-reimbursement contracts to the Limitation of Funds or
Limitation of Cost clause of the contract. In addition, the amount of
the Government\'s reimbursement will be limited to final judgments or
settlements approved in writing by the Government.

#### Section 328.311 Solicitation provision and contract clause on liability insurance under cost-reimbursement contracts.

##### 328.311-2 Agency solicitation provisions and contract clauses. 

The contracting officer shall insert the clause at
[352.228-7]{.underline}, Insurance\--Liability to Third Persons, in all
solicitations and resulting cost-reimbursement contracts, in lieu of the
clause at [[FAR
52.228-7]{.underline}](http://www.acquisition.gov/comp/far/current/html/52_228_231.html#wp1137464)
required by [[FAR
28.311-1]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 28_3.html#wp1078759).
This is an authorized deviation.

## PART 330\--COST ACCOUNTING STANDARDS 

### Subpart 330.2\--CAS Program Requirements 

#### Section 330.201 Contract requirements. 

##### 330.201-5 Waiver. 

\(c\) The requirements of [[FAR
30.201-5]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 30_2.html#wp1068143)
shall be exercised by the Director, Division of Acquisition Policy
(DAP). Requests shall be forwarded through normal acquisition channels
to the DAP.

## PART 332\--CONTRACT FINANCING 

### Subpart 332.4\--Advance Payments for Non-Commercial Items 

#### Section 332.402 General. 

\(e\) The HCA shall determine whether an advance payment is in the
public interest in accordance with [[FAR
32.402(c)(1)(iii)(A)]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 32_4.html#wp1030669).
This authority is non delegable.

#### Section 332.403 Applicability. 

All contracts for research work with educational institutions located in
the United States shall provide for financing by use of advance
payments, in reasonable amounts, unless otherwise prohibited by law.

#### Section 332.407 Interest. 

\(d\) The HCA (not delegable) is authorized to make the determinations
in [[FAR
32.407(d)]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 32_4.html#wp1030669)
and as follows. Interest-free advance payments may also be approved for
educational institutions and other nonprofit organizations, whether
public or private, performing work under nonprofit contracts (without
fee) involving health services, educational programs, or social service
programs, such as:

\(1\) Community health representative services for an Indian Tribe or
Band;

\(2\) Narcotic addict rehabilitative services;

\(3\) Comprehensive health care service program for Model Neighborhood
programs;

\(4\) Planning and development of health maintenance organizations;

\(5\) Dissemination of information derived from educational research;

\(6\) Surveys or demonstrations in the field of education;

\(7\) Producing or distributing educational media for handicapped
persons including captioned\
films for the hearing impaired;\
(8) Operation of language or area centers;

\(9\) Conduct of biomedical research and support services;

\(10\) Research surveys or demonstrations involving the training and
placement of health\
manpower and health professionals, and dissemination of related
information; and\
(11) Surveys or demonstrations in the field of social service.

#### Section 332.409 Contracting officer action. 

##### 332.409-1 Recommendation for approval. 

The information in [[FAR
32.409-1]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 32_4.html#wp1030669)
(or [[FAR
32.409-2]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 32_4.html#wp1030669))
shall be transmitted to the HCA in the form of a briefing memorandum.

### Subpart 332.5\--Progress Payments Based on Cost 

#### Section 332.501 General.

##### 332.501-2 Unusual progress payments.

\(a\) (3) The approval of an unusual progress payment shall be made by
the HCA (not delegable).

### Subpart 332.7\--Contract Funding 

### Subpart 332.9\--Prompt Payment 

#### Section 332.702 Policy. 

An incrementally funded contract is a multiple year contract in which
funds are allocated to cover specific phases or increments of
performance.\
(a) Incremental funding may be used in cost-reimbursement type contracts
for the acquisition of severable services. It shall not be used in
contracts for construction or architect-engineer services. Incremental
funding allows severable cost-reimbursement type contracts awarded for
more than one year to be funded from succeeding fiscal years.

\(b\) It is Departmental policy that multiple year contracts be fully
funded whenever possible. However, incrementally funded contracts may be
used when:

\(1\) A project, which is part of an approved program, is anticipated to
be of multiple year duration, but funds are not currently available to
cover the entire project;

\(2\) The project represents a valid need for the fiscal year in which
the contract is awarded and for the succeeding fiscal years of the
project's duration;

\(3\) The project is so significant to the approved program that there
is reasonable assurance that it will command a high priority for
proposed appropriations to cover the entire multiple year duration; and

\(4\) The statement of work is specific and is defined by separate
phases or increments so that, at the completion of each, progress can be
effectively measured.

#### Section 332.703 Contract funding requirements. 

##### 332.703-1 General. 

\(b\) The following general guidelines are applicable to incrementally
funded contracts:

\(1\) The estimated total cost of the project (all planned phases or
increments) is to be taken into consideration when determining the
requirements which must be met before entering into the contract; i.e.,
justification for noncompetitive acquisition, approval or award, etc.

\(2\) The RFP and resultant contract are to include a statement of work
which describes the total project covering the proposed multiple year
period of performance and indicating timetables consistent with planned
phases or increments and corresponding allotments of funds.

\(3\) Offerors will be expected to respond to RFPs with technical and
cost proposals for the entire project indicating distinct break-outs of
the planned phases or increments, and the multiple year period of
performance.

\(4\) Negotiations will be conducted based upon the total project,
including all planned phases or\
increments, and the multiple year period of performance.\
(5) Sufficient funds must be obligated under the basic contract to cover
no less than the first year of performance, unless the Contracting
Officer determines it is advantageous to the Government to fund the
contract for a lesser period. In that event, the Contracting Officer
shall ensure that the obligated funds are sufficient to cover a complete
phase or increment of performance representing a material and measurable
part of the total project and the period of time that the funds cover
shall be stated in the contract.

\(6\) An incrementally funded contract must contain precise requirements
for progress reports to be sent to the Project and Contracting Officers.
These reports will enable the contract to be effectively monitored. The
Project Officer shall prepare periodic performance evaluation reports
and provide them to the Contracting Officer.

#### Section 332.704 Limitation of cost or funds. 

See subpart [342.71]{.underline}, ''Administrative Actions for Cost
Overruns,'' for procedures for handling anticipated cost overruns.

## PART 333\--PROTESTS, DISPUTES, AND APPEALS 

### Subpart 333.1\--Protests 

#### Section 333.102 General. 

\(g\) (1) The Office of Acquisition Management (Division of Acquisition
Policy (DAP) has been designated as the headquarters office to serve as
the liaison for protests lodged with GAO. Within the Division of
Acquisition Policy (DAP), the Departmental Protest Control Officer
(DPCO) has been designated as the individual to be contacted by GAO.

\(2\) Each contracting activity shall designate a protest control
officer to serve as an advisor to the contracting officer and to monitor
protests from the time of initial notification until the protest has
been resolved. The protest control officer should be a senior
acquisition specialist in the headquarters acquisition staff office. In
addition, contracting activities should designate similar officials
within their principal components to the extent practicable and
feasible. A copy of each appointment and termination of appointment of
protest control officers shall be forwarded to the Director, Division of
Acquisition Policy (DAP).

#### Section 333.103 Protests to the agency. 

\(f\) (1) The contracting officer is authorized to make the
determination, using the criteria in [[FAR]{.underline}
[33.104(b)]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 33_1.html#wp1088735),
to award a contract notwithstanding the protest after obtaining the
concurrence of the contracting activity\'s protest control officer and
the Office of General Counsel\--Business and Administrative Law Division
(OGC-BAL). If the protest has been lodged with the Secretary, is
addressed to the Secretary, or requests referral to the Secretary,
approval shall also be obtained from the Director, Division of
Acquisition Policy (DAP) before making the award.

\(2\) The contracting officer shall require written confirmation of any
oral protest. To be considered timely, the written confirmation must be
filed in accordance with the applicable provisions in [333.102
(a)]{.underline}. In the following cases, written protests received by
the contracting officer before award shall be forwarded, through
acquisition channels, to the DPCO for processing. Files concerning these
protests shall be submitted in duplicate, or as otherwise specified by
the DPCO and sent in the most expeditious manner, marked \"IMMEDIATE
ACTION\--PROTEST BEFORE AWARD\", and contain the documentation
referenced in [333.104(a)(3)]{.underline}.

> \(i\) The protestant requests referral to the Secretary of Health and
> Human Services;
>
> \(ii\) The protest is known to have been lodged with the Comptroller
> General or the Secretary, or is addressed to either; or
>
> \(iii\) The contracting officer entertains some doubt as to the proper
> action regarding the protest or believes it to be in the best interest
> of the Government that the protest be considered by the Secretary or
> the Comptroller General. Otherwise, protests addressed to the
> contracting officer may be answered by the contracting officer, with
> the concurrence of the contracting activity\'s protest control officer
> and OGC-BAL.

\(3\) Protests received after award shall be treated as indicated in
[[FAR
33.103(f)(3)]{.underline}](http://www.acquisition.gov/far/current/html/Subpart 33_1.html).

#### Section 333.104 Protests to GAO. 

\(a\) *General procedures.*

\(3\) (ii) The DPCO shall process protests filed with GAO, whether pre-
or post award. Protest files shall be prepared by the contracting office
and distributed as follows: Two copies to the DPCO, one copy to the
contracting activity's protest control officer, and one copy to
OGC--GLD. In addition to the items listed in 33.104(a)(3)(ii) (A)
through (G), the protest file shall include the following documents:

> \(H\) The current status of award. When award has been made, this
> shall include whether performance has commenced, shipment or delivery
> has been made, or a stop work order has been issued.
>
> \(I\) A copy of any mutual agreement to suspend work on a no-cost
> basis, when appropriate (see FAR 33.104(c)(4)).\
> (J) Copies of the notice of protest given offerors and other parties
> when the notice is appropriate (see FAR 33.104(a)(2)).

\(K\) A copy of the negotiation memorandum, when applicable.

> \(L\) The name and telephone number of the person in the contracting
> office who may be contacted for information relevant to the protest.

\(M\) A copy of the competitive range memorandum.

> \(N\) The contracting officer's statement of facts and circumstances,
> including a discussion of the merits of the protest, and conclusions
> and recommendations, including documentary evidence on which they are
> based. The files shall be assembled in an orderly manner and shall
> have an index of enclosures and any document referred to therein.

\(4\) The DPCO is responsible for making the necessary distributions
referenced in FAR 33.104(a)(4).

\(5\) The Contracting Officer shall furnish the protest file containing
the documentation specified in paragraph (a)(3)(ii) of this section
(with the exception of the contracting officer statement of facts and
circumstances) and FAR 33.104(a)(3)(ii)(A) through (G) to the DPCO
within fourteen (14) calendar days from receipt of the protest. The
contracting officer shall submit the contracting officer's statement of
facts and circumstances within twenty-one (21) calendar days from
receipt of the protest. Since the statute allows only a short time
period in which to respond to protests lodged with GAO, the Contracting
Officer shall handle each protest on a priority basis. The DPCO shall
submit copies of the protest file to GAO, the protestor, and any
intervenors in accordance with FAR 33.104(a)(4)(i).

\(6\) Since the DPCO will furnish the protest file to GAO, the
protestor, and any intervenors, comments on the file from the protestor
and any intervenors will be sent to the DPCO.

\(7\) The DPCO, Division of Acquisition Policy (DAP), shall serve as the
GAO point of contact for protests lodged with GAO.

\(b\) *Protests before award.*

\(1\) To make an award notwithstanding a protest, the Contracting
Officer shall prepare a finding using the criteria in FAR 33.104(b)(1),
have it executed by the HCA (not delegable), and forward it, along with
a written request for approval to make the award, to the Deputy
Assistant Secretary for Acquisition Management and Policy (DASAMP).

\(2\) If the request to make an award notwithstanding the protest is
approved by the Deputy Assistant Secretary for Acquisition Management
and Policy (DASAMP), the DPCO shall notify GAO. Whether the request is
approved or not, the DPCO shall telephonically notify the contracting
activity's protest control officer of the decision of the Deputy
Assistant Secretary for Acquisition Management and Policy (DASAMP), and
the contracting activity's protest control officer shall immediately
notify the Contracting Officer. The DPCO shall confirm the decision by
memorandum to the contracting activity's protest control officer.

\(c\) *Protests after award.*

\(2\) If the Contracting Officer believes performance should be allowed
to continue notwithstanding the protest, a finding shall be prepared by
the Contracting Officer using the criteria in FAR 33.104 (c)(2),
executed by the HCA (not delegable), and forwarded, along with a written
request for approval, to the Deputy Assistant Secretary for Acquisition
Management and Policy (DASAMP). The same procedures for notification
stated in paragraph (b)(2) of this section shall be followed.

\(d\) *Findings and notice.* The written notice required by FAR
33.104(d) shall be provided to the protestor and any intervenors by the
DPCO.

\(g\) *Notice to GAO.* The Deputy Assistant Secretary for Acquisition
Management and Policy (DASAMP) shall be the official to comply with the
requirements of FAR 33.104(g).\
(i) Express option. When GAO invokes the express option, the contracting
officer shall prepare the complete protest file as described in
paragraph (a)(3) of this section, to include the item in paragraph

\(a\) (3) (i), and deliver it (hand-carry, if necessary) to the DPCO in
time to meet the submittal date established by GAO. The DPCO will notify
the contracting officer of the submittal date after GAO has finalized
its requirements.

### Subpart 333.2\--Disputes and Appeals 

#### Section 333.203 Applicability. 

\(c\) The Secretary has designated the Armed Services Board of Contract
Appeals (ASBCA) as the authorized ''Board'' to hear and determine
disputes for the Department.

#### Section 333.209 Suspected fraudulent claims. 

The contracting officer shall submit any instance of a contractor\'s
suspected fraudulent claim to the Office of the Inspector General for
investigation.

#### Section 333.211 Contracting officer\'s decision. 

\(a\) (2) The contracting officer shall refer a proposed final decision
to the Office of General Counsel-General Law Division (OGC--GLD), for
advice as to the legal sufficiency and format before sending the final
decision to the contractor. The contracting officer shall provide
OGC--GLD with the pertinent documents with the submission of each
proposed final decision.

\(a\) (4) (v) When using the paragraph in [[FAR 33.211
(a)(4)(v)]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 33_2.html#wp1079912),
the contracting officer shall insert the words ''Armed Services'' before
each mention of the term ''Board of Contract Appeals''.

\(h\) At any time within the period of appeal, the contracting officer
may modify or withdraw his/her final decision. If an appeal from the
final decision has been taken to the ASBCA, the contracting officer will
forward his/her recommended action to OGC--GLD with the supplement to
the contract file which supports the recommended correction or
amendment.

#### Section 333.212 Contracting officer\'s duties upon appeal. 

\(a\) Appeals shall be governed by the rules set forth in the ''Rules of
the Armed Services Board of Contract Appeals,'' or by the rules
established by the U.S. Court of Federal Claims, as appropriate.

\(b\) The Office of General Counsel-General Law Division (OGC-GLD) is
designated as the Government Trial Attorney to represent the Government
in the defense of appeals before the ASBCA. A decision by the ASBCA will
be transmitted by the Government Trial Attorney to the appropriate
contracting officer for compliance in accordance with the ASBCA's
decision.

\(c\) If an appeal is filed with the ASBCA, the contracting officer
shall assemble a file within 30 days of receipt of an appeal, or advice
that an appeal has been filed, that consists of all documents pertinent
to the appeal, including:

\(1\) The decision and findings of fact from which the appeal is taken;

\(2\) The contract, including specifications and pertinent
modifications, plans and drawings;

\(3\) All correspondence between the parties pertinent to the appeal,
including the letter or letters of\
claim in response to which the decision was issued;\
(4) Transcripts of any testimony taken during the course of proceedings,
and affidavits or statements of any witness on the matter in dispute
made prior to the filing of the notice of appeal with the Board; and\
(5) Any additional information considered pertinent. The contracting
officer shall furnish the appeal file to the Government Trial Attorney
for review and approval. After approval, the contracting officer shall
prepare four copies of the file, one for the ASBCA, one for the
appellant, one for the Government Trial Attorney, and one for the
contracting office.

\(d\) At all times after the filing of an appeal, the contracting
officer shall render whatever assistance is requested by the Government
Trial Attorney. When an appeal is set for hearing, the concerned
contracting officer shall be responsible for providing Government
witnesses and specified physical and documentary evidence to the Trial
Attorney. The Trial Attorney shall ensure the presence of all witnesses
and documentary evidence at both the prehearing conference and hearing.

\(e\) If a contractor which has filed an appeal with the ASBCA elects to
accept fully the decision from which the appeal was taken, or any
modification to it, and gives written notification of acceptance to the
Government Trial Attorney or the concerned contracting officer, the
Government Trial Attorney will notify the ASBCA of the disposition of
the dispute in accordance with Rule 27 of the ASBCA.

\(f\) If the contractor has elected to appeal to the U.S. Court of
Federal Claims, the U.S. Department of Justice will represent the
Department. However, the contracting officer shall still coordinate all
actions through OGC--GLD.

##### 333.212-70 Formats. 

\(a\) The following format is suggested for use in transmitting appeal
files to the ASBCA:

> Your reference:\
> (Docket No.)
>
> (Name)\
> Recorder, Armed Services Board of Contract Appeals\
> Skyline Six 5109 Leesburg Pike\
> Falls Church, Virginia 22041
>
> Dear (Name):
>
> Transmitted herewith are documents relative to the appeal under
> Contract No. \_\_\_ with the \_\_\_\_\_ (Name of contractor) in
> accordance with the procedures under Rule 4. The Government Trial
> Attorney for this case is
>
> (*Insert General Law Division, Office of General Counsel, Department
> of Health and Huma*n *Services, 330 Independence Avenue, SW.,
> Washington, DC 20201*).
>
> The request for payment of charges resulting from the processing of
> this appeal should be addressed to:
>
> (Insert name and address of cognizant finance office.)
>
> Sincerely yours,
>
> Contracting Officer
>
> Enclosures

\(b\) The following format is suggested for use in notifying the
appellant that the appeal file was submitted to the ASBCA:

> (Contractor Address)
>
> Dear \_\_\_\_\_\_:
>
> An appeal file has been compiled relative to the appeal under Contract
> No. \_\_\_\_\_\_, and has been submitted to the Armed Services Board
> of Contract Appeals (ASBCA). The enclosed duplicate of the appeal file
> is identical to that submitted to the Board, except that contract
> documents which you already have been excluded. You may furnish or
> suggest any additional information deemed pertinent to the appeal to
> the Armed Services Board of Contract Appeals according to their rules.
>
> The ASBCA will provide you with further information concerning this
> appeal.\
> Sincerely yours,
>
> Contracting Officer\
> Enclosure

#### Section 333.213 Obligation to continue performance. 

\(a\) The Disputes clause at [[FAR
52.233-1]{.underline}](http://www.acqnet.gov/far/current/html/52_233_240.html)
shall be used without the use of Alternate I. However, if the
contracting officer determines that the Government\'s interest would be
better served by use of paragraph (i) in Alternate I, he/she must
request approval for its use from the chief of the contracting office.

##### 333.215-70 Additional Contract Clause 

Use the clause at 352.333--7001, Choice of Law (Overseas), in
solicitations and contracts when contract performance will be outside
the United States, its possessions, and Puerto Rico, except as otherwise
provided for in a government-to government agreement.

# SUBCHAPTER F---SPECIAL CATEGORIES OF CONTRACTING 

[PART 335\--RESEARCH AND DEVELOPMENT CONTRACTING
89](#part-335--research-and-development-contracting)

[Section 335.070 Cost-sharing. 89](#section-335.070-cost-sharing.)

[335.070-1 Policy. 89](#policy.)

[335.070-2 Amount of cost-sharing. 90](#amount-of-cost-sharing.)

[335.070-3 Method of cost-sharing. 90](#method-of-cost-sharing.)

[335.070-4 Contract award. 90](#contract-award.)

[Section 335.071 Special determinations and findings affecting research
and development contracting.
91](#section-335.071-special-determinations-and-findings-affecting-research-and-development-contracting.)

[PART 339---ACQUISITION OF INFORMATION TECHNOLOGY
91](#part-339acquisition-of-information-technology)

[339.201--10 Clarification 91](#clarification)

[339.201--70 Required provision and contract clause
91](#required-provision-and-contract-clause)

## PART 335\--RESEARCH AND DEVELOPMENT CONTRACTING 

#### Section 335.070 Cost-sharing. 

##### 335.070-1 Policy. 

\(a\) The use of cost-sharing type contracts should be encouraged to
contribute to the cost of performing research where there is a
probability that the contractor will receive present or future benefits
from participation, such as, increased technical know-how, training to
employees, acquisition of equipment, use of background knowledge in
future contracts, etc. Cost-sharing is intended to serve the mutual
interests of the Government and the performing organization by helping
to assure efficient utilization of the resources available for the
conduct of research projects and by promoting sound planning and prudent
fiscal policies by the performing organization. Encouragement should be
given to organizations to contribute to the cost of performing research
under contracts unless the contracting officer determines that a request
for cost-sharing would not be appropriate because of the following
circumstances:

\(1\) The particular research objective or scope of effort for the
project is specified by the Government rather than proposed by the
performing organization. This would usually include any formal
Government request for proposals for a specific project.

\(2\) The research effort has only minor relevance to the non-Federal
activities of the performing organization, and the organization is
proposing to undertake the research primarily as a service to the
Government. \[\[Page 4252\]\]

\(3\) The organization has little or no non-Federal sources or funds
from which to make a cost contribution. Cost-sharing should generally
not be requested if cost-sharing would require the Government to provide
funds through some other means (such as fees) to enable the organization
to cost-share. It should be recognized that those organizations which
are predominantly engaged in research and development and have little or
no production or other service activities may not be in a favorable
position to make a cost contribution.

\(b\) The responsibility for negotiating cost-sharing is that of the
contracting office. Each research contract file should show whether the
contracting officer considered cost-sharing appropriate for that
particular contract and in what amount. If cost-sharing was not
considered appropriate, the file must indicate the factual basis for
that decision, e.g., \"Because the contractor will derive no benefits
from this award that can be applied to its commercial activities,
cost-sharing is not considered appropriate.\" The contracting officer
may wish to coordinate with the project officer before documenting this
decision.

\(c\) If the contracting officer considers cost-sharing to be
appropriate for a research contract and the contractor refuses to accept
this type of contract, the award may be made without cost-sharing, if
the contracting officer concludes that payment of the full cost of the
research effort is necessary in order to obtain the services of that
particular contractor.

##### 335.070-2 Amount of cost-sharing. 

When cost-sharing is appropriate, use the following guidelines to
determine the amount of cost participation by the contractor:

\(a\) The amount of cost participation should depend on the extent to
which the research effort or results are likely to enhance the
performing organization's capability, expertise, or competitive
position, and the value of this enhancement to the performing
organization. It should be recognized that those organizations which are
predominantly engaged in research and development have little or no
production or other service activities and may not be in a favorable
position to derive a monetary benefit from their research under Federal
agreements. Therefore, contractor cost participation could reasonably
range from as little as 1 percent or less of the total project cost, to
more than 50 percent of the total project cost. Ultimately, the
Contracting Officer should bear in mind that cost sharing is a
negotiable item. As such, the amount of cost-sharing should be
proportional to the anticipated value of the contractor's gain.

\(b\) If the performing organization will not acquire title or the right
to use inventions, patents, or technical information resulting from the
research project, it would generally be appropriate to obtain less
cost-sharing than in cases in which the performer acquires these rights.

\(c\) A fee or profit will usually not be paid to the performing
organization if the organization is to contribute to the cost of the
research effort, but the amount of cost-sharing may be reduced to
reflect the fact that the organization is foregoing its normal fee or
profit in the research. However, if the research is expected to be of
only minor value to the performing organization and if cost-sharing is
not required by statute, it may be appropriate for the performer to make
a contribution in the form of a reduced fee or profit rather than
sharing costs of the project.

\(d\) The organization\'s participation may be considered over the total
term of the project so that a relatively high contribution in one year
may be offset by a relatively low contribution in another.

\(e\) A relatively low degree of cost-sharing may be appropriate if, in
the view of the operating divisions or their subordinate elements, an
area of research requires special stimulus in the national interest.

##### 335.070-3 Method of cost-sharing. 

Cost-sharing on individual contracts may be accomplished either by a
contribution of part or all of one or more elements of allowable cost of
the work being performed, or by a fixed amount or stated percentage of
the total allowable costs of the project. Costs so contributed may not
be charged to the Government under any other grant or contract
(including allocations to other grants or contracts as part of any
independent research and development program).

##### 335.070-4 Contract award. 

In consonance with the Department\'s objectives of competition and
support of the small business program, award of contracts should not be
made solely on the basis of ability or willingness to cost-share. Awards
should be made primarily on the contractor\'s competence and only after
adequate competition has been obtained among large and small business
organizations whenever possible. The offeror\'s willingness to share
costs should not be considered in the technical evaluation process but
as a business consideration, which is secondary to selecting the best
qualified source.

#### Section 335.071 Special determinations and findings affecting research and development contracting. 

OPDIV heads for health agencies shall sign individual and class
determinations and findings for:

\(a\) Acquisition or construction of equipment or facilities on property
not owned by the United States pursuant to [[42 U.S.C.
241(a)(7)]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode42&STEMMER=en&WORDS=241+&COLOUR=Red&STYLE=s&URL=/uscode/42/241.html);
and

\(b\) Use of an indemnification provision in a research contract
pursuant to [[42 U.S.C.
241(a)(7)]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode42&STEMMER=en&WORDS=241+&COLOUR=Red&STYLE=s&URL=/uscode/42/241.html).

## PART 339---ACQUISITION OF INFORMATION TECHNOLOGY 

##### 339.201--10 Clarification 

[[FAR Subpart 39.2, Electronic and Information
Technology]{.underline}](http://www.acquisition.gov/far/current/html/Subpart 39_2.html),
requires Federal agencies to ensure that, when acquiring EIT, Federal
employees with disabilities and members of the public with disabilities
have access to and use of information and data that is comparable to
individuals without disabilities. This EIT access requirement does not
apply to a contractor's internal workplaces. EIT that is not used nor
accessed by Federal employees or members of the public is not subject to
the Architectural and Transportation Barriers Compliance Board (Access
Board) standards. Contractors in their professional capacity are not
members of the public for purposes of Section 508.

##### 339.201--70 Required provision and contract clause 

When acquiring EIT, the Contracting Officer shall insert the provision
at
[[352.270--19(a)]{.underline}](http://www.knownet.hhs.gov/acquisition/hhsar/%23352.270–19_Electronic_information_and_technology_accessibility.)
in solicitations and the clause in
[[352.270--19(b)]{.underline}](http://www.knownet.hhs.gov/acquisition/hhsar/%23352.270–19_Electronic_information_and_technology_accessibility.)
in contracts and orders for projects that will develop, purchase,
maintain, or use electronic and information technology (EIT), unless
these EIT products and/or services are incidental to the project. (Note:
Other exceptions to this requirement can be found at [[FAR]{.underline}
[39.204]{.underline}](http://www.acquisition.gov/far/current/html/Subpart 39_2.html).)

# SUBCHAPTER G\--CONTRACT MANAGEMENT

[PART 342\--CONTRACT ADMINISTRATION
92](#part-342--contract-administration)

[Subpart 342.7\--Indirect Cost Rates
92](#subpart-342.7--indirect-cost-rates)

[Section 342.705 Final indirect cost rates.
92](#section-342.705-final-indirect-cost-rates.)

[Subpart 342.70\--Contract Monitoring
92](#subpart-342.70--contract-monitoring)

[Section 342.7001 Purpose. 92](#section-342.7001-purpose.)

[Section 342.7002 Contract monitoring responsibilities.
92](#section-342.7002-contract-monitoring-responsibilities.)

[Section 342.7003 Withholding of contract payments.
94](#section-342.7003-withholding-of-contract-payments.)

[342.7003-1 Policy. 94](#policy.-1)

[342.7003-2 Procedures. 94](#procedures.-2)

[342.7003-3 Withholding payments. 95](#withholding-payments.)

[Subpart 342.71\--Administrative Actions for Cost Overruns
96](#subpart-342.71--administrative-actions-for-cost-overruns)

[Section 342.7100 Scope of subpart.
96](#section-342.7100-scope-of-subpart.)

[Section 342.7101 Contract administration.
96](#section-342.7101-contract-administration.)

[342.7101-1 General. 96](#general.-2)

[342.7101-2 Procedures. 96](#procedures.-3)

[Section 342.7102 Contract modifications.
97](#section-342.7102-contract-modifications.)

## PART 342\--CONTRACT ADMINISTRATION 

#### Subpart 342.7\--Indirect Cost Rates 

#### Section 342.705 Final indirect cost rates. 

\(a\) The Director, Division of Cost Allocation of the Program Support
Center, within each servicing HHS regional office, has been delegated
the authority to establish indirect cost rates, research patient care
rates, and, as necessary, fringe benefit, computer, and other special
costing rates for use in contracts and grants awarded to State and local
governments, colleges and universities, hospitals, and other nonprofit
organizations.

\(b\) The Division of Financial Advisory Services of the National
Institutes of Health has the authority to establish indirect cost rates,
fringe benefit rates, etc., for use in contracts and grants awarded to
commercial organizations.

### Subpart 342.70\--Contract Monitoring 

#### Section 342.7001 Purpose. 

Contract monitoring is an essential element of contract administration
and is performed jointly by the Project Officer and the Contracting
Officer. This subpart describes the Department's operating concepts.

#### Section 342.7002 Contract monitoring responsibilities. 

\(a\) The contract establishes the obligations of both the Government
and the contractor. The Contracting Officer is the only person
authorized to make changes to the contract. The Contracting Officer must
confirm all changes in writing.

\(b\) The Contracting Officer is responsible for assuring compliance
with all the terms and conditions of the contract. The Contracting
Officer shall inform the contractor by letter (if not already stipulated
in the contract) of the authorities and responsibilities of the
Government personnel involved with the contract.

\(c\) The Contracting Officer must depend on program, technical, and
other personnel for assistance and advice in monitoring the contractor's
performance, and in other areas of postaward administration. The
Contracting Officer must assure that these individuals understand and
carry out their assigned responsibilities. The individual roles and
corresponding responsibilities typically involve, but are not limited
to, the following:

\(1\) The role of program and technical personnel in monitoring the
contract is to assist and/or advise the Contracting Officer or act as
his/her representative when so designated by the Contracting Officer.
Activities may include:

\(i\) Providing technical monitoring during contract performance, and
issuing letters to the contractor and Contracting Officer relating to
delivery, acceptance, or rejection in accordance with the terms of the
contract;

\(ii\) Assessing contractor performance, including inspection and
testing of products and evaluation of reports and data;\
(iii) Recommending necessary changes to the schedule of work and period
of performance in order to accomplish the objectives of the contract.
Program officials must provide the Contracting Officer a written request
along with an appropriate justification and a funding document if
additional funds are needed;

\(iv\) Reviewing invoices/vouchers and recommending approval/disapproval
action by the Contracting Officer, to include comments regarding
anything unusual discovered in the review;

\(v\) Reviewing and recommending approval or disapproval of
subcontractors, overtime, travel, and key personnel changes; and

\(vi\) Participating, as necessary, in various phases of the contract
closeout process.

\(2\) The role of the Project Officer in monitoring the contract
includes the applicable activities set forth in paragraph (c)(1) of this
section. The Project Officer also shall do the following:

\(i\) Submit periodic reports to the Contracting Officer that concisely
explain the status of the contract, and include recommended actions for
any problems reported. Provide the Contracting Officer with written
notification of evaluation and approval/disapproval of contract
deliverables and of completion of tasks or phases. The Contracting
Officer or designee will provide the contractor with written
notification of approval or disapproval and include a copy in the
contract file;

\(ii\) Monitor the technical aspects of the contract, identify existing
and potential problems that threaten performance, and immediately inform
the Contracting Officer of deviations from contract objectives or from
any technical or delivery requirements;

\(iii\) Immediately notify the head of the program office whenever it is
determined that objectives are not being met and provide specific
recommendations of actions to be taken. The Contracting Officer shall
receive a copy of the Project Officer's report and recommendations;

\(iv\) Within 120 days after contract completion, submit a final written
assessment report to the Contracting Officer. The report should include
analysis of the contractor's performance, including the contract and
program objectives achieved and missed. A copy of the final assessment
report shall be forwarded to the head of the program office responsible
for the program for management review and follow-up, as necessary; and

\(v\) Accompany and/or provide, when requested, technical support to the
HHS auditor in the conduct of visual inspections.

\(3\) The roles of the contract administrator, auditor, cost analyst,
and property administrator are to assist and/or advise the Contracting
Officer in post-award administration activities such as:

\(i\) Evaluation of contractor systems and procedures, to include
accounting policies and procedures, purchasing policies and practices,
property accounting and control, wage and salary plans and rate
structures, personnel policies and practices, etc.;

\(ii\) Processing of disputes under the Disputes clause and any
resultant appeals;

> \(iii\) Modification or termination of the contract; and

\(iv\) Determination of the allowability of cost charges to incentive or
cost reimbursement type contracts and progress payments under
fixed-price contracts. This is especially important when award is made
to new organizations or those with financial weaknesses.

\(d\) The Contracting Officer is responsible for assuring that
contractor performance and contract monitoring conform with contract
terms. If performance is not satisfactory or if problems are
anticipated, it is essential that the Contracting Officer take immediate
action to protect the Government's rights under the contract. The
Contracting Officer shall notify his/her immediate supervisor of
problems that cannot be resolved within contract limitations and
whenever contract or program objectives are not met. The notification
shall include a statement of action being taken by the Contracting
Officer.

#### Section 342.7003 Withholding of contract payments. 

##### 342.7003-1 Policy. 

\(a\) All solicitations and resultant contracts (other than awards made
using simplified acquisition procedures) shall contain the withholding
of contract payments clause at [352.232--9]{.underline}, and an
excusable delays clause, or a clause which incorporates the definition
of excusable delays. Use the excusable delays clause at
[352.249--14]{.underline} when the solicitation and resultant contract
(other than purchase orders) does not contain a default or other
excusable delays clause.

\(b\) When appropriate, the Contracting Officer may withhold any
contract payment when a required report is overdue, or the contractor
fails to perform or deliver required work or services.

##### 342.7003-2 Procedures. 

\(a\) The Contracting Officer is responsible for initiating immediate
action to protect the Government's rights whenever the contractor fails
to comply with either the delivery or reporting terms of the contract.
Compliance with the reporting terms includes those reports to be
submitted directly to the payment office. The payment office shall
notify the Contracting Officer promptly when such a report is not
submitted on time.

\(b\) When the contract contains a termination for default clause, the
contractor's failure to submit any report, perform services, or deliver
work when required by the contract is considered a default in
performance. The Contracting Officer shall immediately issue a formal
ten-day cure notice pursuant to [[FAR
49.607]{.underline}](http://www.acqnet.gov/far/current/html/Subpart_49_6.html#1046478).
The notice shall include a statement to the effect that payments will be
withheld if the default is not cured within the time frame specified in
the notice or if the default is not determined to be excusable.

\(1\) If the default is cured or is determined to be excusable, the
Contracting Officer shall not initiate the withholding action.

\(2\) If the default is not determined to be excusable or a response is
not received within the allotted time, the Contracting Officer shall
initiate withholding action on all contract payments and shall determine
whether termination for default or other action would be in the best
interest of the Government.

\(c\) When the contract does not contain a termination for default
clause, the contractor's failure to submit any required report, perform
services, or deliver work when required by the contract shall be
considered a failure to perform. The Contracting Officer shall
immediately issue a written notice to the contractor specifying the
failure and providing a ten-day period (or longer period if the
Contracting Officer deems it necessary) in which the contractor shall
cure the failure or provide reasons for an excusable delay. The notice
shall include a statement to the effect that payments will be withheld
if the default is not cured within the time specified in the notice or
if the default is not determined to be excusable.

\(1\) If the failure is cured or is determined to be excusable, the
Contracting Officer shall not initiate the withholding action.

\(2\) If the failure is not determined to be excusable or a response is
not received within the allotted time, the Contracting Officer shall
initiate withholding action on all contract payments and shall determine
whether termination for convenience or other action would be in the best
interest of the Government.

\(d\) The Contracting Officer should consult [[FAR subpart
49.4]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 49_4.html#wp1083161)
for further guidance before taking any of the actions described in this
section.

##### 342.7003-3 Withholding payments. 

\(a\) When making the determination that contract payments should be
withheld in accordance with the Withholding of Contract Payments clause,
the Contracting Officer shall immediately notify the servicing finance
office in writing of the determination to withhold payments. The notice
of suspension shall contain all information necessary for the finance
office to identify the contract, *i.e.*, contract number, task/delivery
order number, contractor name and address, etc.

\(b\) The Contracting Officer shall immediately notify the contractor in
writing that payments have been suspended until the default or failure
is cured.

\(c\) When the contractor cures the default or failure, the Contracting
Officer shall immediately notify, in writing, all recipients of the
notice of suspension that the suspension is to be lifted and contract
payments are to be resumed.

\(d\) When exercising actions regarding the withholding of payment
procedures, the Contracting Officer must be careful not to waive any of
the Government's rights when corresponding with the contractor or when
taking any other actions.

### Subpart 342.71\--Administrative Actions for Cost Overruns 

#### Section 342.7100 Scope of subpart. 

This subpart sets forth the procedures to follow when a cost overrun is
anticipated. A cost overrun occurs when the allowable actual cost of
performing a cost-reimbursement type contract exceeds the total
estimated cost specified in the contract.

#### Section 342.7101 Contract administration. 

##### 342.7101-1 General. 

Upon receipt of information that a contractor\'s accumulated cost and
projected expenditures will exceed the limit of funds obligated by the
contract, the contracting officer shall coordinate immediately with the
appropriate program office to determine whether the contract should be
modified or terminated. If the contracting officer receives information
from a source other than the contractor that a cost overrun is
anticipated, the contracting officer shall verify the information with
the contractor, and remind the contractor of the notification
requirements of the Limitation of Cost clause.

##### 342.7101-2 Procedures. 

\(a\) Upon notification that a cost overrun is anticipated, the
Contracting Officer shall inform the contractor to submit a request for
additional funds which shall include:\
(1) Name and address of contractor.

\(2\) Contract number and expiration date.

\(3\) Contract item(s) and amount(s) creating overrun.

\(4\) The elements of cost which changed from the original estimate
(i.e., labor, material, travel, overhead, etc.) to be furnished in the
following format:

> \(i\) Original estimate,
>
> \(ii\) Costs incurred to date,

\(iii\) Estimated cost to completion,

> \(iv\) Revised estimate, and

\(v\) Amount of adjustment.

\(5\) The factors responsible for the increase, i.e., error in estimate,
changed conditions, etc.

\(6\) The latest date by which funds must be available for commitment to
avoid contract slippage, work stoppage, or other program impairment.

\(b\) When the contractor submits a notice of an impending overrun, the
contracting officer shall:

\(1\) Immediately advise the appropriate program office and furnish a
copy of the notice and any other data received;\
(2) Request audit or cost advisory services, and technical support, as
necessary, for evaluation of information and data received; and

\(3\) Maintain continuous follow-up with the program office to obtain a
timely decision as to whether the work under the contract should
continue and additional funds be provided, or the contract terminated.
An appropriate written statement and funding authority, or a formal
request for termination, must support the decision of the program
office. After receiving the decision by the program office, the
Contracting Officer shall promptly notify the contractor in writing of
the following:

> \(i\) The specified amount of additional funds allotted to the
> contract; or

\(ii\) Work will be discontinued when the allotted funds are exhausted,
and any work performed after that date is at the contractor's risk; or\
(iii) The Government is considering whether to allot additional funds to
the contract and will notify the contractor as soon as possible, but
that any work performed after the currently allotted funds are exhausted
is at the contractor's risk. Timely, formal notification of the
Government's intention is essential in order to preclude loss of
contractual rights in the event of dispute, termination, or litigation.

\(c\) If program requirements permit, contracting officers should
refrain from issuing any contractual documents which will require new
work or an extension of time, pending resolution of an overrun or
additional fund request.

#### Section 342.7102 Contract modifications. 

\(a\) Modifications to contracts containing the Limitation of Cost
clause shall include either:

\(1\) A provision increasing the estimated or ceiling amount referred to
in the Limitation of Cost clause of the contract and stating that the
clause will thereafter apply in respect to the increased amount; or

\(2\) A provision stating that the estimated or ceiling amount referred
to in the contract is not changed by the modification and that the
Limitation of Cost clause will continue to apply with respect to the
amount in effect prior to the modification.

\(b\) A fixed-fee provided in a contract shall not be changed when
funding a cost overrun. Changes in fixed-fee will be made only to
reflect changes in the scope of work which justify an increase or
decrease in fee.

# SUBCHAPTER H---CLAUSES AND FORMS 

[PART 352\--SOLICITATION PROVISIONS AND CONTRACT CLAUSES
98](#part-352--solicitation-provisions-and-contract-clauses)

[Subpart 352.2\--Texts of Provisions and Clauses
98](#subpart-352.2--texts-of-provisions-and-clauses)

[352.202-1 Definitions. 98](#definitions.)

[352.215-1 Instructions to offerors\--Competitive acquisition.
99](#instructions-to-offerors--competitive-acquisition.)

[352.215-70 Late proposals and revisions.
100](#late-proposals-and-revisions.)

[352.216-72 Additional cost principles.
100](#additional-cost-principles.)

[352.223-70 Safety and health. 101](#safety-and-health.)

[352.224-70 Confidentiality of information.
102](#confidentiality-of-information.)

[352.228-7 Insurance\--Liability to third persons.
103](#insurance--liability-to-third-persons.)

[352.232-9 Withholding of contract payments.
105](#withholding-of-contract-payments.)

[352.232-75 Incremental funding. 106](#incremental-funding.)

[352.233-70 Litigation and claims. 106](#litigation-and-claims.)

[352.242-71 Final decisions on audit findings.
107](#final-decisions-on-audit-findings.)

[352.249-14 Excusable delays. 107](#excusable-delays.)

[352.270-1 Accessibility of meetings, conferences, and seminars to
persons with disabilities.
108](#accessibility-of-meetings-conferences-and-seminars-to-persons-with-disabilities.)

[352.270-2 Indian preference. 109](#indian-preference.)

[352.270-4 Pricing of adjustments. 113](#pricing-of-adjustments.)

[352.270-5 Key personnel. 114](#key-personnel.)

[352.270-6 Publications and Publicity.
114](#publications-and-publicity.)

[352.270-7 Paperwork Reduction Act. 115](#paperwork-reduction-act.)

[352.270-8 Protection of human subjects.
115](#protection-of-human-subjects.)

[352.270-9 Care of laboratory animals.
117](#care-of-laboratory-animals.)

[352.333--7001 Choice of Law (Overseas). 119](#choice-of-law-overseas.)

[352.270--10 Anti-lobbying. 119](#anti-lobbying.)

[352.270--11 Privacy Act. 119](#privacy-act.)

[352.270--12 Pro-Children Act. 120](#pro-children-act.)

[352.270--13 Tobacco-free facilities. 121](#tobacco-free-facilities.)

[352.270--14 Restriction on use of human subjects.
121](#restriction-on-use-of-human-subjects.)

[352.270--15 Salary rate limitation. 122](#salary-rate-limitation.)

[352.270--16 Native American Graves Protection and Repatriation Act.
123](#native-american-graves-protection-and-repatriation-act.)

[352.270--17 Crime Control Act---Reporting of child abuse.
123](#crime-control-actreporting-of-child-abuse.)

[352.270--18 Crime Control Act---Requirement for background checks.
124](#crime-control-actrequirement-for-background-checks.)

[352.270--19 Electronic information and technology accessibility.
125](#electronic-information-and-technology-accessibility.)

[PART 353\--FORMS 126](#part-353--forms)

[Subpart 353.3\--Illustrations of Forms
126](#subpart-353.3--illustrations-of-forms)

[353.370-674 Form HHS 674, Structured Approach Profit/Fee Objective.
126](#form-hhs-674-structured-approach-profitfee-objective.)

## PART 352\--SOLICITATION PROVISIONS AND CONTRACT CLAUSES 

### Subpart 352.2\--Texts of Provisions and Clauses 

##### 352.202-1 Definitions. 

As prescribed in [302.201]{.underline}, use the FAR Definitions clause
at
[[52.202-1]{.underline}](http://www.arnet.gov/far/current/html/52_200_206.html#1105938)
as modified:

> **Definitions (January 2006)**

\(a\) In accordance with
[[52.202--1(a)(1)]{.underline}](http://www.acquisition.gov/far/current/html/52_200_206.html),
substitute the following as paragraph (a):

> ''(a) The term ''Secretary'' or ''Head of the Agency'' (also called
> ''Agency Head'') means the Secretary, Deputy Secretary, or any
> Assistant Secretary, Administrator or Commissioner of the Department
> of Health and Human Services; and the term ''his/her duly authorized
> representative'' means any person, persons, or board authorized to act
> for the Secretary.''
>
> \(b\) In accordance with
> [[52.202--1(a)(1)]{.underline}](http://www.acquisition.gov/far/current/html/52_200_206.html),
> add the following paragraph (h):
>
> ''(h) The term ''Project Officer'' means the person who monitors the
> technical aspects of contract performance. The Project Officer is not
> authorized to issue any instructions or directions which cause any
> increase or decrease in the scope of work which would result in the
> increase or decrease in the price of this contract, or changes in the
> delivery schedule or period of performance of this contract. If
> applicable, the Project Officer is not authorized to receive or act
> upon any notification or revised cost estimate provided by the
> Contractor in accordance with the Limitation of Cost or Limitation of
> Funds clauses of this contract.''

##### 352.215-1 Instructions to offerors\--Competitive acquisition. 

Insert the following paragraph (e) in place of paragraph (e) of the
provision at [[FAR
52.215-1]{.underline}](http://www.acquisition.gov/comp/far/current/html/52_215.html#wp1144408):

> \(e\) *Restriction on disclosure and use of data.*
>
> \(1\) The proposal submitted in response to this request may contain
> data (trade secrets; business data, e.g., commercial information,
> financial information, and cost and pricing data; and technical data)
> which the offeror, including its prospective subcontractor(s), does
> not want used or disclosed for any purpose other than for evaluation
> of the proposal. The use and disclosure of any data may be so
> restricted; provided, that the Government determines that the data is
> not required to be disclosed under the Freedom of Information Act, [[5
> U.S.C.
> 552]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode5&STEMMER=en&WORDS=552+&COLOUR=Red&STYLE=s&URL=/uscode/5/552.html),
> as amended, and the offeror marks the cover sheet of the proposal with
> the following statements, specifying the particular portions of the
> proposal which are to be restricted: ''Unless disclosure is required
> by the Freedom of Information Act, [[5 U.S.C.]{.underline}
> [552]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode5&STEMMER=en&WORDS=552+&COLOUR=Red&STYLE=s&URL=/uscode/5/552.html),
> as amended, (the Act) as determined by Freedom of Information (FOI)
> officials of the Department of Health and Human Services, data
> contained in the portions of this proposal which have been
> specifically identified by page number, paragraph, etc. by the offeror
> as containing restricted information shall not be used or disclosed
> except for evaluation purposes. The offeror acknowledges that the
> Department may not be able to withhold a record (data, document, etc.)
> nor deny access to a record requested pursuant to the Act and that the
> Department's FOI officials must make that determination. The offeror
> hereby agrees that the Government is not liable for disclosure if the
> Department has determined that disclosure is required by the Act. If a
> contract is awarded to the offeror as a result of, or in connection
> with, the submission of this proposal, the Government shall have the
> right to use or disclose the data to the extent provided in the
> contract. Proposals not resulting in a contract remain subject to the
> Act. The offeror also agrees that the Government is not liable for
> disclosure or use of unmarked data and may use or disclose the data
> for any purpose, including the release of the information pursuant to
> requests under the Act. The data subject to this restriction are
> contained in pages (insert page numbers, paragraph designations, etc.
> or other identification).''
>
> \(2\) In addition, the offeror must mark each page of data it wishes
> to restrict with the following statement:
>
> ''Use or disclosure of data contained on this page is subject to the
> restriction on the cover sheet of this proposal or quotation.''
>
> \(3\) Offerors are cautioned that proposals submitted with restrictive
> statements or statements differing in substance from those cited above
> may not be considered for award. The Government reserves the right to
> reject any proposal submitted with nonconforming statement(s).

##### 352.215-70 Late proposals and revisions. 

As prescribed in [315.208]{.underline}, the following provision may be
included in the solicitation:

> **Late Proposals and Revisions (January 2006)**
>
> Notwithstanding the procedures contained in [[FAR
> 52.215-1(c)(3)]{.underline}](http://www.acquisition.gov/comp/far/current/html/52_215.html#wp1144408)
> of the provision of this solicitation entitled Instructions to
> Offerors---Competitive Acquisition, a proposal received after the date
> specified for receipt may be considered if it appears to offer the
> best value to the Government and it was received before proposals were
> distributed for evaluation, or within five calendar days after the
> exact time specified for receipt, whichever is earlier.
>
> (End of provision)

##### 352.216-72 Additional cost principles.

As prescribed in [316.307(j)]{.underline}, insert the following clause
in all solicitations and resultant cost-reimbursement contracts:

> **Additional Cost Principles (January 2006)**
>
> \(a\) Bid and proposal costs.
>
> \(1\) Bid and proposal costs are the immediate costs of preparing
> bids, proposals, and applications for potential Federal and
> non-Federal contracts, grants, and agreements, including the
> development of scientific, cost, and other data needed to support the
> bids, proposals, and applications.
>
> \(2\) Bid and proposal costs of the current accounting period are
> allowable as indirect costs.
>
> \(3\) Bid and proposal costs of past accounting periods are
> unallowable in the current period. However, if the organization\'s
> established practice is to treat these costs by some other method,
> they may be accepted if they are found to be reasonable and equitable.
>
> \(4\) Bid and proposal costs do not include independent research and
> development costs covered by the following paragraph, or preaward
> costs covered by paragraph 36 of Attachment B to [[OMB]{.underline}
> [Circular
> A-122]{.underline}](http://www.knownet.hhs.gov/policy/policy/a122/a-122.htm).
>
> \(b\) Independent research and development costs.
>
> \(1\) Independent research and development is research and development
> conducted by an organization which is not sponsored by Federal or
> non-Federal contracts, grants, or other agreements.
>
> \(2\) Independent research and development shall be allocated its
> proportionate share of indirect costs on the same basis as the
> allocation of indirect costs to sponsored research and development.\
> (3) The cost of independent research and development, including its
> proportionate share of indirect costs, are unallowable.\
> (End of clause)

##### 352.223-70 Safety and health. 

The following clause shall be used as prescribed in
[323.7002]{.underline}:

> **Safety and Health (January 2006)**
>
> \(a\) To help ensure the protection of the life and health of all
> persons, and to help prevent damage to property, the Contractor shall
> comply with all Federal, State and local laws and regulations
> applicable to the work being performed under this contract. These laws
> are implemented and/or enforced by the Environmental Protection
> Agency, Occupational Safety and Health Administration and other
> agencies at the Federal, State and local levels (Federal, State and
> local regulatory/enforcement agencies).
>
> \(1\) In addition, the following regulations must be followed when
> developing and implementing health and safety operating procedures and
> practices for both personnel and facilities involving the use or
> handling of hazardous materials and the conduct of research,
> development, or test projects:
>
> \(i\) [[29 CFR
> 1910.1030]{.underline}](http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&tpl=/ecfrbrowse/Title29/29cfr1910_main_02.tpl),
> Bloodborne pathogens; [[29 CFR
> 1910.1450]{.underline}](http://www.osha.gov/pls/oshaweb/owadisp.show_document?p_table=STANDARDS&p_id=10106),
> Occupational exposure to hazardous chemicals in laboratories; and
> other applicable occupational health and safety standards issued by
> the Occupational Health and Safety Administration (OSHA) and included
> in [[29]{.underline} [CFR Part
> 1910]{.underline}](http://aolsearch.aol.com/aol/search?invocationType=wscreen-searchbox&query=29 CFR Part 1910).
> These regulations are available at
> *[[http://www.osha.gov/complinks.html]{.underline}](http://www.osha.gov/complinks.html).*
>
> \(ii\) Nuclear Regulatory Commission Standards and Regulations,
> pursuant to the Energy Reorganization Act of 1974 ([[42 U.S.C.
> 5801]{.underline}](http://www.law.cornell.edu/uscode/42/usc_sup_01_42_10_73.html)
> et seq.). Copies may be obtained from the U.S. Nuclear Regulatory
> Commission, Washington, DC 20555--0001.\
> (2) The following guidelines are recommended for use in developing and
> implementing health and safety operating procedures and practices for
> both personnel and facilities:
>
> \(i\) Biosafety in Microbiological and Biomedical Laboratories, CDC
> and NIH, HHS. This publication is available at
> *[[http://bmbl.od.nih.gov/index.htm]{.underline}](http://bmbl.od.nih.gov/index.htm).*
>
> \(ii\) Prudent Practices for Safety in Laboratories (1995), National
> Research Council, National Academy Press, 500 Fifth Street, NW.,
> Lockbox 285, Washington, DC 20055 (ISBN 0--309--05229-- 7). This
> publication can be obtained by telephoning 800--624--8373. It also is
> available at
> [*[http://]{.underline}*](http://www.nap.edu/catalog/4911.html)
>
> \(b\) Further, the Contractor shall take or cause to be taken
> additional safety measures as the Contracting Officer, in conjunction
> with the project or other appropriate officers, determines to be
> reasonably necessary. If compliance with these additional safety
> measures results in an increase or decrease in the cost or time
> required for performance of any part of work under this contract, an
> equitable adjustment will be made in accordance with the applicable
> ''Changes'' clause set forth in this contract.
>
> \(c\) The Contractor shall maintain an accurate record of, and
> promptly report to the Contracting Officer, all accidents or incidents
> resulting in the exposure of persons to toxic substances, hazardous
> materials or hazardous operations; the injury or death of any person;
> and/or damage to property incidental to work performed under the
> contract and all violations for which the Contractor has been cited by
> any Federal, State or local regulatory/enforcement agency. The report
> shall include a copy of the notice of violation and the findings of
> any inquiry or inspection, and an analysis addressing the impact these
> violations may have on the work remaining to be performed. The report
> shall also state the required action(s), if any, to be taken to
> correct any violation(s) noted by the Federal, State or local
> regulatory/enforcement agency and the time frame allowed by the agency
> to accomplish the necessary corrective action.
>
> \(d\) If the Contractor fails or refuses to comply with the Federal,
> State or local regulatory/enforcement agency's directive(s) regarding
> any violation(s) and prescribed corrective action(s), the Contracting
> Officer may issue an order stopping all or part of the work until
> satisfactory corrective action (as approved by the Federal, State or
> local regulatory/enforcement agencies) has been taken and documented
> to the Contracting Officer. No part of the time lost due to any stop
> work order shall be subject to a claim for extension of time or costs
> or damages by the Contractor.
>
> \(e\) The Contractor shall insert the substance of this clause in each
> subcontract involving toxic substances, hazardous materials, or
> hazardous operations. Compliance with the provisions of this clause by
> subcontractors will be the responsibility of the Contractor.
>
> (End of clause)

##### 352.224-70 Confidentiality of information. 

The following clause covers the policy set forth in subpart
[324.70]{.underline} and is used in accordance with the instructions set
forth in [324.7004:]{.underline}

> **Confidentiality of Information (January 2006)**
>
> \(a\) Confidential information, as used in this clause, means
> information or data of a personal nature about an individual, or
> proprietary information or data submitted by or pertaining to an
> institution or organization.
>
> \(b\) The Contracting Officer and the Contractor may, by mutual
> consent, identify elsewhere in this contract specific information
> and/or categories of information which the Government will furnish to
> the Contractor or that the Contractor is expected to generate which is
> confidential. Similarly, the Contracting Officer and the Contractor
> may, by mutual consent, identify such confidential information from
> time to time during the performance of the contract. Failure to agree
> will be settled pursuant to the ''Disputes'' clause.
>
> \(c\) If it is established elsewhere in this contract that information
> to be utilized under this contract, or a portion thereof, is subject
> to the Privacy Act, the Contractor will follow the rules and
> procedures of disclosure set forth in the Privacy Act of 1974, [[5
> U.S.C.
> 552a]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode5&STEMMER=en&WORDS=552+&COLOUR=Red&STYLE=s&URL=/uscode/5/552.html),
> and implementing regulations and policies, with respect to systems of
> records determined to be subject to the Privacy Act.
>
> \(d\) Confidential information, as defined in paragraph (a) of this
> clause, shall not be disclosed without the prior written consent of
> the individual, institution, or organization.\
> (e) Whenever the Contractor is uncertain with regard to the proper
> handling of material under the contract, or if the material in
> question is subject to the Privacy Act or is confidential information
> subject to the provisions of this clause, the Contractor should obtain
> a written determination from the Contracting Officer prior to any
> release, disclosure, dissemination, or publication.
>
> \(f\) Contracting Officer determinations will reflect the result of
> internal coordination with appropriate program and legal officials.\
> (g) The provisions of paragraph (d) of this clause shall not apply to
> conflicting or overlapping provisions in other Federal, State, or
> local laws.\
> (End of clause)

##### 352.228-7 Insurance\--Liability to third persons. 

As prescribed in [328.311-2]{.underline}, contracting officers shall
include the following clause in all cost-reimbursement contracts, in
lieu of the clause at [[FAR
52.228-7]{.underline}](http://www.acquisition.gov/comp/far/current/html/52_228_231.html#wp1137464):

> Insurance\--Liability to Third Persons (Dec. 1991)
>
> \(a\) (1) Except as provided in paragraph (a)(2) immediately
> following, or in paragraph (h) of this clause (if the clause has a
> paragraph (h)), the Contractor shall provide and maintain workers\'
> compensation, employer\'s liability, comprehensive general liability
> (bodily injury), comprehensive automobile liability (bodily injury and
> property damage) insurance, and such other insurance as the
> Contracting Officer may require under this contract.
>
> \(2\) The Contractor may, with the approval of the Contracting
> Officer, maintain a self-insurance program; provided that, with
> respect to workers\' compensation, the Contractor is qualified
> pursuant to statutory authority.
>
> \(3\) All insurance required by this paragraph shall be in form and
> amount and for those periods as the Contracting Officer may require or
> approve and with insurers approved by the Contracting Officer.
>
> \(b\) The Contractor agrees to submit for the Contracting Officer\'s
> approval, to the extent and in the manner required by the Contracting
> Officer, any other insurance that is maintained by the Contractor in
> connection with performance of this contract and for which the
> Contractor seeks reimbursement.
>
> \(c\) Except as provided in paragraph (h) of this clause (if the
> clause has a paragraph (h)), the Contractor shall be reimbursed:\
> (1) For that portion of the reasonable cost of insurance allocable to
> this contract, and required or approved under this clause; and
>
> \(2\) For certain liabilities (and expenses incidental to such
> liabilities) to third persons not compensated by insurance or
> otherwise within the funds available under the Limitation of Cost or
> the Limitation of Funds clause of this contract. These liabilities
> must arise out of the performance of this contract, whether or not
> caused by the negligence of the Contractor or the Contractor\'s
> agents, servants, or employees, and must be represented by final
> judgments or settlements approved in writing by the Government. These
> liabilities are for:
>
> \(i\) Loss of or damage to property (other than property owned,
> occupied, or used by the Contractor, rented to the Contractor, or in
> the care, custody, or control of the Contractor); or\
> (ii) Death or bodily injury.
>
> \(d\) The Government's liability under paragraph (c) of this clause is
> limited to the amounts reflected in final judgments, or settlements
> approved in writing by the Government, but in no event to exceed the
> funds available under the Limitation of Cost or Limitation of Funds
> clause of this contract. Nothing in this contract shall be construed
> as implying that, at a later date, the Government will request, or the
> Congress will appropriate, funds sufficient to meet any deficiencies.
>
> \(e\) The Contractor shall not be reimbursed for liabilities (and
> expenses incidental to such liabilities):
>
> \(1\) For which the Contractor is otherwise responsible under the
> express terms of any clause specified in the Schedule or elsewhere in
> the contract:\
> (2) For which the Contractor has failed to insure or to maintain
> insurance as required by the Contracting Officer; or\
> (3) That result from willful misconduct or lack of good faith on the
> part of the Contractor\'s directors, officers, managers,
> superintendents, or other representatives who have supervision or
> direction of:\
> (i) All or substantially all of the Contractor\'s business;
>
> \(ii\) All or substantially all of the Contractor\'s operations at any
> one plant or separate location in which this contract is being
> performed; or
>
> \(iii\) A separate and complete major industrial operation in
> connection with the performance of this contract.
>
> \(f\) The provisions of paragraph (e) of this clause shall not
> restrict the right of the Contractor to be reimbursed for the cost of
> insurance maintained by the Contractor in connection with the
> performance of this contract, other than insurance required in
> accordance with this clause; provided, that such cost is allowable
> under the Allowable Cost and Payment clause of this contract.
>
> \(g\) If any suit or action is filed or any claim is made against the
> Contractor, the cost and expense of which may be reimbursable to the
> Contractor under this contract, and the risk of which is then
> uninsured or is insured for less than the amount claimed, the
> Contractor shall:
>
> \(1\) Immediately notify the Contracting Officer and promptly furnish
> copies of all pertinent papers received;
>
> \(2\) Authorize Government representatives to collaborate with counsel
> for the insurance carrier in settling or defending the claim when the
> amount of the liability claimed exceeds the amount of coverage; and
>
> \(3\) Authorize Government representatives to settle or defend the
> claim and to represent the Contractor in or to take charge of any
> litigation, if required by the Government, when the liability is not
> insured or covered by the bond. The Contractor may, at its own
> expense, be associated with the Government representatives in any such
> claim or litigation.\
> (End of clause)

**Alternate I (APR 1984).** If the successful offeror represents in the
offer that the offeror is partially immune from tort liability as a
State agency, add the following paragraph (h) to the basic clause:

> \(h\) Notwithstanding paragraphs (a) and (c) of this clause-­
>
> \(1\) The Government does not assume any liability to third persons,
> nor will the Government reimburse the Contractor for its liability to
> third persons, with respect to loss due to death, bodily injury, or
> damage to property resulting in any way from the performance of this
> contract or any subcontract under this contract; and
>
> \(2\) The Contractor need not provide or maintain insurance coverage
> as required by paragraph (a) of this clause; provided, that the
> Contractor may obtain any insurance coverage deemed necessary, subject
> to approval by the Contracting Officer as to form, amount, and
> duration. The Contractor shall be reimbursed for the cost of such
> insurance and, to the extent provided in paragraph (c) of this clause,
> to liabilities to third persons for which the Contractor has obtained
> insurance coverage as provided in this paragraph, but for which such
> coverage is insufficient in amount.
>
> (End of clause)

**Alternate II (APR 1984).** If the successful offeror represents in the
offer that the offeror is totally immune from tort liability as a State
agency, substitute the following paragraphs (a) and (b) for paragraphs
(a) and (b) of the basic clause:

> \(a\) The Government does not assume any liability to third persons,
> nor will the Government reimburse the Contractor for its liability to
> third persons, with respect to loss due to death, bodily injury, or
> damage to property resulting in any way from the performance of this
> contract or any subcontract under this contract.
>
> \(b\) If any suit or action is filed, or if any claim is made against
> the Contractor, the cost and expense of which may be reimbursable to
> the Contractor under this contract, the Contractor shall immediately
> notify the Contracting Officer and promptly furnish copies of all
> pertinent papers received by the Contractor. The Contractor shall, if
> required by the Government, authorize Government representatives to
> settle or defend the claim and to represent the Contractor in or take
> charge of any litigation. The Contractor may, at its own expense, be
> associated with the Government representatives in any such claims or
> litigation.
>
> (End of clause)

##### 352.232-9 Withholding of contract payments. 

Insert the following clause in all solicitations and contracts other
than awards made using simplified acquisition procedures:

> **Withholding of Contract Payments (January 2006)**
>
> Notwithstanding any other payment provisions of this contract, failure
> of the Contractor to submit required reports when due or failure to
> perform or deliver required work, supplies, or services, may result in
> the withholding of payments under this contract unless such failure
> arises out of causes beyond the control, and without the fault or
> negligence of the Contractor as defined by the clause entitled
> ''Excusable Delays'' or ''Default'', as applicable. The Government
> shall immediately notify the Contractor of its intention to withhold
> payment of any invoice or voucher submitted.
>
> (End of clause)

##### 352.232-75 Incremental funding. 

The following provision shall be included in all requests for proposals
whenever the use of incremental funding is contemplated:

> **Incremental Funding (January 2006)**
>
> \(a\) It is the Government's intention to negotiate and award a
> contract using the incremental funding concepts described in the
> clause entitled Limitation of Funds, as specified in [[FAR
> 52.232--22]{.underline}](http://www.acquisition.gov/far/current/html/52_232.html).
> Under the clause, which will be included in the resultant contract,
> initial funds will be obligated under the contract to cover the first
> year of performance. The Government intends to allot additional funds
> up to and including the full estimated cost of the contract for the
> remaining years of performance by contract modification. However, the
> Government is not obligated to reimburse the Contractor for costs
> incurred in excess of the periodic allotments nor is the Contractor
> obligated to perform in excess of the amount allotted.\
> (b) The Limitation of Funds clause to be included in the resultant
> contract, as specified in [[FAR 52.232--]{.underline}
> [22]{.underline}](http://www.acquisition.gov/far/current/html/52_232.html),
> shall supersede the Limitation of Cost clause found in the Section I,
> Contract Clauses.
>
> (End of provision)

##### 352.233-70 Litigation and claims. 

Insert the following clause in all solicitations and resultant cost
reimbursement contracts:

**Litigation and Claims (January 2006)**

> The Contractor shall provide written notification immediately to the
> Contracting Officer of any action, including any proceeding before an
> administrative agency, filed against the Contractor arising out of the
> performance of this contract, including, but not limited to the
> performance of any subcontract hereunder; and any claim against the
> Contractor the cost and expense of which is allowable under the clause
> entitled ''Allowable Cost and Payment.'' Except as otherwise directed
> by the Contracting Officer, the Contractor shall furnish immediately
> to the Contracting Officer copies of all pertinent papers received by
> the Contractor with respect to such action or claim. To the extent not
> in conflict with any applicable policy of insurance, the Contractor
> may, with the Contracting Officer's approval, settle any such action
> or claim. If required by the Contracting Officer, the Contractor shall
> effect an assignment and subrogation in favor of the Government of all
> the Contractor's rights and claims (except those against the
> Government) arising out of any such action or claim against the
> Contractor; and authorize representatives of the Government to settle
> or defend any such action or claim and to represent the Contractor in,
> or to take charge of, any action. If the settlement or defense of an
> action or claim is undertaken by the Government, the Contractor shall
> furnish all reasonable assistance in effecting a settlement or
> asserting a defense. Where an action against the Contractor is not
> covered by a policy of insurance, the Contractor shall, with the
> approval of the Contracting Officer, proceed with the defense of the
> action in good faith. The Government shall not be liable for the
> expense of defending any action or for any costs resulting from the
> loss thereof to the extent that the Contractor would have been
> compensated by insurance which was required by law or regulation or by
> written direction of the Contracting Officer, but which the Contractor
> failed to secure through its own fault or negligence. In any event,
> unless otherwise expressly provided in this contract, the Contractor
> shall not be reimbursed or indemnified by the Government for any
> liability loss, cost or expense, which the Contractor may incur or be
> subject to by reason of any loss, injury or damage, to the person or
> to real or personal property of any third parties as may accrue
> during, or arise from, the performance of this contract.
>
> (End of clause)

##### 352.242-71 Final decisions on audit findings. 

Insert the following clause in all solicitations and resultant
cost-reimbursement contracts.

> **Final Decisions on Audit Findings (Apr. 1984)**
>
> For the purpose of issuing final decisions under the Disputes clause
> of this contract concerning monetary audit findings, the Contracting
> Officer shall be that person with ultimate responsibility for making
> that decision in accordance with Chapter 1-105, Resolution of Audit
> Findings, of the Department\'s Grants Administration Manual.
>
> (End of clause)

##### 352.249-14 Excusable delays. 

Insert the following clause in all solicitations and resultant
contracts, other than awards made using simplified acquisition
procedures:

> **Excusable Delays (January 2006)**
>
> \(a\) Except with respect to failures of subcontractors, the
> Contractor shall not be considered to have failed in performance of
> this contract if such failure arises out of causes beyond the control
> and without the fault or negligence of the Contractor.
>
> \(b\) 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 embargoes, 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 failure of a subcontractor to
> perform, and if such failure 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 deemed to
> have failed in performance of the contract, unless:
>
> \(1\) The supplies or services to be furnished by the subcontractor
> were obtainable from other sources,
>
> \(2\) the Contracting Officer ordered the Contractor in writing to
> procure such supplies or services from such other sources, and\
> (3) the Contractor failed to comply with such order. Upon request of
> the Contractor, the Contracting Officer shall ascertain the facts and
> extent of such failure and if the Contracting Officer determines that
> any failure to perform was caused by circumstances beyond the control
> and without the fault or negligence of the Contractor, the delivery
> schedule shall be revised accordingly, subject to the rights of the
> Government under the termination clause contained in this contract.
> (As used in this clause, the terms ''subcontractor'' and
> ''subcontractors'' mean subcontractor(s) at any tier.)
>
> (End of clause)

##### 352.270-1 Accessibility of meetings, conferences, and seminars to persons with disabilities. 

Use the following clause in accordance with [370.102]{.underline}:

> **Accessibility of Meetings, Conferences, and Seminars to Persons with
> Disabilities (Jan 2001)**
>
> The Contractor agrees as follows:
>
> \(a\) Planning. The Contractor will develop a plan to assure that any
> meeting, conference, or seminar held pursuant to this contract will
> meet or exceed the minimum accessibility standards set forth in
> [[28]{.underline} [CFR
> 36.101-36.500]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_03/28cfr36_03.html)
> and Appendix A: ADA Accessibility Guidelines (ADAAG). The plan shall
> be submitted to the project officer for approval prior to initiating
> action. ( A consolidated or master plan for contracts requiring
> numerous meetings, conferences, or seminars may be submitted in lieu
> of separate plans.)
>
> \(b\) Facilities. Any facility to be utilized for meetings,
> conferences, or seminars in performance of this contract shall be in
> compliance with [[28 CFR
> 36.101-36.500]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_03/28cfr36_03.html)
> and Appendix A. The Contractor shall determine, by an on-site
> inspection, that the facility meets these requirements. \[\[Page
> 4259\]\]\
> (1) Parking. Parking shall be in compliance with 2[[28 CFR
> 36.101-36.500]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_03/28cfr36_03.html)
> and Appendix A.
>
> \(2\) Entrances. Entrances shall be in compliance with [[28 CFR
> 36.101-36.500]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_03/28cfr36_03.html)
> and Appendix A.
>
> \(3\) Meeting Rooms. Meeting rooms, including seating arrangements,
> shall be in compliance with [[28 CFR
> 36.101-36.500]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_03/28cfr36_03.html)
> and Appendix A. In addition, stages, speaker platforms, etc. which are
> to be used by persons in wheelchairs must be accessible by ramps or
> lifts. When used, the ramp may not necessarily be independently
> negotiable if space does not permit. However, any slope over 1:12 must
> be approved by the Project Officer and the Contractor must provide
> assistance to negotiate access to the stage or platform.
>
> \(4\) Restrooms. Restrooms shall be in compliance with [[28 CFR
> 36.101-36.500]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_03/28cfr36_03.html)
> and Appendix A.
>
> \(5\) Eating Facilities. Eating facilities in the meeting facility
> must also comply with [[28 CFR
> 36.101-36.500]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_03/28cfr36_03.html)
> and Appendix A.
>
> \(6\) Overnight Facilities. If overnight accommodations are required,
> the facility providing the overnight accommodations shall also comply
> with [[28 CFR
> 36.101-36.500]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_03/28cfr36_03.html)
> and Appendix A.\
> (7) Water Fountains. Water fountains shall comply with [[28 CFR
> 36.101-36.500]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_03/28cfr36_03.html)
> and Appendix A.
>
> \(8\) Telephones. Public telephones shall comply with [[28 CFR
> 36.101-36.500]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_03/28cfr36_03.html)
> and Appendix A.
>
> \(c\) Provisions of Services for Attendees with Sensory Impairments.
>
> \(1\) The Contractor, in planning the meeting, conference, or seminar,
> shall include in all announcements and other materials pertaining to
> the meeting, conference, or seminar a notice indicating that services
> will be made available to persons with sensory impairments attending
> the meeting, if requested within five (5) days of the date of the
> meeting, conference, or seminar. The announcement(s) and other
> material(s) shall indicate that persons with sensory impairments may
> contact a specific person(s), at a specific address and phone
> number(s), to make their service requirements known. The phone
> number(s) shall include a telecommunication device for the deaf (TDD).
>
> \(2\) The Contractor shall provide, at no additional cost to the
> individual, those services required by persons with sensory
> impairments to insure their complete participation in the meeting,
> conference, or seminar.
>
> \(3\) At a minimum, when requested in advance, the Contractor shall
> provide the following services:
>
> \(i\) For persons with hearing impairments, qualified interpreters.
> Also, the meeting rooms will be adequately illuminated so signing by
> interpreters can be easily seen.
>
> \(ii\) For persons with vision impairments, readers and/or cassette
> materials, as necessary, to enable full participation. Also, meeting
> rooms will be adequately illuminated.
>
> \(iii\) Agenda and other conference material(s) shall be translated
> into a usable form for persons with sensory impairments. Readers,
> Braille translations, large print text, and/or tape recordings are all
> acceptable. These materials shall be available to individuals with
> sensory impairments upon their arrival.
>
> \(4\) The Contractor is responsible for making a reasonable effort to
> ascertain the number of individuals with sensory impairments who plan
> to attend the meeting, conference, or seminar. However, if it can be
> determined that there will be no person with sensory impairment in
> attendance, the provision of those services under paragraph (c) of
> this clause for the nonrepresented group, or groups, is not required.
>
> (End of clause)

##### 352.270-2 Indian preference. 

Use the following clause as prescribed in [370.202(a)]{.underline}:

> **Indian Preference (Apr. 1984)**
>
> \(a\) The Contractor agrees to give preference in employment
> opportunities under this contract to Indians who can perform required
> work, regardless of age (subject to existing laws and regulations),
> sex, religion, or tribal affiliation. To the extent feasible and
> consistent with the efficient performance of this contract, the
> Contractor further agrees to give preference in employment and
> training opportunities under this contract to Indians who are not
> fully qualified to perform regardless of age (subject to existing laws
> and regulations), sex, religion, or tribal affiliation. The Contractor
> also agrees to give preference to Indian organizations and
> Indian-owned economic enterprises in the awarding of any subcontracts
> to the extent feasible and consistent with the efficient performance
> of this contract. The Contractor shall maintain statistical records as
> are necessary to indicate compliance with this paragraph.
>
> \(b\) In connection with the Indian employment preference requirements
> of this clause, the Contractor shall provide opportunities for
> training incident to such employment. Such training shall include
> on-the­job, classroom or apprenticeship training which is designed to
> increase the vocational effectiveness of an Indian employee.
>
> \(c\) If the Contractor is unable to fill its employment and training
> opportunities after giving full consideration to Indians as required
> by this clause, those needs may be satisfied by selection of persons
> other than Indians in accordance with the clause of this contract
> entitled \"Equal Opportunity.\"
>
> \(d\) If no Indian organizations or Indian-owned economic enterprises
> are available under reasonable terms and conditions, including price,
> for awarding of subcontracts in connection with the work performed
> under this contract, the Contractor agrees to comply with the
> provisions of this contract involving utilization of small business
> concerns, small disadvantaged business concerns, and women-owned small
> business concerns.
>
> \(e\) As used in this clause:
>
> \(1\) \"Indian\" means a person who is a member of an Indian Tribe. If
> the Contractor has reason to doubt that a person seeking employment
> preference is an Indian, the Contractor shall grant the preference but
> shall require the individual to provide evidence within thirty (30)
> days from the Tribe concerned that the person is a member of the
> Tribe.
>
> \(2\) \"Indian Tribe\" means an Indian Tribe, pueblo, band, nation, or
> other organized group or community, including Alaska Native village or
> regional or village corporation as defined in or established pursuant
> to the Alaska Native Claims Settlement Act (85 Stat. 688; [[43 U.S.C.
> 1601]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode43&STEMMER=en&WORDS=1601+&COLOUR=Red&STYLE=s&URL=/uscode/43/1601.html))
> which is recognized as eligible for the special programs and services
> provided by the United States to Indians because of their status as
> Indians.
>
> \(3\) \"Indian organization\" means the governing body of any Indian
> Tribe or entity established or recognized by such governing body in
> accordance with the Indian Financing Act of 1974 (88 Stat. 77; [[25
> U.S.C.
> 1451]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode25&STEMMER=en&WORDS=1451+&COLOUR=Red&STYLE=s&URL=/uscode/25/1451.html));
> and
>
> \(4\) \"Indian-owned economic enterprise\" means any Indian-owned
> commercial, industrial, or business activity established or organized
> for the purpose of profit, provided that such Indian ownership shall
> constitute not less than 51 percent of the enterprise, and that
> ownership shall encompass active operation and control of the
> enterprise.
>
> \(f\) The Contractor agrees to include the provisions of this clause,
> including this paragraph (f) of this clause, in each subcontract
> awarded at any tier under this contract.\
> (g) In the event of noncompliance with this clause, the Contracting
> Officer may terminate the contract in whole or in part or may impose
> any other sanctions authorized by law or by other provisions of the\
> contract.\
> (End of clause)

**352.270-3 Indian preference program.**

Use the following clause as prescribed in [370.202(b)]{.underline}:

**Indian Preference Program (January 2006)**

\(a\) In addition to the requirements of the clause of this contract
entitled ''Indian Preference,'' the Contractor agrees to establish and
conduct an Indian preference program which will expand opportunities for
Indians to receive preference for employment and training in connection
with the work to be performed under this contract, and which will expand
the opportunities for Indian organizations and Indian-owned economic
enterprises to receive a preference in the awarding of subcontracts. In
this connection, the Contractor shall:

\(1\) Designate a liaison officer who will maintain liaison with the
Government and the Tribe(s) on Indian preference matters; supervise
compliance with the provisions of this clause; and administer the
Contractor's Indian preference program.

\(2\) Advise its recruitment sources in writing and include a statement
in all advertisements for employment that Indian applicants will be
given preference in employment and training incident to such employment.

\(3\) Not more than twenty (20) calendar days after award of the
contract, post a written notice in the Tribal office of any reservations
on which or near where the work under this contract is to be performed
that sets forth the Contractor's employment needs and related training
opportunities. The notice shall include the approximate numbers and
types of employees needed; the approximate dates of employment; the
experience or special skills required for employment, if any; training
opportunities available; and other pertinent information necessary to
advise prospective employees of any other employment requirements. The
Contractor shall also request the Tribe(s) on or near whose
reservation(s) the work is to be performed to provide assistance to the
Contractor in filling its employment needs and training opportunities.
The Contracting Officer will advise the Contractor of the name,
location, and phone number of the Tribal officials to contact in regard
to the posting of notices and requests for Tribal assistance.

\(4\) Establish and conduct a subcontracting program which gives
preference to Indian organizations and Indian-owned economic enterprises
as subcontractors and suppliers under this contract. The Contractor
shall give public notice of existing subcontracting opportunities and,
to the extent feasible and consistent with the efficient performance of
this contract, shall solicit bids or proposals only from Indian
organizations or Indian-owned economic enterprises. The Contractor shall
request assistance and information on Indian firms qualified as
suppliers or subcontractors from the Tribe

\(s\) on or near whose reservation(s) the work under the contract is to
be performed. The\
Contracting Officer will advise the Contractor of the name, location,
and phone number of the\
Tribal officials to be contacted in regard to the request for assistance
and information. Public\
notices and solicitations for existing subcontracting opportunities
shall provide an equitable\
opportunity for Indian firms to submit bids or proposals by including:

\(i\) A clear description of the supplies or services required,
including quantities, specifications, and delivery schedules which
facilitate the participation of Indian firms;

\(ii\) A statement indicating that preference will be given to Indian
organizations and Indian-owned economic enterprises in accordance with
section 7(b) of [[Public Law
93--638]{.underline}](http://www.ihs.gov/NonMedicalPrograms/chr/pl93-638.cfm)
(88 Stat. 2205; 25 U.S.C. 450e(b)); (iii) Definitions for the terms
''Indian organization'' and ''Indian-owned economic enterprise'' as
prescribed under the ''Indian Preference'' clause of this contract;

\(iv\) A statement to be completed by the bidder or offeror that it is
an Indian organization or Indian-owned economic enterprise; and

\(v\) A closing date for receipt of bids or proposals which provides
sufficient time for preparation and submission of a bid or proposal.

If after soliciting bids or proposals from Indian organizations and
Indian-owned economic enterprises, no responsive bid or acceptable
proposal is received, the Contractor shall comply with the requirements
of paragraph (d) of the ''Indian Preference'' clause of this contract.
If one or more responsible bids or acceptable proposals are received,
award shall be made to the low responsible bidder or acceptable offeror
if the price is determined to be reasonable. If the low responsive bid
or acceptable proposal is determined to be unreasonable as to price, the
Contractor shall attempt to negotiate a reasonable price and award a
subcontract. If a reasonable price cannot be agreed upon, the Contractor
shall comply with the requirements of paragraph (d) of the ''Indian
Preference'' clause of this contract.

\(5\) Maintain written records under this contract which indicate:

\(i\) The numbers of Indians seeking employment for each employment
position available under this contract;

\(ii\) The number and types of positions filled by Indians and
non-Indians;

\(iii\) The total number of Indians employed under this contract;

\(iv\) For those positions where there are both Indian and non-Indian
applicants, and a non-Indian is selected for employment, the reason(s)
why the Indian applicant was not selected;

\(v\) Actions taken to give preference to Indian organizations and
Indian-owned economic\
enterprises for subcontracting opportunities which exist under this
contract;\
(vi) Reasons why preference was not given to Indian firms as
subcontractors or suppliers for each requirement where it was determined
by the Contractor that such preference would not be consistent with the
efficient performance of the contract; and

\(vii\) The number of Indian organizations and Indian-owned economic
enterprises contacted, and the number receiving subcontract awards under
this contract.

\(6\) Submit to the Contracting Officer for approval a quarterly report
which summarizes the Contractor's Indian preference program and
indicates the number and types of available positions filled by Indians
and non-Indians, and the dollar amounts of all subcontracts awarded to
Indian organizations and Indian-owned economic enterprises, and to all
other firms.

\(7\) Maintain records pursuant to this clause and keep them available
for review by the Government

for one year after final payment under this contract, or for such longer
period as may be required by any other clause of this contract or by
applicable law or regulation.

\(b\) For purposes of this clause, the following definitions of terms
shall apply:

\(1\) The terms ''Indian,'' ''Indian Tribe,'' ''Indian Organization,''
and ''Indian-owned economic enterprise'' are defined in the clause of
this contract entitled ''Indian Preference.''\
(2) ''Indian reservation'' includes Indian reservations, public domain
Indian Allotments, former Indian reservations in Oklahoma, and land held
by incorporated Native groups, regional corporations, and village
corporations under the provisions of the [[Alaska Native Claims
Settlement]{.underline}
[Act]{.underline}](http://www.law.cornell.edu/uscode/43/usc_sup_01_43_10_33.html)
(85 Stat. 688; 43 U.S.C. 1601 et seq.)

\(3\) ''On or near an Indian Reservation'' means on a reservation or
reservations or within that area surrounding an Indian reservation(s)
where a person seeking employment could reasonably be expected to
commute to and from in the course of a work day.

\(c\) Nothing in the requirements of this clause shall be interpreted to
preclude Indian Tribes from independently developing and enforcing their
own Indian preference requirements. Such requirements must not conflict
with any Federal statutory or regulatory requirement dealing with
theaward and administration of contracts.

\(d\) The Contractor agrees to include the provisions of this clause,
including this paragraph (d), in each subcontract awarded at any tier
under this contract and to notify the Contracting Officer of such
subcontracts.

\(e\) In the event of noncompliance with this clause, the Contracting
Officer may terminate the contract in whole or in part or may impose any
other sanctions authorized by law or by other provisions of the
contract.

(End of clause)

##### 352.270-4 Pricing of adjustments. 

Insert the following clause in all solicitations and resultant
fixed-priced contracts other than awards made using simplified
acquisition procedures:

> **Pricing of Adjustments (Jan. 2001)**
>
> When costs are a factor in determination of a contract price
> adjustment pursuant to the \"Changes\" clause or any provision of this
> contract, such costs shall be determined in accordance with the
> applicable cost principles and procedures set forth below:
>
> [Principles]{.underline} [Types of organizations]{.underline}
>
> [(a) Subpart 31.2 of the
> Federal](http://www.acqnet.gov/far/current/html/Subpart_31_2.html#1048053)
> Commercial.
>
> [Acquisition
> Regulation.](http://www.acqnet.gov/far/current/html/Subpart_31_2.html#1048053)
>
> [(b) Subpart 31.3 of the
> Federal](http://www.acqnet.gov/far/current/html/Subpart_31_3.html)
> Educational.
>
> [Acquisition
> Regulation.](http://www.acqnet.gov/far/current/html/Subpart_31_3.html)
>
> [(c) Subpart 31.6 of the
> Federal](http://www.acqnet.gov/far/current/html/Subpart_31_6.html)
> State, local, and federally
>
> [Acquisition
> Regulation.](http://www.acqnet.gov/far/current/html/Subpart_31_6.html)
> recognized Indian tribal governments.
>
> \(d\) [45 CFR Part 74 Appendix
> E](http://www.access.gpo.gov/nara/cfr/waisidx_02/45cfr74_02.html)
> Hospitals (performing research and development contracts only.
>
> \(e\) [[Subpart 31.7 of the
> Federal]{.underline}](http://www.acqnet.gov/far/current/html/Subpart_31_7.html)
> Other nonprofit [institutions. Acquisition
> Regulation](http://www.acqnet.gov/far/current/html/Subpart_31_7.html).
>
> (End of clause)

##### 352.270-5 Key personnel. 

Insert the following clause in all solicitations and resultant contracts
which require Key Personnel, regardless of the type of contract:

> **Key Personnel (January 2006)**
>
> The key personnel specified in this contract are considered to be
> essential to work performance. At least 30 days prior to diverting any
> of the specified individuals to other programs or contracts (or as
> soon as possible, if an individual must be replaced, for example, as a
> result of leaving the employ of the Contractor), the Contractor shall
> notify the Contracting Officer and shall submit comprehensive
> justification for the diversion or replacement request (including
> proposed substitutions for key personnel) to permit evaluation by the
> Government of the impact on performance under this contract. The
> Contractor shall not divert or otherwise replace any key personnel
> without the written consent of the Contracting Officer. The Government
> may modify the contract to add or delete key personnel at the request
> of the contractor or Government.
>
> (End of clause)

##### 352.270-6 Publications and Publicity. 

Insert the following clause in all solicitations and resultant
contracts:

> **Publications and Publicity (January 2006)**
>
> \(a\) Unless otherwise specified in this contract and the
> Confidentiality of Information clause is included, the Contractor is
> encouraged to publish the results of its work under this contract. A
> copy of each article submitted by the Contractor for publication shall
> be promptly sent to the Project Officer. The Contractor shall also
> inform the Project Officer when the article or other publication is
> published, and furnish a copy of it as finally published.
>
> \(b\) The Contractor shall include in any publication resulting from
> work performed under this contract a disclaimer reading as follows:
>
> ''The views expressed in written conference materials or publications
> and by speakers and moderators at HHS-sponsored conferences, do not
> necessarily reflect the official policies of the Department of Health
> and Human Services; nor does mention of trade names, commercial
> practices, or organizations imply endorsement by the U.S.
> Government.''
>
> \(c\) Unless authorized by the Project Officer, the contractor shall
> not display the HHS logo on any conference materials or publications.\
> (End of clause)

##### 352.270-7 Paperwork Reduction Act. 

Insert the following clause in all solicitations and contracts subject
to the Paperwork Reduction Act requirements regarding the collection and
recording of information from 10 or more persons other than Federal
employees.

**Paperwork Reduction Act (January 2006)**

> \(a\) This contract involves a requirement to collect or record
> information calling either for answers to identical questions from 10
> or more persons other than Federal employees, or information from
> Federal employees which is outside the scope of their employment, for
> use by the Federal government or disclosure to third parties;
> therefore, the [[Paperwork Reduction Act of
> 1995]{.underline}](http://www.archives.gov/federal-register/laws/paperwork-reduction/)
> (Pub. L. 104--13) shall apply to this contract. No plan,
> questionnaire, interview guide or other similar device for collecting
> information (whether repetitive or single time) may be used without
> first obtaining clearance from the Office of Management and Budget
> (OMB). Contractors and Project Officers should be guided by the
> provisions of [[5 CFR Part
> 1320]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_03/5cfr1320_03.html),
> Controlling Paperwork Burdens on the Public, and seek the advice of
> the HHS operating division or Office of the Secretary Reports
> Clearance Officer to determine the procedures for acquiring OMB
> clearance.
>
> \(b\) The Contractor shall not expend any funds or begin any data
> collection until OMB Clearance is received. Once OMB Clearance is
> received from the Project Officer, the Contracting Officer shall
> provide the Contractor with written notification authorizing the
> expenditure of funds and the collection of data. The Contractor must
> allow at least 120 days for OMB clearance. Excessive delays caused by
> the Government which arise out of causes beyond the control and
> without the fault or negligence of the Contractor will be considered
> in accordance with the Excusable Delays or Default clause of this
> contract.
>
> (End of clause)

##### 352.270-8 Protection of human subjects. 

\(a\) Include the following provision in solicitations expected to
involve human subjects:

> **Notice to Offerors of Requirements of 45 CFR Part 46, Protection of
> Human Subjects (January 2006)\
> **
>
> \(a\) Copies of the Department of Health and Human Services (HHS)
> regulations for the protection of human subjects, [[45 CFR Part
> 46]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_02/45cfr46_02.html),
> are available from the Office for Human Research Protections (OHRP),
> Bethesda, Maryland 20892. The regulations provide a systematic means,
> based on established ethical principles, to safeguard the rights and
> welfare of individuals who participate as subjects in research
> activities supported or conducted by HHS.
>
> \(b\) The regulations define a human subject as a living individual
> about whom an investigator (whether professional or student)
> conducting research obtains data through intervention or interaction
> with the individual, or identifiable private information. The
> regulations extend to the use of human organs, tissue, and body fluids
> from individually identifiable human subjects as well as to graphic,
> written, or recorded information derived from individually
> identifiable human subjects.
>
> The use of autopsy materials is governed by applicable State and local
> law and is not directly regulated by [[45 CFR Part
> 46]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_02/45cfr46_02.html).\
> (c) Activities in which the only involvement of human subjects will be
> in one or more of the categories set forth in [[45 CFR
> 46.101(b)(1-6)]{.underline}](http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/cfr_2002/octqtr/45cfr46.101.htm)
> are exempt from coverage.
>
> \(d\) Inappropriate designations of the noninvolvement of human
> subjects or of exempt categories of research in a project may result
> in delays in the review of a proposal. The OPDIV will make a final
> determination of whether the proposed activities are covered by the
> regulations or are in an exempt category, based on the information
> provided in the proposal. In doubtful cases, prior consultation with
> OHRP, (telephone: 301--496--7014), is recommended.
>
> \(e\) In accordance with [[45 CFR Part
> 46]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_02/45cfr46_02.html)
> prospective Contractors being considered for award shall be required
> to file with OHRP an acceptable Assurance of Compliance with the
> regulations, specifying review procedures and assigning
> responsibilities for the protection of human subjects. The initial and
> continuing review of a research project by an institutional review
> board shall assure that the rights and welfare of the human subjects
> involved are adequately protected, that the risks to the subjects are
> reasonable in relation to the potential benefits, if any, to the
> subjects and the importance of the knowledge to be gained, and that
> informed consent will be obtained by methods that are adequate and
> appropriate. HHS regulations for the protection of human subjects (45
> CFR part 46), information regarding OHRP registration and assurance
> requirements/processes, and OHRP contact information can be accessed
> at the OHRP Web site:
> *[[http://www.hhs.gov/ohrp/]{.underline}](http://www.hhs.gov/ohrp/).*
>
> \(f\) It is recommended that OHRP be consulted for advice or guidance
> concerning either regulatory requirements or ethical issues pertaining
> to research involving human subjects.\
> (End of provision)

\(b\) Include the following clause in solicitations and resultant
contracts involving human subjects:

> **Protection of Human Subjects (January 2006)**
>
> \(a\) The Contractor agrees that the rights and welfare of human
> subjects involved in research under this contract shall be protected
> in accordance with [[45 CFR Part
> 46]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_02/45cfr46_02.html)
> and with the Contractor's current Assurance of Compliance on file with
> the Office for Human Research Protections (OHRP), Office of Public
> Health and Science (OPHS). The Contractor further agrees to provide
> certification at least annually that the Institutional Review Board
> has reviewed and approved the procedures, which involve human subjects
> in accordance with [[45 CFR Part
> 46]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_02/45cfr46_02.html)
> and the Assurance of Compliance.
>
> \(b\) The Contractor shall bear full responsibility for the
> performance of all work and services involving the use of human
> subjects under this contract and shall ensure that work is conducted
> in a proper manner and as safely as is feasible. The parties hereto
> agree that the Contractor retains the right to control and direct the
> performance of all work under this contract. Nothing in this contract
> shall be deemed to constitute the Contractor or any subcontractor,
> agent or employee of the Contractor, or any other person,
> organization, institution, or group of any kind whatsoever, as the
> agent or employee of the Government. The Contractor agrees that it has
> entered into this contract and will discharge its obligations, duties,
> and undertakings and the work pursuant thereto, whether requiring
> professional judgment or otherwise, as an independent contractor
> without imputing liability on the part of the Government for the acts
> of the Contractor or its employees.
>
> \(c\) If at any time during the performance of this contract, the
> Contracting Officer determines, in consultation with the OHRP, OPHS,
> ASH, that the Contractor is not in compliance with any of the
> requirements and/or standards stated in paragraphs (a) and (b) above,
> the Contracting Officer may immediately suspend, in whole or in part,
> work and further payments under this contract until the Contractor
> corrects the noncompliance. Notice of the suspension may be
> communicated by telephone and confirmed in writing. If the Contractor
> fails to complete corrective action within the period of time
> designated in the Contracting Officer's written notice of suspension,
> the Contracting Officer may, in consultation with OHRP, OPHS, ASH,
> terminate this contract in a whole or in part, and the Contractor's
> name may be removed form the list of those contractors with approved
> Health and Human Services Human Subject Assurances.
>
> (End of clause)

##### 352.270-9 Care of laboratory animals. 

\(a\) Include the following provision in solicitations expected to
involve vertebrate animals:

> **Notice to Offerors of Requirement for Compliance With the Public
> Health Service Policy on Humane Care and Use of Laboratory Animals
> (January 2006)\
> **
>
> The PHS Policy on Humane Care and Use of Laboratory Animals by Awardee
> Institutions establishes a number of requirements for research
> activities involving animals. Before award may be made to an applicant
> organization, the organization shall file, with the Office of
> Laboratory Animal Welfare (OLAW), National Institutes of Health (NIH),
> a written Animal Welfare Assurance which commits the organization to
> comply with the provisions of the PHS Policy on Humane Care and Use of
> Laboratory Animals by Awardee Institutions, the Animal Welfare Act,
> and the Guide for the Care and Use of Laboratory Animals prepared by
> the Institute of Laboratory Animal Resources. In accordance with the
> PHS Policy on Humane Care and Use of Laboratory Animals by Awardee
> Institutions, applicant organizations must establish a committee,
> qualified through the experience and expertise of its members, to
> oversee the institution's animal program, facilities and procedures.
> No award involving the use of animals shall be made unless OLAW
> approves the Animal Welfare Assurance. Prior to award, the Contracting
> Officer will notify Contractor(s) selected for projects that involve
> live vertebrate animals that an Animal Welfare Assurance is required.
> The Contracting Officer will request that OLAW negotiate an acceptable
> Animal Welfare Assurance with those Contractor(s). For further
> information, contact OLAW at NIH, Bethesda, Maryland 20892
> (301--496--7163).
>
> (End of provision)

\(b\) Include the following clause in all solicitations and resultant
contracts involving research on vertebrate animals:

> **Care of Live Vertebrate Animals (January 2006)**
>
> \(a\) Before undertaking performance of any contract involving animal
> related activities the Contractor shall register with the Secretary of
> Agriculture of the United States in accordance with [[7 U.S.C.
> 2136]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode7&STEMMER=en&WORDS=2136+&COLOUR=Red&STYLE=s&URL=/uscode/7/2136.html)
> and [[9 CFR sections 2.25 through
> 2.28]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_03/9cfr2_03.html).
> The Contractor shall furnish evidence of the registration to the
> Contracting Officer.
>
> \(b\) The Contractor shall acquire vertebrate animals used in research
> from a dealer licensed by the Secretary of Agriculture under [[7
> U.S.C.
> 2133]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode7&STEMMER=en&WORDS=2133+&COLOUR=Red&STYLE=s&URL=/uscode/7/2133.html)
> and [[9 CFR Sections
> 2.1-2.11]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_03/9cfr2_03.html),
> or from a source that is exempt from licensing under those sections.
>
> \(c\) The Contractor agrees that the care and use of any live
> vertebrate animals used or intended for use in the performance of this
> contract will conform with the [[PHS Policy on Humane Care of Use
> of]{.underline} [Laboratory
> Animals]{.underline}](http://grants.nih.gov/grants/olaw/references/phspol.htm),
> the current Animal Welfare Assurance, the [[Guide for the Care and Use
> of]{.underline} [Laboratory
> Animals]{.underline}](http://www.nap.edu/readingroom/books/labrats/contents.html)
> prepared by the [[Institute of Laboratory Animal
> Resources]{.underline}](http://dels.nas.edu/ilar_n/ilarhome/) and the
> pertinent laws and regulations of the United States Department of
> Agriculture (*see* [[7 U.S.C.
> 2131]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode7&STEMMER=en&WORDS=2131+&COLOUR=Red&STYLE=s&URL=/uscode/7/2131.html)
> *et seq.* and [[9 CFR]{.underline} [Subchapter A, Parts
> 1-4]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_03/9cfrv1_03.html)).
> In case of conflict between standards, the more stringent standard
> shall be used.
>
> \(d\) If at any time during performance of this contract, the
> Contracting Officer determines, in consultation with the Office of
> Laboratory Animal Welfare (OLAW), National Institutes of Health (NIH),
> that the Contractor is not in compliance with any of the requirements
> and/or standards stated in paragraphs (a) through (c) above, the
> Contracting Officer may immediately suspend, in whole or in part, work
> and further payments under this contract until the Contractor corrects
> the noncompliance. Notice of the suspension may be communicated by
> telephone and confirmed in writing. If the Contractor fails to
> complete corrective action within the period of time designated in the
> Contracting Officer's written notice of suspension, the Contracting
> Officer may, in consultation with OLAW, NIH, terminate this contract
> in whole or in part, and the Contractor's name may be removed from the
> list of those contractors with approved PHS Animal Welfare Assurances.
>
> **Note:** The Contractor may request registration of its facility and
> a current listing of licensed dealers from the Regional Office of the
> Animal and Plant Health Inspection Service (APHIS), USDA, for the
> region in which its research facility is located. The location of the
> appropriate APHIS Regional Office, as well as information concerning
> this program may be obtained by contacting the Animal Care Staff,
> USDA/APHIS, 4700 River Road, Riverdale, Maryland 20737.
>
> (End of clause)

##### 352.333--7001 Choice of Law (Overseas). 

As prescribed in [333.215--70]{.underline}, use the following clause:
Choice of Law (Overseas) This contract shall be construed and
interpreted in accordance with the substantive laws of the United States
of America. By the execution of this contract, the contractor expressly
agrees to waive any rights to invoke the jurisdiction of local national
courts where this contract is performed and agrees to accept the
exclusive jurisdiction of the United States Armed Services Board of
Contract Appeals and the United States Court of Federal Claims for
hearing and determination of any and all disputes that may arise under
the Disputes clause of this contract.

##### 352.270--10 Anti-lobbying. 

Insert the following clause in all solicitations and resultant contracts
expected to exceed \$100,000:

> **Anti-Lobbying (January 2006)**
>
> Pursuant to the current HHS annual appropriations act, except for
> normal and recognized executive-legislative relationships, the
> Contractor shall not use any HHS contract funds for (i) publicity or
> propaganda purposes; (ii) the preparation, distribution, or use of any
> kit, pamphlet, booklet, publication, radio, television or video
> presentation designed to support or defeat legislation pending before
> the Congress or any State legislature, except in presentation to the
> Congress or any State legislature itself; or (iii) payment of salary
> or expenses of the Contractor, or any agent acting for the Contractor,
> related to any activity designed to influence legislation or
> appropriations pending before the Congress or any State legislature.
>
> (End of Clause)

##### 352.270--11 Privacy Act. 

The following clause shall be used as prescribed in
[324.103(a)]{.underline}:

> **Privacy Act (January 2006)**
>
> This contract requires the Contractor to perform one or more of the
> following: (a) Design; (b) develop; or (c) operate a Federal agency
> system of records to accomplish an agency function in accordance with
> the Privacy Act of 1974 (Act) ([[5 U.S.C.
> 552a(m)(1)]{.underline}](http://www.law.cornell.edu/uscode/5/usc_sec_05_00000552----000-.html))
> and applicable agency regulations. The term ''system of records''
> means a group of any records under the control of any agency from
> which information is retrieved by the name of the individual or by
> some identifying number, symbol, or other identifying particular
> assigned to the individual. Violations of the Act by the Contractor
> and/or its employees may result in the imposition of criminal
> penalties ([[5 U.S.C.
> 552a(i)]{.underline}](http://www.law.cornell.edu/uscode/5/usc_sec_05_00000552----000-.html)).
> The Contractor shall ensure that each of its employees knows the
> prescribed rules of conduct and that each employee is aware that
> he/she is subject to criminal penalties for violation of the Act to
> the same extent as HHS employees. These provisions also apply to all
> subcontracts awarded under this contract which require the design,
> development or operation of the designated system(s) of records ([[5
> U.S.C.
> 552a(m)(1)]{.underline}](http://www.law.cornell.edu/uscode/5/usc_sec_05_00000552----000-.html)).
> The contract work statement: (a) identifies the system(s) of records
> and the design, development, or operation work to be performed by the
> Contractor; and (b) specifies the disposition to be made of such
> records upon completion of contract performance.
>
> (End of clause)

##### 352.270--12 Pro-Children Act. 

Insert the following clause in all solicitations and resultant contracts
and orders, regardless of dollar amount, for (i) kindergarten,
elementary, or secondary education or library services or (ii) health or
day care services that are provided to children under the age of 18 on a
routine or regular basis pursuant to the Pro-Children Act of 1994:

> **Pro-Children Act of 1994 (January 2006)**
>
> Public Law 103--227, Title X, Part C, also known as the [[Pro-Children
> Act of
> 1994]{.underline}](http://www.cdc.gov/tobacco/research_data/youth/464119.htm)
> (Act), 20 U.S.C. 7183, imposes restrictions on smoking in facilities
> where certain federally funded children's services are provided. The
> Act prohibits smoking within any indoor facility (or portion thereof),
> whether owned, leased, or contracted for, that is used for the routine
> or regular provision of (i) kindergarten, elementary, or secondary
> education or library services or (ii) health or day care services that
> are provided to children under the age of 18. The statutory
> prohibition also applies to indoor facilities that are constructed,
> operated, or maintained with Federal funds.
>
> By acceptance of this contract or order, the Contractor agrees to
> comply with the requirements of the Act. The Act also applies to all
> subcontracts awarded under this contract for the specified children's
> services. Accordingly, the Contractor shall ensure that each of its
> employees, and any subcontractor staff, is made aware of, understand,
> and comply with the provisions of the Act. Failure to comply with the
> Act may result in the imposition of a civil monetary penalty in an
> amount not to exceed \$1,000 for each violation and/or the imposition
> of an administrative compliance order on the responsible entity. Each
> day a violation continues constitutes a separate violation.
>
> (End of clause)

##### 352.270--13 Tobacco-free facilities. 

Insert the following clause in all new solicitations and resultant
contracts and orders (including construction) and all modifications
resulting from the exercise of an option under a contract or order,
regardless of dollar value, where some or all of the Contractor's
performance, will take place on HHS properties. This clause is not
required to be included if contract or order performance requires only
that Contractor staff attend occasional meetings on HHS properties. In
this case, Contractor employees are considered ''visitors.'' Further,
for any proposed or existing construction contract or order, the
Contracting Officer should coordinate any exceptions to the policy
raised by an incumbent or potential Contractor based on union or
collective bargaining agreements with the designated OPDIV tobacco-free
policy contact point for final disposition.

> **Tobacco-Free Facilities (January 2006)**
>
> In accordance with Department of Health and Human Services (HHS)
> policy, the Contractor and its staff are prohibited from using tobacco
> products of any kind (e.g., cigarettes, cigars, pipes, and smokeless
> tobacco) while on any HHS property, including use in personal or
> company vehicles operated by Contractor employees while on an HHS
> property. This policy also applies to all subcontracts awarded under
> the contract or order. The term ''HHS properties'' includes all
> properties owned, controlled and/or leased by HHS when totally
> occupied by HHS, including all indoor and outdoor areas of such
> properties. Where HHS only partially occupies such properties, it
> includes all HHS-occupied interior space. Where HHS leases space in a
> multi-occupant building or complex, the tobacco-free HHS policy will
> apply to the maximum area permitted by law and compliance with the
> provisions of any current lease agreements. The Contractor shall
> ensure that each of its employees, and any subcontractor staff, is
> made aware of, understand, and comply with this policy.

(End of clause)

##### 352.270--14 Restriction on use of human subjects. 

If the Contractor has an approved Federal-wide assurance of compliance
in place, but the certification that the Institutional Review Board
(IRB)designated under the assurance has reviewed and approved the
research cannot be completed prior to contract award because definite
plans for involvement of human subjects are not set forth in the
proposal (e.g., projects in which human subjects' involvement will
depend upon completion of instruments, prior animal studies, or
purification of compounds), the award may be made without the requisite
certification as long as the contract is appropriately conditioned.
Under these conditions, insert the following clause in applicable
contracts:

> **Restriction on Use of Human Subjects (January 2006)**
>
> Pursuant to [[45 CFR part 46, *Protection of Human Research
> Subjects*]{.underline}](http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&tpl=/ecfrbrowse/Title45/45cfr46_main_02.tpl),
> the Contractor shall not expend funds under this award for research
> involving human subjects or engage in any human subjects research
> activity prior to the receipt by the Contracting Officer of a
> certification that the research has been reviewed and approved by the
> Institutional Review Board (IRB) designated under the Contractor's
> Federal-wide assurance of compliance. This restriction applies to all
> collaborating sites, whether domestic or foreign, and subcontractors.
> The Contractor must ensure compliance by collaborators and
> subcontractors.
>
> (End of clause)

##### 352.270--15 Salary rate limitation. 

Insert the following clause in all new NIH, SAMHSA, and AHRQ
solicitations and resultant contracts and orders (except fixed-price
completion contracts) and modifications of existing contracts for
projects that support extramural activities. Projects that support
extramural activities include extramural R&D, SAMHSA's mission related
requirements, and those activities commonly referred to as ''extramural
R&D support.''

OR

Insert the following clause in all new NIH, SAMHSA, and AHRQ
solicitations and resultant contracts (except fixed price completion
contracts) and modifications of existing contracts for extramural R&D
and SAMHSA's mission-related requirements. Projects that are not
considered R&D but that support extramural R&D activities (commonly
referred to as ''extramural R&D support'') are or are not included.

> **Salary Rate Limitation (January 2006)**
>
> Pursuant to the applicable HHS appropriations acts cited in the table
> below, the Contractor shall not use contract funds to pay the direct
> salary of an individual at a rate in excess of the salary level in
> effect on the date the expense is incurred as shown in the table
> below.
>
> For purposes of the salary limitation, the terms ''direct salary,''
> ''salary,'' and ''institutional base salary'' have the same meaning
> and are collectively referred to as ''direct salary'' in this clause.
> An individual's direct salary is the annual compensation that the
> Contractor pays for an individual's appointment whether that
> individual's time is spent on research, teaching, patient care, or
> other activities. Direct salary excludes any income that an individual
> may be permitted to earn outside of duties to the Contractor. Direct
> salary also excludes fringe benefits, overhead, and general and
> administrative expenses (also referred to as indirect costs or
> facilities and administrative \[F&A\] costs). The salary rate
> limitation also applies to individuals performing under subcontracts.
> However, it does not apply to fees paid to consultants. If this is a
> multiple-year contract, it may be subject to unilateral modification
> by the Contracting Officer to ensure that an individual is not paid at
> a rate that exceeds the salary rate limitation provision established
> in the HHS appropriations act in effect when the expense is incurred
> regardless of the rate initially used to establish contract funding.
>
> ![](media/image1.jpeg){width="5.939583333333333in"
> height="1.3708333333333333in"}
>
> ![](media/image2.jpeg){width="5.9319444444444445in"
> height="1.46875in"}
>
> Executive Level salaries for the current and prior periods can be
> found at the following Web site: [*[http://]{.underline}*
> *[www.opm.gov/oca/05tables/html/ex.asp]{.underline}*](http://www.opm.gov/oca/05tables/html/ex.asp)*.*
> Click on ''Salaries and Wages'' and then scroll to the bottom of the
> page to select the desired period.
>
> (End of Clause)

##### 352.270--16 Native American Graves Protection and Repatriation Act. 

Insert the following clause in any solicitation and resultant contract
or order that requires performance on tribal lands and all solicitations
and resultant contracts or orders for construction on Federal or tribal
lands, regardless of dollar amount:

**Native American Graves Protection and Repatriation Act (January
2006)**

> Public Law 101--601, dated November 16, 1990, also known as the
> [[Native American Graves]{.underline} [Protection and Repatriation
> Act]{.underline}](http://www.cr.nps.gov/nagpra/MANDATES/25USC3001etseq.htm)
> (Act), imposes certain responsibilities on individuals and
> organizations when they discover Native American cultural items
> (including human remains) on Federal or tribal lands. In the event the
> Contractor discovers Native American cultural items (including human
> remains, associated funerary objects, unassociated funerary objects,
> sacred objects and cultural patrimony), as defined in the Act during
> contract performance, the Contractor shall: (i) Immediately cease
> activity in the area of the discovery; (ii) notify the Contracting
> Officer of the discovery; and (iii) make a reasonable effort to
> protect the items discovered before resuming such activity. Upon
> receipt of the Contractor's discovery notice, the Contracting Officer
> will notify the appropriate authorities as required by the Act. Unless
> otherwise specified by the Contracting Officer, the Contractor may
> resume activity in the area on the 31st calendar day following the
> date that the appropriate authorities certify receipt of the discovery
> notice. The date that the appropriate authorities certify receipt of
> the discovery notice and the date on which the Contractor may resume
> activities shall be provided to the Contractor by the Contracting
> Officer.
>
> (End of clause)

##### 352.270--17 Crime Control Act---Reporting of child abuse. 

Insert the following clause in all solicitations and resultant contracts
and orders, regardless of dollar amount, where performance will take
place on Federal land or in a federally-operated (or contracted)
facility and that involve the professions/activities performed by
persons specified in the Crime Control Act of 1990, including, but not
limited to, physicians, nurses, dentists, health care practitioners,
optometrists, psychologists, emergency medical technicians, alcohol or
drug treatment personnel, child care workers and administrators,
emergency medical technicians and ambulance drivers:

**Crime Control Act of 1990---Reporting of Child Abuse (January 2006)**

> [[Public Law 101--647, also known as the Crime Control Act of 1990
> (Act)]{.underline}](http://www.law.cornell.edu/uscode/42/usc_sec_42_00013031----000-.html),
> imposes responsibilities on certain individuals who, while engaged in
> a professional capacity or activity, as defined in the Act, on Federal
> land or in a federally-operated (or contracted) facility, learn of
> facts that give the individual reason to suspect that a child has
> suffered an incident of child abuse. The Act designates ''covered
> professionals'' as those persons engaged in professions and activities
> in eight different categories including, but not limited to,
> physicians, dentists, medical residents or interns, hospital personnel
> and administrators, nurses, health care practitioners, chiropractors,
> osteopaths, pharmacists, optometrists, podiatrists, emergency medical
> technicians, ambulance drivers, alcohol or drug treatment personnel,
> psychologists, psychiatrists, mental health professionals, child care
> workers and administrators, and commercial film and photo processors.
> The Act defines the term ''child abuse'' as the physical or mental
> injury, sexual abuse or exploitation, or negligent treatment of a
> child. Accordingly, any person engaged in a covered profession or
> activity under an HHS contract or subcontract, regardless of the
> purpose of the contract or subcontract, shall immediately report a
> suspected child abuse incident in accordance with the provisions of
> the Act. If a child is suspected of being harmed, the appropriate
> State Child Abuse Hotline, local child protective services (CPS), or
> law enforcement agency should be contacted. For more information about
> where and how to file a report, the Childhelp USA, National Child
> Abuse Hotline (1--800--4--A--CHILD•) should be called. Any covered
> professional failing to make a timely report of such incident shall be
> guilty of a Class B misdemeanor. By acceptance of this contract or
> order, the Contractor agrees to comply with the requirements of the
> Act. The Act also applies to all applicable subcontracts awarded under
> this contract. Accordingly, the Contractor shall ensure that each of
> its employees, and any subcontractor staff, is made aware of,
> understand, and comply with the provisions of the Act.
>
> (End of clause)

##### 352.270--18 Crime Control Act---Requirement for background checks. 

Insert the following clause in all solicitations and resultant contracts
and orders, regardless of dollar amount, for all child care services to
children under the age of 18, including social services, health and
mental health care, child (day) care, education (whether or not directly
involved in teaching), and rehabilitative programs covered under the
Crime Control Act of 1990 (Act):

> **Crime Control Act of 1990---Requirement for Background Checks
> (January 2006) [Public Law 101--647, also known as the Crime Control
> Act of 1990
> (Act)](http://www.law.cornell.edu/uscode/42/usc_sec_42_00013031----000-.html)**,
> requires that all individuals involved with the provision of child
> care services to children under the age of 18 undergo a criminal
> background check. ''Child care services'' include, but are not limited
> to, social services, health and mental health care, child (day) care,
> education (whether or not directly involved in teaching), and
> rehabilitative programs. Any conviction for a sex crime, an offense
> involving a child victim, or a drug felony, may be grounds for denying
> employment or for dismissal of an employee providing any of the
> services listed above. The Contracting Officer will provide the
> necessary information to the Contractor regarding the process for
> obtaining the background check. The Contractor may hire a staff person
> provisionally prior to the completion of a background check, if at all
> times prior to the receipt of the background check during which
> children are in the care of the newly-hired person, the person is
> within the sight and under the supervision of a previously
> investigated staff person.
>
> By acceptance of this contract or order, the Contractor agrees to
> comply with the requirements of the Act. The Act also applies to all
> applicable subcontracts awarded under this contract. Accordingly, the
> Contractor shall ensure that each of its employees, and any
> subcontractor staff, is made aware of, understand, and comply with the
> provisions of the Act.
>
> (End of clause)

##### 352.270--19 Electronic information and technology accessibility. 

\(a\) The following clause shall be used in solicitations as provided in
[[339.201--70]{.underline}](http://www.knownet.hhs.gov/acquisition/hhsar/%23339.201–70_Required_provision_and_contract_clause):

**Electronic and Information Technology Accessibility (January 2006)**

> Section 508 of the Rehabilitation Act of 1973 (29 U.S.C. 794d), as
> amended by Public Law 105--220 under Title IV (Rehabilitation Act
> Amendments of 1998) and the Architectural and Transportation Barriers
> Compliance Board Electronic and Information (EIT) Accessibility
> Standards (36 CFR part 1194), require that all EIT acquired must
> ensure that:
>
> \(1\) Federal employees with disabilities have access to and use of
> information and data that is comparable to the access and use by
> Federal employees who are not individuals with disabilities; and
>
> \(2\) Members of the public with disabilities seeking information or
> services from an agency have access to and use of information and data
> that is comparable to the access to and use of information and data by
> members of the public who are not individuals with disabilities. This
> requirement includes the development, procurement, maintenance, and/or
> use of EIT products/services; therefore, any proposal submitted in
> response to this solicitation must demonstrate compliance with the
> established EIT Accessibility Standards. Information about Section 508
> is available at
> *[[http://www.section508.gov/]{.underline}](http://www.section508.gov/).*
>
> (End of provision)

\(b\) The following clause shall be used in contracts and orders as
provided in
[[339.201--70]{.underline}](http://www.knownet.hhs.gov/acquisition/hhsar/%23339.201–70_Required_provision_and_contract_clause):

**Electronic and Information Technology Accessibility (January 2006)**

> Pursuant to Section 508 of the Rehabilitation Act of 1973 ([[29 U.S.C.
> 794d]{.underline}](http://www.law.cornell.edu/uscode/html/uscode29/usc_sec_29_00000794----000-.html))
> as amended by Public Law 105--220 under Title IV (Rehabilitation Act
> Amendments of 1998), all Electronic and Information Technology (EIT)
> developed, procured, maintained, and/or used under this contract shall
> be in compliance with the ''Electronic and Information Technology
> Accessibility Standards'' set forth by the Architectural and
> Transportation Barriers Compliance Board (also referred to as the
> ''Access Board'') in [[36 CFR part
> 1194]{.underline}](http://www.access.gpo.gov/nara/cfr/waisidx_01/36cfr1194_01.html).
> The complete text of Section 508 Final Standards can be accessed at
> [*[http://]{.underline}*
> *[www.access-board.gov/sec508/standards.htm]{.underline}*](http://www.access-board.gov/sec508/standards.htm)*.*
>
> The standards applicable to this requirement are \[identified in the
> Statement of Work listed below\]:
>
> (Select the appropriate phrase within the brackets \[ \] and complete
> if necessary and identify location of/provide complete list of
> applicable provisions. Use the Buy accessible wizard at
> [*[http://www.]{.underline}*
> *[buyaccessible.gov]{.underline}*](http://www.buyaccessible.gov/) if
> necessary or contact your Section 508 Coordinator)
>
> Vendors may document conformance using \[attached
> documentation/industry-standard Voluntary Product Accessibility
> Template at
> [*[http://www.itic.org/archives/articles/20040506/]{.underline}*
> *[faq]{.underline}*](http://www.itic.org/archives/articles/20040506/faq_voluntary_product_accessibility_template_vpat.php)[\_*voluntary*\_*product*\_*accessibility*\_*template*\_*vpat.php*]{.underline}\]
> (select the appropriate phrase within the brackets \[ \]).
>
> Vendors should provide detailed information necessary for determining
> compliance, including defined contractor-incidental exceptions.
>
> (End of clause)

## PART 353\--FORMS 

### Subpart 353.3\--Illustrations of Forms 

##### 353.370-674 Form HHS 674, Structured Approach Profit/Fee Objective. 

This form is available from local cost advisory personnel. For copies of
the form, contact the Program Support Center at (301) 443-6740.

# SUBCHAPTER T\--HHS SUPPLEMENTATIONS 

[PART 370\--SPECIAL PROGRAMS AFFECTING ACQUISITION
127](#part-370--special-programs-affecting-acquisition)

[Subpart 370.1\--Accessibility of Meetings, Conferences, and Seminars to
Persons with Disabilities
127](#subpart-370.1--accessibility-of-meetings-conferences-and-seminars-to-persons-with-disabilities)

[370.101 Policy. 127](#section-370.101-policy.)

[370.102 Responsibilities. 127](#section-370.102-responsibilities.)

[Subpart 370.2\--Indian Preference in Employment, Training, and
Subcontracting Opportunities
128](#subpart-370.2--indian-preference-in-employment-training-and-subcontracting-opportunities)

[370.201 Statutory requirements.
128](#section-370.201-statutory-requirements.)

[370.202 Applicability. 128](#section-370.202-applicability.)

[370.203 Definitions. 129](#section-370.203-definitions.)

[370.204 Compliance enforcement.
130](#section-370.204-compliance-enforcement.)

[370.205 Tribal preference requirements.
130](#section-370.205-tribal-preference-requirements.)

[Subpart 370.3\--Acquisitions Involving Human Subjects
130](#subpart-370.3--acquisitions-involving-human-subjects)

[370.300 Scope of subpart. 130](#section-370.300-scope-of-subpart.)

[370.301 Policy. 130](#section-370.301-policy.)

[370.302 Types of assurances.
131](#section-370.302-types-of-assurances.)

[370.303 Notice to offerors. 131](#section-370.303-notice-to-offerors.)

[370.304 Contract clause. 132](#section-370.304-contract-clause.)

[Subpart 370.4\--Acquisitions Involving the Use of Laboratory Animals
132](#subpart-370.4--acquisitions-involving-the-use-of-laboratory-animals)

[370.400 Scope of subpart. 132](#section-370.400-scope-of-subpart.)

[370.401 Policy. 132](#section-370.401-policy.)

[370.402 Assurances. 132](#section-370.402-assurances.)

[370.403 Notice to offerors. 133](#section-370.403-notice-to-offerors.)

[370.404 Contract clause. 133](#section-370.404-contract-clause.)

[Subpart 370.5\--Acquisitions Under the Buy Indian Act
133](#subpart-370.5--acquisitions-under-the-buy-indian-act)

[370.500 Scope of subpart. 133](#scope-of-subpart.-1)

[370.501 Policy. 134](#section-370.501-policy.)

[370.502 Definitions. 134](#section-370.502-definitions.)

[370.503 Requirements. 135](#section-370.503-requirements.)

[370.504 Competition. 136](#section-370.504-competition.)

[370.505 Responsibility determinations.
136](#section-370.505-responsibility-determinations.)

## PART 370\--SPECIAL PROGRAMS AFFECTING ACQUISITION 

### Subpart 370.1\--Accessibility of Meetings, Conferences, and Seminars to Persons with Disabilities

#### Section 370.101 Policy. 

\(a\) It is the policy of HHS that all meetings, conferences, and
seminars be accessible to persons with disabilities. For the purpose of
this policy, accessibility is defined as both physical access to
meeting, conference, and seminar sites, and aids and services to enable
individuals with sensory disabilities to fully participate in meetings,
conferences, and seminars.

\(b\) In regard to acquisition, the policy is applicable to all
contracts where the statement of work requires the contractor to conduct
meetings, conferences, or seminars that are open to the public or
involve HHS personnel, but not to ad hoc meetings that may be necessary
or incidental to contract performance.

#### Section 370.102 Responsibilities. 

\(a\) The Contracting Officer shall include the clause in
[352.270--1]{.underline} in every solicitation and resulting contract
when the statement of work requires the contractor to conduct meetings,
conferences, or seminars in accordance with [370.101(b)]{.underline}.

\(b\) The Project Officer shall be responsible for obtaining, reviewing,
and approving the contractor's plan, which is to be submitted in
response to paragraph (a) of the contract clause in
[352.270--1]{.underline}. A consolidated or master plan for contracts
requiring numerous meetings, conferences, or seminars will be
acceptable. The Project Officer, prior to approving the plan, should
consult with the OPDIV or other designated organization responsible for
ensuring compliance with the Architectural Barriers Act of 1968 and the
Americans with Disabilities Act of 1990 to ensure that the contractor's
plan meets the accessibility requirements of the contract clause. The
Project Officer shall ask the responsible organization to review, and
determine the adequacy of, the contractor's plan, and respond to the
Project Officer, in writing, within ten (10) working days of receiving
the request from the Project Officer.

### Subpart 370.2\--Indian Preference in Employment, Training, and Subcontracting Opportunities 

#### Section 370.201 Statutory requirements. 

Section 7(b) of the Indian Self-Determination and Education Assistance
Act, Public Law 93-638, 88 Stat. 2205, [[25 U.S.C.
450e(b)]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode25&STEMMER=en&WORDS=450+&COLOUR=Red&STYLE=s&URL=/uscode/25/450.html),
requires:

> \"Any contract, subcontract, grant, or subgrant pursuant to this Act,
> the Act of April 16, 1934 (48 Stat. 596), as amended, or any other Act
> authorizing Federal contracts with or grants to Indian organizations
> or for the benefit of Indians, shall require that to the greatest
> extent feasible:
>
> \(1\) Preferences and opportunities for training and employment in
> connection with the administration of such contracts or grants shall
> be given to Indians; and\
> (b) Preference in the award of subcontracts and subgrants in
> connection with the administration of such contracts or grants shall
> be given to Indian organizations and to Indian-owned economic
> enterprises as defined in section 3 of the Indian Financing Act of
> 1974 (88 Stat. 77).\"

#### Section 370.202 Applicability. 

The Indian Preference clause set forth in [352.270-2]{.underline} and
the Indian Preference Program clause set forth in
[352.270-3]{.underline} have been developed to implement section 7 (b)
of Public Law 93-638 for all activities of the Department. The clauses
shall be used by any affected departmental contracting activity as
follows, except solicitations issued and contracts awarded pursuant to
Title I of Public Law 93-638 ([[25 U.S.C.
450]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode25&STEMMER=en&WORDS=450+&COLOUR=Red&STYLE=s&URL=/uscode/25/450.html)
et seq.) are exempted:

\(a\) The Indian Preference clause ([352.270-2]{.underline}) shall be
included in each solicitation and resultant contract, regardless of
dollar amount:

\(1\) When the contract is to be awarded pursuant to an act specifically
authorizing contracts with Indian organizations; or\
(2) Where the work to be performed under the contract is specifically
for the benefit of Indians and is in addition to any incidental benefits
which might otherwise accrue to the general public.

\(b\) The Indian Preference Program clause ([352.270-3]{.underline})
shall be included in each solicitation and resultant contract when:\
(1) The dollar amount of the acquisition is expected to equal or exceed
\$50,000 for nonconstruction work or \$100,000 for construction work;\
(2) The Indian Preference clause is to be included in the solicitation
and resultant contract; and

\(3\) The determination is made, prior to solicitation, that the work to
be performed under the resultant contract will take place in whole or in
substantial part on or near an Indian reservation(s). In addition, the
Indian Preference Program clause may be included in any solicitation and
resultant contract below the \$50,000 or \$100,000 level for
nonconstruction or construction contracts, respectively, but which meet
the requirements of paragraphs (b)(2) and (3) of this section
[370.202]{.underline}, and, in the opinion of the contracting activity,
offer substantial opportunities for Indian employment, training, and
subcontracting.

#### Section 370.203 Definitions.

For purposes of this subpart [370.2]{.underline}, the following
definitions shall apply:

\(a\) Indian means a person who is a member of an Indian Tribe. If the
contractor has reason to doubt that a person seeking employment
preference is an Indian, the contractor shall grant the preference but
shall require the individual to provide evidence within thirty (30) days
from the Tribe concerned that the person is a member of the Tribe.

\(b\) Indian Tribe means an Indian Tribe, pueblo, band, nation, or other
organized group or community, including any Alaska Native Village or
regional or village corporation as defined in or established pursuant to
the Alaska Native Claims Settlement Act (85 Stat. 688, [[43 U.S.C.
1601]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode43&STEMMER=en&WORDS=1601+&COLOUR=Red&STYLE=s&URL=/uscode/43/1601.html))
which is recognized as eligible for the special programs and services
provided by the United States to Indians because of their status as
Indians.

\(c\) Indian organization means the governing body of any Indian Tribe
or entity established or recognized by such governing body in accordance
with the Indian Financing Act of 1974 (88 Stat. 77, [[25 U.S.C.
1451]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode25&STEMMER=en&WORDS=1451+&COLOUR=Red&STYLE=s&URL=/uscode/25/1451.html)).

\(d\) Indian-owned economic enterprise means any Indian-owned
commercial, industrial, or business activity established or organized
for the purpose of profit, provided that such Indian ownership shall
constitute not less than 51 percent of the enterprise, and the ownership
shall encompass active operation and control of the enterprise.

\(e\) Indian reservation includes Indian reservations, public domain
Indian allotments, former Indian reservations in Oklahoma, and land held
by incorporated Native groups, regional corporations, and village
corporations under the provisions of the Alaska Native Claims Settlement
Act (85 Stat. 688, [[43]{.underline} [U.S.C.
1601]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode43&STEMMER=en&WORDS=1601+&COLOUR=Red&STYLE=s&URL=/uscode/43/1601.html)
et seq.)

\(f\) On or near an Indian Reservation means on a reservation or
reservations or within that area surrounding an Indian reservation(s)
where a person seeking employment could reasonably be expected to
commute to and from in the course of a work day.

#### Section 370.204 Compliance enforcement.

\(a\) The concerned contracting activity shall be responsible for
conducting periodic reviews to insure contractor compliance with the
requirements of the clauses set forth in [352.270-2]{.underline} and
[352.270­-3]{.underline}. These reviews may be conducted with the
assistance of the Indian Tribe(s) concerned.

\(b\) Complaints of noncompliance with the requirements of the clauses
set forth in [352.270-2]{.underline} and [352.270-3]{.underline} which
are filed in writing with the contracting activity shall be promptly
investigated and resolved by the contracting officer.

#### Section 370.205 Tribal preference requirements. 

\(a\) Where the work under a contract is to be performed on an Indian
reservation, the contracting activity may supplement the clause set
forth in [352.270-3]{.underline} by adding specific Indian preference
requirements of the Tribe on whose reservation the work is to be
performed. The supplemental requirements shall be jointly developed for
the contract by the contracting activity and the Tribe. Supplemental
preference requirements must represent a further implementation of the
requirements of section 7(b) of Public Law 93--638 and must be approved
by the affected program director and approved for legal sufficiency by
the General Law Division, OGC, or a regional attorney before being added
to a solicitation and resultant contract. Any supplemental preference
requirements to be added to the clause in [352.270-3]{.underline} shall
be included in the solicitation and clearly identified in order to
insure uniform understanding of the additional requirements by all
prospective bidders or offerors.

\(b\) Nothing in this part shall be interpreted to preclude Tribes from
independently developing and enforcing their own tribal preference
requirements. Such independently \[\[Page 4264\]\] developed tribal
preference requirements shall not, except as provided in paragraph (a)
of this section, become a requirement in contracts covered under this
subpart [370.2]{.underline}, and must not conflict with any Federal
statutory or regulatory requirement concerning the award and
administration of contracts.

### Subpart 370.3\--Acquisitions Involving Human Subjects 

#### Section 370.300 Scope of subpart. 

This subpart applies to all research and development activities
involving human subjects conducted under contract (see [45 CFR 46.102(d)
and
(f)](http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/cfr_2002/octqtr/45cfr46.102.htm)).

#### Section 370.301 Policy. 

It is the policy of the Department of Health and Human Services (HHS)
that no contract involving human subjects shall be awarded until
acceptable assurance has been given that the activity will be subject to
initial and continuing review by an appropriate Institutional Review
Board (IRB) as described in HHS regulations at [[45 CFR
46.103]{.underline}](http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/cfr_2002/octqtr/45cfr46.103.htm).
An applicable Federal-wide Assurance (FWA), approved by the HHS Office
of Human Research Protections (OHRP), shall be required of each
contractor, subcontractor, or cooperating institution having
responsibility for human subjects involved in performance of the
contract. The HHS OHRP is responsible for negotiating assurances
covering all HHS-supported or HHS-conducted activities involving human
subjects. OHRP shall guide Contracting Officers regarding non-award or
termination of a contract due to inadequate assurance or breach of
assurance for protection of human subjects.

#### Section 370.302 Types of assurances. 

\(a\) In January 2005, OHRP announced that the FWA would be the only new
type of assurance accepted for review and approval by OHRP. Institutions
holding an OHRP-approved Multiple Project Assurance (MPA) or Cooperative
Project Assurance (CPA) were required to submit an FWA to OHRP for
approval by December 31, 2005, if the institution is required to have an
OHRP-approved assurance of compliance. Any Inter-Institutional Amendment
between an OHRP-approved MPA and an affiliate institution will be
deactivated on January 1, 2006 if the affiliate institution has not
obtained its own FWA. Single Project Assurances (SPAs) currently
approved by OHRP will remain in effect for the duration of the project
and through all non-competitive award renewals. An FWA listed in OHRP's
current ''List of Registered Institutional Review Boards
(IRBs)/Independent Ethics Committees (IECs) and Approved Assurances'' is
acceptable for the purposes of this policy. The list may be found at
[*http://ohrp.cit.nih.gov/search/asearch.asp*](http://ohrp.cit.nih.gov/search/asearch.asp).

\(b\) The OHRP Web site includes links to instructions and the forms for
submitting both a domestic and international FWA at
[[*http://www.hhs.gov/ohrp/assurances/assurances*\_*index.html*]{.underline}](http://www.hhs.gov/ohrp/assurances/assurances_index.html).
To expedite the

approval of a FWA, as well as any update/renewal, the institution shall
use the OHRP Electronic Submission System. Once an electronic file is
''submitted'' to OHRP, the institution must fax or mail (do not do both)
a copy of the signature page to initiate the review process. FWAs shall
be mailed to the OHRP, U.S. Department of Health and Human Services,
1101 Wootton Parkway, Suite 200, Rockville, Maryland 20852, or faxed to
OHRP at 240--453--8202 (do not do both).

#### Section 370.303 Notice to offerors. 

\(a\) Solicitations shall contain the notice to offerors in
[352.270-8(a)]{.underline} whenever contract performance is expected to
involve human subjects.

\(b\) IRB approval of proposals submitted by institutions having an
OHRP-approved FWA should be certified in the manner required by
instructions for completion of the contract proposal; or by completion
of an OMB Form No. 0990--0263, ''Protection of Human Subjects Assurance
Identification/ IRB Certification/Declaration of Exemption (Common
Rule); or by letter indicating the institution's OHRP-assigned FWA
number, the date of IRB review and approval, and the type of review
(convened or expedited). The date of IRB approval must not be more than
12 months prior to the deadline for proposal submission.

\(c\) FWAs for contractors, subcontractors, or cooperating institutions
generally will not be requested prior to determination that a contract
proposal has been selected for negotiation. When an FWA is submitted, it
provides certification for the initial contract period. No additional
documentation is required. If the contract provides for additional years
to complete the project, the noncompetitive renewal proposal shall be
certified in the manner described in the preceding paragraph.

#### Section 370.304 Contract clause. 

The clause set forth in [352.270-8(b)]{.underline} shall be inserted in
all solicitations and resultant contracts involving human subjects.

### Subpart 370.4\--Acquisitions Involving the Use of Laboratory Animals 

#### Section 370.400 Scope of subpart. 

This subpart applies to all research, research training and biological
testing activities involving live vertebrate animals conducted under
contract (see [[Public Health Service Policy on Humane Care
and]{.underline} [Use of Laboratory Animals (PHS Policy), Rev. 1986,
Repr.
1996]{.underline}](http://grants.nih.gov/grants/olaw/references/phspol.htm)).

#### Section 370.401 Policy. 

\(a\) It is the policy of the Department of Health and Human Services
(HHS) that no contract involving live vertebrate animals shall be
awarded until acceptable assurance has been given that the activity will
be subject to initial and continuing review by an appropriate
Institutional Animal Care and Use Committee (IACUC) as described in the
PHS Policy at IV.B.6. and 7. An applicable Full Animal Welfare Assurance
or Interinstitutional Agreement/Assurance, approved by the Office of
Laboratory Animal Welfare (OLAW), National Institutes of Health (NIH),
shall be required of each contractor, subcontractor, or cooperating
institution having responsibility for animal care and use involved in
performance of the contract (see PHS Policy II., IV.A., and V.B.).

\(b\) The OLAW, NIH, is responsible for negotiating assurances covering
all HHS/PHS-supported or HHS/PHS conducted activities involving the care
and use of live vertebrate animals. OLAW shall guide Contracting
Officers regarding adequate animal care, and use, approval, disapproval,
restriction, or withdrawal of approval of assurances (see PHS Policy
V.A.).

#### Section 370.402 Assurances. 

\(a\) Assurances may be one of two types:

\(1\) *Full Animal Welfare Assurance (AWA).* An AWA describes the
institution's complete program for the care and use of animals,
including but not limited to the facilities, occupational health,
training, veterinary care, IACUC procedures and lines of authority and
responsibility. An AWA listed in OLAW's list of institutions which have
an approved full AWA will be considered acceptable for purposes of this
policy.

\(2\) *Interinstitutional Agreement/Assurance (IAA).* An IAA describes
the arrangements between an offeror and usually a subcontractor where
animal activities will occur. An IAA is limited to the specific award or
single project.

\(b\) The Contracting Officer shall forward copies of proposals selected
for negotiation and requiring an assurance to the Assurance Branch,
Office of Laboratory Animal Welfare (OLAW), NIH MSC 7507, 6100 Executive
Blvd., Room 3B01, Rockville, Maryland 20892, as early as possible to
secure the necessary assurances.

\(c\) A contractor providing animal care services at an assured entity,
such as a Government-owned, contractor-operated (GOCO) site, does not
need a separate assurance because the GOCO site normally covers the
contractor services in the GOCO site assurance.

#### Section 370.403 Notice to offerors. 

Solicitations shall contain the notice to offerors in
[352.270-9(a)]{.underline} whenever contract performance is expected to
involve the use of live vertebrate animals.

\(a\) For offerors having a full AWA on file with OLAW, IACUC approval
of the use of animals shall be submitted in the manner required by
instructions for completion of the contract proposal, but prior to the
technical review of the proposal. The date of IACUC review and approval
must not be more than 36 months prior to the deadline for proposal
submission.

\(b\) Non-assured offerors are not required to submit assurances or
IACUC approval with proposals. OLAW will contact contractors,
subcontractors and cooperating institutions to negotiate necessary
assurances and verify IACUC approvals when requested by appropriate
HHS/PHS staff.

#### Section 370.404 Contract clause. 

The clause set forth in [352.270-9(b)]{.underline} shall be included in
all solicitations and resultant contracts involving the care and use of
live vertebrate animals.

### Subpart 370.5\--Acquisitions Under the Buy Indian Act 

#### 370.500 Scope of subpart. 

This subpart sets forth the policy on preferential acquisition from
Indians under the negotiation authority of the Buy Indian Act.
Applicability of this subpart is limited to acquisitions made by or on
behalf of the Indian Health Service of the Public Health Service.

#### Section 370.501 Policy. 

\(a\) The Indian Health Service will utilize the negotiation authority
of the Buy Indian Act to give preference to Indians whenever the use of
that authority is authorized and is practicable. The Buy Indian Act,
[[25 U.S.C.
47]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode25&STEMMER=en&WORDS=47+&COLOUR=Red&STYLE=s&URL=/uscode/25/47.html),
prescribes the application of the advertising requirements of section
3709 of the Revised Statutes to the acquisition of Indian supplies. As
set out in [[25 U.S.C.
47]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode25&STEMMER=en&WORDS=47+&COLOUR=Red&STYLE=s&URL=/uscode/25/47.html),
the Buy Indian Act provides as follows:

So far as may be practicable Indian labor shall be employed, and
purchases of the products (including, but not limited to printing,
notwithstanding any other law) of Indian industry may be made in open
market in the discretion of the Secretary of the Interior.

\(b\) The functions, responsibilities, authorities, and duties of the
Secretary of the Interior for maintenance and operation of hospital and
health facilities for Indians and for the conservation of the health of
Indians are transferred to the Surgeon General of the United States
under the supervision of the Secretary of Health and Human Services,
[[42 U.S.C. 2001
(a)]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode42&STEMMER=en&WORDS=2001+&COLOUR=Red&STYLE=s&URL=/uscode/42/2001.html).
Accordingly, the Secretary of Health and Human Services is authorized to
use the Buy Indian Act in the acquisition of products of Indian industry
in connection with the maintenance and operation of hospital and health
facilities for Indians and for the conservation of the health of
Indians. This authority has been delegated exclusively to the Indian
Health Service and is not available for use by any other HHS component
(unless that component is making an acquisition on behalf of the Indian
Health Service).

\(c\) Use of the Buy Indian Act negotiation authority has been
emphasized in subsequent legislation, particularly Public Law 94-437 and
Public Law 96-537.

#### Section 370.502 Definitions. 

*Buy Indian contract* means any contract involving activities covered by
the Buy Indian Act that is negotiated under the provisions of [[41
U.S.C.
252(c)]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode41&STEMMER=en&WORDS=252+&COLOUR=Red&STYLE=s&URL=/uscode/41/252.html)
and [[25 U.S.C.
47]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode25&STEMMER=en&WORDS=47+&COLOUR=Red&STYLE=s&URL=/uscode/25/47.html)
between an Indian firm and a contracting officer representing the Indian
Health Service.

*Indian* means a member of any tribe, pueblo, band, group, village or
community that is recognized by the Secretary of the Interior as being
Indian or any individual or group of individuals that is recognized by
the Secretary of the Interior or the Secretary of Health and Human
Services. The Secretary of Health and Human Services in making
determinations may take into account the determination of the tribe with
which affiliation is claimed.

*Indian firm* means a sole enterprise, partnership, corporation, or
other type of business organization owned, controlled, and operated by
one or more Indians (including, for the purpose of sections 301 and 302
of Public Law 94-437, former or currently federally recognized Indian
tribes in the State of New York) or by an Indian firm; or a nonprofit
firm organized for the benefit of Indians and controlled by Indians (see
[370.503(a)]{.underline}).

*Product of Indian industry* means anything produced by Indians through
physical labor or by intellectual effort involving the use and
application of skills by them.

#### Section 370.503 Requirements. 

\(a\) Indian ownership. The degree of Indian ownership of an Indian firm
shall be at least 51 percent during the period covered by a Buy Indian
contract.

\(b\) Joint ventures. An Indian firm may enter into a joint venture with
other entities for specific projects as long as the Indian firm is the
managing partner. However, the joint venture must be approved by the
contracting officer prior to the award of a contract under the Buy
Indian Act.

\(c\) Bonds. In the case of contracts for the construction, alteration,
or repair of public buildings or public works, performance and payment
bonds are required by the Miller Act ([[40 U.S.C.
270a-270f]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode40&STEMMER=en&WORDS=270+&COLOUR=Red&STYLE=s&URL=/uscode/40/270.html))
and [[FAR]{.underline} [part
28]{.underline}](http://www.acqnet.gov/far/current/html/FARTOCP28.html#227535).
In the case of contracts with Indian tribes or public nonprofit
organizations serving as governmental instrumentalities of an Indian
tribe, bonds are not required. However, bonds are required when dealing
with private business entities which are owned by an Indian tribe or
members of an Indian tribe. Bonds may be required of private business
entities which are joint ventures with, or subcontractors of, an Indian
tribe or a public nonprofit organization serving as a governmental
instrumentality of an Indian tribe. A bid guarantee or bid bond is
required only when a performance or payment bond is required.

\(d\) Indian preference in employment, training and subcontracting.
Contracts awarded under the Buy Indian Act are subject to the
requirements of section 7(b) of the Indian Self-Determination and
Education Assistance Act [[25 U.S.C.
450e]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode25&STEMMER=en&WORDS=450+&COLOUR=Red&STYLE=s&URL=/uscode/25/450.html),
which requires that preference be given to Indians in employment,
training, and subcontracting. The Indian Preference clause set forth in
[352.270-2]{.underline} shall be included in all Buy Indian
solicitations and resultant contracts. The Indian Preference Program
clause set forth in [352.270-3]{.underline} shall be used as specified
in [370.202(b)]{.underline}. All requirements set forth in

subpart [370.2]{.underline} which are applicable to the instant Buy
Indian acquisition shall be followed by the contracting officer, e.g.,
sections [370.204]{.underline} and [370.205]{.underline}.

\(e\) Subcontracting. Not more than 50 percent of the work to be
performed under a prime contract awarded pursuant to the Buy Indian Act
shall be subcontracted to other than Indian firms. For this purpose,
work to be performed does not include the provision of materials,
supplies, or equipment.

\(f\) Wage rates. A determination of the minimum wage rates by the
Secretary of Labor as required by the Davis-Bacon Act ([[40 U.S.C.
276a]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode40&STEMMER=en&WORDS=276+&COLOUR=Red&STYLE=s&URL=/uscode/40/274to276.html))
shall be included in all contracts awarded under the Buy Indian Act for
over \$2,000 for construction, alteration, or repair, including painting
and decorating, of public buildings and public works, \[\[Page 4266\]\]
except contracts with Indian tribes or public nonprofit organizations
serving as governmental instrumentalities of an Indian tribe. The wage
rate determination is to be included in contracts with private business
entities even if they are owned by an Indian tribe or a member of an
Indian tribe and in connection with joint ventures with, or
subcontractors of, an Indian tribe or a public nonprofit organization
serving as a governmental instrumentality of an Indian tribe.

#### Section 370.504 Competition. 

\(a\) Contracts awarded under the Buy Indian Act are subject to
competition among Indians or Indian concerns to the maximum extent that
the Contracting Officer determines is practicable. When competition is
determined not to be practicable, a Justification for Other than Full
and Open Competition shall be prepared in accordance with 306.303 and
subsequently retained in the contract file.

\(b\) Solicitations must be synopsized and publicized in *FedBizOpps* at
[*[http://www.fedbizopps.gov]{.underline}*](http://www.fedbizopps.gov/)
and copies of the synopses sent to the tribal office of the Indian
tribal government directly concerned with the proposed acquisition as
well as to Indian concerns and others having a legitimate interest. The
synopsis must state that the acquisition is restricted to Indian firms
under the Buy Indian Act.

#### Section 370.505 Responsibility determinations. 

\(a\) A contract may be awarded under the Buy Indian Act only if it is
first determined that the project or function to be contracted for is
likely to be satisfactorily performed under that contract and the
project or function is likely to be properly completed or maintained
under that contract.

\(b\) The determination called for by paragraph (a) of this section, to
be made prior to the award of a contract, will be made in writing by the
contracting officer reflecting an analysis of the standards set forth in
[[FAR
9.104-1]{.underline}](http://www.acquisition.gov/comp/far/current/html/Subpart 9_1.html#wp1084075).

48 CFR Parts 301, 302, 303, 304, 305, 306, 307, 309, 311, 312, 314, 315,
316, 319, 323, 324, 325, 330, 332, 333, 334, 335, 339, 342, 352, and 370

**SUMMARY**: The Department of Health Human Services is amending its
acquisition regulations (HHSAR) to make administrative and editorial
changes to reflect organizational changes resulting from Office of
Secretary (OS) and Operating Division (OPDIV) reorganizations and to
remove outdated text and references. The intent of the final rule is to
the HHSAR up to date and to make HHSAR consistent with the latest
amendments to the Federal Acquisition Regulations (FAR).

**DATES:** *Effective Date:* December 2006.

**FOR FURTHER INFORMATION CONTACT:** Katherine Hughes, Office of
Acquisition Management and Policy, telephone (202) 690--7079, e-mail:
[*Katherine.Hughes@hhs.gov*](mailto:Katherine.Hughes@hhs.gov).

**SUPPLEMENTARY INFORMATION**:

**A. Background:** The Department is not making significant amendments
to the existing HHSAR. The amendments to the HHSAR concern internal
procedural matters which are administrative in nature, and will not have
a major effect on the general public or on contractors or offerors
supporting the Department. The majority of the amendments address the
following:

HHS organizational title changes resulting from agency reorganizations;

Eliminating procedural guidance no longer deemed necessary;

> Changing contracting review and approval authorities to situate them
> at levels more appropriate to simplification, streamlining, and
> empowerment;
>
> Updating the HHSAR to bring it in line with the latest amendments made
> to the Federal Acquisition Regulation (FAR);

Clarifying authorities for selecting and terminating Contracting
Officers;

Establishing minimum training requirements for certain positions;

Specifically referencing regulations of other Federal agencies; and

Updating the text required to be inserted and contracts.

**B. Comments on the Notice of Proposed Rulemaking**

The Department published a Notice of Proposed Rulemaking (NPRM) on May
26, 2006 (70 FR 30520). The comment period closed on July 25, 2006. The
Department received one comment from the public regarding section
352.270--8. The commenter stated that the Office for Human Research
Protections (OHRP), which was cited as an office within the National
Institutes of Health (NIH), is now an office in the Office of Public
Health and Science (OPHS). Section [352.270--8]{.underline} has been
corrected in this final rule to refer to the new office location. In
addition, the Department's internal review of the NPRM has resulted in a
number of editorial changes and corrections, none of which are
substantive.

**C. Regulatory Flexibility Act**

The Department of Health and Human Service certifies this rulemaking
will not have a significant economic effect on a substantial number of
small entities under the Regulatory Flexibility Act ([[5
U.S.C.]{.underline}
[601]{.underline}](http://www.law.cornell.edu/uscode/5/usc_sec_05_00000601----000-.html)
*et seq.*) because it does not impose any new requirements. Therefore,
no regulatory flexibility statement has been prepared. Since this rule
conveys existing acquisition policies or procedures and does not
promulgate any new policies or procedures that would impact the public,
it has been determined that this rule will not have a significant
economic effect on a substantial number of small entities, and, thus, a
regulatory flexibility analysis was not performed.

**D. Paperwork Reduction Act**

The Paperwork Reduction Act does not apply because the changes to the
HHSAR do not impose any record keeping or information collection
requirements that require approval by the Office of Management and
Budget under [[44 U.S.C.
3501]{.underline}](http://www4.law.cornell.edu/uscode/html/uscode44/usc_sec_44_00003501----000-.html),
*et seq.* Existing approvals cited in [[48 CFR
301.106]{.underline}](http://a257.g.akamaitech.net/7/257/2422/14mar20010800/edocket.access.gpo.gov/cfr_2002/octqtr/48cfr301.106.htm)
remain in effect. The provisions of this regulation are issued under [[5
U.S.C.
301]{.underline}](http://www.law.cornell.edu/uscode/5/usc_sec_05_00000301----000-.html);
[[40 U.S.C.
486(c)]{.underline}](http://www4.law.cornell.edu/cgi-bin/htm_hl?DB=uscode40&STEMMER=en&WORDS=486+&COLOUR=Red&STYLE=s&URL=/uscode/40/486.html).

**E. Administrative Procedure Act Exception**

This final rule imposes no new burdens on the public and merely updates,
corrects, or clarifies existing regulations. Therefore, good cause
exists under [[5 U.S.C.
553(d)]{.underline}](http://www.law.cornell.edu/uscode/uscode05/usc_sec_05_00000553----000-.html)
to dispense with the 30-day delay in the effective date requirement, and
the Department of Health and Human Services is making the rule effective
upon publication in the *Federal Register.*

**List of Subjects in 48 CFR Chapter 3:** Government procurement.

Dated: September 21, 2006.

**Joe W. Ellis,**

*Assistant Secretary for Administration and Management.*

**Editorial Note:** This document was received in the Office of the
Federal Register on December 13,\
2006.

Under the authority of [5 U.S.C.
301](http://www.law.cornell.edu/uscode/5/usc_sec_05_00000301----000-.html);
[40 U.S.C.
486(c)](http://www.knownet.hhs.gov/acquisition/hhsar/40 U.S.C. 486(c)),
the Department of Health and Human Services amends 48 CFR Chapter 3 as
set forth above.