(A) The extent to which the project requirements have been 
adequately defined. 
(B) The time constraints for delivery of the project. 
(C) The capability and experience of potential contractors. 
(D) The suitability of the project for use of the two-phase selec-
tion procedures. 
(E) The capability of the agency to manage the two-phase selec-
tion process. 
(F) Other criteria established by the agency. 
(c) PROCEDURES DESCRIBED.—Two-phase selection procedures consist of 
the following: 
(1) DEVELOPMENT OF SCOPE OF WORK STATEMENT.—The agency 
develops, either in-house or by contract, a scope of work statement for 
inclusion in the solicitation that defines the project and provides pro-
spective offerors with sufficient information regarding the Federal Gov-
ernment’s requirements (which may include criteria and preliminary de-
sign, budget parameters, and schedule or delivery requirements) to en-
able the offerors to submit proposals that meet the Government’s 
needs. If the agency contracts for development of the scope of work 
statement, the agency shall contract for architectural and engineering 
services as defined by and in accordance with chapter 11 of title 40. 
(2) SOLICITATION OF PHASE-ONE PROPOSALS.—The contracting offi-
cer solicits phase-one proposals that—
(A) include information on the offeror’s—
(i) technical approach; and 
(ii) technical qualifications; and 
(B) do not include—
(i) detailed design information; or 
(ii) cost or price information. 
(3) EVALUATION FACTORS.—The evaluation factors to be used in 
evaluating phase-one proposals are stated in the solicitation and include 
specialized experience and technical competence, capability to perform, 
past performance of the offeror’s team (including the architect-engineer 
and construction members of the team), and other appropriate factors, 
except that cost-related or price-related evaluation factors are not per-
mitted. Each solicitation establishes the relative importance assigned to 
the evaluation factors and subfactors that must be considered in the 
evaluation of phase-one proposals. The agency evaluates phase-one pro-
posals on the basis of the phase-one evaluation factors set forth in the 
solicitation. 
(4) SELECTION BY CONTRACTING OFFICER.—
(A) NUMBER OF OFFERORS SELECTED AND WHAT IS TO BE 
EVALUATED.—The contracting officer selects as the most highly 
qualified the number of offerors specified in the solicitation to pro-
vide the property or services under the contract and requests the 
selected offerors to submit phase-two competitive proposals that 
include technical proposals and cost or price information. Each so-
licitation establishes with respect to phase two—
(i) the technical submission for the proposal, including de-
sign concepts or proposed solutions to requirements addressed 
within the scope of work, or both; and 
(ii) the evaluation factors and subfactors, including cost or 
price, that must be considered in the evaluations of proposals 
in accordance with section 3305(b)–(d) of this title. 
(B) SEPARATE
EVALUATIONS.—The contracting officer sepa-
rately evaluates the submissions described in clauses (i) and (ii) 
of subparagraph (A). 
(5) AWARDING OF CONTRACT.—The agency awards the contract in 
accordance with section 3307, chapter 37, and section 4702 of this 
title. 
(d) SOLICITATION TO STATE NUMBER OF OFFERORS TO BE SELECTED 
FOR PHASE-TWO REQUESTS FOR COMPETITIVE PROPOSALS.—A solicitation 
issued pursuant to the procedures described in subsection (c) shall state the 
maximum number of offerors that are to be selected to submit competitive 
proposals pursuant to subsection (c)(4). The maximum number specified in 
the solicitation shall not exceed five unless the agency determines with re-
spect to an individual solicitation that a specified number greater than five 
is in the Government’s interest and is consistent with the purposes and ob-
jectives of the two-phase selection process. 
(e) REQUIREMENT FOR GUIDANCE AND REGULATIONS.—The Federal Ac-
quisition Regulation shall include guidance—
(1) regarding the factors that may be considered in determining 
whether the two-phase contracting procedures authorized by subsection 
(a) are appropriate for use in individual contracting situations; 
(2) regarding the factors that may be used in selecting contractors; 
and 
(3) providing for a uniform approach to be used Government-wide. 
§ 3309. Quantities to order 
(a) FACTORS AFFECTING QUANTITY TO ORDER.—Each executive agency 
shall procure supplies in a quantity that—
(1) will result in the total cost and unit cost most advantageous to 
the Federal Government, where practicable; and
(2) does not exceed the quantity reasonably expected to be required 
by the agency. 
(b) OFFEROR’S OPINION OF QUANTITY.—Each solicitation for a contract 
for supplies shall, if practicable, include a provision inviting each offeror re-
sponding to the solicitation to state an opinion on whether the quantity of 
supplies proposed to be procured is economically advantageous to the Gov-
ernment and, if applicable, to recommend a quantity that would be more 
economically advantageous to the Government. Each recommendation shall 
include a quotation of the total price and the unit price for supplies pro-
cured in each recommended quantity. 
§ 3310. Qualification requirement 
(a) DEFINITION.—In this section, the term ‘‘qualification requirement’’ 
means a requirement for testing or other quality assurance demonstration 
that must be completed by an offeror before award of a contract. 
(b) ACTIONS BEFORE ENFORCING QUALIFICATION REQUIREMENT.—Ex-
cept as provided in subsection (c), the head of an agency, before enforcing 
any qualification requirement, shall—
(1) prepare a written justification stating the necessity for estab-
lishing the qualification requirement and specify why the qualification 
requirement must be demonstrated before contract award; 
(2) specify in writing and make available to a potential offeror on 
request all requirements that a prospective offeror, or its product, must 
satisfy to become qualified, with those requirements to be limited to 
those least restrictive to meet the purposes necessitating the establish-
ment of the qualification requirement; 
(3) specify an estimate of the cost of testing and evaluation likely 
to be incurred by a potential offeror to become qualified; 
(4) ensure that a potential offeror is provided, on request, a prompt 
opportunity to demonstrate at its own expense (except as provided in 
subsection (d)) its ability to meet the standards specified for qualifica-
tion using—
(A) qualified personnel and facilities—
(i) of the agency concerned; 
(ii) of another agency obtained through interagency agree-
ment; or 
(iii) under contract; or 
(B) other methods approved by the agency (including use of ap-
proved testing and evaluation services not provided under contract 
to the agency);
(5) if testing and evaluation services are provided under contract to 
the agency for the purposes of clause (4), provide to the extent possible 
that those services be provided by a contractor that—
(A) is not expected to benefit from an absence of additional 
qualified sources; and 
(B) is required in the contract to adhere to any restriction on 
technical data asserted by the potential offeror seeking qualifica-
tion; and 
(6) ensure that a potential offeror seeking qualification is promptly 
informed whether qualification is attained and, if not attained, is 
promptly furnished specific information about why qualification was 
not attained. 
(c) APPLICABILITY, WAIVER AUTHORITY, AND REFERRAL OF OFFERS.—
(1) APPLICABILITY.—Subsection (b) does not apply to a qualification 
requirement established by statute prior to October 30, 1984. 
(2) WAIVER AUTHORITY.—
(A) 
SUBMISSION
OF
DETERMINATION
OF 
UNREASONABLENESS.—Except as provided in subparagraph (C), if 
it is unreasonable to specify the standards for qualification that 
a prospective offeror or its product must satisfy, a determination 
to that effect shall be submitted to the advocate for competition 
of the procuring activity responsible for the purchase of the item 
subject to the qualification requirement. 
(B) AUTHORITY
TO
GRANT
WAIVER.—After considering any 
comments of the advocate for competition reviewing the deter-
mination, the head of the procuring activity may waive the re-
quirements of paragraphs (2)–(5) of subsection (b) for up to two 
years with respect to the item subject to the qualification require-
ment. 
(C) NONAPPLICABILITY TO QUALIFIED PRODUCTS LIST.—Waiv-
er authority under this paragraph does not apply with respect to 
a qualified products list. 
(3) SUBMISSION AND CONSIDERATION OF OFFER NOT TO BE DE-
NIED.—A potential offeror may not be denied the opportunity to sub-
mit and have considered an offer for a contract solely because the po-
tential offeror has not been identified as meeting a qualification re-
quirement if the potential offeror can satisfy the contracting officer 
that the potential offeror or its product meets the standards established 
for qualification or can meet those standards before the date specified 
for award of the contract.
(4) REFERRAL
TO
SMALL
BUSINESS
ADMINISTRATION
NOT
RE-
QUIRED.—This subsection does not require the referral of an offer to 
the Small Business Administration pursuant to section 8(b)(7) of the 
Small Business Act (15 U.S.C. 637(b)(7)) if the basis for the referral 
is a challenge by the offeror to either the validity of the qualification 
requirement or the offeror’s compliance with that requirement. 
(5) DELAY OF PROCUREMENT NOT REQUIRED.—The head of an 
agency need not delay a proposed procurement to comply with sub-
section (b) or to provide a potential offeror with an opportunity to dem-
onstrate its ability to meet the standards specified for qualification. 
(d) FEWER THAN TWO ACTUAL MANUFACTURERS.—
(1) SOLICITATION AND TESTING OF ADDITIONAL SOURCES OR PROD-
UCTS.—If the number of qualified sources or qualified products avail-
able to compete actively for an anticipated future requirement is fewer 
than two actual manufacturers or the products of two actual manufac-
turers, respectively, the head of the agency concerned shall—
(A) publish notice periodically in the Commerce Business Daily 
soliciting additional sources or products to seek qualification, un-
less the contracting officer determines that doing so would com-
promise national security; and 
(B) subject to paragraph (2), bear the cost of conducting the 
specified testing and evaluation (excluding the cost associated with 
producing the item or establishing the production, quality control, 
or other system to be tested and evaluated) for a small business 
concern or a product manufactured by a small business concern 
that has met the standards specified for qualification and that 
could reasonably be expected to compete for a contract for that 
requirement. 
(2) WHEN AGENCY MAY BEAR COST.—The head of the agency con-
cerned may bear the cost under paragraph (1)(B) only if the head of 
the agency determines that the additional qualified sources or products 
are likely to result in cost savings from increased competition for future 
requirements sufficient to offset (within a reasonable period of time 
considering the duration and dollar value of anticipated future require-
ments) the cost incurred by the agency. 
(3) CERTIFICATION REQUIRED.—The head of the agency shall re-
quire a prospective contractor requesting the Federal Government to 
bear testing and evaluation costs under paragraph (1)(B) to certify its 
status as a small business concern under section 3 of the Small Busi-
ness Act (15 U.S.C. 632).
(e) EXAMINATION
AND REVALIDATION
OF QUALIFICATION REQUIRE-
MENT.—Within seven years after the establishment of a qualification re-
quirement, the need for the requirement shall be examined and the stand-
ards of the requirement revalidated in accordance with the requirements of 
subsection (b). This subsection does not apply in the case of a qualification 
requirement for which a waiver is in effect under subsection (c)(2). 
(f) WHEN ENFORCEMENT OF QUALIFICATION REQUIREMENT NOT AL-
LOWED.—Except in an emergency as determined by the head of the agency, 
after the head of the agency determines not to enforce a qualification re-
quirement for a solicitation, the agency may not enforce the requirement un-
less the agency complies with the requirements of subsection (b).
CHAPTER 35—TRUTHFUL COST AND PRICING DATA
Sec. 
3501.
Definitions. 
3502.
Required cost or pricing data and certification. 
3503.
Exceptions. 
3504.
Cost or pricing data on below-threshold contracts. 
3505.
Submission of other information. 
3506.
Price reductions for defective cost or pricing data. 
3507.
Interest and penalties for certain overpayments. 
3508.
Right to examine contractor records.
§ 3501. Definitions 
In this chapter—
(1) COMMERCIAL
ITEM.—The term ‘‘commercial item’’ has the 
meaning provided the term by section 103 of this title. 
(2) COST
OR
PRICING
DATA.—The term ‘‘cost or pricing data’’ 
means all facts that, as of the date of agreement on the price of a con-
tract (or the price of a contract modification) or, if applicable con-
sistent with section 3506(a)(2) of this title, another date agreed upon 
between the parties, a prudent buyer or seller would reasonably expect 
to affect price negotiations significantly. The term does not include in-
formation that is judgmental, but does include factual information from 
which a judgment was derived. 
(3) SUBCONTRACT.—The term ‘‘subcontract’’ includes a transfer of 
commercial items between divisions, subsidiaries, or affiliates of a con-
tractor or a subcontractor. 
§ 3502. Required cost or pricing data and certification 
(a) WHEN REQUIRED.—The head of an executive agency shall require 
offerors, contractors, and subcontractors to make cost or pricing data avail-
able as follows: 
(1) OFFEROR FOR PRIME CONTRACT.—An offeror for a prime con-
tract under this part to be entered into using procedures other than 
sealed-bid procedures shall be required to submit cost or pricing data 
before the award of a contract if—
(A) in the case of a prime contract entered into after October 
13, 1994, the price of the contract to the Federal Government is 
expected to exceed $500,000; and 
(B) in the case of a prime contract entered into on or before 
October 14, 1994, the price of the contract to the Government is 
expected to exceed $100,000. 
(2) CONTRACTOR.—The contractor for a prime contract under this 
part shall be required to submit cost or pricing data before the pricing 
of a change or modification to the contract if—
(A) in the case of a change or modification made to a prime 
contract referred to in paragraph (1)(A), the price adjustment is 
expected to exceed $500,000; 
(B) in the case of a change or modification made to a prime 
contract that was entered into on or before October 13, 1994, and 
that has been modified pursuant to subsection (f), the price ad-
justment is expected to exceed $500,000; and 
(C) in the case of a change or modification not covered by 
clause (A) or (B), the price adjustment is expected to exceed 
$100,000. 
(3) OFFEROR FOR SUBCONTRACT.—An offeror for a subcontract (at 
any tier) of a contract under this part shall be required to submit cost 
or pricing data before the award of the subcontract if the prime con-
tractor and each higher-tier subcontractor have been required to make 
available cost or pricing data under this section and—
(A) in the case of a subcontract under a prime contract referred 
to in paragraph (1)(A), the price of the subcontract is expected 
to exceed $500,000; 
(B) in the case of a subcontract entered into under a prime con-
tract that was entered into on or before October 13, 1994, and 
that has been modified pursuant to subsection (f), the price of the 
subcontract is expected to exceed $500,000; and 
(C) in the case of a subcontract not covered by clause (A) or 
(B), the price of the subcontract is expected to exceed $100,000. 
(4) SUBCONTRACTOR.—The subcontractor for a subcontract covered 
by paragraph (3) shall be required to submit cost or pricing data before 
the pricing of a change or modification to the subcontract if—
(A) in the case of a change or modification to a subcontract re-
ferred to in paragraph (3)(A) or (B), the price adjustment is ex-
pected to exceed $500,000; and
(B) in the case of a change or modification to a subcontract re-
ferred to in paragraph (3)(C), the price adjustment is expected to 
exceed $100,000. 
(b) CERTIFICATION.—A person required, as an offeror, contractor, or 
subcontractor, to submit cost or pricing data under subsection (a) (or re-
quired by the head of the procuring activity concerned to submit the data 
under section 3504 of this title) shall be required to certify that, to the best 
of the person’s knowledge and belief, the cost or pricing data submitted are 
accurate, complete, and current. 
(c) TO WHOM SUBMITTED.—Cost or pricing data required to be sub-
mitted under subsection (a) (or under section 3504 of this title), and a cer-
tification required to be submitted under subsection (b), shall be sub-
mitted—
(1) in the case of a submission by a prime contractor (or an offeror 
for a prime contract), to the contracting officer for the contract (or a 
designated representative of the contracting officer); or 
(2) in the case of a submission by a subcontractor (or an offeror for 
a subcontract), to the prime contractor. 
(d) APPLICATION OF CHAPTER.—Except as provided under section 3503 
of this title, this chapter applies to contracts entered into by the head of 
an executive agency on behalf of a foreign government. 
(e) SUBCONTRACTS NOT AFFECTED BY WAIVER.—A waiver of require-
ments for submission of certified cost or pricing data that is granted under 
section 3503(a)(3) of this title in the case of a contract or subcontract does 
not waive the requirement under section 3503(a)(3) for submission of cost 
or pricing data in the case of subcontracts under that contract or sub-
contract unless the head of the procuring activity granting the waiver deter-
mines that the requirement under that subsection should be waived in the 
case of those subcontracts and justifies in writing the reason for the deter-
mination. 
(f) MODIFICATIONS TO PRIOR CONTRACTS.—On the request of a con-
tractor that was required to submit cost or pricing data under subsection 
(a) in connection with a prime contract entered into on or before October 
13, 1994, the head of the executive agency that entered into the contract 
shall modify the contract to reflect paragraphs (2)(B) and (3)(B) of sub-
section (a). All those modifications shall be made without requiring consid-
eration. 
(g) ADJUSTMENT OF AMOUNTS.—Effective on October 1 of each year 
that is divisible by 5, each amount set forth in subsection (a) shall be ad-
justed to the amount that is equal to the fiscal year 1994 constant dollar 
value of the amount set forth. Any amount, as so adjusted, that is not even-
ly divisible by $50,000 shall be rounded to the nearest multiple of $50,000. 
In the case of an amount that is evenly divisible by $25,000 but not evenly 
divisible by $50,000, the amount shall be rounded to the next higher mul-
tiple of $50,000. 
§ 3503. Exceptions 
(a) IN GENERAL.—Submission of certified cost or pricing data shall not 
be required under section 3502 of this title in the case of a contract, a sub-
contract, or a modification of a contract or subcontract—
(1) for which the price agreed on is based on—
(A) adequate price competition; or 
(B) prices set by law or regulation; 
(2) for the acquisition of a commercial item; or 
(3) in an exceptional case when the head of the procuring activity, 
without delegation, determines that the requirements of this chapter 
may be waived and justifies in writing the reasons for the determina-
tion. 
(b) MODIFICATIONS OF CONTRACTS AND SUBCONTRACTS FOR COMMER-
CIAL ITEMS.—In the case of a modification of a contract or subcontract for 
a commercial item that is not covered by the exception to the submission 
of certified cost or pricing data in subsection (a)(1) or (2), submission of 
certified cost or pricing data shall not be required under section 3502 of 
this title if—
(1) the contract or subcontract being modified is a contract or sub-
contract for which submission of certified cost or pricing data may not 
be required by reason of subsection (a)(1) or (2); and 
(2) the modification would not change the contract or subcontract, 
as the case may be, from a contract or subcontract for the acquisition 
of a commercial item to a contract or subcontract for the acquisition 
of an item other than a commercial item. 
§ 3504. Cost or pricing data on below-threshold contracts 
(a) AUTHORITY TO REQUIRE SUBMISSION.—Subject to subsection (b), 
when certified cost or pricing data are not required to be submitted by sec-
tion 3502 of this title for a contract, subcontract, or modification of a con-
tract or subcontract, the data may nevertheless be required to be submitted 
by the head of the procuring activity, but only if the head of the procuring 
activity determines that the data are necessary for the evaluation by the 
agency of the reasonableness of the price of the contract, subcontract, or 
modification of a contract or subcontract. In any case in which the head 
of the procuring activity requires the data to be submitted under this sec-
tion, the head of the procuring activity shall justify in writing the reason 
for the requirement.
(b) EXCEPTION.—The head of the procuring activity may not require cer-
tified cost or pricing data to be submitted under this section for any con-
tract or subcontract, or modification of a contract or subcontract, covered 
by the exceptions in section 3503(a)(1) or (2) of this title. 
(c) DELEGATION OF AUTHORITY PROHIBITED.—The head of a procuring 
activity may not delegate the functions under this section. 
§ 3505. Submission of other information 
(a) AUTHORITY TO REQUIRE SUBMISSION.—When certified cost or pric-
ing data are not required to be submitted under this chapter for a contract, 
subcontract, or modification of a contract or subcontract, the contracting of-
ficer shall require submission of data other than certified cost or pricing 
data to the extent necessary to determine the reasonableness of the price 
of the contract, subcontract, or modification of the contract or subcontract. 
Except in the case of a contract or subcontract covered by the exceptions 
in section 3503(a)(1) of this title, the contracting officer shall require that 
the data submitted include, at a minimum, appropriate information on the 
prices at which the same item or similar items have previously been sold 
that is adequate for evaluating the reasonableness of the price for the pro-
curement. 
(b) LIMITATIONS ON AUTHORITY.—The Federal Acquisition Regulation 
shall include the following provisions regarding the types of information that 
contracting officers may require under subsection (a): 
(1) REASONABLE LIMITATIONS.—Reasonable limitations on requests 
for sales data relating to commercial items. 
(2) LIMITATION ON SCOPE OF REQUEST.—A requirement that a con-
tracting officer limit, to the maximum extent practicable, the scope of 
any request for information relating to commercial items from an offer-
or to only that information that is in the form regularly maintained 
by the offeror in commercial operations. 
(3) INFORMATION NOT TO BE DISCLOSED.—A statement that any in-
formation received relating to commercial items that is exempt from 
disclosure under section 552(b) of title 5 shall not be disclosed by the 
Federal Government. 
§ 3506. Price reductions for defective cost or pricing data 
(a) PROVISION REQUIRING ADJUSTMENT.—
(1) IN GENERAL.—A prime contract (or change or modification to 
a prime contract) under which a certificate under section 3502(b) of 
this title is required shall contain a provision that the price of the con-
tract to the Federal Government, including profit or fee, shall be ad-
justed to exclude any significant amount by which it may be deter-
mined by the head of the executive agency that the price was increased
because the contractor (or any subcontractor required to make the cer-
tificate available) submitted defective cost or pricing data.
(2) WHAT CONSTITUTES DEFECTIVE COST OR PRICING DATA.—For 
the purposes of this chapter, defective cost or pricing data are cost or 
pricing data that, as of the date of agreement on the price of the con-
tract (or another date agreed on between the parties), were inaccurate, 
incomplete, or noncurrent. If for purposes of the preceding sentence the 
parties agree on a date other than the date of agreement on the price 
of the contract, the date agreed on by the parties shall be as close to 
the date of agreement on the price of the contract as is practicable. 
(b) VALID DEFENSE.—In determining for purposes of a contract price 
adjustment under a contract provision required by subsection (a) whether, 
and to what extent, a contract price was increased because the contractor 
(or a subcontractor) submitted defective cost or pricing data, it is a defense 
that the Government did not rely on the defective data submitted by the 
contractor or subcontractor. 
(c) INVALID DEFENSES.—It is not a defense to an adjustment of the 
price of a contract under a contract provision required by subsection (a) 
that—
(1) the price of the contract would not have been modified even if 
accurate, complete, and current cost or pricing data had been sub-
mitted by the contractor or subcontractor because the contractor or 
subcontractor—
(A) was the sole source of the property or services procured; or 
(B) otherwise was in a superior bargaining position with respect 
to the property or services procured; 
(2) the contracting officer should have known that the cost or pricing 
data in issue were defective even though the contractor or subcon-
tractor took no affirmative action to bring the character of the data 
to the attention of the contracting officer; 
(3) the contract was based on an agreement between the contractor 
and the Government about the total cost of the contract and there was 
no agreement about the cost of each item procured under the contract; 
or 
(4) the prime contractor or subcontractor did not submit a certifi-
cation of cost or pricing data relating to the contract as required by 
section 3502(b) of this title. 
(d) OFFSETS.—
(1) WHEN ALLOWED.—A contractor shall be allowed to offset an 
amount against the amount of a contract price adjustment under a 
contract provision required by subsection (a) if—
(A) the contractor certifies to the contracting officer (or to a 
designated representative of the contracting officer) that, to the 
best of the contractor’s knowledge and belief, the contractor is en-
titled to the offset; and 
(B) the contractor proves that the cost or pricing data were 
available before the date of agreement on the price of the contract 
(or price of the modification), or, if applicable, consistent with 
subsection (a)(2), another date agreed on by the parties, and that 
the data were not submitted as specified in section 3502(c) of this 
title before that date. 
(2) WHEN NOT ALLOWED.—A contractor shall not be allowed to off-
set an amount otherwise authorized to be offset under paragraph (1) 
if—
(A) the certification under section 3502(b) of this title with re-
spect to the cost or pricing data involved was known to be false 
when signed; or 
(B) the Government proves that, had the cost or pricing data 
referred to in paragraph (1)(B) been submitted to the Government 
before date of agreement on the price of the contract (or price of 
the modification), or, if applicable, under subsection (a)(2), an-
other date agreed on by the parties, the submission of the cost or 
pricing data would not have resulted in an increase in that price 
in the amount to be offset. 
§ 3507. Interest and penalties for certain overpayments 
(a) IN GENERAL.—If the Federal Government makes an overpayment to 
a contractor under a contract with an executive agency subject to this chap-
ter and the overpayment was due to the submission by the contractor of 
defective cost or pricing data, the contractor shall be liable to the Govern-
ment—
(1) for interest on the amount of the overpayment, to be computed—
(A) for the period beginning on the date the overpayment was 
made to the contractor and ending on the date the contractor re-
pays the amount of the overpayment to the Government; and 
(B) at the current rate prescribed by the Secretary of the 
Treasury under section 6621 of the Internal Revenue Code of 
1986 (26 U.S.C. 6621); and 
(2) if the submission of the defective data was a knowing submission, 
for an additional amount equal to the amount of the overpayment. 
(b) LIABILITY NOT AFFECTED
BY REFUSAL TO SUBMIT CERTIFI-
CATION.—Any liability under this section of a contractor that submits cost 
or pricing data but refuses to submit the certification required by section
3502(b) of this title with respect to the cost or pricing data is not affected 
by the refusal to submit the certification. 
§ 3508. Right to examine contractor records 
For the purpose of evaluating the accuracy, completeness, and currency 
of cost or pricing data required to be submitted by this chapter, an execu-
tive agency shall have the authority provided by section 4706(b)(2) of this 
title. 
CHAPTER 37—AWARDING OF CONTRACTS
Sec. 
3701.
Basis of award and rejection. 
3702.
Sealed bids. 
3703.
Competitive proposals. 
3704.
Post-award debriefings. 
3705.
Pre-award debriefings. 
3706.
Encouragement of alternative dispute resolution. 
3707.
Antitrust violations. 
3708.
Protests.
§ 3701. Basis of award and rejection 
(a) AWARD.—An executive agency shall evaluate sealed bids and competi-
tive proposals, and award a contract, based solely on the factors specified 
in the solicitation. 
(b) REJECTION.—All sealed bids or competitive proposals received in re-
sponse to a solicitation may be rejected if the agency head determines that 
rejection is in the public interest. 
§ 3702. Sealed bids 
(a) OPENING OF BIDS.—Sealed bids shall be opened publicly at the time 
and place stated in the solicitation. 
(b) CRITERIA FOR AWARDING CONTRACT.—The executive agency shall 
evaluate the bids in accordance with section 3701(a) of this title without 
discussions with the bidders and, except as provided in section 3701(b) of 
this title, shall award a contract with reasonable promptness to the respon-
sible source whose bid conforms to the solicitation and is most advantageous 
to the Federal Government, considering only price and the other price-re-
lated factors included in the solicitation. 
(c) NOTICE OF AWARD.—The award of a contract shall be made by trans-
mitting, in writing or by electronic means, notice of the award to the suc-
cessful bidder. Within three days after the date of contract award, the exec-
utive agency shall notify, in writing or by electronic means, each bidder not 
awarded the contract that the contract has been awarded. 
§ 3703. Competitive proposals 
(a) EVALUATION AND AWARD.—An executive agency shall evaluate com-
petitive proposals in accordance with section 3701(a) of this title and may 
award a contract—
100
(1) after discussions with the offerors, provided that written or oral 
discussions have been conducted with all responsible offerors who sub-
mit proposals within the competitive range; or
(2) based on the proposals received and without discussions with the 
offerors (other than discussions conducted for the purpose of minor 
clarification), if, as required by section 3305(b)(2)(B)(i) of this title, 
the solicitation included a statement that proposals are intended to be 
evaluated, and award made, without discussions unless discussions are 
determined to be necessary. 
(b) LIMIT ON NUMBER OF PROPOSALS.—If the contracting officer deter-
mines that the number of offerors that would otherwise be included in the 
competitive range under subsection (a)(1) exceeds the number at which an 
efficient competition can be conducted, the contracting officer may limit the 
number of proposals in the competitive range, in accordance with the cri-
teria specified in the solicitation, to the greatest number that will permit 
an efficient competition among the offerors rated most highly in accordance 
with those criteria. 
(c) CRITERIA FOR AWARDING CONTRACT.—Except as otherwise provided 
in section 3701(b) of this title, the executive agency shall award a contract 
with reasonable promptness to the responsible source whose proposal is most 
advantageous to the Federal Government, considering only cost or price and 
the other factors included in the solicitation. 
(d) NOTICE OF AWARD.—The executive agency shall award the contract 
by transmitting, in writing or by electronic means, notice of the award to 
that source and, within three days after the date of contract award, shall 
notify, in writing or by electronic means, all other offerors of the rejection 
of their proposals. 
§ 3704. Post-award debriefings 
(a) REQUEST FOR DEBRIEFING.—When a contract is awarded by the 
head of an executive agency on the basis of competitive proposals, an unsuc-
cessful offeror, on written request received by the agency within three days 
after the date on which the unsuccessful offeror receives the notification of 
the contract award, shall be debriefed and furnished the basis for the selec-
tion decision and contract award. 
(b) WHEN DEBRIEFING TO BE CONDUCTED.—The executive agency shall 
debrief the offeror within, to the maximum extent practicable, five days 
after receipt of the request by the executive agency. 
(c) INFORMATION TO BE PROVIDED.—The debriefing shall include, at a 
minimum—
(1) the executive agency’s evaluation of the significant weak or defi-
cient factors in the offeror’s offer;
101
(2) the overall evaluated cost and technical rating of the offer of the 
contractor awarded the contract and the overall evaluated cost and 
technical rating of the offer of the debriefed offeror; 
(3) the overall ranking of all offers; 
(4) a summary of the rationale for the award; 
(5) in the case of a proposal that includes a commercial item that 
is an end item under the contract, the make and model of the item 
being provided in accordance with the offer of the contractor awarded 
the contract; and 
(6) reasonable responses to relevant questions posed by the debriefed 
offeror as to whether source selection procedures set forth in the solici-
tation, applicable regulations, and other applicable authorities were fol-
lowed by the executive agency. 
(d) INFORMATION NOT TO BE INCLUDED.—The debriefing may not in-
clude point-by-point comparisons of the debriefed offeror’s offer with other 
offers and may not disclose any information that is exempt from disclosure 
under section 552(b) of title 5. 
(e) INCLUSION OF STATEMENT IN SOLICITATION.—Each solicitation for 
competitive proposals shall include a statement that information described 
in subsection (c) may be disclosed in post-award debriefings. 
(f) AFTER SUCCESSFUL PROTEST.—If, within one year after the date of 
the contract award and as a result of a successful procurement protest, the 
executive agency seeks to fulfill the requirement under the protested con-
tract either on the basis of a new solicitation of offers or on the basis of 
new best and final offers requested for that contract, the head of the execu-
tive agency shall make available to all offerors—
(1) the information provided in debriefings under this section regard-
ing the offer of the contractor awarded the contract; and 
(2) the same information that would have been provided to the origi-
nal offerors. 
(g) SUMMARY TO BE INCLUDED IN FILE.—The contracting officer shall 
include a summary of the debriefing in the contract file. 
§ 3705. Pre-award debriefings 
(a) REQUEST FOR DEBRIEFING.—When the contracting officer excludes 
an offeror submitting a competitive proposal from the competitive range (or 
otherwise excludes that offeror from further consideration prior to the final 
source selection decision), the excluded offeror may request in writing, with-
in three days after the date on which the excluded offeror receives notice 
of its exclusion, a debriefing prior to award. 
(b) WHEN DEBRIEFING TO BE CONDUCTED.—The contracting officer 
shall make every effort to debrief the unsuccessful offeror as soon as prac-
102
ticable but may refuse the request for a debriefing if it is not in the best 
interests of the Federal Government to conduct a debriefing at that time. 
(c) PRECONDITION FOR POST-AWARD DEBRIEFING.—The contracting of-
ficer is required to debrief an excluded offeror in accordance with section 
3704 of this title only if that offeror requested and was refused a pre-award 
debriefing under subsection (b). 
(d) INFORMATION TO BE PROVIDED.—The debriefing conducted under 
this section shall include—
(1) the executive agency’s evaluation of the significant elements in 
the offeror’s offer; 
(2) a summary of the rationale for the offeror’s exclusion; and 
(3) reasonable responses to the relevant questions posed by the de-
briefed offeror as to whether source selection procedures set forth in 
the solicitation, applicable regulations, and other applicable authorities 
were followed by the executive agency. 
(e) INFORMATION NOT TO BE DISCLOSED.—The debriefing conducted 
pursuant to this section may not disclose the number or identity of other 
offerors and shall not disclose information about the content, ranking, or 
evaluation of other offerors’ proposals. 
(f) SUMMARY TO BE INCLUDED IN FILE.—The contracting officer shall 
include a summary of the debriefing in the contract file. 
§ 3706. Encouragement of alternative dispute resolution 
The Federal Acquisition Regulation shall include a provision encouraging 
the use of alternative dispute resolution techniques to provide informal, ex-
peditious, and inexpensive procedures for an offeror to consider using before 
filing a protest, prior to the award of a contract, of the exclusion of the 
offeror from the competitive range (or otherwise from further consideration) 
for that contract. 
§ 3707. Antitrust violations 
If the agency head considers that a bid or proposal evidences a violation 
of the antitrust laws, the agency head shall refer the bid or proposal to the 
Attorney General for appropriate action. 
§ 3708. Protests 
(a) PROTEST FILE.—
(1) ESTABLISHMENT AND ACCESS.—If, in the case of a solicitation 
for a contract issued by, or an award or proposed award of a contract 
by, the head of an executive agency, a protest is filed pursuant to the 
procedures in subchapter V of chapter 35 of title 31, and an actual 
or prospective offeror requests, a file of the protest shall be established 
by the procuring activity and reasonable access shall be provided to ac-
tual or prospective offerors.
103
(2) REDACTED INFORMATION.—Information exempt from disclosure 
under section 552 of title 5 may be redacted in a file established pursu-
ant to paragraph (1) unless an applicable protective order provides oth-
erwise. 
(b) AGENCY ACTIONS ON PROTESTS.—If, in connection with a protest, 
the head of an executive agency determines that a solicitation, proposed 
award, or award does not comply with the requirements of law or regula-
tion, the head of the executive agency—
(1) may take any action set out in clauses (A)–(F) of subsection 
(b)(1) of section 3554 of title 31; and 
(2) may pay costs described in paragraph (1) of section 3554(c) of 
title 31 within the limits referred to in paragraph (2) of section 
3554(c). 
CHAPTER 39—SPECIFIC TYPES OF CONTRACTS
Sec. 
3901.
Contracts awarded using procedures other than sealed-bid procedures. 
3902.
Severable services contracts for periods crossing fiscal years. 
3903.
Multiyear contracts. 
3904.
Contract authority for severable services contracts and multiyear contracts. 
3905.
Cost-plus contracts. 
3906.
Share-in-savings contracts.
§ 3901. Contracts awarded using procedures other than 
sealed-bid procedures 
(a) AUTHORIZED TYPES.—Except as provided in section 3905 of this 
title, contracts awarded after using procedures other than sealed-bid proce-
dures may be of any type which in the opinion of the agency head will pro-
mote the best interests of the Federal Government. 
(b) REQUIRED WARRANTY.—
(1) CONTENT.—Every contract awarded after using procedures other 
than sealed-bid procedures shall contain a suitable warranty, as deter-
mined by the agency head, by the contractor that no person or selling 
agency has been employed or retained to solicit or secure the contract 
on an agreement or understanding for a commission, percentage, bro-
kerage, or contingent fee, except for bona fide employees or bona fide 
established commercial or selling agencies the contractor maintains to 
secure business. 
(2) REMEDY FOR BREACH OR VIOLATION.—For the breach or viola-
tion of the warranty, the Government may annul the contract without 
liability or deduct from the contract price or consideration the full 
amount of the commission, percentage, brokerage, or contingent fee. 
(3) NONAPPLICATION.—Paragraph (1) does not apply to a contract 
for an amount that is not greater than the simplified acquisition 
threshold or to a contract for the acquisition of commercial items.
104
§ 3902. Severable services contracts for periods crossing fis-
cal years 
(a) AUTHORITY TO ENTER INTO CONTRACT.—The head of an executive 
agency may enter into a contract for the procurement of severable services 
for a period that begins in one fiscal year and ends in the next fiscal year 
if (without regard to an option to extend the period of the contract) the 
contract period does not exceed one year. 
(b) OBLIGATION OF AMOUNTS.—Amounts made available for a fiscal year 
may be obligated for the total amount of a contract entered into under the 
authority of this section. 
§ 3903. Multiyear contracts 
(a) DEFINITION.—In this section, a multiyear contract is a contract for 
the purchase of property or services for more than one, but not more than 
five, program years. 
(b) AUTHORITY TO ENTER INTO CONTRACT.—An executive agency may 
enter into a multiyear contract for the acquisition of property or services 
if—
(1) amounts are available and obligated for the contract, for the full 
period of the contract or for the first fiscal year in which the contract 
is in effect, and for the estimated costs associated with a necessary ter-
mination of the contract; and 
(2) the executive agency determines that—
(A) the need for the property or services is reasonably firm and 
continuing over the period of the contract; and 
(B) a multiyear contract will serve the best interests of the Fed-
eral Government by encouraging full and open competition or pro-
moting economy in administration, performance, and operation of 
the agency’s programs. 
(c) TERMINATION CLAUSE.—A multiyear contract entered into under the 
authority of this section shall include a clause that provides that the con-
tract shall be terminated if amounts are not made available for the continu-
ation of the contract in a fiscal year covered by the contract. Amounts avail-
able for paying termination costs shall remain available for that purpose 
until the costs associated with termination of the contract are paid. 
(d) CANCELLATION CEILING NOTICE.—Before a contract described in 
subsection (b) that contains a clause setting forth a cancellation ceiling in 
excess of $10,000,000 may be awarded, the executive agency shall give writ-
ten notification of the proposed contract and of the proposed cancellation 
ceiling for that contract to Congress. The contract may not be awarded until 
the end of the 30-period beginning on the date of the notification.
105
(e) CONTINGENCY
CLAUSE
FOR
APPROPRIATION
OF
AMOUNTS.—A 
multiyear contract may provide that performance under the contract after 
the first year of the contract is contingent on the appropriation of amounts 
and, if that is provided, that a cancellation payment shall be made to the 
contractor if the amounts are not appropriated. 
(f) OTHER LAW NOT AFFECTED.—This section does not modify or affect 
any other provision of law that authorizes multiyear contracts. 
§ 3904. Contract authority for severable services contracts 
and multiyear contracts 
(a) COMPTROLLER GENERAL.—The Comptroller General may use avail-
able amounts to enter into contracts for the procurement of severable serv-
ices for a period that begins in one fiscal year and ends in the next fiscal 
year and to enter into multiyear contracts for the acquisition of property 
and nonaudit-related services to the same extent as executive agencies under 
sections 3902 and 3903 of this title. 
(b) LIBRARY OF CONGRESS.—The Library of Congress may use available 
amounts to enter into contracts for the lease or procurement of severable 
services for a period that begins in one fiscal year and ends in the next fis-
cal year and to enter into multiyear contracts for the acquisition of property 
and services pursuant to sections 3902 and 3903 of this title. 
(c) CHIEF ADMINISTRATIVE OFFICER OF THE HOUSE OF REPRESENTA-
TIVES.—The Chief Administrative Officer of the House of Representatives 
may enter into—
(1) contracts for the procurement of severable services for a period 
that begins in one fiscal year and ends in the next fiscal year to the 
same extent as the head of an executive agency under the authority of 
section 3902 of this title; and 
(2) multiyear contracts for the acquisitions of property and 
nonaudit-related services to the same extent as executive agencies 
under the authority of section 3903 of this title. 
(d) CONGRESSIONAL BUDGET OFFICE.—The Congressional Budget Office 
may use available amounts to enter into contracts for the procurement of 
severable services for a period that begins in one fiscal year and ends in 
the next fiscal year and may enter into multiyear contracts for the acquisi-
tion of property and services to the same extent as executive agencies under 
the authority of sections 3902 and 3903 of this title. 
(e) SECRETARY AND SERGEANT AT ARMS AND DOORKEEPER OF THE 
SENATE.—Subject to regulations prescribed by the Committee on Rules and 
Administration of the Senate, the Secretary and the Sergeant of Arms and 
Doorkeeper of the Senate may enter into—
106
(1) contracts for the procurement of severable services for a period 
that begins in one fiscal year and ends in the next fiscal year to the 
same extent and under the same conditions as the head of an executive 
agency under the authority of section 3902 of this title; and 
(2) multiyear contracts for the acquisition of property and services 
to the same extent and under the same conditions as executive agencies 
under the authority of section 3903 of this title. 
(f) CAPITOL POLICE.—The United States Capitol Police may enter into—
(1) contracts for the procurement of severable services for a period 
that begins in one fiscal year and ends in the next fiscal year to the 
same extent as the head of an executive agency under the authority of 
section 3902 of this title; and 
(2) multiyear contracts for the acquisitions of property and 
nonaudit-related services to the same extent as executive agencies 
under the authority of section 3903 of this title. 
(g) ARCHITECT OF THE CAPITOL.—The Architect of the Capitol may 
enter into—
(1) contracts for the procurement of severable services for a period 
that begins in one fiscal year and ends in the next fiscal year to the 
same extent as the head of an executive agency under the authority of 
section 3902 of this title; and 
(2) multiyear contracts for the acquisitions of property and 
nonaudit-related services to the same extent as executive agencies 
under the authority of section 3903 of this title. 
(h) SECRETARY OF THE SMITHSONIAN INSTITUTION.—The Secretary of 
the Smithsonian Institution may enter into—
(1) contracts for the procurement of severable services for a period 
that begins in one fiscal year and ends in the next fiscal year under 
the authority of section 3902 of this title; and 
(2) multiyear contracts for the acquisition of property and services 
under the authority of section 3903 of this title. 
§ 3905. Cost-plus contracts 
(a) COST-PLUS-A-PERCENTAGE-OF-COST CONTRACTS DISALLOWED.—
The cost-plus-a-percentage-of-cost system of contracting shall not be used. 
(b) COST-PLUS-A-FIXED-FEE CONTRACTS.—
(1) IN GENERAL.—Except as provided in paragraphs (2) and (3), the 
fee in a cost-plus-a-fixed-fee contract shall not exceed 10 percent of the 
estimated cost of the contract, not including the fee, as determined by 
the agency head at the time of entering into the contract. 
(2) EXPERIMENTAL, DEVELOPMENTAL, OR RESEARCH WORK.—The 
fee in a cost-plus-a-fixed-fee contract for experimental, developmental,
107
or research work shall not exceed 15 percent of the estimated cost of 
the contract, not including the fee. 
(3) ARCHITECTURAL
OR
ENGINEERING
SERVICES.—The fee in a 
cost-plus-a-fixed-fee for architectural or engineering services relating to 
any public works or utility project may include the contractor’s costs 
and shall not exceed six percent of the estimated cost of the contract, 
not including the fee, as determined by the agency head at the time 
of entering into the contract, of the project to which the fee applies. 
(c) NOTIFICATION.—All cost and cost-plus-a-fixed-fee contracts shall pro-
vide for advance notification by the contractor to the procuring agency of 
any subcontract on a cost-plus-a-fixed-fee basis and of any fixed-price sub-
contract or purchase order which exceeds in dollar amount either the sim-
plified acquisition threshold or five percent of the total estimated cost of the 
prime contract. 
(d) RIGHT TO AUDIT.—An authorized representative of a procuring agen-
cy has the right to inspect the plans and to audit the books and records 
of a prime contractor or subcontractor engaged in the performance of a cost 
or cost-plus-a-fixed-fee contract. 
§ 3906. Share-in-savings contracts 
(a) DEFINITIONS.—In this section—
(1) CONTRACTOR.—The term ‘‘contractor’’ means a private entity 
that enters into a contract with an agency. 
(2) SAVINGS.—The term ‘‘savings’’ means—
(A) monetary savings to an agency; or 
(B) savings in time or other benefits realized by the agency, in-
cluding enhanced revenue (other than enhanced revenue from the 
collection of fees, taxes, debts, claims, or other amounts owed the 
Federal Government). 
(3) SHARE-IN-SAVINGS CONTRACT.—The term ‘‘share-in-savings con-
tract’’ means a contract under which—
(A) a contractor provides solutions for—
(i) improving the agency’s mission-related or administrative 
processes; or 
(ii) accelerating the achievement of agency missions; and 
(B) the head of the agency pays the contractor an amount equal 
to a portion of the savings the agency derives from—
(i) improvements in mission-related or administrative proc-
esses that result from implementing the solution; or 
(ii) accelerating the achievement of agency missions. 
(b) AUTHORITY TO ENTER INTO CONTRACT.—The head of an executive 
agency may enter into a share-in-savings contract for information tech-
108
nology (as defined in section 11101(6) of title 40) in which the Government 
awards a contract to improve mission-related or administrative processes or 
to accelerate the achievement of its mission and share with the contractor 
in savings achieved through contract performance. 
(c) DURATION OF CONTRACT.—
(1) IN GENERAL.—Except as provided in paragraph (2), a share-in-
savings contract shall be awarded for a period of not more than five 
years. 
(2) EXCEPTION.—A share-in-savings contract may be awarded for a 
period greater than five years but not more than 10 years if the head 
of the agency determines in writing before the contract is awarded 
that—
(A) the level of risk to be assumed and the investment to be 
undertaken by the contractor is likely to inhibit the Government 
from obtaining the needed information technology competitively at 
a fair and reasonable price if the contract is limited in duration 
to a period of not more than five years; and 
(B) use of the information technology to be acquired is likely 
to continue for a period of time sufficient to generate reasonable 
benefit for the Government. 
(d) CONTRACT TO BE PERFORMANCE-BASED.—To the maximum extent 
practicable, a contract awarded pursuant to this section shall be a perform-
ance-based contract that identifies objective outcomes and contains perform-
ance standards that will be used to measure achievement and milestones 
that must be met before payment is made. 
(e) SAVINGS SHARE RATIO.—A contract awarded pursuant to this section 
shall include a provision containing a quantifiable baseline that is to be the 
basis on which a savings share ratio is established that governs the amount 
of payment a contractor is to receive under the contract. Before perform-
ance of the contract begins, the senior procurement executive of the agency 
shall determine in writing that the terms of the provision are quantifiable 
and will likely yield value to the Government. 
(f) RETAINING SAVINGS.—The head of the agency may retain savings re-
alized through the use of a share-in-savings contract under this section that 
are more than the total amount of savings paid to the contractor under the 
contract but may not retain the part of the savings that is attributable to 
a decrease in the number of civilian employees of the Government per-
forming the function. Savings shall be credited to the appropriation or fund 
against which charges were made to carry out the contract and shall be 
used for information technology, except that amounts the agency retains—
109
(1) without further appropriation, remain available until expended; 
and 
(2) shall be applied first to fund contingent liabilities associated with 
share-in-savings procurements that are not fully funded. 
(g) CANCELLATION AND TERMINATION.—
(1) IN GENERAL.—A share-in-savings contract entered into under 
this section shall be canceled or terminated if amounts are not made 
available to continue the contract in a subsequent fiscal year. 
(2) SOURCE
OF
PAYMENT
OF
CANCELLATION
AND
TERMINATION 
COSTS.—The cost of cancellation or termination may be paid out of—
(A) appropriations available for the performance of the contract; 
(B) appropriations available for acquiring the information tech-
nology procured under the contract and not otherwise obligated; 
or 
(C) amounts subsequently appropriated to pay cancellation or 
termination costs, subject to the limitations in paragraph (4). 
(3) AMOUNT OF CANCELLATION OR TERMINATION COST TO BE NE-
GOTIATED.—The amount payable if a share-in-savings contract is can-
celed or terminated shall be negotiated with the contractor when the 
contract is entered into. 
(4) AUTHORITY TO ENTER INTO CONTRACT WHEN CANCELLATION 
OR TERMINATION COSTS NOT FULLY FUNDED.—
(A) IN GENERAL.—Subject to subparagraph (B), the head of an 
executive agency may enter into a share-in-savings contract under 
this section in a fiscal year even if amounts are not made specifi-
cally available for the full cost of cancellation or termination if 
amounts are available and sufficient to make payments for the 
first fiscal year of the contract and the following conditions are 
met regarding the funding of cancellation and termination liability: 
(i) The amount of unfunded contingent liability for the 
contract does not exceed the lesser of—
(I) 25 percent of the estimated cost of a cancellation 
or termination; or 
(II) $5,000,000. 
(ii) The Director of the Office of Management and Budget 
or the Director’s designee has approved an unfunded contin-
gent liability of more than $1,000,000. 
(B) TOTAL NUMBER OF CONTRACTS ALLOWED.—The aggregate 
number of contracts that all executive agencies to which this part 
applies may enter into under subparagraph (A) may not exceed 
five in each of fiscal years 2004 and 2005.
110
(h) TERMINATION OF AUTHORITY.—Share-in-service contracts may not 
be entered into under this section after September 30, 2005. 
CHAPTER 41—TASK AND DELIVERY ORDER CONTRACTS
Sec. 
4101.
Definitions. 
4102.
Authorities or responsibilities not affected. 
4103.
General authority. 
4104.
Guidance on use of task and delivery order contracts. 
4105.
Advisory and assistance services. 
4106.
Orders.
§ 4101. Definitions 
In this chapter—
(1) DELIVERY ORDER CONTRACT.—The term ‘‘delivery order con-
tract’’ means a contract for property that—
(A) does not procure or specify a firm quantity of property 
(other than a minimum or maximum quantity); and 
(B) provides for the issuance of orders for the delivery of prop-
erty during the period of the contract. 
(2) TASK
ORDER
CONTRACT.—The term ‘‘task order contract’’ 
means a contract for services that—
(A) does not procure or specify a firm quantity of services 
(other than a minimum or maximum quantity); and 
(B) provides for the issuance of orders for the performance of 
tasks during the period of the contract. 
§ 4102. Authorities or responsibilities not affected 
This chapter does not modify or supersede, and is not intended to impair 
or restrict, authorities or responsibilities under chapter 11 of title 40. 
§ 4103. General authority 
(a) AUTHORITY TO AWARD.—Subject to the requirements of this section, 
section 4106 of this title, and other applicable law, the head of an executive 
agency may enter into a task or delivery order contract for procurement of 
services or property. 
(b) SOLICITATION.—The solicitation for a task or delivery order contract 
shall include—
(1) the period of the contract, including the number of options to 
extend the contract and the period for which the contract may be ex-
tended under each option; 
(2) the maximum quantity or dollar value of the services or property 
to be procured under the contract; and 
(3) a statement of work, specifications, or other description that rea-
sonably describes the general scope, nature, complexity, and purposes 
of the services or property to be procured under the contract. 
(c) APPLICABILITY OF RESTRICTION ON USE OF NONCOMPETITIVE PRO-
CEDURES.—The head of an executive agency may use procedures other than
111
competitive procedures to enter into a task or delivery order contract under 
this section only if an exception in section 3303(a) of this title applies to 
the contract and the use of those procedures is approved in accordance with 
section 3303(d) of this title. 
(d) SINGLE AND MULTIPLE CONTRACT AWARDS.—
(1) EXERCISE OF AUTHORITY.—The head of an executive agency 
may exercise the authority provided in this section—
(A) to award a single task or delivery order contract; or 
(B) if the solicitation states that the head of the executive agen-
cy has the option to do so, to award separate task or delivery 
order contracts for the same or similar services or property to two 
or more sources. 
(2) DETERMINATION NOT REQUIRED.—No determination under sec-
tion 3302 of this title is required for an award of multiple task or de-
livery order contracts under paragraph (1)(B). 
(3) REGULATIONS.—Regulations implementing this subsection shall 
establish—
(A) a preference for awarding, to the maximum extent prac-
ticable, multiple task or delivery order contracts for the same or 
similar services or property under paragraph (1)(B); and 
(B) criteria for determining when award of multiple task or de-
livery order contracts would not be in the best interest of the Fed-
eral Government. 
(e) CONTRACT MODIFICATIONS.—A task or delivery order may not in-
crease the scope, period, or maximum value of the task or delivery order 
contract under which the order is issued. The scope, period, or maximum 
value of the contract may be increased only by modification of the contract. 
(f) INAPPLICABILITY TO CONTRACTS FOR ADVISORY AND ASSISTANCE 
SERVICES.—Except as otherwise specifically provided in section 4105 of this 
title, this section does not apply to a task or delivery order contract for the 
acquisition of advisory and assistance services (as defined in section 1105(g) 
of title 31). 
(g) RELATIONSHIP TO OTHER CONTRACTING AUTHORITY.—Nothing in 
this section may be construed to limit or expand any authority of the head 
of an executive agency or the Administrator of General Services to enter 
into schedule, multiple award, or task or delivery order contracts under any 
other provision of law.
§ 4104. Guidance on use of task and delivery order contracts 
(a) GUIDANCE IN FEDERAL ACQUISITION REGULATION.—The Federal 
Acquisition Regulation issued in accordance with sections 1121(b) and 
1302(a)(1) of this title shall provide guidance to agencies on the appropriate
112
use of task and delivery order contracts in accordance with this chapter and 
sections 2304a–2304d of title 10. 
(b) CONTENT OF REGULATIONS.—The regulations issued pursuant to 
subsection (a) at a minimum shall provide specific guidance on—
(1) the appropriate use of governmentwide and other multiagency 
contracts entered into in accordance this chapter and sections 2304a–
2304d of title 10; and 
(2) steps that agencies should take in entering into and admin-
istering multiple award task and delivery order contracts to ensure 
compliance with the requirement in—
(A) section 11312 of title 40 for capital planning and invest-
ment control in purchases of information technology products and 
services; 
(B) section 4106(c) of this title and section 2304c(b) of title 10 
to ensure that all contractors are afforded a fair opportunity to 
be considered for the award of task and delivery orders; and 
(C) section 4106(d) of this title and section 2304c(c) of title 10 
for a statement of work in each task or delivery order issued that 
clearly specifies all tasks to be performed or property to be deliv-
ered under the order. 
(c) FEDERAL SUPPLY SCHEDULES PROGRAM.—The Administrator for 
Federal Procurement Policy shall consult with the Administrator of General 
Services to assess the effectiveness of the multiple awards schedule program 
of the General Services Administration referred to in section 3101(2)(C) of 
this title that is administered as the Federal Supply Schedules program. 
The assessment shall include examination of—
(1) the administration of the program by the Administrator of Gen-
eral Services; and 
(2) the ordering and program practices followed by Federal customer 
agencies in using schedules established under the program. 
§ 4105. Advisory and assistance services 
(a) DEFINITION.—In this section, the term ‘‘advisory and assistance serv-
ices’’ has the same meaning given that term in section 1105(g) of title 31. 
(b) AUTHORITY TO AWARD.—
(1) IN GENERAL.—Subject to the requirements of this section, sec-
tion 4106 of this title, and other applicable law, the head of an execu-
tive agency may enter into a task order contract for procurement of 
advisory and assistance services. 
(2) ONLY UNDER THIS SECTION.—The head of an executive agency 
may enter into a task order contract for advisory and assistance serv-
ices only under this section.
113
(c) LIMITATION ON CONTRACT PERIOD.—The period of a task order con-
tract entered into under this section, including all periods of extensions of 
the contract under options, modifications, or otherwise, may not exceed five 
years unless a longer period is specifically authorized in a law that is appli-
cable to the contract. 
(d) CONTENT OF NOTICE.—The notice required by section 1707 of this 
title and section 8(e) of the Small Business Act (15 U.S.C. 637(e)) shall 
reasonably and fairly describe the general scope, magnitude, and duration 
of the proposed task order contract in a manner that would reasonably en-
able a potential offeror to decide whether to request the solicitation and con-
sider submitting an offer. 
(e) REQUIRED CONTENT OF SOLICITATION AND CONTRACT.—
(1) SOLICITATION.—The solicitation shall include the information 
(regarding services) described in section 4103(b) of this title. 
(2) CONTRACT.—A task order contract entered into under this sec-
tion shall contain the same information that is required by paragraph 
(1) to be included in the solicitation of offers for that contract. 
(f) MULTIPLE AWARDS.—
(1) AUTHORITY TO MAKE MULTIPLE AWARDS.—On the basis of one 
solicitation, the head of an executive agency may award separate task 
order contracts under this section for the same or similar services to 
two or more sources if the solicitation states that the head of the exec-
utive agency has the option to do so. 
(2) CONTENT OF SOLICITATION.—In the case of a task order con-
tract for advisory and assistance services to be entered into under this 
section, if the contract period is to exceed three years and the contract 
amount is estimated to exceed $10,000,000 (including all options), the 
solicitation shall—
(A) provide for a multiple award authorized under paragraph 
(1); and 
(B) include a statement that the head of the executive agency 
may also elect to award only one task order contract if the head 
of the executive agency determines in writing that only one of the 
offerors is capable of providing the services required at the level 
of quality required. 
(3) NONAPPLICATION.—Paragraph (2) does not apply in the case of 
a solicitation for which the head of the executive agency concerned de-
termines in writing that, because the services required under the con-
tract are unique or highly specialized, it is not practicable to award 
more than one contract. 
(g) CONTRACT MODIFICATIONS.—
114
(1) INCREASE IN SCOPE, PERIOD, OR MAXIMUM VALUE OF CONTRACT 
ONLY BY MODIFICATION OF CONTRACT.—A task order may not in-
crease the scope, period, or maximum value of the task order contract 
under which the order is issued. The scope, period, or maximum value 
of the contract may be increased only by modification of the contract. 
(2) USE OF COMPETITIVE PROCEDURES.—Unless use of procedures 
other than competitive procedures is authorized by an exception in sec-
tion 3303(a) of this title and approved in accordance with section 
3303(d) of this title, competitive procedures shall be used for making 
such a modification. 
(3) NOTICE.—Notice regarding the modification shall be provided in 
accordance with section 1707 of this title and section 8(e) of the Small 
Business Act (15 U.S.C. 637(e)). 
(h) CONTRACT EXTENSIONS.—
(1) WHEN
CONTRACT
MAY
BE
EXTENDED.—Notwithstanding the 
limitation on the contract period set forth in subsection (c) or in a so-
licitation or contract pursuant to subsection (f), a contract entered into 
by the head of an executive agency under this section may be extended 
on a sole-source basis for a period not exceeding six months if the head 
of the executive agency determines that—
(A) the award of a follow-on contract has been delayed by cir-
cumstances that were not reasonably foreseeable at the time the 
initial contract was entered into; and 
(B) the extension is necessary to ensure continuity of the receipt 
of services pending the award of, and commencement of perform-
ance under, the follow-on contract. 
(2) LIMIT OF ONE EXTENSION.—A task order contract may be ex-
tended under paragraph (1) only once and only in accordance with the 
limitations and requirements of this subsection. 
(i) INAPPLICABILITY TO CERTAIN CONTRACTS.—This section does not 
apply to a contract for the acquisition of property or services that includes 
acquisition of advisory and assistance services if the head of the executive 
agency entering into the contract determines that, under the contract, advi-
sory and assistance services are necessarily incident to, and not a significant 
component of, the contract.
§ 4106. Orders 
(a) APPLICATION.—This section applies to task and delivery order con-
tracts entered into under sections 4103 and 4105 of this title. 
(b) ACTIONS NOT REQUIRED FOR ISSUANCE OF ORDERS.—The following 
actions are not required for issuance of a task or delivery order under a 
task or delivery order contract:
115
(1) A separate notice for the order under section 1707 of this title 
or section 8(e) of the Small Business Act (15 U.S.C. 637(e)). 
(2) Except as provided in subsection (c), a competition (or a waiver 
of competition approved in accordance with section 3303(d) of this 
title) that is separate from that used for entering into the contract. 
(c) MULTIPLE AWARD CONTRACTS.—When multiple contracts are award-
ed under section 4103(d)(1)(B) or 4105(f) of this title, all contractors 
awarded the contracts shall be provided a fair opportunity to be considered, 
pursuant to procedures set forth in the contracts, for each task or delivery 
order in excess of $2,500 that is to be issued under any of the contracts, 
unless—
(1) the executive agency’s need for the services or property ordered 
is of such unusual urgency that providing the opportunity to all of 
those contractors would result in unacceptable delays in fulfilling that 
need; 
(2) only one of those contractors is capable of providing the services 
or property required at the level of quality required because the services 
or property ordered are unique or highly specialized; 
(3) the task or delivery order should be issued on a sole-source basis 
in the interest of economy and efficiency because it is a logical follow-
on to a task or delivery order already issued on a competitive basis; 
or 
(4) it is necessary to place the order with a particular contractor to 
satisfy a minimum guarantee. 
(d) STATEMENT OF WORK.—A task or delivery order shall include a 
statement of work that clearly specifies all tasks to be performed or prop-
erty to be delivered under the order. 
(e) PROTESTS.—A protest is not authorized in connection with the 
issuance or proposed issuance of a task or delivery order except for a pro-
test on the ground that the order increases the scope, period, or maximum 
value of the contract under which the order is issued. 
(f) TASK AND DELIVERY ORDER OMBUDSMAN.—
(1) APPOINTMENT OR DESIGNATION AND RESPONSIBILITIES.—The 
head of each executive agency who awards multiple task or delivery 
order contracts under section 4103(d)(1)(B) or 4105(f) of this title 
shall appoint or designate a task and delivery order ombudsman who 
shall be responsible for reviewing complaints from the contractors on 
those contracts and ensuring that all of the contractors are afforded 
a fair opportunity to be considered for task or delivery orders when re-
quired under subsection (c).
116
(2) WHO IS ELIGIBLE.—The task and delivery order ombudsman 
shall be a senior agency official who is independent of the contracting 
officer for the contracts and may be the executive agency’s advocate 
for competition. 
CHAPTER 43—ALLOWABLE COSTS
Sec. 
4301.
Definitions. 
4302.
Adjustment of threshold amount of covered contract. 
4303.
Effect of submission of unallowable costs. 
4304.
Specific costs not allowable. 
4305.
Required regulations. 
4306.
Applicability of regulations to subcontractors. 
4307.
Contractor certification. 
4308.
Penalties for submission of cost known to be unallowable. 
4309.
Burden of proof on contractor. 
4310.
Proceeding costs not allowable.
§ 4301. Definitions 
In this chapter—
(1) COMPENSATION.—The term ‘‘compensation’’, for a fiscal year, 
means the total amount of wages, salary, bonuses, and deferred com-
pensation for the fiscal year, whether paid, earned, or otherwise accru-
ing, as recorded in an employer’s cost accounting records for the fiscal 
year. 
(2) COVERED CONTRACT.—The term ‘‘covered contract’’ means a 
contract for an amount in excess of $500,000 that is entered into by 
an executive agency, except that the term does not include a fixed-price 
contract without cost incentives or any firm, fixed price contract for 
the purchase of commercial items. 
(3) FISCAL YEAR.—The term ‘‘fiscal year’’ means a fiscal year estab-
lished by a contractor for accounting purposes. 
(4) SENIOR EXECUTIVE.—The term ‘‘senior executive’’, with respect 
to a contractor, means the five most highly compensated employees in 
management positions at each home office and each segment of the 
contractor. 
§ 4302. Adjustment of threshold amount of covered contract 
Effective on October 1 of each year that is divisible by five, the amount 
set forth in section 4301(2) shall be adjusted to the equivalent amount in 
constant fiscal year 1994 dollars. An adjusted amount that is not evenly di-
visible by $50,000 shall be rounded to the nearest multiple of $50,000. If 
an amount is evenly divisible by $25,000 but is not evenly divisible by 
$50,000, the amount shall be rounded to the next higher multiple of 
$50,000. 
§ 4303. Effect of submission of unallowable costs 
(a) INDIRECT COST THAT VIOLATES FEDERAL ACQUISITION REGULA-
TION COST PRINCIPLE.—An executive agency shall require that a covered
117
contract provide that if the contractor submits to the executive agency a 
proposal for settlement of indirect costs incurred by the contractor for any 
period after those costs have been accrued and if that proposal includes the 
submission of a cost that is unallowable because the cost violates a cost 
principle in the Federal Acquisition Regulation or an executive agency sup-
plement to the Federal Acquisition Regulation, the cost shall be disallowed. 
(b) PENALTY FOR VIOLATION OF COST PRINCIPLE.—
(1) UNALLOWABLE COST IN PROPOSAL.—If the executive agency de-
termines that a cost submitted by a contractor in its proposal for set-
tlement is expressly unallowable under a cost principle referred to in 
subsection (a) that defines the allowability of specific selected costs, the 
executive agency shall assess a penalty against the contractor in an 
amount equal to—
(A) the amount of the disallowed cost allocated to covered con-
tracts for which a proposal for settlement of indirect costs has 
been submitted; plus 
(B) interest (to be computed based on provisions in the Federal 
Acquisition Regulation) to compensate the Federal Government 
for the use of the amount which a contractor has been paid in ex-
cess of the amount to which the contractor was entitled. 
(2) COST DETERMINED TO BE UNALLOWABLE BEFORE PROPOSAL 
SUBMITTED.—If the executive agency determines that a proposal for 
settlement of indirect costs submitted by a contractor includes a cost 
determined to be unallowable in the case of that contractor before the 
submission of that proposal, the executive agency shall assess a penalty 
against the contractor in an amount equal to two times the amount of 
the disallowed cost allocated to covered contracts for which a proposal 
for settlement of indirect costs has been submitted. 
(c) WAIVER OF PENALTY.—The Federal Acquisition Regulation shall pro-
vide for a penalty under subsection (b) to be waived in the case of a con-
tractor’s proposal for settlement of indirect costs when—
(1) the contractor withdraws the proposal before the formal initiation 
of an audit of the proposal by the Government and resubmits a revised 
proposal;
(2) the amount of unallowable costs subject to the penalty is insig-
nificant; or 
(3) the contractor demonstrates, to the contracting officer’s satisfac-
tion, that—
(A) it has established appropriate policies and personnel train-
ing and an internal control and review system that provide assur-
ances that unallowable costs subject to penalties are precluded
118
from being included in the contractor’s proposal for settlement of 
indirect costs; and 
(B) the unallowable costs subject to the penalty were inadvert-
ently incorporated into the proposal. 
(d) APPLICABILITY OF CONTRACT DISPUTES PROCEDURE.—An action of 
an executive agency under subsection (a) or (b)—
(1) shall be considered a final decision for the purposes of section 
6903 of this title; and 
(2) is appealable in the manner provided in section 6904(a) of this 
title. 
§ 4304. Specific costs not allowable 
(a) SPECIFIC COSTS.—The following costs are not allowable under a cov-
ered contract: 
(1) Costs of entertainment, including amusement, diversion, and so-
cial activities, and any costs directly associated with those costs (such 
as tickets to shows or sports events, meals, lodging, rentals, transpor-
tation, and gratuities). 
(2) Costs incurred to influence (directly or indirectly) legislative ac-
tion on any matter pending before Congress, a State legislature, or a 
legislative body of a political subdivision of a State. 
(3) Costs incurred in defense of any civil or criminal fraud pro-
ceeding or similar proceeding (including filing of any false certification) 
brought by the Federal Government where the contractor is found lia-
ble or had pleaded nolo contendere to a charge of fraud. 
(4) Payments of fines and penalties resulting from violations of, or 
failure to comply with, Federal, State, local, or foreign laws and regula-
tions, except when incurred as a result of compliance with specific 
terms and conditions of the contract or specific written instructions 
from the contracting officer authorizing in advance those payments in 
accordance with applicable provisions of the Federal Acquisition Regu-
lation. 
(5) Costs of membership in any social, dining, or country club or or-
ganization. 
(6) Costs of alcoholic beverages. 
(7) Contributions or donations, regardless of the recipient. 
(8) Costs of advertising designed to promote the contractor or its 
products. 
(9) Costs of promotional items and memorabilia, including models, 
gifts, and souvenirs. 
(10) Costs for travel by commercial aircraft that exceed the amount 
of the standard commercial fare.
119
(11) Costs incurred in making any payment (commonly known as a 
‘‘golden parachute payment’’) that is—
(A) in an amount in excess of the normal severance pay paid 
by the contractor to an employee on termination of employment; 
and 
(B) paid to the employee contingent on, and following, a change 
in management control over, or ownership of, the contractor or a 
substantial portion of the contractor’s assets. 
(12) Costs of commercial insurance that protects against the costs 
of the contractor for correction of the contractor’s own defects in mate-
rials or workmanship. 
(13) Costs of severance pay paid by the contractor to foreign nation-
als employed by the contractor under a service contract performed out-
side the United States, to the extent that the amount of severance pay 
paid in any case exceeds the amount paid in the industry involved 
under the customary or prevailing practice for firms in that industry 
providing similar services in the United States, as determined under 
the Federal Acquisition Regulation. 
(14) Costs of severance pay paid by the contractor to a foreign na-
tional employed by the contractor under a service contract performed 
in a foreign country if the termination of the employment of the foreign 
national is the result of the closing of, or the curtailment of activities 
at, a Government facility in that country at the request of the govern-
ment of that country. 
(15) Costs incurred by a contractor in connection with any criminal, 
civil, or administrative proceeding commenced by the Government or a 
State, to the extent provided in section 4310 of this title. 
(16) Costs of compensation of senior executives of contractors for a 
fiscal year, regardless of the contract funding source, to the extent that 
the compensation exceeds the benchmark compensation amount deter-
mined applicable for the fiscal year by the Administrator for Federal 
Procurement Policy under section 1127 of this title. 
(b) WAIVER OF SEVERANCE PAY RESTRICTIONS FOR FOREIGN NATION-
ALS.—
(1) EXECUTIVE AGENCY DETERMINATION.—Pursuant to the Federal 
Acquisition Regulation and subject to the availability of appropriations, 
an executive agency, in awarding a covered contract, may waive the ap-
plication of clauses (13) and (14) of subsection (a) to that contract if 
the executive agency determines that—
(A) the application of clauses (13) and (14) to that contract 
would adversely affect the continuation of a program, project, or
120
activity that provides significant support services for employees of 
the executive agency posted outside the United States; 
(B) the contractor has taken (or has established plans to take) 
appropriate actions within the contractor’s control to minimize the 
amount and number of incidents of the payment of severance pay 
by the contractor to employees under the contract who are foreign 
nationals; and 
(C) the payment of severance pay is necessary to comply with 
a law that is generally applicable to a significant number of busi-
nesses in the country in which the foreign national receiving the 
payment performed services under the contract or is necessary to 
comply with a collective bargaining agreement. 
(2) SOLICITATION TO INCLUDE STATEMENT ABOUT WAIVER.—An ex-
ecutive agency shall include in the solicitation for a covered contract 
a statement indicating—
(A) that a waiver has been granted under paragraph (1) for the 
contract; or 
(B) whether the executive agency will consider granting a waiver 
and, if the executive agency will consider granting a waiver, the 
criteria to be used in granting the waiver. 
(3) DETERMINATION TO BE MADE BEFORE CONTRACT AWARDED.—
An executive agency shall make the final determination whether to 
grant a waiver under paragraph (1) with respect to a covered contract 
before award of the contract. 
(c) ESTABLISHMENT OF DEFINITIONS, EXCLUSIONS, LIMITATIONS, AND 
QUALIFICATIONS.—The provisions of the Federal Acquisition Regulation 
implementing this chapter may establish appropriate definitions, exclusions, 
limitations, and qualifications. A submission by a contractor of costs that 
are incurred by the contractor and that are claimed to be allowable under 
Department of Energy management and operating contracts shall be consid-
ered a proposal for settlement of indirect costs incurred by the contractor 
for any period after those costs have been accrued.
§ 4305. Required regulations 
(a) IN GENERAL.—The Federal Acquisition Regulation shall contain pro-
visions on the allowability of contractor costs. Those provisions shall define 
in detail and in specific terms the costs that are unallowable, in whole or 
in part, under covered contracts. 
(b) SPECIFIC ITEMS.—The regulations shall, at a minimum, clarify the 
cost principles applicable to contractor costs of the following: 
(1) Air shows. 
(2) Membership in civic, community, and professional organizations.
121
(3) Recruitment. 
(4) Employee morale and welfare. 
(5) Actions to influence (directly or indirectly) executive branch ac-
tion on regulatory and contract matters (other than costs incurred in 
regard to contract proposals pursuant to solicited or unsolicited bids). 
(6) Community relations. 
(7) Dining facilities. 
(8) Professional and consulting services, including legal services. 
(9) Compensation. 
(10) Selling and marketing. 
(11) Travel. 
(12) Public relations. 
(13) Hotel and meal expenses. 
(14) Expense of corporate aircraft. 
(15) Company-furnished automobiles. 
(16) Advertising. 
(17) Conventions. 
(c) ADDITIONAL REQUIREMENTS.—
(1) WHEN QUESTIONED COSTS MAY BE RESOLVED.—The Federal 
Acquisition Regulation shall require that a contracting officer not re-
solve any questioned costs until the contracting officer has obtained—
(A) adequate documentation of those costs; and 
(B) the opinion of the contract auditor on the allowability of 
those costs. 
(2) PRESENCE OF CONTRACT AUDITOR.—The Federal Acquisition 
Regulation shall provide that, to the maximum extent practicable, a 
contract auditor be present at any negotiation or meeting with the con-
tractor regarding a determination of the allowability of indirect costs 
of the contractor. 
(3) SETTLEMENT
TO
REFLECT
AMOUNT
OF
INDIVIDUAL
QUES-
TIONED COSTS.—The Federal Acquisition Regulation shall require that 
all categories of costs designated in the report of a contract auditor as 
questioned with respect to a proposal for settlement be resolved in a 
manner so that the amount of the individual questioned costs that are 
paid will be reflected in the settlement. 
§ 4306. Applicability of regulations to subcontractors 
The regulations referred to in subsections 4304 and 4305(a) and (b) of 
this title shall require prime contractors of a covered contract, to the max-
imum extent practicable, to apply the provisions of those regulations to all 
subcontractors of the covered contract.
122
§ 4307. Contractor certification 
(a) CONTENT AND FORM.—A proposal for settlement of indirect costs ap-
plicable to a covered contract shall include a certification by an official of 
the contractor that, to the best of the certifying official’s knowledge and be-
lief, all indirect costs included in the proposal are allowable. The certifi-
cation shall be in a form prescribed in the Federal Acquisition Regulation. 
(b) WAIVER.—An executive agency may, in an exceptional case, waive the 
requirement for certification under subsection (a) in the case of a contract 
if the agency—
(1) determines that it would be in the interest of the Federal Gov-
ernment to waive the certification; and 
(2) states in writing the reasons for the determination and makes 
the determination available to the public. 
§ 4308. Penalties for submission of cost known to be unal-
lowable 
The submission to an executive agency of a proposal for settlement of 
costs for any period after those costs have been accrued that includes a cost 
that is expressly specified by statute or regulation as being unallowable, 
with the knowledge that the cost is unallowable, is subject to section 287 
of title 18 and section 3729 of title 31. 
§ 4309. Burden of proof on contractor 
In a proceeding before a board of contract appeals, the United States 
Court of Federal Claims, or any other Federal court in which the reason-
ableness of indirect costs for which a contractor seeks reimbursement from 
the Federal Government is in issue, the burden of proof is on the contractor 
to establish that those costs are reasonable. 
§ 4310. Proceeding costs not allowable 
(a) DEFINITIONS.—In this section—
(1) COSTS.—The term ‘‘costs’’, with respect to a proceeding, means 
all costs incurred by a contractor, whether before or after the com-
mencement of the proceeding, including—
(A) administrative and clerical expenses; 
(B) the cost of legal services, including legal services performed 
by an employee of the contractor; 
(C) the cost of the services of accountants and consultants re-
tained by the contractor; and 
(D) the pay of directors, officers, and employees of the con-
tractor for time devoted by those directors, officers, and employees 
to the proceeding. 
(2) PENALTY.—The term ‘‘penalty’’ does not include restitution, re-
imbursement, or compensatory damages.
123
(3) PROCEEDING.—The term ‘‘proceeding’’ includes an investigation. 
(b) IN GENERAL.—Except as otherwise provided in this section, costs in-
curred by a contractor in connection with a criminal, civil, or administrative 
proceeding commenced by the Federal Government or a State are not allow-
able as reimbursable costs under a covered contract if the proceeding—
(1) relates to a violation of, or failure to comply with, a Federal or 
State statute or regulation; and 
(2) results in a disposition described in subsection (c). 
(c) COVERED DISPOSITIONS.—A disposition referred to in subsection 
(b)(2) is any of the following: 
(1) In a criminal proceeding, a conviction (including a conviction 
pursuant to a plea of nolo contendere) by reason of the violation or 
failure referred to in subsection (b). 
(2) In a civil or administrative proceeding involving an allegation of 
fraud or similar misconduct, a determination of contractor liability on 
the basis of the violation or failure referred to in subsection (b). 
(3) In any civil or administrative proceeding, the imposition of a 
monetary penalty by reason of the violation or failure referred to in 
subsection (b). 
(4) A final decision to do any of the following, by reason of the viola-
tion or failure referred to in subsection (b): 
(A) Debar or suspend the contractor. 
(B) Rescind or void the contract. 
(C) Terminate the contract for default. 
(5) A disposition of the proceeding by consent or compromise if the 
disposition could have resulted in a disposition described in clause (1), 
(2), (3), or (4). 
(d) COSTS ALLOWED
BY SETTLEMENT AGREEMENT
IN PROCEEDING 
COMMENCED BY GOVERNMENT.—In the case of a proceeding referred to in 
subsection (b) that is commenced by the Government and is resolved by con-
sent or compromise pursuant to an agreement entered into by a contractor 
and the Government, the costs incurred by the contractor in connection with
the proceeding that are otherwise not allowable as reimbursable costs under 
subsection (b) may be allowed to the extent specifically provided in that 
agreement. 
(e) COSTS SPECIFICALLY AUTHORIZED BY EXECUTIVE AGENCY IN PRO-
CEEDING COMMENCED BY STATE.—In the case of a proceeding referred to 
in subsection (b) that is commenced by a State, the executive agency that 
awarded the covered contract involved in the proceeding may allow the costs 
incurred by the contractor in connection with the proceeding as reimburs-
124
able costs if the executive agency determines, in accordance with the Fed-
eral Acquisition Regulation, that the costs were incurred as a result of—
(1) a specific term or condition of the contract; or 
(2) specific written instructions of the executive agency. 
(f) OTHER ALLOWABLE COSTS.—
(1) IN GENERAL.—Except as provided in paragraph (3), costs in-
curred by a contractor in connection with a criminal, civil, or adminis-
trative proceeding commenced by the Government or a State in connec-
tion with a covered contract may be allowed as reimbursable costs 
under the contract if the costs are not disallowable under subsection 
(b), but only to the extent provided in paragraph (2). 
(2) AMOUNT OF ALLOWABLE COSTS.—
(A) MAXIMUM AMOUNT ALLOWED.—The amount of the costs al-
lowable under paragraph (1) in any case may not exceed the 
amount equal to 80 percent of the amount of the costs incurred, 
to the extent that the costs are determined to be otherwise allow-
able and allocable under the Federal Acquisition Regulation. 
(B) CONTENT OF REGULATIONS.—Regulations issued for the 
purpose of subparagraph (A) shall provide for appropriate consid-
eration of the complexity of procurement litigation, generally ac-
cepted principles governing the award of legal fees in civil actions 
involving the Government as a party, and other factors as may be 
appropriate. 
(3) WHEN OTHERWISE ALLOWABLE COSTS ARE NOT ALLOWABLE.—
In the case of a proceeding referred to in paragraph (1), contractor 
costs otherwise allowable as reimbursable costs under this subsection 
are not allowable if—
(A) the proceeding involves the same contractor misconduct al-
leged as the basis of another criminal, civil, or administrative pro-
ceeding; and 
(B) the costs of the other proceeding are not allowable under 
subsection (b).
CHAPTER 45—CONTRACT FINANCING
Sec. 
4501.
Authority of executive agency. 
4502.
Payment. 
4503.
Security for advance payments. 
4504.
Conditions for progress payments. 
4505.
Payments for commercial items. 
4506.
Action in case of fraud.
§ 4501. Authority of executive agency 
An executive agency may—
(1) make advance, partial, progress or other payments under con-
tracts for property or services made by the agency; and
125
(2) insert in solicitations for procurement of property or services a 
provision limiting to small business concerns advance or progress pay-
ments. 
§ 4502. Payment 
(a) BASIS FOR PAYMENT.—When practicable, payments under section 
4501 of this title shall be made on any of the following bases: 
(1) Performance measured by objective, quantifiable methods such as 
delivery of acceptable items, work measurement, or statistical process 
controls. 
(2) Accomplishment of events defined in the program management 
plan. 
(3) Other quantifiable measures of results. 
(b) PAYMENT AMOUNT.—Payments made under section 4501 of this title 
may not exceed the unpaid contract price. 
§ 4503. Security for advance payments 
Advance payments under section 4501 of this title may be made only on 
adequate security and a determination by the agency head that to do so 
would be in the public interest. The security may be in the form of a lien 
in favor of the Federal Government on the property contracted for, on the 
balance in an account in which the payments are deposited, and on such 
of the property acquired for performance of the contract as the parties may 
agree. This lien shall be paramount to all other liens and is effective imme-
diately upon the first advancement of amounts without filing, notice, or any 
other action by the Government. 
§ 4504. Conditions for progress payments 
(a) PAYMENT COMMENSURATE WITH WORK.—The executive agency shall 
ensure that a payment for work in progress (including materials, labor, and 
other items) under a contract of an executive agency that provides for those 
payments is commensurate with the work accomplished that meets stand-
ards established under the contract. The contractor shall provide informa-
tion and evidence the executive agency determines is necessary to permit the 
executive agency to carry out this subsection. 
(b) LIMITATION.—The executive agency shall ensure that progress pay-
ments referred to in subsection (a) are not made for more than 80 percent 
of the work accomplished under the contract as long as the executive agency 
has not made the contractual terms, specifications, and price definite. 
(c) APPLICATION.—This section applies to a contract in an amount great-
er than $25,000. 
§ 4505. Payments for commercial items 
(a) TERMS AND CONDITIONS FOR PAYMENTS.—Payments under section 
4501 of this title for commercial items may be made under terms and condi-
126
tions that the head of the executive agency determines are appropriate or 
customary in the commercial marketplace and are in the best interests of 
the Federal Government. 
(b) SECURITY FOR PAYMENTS.—The head of the executive agency shall 
obtain adequate security for the payments. If the security is in the form 
of a lien in favor of the Government, the lien is paramount to all other liens 
and is effective immediately on the first payment, without filing, notice, or 
other action by the Government. 
(c) LIMITATION
ON ADVANCE PAYMENTS.—Advance payments made 
under section 4501 of this title for commercial items may include payments, 
in a total amount not more than 15 percent of the contract price, in ad-
vance of any performance of work under the contract. 
(d) NONAPPLICATION OF CERTAIN CONDITIONS.—The conditions of sec-
tions 4503 and 4504 of this title need not be applied if they would be incon-
sistent, as determined by the head of the executive agency, with commercial 
terms and conditions pursuant to this section. 
§ 4506. Action in case of fraud 
(a) DEFINITION.—In this section, the term ‘‘remedy coordination offi-
cial’’, with respect to an executive agency, means the individual or entity 
in that executive agency who coordinates within that executive agency the 
administration of criminal, civil, administrative, and contractual remedies 
resulting from investigations of fraud or corruption related to procurement 
activities. 
(b) RECOMMENDATION TO REDUCE OR SUSPEND PAYMENTS.—In any 
case in which the remedy coordination official of an executive agency finds 
that there is substantial evidence that the request of a contractor for ad-
vance, partial, or progress payment under a contract awarded by that execu-
tive agency is based on fraud, the remedy coordination official shall rec-
ommend that the executive agency reduce or suspend further payments to 
that contractor.
(c) REDUCTION OR SUSPENSION OF PAYMENTS.—The head of an execu-
tive agency receiving a recommendation under subsection (b) in the case of 
a contractor’s request for payment under a contract shall determine whether 
there is substantial evidence that the request is based on fraud. On making 
that determination, the head of the executive agency may reduce or suspend 
further payments to the contractor under the contract. 
(d) EXTENT OF REDUCTION OR SUSPENSION.—The extent of any reduc-
tion or suspension of payments by an executive agency under subsection (c) 
on the basis of fraud shall be reasonably commensurate with the anticipated 
loss to the Federal Government resulting from the fraud.
127
(e) WRITTEN JUSTIFICATION.—A written justification for each decision 
of the head of an executive agency whether to reduce or suspend payments 
under subsection (c), and for each recommendation received by the executive 
agency in connection with the decision, shall be prepared and be retained 
in the files of the executive agency. 
(f) NOTICE.—The head of each executive agency shall prescribe proce-
dures to ensure that, before the head of the executive agency decides to re-
duce or suspend payments in the case of a contractor under subsection (c), 
the contractor is afforded notice of the proposed reduction or suspension 
and an opportunity to submit matters to the executive agency in response 
to the proposed reduction or suspension. 
(g) REVIEW.—Not later than 180 days after the date on which the head 
of an executive agency reduces or suspends payments to a contractor under 
subsection (c), the remedy coordination official of the executive agency 
shall—
(1) review the determination of fraud on which the reduction or sus-
pension is based; and 
(2) transmit a recommendation to the head of the executive agency 
whether the suspension or reduction should continue. 
(h) REPORT.—The head of each executive agency who receives rec-
ommendations made by the remedy coordination official of the executive 
agency to reduce or suspend payments under subsection (c) during a fiscal 
year shall prepare for that year a report that contains the recommendations, 
the actions taken on the recommendations and the reasons for those actions, 
and an assessment of the effects of those actions on the Federal Govern-
ment. The report shall be available to any Member of Congress on request. 
(i) RESTRICTION ON DELEGATION.—The head of an executive agency 
may not delegate responsibilities under this section to an individual in a po-
sition below level IV of the Executive Schedule.
CHAPTER 47—MISCELLANEOUS
Sec. 
4701.
Determinations and decisions. 
4702.
Prohibition on release of contractor proposals. 
4703.
Validation of proprietary data restrictions. 
4704.
Prohibition of contractors limiting subcontractor sales directly to Federal Government. 
4705.
Protection of contractor employees from reprisal for disclosure of certain information. 
4706.
Examination of facilities and records of contractor. 
4707.
Remission of liquidated damages. 
4708.
Payment of reimbursable indirect costs in cost-type research and development contracts 
with educational institutions. 
4709.
Implementation of electronic commerce capability.
§ 4701. Determinations and decisions 
(a) INDIVIDUAL OR CLASS DETERMINATIONS AND DECISIONS AUTHOR-
IZED.—
128
(1) IN GENERAL.—Determinations and decisions required to be made 
under this part by the head of an executive agency or provided in this 
part or subtitle I of title 40 to be made by the Administrator of Gen-
eral Services or other agency head may be made for an individual pur-
chase or contract or, except for determinations or decisions made under 
section 3106, chapters 33 and 37, and section 4702 of this title or to 
the extent expressly prohibited by another law, for a class of purchases 
or contracts. 
(2) DELEGATION.— Except as provided in section 3303(a)(7) of this 
title, and except as provided in section 121(d)(1) and (2) of title 40 
with respect to the Administrator, the agency head, in the discretion, 
and subject to the direction, of the agency head, may delegate powers 
provided by this part or subtitle I of title 40, including the making of 
determinations and decisions described in paragraph (1), to other offi-
cers or officials of the agency. 
(3) FINALITY.—The determinations and decisions are final. 
(b) WRITTEN FINDINGS.—
(1) BASIS FOR CERTAIN DETERMINATIONS.—Each determination or 
decision under section 3901, 3905, 4503, or 4706(d)(2)(B) of this title 
shall be based on a written finding by the individual making the deter-
mination or decision. A finding under section 4503 or 4706(d)(2)(B) 
shall set out facts and circumstances that support the determination 
or decision. 
(2) FINALITY.—Each finding referred to in paragraph (1) is final. 
(3) MAINTAINING COPIES OF FINDINGS.—The head of an executive 
agency shall maintain for a period of not less than 6 years a copy of 
each finding referred to in paragraph (1) that is made by an individual 
in that executive agency. The period begins on the date of the deter-
mination or decision to which the finding relates. 
§ 4702. Prohibition on release of contractor proposals 
(a) DEFINITION.—In this section, the term ‘‘proposal’’ means a proposal, 
including a technical, management, or cost proposal, submitted by a con-
tractor in response to the requirements of a solicitation for a competitive 
proposal. 
(b) PROHIBITION.—A proposal in the possession or control of an execu-
tive agency may not be made available to any person under section 552 of 
title 5. 
(c) NONAPPLICATION.—Subsection (b) does not apply to a proposal that 
is set forth or incorporated by reference in a contract entered into between 
the agency and the contractor that submitted the proposal.
129
§ 4703. Validation of proprietary data restrictions 
(a) CONTRACT THAT PROVIDES FOR DELIVERY OF TECHNICAL DATA.—
A contract for property or services an executive agency enters into that pro-
vides for the delivery of technical data shall provide that—
(1) a contractor or subcontractor at any tier shall be prepared to 
furnish to the contracting officer a written justification for any restric-
tion the contractor or subcontractor asserts on the right of the Federal 
Government to use the data; and 
(2) the contracting officer may review the validity of a restriction the 
contractor or subcontractor asserts under the contract on the right of 
the Government to use technical data furnished to the Government 
under the contract if the contracting officer determines that reasonable 
grounds exist to question the current validity of the asserted restriction 
and that the continued adherence to the asserted restriction by the 
Government would make it impracticable to procure the item competi-
tively at a later time. 
(b) CHALLENGE OF RESTRICTION.—If after a review the contracting offi-
cer determines that a challenge to the asserted restriction is warranted, the 
contracting officer shall provide written notice to the contractor or subcon-
tractor asserting the restriction. The notice shall state—
(1) the grounds for challenging the asserted restriction; and 
(2) the requirement for a response within 60 days justifying the cur-
rent validity of the asserted restriction. 
(c) ADDITIONAL TIME FOR RESPONSES.—When a contractor or subcon-
tractor asserting a restriction subject to this section submits to the con-
tracting officer a written request showing the need for additional time to 
comply with the requirement to justify the current validity of the asserted 
restriction, the contracting officer shall provide appropriate additional time 
to adequately permit the justification to be submitted.
(d) MULTIPLE CHALLENGES.—When a party asserting a restriction re-
ceives notices of challenges to restrictions on technical data from more than 
one contracting officer, and notifies each contracting officer of the existence 
of more than one challenge, the contracting officer initiating the earliest 
challenge, after consultation with the party asserting the restriction and the 
other contracting officers, shall formulate a schedule of responses to each 
of the challenges that will afford the party asserting the restriction with an 
equitable opportunity to respond to each challenge. 
(e) DECISION ON VALIDITY OF ASSERTED RESTRICTION.—
(1) NO RESPONSE SUBMITTED.—The contracting officer shall issue 
a decision pertaining to the validity of the asserted restriction if the
130
contractor or subcontractor does not submit a response under sub-
section (b). 
(2) RESPONSE SUBMITTED.—Within 60 days of receipt of a justifica-
tion submitted in response to the notice provided pursuant to sub-
section (b), a contracting officer shall issue a decision or notify the 
party asserting the restriction of the time within which a decision will 
be issued. 
(f) CLAIM DEEMED CLAIM WITHIN CHAPTER 69.—A claim pertaining to 
the validity of the asserted restriction that is submitted in writing to a con-
tracting officer by a contractor or subcontractor at any tier is deemed to 
be a claim within the meaning of chapter 69 of this title. 
(g) FINAL DISPOSITION OF CHALLENGE.— 
(1) CHALLENGE IS SUSTAINED.—If the contracting officer’s chal-
lenge to the restriction on the right of the Government to use technical 
data is sustained on final disposition—
(A) the restriction is cancelled; and 
(B) if the asserted restriction is found not to be substantially 
justified, the contractor or subcontractor, as appropriate, is liable 
to the Government for payment of the cost to the Government of 
reviewing the asserted restriction and the fees and other expenses 
(as defined in section 2412(d)(2)(A) of title 28) the Government 
incurred in challenging the asserted restriction, unless special cir-
cumstances would make the payment unjust. 
(2) CHALLENGE NOT SUSTAINED.—If the contracting officer’s chal-
lenge to the restriction on the right of the Government to use technical 
data is not sustained on final disposition, the Government—
(A) continues to be bound by the restriction; and 
(B) is liable for payment to the party asserting the restriction 
for fees and other expenses (as defined in section 2412(d)(2)(A) 
of title 28) the party asserting the restriction incurred in defend-
ing the asserted restriction if the challenge by the Government is 
found not to be made in good faith. 
§ 4704. Prohibition of contractors limiting subcontractor 
sales directly to Federal Government 
(a) CONTRACT RESTRICTIONS.—Each contract for the purchase of prop-
erty or services made by an executive agency shall provide that the con-
tractor will not—
(1) enter into an agreement with a subcontractor under the contract 
that has the effect of unreasonably restricting sales by the subcon-
tractor directly to the Federal Government of any item or process (in-
131
cluding computer software) made or furnished by the subcontractor 
under the contract (or any follow-on production contract); or 
(2) otherwise act to restrict unreasonably the ability of a subcon-
tractor to make sales described in clause (1) to the Government. 
(b) RIGHTS UNDER LAW PRESERVED.—This section does not prohibit a 
contractor from asserting rights it otherwise has under law. 
(c) INAPPLICABILITY TO CERTAIN CONTRACTS.—This section does not 
apply to a contract for an amount that is not greater than the simplified 
acquisition threshold. 
(d) INAPPLICABILITY WHEN GOVERNMENT TREATED SIMILARLY
TO 
OTHER PURCHASERS.—An agreement between the contractor in a contract 
for the acquisition of commercial items and a subcontractor under the con-
tract that restricts sales by the subcontractor directly to persons other than 
the contractor may not be considered to unreasonably restrict sales by that 
subcontractor to the Government in violation of the provision included in 
the contract pursuant to subsection (a) if the agreement does not result in 
the Government being treated differently with regard to the restriction than 
any other prospective purchaser of the commercial items from that subcon-
tractor. 
§ 4705. Protection of contractor employees from reprisal for 
disclosure of certain information 
(a) DEFINITIONS.—In this section—
(1) CONTRACT.—The term ‘‘contract’’ means a contract awarded by 
the head of an executive agency. 
(2) CONTRACTOR.—The term ‘‘contractor’’ means a person awarded 
a contract with an executive agency. 
(3) INSPECTOR GENERAL.—The term ‘‘Inspector General’’ means an 
Inspector General appointed under the Inspector General Act of 1978 
(5 App. U.S.C.). 
(b) PROHIBITION OF REPRISALS.—An employee of a contractor may not 
be discharged, demoted, or otherwise discriminated against as a reprisal for 
disclosing to a Member of Congress or an authorized official of an executive 
agency or the Department of Justice information relating to a substantial 
violation of law related to a contract (including the competition for, or nego-
tiation of, a contract). 
(c) INVESTIGATION OF COMPLAINTS.—An individual who believes that the 
individual has been subjected to a reprisal prohibited by subsection (a) may 
submit a complaint to the Inspector General of the executive agency. Unless 
the Inspector General determines that the complaint is frivolous, the Inspec-
tor General shall investigate the complaint and, on completion of the inves-
tigation, submit a report of the findings of the investigation to the indi-
132
vidual, the contractor concerned, and the head of the agency. If the execu-
tive agency does not have an Inspector General, the duties of the Inspector 
General under this section shall be performed by an official the head of the 
executive agency designates. 
(d) REMEDY AND ENFORCEMENT AUTHORITY.— 
(1) ACTIONS CONTRACTOR MAY BE ORDERED TO TAKE.—If the head 
of an executive agency determines that a contractor has subjected an 
individual to a reprisal prohibited by subsection (a), the head of the 
executive agency may take one or more of the following actions: 
(A) ABATEMENT.—Order the contractor to take affirmative ac-
tion to abate the reprisal. 
(B) REINSTATEMENT.—Order the contractor to reinstate the in-
dividual to the position that the individual held before the reprisal, 
together with the compensation (including back pay), employment 
benefits, and other terms and conditions of employment that 
would apply to the individual in that position if the reprisal had 
not been taken. 
(C) PAYMENT.—Order the contractor to pay the complainant an 
amount equal to the aggregate amount of all costs and expenses 
(including attorneys’ fees and expert witnesses’ fees) that the com-
plainant reasonably incurred for, or in connection with, bringing 
the complaint regarding the reprisal, as the head of the executive 
agency determines. 
(2) ENFORCEMENT ORDER.—When a contractor fails to comply with 
an order issued under paragraph (1), the head of the executive agency 
shall file an action for enforcement of the order in the United States 
district court for a district in which the reprisal was found to have oc-
curred. In an action brought under this paragraph, the court may 
grant appropriate relief, including injunctive relief and compensatory 
and exemplary damages.
(3) REVIEW OF ENFORCEMENT ORDER.—A person adversely affected 
or aggrieved by an order issued under paragraph (1) may obtain review 
of the order’s conformance with this subsection, and regulations issued 
to carry out this section, in the United States court of appeals for a 
circuit in which the reprisal is alleged in the order to have occurred. 
A petition seeking review must be filed no more than 60 days after the 
head of the agency issues the order. Review shall conform to chapter 
7 of title 5. 
(e) SCOPE OF SECTION.—This section does not—
133
(1) authorize the discharge of, demotion of, or discrimination against 
an employee for a disclosure other than a disclosure protected by sub-
section (a); or 
(2) modify or derogate from a right or remedy otherwise available 
to the employee. 
§ 4706. Examination of facilities and records of contractor 
(a) DEFINITION.—In this section, the term ‘‘records’’ includes books, doc-
uments, accounting procedures and practices, and other data, regardless of 
type and regardless of whether the items are in written form, in the form 
of computer data, or in any other form. 
(b) AGENCY AUTHORITY.—
(1) INSPECTION OF PLANT AND AUDIT OF RECORDS.—An authorized 
representative of the head of an executive agency may inspect the plant 
and audit the records of—
(A) a contractor performing a cost-reimbursement, incentive, 
time-and-materials, labor-hour, or price-redeterminable contract, 
or any combination of those contracts, the executive agency makes 
under this part; and 
(B) a subcontractor performing a cost-reimbursement, incentive, 
time-and-materials, 
labor-hour, 
or 
price-redeterminable 
sub-
contract, or any combination of those subcontracts, under a con-
tract referred to in subparagraph (A). 
(2) EXAMINATION OF RECORDS.—An authorized representative of 
the head of an executive agency, to evaluate the accuracy, complete-
ness, and currency of certified cost or pricing data required to be sub-
mitted pursuant to chapter 35 of this title with respect to a contract 
or subcontract, may examine all records of the contractor or subcon-
tractor related to—
(A) the proposal for the contract or subcontract; 
(B) the discussions conducted on the proposal; 
(C) pricing of the contract or subcontract; or 
(D) performance of the contract or subcontract. 
(c) SUBPENA POWER.—
(1) AUTHORITY TO REQUIRE THE PRODUCTION OF RECORDS.—The 
Inspector General of an executive agency appointed under section 3 or 
8G of the Inspector General Act of 1978 (5 App. U.S.C.) or, on re-
quest of the head of an executive agency, the Director of the Defense 
Contract Audit Agency (or any successor agency) of the Department 
of Defense or the Inspector General of the General Services Adminis-
tration may require by subpena the production of records of a con-
134
tractor, access to which is provided for that executive agency by sub-
section (b). 
(2) ENFORCEMENT OF SUBPENA.—A subpena under paragraph (1), 
in the case of contumacy or refusal to obey, is enforceable by order of 
an appropriate United States district court. 
(3) AUTHORITY NOT DELEGABLE.—The authority provided by para-
graph (1) may not be delegated. 
(4) REPORT.—In the year following a year in which authority pro-
vided in paragraph (1) is exercised for an executive agency, the head 
of the executive agency shall submit to the Committee on Governmental 
Affairs of the Senate and the Committee on Government Operations of 
the House of Representatives a report on the exercise of the authority 
during the preceding year and the reasons why the authority was exer-
cised in any instance. 
(d) AUTHORITY OF COMPTROLLER GENERAL.—
(1) IN GENERAL.—Except as provided in paragraph (2), each con-
tract awarded after using procedures other than sealed bid procedures 
shall provide that the Comptroller General and representatives of the 
Comptroller General may examine records of the contractor, or any of 
its subcontractors, that directly pertain to, and involve transactions re-
lating to, the contract or subcontract. 
(2) EXCEPTION FOR FOREIGN CONTRACTOR OR SUBCONTRACTOR.—
Paragraph (1) does not apply to a contract or subcontract with a for-
eign contractor or foreign subcontractor if the executive agency con-
cerned determines, with the concurrence of the Comptroller General or 
the designee of the Comptroller General, that applying paragraph (1) 
to the contract or subcontract would not be in the public interest. The 
concurrence of the Comptroller General or the designee is not required 
when—
(A) the contractor or subcontractor is—
(i) the government of a foreign country or an agency of 
that government; or 
(ii) precluded by the laws of the country involved from 
making its records available for examination; and 
(B) the executive agency, after taking into account the price 
and availability of the property and services from United States 
sources, determines that the public interest would be best served 
by not applying paragraph (1). 
(3) ADDITIONAL RECORDS NOT REQUIRED.—Paragraph (1) does not 
require a contractor or subcontractor to create or maintain a record
135
that the contractor or subcontractor does not maintain in the ordinary 
course of business or pursuant to another law. 
(e) LIMITATION ON AUDITS RELATING TO INDIRECT COSTS.—An execu-
tive agency may not perform an audit of indirect costs under a contract, 
subcontract, or modification before or after entering into the contract, sub-
contract, or modification when the contracting officer determines that the 
objectives of the audit can reasonably be met by accepting the results of 
an audit that was conducted by another department or agency of the Fed-
eral Government within one year preceding the date of the contracting offi-
cer’s determination. 
(f) EXPIRATION OF AUTHORITY.—The authority of an executive agency 
under subsection (b) and the authority of the Comptroller General under 
subsection (d) shall expire three years after final payment under the con-
tract or subcontract. 
(g) INAPPLICABILITY TO CERTAIN CONTRACTS.—This section does not 
apply to the following contracts: 
(1) CONTRACTS FOR UTILITY SERVICES.—Contracts for utility serv-
ices at rates not exceeding those established to apply uniformly to the 
public, plus any applicable reasonable connection charge. 
(2) CONTRACT OR SUBCONTRACT NOT GREATER THAN SIMPLIFIED 
ACQUISITION
THRESHOLD.—A contract or subcontract that is not 
greater than the simplified acquisition threshold. 
(h) ELECTRONIC FORM ALLOWED.—This section does not preclude a con-
tractor from duplicating or storing original records in electronic form. 
(i) ORIGINAL RECORDS NOT REQUIRED.—An executive agency shall not 
require a contractor or subcontractor to provide original records in an audit 
carried out pursuant to this section if the contractor or subcontractor pro-
vides photographic or electronic images of the original records and meets 
the following requirements: 
(1) PRESERVATION PROCEDURES ESTABLISHED.—The contractor or 
subcontractor has established procedures to ensure that the imaging 
process preserves the integrity, reliability, and security of the original 
records.
(2) INDEXING
SYSTEM
MAINTAINED.—The contractor or subcon-
tractor maintains an effective indexing system to permit timely and 
convenient access to the imaged records. 
(3) ORIGINAL
RECORDS
RETAINED.—The contractor or subcon-
tractor retains the original records for a minimum of one year after 
imaging to permit periodic validation of the imaging systems.
136
§ 4707. Remission of liquidated damages 
When a contract made on behalf of the Federal Government by the head 
of a Federal agency, or by an authorized officer of the agency, includes a 
provision for liquidated damages for delay, the Secretary of the Treasury 
on recommendation of the head of the agency may remit any part of the 
damages as the Secretary believes is just and equitable. 
§ 4708. Payment of reimbursable indirect costs in cost-type 
research and development contracts with edu-
cational institutions 
A cost-type research and development contract (including a grant) with 
a university, college, or other educational institution may provide for pay-
ment of reimbursable indirect costs on the basis of predetermined fixed-per-
centage rates applied to the total of the reimbursable direct costs incurred 
or to an element of the total of the reimbursable direct costs. 
§ 4709. Implementation of electronic commerce capability 
(a) ROLE OF HEAD OF EXECUTIVE AGENCY.—The head of each execu-
tive agency shall implement the electronic commerce capability required by 
section 2301 of this title. In implementing the capability, the head of an 
executive agency shall consult with the Administrator for Federal Procure-
ment Policy. 
(b) PROGRAM MANAGER.—The head of each executive agency shall des-
ignate a program manager to implement the electronic commerce capability 
for the agency. The program manager reports directly to an official at a 
level not lower than the senior procurement executive designated for the 
agency under section 1702(c) of this title.
Subtitle II—Other Advertising and Contract 
Provisions
Chapter 
Sec. 
61. Advertising ..................................................................................................
6101
63. General Contract Provisions ................................................................
6301
65. Contracts for Materials, Supplies, Articles, and Equipment 
Exceeding $10,000.
6501
67. Service Contract Labor Standards ....................................................
6701
69. Contract Disputes .....................................................................................
6901
CHAPTER 61—ADVERTISING
Sec. 
6101.
Advertising requirement for Federal Government purchases and sales. 
6102.
Exceptions from advertising requirement. 
6103.
Opening of bids.
§ 6101. Advertising requirement for Federal Government 
purchases and sales 
(a) DEFINITIONS.—In this section—
(1) APPROPRIATION.—The term ‘‘appropriation’’ includes amounts 
made available by legislation under section 9104 of title 31.
137
(2) FEDERAL GOVERNMENT AND GOVERNMENT.—The terms ‘‘Fed-
eral Government’’ and ‘‘Government’’ include the government of the 
District of Columbia. 
(b) PURCHASES.—
(1) IN GENERAL.—Unless otherwise provided in the appropriation 
concerned or other law, purchases and contracts for supplies or services 
for the Federal Government may be made or entered into only after 
advertising a sufficient time previously for proposals. 
(2) LIMITATIONS ON APPLICABILITY.—Paragraph (1) does not apply 
when—
(A) the amount involved in any one case does not exceed 
$25,000; 
(B) public exigencies require the immediate delivery of articles 
or performance of services; 
(C) only one source of supply is available and the Government 
purchasing or contracting officer so certifies; or 
(D) services are required to be performed by a contractor in 
person and are—
(i) of a technical and professional nature; or 
(ii) under Government supervision and paid for on a time 
basis. 
(c) SALES.—Except when otherwise authorized by law or when the rea-
sonable value involved in any one case does not exceed $500, sales and con-
tracts of sale by the Government are governed by the requirements of this 
section for advertising. 
(d) APPLICATION TO WHOLLY OWNED GOVERNMENT CORPORATIONS.—
For wholly owned Government corporations, this section applies only to ad-
ministrative transactions. 
§ 6102. Exceptions from advertising requirement 
(a) AMERICAN BATTLE MONUMENTS COMMISSION.—Section 6101 of this 
title does not apply to the American Battle Monuments Commission with 
respect to leases in foreign countries for office or garage space. 
(b) BUREAU
OF INTERPARLIAMENTARY UNION
FOR PROMOTION
OF 
INTERNATIONAL ARBITRATION.—Section 6101 of this title does not apply 
to the Bureau of Interparliamentary Union for Promotion of International 
Arbitration with respect to necessary stenographic reporting services by con-
tract. 
(c) DEPARTMENT OF STATE.—Section 6101 of this title does not apply 
to the Department of State when the purchase or service relates to the 
packing of personal and household effects of Diplomatic, Consular, and For-
eign Service officers and clerks for foreign shipment.
138
(d) INTERNATIONAL COMMITTEE OF AERIAL LEGAL EXPERTS.—Section 
6101 of this title does not apply to the International Committee of Aerial 
Legal Experts with respect to necessary stenographic and other services by 
contract. 
(e) ARCHITECT OF THE CAPITOL.—The purchase of supplies and equip-
ment and the procurement of services for all branches under the Architect 
of the Capitol may be made in the open market according to common busi-
ness practice, without compliance with section 6101 of this title, when the 
aggregate amount of the purchase or the service does not exceed $25,000 
in any instance. 
(f) FOREST PRODUCTS FROM INDIAN RESERVATIONS.—Lumber and 
other forest products produced by Indian enterprises from forests on Indian 
reservations may be sold under regulations the Secretary of the Interior pre-
scribes, without compliance with section 6101 of this title. 
(g) HOUSE OF REPRESENTATIVES.—Section 6101 of this title does not 
apply to purchases and contracts for supplies or services for any office of 
the House of Representatives. 
(h) CONGRESSIONAL BUDGET OFFICE.—The Director of the Congres-
sional Budget Office may enter into agreements or contracts without regard 
to section 6101 of this title. 
§ 6103. Opening of bids 
Whenever proposals for supplies have been solicited, the parties respond-
ing to the solicitation shall be notified of the time and place of the opening 
of the bids, and be permitted to be present either in person or by attorney. 
A record of each bid shall be made at the time and place of the opening 
of the bids. 
CHAPTER 63—GENERAL CONTRACT PROVISIONS
Sec. 
6301.
Authorization requirement. 
6302.
Contracts for fuel made by Secretary of the Army. 
6303.
Certain contracts limited to appropriated amounts. 
6304.
Certain contracts limited to one-year term. 
6305.
Prohibition on transfer of contract and certain allowable assignments. 
6306.
Prohibition on Members of Congress making contracts with Federal Government. 
6307.
Contracts with Government-owned establishments and availability of appropriations. 
6308.
Contracts for transportation of Federal Government securities. 
6309.
Honorable discharge certificate in lieu of birth certificate.
§ 6301. Authorization requirement 
(a) IN GENERAL.—A contract or purchase on behalf of the Federal Gov-
ernment shall not be made unless the contract or purchase is authorized by 
law or is under an appropriation adequate to its fulfillment. 
(b) EXCEPTION.—
(1) DEFINITION.—In this subsection, the term ‘‘defined Secretary’’ 
means—
(A) the Secretary of Defense; or
139
(B) the Secretary of Transportation with respect to the Coast 
Guard when the Coast Guard is not operating as a service in the 
Navy. 
(2) IN GENERAL.—Subsection (a) does not apply to a contract or 
purchase made by a defined Secretary for clothing, subsistence, forage, 
fuel, quarters, transportation, or medical and hospital supplies. 
(3) CURRENT YEAR LIMITATION.—A contract or purchase made by 
a defined Secretary under this subsection may not exceed the neces-
sities of the current year. 
(4) REPORTS.—The defined Secretary shall immediately advise Con-
gress when authority is exercised under this subsection. The defined 
Secretary shall report quarterly on the estimated obligations incurred 
pursuant to the authority granted in this subsection. 
(c) SPECIAL RULE FOR PURCHASE OF LAND.—Land may not be pur-
chased by the Government unless the purchase is authorized by law. 
§ 6302. Contracts for fuel made by Secretary of the Army 
The Secretary of the Army, when the Secretary believes it is in the inter-
est of the Federal Government, may enter into contracts and incur obliga-
tions for fuel in sufficient quantities to meet the requirements for one year 
without regard to the current fiscal year. Funds appropriated for the cur-
rent fiscal year or the following fiscal year may be used to pay for supplies 
delivered under a contract made pursuant to this section. 
§ 6303. Certain contracts limited to appropriated amounts 
A contract to erect, repair, or furnish a public building, or to make any 
public improvement, shall not be made on terms requiring the Federal Gov-
ernment to pay more than the amount specifically appropriated for the ac-
tivity covered by the contract. 
§ 6304. Certain contracts limited to one-year term 
Except as otherwise provided, an executive department shall not make a 
contract for stationery or other supplies for a term longer than one year 
from the time the contract is made. 
§ 6305. Prohibition on transfer of contract and certain al-
lowable assignments 
(a) GENERAL PROHIBITION ON TRANSFER OF CONTRACTS.—The party 
to whom the Federal Government gives a contract or order may not transfer 
the contract or order, or any interest in the contract or order, to another 
party. A purported transfer in violation of this subsection annuls the con-
tract so far as the Government is concerned, except that all rights of action 
for breach of contract are reserved to the Government. 
(b) ASSIGNMENT.—
140
(1) IN GENERAL.—Notwithstanding subsection (a) and in accordance 
with the requirements of this subsection, amounts due from the Gov-
ernment under a contract may be assigned to a bank, trust company, 
Federal lending agency, or other financing institution. 
(2) MINIMUM AMOUNT.—This subsection applies only to a contract 
under which the aggregate amounts due from the Government total at 
least $1,000. 
(3) ACCORD WITH CONTRACT TERMS.—Assignment may not be made 
under this subsection if the contract forbids the assignment. 
(4) FULL BALANCE DUE.—Unless otherwise expressly permitted by 
the contract, an assignment under this subsection must cover the bal-
ance of all amounts due from the Government under the contract. 
(5) SINGLE ASSIGNMENT.—Unless otherwise expressly permitted by 
the contract, an assignment under this subsection may not be made to 
more than one party or be subject to further assignment, except that 
assignment may be made to one party as agent or trustee for two or 
more parties. 
(6) WRITTEN NOTICE.—The assignee of an assignment under this 
subsection shall file written notice and a true copy of the instrument 
of assignment with—
(A) the contracting officer or head of the officer’s department 
or agency; 
(B) the surety on any bond connected with the contract; and 
(C) the disbursing officer, if any, designated in the contract to 
make payment. 
(7) VALIDITY.—Notwithstanding any law governing the validity of 
assignments to the contrary, an assignment under this subsection is a 
valid assignment for all purposes. 
(8) NO REFUND TO COVER ASSIGNOR’S LIABILITY.—The assignee of 
an assignment under this subsection is not liable to make any refund 
to the Government because of an assignor’s liability to the Government, 
whether that liability arises from the contract or independently. 
(9) AVOIDING REDUCTION OR SETOFF WITH CERTAIN CONTRACTS.—
(A) CONTRACT PROVISION.—A contract of the Department of 
Defense, the General Services Administration, the Department of 
Energy, or another department or agency of the Government des-
ignated by the President may provide or be amended without con-
sideration to provide, on a determination of need by the President, 
that payments made to an assignee under the contract are not 
subject to reduction or setoff. Each determination of need by the
141
President under this subparagraph must be published in the Fed-
eral Register. 
(B) CARRYING OUT CONTRACT PROVISION.—When a ‘‘no reduc-
tion or setoff’’ provision as described in subparagraph (A) is in-
cluded in a contract, payments to the assignee are not subject to 
reduction or setoff for an assignor’s liability arising—
(i) independently of the contract; 
(ii) on account of renegotiation under a renegotiation stat-
ute or under a statutory renegotiation article in the contract; 
(iii) on account of fines; 
(iv) on account of penalties; or 
(v) on account of taxes, Social Security contributions, or 
the withholding or non-withholding of taxes or Social Security 
contributions, whether arising from or independently of the 
contract. 
(C) LIMITATION.—Subparagraph (B)(iv) does not apply to 
amounts which may be collected or withheld from the assignor in 
accordance with or for failure to comply with the terms of the con-
tract. 
§ 6306. Prohibition on Members of Congress making con-
tracts with Federal Government 
(a) IN GENERAL.—A Member of Congress may not enter into or benefit 
from a contract or any part of a contract with the Federal Government. 
(b) EXEMPTIONS.—
(1) IN GENERAL.—Subsection (a) does not apply to contracts that 
the Secretary of Agriculture may enter into with farmers. 
(2) CERTAIN ACTS.—Subsection (a) does not apply to a contract en-
tered into under—
(A) the Agricultural Adjustment Act (7 U.S.C. 601 et seq.); 
(B) the Farm Credit Act of 1971 (12 U.S.C. 2001 et seq.); or 
(C) the Home Owners’ Loan Act (12 U.S.C. 1461 et seq.). 
(3) PUBLIC RECORD.—An exemption under this subsection shall be 
made a matter of public record.
§ 6307. Contracts with Government-owned establishments 
and availability of appropriations 
An order or contract placed with a Government-owned establishment for 
work, material, or the manufacture of material pertaining to an approved 
project is deemed to be an obligation in the same manner that a similar 
order or contract placed with a commercial manufacturer or private con-
tractor is an obligation. Appropriations remain available to pay an obliga-
tion to a Government-owned establishment just as appropriations remain
142
available to pay an obligation to a commercial manufacturer or private con-
tractor. 
§ 6308. Contracts for transportation of Federal Government 
securities 
When practicable, a contract for transporting bullion, cash, or securities 
of the Federal Government shall be awarded to the lowest responsible bidder 
after notice to all parties with means of transportation. 
§ 6309. Honorable discharge certificate in lieu of birth cer-
tificate 
(a) IN GENERAL.—An employer described in subsection (b) may not deny 
employment, on account of failure to produce a birth certificate, to an indi-
vidual who submits, in lieu of the birth certificate, an honorable discharge 
certificate (or certificate issued in lieu of an honorable discharge certificate) 
from the Army, Air Force, Navy, Marine Corps, or Coast Guard of the 
United States, unless the honorable discharge certificate shows on its face 
that the individual may have been an alien at the time of its issuance. 
(b) EMPLOYERS TO WHICH SECTION APPLIES.—An employer referred to 
in subsection (a) is an employer—
(1) engaged in—
(A) the production, maintenance, or storage of arms, armament, 
ammunition, implements of war, munitions, machinery, tools, 
clothing, food, fuel, or any articles or supplies, or parts or ingredi-
ents of any articles or supplies; or 
(B) the construction, reconstruction, repair, or installation of a 
building, plant, structure, or facility; and 
(2) engaged in the activity described in clause (1) under—
(A) a contract with the Federal Government; or 
(B) any contract that the President, the Secretary of the Army, 
the Secretary of the Air Force, the Secretary of the Navy, or the 
Secretary of Transportation certifies to the employer to be nec-
essary to the national defense. 
CHAPTER 65—CONTRACTS FOR MATERIALS, SUPPLIES, 
ARTICLES, AND EQUIPMENT EXCEEDING $10,000
Sec. 
6501.
Definitions. 
6502.
Required contract terms. 
6503.
Breach or violation of required contract terms. 
6504.
Three-year prohibition on new contracts in case of breach or violation. 
6505.
Exclusions. 
6506.
Authority to make exceptions. 
6507.
Administrative provisions. 
6508.
Hearing authority and procedures. 
6509.
Other procedures. 
6510.
Manufacturers and regular dealers. 
6511.
Effect on other law.
143
§ 6501. Definitions 
In this chapter—
(1) AGENCY OF THE UNITED STATES.—The term ‘‘agency of the 
United States’’ means an executive department, independent establish-
ment, or other agency or instrumentality of the United States, the Dis-
trict of Columbia, or a corporation in which all stock is beneficially 
owned by the Federal Government. 
(2) PERSON.—The term ‘‘person’’ includes one or more legal rep-
resentatives, trustees, trustees in cases under title 11, or receivers. 
§ 6502. Required contract terms 
A contract made by an agency of the United States for the manufacture 
or furnishing of materials, supplies, articles, or equipment, in an amount 
exceeding $10,000, shall include the following representations and stipula-
tions: 
(1) MINIMUM WAGE TO BE PAID.—All individuals employed by the 
contractor in the manufacture or furnishing of materials, supplies, arti-
cles, or equipment under the contract will be paid, without subsequent 
deduction or rebate on any account, not less than the prevailing min-
imum wage, as determined by the Secretary of Labor, for individuals 
employed in similar work or in the particular or similar industries or 
groups of industries currently operating in the locality in which the ma-
terials, supplies, articles, or equipment are to be manufactured or fur-
nished under the contract, except that this clause applies only to pur-
chases or contracts relating to industries that have been the subject 
matter of a determination by the Secretary. 
(2) MAXIMUM NUMBER OF HOURS TO BE WORKED IN A WEEK.—In-
dividuals employed by the contractor in the manufacture or furnishing 
of materials, supplies, articles, or equipment under the contract shall 
not be permitted to work in excess of 40 hours in any one week, except 
that this clause does not apply to an employer who has entered into 
an agreement with employees pursuant to section 7(b)(1) or (2) of the 
Fair Labor Standards Act of 1938 (29 U.S.C. 207(b)(1) or (2)). 
(3) INELIGIBLE EMPLOYEES.—Male individuals under 16 years of 
age, female individuals under 18 years of age, and convict labor will 
not be employed by the contractor in the manufacture or furnishing of 
materials, supplies, articles, or equipment under the contract, except 
that this clause, or other law or executive order containing similar pro-
hibitions against the purchase of goods by the Federal Government, 
does not apply to convict labor that satisfies the conditions of section 
1761(c) of title 18.
144
(4) STANDARDS OF PLACES AND WORKING CONDITIONS WHERE CON-
TRACT PERFORMED.—Materials, supplies, articles, or equipment will 
not be manufactured or furnished under the contract and no part of 
the contract will otherwise be performed in plants, factories, buildings, 
or surroundings, or under working conditions, that are unsanitary, haz-
ardous, or dangerous to the health and safety of employees engaged in 
the performance of the contract. Compliance with the safety, sanitary, 
and factory inspection laws of the State in which the work or part of 
the work is to be performed is prima facie evidence of compliance with 
this clause. 
§ 6503. Breach or violation of required contract terms 
(a) APPLICABLE BREACH OR VIOLATION.—This section applies in case of 
breach or violation of a representation or stipulation included in a contract 
under section 6502 of this title. 
(b) LIQUIDATED DAMAGES.—In addition to damages for any other breach 
of the contract, the party responsible for a breach or violation described in 
subsection (a) is liable to the Federal Government for the following liq-
uidated damages: 
(1) An amount equal to the sum of $10 per day for each male indi-
vidual under 16 years of age and each female individual under 18 years 
of age and each convict laborer knowingly employed in the performance 
of the contract. 
(2) An amount equal to the sum of each underpayment of wages due 
an employee engaged in the performance of the contract, including any 
underpayments arising from deductions or rebates. 
(c) CANCELLATION AND ALTERNATIVE COMPLETION.—In addition to the 
Government being entitled to damages described in subsection (b), the agen-
cy of the United States that made the contract may cancel the contract and 
make open-market purchases or make other contracts for the completion of 
the original contract, charging any additional cost to the original contractor.
(d) RECOVERY OF AMOUNTS DUE.—An amount due the Government be-
cause of a breach or violation described in subsection (a) may be withheld 
from any amounts owed the contractor under the contract or may be recov-
ered in a suit brought by the Attorney General. 
(e) EMPLOYEE REIMBURSEMENT FOR UNDERPAYMENT OF WAGES.—An 
amount withheld or recovered under subsection (d) that is based on an un-
derpayment of wages as described in subsection (b)(2) shall be held in a 
special deposit account. On order of the Secretary of Labor, the amount 
shall be paid directly to the underpaid employee on whose account the 
amount was withheld or recovered. However, an employee’s claim for pay-
ment under this subsection may be entertained only if made within one year
145
from the date of actual notice to the contractor of the withholding or recov-
ery. 
§ 6504. Three-year prohibition on new contracts in case of 
breach or violation 
(a) DISTRIBUTION OF LIST.—The Comptroller General shall distribute to 
each agency of the United States a list containing the names of persons 
found by the Secretary of Labor to have breached or violated a representa-
tion or stipulation included in a contract under section 6502 of this title. 
(b) THREE-YEAR PROHIBITION.—Unless the Secretary recommends oth-
erwise, a contract described in section 6502 of this title may not be awarded 
to a person named on the list under subsection (a) of this section, or to 
an entity in which the person has a controlling interest, until three years 
have elapsed from the date of the determination by the Secretary of Labor 
that a breach or violation occurred. 
§ 6505. Exclusions 
(a) ITEMS AVAILABLE IN THE OPEN MARKET.—This chapter does not 
apply to the purchase of materials, supplies, articles, or equipment that may 
usually be bought in the open market. 
(b) PERISHABLES AND AGRICULTURAL PRODUCTS.—This chapter does 
not apply to any of the following: 
(1) Perishables, including dairy, livestock and nursery products. 
(2) Agricultural or farm products processed for first sale by the 
original producers. 
(3) Contracts made by the Secretary of Agriculture for the purchase 
of agricultural commodities or products of agricultural commodities. 
(c) CARRIAGE OF FREIGHT OR PERSONNEL.—This chapter may not be 
construed to apply to—
(1) the carriage of freight or personnel by vessel, airplane, bus, 
truck, express, or railway line where published tariff rates are in effect; 
or 
(2) common carriers subject to the Communications Act of 1934 (47 
U.S.C. 151 et seq.). 
§ 6506. Authority to make exceptions 
(a) AUTHORITY OF THE PRESIDENT TO SUSPEND.—The President may 
suspend any of the representations and stipulations contained in section 
6502 of this title whenever, in the President’s judgment, suspension is in 
the public interest. 
(b) DUTY OF THE SECRETARY OF LABOR TO MAKE EXCEPTIONS.—
When the head of an agency of the United States makes a written finding 
that the inclusion of representations or stipulations under section 6502 of 
this title in a proposal or contract will seriously impair the conduct of Fed-
146
eral Government business, the Secretary of Labor shall make exceptions in 
specific cases or otherwise when justice or the public interest will be served. 
(c) AUTHORITY
OF
THE SECRETARY TO MODIFY EXISTING CON-
TRACTS.—When an agency of the United States and a contractor jointly 
recommend, the Secretary may modify the terms of an existing contract 
with respect to minimum wages and maximum hours of labor as the Sec-
retary finds necessary and proper in the public interest or to prevent injus-
tice and undue hardship. 
(d) AUTHORITY OF THE SECRETARY TO PRESCRIBE REGULATIONS.—The 
Secretary may prescribe regulations to allow reasonable limitations, vari-
ations, tolerances, and exemptions in the application of this chapter to con-
tractors, including with respect to minimum wages and maximum hours of 
labor. 
(e) RATE OF PAY FOR OVERTIME.—When the Secretary permits an in-
crease in the maximum hours of labor stipulated in a contract, the Sec-
retary shall set a rate of pay for overtime. The overtime rate must be at 
least one and one-half times the basic hourly rate. 
§ 6507. Administrative provisions 
(a) IN GENERAL.—The Secretary of Labor shall administer this chapter. 
(b) USE OF GOVERNMENT OFFICERS AND EMPLOYEES.—The Secretary 
shall use Federal officers and employees and, with a State’s consent, State 
and local officers and employees as the Secretary finds necessary to assist 
in the administration of this chapter. 
(c) APPOINTMENTS.—The Secretary shall appoint an administrative offi-
cer and attorneys, experts, and other employees from time to time as the 
Secretary finds necessary for the administration of this chapter. The ap-
pointments are subject to chapter 51 and subchapter III of chapter 53 of 
title 5 and other law applicable to the employment and compensation of offi-
cers and employees of the Federal Government. 
(d) INVESTIGATIONS.—The Secretary, or an authorized representative of 
the Secretary, may make investigations and findings as provided in this 
chapter and may, in any part of the United States, prosecute an inquiry 
necessary to carry out this chapter. 
(e) REGULATIONS.—The Secretary may make, amend, and rescind regu-
lations as necessary to carry out this chapter. 
§ 6508. Hearing authority and procedures 
(a) AUTHORITY TO HOLD HEARINGS.—The Secretary of Labor or an im-
partial representative designated by the Secretary may hold hearings when 
there is a complaint of breach or violation of a representation or stipulation 
included in a contract under section 6502 of this title. The Secretary may 
initiate the hearings on the Secretary’s own motion or on the application
147
of a person affected by the ruling of an agency of the United States relating 
to a proposal or contract under this chapter. 
(b) ORDERS TO COMPEL TESTIMONY.—The Secretary or an impartial 
representative designated by the Secretary may issue orders requiring wit-
nesses to attend hearings held under this section and to produce evidence 
and testify under oath. Witnesses shall be paid fees and mileage at the same 
rates as witnesses in courts of the United States. 
(c) ENFORCEMENT OF ORDERS.—If a person refuses or fails to obey an 
order issued under subsection (b), the Secretary or an impartial representa-
tive designated by the Secretary may bring an action to enforce the order 
in a district court of the United States or in the district court of a territory 
or possession of the United States. A court has jurisdiction to enforce the 
order if the inquiry is being carried out within the court’s judicial district 
or if the person is found or resides or transacts business within the court’s 
judicial district. The court may issue an order requiring the person to obey 
the order issued under subsection (b), and the court may punish any further 
refusal or failure as contempt of court. 
(d) FINDINGS OF FACT.—After notice and a hearing, the Secretary or an 
impartial representative designated by the Secretary shall make findings of 
fact. The findings are conclusive for agencies of the United States. If sup-
ported by a preponderance of the evidence, the findings are conclusive in 
any court of the United States. 
(e) DECISIONS.—The Secretary or an impartial representative designated 
by the Secretary may make decisions, based on findings of fact, that are 
considered necessary to enforce this chapter. 
§ 6509. Other procedures 
(a) APPLICABILITY
OF CERTAIN ADMINISTRATIVE PROVISIONS.—Not-
withstanding section 553 of title 5, subchapter II of chapter 5 and chapter
7 of title 5 are applicable in the administration of sections 6501–6505, 
6507, 6508, and 6511 of this title. 
(b) JUDICIAL REVIEW IN GENERAL.—Notwithstanding the inclusion of 
representations and stipulations in a contract under section 6502 of this 
title, an interested person has the right of judicial review of any legal ques-
tion which might otherwise be raised, including wage determinations and the 
interpretation of the terms ‘‘locality’’ and ‘‘open market’’. 
(c) WAGE DETERMINATIONS.—
(1) RECORD AND HEARING REQUIREMENTS.—A wage determination 
under section 6502(1) of this title shall be made on the record after 
opportunity for a hearing. 
(2) JUDICIAL REVIEW.—A person adversely affected or aggrieved by 
a wage determination under section 6502(1) of this title has the right
148
of judicial review of the determination, or of the applicability of the de-
termination, within 90 days after the determination is made, in the 
manner provided by chapter 7 of title 5. A person adversely affected 
or aggrieved by a wage determination is deemed to include a person 
in an industry to which the determination applies that is a supplier of 
material, supplies, articles, or equipment that are purchased or in-
tended to be purchased by the Federal Government from any source. 
§ 6510. Manufacturers and regular dealers 
(a) PRESCRIBING STANDARDS.—The Secretary of Labor may prescribe, 
in regulations, standards for determining whether a contractor is a manu-
facturer or regular dealer with respect to materials, supplies, articles, or 
equipment to be manufactured or furnished under, or used in the perform-
ance of, a contract entered into by an agency of the United States. 
(b) JUDICIAL REVIEW.—An interested person has the right of judicial re-
view of any legal question relating to interpretation of the terms ‘‘regular 
dealer’’ and ‘‘manufacturer’’ as defined pursuant to subsection (a). 
§ 6511. Effect on other law 
This chapter may not be construed to modify or amend the following pro-
visions: 
(1) Chapter 83 of this title. 
(2) Subchapter IV of chapter 31 of title 40. 
(3) Chapter 307 of title 18. 
CHAPTER 67—SERVICE CONTRACT LABOR STANDARDS
Sec. 
6701.
Definitions. 
6702.
Contracts to which this chapter applies. 
6703.
Required contract terms. 
6704.
Limitation on minimum wage. 
6705.
Violations. 
6706.
Three-year prohibition on new contracts in case of violation. 
6707.
Enforcement and administration of chapter.
§ 6701. Definitions 
In this chapter—
(1) COMPENSATION.—The term ‘‘compensation’’ means any of the 
payments or fringe benefits described in section 6703 of this title. 
(2) SERVICE EMPLOYEE.—The term ‘‘service employee’’—
(A) means an individual engaged in the performance of a con-
tract made by the Federal Government and not exempted under 
section 6702(b) of this title, whether negotiated or advertised, the 
principal purpose of which is to furnish services in the United 
States; 
(B) includes an individual without regard to any contractual re-
lationship alleged to exist between the individual and a contractor 
or subcontractor; but
149
(C) does not include an individual employed in a bona fide exec-
utive, administrative, or professional capacity, as those terms are 
defined in part 541 of title 29, Code of Federal Regulations. 
(3) UNITED STATES.—The term ‘‘United States’’—
(A) includes any State of the United States, the District of Co-
lumbia, Puerto Rico, the Virgin Islands, the outer Continental 
Shelf as defined in the Outer Continental Shelf Lands Act (43 
U.S.C. § 1331 et seq.), American Samoa, Guam, Wake Island, 
Eniwetok Atoll, Kwajalein Atoll, Johnston Island, and Canton Is-
land; but 
(B) does not include any other territory under the jurisdiction 
of the United States or any United States base or possession with-
in a foreign country. 
§ 6702. Contracts to which this chapter applies 
(a) IN GENERAL.—Except as provided in subsection (b), this chapter ap-
plies to any contract or bid specification for a contract, whether negotiated 
or advertised, that—
(1) is made by the Federal Government or the District of Columbia; 
(2) involves an amount exceeding $2,500; and 
(3) has as its principal purpose the furnishing of services in the 
United States through the use of service employees. 
(b) EXEMPTIONS.—This chapter does not apply to—
(1) a contract of the Government or the District of Columbia for the 
construction, alteration, or repair, including painting and decorating, of 
public buildings or public works; 
(2) any work required to be done in accordance with chapter 65 of 
this title; 
(3) a contract for the carriage of freight or personnel by vessel, air-
plane, bus, truck, express, railway line or oil or gas pipeline where pub-
lished tariff rates are in effect; 
(4) a contract for the furnishing of services by radio, telephone, tele-
graph, or cable companies, subject to the Communications Act of 1934 
(47 U.S.C. 151 et seq.); 
(5) a contract for public utility services, including electric light and 
power, water, steam, and gas; 
(6) an employment contract providing for direct services to a Federal 
agency by an individual; or 
(7) a contract with the United States Postal Service, the principal 
purpose of which is the operation of postal contract stations.
150
§ 6703. Required contract terms 
A contract to which this chapter applies under section 6702 of this title 
shall contain the following terms: 
(1) MINIMUM WAGE.—The contract shall contain a provision speci-
fying the minimum wage to be paid to each class of service employee 
engaged in the performance of the contract or any subcontract, as de-
termined by the Secretary of Labor or the Secretary’s authorized rep-
resentative, in accordance with prevailing rates in the locality, or, 
where a collective-bargaining agreement covers the service employees, 
in accordance with the rates provided for in the agreement, including 
prospective wage increases provided for in the agreement as a result 
of arm’s length negotiations. In any case the minimum wage may not 
be less than the minimum wage specified in section 6704 of this title. 
(2) FRINGE
BENEFITS.—The contract shall contain a provision 
specifying the fringe benefits to be provided to each class of service em-
ployee engaged in the performance of the contract or any subcontract, 
as determined by the Secretary or the Secretary’s authorized represent-
ative to be prevailing in the locality, or, where a collective-bargaining 
agreement covers the service employees, to be provided for under the 
agreement, including prospective fringe benefit increases provided for 
in the agreement as a result of arm’s-length negotiations. The fringe 
benefits shall include medical or hospital care, pensions on retirement 
or death, compensation for injuries or illness resulting from occupa-
tional activity, or insurance to provide any of the foregoing, unemploy-
ment benefits, life insurance, disability and sickness insurance, accident 
insurance, vacation and holiday pay, costs of apprenticeship or other 
similar programs and other bona fide fringe benefits not otherwise re-
quired by Federal, State, or local law to be provided by the contractor 
or subcontractor. The obligation under this paragraph may be dis-
charged by furnishing any equivalent combinations of fringe benefits or 
by making equivalent or differential payments in cash under regula-
tions established by the Secretary. 
(3) WORKING CONDITIONS.—The contract shall contain a provision 
specifying that no part of the services covered by this chapter may be 
performed in buildings or surroundings or under working conditions, 
provided by or under the control or supervision of the contractor or any 
subcontractor, which are unsanitary or hazardous or dangerous to the 
health or safety of service employees engaged to provide the services. 
(4) NOTICE.—The contract shall contain a provision specifying that 
on the date a service employee begins work on a contract to which this 
chapter applies, the contractor or subcontractor will deliver to the em-
151
ployee a notice of the compensation required under paragraphs (1) and 
(2), on a form prepared by the Federal agency, or will post a notice 
of the required compensation in a prominent place at the worksite. 
(5) GENERAL SCHEDULE PAY RATES AND PREVAILING RATE SYS-
TEMS.—The contract shall contain a statement of the rates that would 
be paid by the Federal agency to each class of service employee if sec-
tion 5332 or 5341 of title 5 were applicable to them. The Secretary 
shall give due consideration to these rates in making the wage and 
fringe benefit determinations specified in this section. 
§ 6704. Limitation on minimum wage 
(a) IN GENERAL.—A contractor that makes a contract with the Federal 
Government, the principal purpose of which is to furnish services through 
the use of service employees, and any subcontractor, may not pay less than 
the minimum wage specified under section 6(a)(1) of the Fair Labor Stand-
ards Act of 1938 (29 U.S.C. 206(a)(1)) to an employee engaged in per-
forming work on the contract. 
(b) VIOLATIONS.—Sections 6705–6707(d) of this title are applicable to a 
violation of this section. 
§ 6705. Violations 
(a) LIABILITY OF RESPONSIBLE PARTY.—A party responsible for a viola-
tion of a contract provision required under section 6703(1) or (2) of this 
title or a violation of section 6704 of this title is liable for an amount equal 
to the sum of any deduction, rebate, refund, or underpayment of compensa-
tion due any employee engaged in the performance of the contract. 
(b) RECOVERY OF AMOUNTS UNDERPAID TO EMPLOYEES.—
(1) WITHHOLDING ACCRUED PAYMENTS DUE ON CONTRACTS.—The 
total amount determined under subsection (a) to be due any employee 
engaged in the performance of a contract may be withheld from ac-
crued payments due on the contract or on any other contract between 
the same contractor and the Federal Government. The amount with-
held shall be held in a deposit fund. On order of the Secretary of 
Labor, the compensation found by the Secretary or the head of a Fed-
eral agency to be due an underpaid employee pursuant to this chapter 
shall be paid from the deposit fund directly to the underpaid employee. 
(2) BRINGING ACTIONS AGAINST CONTRACTORS.—If the accrued pay-
ments withheld under the terms of the contract are insufficient to reim-
burse a service employee with respect to whom there has been a failure 
to pay the compensation required pursuant to this chapter, the Govern-
ment may bring action against the contractor, subcontractor, or any 
sureties in any court of competent jurisdiction to recover the remaining 
amount of underpayment. Any amount recovered shall be held in the
152
deposit fund and shall be paid, on order of the Secretary, directly to 
the underpaid employee. Any amount not paid to an employee because 
of inability to do so within three years shall be covered into the Treas-
ury as miscellaneous receipts. 
(c) CANCELLATION
AND ALTERNATIVE COMPLETION.—In addition to 
other actions in accordance with this section, when a violation of any con-
tract stipulation is found, the Federal agency that made the contract may 
cancel the contract on written notice to the original contractor. The Govern-
ment may then make other contracts or arrangements for the completion 
of the original contract, charging any additional cost to the original con-
tractor. 
(d) ENFORCEMENT OF SECTION.—In accordance with regulations pre-
scribed pursuant to section 6707(a)–(d) of this title, the Secretary or the 
head of a Federal agency may carry out this section. 
§ 6706. Three-year prohibition on new contracts in case of 
violation 
(a) DISTRIBUTION OF LIST.—The Comptroller General shall distribute to 
each agency of the Federal Government a list containing the names of per-
sons or firms that a Federal agency or the Secretary of Labor has found 
to have violated this chapter. 
(b) THREE-YEAR PROHIBITION.—Unless the Secretary recommends oth-
erwise because of unusual circumstances, a Government contract may not 
be awarded to a person or firm named on the list under subsection (a) of 
this section, or to an entity in which the person or firm has a substantial 
interest, until three years have elapsed from the date of publication of the 
list. If the Secretary does not recommend otherwise because of unusual cir-
cumstances, the Secretary shall, not later than 90 days after a hearing ex-
aminer has made a finding of a violation of this chapter, forward to the 
Comptroller General the name of the person or firm found to have violated 
this chapter. 
§ 6707. Enforcement and administration of chapter 
(a) ENFORCEMENT OF CHAPTER.—Sections 6507 and 6508 of this title 
govern the Secretary of Labor’s authority to enforce this chapter, including 
the Secretary’s authority to make regulations, issue orders, hold hearings, 
make decisions based on findings of fact, and take other appropriate action 
under this chapter. 
(b) LIMITATIONS
AND REGULATIONS
FOR VARIATIONS, TOLERANCES, 
AND EXEMPTIONS.—The Secretary may provide reasonable limitations and 
may prescribe regulations allowing reasonable variation, tolerances, and ex-
emptions with respect to this chapter (other than subsection (f) of this sec-
tion), but only in special circumstances where the Secretary determines that
153
the limitation, variation, tolerance, or exemption is necessary and proper in 
the public interest or to avoid the serious impairment of Government busi-
ness, and is in accord with the remedial purpose of this chapter to protect 
prevailing labor standards. 
(c) PRESERVATION
OF WAGES
AND BENEFITS DUE UNDER PREDE-
CESSOR CONTRACTS.—
(1) IN GENERAL.—Under a contract which succeeds a contract sub-
ject to this chapter, and under which substantially the same services 
are furnished, a contractor or subcontractor may not pay a service em-
ployee less than the wages and fringe benefits the service employee 
would have received under the predecessor contract, including accrued 
wages and fringe benefits and any prospective increases in wages and 
fringe benefits provided for in a collective-bargaining agreement as a 
result of arm’s-length negotiations. 
(2) EXCEPTION.—This subsection does not apply if the Secretary 
finds after a hearing in accordance with regulations adopted by the 
Secretary that wages and fringe benefits under the predecessor con-
tract are substantially at variance with wages and fringe benefits pre-
vailing in the same locality for services of a similar character. 
(d) DURATION OF CONTRACTS.—Subject to limitations in annual appro-
priation acts but notwithstanding any other law, a contract to which this 
chapter applies may, if authorized by the Secretary, be for any term of 
years not exceeding five, if the contract provides for periodic adjustment of 
wages and fringe benefits pursuant to future determinations, issued in the 
manner prescribed in section 6703 of this title at least once every two years 
during the term of the contract, covering each class of service employee.
(e) EXCLUSION OF FRINGE BENEFIT PAYMENTS IN DETERMINING OVER-
TIME PAY.—In determining any overtime pay to which a service employee 
is entitled under Federal law, the regular or basic hourly rate of pay of the 
service employee does not include any fringe benefit payments computed 
under this chapter which are excluded from the definition of ‘‘regular rate’’ 
under section 7(e) of the Fair Labor Standards Act of 1938 (29 U.S.C. 
207(e)). 
(f) TIMELINESS OF WAGE AND FRINGE BENEFIT DETERMINATIONS.—It 
is the intent of Congress that determinations of minimum wages and fringe 
benefits under section 6703(1) and (2) of this title should be made as soon 
as administratively feasible for all contracts subject to this chapter. In any 
event, the Secretary shall at least make the determinations for contracts 
under which more than five service employees are to be employed. 
CHAPTER 69—CONTRACT DISPUTES
Sec. 
6901.
Definitions.
154
6902.
Applicability of chapter. 
6903.
Decision by contracting officer. 
6904.
Contractor’s right of appeal from decision by contracting officer. 
6905.
Agency boards. 
6906.
Agency board procedures for accelerated and small claims. 
6907.
Judicial review of agency board decisions. 
6908.
Payment of claims. 
6909.
Interest.
§ 6901. Definitions 
In this chapter—
(1) ADMINISTRATOR.—The term ‘‘Administrator’’ means the Admin-
istrator for Federal Procurement Policy appointed pursuant to chapter 
11 of this title. 
(2) AGENCY BOARD.—The term ‘‘agency board’’ means an agency 
board of contract appeals established under section 6905 of this title. 
(3) AGENCY HEAD.—The term ‘‘agency head’’ means the head and 
any assistant head of an executive agency. The term may include the 
chief official of a principal division of an executive agency if the head 
of the executive agency so designates that chief official. 
(4) CONTRACTING OFFICER.—The term ‘‘contracting officer’’—
(A) means an individual who, by appointment in accordance 
with applicable regulations, has the authority to make and admin-
ister contracts and to make determinations and findings with re-
spect to contracts; and 
(B) includes an authorized representative of the contracting of-
ficer, acting within the limits of the representative’s authority. 
(5) CONTRACTOR.—The term ‘‘contractor’’ means a party to a Fed-
eral Government contract other than the Government. 
(6) EXECUTIVE AGENCY.—The term ‘‘executive agency’’ means—
(A) an executive department as defined in section 101 of title 
5; 
(B) a military department as defined in section 102 of title 5; 
(C) an independent establishment as defined in section 104 of 
title 5, except that the term does not include the General Account-
ing Office; 
(D) a wholly owned Government corporation as defined in sec-
tion 9101(3) of title 31; 
(E) the United States Postal Service; or 
(F) the Postal Rate Commission. 
(7) MISREPRESENTATION OF FACT.—The term ‘‘misrepresentation 
of fact’’ means a false statement of substantive fact, or conduct that 
leads to a belief of a substantive fact material to proper understanding 
of the matter in hand, made with intent to deceive or mislead.
155
§ 6902. Applicability of chapter 
(a) EXECUTIVE AGENCY CONTRACTS.—Unless otherwise specifically pro-
vided in this chapter, this chapter applies to any express or implied contract 
(including those of the nonappropriated fund activities described in sections 
1346 and 1491 of title 28) made by an executive agency for—
(1) the procurement of property, other than real property; 
(2) the procurement of services; 
(3) the procurement of construction, alteration, repair, or mainte-
nance of real property; or 
(4) the disposal of personal property. 
(b) TENNESSEE VALLEY AUTHORITY CONTRACTS.—
(1) IN GENERAL.—With respect to contracts of the Tennessee Valley 
Authority, this chapter applies only to contracts containing a clause 
that requires contract disputes to be resolved through an agency ad-
ministrative process. 
(2) EXCLUSION.—Notwithstanding any other provision of this chap-
ter, this chapter does not apply to a contract of the Tennessee Valley 
Authority for the sale of fertilizer or electric power or related to the 
conduct or operation of the electric power system. 
(c) FOREIGN GOVERNMENT
OR INTERNATIONAL ORGANIZATION CON-
TRACTS.—If an agency head determines that applying this chapter would 
not be in the public interest, this chapter does not apply to a contract with 
a foreign government, an agency of a foreign government, an international 
organization, or a subsidiary body of an international organization. 
(d) MARITIME CONTRACTS.—Appeals under section 6907(a) of this title 
and actions brought under sections 6904(b) and 6907(b)–(f) of this title, 
arising out of maritime contracts, are governed by the Act of March 9, 1920 
(known as the Suits in Admiralty Act) (46 App. U.S.C. 741 et seq.) or the 
Act of March 3, 1925 (known as the Public Vessels Act) (46 App. U.S.C. 
781 et seq.), as applicable, to the extent that those Acts are not inconsistent 
with this chapter. 
§ 6903. Decision by contracting officer 
(a) APPLICABILITY.—
(1) IN GENERAL.—This section applies to claims relating to a con-
tract between the Federal Government and a contractor. 
(2) LIMITATION
REGARDING
CERTAIN
PENALTIES
AND
FORFEIT-
URES.—The authority of this section does not extend to a claim or dis-
pute for penalties or forfeitures prescribed by statute or regulation that 
another Federal agency is specifically authorized to administer, settle, 
or determine. 
(b) CLAIMS GENERALLY.—
156
(1) SUBMISSION OF CLAIMS TO CONTRACTING OFFICER.—Each claim 
by a contractor against the Government and each claim by the Govern-
ment against a contractor shall be submitted to the contracting officer 
for a decision. 
(2) CONTRACTOR’S CLAIMS IN WRITING.—Each claim by a contractor 
against the Government shall be in writing. 
(3) TIME FOR SUBMITTING CLAIMS.—
(A) IN GENERAL.—Each claim by a contractor against the Gov-
ernment and each claim by the Government against a contractor 
shall be submitted within six years after the accrual of the claim. 
(B) EXCEPTION.—This paragraph does not apply to a claim by 
the Government against a contractor that is based on a claim by 
the contractor involving fraud. 
(c) CERTIFICATION OF CLAIMS.—
(1) 
REQUIREMENT
GENERALLY.—For 
claims 
of 
more 
than 
$100,000, the contractor shall certify that—
(A) the claim is made in good faith; 
(B) the supporting data are accurate and complete to the best 
of the contractor’s knowledge and belief; 
(C) the amount requested accurately reflects the contract ad-
justment for which the contractor believes the Government is lia-
ble; and 
(D) the certifier is authorized to certify the claim on behalf of 
the contractor.
(2) WHO MAY EXECUTE CERTIFICATION.—The certification required 
by paragraph (1) may be executed by an individual authorized to bind 
the contractor with respect to the claim. 
(3) FAILURE TO CERTIFY OR DEFECTIVE CERTIFICATION.—A con-
tracting officer is not obligated to render a final decision on a claim 
of more than $100,000 that is not certified in accordance with para-
graph (1) if, within 60 days after receipt of the claim, the contracting 
officer notifies the contractor in writing of the reasons why any at-
tempted certification was found to be defective. A defect in the certifi-
cation of a claim does not deprive a court or an agency board of juris-
diction over the claim. Prior to the entry of a final judgment by a court 
or a decision by an agency board, the court or agency board shall re-
quire a defective certification to be corrected. 
(d) FRAUDULENT CLAIMS.—
(1) NO AUTHORITY TO SETTLE.—This section does not authorize an 
agency head to settle, compromise, pay, or otherwise adjust any claim 
involving fraud.
157
(2) LIABILITY OF CONTRACTOR.—If a contractor is unable to sup-
port any part of the contractor’s claim and it is determined that the 
inability is attributable to a misrepresentation of fact or fraud by the 
contractor, then the contractor is liable to the Government for an 
amount equal to the unsupported part of the claim plus all of the Gov-
ernment’s costs attributable to reviewing the unsupported part of the 
claim. Liability under this paragraph shall be determined within six 
years of the commission of the misrepresentation of fact or fraud. 
(e) ISSUANCE OF DECISION.—The contracting officer shall issue a deci-
sion in writing and shall mail or otherwise furnish a copy of the decision 
to the contractor. 
(f) CONTENTS OF DECISION.—The contracting officer’s decision shall 
state the reasons for the decision reached and shall inform the contractor 
of the contractor’s rights as provided in this chapter. Specific findings of 
fact are not required. If made, specific findings of fact are not binding in 
any subsequent proceeding. 
(g) TIME FOR ISSUANCE OF DECISION.—
(1) CLAIM OF $100,000 OR LESS.—A contracting officer shall issue a 
decision on any submitted claim of $100,000 or less within 60 days 
from the contracting officer’s receipt of a written request from the con-
tractor that a decision be rendered within that period. 
(2) CLAIM OF MORE THAN $100,000.—A contracting officer shall, 
within 60 days of receipt of a submitted certified claim over 
$100,000—
(A) issue a decision; or 
(B) notify the contractor of the time within which a decision will 
be issued. 
(3) GENERAL REQUIREMENT OF REASONABLENESS.—The decision of 
a contracting officer on submitted claims shall be issued within a rea-
sonable time, in accordance with regulations prescribed by the agency, 
taking into account factors including the size and complexity of the 
claim and the adequacy of information in support of the claim provided 
by the contractor. 
(4) REQUESTING TRIBUNAL TO DIRECT ISSUANCE WITHIN SPECIFIED 
TIME PERIOD.—A contractor may request a tribunal concerned to di-
rect a contracting officer to issue a decision in a specified period of 
time, as determined by the tribunal concerned, in the event of undue 
delay on the part of the contracting officer. 
(5) FAILURE TO ISSUE DECISION WITHIN REQUIRED TIME PERIOD.—
If a contracting officer fails to issue a decision on a claim within the 
required time period, the claim is deemed to be denied and an appeal
158
or action on the claim may be initiated as otherwise provided in this 
chapter. However, a tribunal concerned may, at its option, stay the 
proceedings of the appeal or action to obtain a decision by the con-
tracting officer. 
(h) FINALITY OF DECISION UNLESS APPEALED.—The contracting offi-
cer’s decision on a claim is final and conclusive and is not subject to review 
by any forum, tribunal, or Government agency, unless an appeal or action 
is timely commenced as authorized by this chapter. This chapter does not 
prohibit an executive agency from including a clause in a Government con-
tract requiring that, pending final decision of an appeal, action, or final set-
tlement, a contractor shall proceed diligently with performance of the con-
tract in accordance with the contracting officer’s decision. 
(i) ALTERNATIVE MEANS OF DISPUTE RESOLUTION.—
(1) IN GENERAL.—Notwithstanding any other provision of this chap-
ter, a contractor and a contracting officer may use any alternative 
means of dispute resolution under subchapter IV of chapter 5 of title 
5, or other mutually agreeable procedures, for resolving claims. All pro-
visions of subchapter IV of chapter 5 of title 5 apply to alternative 
means of dispute resolution under this subsection. 
(2) CERTIFICATION
OF
CLAIM.—The contractor shall certify the 
claim when required to do so under subsection (c)(1) or other law. 
(3) REJECTING
REQUEST
FOR
ALTERNATIVE
DISPUTE
RESOLU-
TION.—
(A) CONTRACTING OFFICER.—A contracting officer who rejects 
a contractor’s request for alternative dispute resolution pro-
ceedings shall provide the contractor with a written explanation, 
citing one or more of the conditions in section 572(b) of title 5 
or other specific reasons that alternative dispute resolution proce-
dures are inappropriate. 
(B) CONTRACTOR.—A contractor that rejects an agency’s re-
quest for alternative dispute resolution proceedings shall inform 
the agency in writing of the contractor’s specific reasons for re-
jecting the request. 
§ 6904. Contractor’s right of appeal from decision by con-
tracting officer 
(a) APPEAL TO AGENCY BOARD.—A contractor, within 90 days from the 
date of receipt of a contracting officer’s decision under section 6903 of this 
title, may appeal the decision to an agency board as provided in section 
6905 of this title. 
(b) BRINGING AN ACTION DE NOVO IN FEDERAL COURT.—
159
(1) IN GENERAL.—Except as provided in paragraph (2), and in lieu 
of appealing the decision of a contracting officer under section 6903 
of this title to an agency board, a contractor may bring an action di-
rectly on the claim in the United States Court of Federal Claims, not-
withstanding any contract provision, regulation, or rule of law to the 
contrary. 
(2) TENNESSEE
VALLEY
AUTHORITY.—In the case of an action 
against the Tennessee Valley Authority, the contractor may only bring 
an action directly on the claim in a district court of the United States 
pursuant to section 1337 of title 28, notwithstanding any contract pro-
vision, regulation, or rule of law to the contrary. 
(3) TIME FOR FILING.—A contractor shall file any action under 
paragraph (1) or (2) within 12 months from the date of receipt of a 
contracting officer’s decision under section 6903 of this title. 
(4) DE NOVO.—An action under paragraph (1) or (2) shall proceed 
de novo in accordance with the rules of the appropriate court. 
§ 6905. Agency boards 
(a) ESTABLISHMENT.—
(1) IN GENERAL.—Except as provided in paragraph (2), an agency 
board of contract appeals may be established within an executive agen-
cy when the agency head, after consultation with the Administrator, de-
termines from a workload study that the volume of contract claims jus-
tifies the establishment of a full-time agency board of at least three 
members who shall have no other inconsistent duties. Workload studies
will be updated at least once every three years and submitted to the 
Administrator. 
(2) TENNESSEE VALLEY AUTHORITY.—The Board of Directors of 
the Tennessee Valley Authority may establish an agency board of con-
tract appeals for the Authority of an indeterminate number of mem-
bers. 
(3) GUIDELINES.—The Administrator, pursuant to the authority 
conferred under part B of subtitle I of this title and as necessary or 
desirable to carry out this chapter, shall issue guidelines with respect 
to the establishment, functions, and procedures of agency boards, ex-
cept for the agency board established by the Tennessee Valley Author-
ity. 
(b) APPOINTMENT OF MEMBERS AND COMPENSATION.—
(1) IN GENERAL.—Except as provided in paragraph (2), members of 
an agency board are selected and appointed in the same way that ad-
ministrative law judges are appointed pursuant to section 3105 of title 
5, with an additional requirement that members of an agency board
160
must have had at least five years of experience in public contract law. 
A chairman and vice chairman of each agency board shall be des-
ignated by the agency head from among the appointed members. Com-
pensation for the chairman, vice chairman, and other members is deter-
mined under section 5372a of title 5. 
(2) TENNESSEE VALLEY AUTHORITY.—The Board of Directors of 
the Tennessee Valley Authority shall establish criteria for the appoint-
ment of members to the agency board established under subsection 
(a)(2), and shall designate a chairman of the agency board. The chair-
man and other members of the agency board shall receive compensa-
tion, at the daily equivalent of the rates determined under section 
5372a of title 5, for each day they are engaged in the actual perform-
ance of their duties as members of the agency board. 
(c) INTER-AGENCY ARRANGEMENTS.—If the volume of contract claims is 
not sufficient to justify an agency board under subsection (a), or if an agen-
cy head otherwise considers it appropriate, the agency head shall arrange 
for appeals from decisions by contracting officers of the agency to be de-
cided by the agency board of another executive agency. If an agency head 
is unable to make such an arrangement, the agency head shall submit any 
appeals to the Administrator for placement with an agency board. This sub-
section does not apply to the Tennessee Valley Authority. 
(d) JURISDICTION.—
(1) IN GENERAL.—Each agency board has jurisdiction to decide any 
appeal from the decision of a contracting officer, relative to a contract 
made by—
(A) the agency board’s own agency; or 
(B) another agency, if the other agency or the Administrator 
designates the agency board to decide the appeal pursuant to sub-
section (c). 
(2) RELIEF.—In exercising jurisdiction, an agency board may grant 
any relief that would be available to a litigant asserting a contract 
claim in the United States Court of Federal Claims. 
(e) SUBPENA, DISCOVERY, AND DEPOSITION.—A member of an agency 
board may administer oaths to witnesses, authorize depositions and dis-
covery proceedings, and require by subpena the attendance of witnesses, and 
production of books and papers, for the taking of testimony or evidence by 
deposition or in the hearing of an appeal by the agency board. In case of 
contumacy or refusal to obey a subpena by a person who resides, is found, 
or transacts business within the jurisdiction of a United States district 
court, the court, upon application of the agency board through the Attorney 
General; or upon application by the agency board of the Tennessee Valley
161
Authority, shall have jurisdiction to issue the person an order requiring the 
person to appear before the agency board or a member of the agency board, 
to produce evidence or to give testimony, or both. Any failure of the person 
to obey the order of the court may be punished by the court as contempt 
of court. 
(f) DECISIONS.—An agency board shall—
(1) to the fullest extent practicable provide informal, expeditious, and 
inexpensive resolution of disputes; 
(2) issue a decision in writing or take other appropriate action on 
each appeal submitted; and 
(3) mail or otherwise furnish a copy of the decision to the contractor 
and the contracting officer. 
§ 6906. Agency board procedures for accelerated and small 
claims 
(a) ACCELERATED PROCEDURE WHERE $100,000 OR LESS
IN DIS-
PUTE.—The rules of each agency board shall include a procedure for the 
accelerated disposition of any appeal from a decision of a contracting officer 
where the amount in dispute is $100,000 or less. The accelerated procedure 
is applicable at the sole election of the contractor. An appeal under the ac-
celerated procedure shall be resolved, whenever possible, within 180 days 
from the date the contractor elects to use the procedure. 
(b) SMALL CLAIMS PROCEDURE WHERE $50,000 OR LESS
IN DIS-
PUTE.—
(1) IN GENERAL.—The rules of each agency board shall include a 
procedure for the expedited disposition of any appeal from a decision 
of a contracting officer where the amount in dispute is $50,000 or less. 
The small claims procedure is applicable at the sole election of the con-
tractor. 
(2) SIMPLIFIED RULES OF PROCEDURE.—The small claims proce-
dure shall provide for simplified rules of procedure to facilitate decision 
making. An appeal under the small claims procedure may be decided 
by a single member of the agency board with concurrences as may be 
provided by rule or regulation. 
(3) TIME OF DECISION.—An appeal under the small claims proce-
dure shall be resolved, whenever possible, within 120 days from the 
date the contractor elects to use the procedure. 
(4) FINALITY OF DECISION.—A decision against the Federal Govern-
ment or against the contractor reached under the small claims proce-
dure is final and conclusive and may not be set aside except in cases 
of fraud.
162
(5) NO PRECEDENT.—Administrative determinations and final deci-
sions under this subsection have no value as precedent for future cases 
under this chapter. 
(6) REVIEW OF REQUISITE AMOUNT IN CONTROVERSY.—The Admin-
istrator, from time to time, may review the dollar amount specified in 
paragraph (1) and adjust the amount in accordance with economic in-
dexes selected by the Administrator. 
§ 6907. Judicial review of agency board decisions 
(a) REVIEW.—
(1) IN GENERAL.—The decision of an agency board is final, except 
that—
(A) a contractor may appeal the decision to the United States 
Court of Appeals for the Federal Circuit within 120 days from the 
date the contractor receives a copy of the decision; or 
(B) if an agency head determines that an appeal should be 
taken, the agency head, with the prior approval of the Attorney 
General, may transmit the decision to the Court of Appeals for the 
Federal Circuit for judicial review under section 1295 of title 28, 
within 120 days from the date the agency receives a copy of the 
decision.
(2) TENNESSEE VALLEY AUTHORITY.—Notwithstanding paragraph 
(1), a decision of the agency board of the Tennessee Valley Authority 
is final, except that—
(A) a contractor may appeal the decision to a United States dis-
trict court pursuant to section 1337 of title 28, within 120 days 
from the date the contractor receives a copy of the decision; or 
(B) the Tennessee Valley Authority may appeal the decision to 
a United States district court pursuant to section 1337 of title 28, 
within 120 days from the date of the decision. 
(3) REVIEW OF ARBITRATION.—An award by an arbitrator under 
this chapter shall be reviewed pursuant to sections 9 through 13 of title 
9, except that the court may set aside or limit any award that is found 
to violate limitations imposed by Federal statute. 
(b) FINALITY OF AGENCY BOARD DECISIONS ON QUESTIONS OF LAW 
AND FACT.—Notwithstanding any contract provision, regulation, or rule of 
law to the contrary, in an appeal by a contractor or the Federal Government 
from the decision of an agency board pursuant to section 6905(f) of this 
title—
(1) the decision of the agency board on a question of law is not final 
or conclusive; but
163
(2) the decision of the agency board on a question of fact is final 
and conclusive and may not be set aside unless the decision is—
(A) fraudulent, arbitrary, or capricious; 
(B) so grossly erroneous as to necessarily imply bad faith; or 
(C) not supported by substantial evidence. 
(c) REMAND.—In an appeal by a contractor or the Government from the 
decision of an agency board pursuant to section 6905(f) of this title, the 
court may render an opinion and judgment and remand the case for further 
action by the agency board or by the executive agency as appropriate, with 
direction the court considers just and proper. 
(d) CONSOLIDATION.—If two or more actions arising from one contract 
are filed in the United States Court of Federal Claims and one or more 
agency boards, for the convenience of parties or witnesses or in the interest 
of justice, the United States Court of Federal Claims may order the consoli-
dation of the actions in that court or transfer any actions to or among the 
agency boards involved. 
(e) JUDGMENTS AS TO FEWER THAN ALL CLAIMS OR PARTIES.—In an 
action filed pursuant to this chapter involving two or more claims, counter-
claims, cross-claims, or third-party claims, and where a portion of one of 
the claims can be divided for purposes of decision or judgment, and in any 
actions where multiple parties are involved, the court, whenever appropriate, 
may enter a judgment as to one or more but fewer than all of the claims 
or portions of claims or parties. 
(f) ADVISORY OPINIONS.—
(1) IN GENERAL.—Whenever an action involving an issue described 
in paragraph (2) is pending in a district court of the United States, 
the district court may request an agency board to provide the court 
with an advisory opinion on the matters of contract interpretation 
under consideration. 
(2) APPLICABLE ISSUE.—An issue referred to in paragraph (1) is 
any issue that could be the proper subject of a final decision of a con-
tracting officer appealable under this chapter. 
(3) REFERRAL TO AGENCY BOARD WITH JURISDICTION.—A district 
court shall direct a request under paragraph (1) to the agency board 
having jurisdiction under this chapter to adjudicate appeals of contract 
claims under the contract being interpreted by the court. 
(4) TIMELY RESPONSE.—After receiving a request for an advisory 
opinion under paragraph (1), an agency board shall provide the advi-
sory opinion in a timely manner to the district court making the re-
quest.
164
§ 6908. Payment of claims 
(a) JUDGMENTS.—Any judgment against the United States on a claim 
under this chapter shall be paid promptly in accordance with the procedures 
provided by section 1304 of title 31. 
(b) MONETARY AWARDS.—Any monetary award to a contractor by an 
agency board shall be paid promptly in accordance with the procedures con-
tained in subsection (a). 
(c) REIMBURSEMENT.—Payments made pursuant to subsections (a) and 
(b) shall be reimbursed to the fund provided by section 1304 of title 31 by 
the agency whose appropriations were used for the contract out of available 
funds or by obtaining additional appropriations for purposes of reimburse-
ment. 
(d) TENNESSEE VALLEY AUTHORITY.—
(1) JUDGMENTS.—Notwithstanding subsections (a) through (c), any 
judgment against the Tennessee Valley Authority on a claim under this 
chapter shall be paid promptly in accordance with section 9(b) of the 
Tennessee Valley Authority Act of 1933 (16 U.S.C. 831h(b)). 
(2) MONETARY AWARDS.—Notwithstanding subsections (a) through 
(c), any monetary award to a contractor by the agency board of the 
Tennessee Valley Authority shall be paid in accordance with section 
9(b) of the Tennessee Valley Authority Act of 1933 (16 U.S.C. 
831h(b)). 
§ 6909. Interest 
(a) PERIOD.—
(1) IN GENERAL.—Interest on an amount found due a contractor on 
a claim shall be paid to the contractor for the period beginning with 
the date the contracting officer receives the contractor’s claim, pursu-
ant to section 6903(b)(3) of this title, until the date of payment of the 
claim. 
(2) DEFECTIVE CERTIFICATION.—On a claim for which the certifi-
cation under section 6903(c)(1) of this title is found to be defective, 
any interest due under this section shall be paid for the period begin-
ning with the date the contracting officer initially receives the contrac-
tor’s claim until the date of payment of the claim. 
(b) RATE.—Interest shall accrue and be paid at a rate which the Sec-
retary of the Treasury shall specify as applicable for each successive six-
month period. The rate shall be determined by the Secretary taking into 
consideration current private commercial rates of interest for new loans ma-
turing in approximately five years.
Subtitle III—Miscellaneous
Chapter 
Sec. 
81. Drug-Free Workplace ..............................................................................
8101
165
83. Buy American .............................................................................................
8301
85. Committee for Purchase From People Who Are Blind or Se-
verely Disabled.
8501
87. Kickbacks .....................................................................................................
8701
CHAPTER 81—DRUG-FREE WORKPLACE
Sec. 
8101.
Definitions and construction. 
8102.
Drug-free workplace requirements for Federal contractors. 
8103.
Drug-free workplace requirements for Federal grant recipients. 
8104.
Employee sanctions and remedies. 
8105.
Waiver. 
8106.
Regulations.
§ 8101. Definitions and construction 
(a) DEFINITIONS.—In this chapter—
(1) CONTRACTOR.—The term ‘‘contractor’’ means the department, 
division, or other unit of a person responsible for the performance 
under the contract. 
(2) CONTROLLED
SUBSTANCE.—The term ‘‘controlled substance’’ 
means a controlled substance in schedules I through V of section 202 
of the Comprehensive Drug Abuse Prevention and Control Act of 1970 
(21 U.S.C. 812). 
(3) CONVICTION.—The term ‘‘conviction’’ means a finding of guilt 
(including a plea of nolo contendere), an imposition of sentence, or 
both, by a judicial body charged with the responsibility to determine 
violations of Federal or State criminal drug statutes.
(4) CRIMINAL DRUG STATUTE.—The term ‘‘criminal drug statute’’ 
means a criminal statute involving manufacture, distribution, dispensa-
tion, use, or possession of a controlled substance. 
(5) DRUG-FREE
WORKPLACE.—The term ‘‘drug-free workplace’’ 
means a site of an entity—
(A) for the performance of work done in connection with a spe-
cific contract or grant described in section 8102 or 8103 of this 
title; and 
(B) at which employees of the entity are prohibited from engag-
ing in the unlawful manufacture, distribution, dispensation, pos-
session, or use of a controlled substance in accordance with the 
requirements of the Anti-Drug Abuse Act of 1988 (Public Law 
100–690, 102 Stat. 4181). 
(6) EMPLOYEE.—The term ‘‘employee’’ means the employee of a 
contractor or grantee directly engaged in the performance of work pur-
suant to the contract or grant described in section 8102 or 8103 of 
this title. 
(7) FEDERAL AGENCY.—The term ‘‘Federal agency’’ means an agen-
cy as defined in section 552(f) of title 5.
166
(8) GRANTEE.—The term ‘‘grantee’’ means the department, division, 
or other unit of a person responsible for the performance under the 
grant. 
(b) CONSTRUCTION.—This chapter does not require law enforcement 
agencies to comply with this chapter if the head of the agency determines 
it would be inappropriate in connection with the agency’s undercover oper-
ations. 
§ 8102. Drug-free workplace requirements for Federal con-
tractors 
(a) IN GENERAL.—
(1) PERSONS OTHER THAN INDIVIDUALS.—A person other than an 
individual shall not be considered a responsible source (as defined in 
section 112 of this title) for the purposes of being awarded a contract 
for the procurement of any property or services of a value greater than 
the simplified acquisition threshold (as defined in section 133 of this 
title) by a Federal agency, other than a contract for the procurement 
of commercial items (as defined in section 103 of this title), unless the 
person agrees to provide a drug-free workplace by— 
(A) publishing a statement notifying employees that the unlaw-
ful manufacture, distribution, dispensation, possession, or use of 
a controlled substance is prohibited in the person’s workplace and 
specifying the actions that will be taken against employees for vio-
lations of the prohibition; 
(B) establishing a drug-free awareness program to inform em-
ployees about— 
(i) the dangers of drug abuse in the workplace; 
(ii) the person’s policy of maintaining a drug-free work-
place; 
(iii) available drug counseling, rehabilitation, and employee 
assistance programs; and 
(iv) the penalties that may be imposed on employees for 
drug abuse violations; 
(C) making it a requirement that each employee to be engaged 
in the performance of the contract be given a copy of the state-
ment required by subparagraph (A); 
(D) notifying the employee in the statement required by sub-
paragraph (A) that as a condition of employment on the contract 
the employee will—
(i) abide by the terms of the statement; and
167
(ii) notify the employer of any criminal drug statute convic-
tion for a violation occurring in the workplace no later than 
five days after the conviction; 
(E) notifying the contracting agency within 10 days after receiv-
ing notice under subparagraph (D)(ii) from an employee or other-
wise receiving actual notice of a conviction; 
(F) imposing a sanction on, or requiring the satisfactory partici-
pation in a drug abuse assistance or rehabilitation program by, 
any employee who is convicted, as required by section 8104 of this 
title; and 
(G) making a good faith effort to continue to maintain a drug-
free workplace through implementation of subparagraphs (A)–(F). 
(2) INDIVIDUALS.—A Federal agency shall not make a contract with 
an individual unless the individual agrees not to engage in the unlawful 
manufacture, distribution, dispensation, possession, or use of a con-
trolled substance in the performance of the contract. 
(b) SUSPENSION, TERMINATION, OR DEBARMENT OF CONTRACTOR.—
(1) GROUNDS FOR SUSPENSION, TERMINATION, OR DEBARMENT.—
Payment under a contract awarded by a Federal agency may be sus-
pended and the contract may be terminated, and the contractor or indi-
vidual who made the contract with the agency may be suspended or 
debarred in accordance with the requirements of this section, if the 
head of the agency determines that—
(A) the contractor is violating, or has violated, the requirements 
of subparagraph (A), (B), (C), (D), (E), or (F) of subsection 
(a)(1); or 
(B) the number of employees of the contractor who have been 
convicted of violations of criminal drug statutes for violations oc-
curring in the workplace indicates that the contractor has failed 
to make a good faith effort to provide a drug-free workplace as 
required by subsection (a). 
(2) CONDUCT
OF
SUSPENSION, TERMINATION, AND
DEBARMENT 
PROCEEDINGS.—A contracting officer who determines in writing that 
cause for suspension of payments, termination, or suspension or debar-
ment exists shall initiate an appropriate action, to be conducted by the 
agency concerned in accordance with the Federal Acquisition Regula-
tion and applicable agency procedures. The Federal Acquisition Regula-
tion shall be revised to include rules for conducting suspension and de-
barment proceedings under this subsection, including rules providing 
notice, opportunity to respond in writing or in person, and other proce-
168
dures as may be necessary to provide a full and fair proceeding to a 
contractor or individual. 
(3) EFFECT OF DEBARMENT.—A contractor or individual debarred 
under this subsection is ineligible for award of a contract by a Federal 
agency, and shall not participate in a future procurement by a Federal 
agency, for a period specified in the final decision issued under this 
subsection, not to exceed five years. 
§ 8103. Drug-free workplace requirements for Federal grant 
recipients 
(a) IN GENERAL.—
(1) PERSONS OTHER THAN INDIVIDUALS.—A person other than an 
individual shall not receive a grant from a Federal agency unless the 
person agrees to provide a drug-free workplace by— 
(A) publishing a statement notifying employees that the unlaw-
ful manufacture, distribution, dispensation, possession, or use of 
a controlled substance is prohibited in the grantee’s workplace and 
specifying the actions that will be taken against employees for vio-
lations of the prohibition; 
(B) establishing a drug-free awareness program to inform em-
ployees about— 
(i) the dangers of drug abuse in the workplace; 
(ii) the grantee’s policy of maintaining a drug-free work-
place;
(iii) available drug counseling, rehabilitation, and employee 
assistance programs; and 
(iv) the penalties that may be imposed on employees for 
drug abuse violations; 
(C) making it a requirement that each employee to be engaged 
in the performance of the grant be given a copy of the statement 
required by subparagraph (A); 
(D) notifying the employee in the statement required by sub-
paragraph (A) that as a condition of employment in the grant the 
employee will—
(i) abide by the terms of the statement; and 
(ii) notify the employer of any criminal drug statute convic-
tion for a violation occurring in the workplace no later than 
five days after the conviction; 
(E) notifying the granting agency within 10 days after receiving 
notice under subparagraph (D)(ii) from an employee or otherwise 
receiving actual notice of a conviction;