  October 1, 2020

      Title 48
      Federal Acquisition Regulations System
      Chapter 2
      Revised as of October 1, 2020
      Containing a codification of documents of general applicability and future effect
      As of October 1, 2020

        Published by the Office of the Federal Register National Archives and Records Administration as a Special Edition of the Federal Register

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      Table of Contents
      Page

        Explanation
        v

        Title 48:

          Chapter 2—Defense Acquisition Regulations System, Department of Defense
          3

        Finding Aids:
        Table of CFR Titles and Chapters
        719
        Alphabetical List of Agencies Appearing in the CFR
        739
        List of CFR Sections Affected
        749

      Cite this Code: CFR

      To cite the regulations in this volume use title, part and section number. Thus, 48 CFR 201.104 refers to title 48, part 201, section 104.

      Explanation
      The Code of Federal Regulations is a codification of the general and permanent rules published in the Federal Register by the Executive departments and agencies of the Federal Government. The Code is divided into 50 titles which represent broad areas subject to Federal regulation. Each title is divided into chapters which usually bear the name of the issuing agency. Each chapter is further subdivided into parts covering specific regulatory areas.
      Each volume of the Code is revised at least once each calendar year and issued on a quarterly basis approximately as follows:

        Title 1 through Title 16
        as of January 1
        Title 17 through Title 27
        as of April 1
        Title 28 through Title 41
        as of July 1
        Title 42 through Title 50
        as of October 1

      The appropriate revision date is printed on the cover of each volume.

        LEGAL STATUS
        The contents of the Federal Register are required to be judicially noticed (44 U.S.C. 1507). The Code of Federal Regulations is prima facie evidence of the text of the original documents (44 U.S.C. 1510).

        HOW TO USE THE CODE OF FEDERAL REGULATIONS
        The Code of Federal Regulations is kept up to date by the individual issues of the Federal Register. These two publications must be used together to determine the latest version of any given rule.
        To determine whether a Code volume has been amended since its revision date (in this case, October 1, 2020), consult the “List of CFR Sections Affected (LSA),” which is issued monthly, and the “Cumulative List of Parts Affected,” which appears in the Reader Aids section of the daily Federal Register. These two lists will identify the Federal Register page number of the latest amendment of any given rule.

        EFFECTIVE AND EXPIRATION DATES
        Each volume of the Code contains amendments published in the Federal Register since the last revision of that volume of the Code. Source citations for the regulations are referred to by volume number and page number of the Federal Register and date of publication. Publication dates and effective dates are usually not the same and care must be exercised by the user in determining the actual effective date. In instances where the effective date is beyond the cut-off date for the Code a note has been inserted to reflect the future effective date. In those instances where a regulation published in the Federal Register states a date certain for expiration, an appropriate note will be inserted following the text.

        OMB CONTROL NUMBERS

        The Paperwork Reduction Act of 1980 (Pub. L. 96-511) requires Federal agencies to display an OMB control number with their information collection request. Many agencies have begun publishing numerous OMB control numbers as amendments to existing regulations in the CFR. These OMB numbers are placed as close as possible to the applicable recordkeeping or reporting requirements.

        PAST PROVISIONS OF THE CODE
        Provisions of the Code that are no longer in force and effect as of the revision date stated on the cover of each volume are not carried. Code users may find the text of provisions in effect on any given date in the past by using the appropriate List of CFR Sections Affected (LSA). For the convenience of the reader, a “List of CFR Sections Affected” is published at the end of each CFR volume. For changes to the Code prior to the LSA listings at the end of the volume, consult previous annual editions of the LSA. For changes to the Code prior to 2001, consult the List of CFR Sections Affected compilations, published for 1949-1963, 1964-1972, 1973-1985, and 1986-2000.

        “[RESERVED]” TERMINOLOGY
        The term “[Reserved]” is used as a place holder within the Code of Federal Regulations. An agency may add regulatory information at a “[Reserved]” location at any time. Occasionally “[Reserved]” is used editorially to indicate that a portion of the CFR was left vacant and not dropped in error.

        INCORPORATION BY REFERENCE

          What is incorporation by reference? Incorporation by reference was established by statute and allows Federal agencies to meet the requirement to publish regulations in the Federal Register by referring to materials already published elsewhere. For an incorporation to be valid, the Director of the Federal Register must approve it. The legal effect of incorporation by reference is that the material is treated as if it were published in full in the Federal Register (5 U.S.C. 552(a)). This material, like any other properly issued regulation, has the force of law.

          What is a proper incorporation by reference? The Director of the Federal Register will approve an incorporation by reference only when the requirements of 1 CFR part 51 are met. Some of the elements on which approval is based are:
        (a) The incorporation will substantially reduce the volume of material published in the Federal Register.
        (b) The matter incorporated is in fact available to the extent necessary to afford fairness and uniformity in the administrative process.
        (c) The incorporating document is drafted and submitted for publication in accordance with 1 CFR part 51.

          What if the material incorporated by reference cannot be found? If you have any problem locating or obtaining a copy of material listed as an approved incorporation by reference, please contact the agency that issued the regulation containing that incorporation. If, after contacting the agency, you find the material is not available, please notify the Director of the Federal Register, National Archives and Records Administration, 8601 Adelphi Road, College Park, MD 20740-6001, or call 202-741-6010.

        CFR INDEXES AND TABULAR GUIDES

        A subject index to the Code of Federal Regulations is contained in a separate volume, revised annually as of January 1, entitled CFR Index and Finding Aids. This volume contains the Parallel Table of Authorities and Rules. A list of CFR titles, chapters, subchapters, and parts and an alphabetical list of agencies publishing in the CFR are also included in this volume.

        An index to the text of “Title 3—The President” is carried within that volume.

        The Federal Register Index is issued monthly in cumulative form. This index is based on a consolidation of the “Contents” entries in the daily Federal Register.
        A List of CFR Sections Affected (LSA) is published monthly, keyed to the revision dates of the 50 CFR titles.

        REPUBLICATION OF MATERIAL
        There are no restrictions on the republication of material appearing in the Code of Federal Regulations.

        INQUIRIES
        For a legal interpretation or explanation of any regulation in this volume, contact the issuing agency. The issuing agency's name appears at the top of odd-numbered pages.

        For inquiries concerning CFR reference assistance, call 202-741-6000 or write to the Director, Office of the Federal Register, National Archives and Records Administration, 8601 Adelphi Road, College Park, MD 20740-6001 or e-mail fedreg.info@nara.gov.

        SALES
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        ELECTRONIC SERVICES

        The full text of the Code of Federal Regulations, the LSA (List of CFR Sections Affected), The United States Government Manual, the Federal Register, Public Laws, Public Papers of the Presidents of the United States, Compilation of Presidential Documents and the Privacy Act Compilation are available in electronic format via www.govinfo.gov. For more information, contact the GPO Customer Contact Center, U.S. Government Publishing Office. Phone 202-512-1800, or 866-512-1800 (toll-free). E-mail, ContactCenter@gpo.gov.

        The Office of the Federal Register also offers a free service on the National Archives and Records Administration's (NARA) website for public law numbers, Federal Register finding aids, and related information. Connect to NARA's website at www.archives.gov/federal-register.

        The e-CFR is a regularly updated, unofficial editorial compilation of CFR material and Federal Register amendments, produced by the Office of the Federal Register and the Government Publishing Office. It is available at www.ecfr.gov.

          Oliver A. Potts,

          Director,

          Office of the Federal Register

          October 1, 2020.

      THIS TITLE
      Title 48—Federal Acquisition Regulations System is composed of seven volumes. The chapters in these volumes are arranged as follows: Chapter 1 (parts 1 to 51), chapter 1 (parts 52 to 99), chapter 2, chapters 3 to 6, chapters 7 to 14, chapters 15 to 28, and chapter 29 to end. The contents of these volumes represent all current regulations codified under this title of the CFR as of October 1, 2020.

      The Federal acquisition regulations in chapter 1 are those government-wide acquisition regulations jointly issued by the General Services Administration, the Department of Defense, and the National Aeronautics and Space Administration. Chapters 2 through 99 are acquisition regulations issued by individual government agencies. Parts 1 to 69 in each of chapters 2 through 99 are reserved for agency regulations implementing the Federal acquisition regulations in chapter 1 and are numerically keyed to them. Parts 70 to 99 in chapters 2 through 99 contain agency regulations supplementing the Federal acquisition regulations.
      The OMB control numbers for the Federal Acquisition Regulations System appear in section 1.106 of chapter 1. For the convenience of the user section 1.106 is reprinted in the Finding Aids section of the second volume containing chapter 1 (parts 52 to 99).
      The first volume, containing chapter 1 (parts 1 to 51), includes an index to the Federal acquisition regulations.
      For this volume, Susannah C. Hurley was Chief Editor. The Code of Federal Regulations publication program is under the direction of John Hyrum Martinez, assisted by Stephen J. Frattini.

    48 CFR Ch. 2 (10-1-20 Edition)
    Defense Acquisition Regulations System, DoD

        Title 48—Federal Acquisition Regulations System
        (This book contains chapter 2, parts 201 to 299)

        Part

            chapter 2—Defense Acquisition Regulations System, Department of Defense
          201

          CHAPTER 2—DEFENSE ACQUISITION REGULATIONS SYSTEM, DEPARTMENT OF DEFENSE

          SUBCHAPTER A—GENERAL

        Part
        Page

          200
          [Reserved]
          201
          Federal Acquisition Regulations System
          7
          202
          Definitions of words and terms
          13
          203
          Improper business practices and personal conflicts of interest
          16
          204
          Administrative and information matters
          22

          SUBCHAPTER B—ACQUISITION PLANNING

          205
          Publicizing contract actions
          43
          206
          Competition requirements
          45
          207
          Acquisition planning
          48
          208
          Required sources of supplies and services
          54
          209
          Contractor qualifications
          60
          210
          Market research
          72
          211
          Describing agency needs
          72
          212
          Acquisition of commercial items
          77

          SUBCHAPTER C—CONTRACTING METHODS AND CONTRACT TYPES

          213
          Simplified acquisition procedures
          91
          214
          Sealed bidding
          96
          215
          Contracting by negotiation
          97
          216
          Types of contracts
          125
          217
          Special contracting methods
          133
          218
          Emergency acquisitions
          150

          SUBCHAPTER D—SOCIOECONOMIC PROGRAMS

          219
          Small business programs
          154
          222
          Application of labor laws to Government acquisitions
          163

          223
          Environment, energy and water efficiency, renewable energy technologies, occupational safety, and drug-free workplace
          173
          224
          Protection of privacy and freedom of information
          178
          225
          Foreign acquisition
          179
          226
          Other socioeconomic programs
          235

          SUBCHAPTER E—GENERAL CONTRACTING REQUIREMENTS

          227
          Patents, data, and copyrights
          238
          228
          Bonds and insurance
          281
          229
          Taxes
          283
          230
          Cost accounting standards administration
          285
          231
          Contract cost principles and procedures
          286
          232
          Contract financing
          291
          233
          Protests, disputes, and appeals
          306

          SUBCHAPTER F—SPECIAL CATEGORIES OF CONTRACTING

          234
          Major system acquisition
          308
          235
          Research and development contracting
          313
          236
          Construction and architect-engineer contracts
          318
          237
          Service contracting
          323
          239
          Acquisition of information technology
          339
          241
          Acquisition of utility services
          350

          SUBCHAPTER G—CONTRACT MANAGEMENT

          242
          Contract administration and audit services
          353
          243
          Contract modifications
          366
          244
          Subcontracting policies and procedures
          369
          245
          Government property
          372
          246
          Quality assurance
          379
          247
          Transportation
          388
          249
          Termination of contracts
          394
          250
          Extraordinary contractual actions and the Safety Act
          397
          251
          Use of Government sources by contractors
          399

          SUBCHAPTER H—CLAUSES AND FORMS

          252
          Solicitation provisions and contract clauses
          401
          253
          Forms
          674

          SUBCHAPTER I—AGENCY SUPPLEMENTARY REGULATIONS

          Appendix A—Armed Services Board of Contract Appeals
          677

          Appendixes B-E [Reserved]

          Appendix F—Material Inspection and Receiving Report
          689

          Appendix G [Reserved]

          Appendix H—Debarment and Suspension Procedures
          706

          Appendix I—Policy and Procedures for the DoD Pilot Mentor-Protégé Program
          707
          254-299
          [Reserved]

        SUBCHAPTER A—GENERAL

          PART 200 [RESERVED]

          Pt. 201
          PART 201—FEDERAL ACQUISITION REGULATIONS SYSTEM

              Subpart 201.1—Purpose, Authority, Issuance
              Sec.
              201.101
              Purpose.
              201.104
              Applicability.
              201.105
              Issuance.
              201.105-3
              Copies.
              201.106
              OMB approval under the Paperwork Reduction Act.
              201.107
              Certifications.
              201.109
              Statutory acquisition-related dollar thresholds-adjustment for inflation.
              201.170
              Peer Reviews.

              Subpart 201.2—Administration
              201.201
              Maintenance of the FAR.
              201.201-1
              The two councils.
              201.201-70
              Maintenance of Procedures, Guidance, and Information.

              Subpart 201.3—Agency Acquisition Regulations
              201.301
              Policy.
              201.303
              Publication and codification.
              201.304
              Agency control and compliance procedures.

              Subpart 201.4—Deviations From the FAR
              201.402
              Policy.
              201.403
              Individual deviations.
              201.404
              Class deviations.

              Subpart 201.6—Career Development, Contracting Authority, and Responsibilities
              201.602
              Contracting officers.
              201.602-2
              Responsibilities.
              201.602-70
              Contract clause.
              201.603
              Selection, appointment, and termination of appointment for contracting officers.
              201.603-2
              Selection.
              201.603-3
              Appointment.
              201.670
              Appointment of property administrators and plant clearance officers.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36284, July 31, 1991, unless otherwise noted.

            Subpart 201.1—Purpose, Authority, Issuance

              201.101
              Purpose.
              (1) The defense acquisition system, as defined in 10 U.S.C. 2545, exists to manage the investments of the United States in technologies, programs, and product support necessary to achieve the national security strategy prescribed by the President pursuant to section 108 of the National Security Act of 1947 (50 U.S.C. 3043) and to support the United States Armed Forces.
              (2) The investment strategy of DoD shall be postured to support not only the current United States armed forces, but also future armed forces of the United States.
              (3) The primary objective of DoD acquisition is to acquire quality supplies and services that satisfy user needs with measurable improvements to mission capability and operational support at a fair and reasonable price.
              [83 FR 19641, May 4, 2018]

              201.104
              Applicability.
              The FAR and the Defense Federal Acquisition Regulation Supplement (DFARS) also apply to purchases and contracts by DoD contracting activities made in support of foreign military sales or North Atlantic Treaty Organization cooperative projects without regard to the nature or sources of funds obligated, unless otherwise specified in this regulation.
              [56 FR 36284, July 31, 1991. Redesignated at 64 FR 39430, July 22, 1999]

              201.105
              Issuance.

              201.105-3
              Copies.

              The DFARS and the DFARS Procedures, Guidance, and Information (PGI) are available electronically via the World Wide Web at http://www.acq.osd.mil/dpap/dars/index.htm.

              [69 FR 63326, Nov. 1, 2004]

              201.106
              OMB approval under the Paperwork Reduction Act.
              See PGI 201.106 for a list of the information collection and recordkeeping requirements contained in this regulation that have been approved by the Office of Management and Budget.
              [80 FR 67255, Oct. 30, 2015]

              201.107
              Certifications.
              In accordance with 41 U.S.C. 1304, a new requirement for a certification by a contractor or offeror may not be included in the DFARS unless—
              (1) The certification requirement is specifically imposed by statute; or
              (2) Written justification for such certification is provided to the Secretary of Defense by the Under Secretary of Defense (Acquisition, Technology, and Logistics), and the Secretary of Defense approves in writing the inclusion of such certification requirement.
              [63 FR 11528, Mar. 9, 1998, as amended at 65 FR 39704, June 27, 2000; 76 FR 58137, Sept. 20, 2011; 77 FR 35879, June 15, 2012]

              201.109
              Statutory acquisition-related dollar thresholds-adjustment for inflation.
              (a)(i) 41 U.S.C. 1908(d) requires the adjustment for inflation of all statutory acquisition-related dollar thresholds in the DFARS be applied to contracts and subcontracts without regard to the date of award of the contract or subcontract, except thresholds based on the Wage Rate Requirements statute, the Service Contract Labor Standards statute, or established by the United States Trade Representative pursuant to the Trade Agreement Act, which are not escalated by the statute.
              (ii) Section 814(b) of the National Defense Authorization Act for Fiscal Year 2012 (Pub. L. 112-81) requires that the threshold established in 10 U.S.C. 2253(a)(2) for the acquisition of right-hand drive passenger sedans be included in the list of dollar thresholds that are subject to adjustment for inflation in accordance with the requirements of 41 U.S.C. 1908, and is adjusted pursuant to such provisions, as appropriate.
              (d) A matrix showing the most recent escalation adjustments of statutory acquisition-related dollar thresholds is available at PGI 201.109.
              [71 FR 75892, Dec. 19, 2006, as amended at 77 FR 19128, Mar. 30, 2012; 84 FR 25187, May 31, 2019]

              201.170
              Peer reviews.
              (a) DoD peer reviews. (1) The Office of the Director, Defense Procurement and Acquisition Policy, will organize teams of reviewers and facilitate peer reviews for solicitations and contracts, as follows using the procedures at PGI 201.170—
              (i) Preaward peer reviews for competitive procurements will be conducted in three phases for all solicitations valued at $1 billion or more;
              (ii) Preaward peer reviews for noncompetitive procurements will be conducted in two phases for new contract actions valued at $500 million or more; and
              (iii) Postaward peer reviews will be conducted for all contracts for services valued at $1 billion or more.

              (2) To facilitate planning for peer reviews, the military departments and defense agencies shall provide a rolling annual forecast of acquisitions at the end of each quarter (i.e., March 31; June 30; September 30; December 31), to the Deputy Director, Defense Procurement and Acquisition Policy (Contract Policy and International Contracting) via email to osd.pentagon.ousd-atl.mbx.peer-reviews@mail.mil.

              (b) Component peer reviews. The military departments and defense agencies shall establish procedures for—
              (1) Preaward peer reviews of solicitations for competitive procurements valued at less than $1 billion;
              (2) Preaward peer reviews for noncompetitive procurements valued at less than $500 million; and
              (3) Postaward peer reviews of all contracts for services valued at less than $1 billion.
              [77 FR 19126, Mar. 30, 2012, as amended at 78 FR 54968, Sept. 9, 2013; 79 FR 51264, Aug. 28, 2014]

            Subpart 201.2—Administration

              201.201
              Maintenance of the FAR.

              201.201-1
              The two councils.
              (c) The composition and operation of the DAR Council is prescribed in DoD Instruction 5000.35, Defense Acquisition Regulations (DAR) System.

              (d)(i) Departments and agencies process proposed revisions of FAR or DFARS through channels to the Director of the DAR Council. Process the proposed revision as a memorandum in the following format, addressed to the Director, DAR Council, OUSD(AT&L), 3060 Defense Pentagon, Washington, DC 20301-3060; datafax (571) 372-6094:

                I. PROBLEM: Succinctly state the problem created by current FAR and/or DFARS coverage and describe the factual and/or legal reasons necessitating the change to the regulation.
                II. Recommendation: Identify the FAR and/or DFARS citations to be revised. Attach as TAB A a copy of the text of the existing coverage, conformed to include the proposed additions and deletions. Indicate deleted coverage with dashed lines through the current words being deleted and insert proposed language in brackets at the appropriate locations within the existing coverage. If the proposed deleted portion is extensive, it may be outlined by lines forming a box with diagonal lines drawn connecting the corners.
                III. Discussion: Include a complete, convincing explanation of why the change is necessary and how the recommended revision will solve the problem. Address advantages and disadvantages of the proposed revision, as well as any cost or administrative impact on Government activities and contractors. Identify any potential impact of the change on automated systems, e.g., automated financial and procurement systems. Provide any other background information that would be helpful in explaining the issue.
                IV. Collaterals: Address the need for public comment (FAR 1.301(b) and subpart 1.5), the Paperwork Reduction Act, and the Regulatory Flexibility Act (FAR 1.301(c)).
                V. Deviations: If a recommended revision of DFARS is a FAR deviation, identify the deviation and include under separate TAB a justification for the deviation that addresses the requirements of 201.402(2). The justification should be in the form of a memorandum for the Director of Defense Procurement and Acquisition Policy, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics).

              (ii) The public may offer proposed revisions of FAR or DFARS by submission of a memorandum, in the format (including all of the information) prescribed in paragraph (d)(i) of this subsection, to the Director of the DAR Council.
              [56 FR 36284, July 31, 1991, as amended at 60 FR 61591, Nov. 30, 1995; 61 FR 50451, Sept. 26, 1996; 63 FR 11528, Mar. 9, 1998; 65 FR 6552, Feb. 10, 2000; 68 FR 7439, Feb. 14, 2003; 73 FR 70906, Nov. 24, 2008; 77 FR 76937, Dec. 31, 2012; 78 FR 13543, Feb. 28, 2013]

              201.201-70
              Maintenance of Procedures, Guidance, and Information.
              The DAR Council is also responsible for maintenance of the DFARS Procedures, Guidance, and Information (PGI).
              [69 FR 63326, Nov. 1, 2004]

            Subpart 201.3—Agency Acquisition Regulations

              201.301
              Policy.
              (a)(1) DoD implementation and supplementation of the FAR is issued in the Defense Federal Acquisition Regulation Supplement (DFARS) under authorization and subject to the authority, direction, and control of the Secretary of Defense. The DFARS contains—
              (i) Requirements of law;
              (ii) DoD-wide policies;
              (iii) Delegations of FAR authorities;
              (iv) Deviations from FAR requirements; and
              (v) Policies/procedures that have a significant effect beyond the internal operating procedures of DoD or a significant cost or administrative impact on contractors or offerors.
              (2) Relevant procedures, guidance, and information that do not meet the criteria in paragraph (a)(1) of this section are issued in the DFARS Procedures, Guidance, and Information (PGI).
              (b) When Federal Register publication is required for any policy, procedure, clause, or form, the department or agency requesting Under Secretary of Defense (Acquisition, Technology, and Logistics) (USD(AT&L)) approval for use of the policy, procedure, clause, or form (see 201.304(1)) must include an analysis of the public comments in the request for approval. Information on determining when a clause requires publication in the Federal Register and approval in accordance with 201.304(1) is provided at PGI 201.301(b).
              [56 FR 36284, July 31, 1991, as amended at 60 FR 61591, Nov. 30, 1995; 65 FR 6552, Feb. 10, 2000; 69 FR 63326, Nov. 1, 2004; 80 FR 36718, June 26, 2015]

              201.303
              Publication and codification.
              (a)(i) The DFARS is codified under chapter 2 in title 48, Code of Federal Regulations.
              (ii) To the extent possible, all DFARS text (whether implemental or supplemental) is numbered as if it were implemental. Supplemental numbering is used only when the text cannot be integrated intelligibly with its FAR counterpart.

              (A) Implemental numbering is the same as its FAR counterpart, except when the text exceeds one paragraph, the subdivisions are numbered by skipping a unit in the FAR 1.105-2(b)(2) prescribed numbering sequence. For example, three paragraphs implementing FAR 19.501 would be numbered 219.501 (1), (2), and (3) rather than (a), (b), and (c). Three paragraphs implementing FAR 19.501(a) would be numbered 219.501(a) (i), (ii), and (iii) rather than (a) (1), (2), and (3). Further subdivision of the paragraphs follows the prescribed numbering sequence, e.g., 219.501(1)(i)(A)(1)(i).
              (B) Supplemental numbering is the same as its FAR counterpart, with the addition of a number of 70 and up or (S-70) and up. Parts, subparts, sections, or subsections are supplemented by the addition of a number of 70 and up. Lower divisions are supplemented by the addition of a number of (S-70) and up. When text exceeds one paragraph, the subdivisions are numbered using the FAR 1.105-2(b)(2) prescribed sequence, without skipping a unit. For example, DFARS text supplementing FAR 19.501 would be numbered 219.501-70. Its subdivisions would be numbered 219.501-70 (a), (b), and (c).
              (C) Subdivision numbering below the 4th level does not repeat the numbering sequence. It uses italicized Arabic numbers and then italicized lower case Roman numerals.
              (D) An example of DFARS numbering is in Table 1-1, DFARS Numbering.
              (iii) Department/agency and component supplements must parallel the FAR and DFARS numbering, except department/agency supplemental numbering uses subsection numbering of 90 and up, instead of 70 and up.

                Table 1-1—DFARS Numbering

                  FAR
                  Is implemented as
                  Is supplemented as

                  19
                  219
                  219.70

                  19.5
                  219.5
                  219.570

                  19.501
                  219.501
                  219.501-70

                  19.501-1
                  219.501-1
                  219.501-1-70

                  19.501-1(a)
                  219.501-1(a)
                  219.501-1(a)(S-70)

                  19.501-1(a)(1)
                  219.501-1(a)(1)
                  219.501-1(a)(1)(S-70)

              [56 FR 36284, July 31, 1991, as amended at 64 FR 51074, Sept. 21, 1999]

              201.304
              Agency control and compliance procedures.
              Departments and agencies and their component organizations may issue acquisition regulations as necessary to implement or supplement the FAR or DFARS.
              (1)(i) Approval of the USD (AT&L) is required before including in a department/agency or component supplement, or any other contracting regulation document such as a policy letter or clause book, any policy, procedure, clause, or form that—
              (A) Has a significant effect beyond the internal operating procedures of the agency; or
              (B) Has a significant cost or administrative impact on contractors or offerors.
              (ii) Except as provided in paragraph (2) of this section, the USD(AT&L) has delegated authority to the Director of Defense Procurement and Acquisition Policy (OUSD(AT&L)DPAP) to approve or disapprove the policies, procedures, clauses, and forms subject to paragraph (1)(i) of this section.
              (2) In accordance with 41 U.S.C. 1304, a new requirement for a certification by a contractor or offeror may not be included in a department/agency or component procurement regulation unless—

              (i) The certification requirement is specifically imposed by statute; or

              (ii) Written justification for such certification is provided to the Secretary of Defense by USD(AT&L), and the Secretary of Defense approves in writing the inclusion of such certification requirement.
              (3) Contracting activities must obtain the appropriate approval (see 201.404) for any class deviation (as defined in FAR subpart 1.4) from the FAR or DFARS, before its inclusion in a department/agency or component supplement or any other contracting regulation document such as a policy letter or clause book.
              (4) Each department and agency must develop and, upon approval by OUSD(AT&L)DPAP, implement, maintain, and comply with a plan for controlling the use of clauses other than those prescribed by FAR or DFARS. Additional information on department and agency clause control plan requirements is available at PGI 201.304(4).
              (5) Departments and agencies must submit requests for the Secretary of Defense, USD(AT&L), and OUSD(AT&L)DPAP approvals required by this section through the Director of the DAR Council. Procedures for requesting approval of department and agency clauses are provided at PGI 201.304(5).

              (6) The Director of Defense Procurement publishes changes to the DFARS in the Federal Register and electronically via the World Wide Web. Each change includes an effective date. Unless guidance accompanying a change states otherwise, contracting officers must include any new or revised clauses, provisions, or forms in solicitations issued on or after the effective date of the change.
              [56 FR 36284, July 31, 1991, as amended at 60 FR 61591, Nov. 30, 1995; 63 FR 11528, Mar. 9, 1998; 64 FR 39430, July 22, 1999; 65 FR 6552, Feb. 10, 2000; 68 FR 7439, Feb. 14, 2003; 76 FR 58137, Sept. 20, 2011; 77 FR 35879, June 15, 2012; 80 FR 36718, June 26, 2015]

            Subpart 201.4—Deviations From the FAR

              201.402
              Policy.
              (1) The Director of Defense Procurement and Acquisition Policy, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics) (OUSD(AT&L)DPAP), is the approval authority within DoD for any individual or class deviation from—
              (i) FAR 3.104, Procurement Integrity, or DFARS 203.104, Procurement Integrity;
              (ii) FAR Subpart 27.4, Rights in Data and Copyrights, or DFARS Subpart 227.4, Rights in Data and Copyrights;
              (iii) FAR part 30, Cost Accounting Standards Administration, or DFARS part 230, Cost Accounting Standards Administration;
              (iv) FAR subpart 31.1, Applicability, or DFARS subpart 231.1, Applicability (contract cost principles);
              (v) FAR subpart 31.2, Contracts with Commercial Organizations, or DFARS subpart 231.2, Contracts with Commercial Organizations; or
              (vi) FAR part 32, Contract Financing (except subparts 32.7 and 32.8 and the payment clauses prescribed by subpart 32.1), or DFARS part 232, Contract Financing (except subparts 232.7 and 232.8).
              (2) Submit requests for deviation approval through department/agency channels to the approval authority in paragraph (1) of this section, 201.403, or 201.404, as appropriate. Submit deviations that require OUSD(AT&L)DPAP approval through the Director of the DAR Council. At a minimum, each request must—
              (i) Identify the department/agency, and component if applicable, requesting the deviation;
              (ii) Identify the FAR or DFARS citation from which a deviation is needed, state what is required by that citation, and indicate whether an individual or class deviation is requested;
              (iii) Describe the deviation and indicate which of paragraphs (a) through (f) of FAR 1.401 best categorizes the deviation;
              (iv) State whether the deviation will have a significant effect beyond the internal operating procedures of the agency and/or a significant cost or administrative impact on contractors or offerors, and give reasons to support the statement;
              (v) State the period of time for which the deviation is required;

              (vi) State whether approval for the same deviation has been received previously, and if so, when;

              (vii) State whether the proposed deviation was published (see FAR subpart 1.5 for publication requirements) in the Federal Register and provide analysis of comments;
              (viii) State whether the request for deviation has been reviewed by legal counsel, and if so, state results; and
              (ix) Give detailed rationale for the request. State what problem or situation will be avoided, corrected, or improved if request is approved.
              [56 FR 36284, July 31, 1991, as amended at 60 FR 61591, Nov. 30, 1995; 61 FR 50451, Sept. 26, 1996; 64 FR 8727, Feb. 23, 1999; 65 FR 6552, Feb. 10, 2000; 68 FR 7439, Feb. 14, 2003]

              201.403
              Individual deviations.
              (1) Individual deviations, except those described in 201.402(1) and paragraph (2) of this section, must be approved in accordance with the department/agency plan prescribed by 201.304(4).
              (2) Contracting officers outside the United States may deviate from prescribed nonstatutory FAR and DFARS clauses when—
              (i) Contracting for support services, supplies, or construction, with the governments of North Atlantic Treaty Organization (NATO) countries or other allies (as described in 10 U.S.C. 2341(2)), or with United Nations or NATO organizations; and
              (ii) Such governments or organizations will not agree to the standard clauses.
              [65 FR 6552, Feb. 10, 2000]

              201.404
              Class deviations.
              (b)(i) Except as provided in paragraph (b)(ii) of this section, OUSD(AT&L)DPAP is the approval authority within DoD for any class deviation.
              (ii) The senior procurement executives for the Army, Navy, and Air Force, and the Directors of the Defense Commissary Agency, the Defense Contract Management Agency, and the Defense Logistics Agency, may approve any class deviation, other than those described in 201.402(1), that does not—
              (A) Have a significant effect beyond the internal operating procedures of the department or agency;
              (B) Have a significant cost or administrative impact on contractors or offerors;
              (C) Diminish any preference given small business concerns by the FAR or DFARS; or
              (D) Extend to requirements imposed by statute or by regulations of other agencies such as the Small Business Administration and the Department of Labor.
              [65 FR 6552, Feb. 10, 2000, as amended at 65 FR 52951, Aug. 31, 2000; 68 FR 7439, Feb. 14, 2003]

            Subpart 201.6—Career Development, Contracting Authority, and Responsibilities

              201.602
              Contracting officers.

              201.602-2
              Responsibilities.
              (d) Follow the procedures at PGI 201.602-2 regarding designation, assignment, and responsibilities of a contracting officer's representative (COR).
              (1) A COR shall be an employee, military or civilian, of the U.S. Government, a foreign government, or a North Atlantic Treaty Organization/coalition partner. In no case shall contractor personnel serve as CORs.
              [79 FR 22036, Apr. 21, 2014]

              201.602-70
              Contract clause.
              Use the clause at 252.201-7000, Contracting Officer's Representative, in solicitations and contracts when appointment of a contracting officer's representative is anticipated.

              201.603
              Selection, appointment, and termination of appointment for contracting officers.

              201.603-2
              Selection.
              (1) In accordance with 10 U.S.C. 1724, in order to qualify to serve as a contracting officer with authority to award or administer contracts for amounts above the simplified acquisition threshold, a person must—

              (i) Have completed all contracting courses required for a contracting officer to serve in the grade in which the employee or member of the armed forces will serve;

              (ii) Have at least 2 years experience in a contracting position;
              (iii) Have received a baccalaureate degree from an accredited educational institution; and
              (iv) Meet such additional requirements, based on the dollar value and complexity of the contracts awarded or administered in the position, as may be established by the Secretary of Defense.
              (2) The qualification requirements in paragraph (1)(iii) of this subsection do not apply to a DoD employee or member of the armed forces who—
              (i) On or before September 30, 2000, occupied—
              (A) A contracting officer position with authority to award or administer contracts above the simplified acquisition threshold; or
              (B) A position either as an employee in the GS-1102 occupational series or a member of the armed forces in an occupational specialty similar to the GS-1102 series;
              (ii) Is in a contingency contracting force; or
              (iii) Is an individual appointed to a 3-year developmental position. Information on developmental opportunities is contained in DoD Instruction 5000.66, Defense Acquisition Workforce Education, Training, Experience, and Career Development Program.
              (3) Waivers to the requirements in paragraph (1) of this subsection may be authorized. Information on waivers is contained in DoD Instruction 5000.66.
              [67 FR 65509, Oct. 25, 2002, as amended at 73 FR 21844, Apr. 23, 2008; 85 FR 34528, June 5, 2020]

              201.603-3
              Appointment.
              (a) Certificates of Appointment executed under the Armed Services Procurement Regulation or the Defense Acquisition Regulation have the same effect as if they had been issued under FAR.
              (b) Agency heads may delegate the purchase authority in 213.301 to DoD civilian employees and members of the U.S. Armed Forces.
              [56 FR 36284, July 31, 1991, as amended at 64 FR 56705, Oct. 21, 1999]

              201.670
              Appointment of property administrators and plant clearance officers.
              (a) The appropriate agency authority shall appoint or terminate (in writing) property administrators and plant clearance officers.
              (b) In appointing qualified property administrators and plant clearance officers, the appointing authority shall consider experience, training, education, business acumen, judgment, character, and ethics.
              [76 FR 52142, Aug. 19, 2011]

          Pt. 202
          PART 202—DEFINITIONS OF WORDS AND TERMS

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Subpart 202.1—Definitions

              202.101
              Definitions.

                Authorized aftermarket manufacturer means an organization that fabricates an electronic part under a contract with, or with the express written authority of, the original component manufacturer based on the original component manufacturer's designs, formulas, and/or specifications.

                Compromise means disclosure of information to unauthorized persons, or a violation of the security policy of a system, in which unauthorized intentional or unintentional disclosure, modification, destruction, or loss of an object, or the copying of information to unauthorized media may have occurred.

                Congressional defense committees means—
              (1) In accordance with 10 U.S.C. 101(a)(16), except as otherwise specified in paragraph (2) of this definition or as otherwise specified by statute for particular applications—
              (i) The Committee on Armed Services of the Senate;
              (ii) The Committee on Appropriations of the Senate;
              (iii) The Committee on Armed Services of the House of Representatives; and

              (iv) The Committee on Appropriations of the House of Representatives.

              (2) For use in subpart 217.1, see the definition at 217.103.

                Contract administration office also means a contract management office of the Defense Contract Management Agency.

                Contract manufacturer means a company that produces goods under contract for another company under the label or brand name of that company.

                Contracting activity for DoD also means elements designated by the director of a defense agency which has been delegated contracting authority through its agency charter. DoD contracting activities are listed at PGI 202.101.

                Contracting officer's representative means an individual designated and authorized in writing by the contracting officer to perform specific technical or administrative functions.

                Contractor-approved supplier means a supplier that does not have a contractual agreement with the original component manufacturer for a transaction, but has been identified as trustworthy by a contractor or subcontractor.

                Counterfeit electronic part means an unlawful or unauthorized reproduction, substitution, or alteration that has been knowingly mismarked, misidentified, or otherwise misrepresented to be an authentic, unmodified electronic part from the original manufacturer, or a source with the express written authority of the original manufacturer or current design activity, including an authorized aftermarket manufacturer. Unlawful or unauthorized substitution includes used electronic parts represented as new, or the false identification of grade, serial number, lot number, date code, or performance characteristics.

                Cyber incident means actions taken through the use of computer networks that result in a compromise or an actual or potentially adverse effect on an information system and/or the information residing therein.

                Department of Defense (DoD), as used in DFARS, means the Department of Defense, the military departments, and the defense agencies.

                Departments and agencies, as used in DFARS, means the military departments and the defense agencies. The military departments are the Departments of the Army, Navy, and Air Force (the Marine Corps is a part of the Department of the Navy). The defense agencies are the Defense Advanced Research Projects Agency, the Defense Commissary Agency, the Defense Contract Management Agency, the Defense Counterintelligence and Security Agency, the Defense Finance and Accounting Service, the Defense Health Agency, the Defense Information Systems Agency, the Defense Intelligence Agency, the Defense Logistics Agency, the Defense Threat Reduction Agency, the Missile Defense Agency, the National Geospatial-Intelligence Agency, the National Security Agency, the Space Development Agency, the United States Cyber Command, the United States Special Operations Command, the United States Transportation Command, and the Washington Headquarters Service.

                Electronic part means an integrated circuit, a discrete electronic component (including, but not limited to, a transistor, capacitor, resistor, or diode), or a circuit assembly (section 818(f)(2) of Pub. L. 112-81).

                Executive agency means for DoD, the Department of Defense, the Department of the Army, the Department of the Navy, and the Department of the Air Force.

                Head of the agency means, for DoD, the Secretary of Defense, the Secretary of the Army, the Secretary of the Navy, and the Secretary of the Air Force. Subject to the direction of the Secretary of Defense, the Under Secretary of Defense (Acquisition, Technology, and Logistics), and the Director of Defense Procurement and Acquisition Policy, the directors of the defense agencies have been delegated authority to act as head of the agency for their respective agencies (i.e., to perform functions under the FAR or DFARS reserved to a head of agency or agency head), except for such actions that by terms of statute, or any delegation, must be exercised within the Office of the Secretary of Defense. (For emergency acquisition flexibilities, see 218.270.)

                Major defense acquisition program is defined in 10.U.S.C. 2430(a).

                Milestone decision authority, with respect to a major defense acquisition program, major automated information system, or major system, means the official within the Department of Defense designated with the overall responsibility and authority for acquisition decisions for the program or system, including authority to approve entry of the program or system into the next phase of the acquisition process (10 U.S.C. 2431a).

                Non-Government sales means sales of the supplies or services to non-Governmental entities for purposes other than governmental purposes.

                Nontraditional defense contractor means an entity that is not currently performing and has not performed any contract or subcontract for DoD that is subject to full coverage under the cost accounting standards prescribed pursuant to 41 U.S.C. 1502 and the regulations implementing such section, for at least the 1-year period preceding the solicitation of sources by DoD for the procurement (10 U.S.C. 2302(9)).

                Obsolete electronic part means an electronic part that is no longer available from the original manufacturer or an authorized aftermarket manufacturer.

                Offset means a benefit or obligation agreed to by a contractor and a foreign government or international organization as an inducement or condition to purchase supplies or services pursuant to a foreign military sale (FMS). There are two types of offsets: Direct offsets and indirect offsets.
              (1) A direct offset involves benefits or obligations, including supplies or services that are directly related to the item(s) being purchased and are integral to the deliverable of the FMS contract. For example, as a condition of a foreign military sale, the contractor may require or agree to permit the customer to produce in its country certain components or subsystems of the item being sold. Generally, direct offsets must be performed within a specified period, because they are integral to the deliverable of the FMS contract.

              (2) An indirect offset involves benefits or obligations, including supplies or services that are not directly related to the specific item(s) being purchased and are not integral to the deliverable of the FMS contract. For example, as a condition of a foreign military sale, the contractor may agree to purchase certain manufactured products, agricultural commodities, raw materials, or services, or make an equity investment or grant of equipment required by the FMS customer, or may agree to build a school, road or other facility. Indirect offsets would also include projects that are related to the FMS contract but not purchased under said contract (e.g., a project to develop or advance a capability, technology transfer, or know-how in a foreign company). Indirect offsets may be accomplished without a clearly defined period of performance.

                Offset costs means the costs to the contractor of providing any direct or indirect offsets required (explicitly or implicitly) as a condition of a foreign military sale.

                Original component manufacturer means an organization that designs and/or engineers a part and is entitled to any intellectual property rights to that part.

                Original equipment manufacturer means a company that manufactures products that it has designed from purchased components and sells those products under the company's brand name.

                Original manufacturer means the original component manufacturer, the original equipment manufacturer, or the contract manufacturer.

                Procedures, Guidance, and Information (PGI) means a companion resource to the DFARS that—
              (1) Contains mandatory internal DoD procedures. The DFARS will direct compliance with mandatory procedures using imperative language such as “Follow the procedures at * * *” or similar directive language;
              (2) Contains non-mandatory internal DoD procedures and guidance and supplemental information to be used at the discretion of the contracting officer. The DFARS will point to non-mandatory procedures, guidance, and information using permissive language such as “The contracting officer may use * * *” or “Additional information is available at * * *” or other similar language;

              (3) Is numbered similarly to the DFARS, except that each PGI numerical designation is preceded by the letters “PGI”; and

              (4) Is available electronically at http://www.acq.osd.mil/dpap/dars/index.htm.

                Senior procurement executive means, for DoD—
              Department of Defense (including the defense agencies)—Under Secretary of Defense (Acquisition, Technology, and Logistics);
              Department of the Army—Assistant Secretary of the Army (Acquisition, Logistics and Technology);
              Department of the Navy—Assistant Secretary of the Navy (Research, Development and Acquisition);
              Department of the Air Force—Assistant Secretary of the Air Force (Acquisition).
              The directors of the defense agencies have been delegated authority to act as senior procurement executive for their respective agencies, except for such actions that by terms of statute, or any delegation, must be exercised by the Under Secretary of Defense (Acquisition, Technology, and Logistics).

                Sufficient non-Government sales means relevant sales data that reflects market pricing and contains enough information to make adjustments covered by FAR 15.404-1(b)(2)(ii)(B).

                Suspect counterfeit electronic part means an electronic part for which credible evidence (including, but not limited to, visual inspection or testing) provides reasonable doubt that the electronic part is authentic.

                Tiered evaluation of offers, also known as cascading evaluation of offers, means a procedure used in negotiated acquisitions, when market research is inconclusive for justifying limiting competition to small business concerns, whereby the contracting officer—
              (1) Solicits and receives offers from both small and other than small business concerns;
              (2) Establishes a tiered or cascading order of precedence for evaluating offers that is specified in the solicitation; and
              (3) If no award can be made at the first tier, evaluates offers at the next lower tier, until award can be made.

                Uncertified cost data means the subset of “data other than certified cost or pricing data” (see FAR 2.101) that relates to cost.
              [56 FR 36287, July 31, 1991]

                Editorial Note:
                For Federal Register citations affecting section 202.101, see the List of CFR Sections Affected, which appears in the Finding Aids section of the printed volume and at www.govinfo.gov.

          Pt. 203
          PART 203—IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF INTEREST

            Sec.
            203.070
            Reporting of violations and suspected violations.

              Subpart 203.1—Safeguards
              203.104
              Procurement integrity.
              203.104-4
              Disclosure, protection, and marking of contractor bid or proposal information and source selection information.
              203.170
              Business practices.
              203.171
              Senior DoD officials seeking employment with defense contractors.
              203.171-1
              Scope.
              203.171-2
              Definition.
              203.171-3
              Policy.
              203.171-4
              Solicitation provision and contract clause.

              Subpart 203.5—Other Improper Business Practices
              203.502-2
              Subcontractor kickbacks.
              203.570
              Prohibition on persons convicted of frauds or other defense-contract-related felonies.
              203.570-1
              Scope.
              203.570-2
              Prohibition period.
              203.570-3
              Contract clause.

              Subpart 203.7—Voiding and Rescinding Contracts
              203.703
              Authority.

              Subpart 203.8—Limitations on the Payment of Funds To Influence Federal Transactions
              203.806
              Processing suspected violations.

              Subpart 203.9—Whistleblower Protections for Contractor Employees
              203.900
              Scope of subpart.
              203.901
              Definitions.
              203.903
              Policy.
              203.904
              Procedures for filing complaints.
              203.905
              Procedures for investigating complaints.
              203.906
              Remedies.
              203.970
              Contract clause.

              Subpart 203.10—Contractor Code of Business Ethics and Conduct
              203.1003
              Requirements.

              203.1004
              Contract clauses.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1

            Source:
            56 FR 36288, July 31, 1991, unless otherwise noted.

            203.070
            Reporting of violations and suspected violations.
            Report violations and suspected violations of the following requirements in accordance with 209.406-3 or 209.407-3 and DoDD 7050.5, Coordination of Remedies for Fraud and Corruption Related to Procurement Activities:
            (a) Certificate of Independent Price Determination (FAR 3.103).
            (b) Procurement integrity (FAR 3.104).
            (c) Gratuities clause (FAR 3.203).
            (d) Antitrust laws (FAR 3.303).
            (e) Covenant Against Contingent Fees (FAR 3.405).
            (f) Kickbacks (FAR 3.502).
            (g) Prohibitions on persons convicted of defense-related contract felonies (203.570).
            [69 FR 74990, Dec. 15, 2004, as amended at 77 FR 35879, June 15, 2012]

            Subpart 203.1—Safeguards

              203.104
              Procurement integrity.

              203.104-4
              Disclosure, protection, and marking of contractor bid or proposal information and source selection information.
              (d)(3) For purposes of FAR 3.104-4(d)(3) only, DoD follows the notification procedures in FAR 27.404-5(a). However, FAR 27.404-5(a)(1) does not apply to DoD.
              [74 FR 2409, Jan. 15, 2009]

              203.170
              Business practices.
              To ensure the separation of functions for oversight, source selection, contract negotiation, and contract award, departments and agencies shall adhere to the following best practice policies:
              (a) Senior leaders shall not perform multiple roles in source selection for a major weapon system or major service acquisition.
              (b) Vacant acquisition positions shall be filled on an “acting” basis from below until a permanent appointment is made. To provide promising professionals an opportunity to gain experience by temporarily filling higher positions, these oversight duties shall not be accrued at the top.
              (c) Acquisition process reviews of the military departments shall be conducted to assess and improve acquisition and management processes, roles, and structures. The scope of the reviews should include—
              (1) Distribution of acquisition roles and responsibilities among personnel;
              (2) Processes for reporting concerns about unusual or inappropriate actions; and
              (3) Application of DoD Instruction 5000.2, Operation of the Defense Acquisition System, and the disciplines in the Defense Acquisition Guidebook.
              (d) Source selection processes shall be—
              (1) Reviewed and approved by cognizant organizations responsible for oversight;
              (2) Documented by the head of the contracting activity or at the agency level; and
              (3) Periodically reviewed by outside officials independent of that office or agency.
              (e) Legal review of documentation of major acquisition system source selection shall be conducted prior to contract award, including the supporting documentation of the source selection evaluation board, source selection advisory council, and source selection authority.
              (f) Procurement management reviews shall determine whether clearance threshold authorities are clear and that independent review is provided for acquisitions exceeding the simplified acquisition threshold.
              [72 FR 20757, Apr. 26, 2007, as amended at 74 FR 2408, Jan. 15, 2009; 79 FR 73488, Dec. 11, 2014]

              203.171
              Senior DoD officials seeking employment with defense contractors.

              203.171-1
              Scope.
              This section implements Section 847 of the National Defense Authorization Act for Fiscal Year 2008 (Public Law 110-181).
              [74 FR 2409, Jan. 15, 2009]

              203.171-2
              Definition.

                Covered DoD official as used in this section, is defined in the clause at 252.203-7000, Requirements Relating to Compensation of Former DoD Officials.
              [74 FR 2409, Jan. 15, 2009]

              203.171-3
              Policy.
              (a) A DoD official covered by the requirements of Section 847 of Public Law 110-181 (a “covered DoD official”) who, within 2 years after leaving DoD service, expects to receive compensation from a DoD contractor, shall, prior to accepting such compensation, request a written opinion from the appropriate DoD ethics counselor regarding the applicability of post-employment restrictions to activities that the official may undertake on behalf of a contractor.
              (b) A DoD contractor may not knowingly provide compensation to a covered DoD official within 2 years after the official leaves DoD service unless the contractor first determines that the official has received, or has requested at least 30 days prior to receiving compensation from the contractor, the post-employment ethics opinion described in paragraph (a) of this section.
              (c) If a DoD contractor knowingly fails to comply with the requirements of the clause at 252.203-7000, administrative and contractual actions may be taken, including cancellation of a procurement, rescission of a contract, or initiation of suspension or debarment proceedings.
              [74 FR 2409, Jan. 15, 2009]

              203.171-4
              Solicitation provision and contract clause.
              (a) Use the clause at 252.203-7000, Requirements Relating to Compensation of Former DoD Officials, in all solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items.
              (b) Use the provision at 252.203-7005, Representation Relating to Compensation of Former DoD Officials, in all solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial items and solicitations for task and delivery orders
              [76 FR 71829, Nov. 18, 2011, as amended at 78 FR 37983, June 25, 2013]

            Subpart 203.5—Other Improper Business Practices

              203.502-2
              Subcontractor kickbacks.
              (h) The DoD Inspector General has designated Special Agents of the following investigative organizations as representatives for conducting inspections and audits under 41 U.S.C. chapter 87, Kickbacks:
              (i) U.S. Army Criminal Investigation Command.
              (ii) Naval Criminal Investigative Service.
              (iii) Air Force Office of Special Investigations.
              (iv) Defense Criminal Investigative Service.
              [56 FR 36288, July 31, 1991, as amended at 60 FR 29497, June 5, 1995; 77 FR 35879, June 15, 2012]

              203.570
              Prohibition on persons convicted of frauds or other defense-contract-related felonies.

              203.570-1
              Scope.
              This subpart implements 10 U.S.C. 2408. For information on 10 U.S.C. 2408, see PGI 203.570-1.
              [71 FR 14100, Mar. 21, 2006]

              203.570-2
              Prohibition period.
              DoD has sole responsibility for determining the period of the prohibition described in paragraph (b) of the clause at 252.203-7001, Prohibition on Persons Convicted of Fraud or Other Defense-Contract-Related Felonies. The prohibition period—
              (a) Shall not be less than 5 years from the date of conviction unless the agency head or a designee grants a waiver in the interest of national security. Follow the waiver procedures at PGI 203.570-2(a); and

              (b) May be more than 5 years from the date of conviction if the agency head or a designee makes a written determination of the need for the longer period. The agency shall provide a copy of the determination to the address at PGI 203.570-2(b).
              [69 FR 74990, Dec. 15, 2004]

              203.570-3
              Contract clause.
              Use the clause at 252.203-7001, Prohibition on Persons Convicted of Fraud or Other Defense-Contract-Related Felonies, in all solicitations and contracts exceeding the simplified acquisition threshold, except solicitations and contracts for commercial items.
              [64 FR 14398, Mar. 25, 1999. Redesignated at 69 FR 74990, Dec. 15, 2004]

            Subpart 203.7—Voiding and Rescinding Contracts

              203.703
              Authority.
              The authority to act for the agency head under this subpart is limited to a level no lower than an official who is appointed by and with the advice of the Senate, without power of redelegation. For the defense agencies, for purposes of this subpart, the agency head designee is the Under Secretary of Defense (Acquisition, Technology, and Logistics).
              [56 FR 36288, July 31, 1991, as amended at 60 FR 61592, Nov. 30, 1995; 65 FR 39704, June 27, 2000]

            Subpart 203.8—Limitations on the Payment of Funds To Influence Federal Transactions

              Source:
              77 FR 19128, Mar. 30, 2012, unless otherwise noted.

              203.806
              Processing suspected violations.
              Report suspected violations to the address at PGI 203.8(a).

            Subpart 203.9—Whistleblower Protections for Contractor Employees

              203.900
              Scope of subpart.
              This subpart applies to DoD instead of FAR subpart 3.9.
              (1) This subpart implements 10 U.S.C. 2409 as amended by section 846 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181), section 842 of the National Defense Authorization Act for Fiscal Year 2009 (Pub. L. 110-417), and section 827 of the National Defense Authorization Act for Fiscal Year 2013 (Pub. L. 112-239).
              (2) This subpart does not apply to any element of the intelligence community, as defined in 50 U.S.C. 3003(4). This subpart does not apply to any disclosure made by an employee of a contractor or subcontractor of an element of the intelligence community if such disclosure—
              (i) Relates to an activity or an element of the intelligence community; or
              (ii) Was discovered during contract or subcontract services provided to an element of the intelligence community.
              [58 FR 59853, Sept. 30, 2013, as amended at 79 FR 11337, Feb. 28, 2014]

              203.901
              Definitions.

                Abuse of authority, as used in this subpart, means an arbitrary and capricious exercise of authority that is inconsistent with the mission of DoD or the successful performance of a DoD contract.

              203.903
              Policy.
              (1) Prohibition. 10 U.S.C. 2409 prohibits contractors and subcontractors from discharging, demoting, or otherwise discriminating against an employee as a reprisal for disclosing, to any of the entities listed at paragraph (3) of this section, information that the employee reasonably believes is evidence of gross mismanagement of a DoD contract, a gross waste of DoD funds, an abuse of authority relating to a DoD contract, a violation of law, rule, or regulation related to a DoD contract (including the competition for or negotiation of a contract), or a substantial and specific danger to public health or safety. Such reprisal is prohibited even if it is undertaken at the request of an executive branch official, unless the request takes the form of a non-discretionary directive and is within the authority of the executive branch official making the request.
              (2) Classified information. As provided in section 827(h) of the National Defense Authorization Act for Fiscal Year 2013, nothing in this subpart provides any rights to disclose classified information not otherwise provided by law.

              (3) Entities to whom disclosure may be made:
              (i) A Member of Congress or a representative of a committee of Congress.
              (ii) An Inspector General that receives funding from or has oversight over contracts awarded for or on behalf of DoD.
              (iii) The Government Accountability Office.
              (iv) A DoD employee responsible for contract oversight or management.
              (v) An authorized official of the Department of Justice or other law enforcement agency.
              (vi) A court or grand jury.
              (vii) A management official or other employee of the contractor or subcontractor who has the responsibility to investigate, discover, or address misconduct.
              (4) Disclosure clarified. An employee who initiates or provides evidence of contractor or subcontractor misconduct in any judicial or administrative proceeding relating to waste, fraud, or abuse on a DoD contract shall be deemed to have made a disclosure.
              (5) Contracting officer actions. A contracting officer who receives a complaint of reprisal of the type described in paragraph (1) of this section shall forward it to legal counsel or to the appropriate party in accordance with agency procedures.
              [58 FR 59853, Sept. 30, 2013, as amended at 79 FR 11337, Feb. 28, 2014; 79 FR 23278, Apr. 28, 2014]

              203.904
              Procedures for filing complaints.
              (1) Any employee of a contractor or subcontractor who believes that he or she has been discharged, demoted, or otherwise discriminated against contrary to the policy in 203.903 may file a complaint with the Inspector General of the Department of Defense.
              (2) A complaint may not be brought under this section more than three years after the date on which the alleged reprisal took place.
              (3) The complaint shall be signed and shall contain—
              (i) The name of the contractor;
              (ii) The contract number, if known; if not, a description reasonably sufficient to identify the contract(s) involved;
              (iii) The violation of law, rule, or regulation giving rise to the disclosure;
              (iv) The nature of the disclosure giving rise to the discriminatory act, including the party to whom the information was disclosed; and
              (v) The specific nature and date of the reprisal.
              [58 FR 59853, Sept. 30, 2013, as amended at 79 FR 11337, Feb. 28, 2014]

              203.905
              Procedures for investigating complaints.
              (1) Unless the DoD Inspector General makes a determination that the complaint is frivolous, fails to allege a violation of the prohibition in 203.903, or has been previously addressed in another Federal or State judicial or administrative proceeding initiated by the complainant, the DoD Inspector General will investigate the complaint.
              (2) If the DoD Inspector General investigates the complaint, the DoD Inspector General will—
              (i) Notify the complainant, the contractor alleged to have committed the violation, and the head of the agency; and
              (ii) Provide a written report of findings to the complainant, the contractor alleged to have committed the violation, and the head of the agency.
              (3) Upon completion of the investigation, the DoD Inspector General—
              (i) Either will determine that the complaint is frivolous, fails to allege a violation of the prohibition in 203.903, or has been previously addressed in another Federal or State judicial or administrative proceeding initiated by the complainant, or will submit the report addressed in paragraph (2) of this section within 180 days after receiving the complaint; and
              (ii) If unable to submit a report within 180 days, will submit the report within the additional time period, up to 180 days, as agreed to by the person submitting the complaint.
              (4) The DoD Inspector General may not respond to any inquiry or disclose any information from or about any person alleging the reprisal, except to the extent that such response or disclosure is—

              (i) Made with the consent of the person alleging reprisal;

              (ii) Made in accordance with 5 U.S.C. 552a (the Freedom of Information Act) or as required by any other applicable Federal law; or
              (iii) Necessary to conduct an investigation of the alleged reprisal.
              (5) The legal burden of proof specified at paragraph (e) of 5 U.S.C. 1221 (Individual Right of Action in Certain Reprisal Cases) shall be controlling for the purposes of an investigation conducted by the DoD Inspector General, decision by the head of an agency, or judicial or administrative proceeding to determine whether prohibited discrimination has occurred.
              [74 FR 2410, Jan. 15, 2009, as amended at 78 FR 59853, Sept. 30, 2013; 79 FR 11337, Feb. 28, 2014]

              203.906
              Remedies.
              (1) Not later than 30 days after receiving a DoD Inspector General report in accordance with 203.905, the head of the agency shall determine whether sufficient basis exists to conclude that the contractor has subjected the complainant to a reprisal as prohibited by 203.903 and shall either issue an order denying relief or shall take one or more of the following actions:
              (i) Order the contractor to take affirmative action to abate the reprisal.
              (ii) Order the contractor to reinstate the person to the position that the person held before the reprisal, together with compensatory damages (including back pay), employment benefits, and other terms and conditions of employment that would apply to the person in that position if the reprisal had not been taken.
              (iii) 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 were reasonably incurred by the complainant for, or in connection with, bringing the complaint regarding the reprisal, as determined by the head of the agency.
              (2) If the head of the agency issues an order denying relief or has not issued an order within 210 days after the submission of the complaint or within 30 days after the expiration of an extension of time granted in accordance with 203.905(3)(ii), and there is no showing that such delay is due to the bad faith of the complainant—
              (i) The complainant shall be deemed to have exhausted all administrative remedies with respect to the complaint; and
              (ii) The complainant may bring a de novo action at law or equity against the contractor to seek compensatory damages and other relief available under 10 U.S.C. 2409 in the appropriate district court of the United States, which shall have jurisdiction over such an action without regard to the amount in controversy. Such an action shall, at the request of either party to the action, be tried by the court with a jury. An action under this authority may not be brought more than two years after the date on which remedies are deemed to have been exhausted.
              (3) An Inspector General determination and an agency head order denying relief under paragraph (2) of this section shall be admissible in evidence in any de novo action at law or equity brought pursuant to 10 U.S.C. 2409(c).
              (4) Whenever a contractor fails to comply with an order issued by the head of agency in accordance with 10 U.S.C. 2409, the head of the agency or designee shall request the Department of Justice to file an action for enforcement of such order in the United States district court for a district in which the reprisal was found to have occurred. In any action brought under this paragraph, the court may grant appropriate relief, including injunctive relief, compensatory and exemplary damages, and reasonable attorney fees and costs. The person upon whose behalf an order was issued may also file such an action or join in an action filed by the head of the agency.

              (5) Any person adversely affected or aggrieved by an order issued by the head of the agency in accordance with 10 U.S.C. 2409 may obtain judicial review of the order's conformance with the law, and the implementing regulation, in the United States Court of Appeals for a circuit in which the reprisal is alleged in the order to have occurred. No petition seeking such review may be filed more than 60 days after issuance of the order by the head of the agency or designee. Review shall conform to Chapter 7 of Title 5, Unites States Code. Filing such an appeal shall not act to stay the enforcement of the order by the head of an agency, unless a stay is specifically entered by the court.
              (6) The rights and remedies provided for in this subpart may not be waived by any agreement, policy, form, or condition of employment.
              [74 FR 2410, Jan. 15, 2009, as amended at 78 FR 59854, Sept. 30, 2013; 78 FR 73450, Dec. 6, 2013]

              203.970
              Contract clause.
              Use the clause at 252.203-7002, Requirement to Inform Employees of Whistleblower Rights, in all solicitations and contracts.
              [74 FR 2410, Jan. 15, 2009]

            Subpart 203.10—Contractor Code of Business Ethics and Conduct

              203.1003
              Requirements.

              (b) Notification of possible contractor violation. Upon notification of a possible contractor violation of the type described in FAR 3.1003(b), coordinate the matter with the following office:

                Department of Defense Office of Inspector General, Administrative Investigations Contractor Disclosure Program, 4800 Mark Center Drive, Suite 14L25, Arlington, VA 22350-1500.
                Toll-Free Telephone: 866-429-8011. Website: https://www.dodig.mil/Programs/Contractor-Disclosure-Program/.

              (c) Fraud hotline poster. For contracts performed outside the United States, when security concerns can be appropriately demonstrated, the contracting officer may provide the contractor the option to publicize the program to contractor personnel in a manner other than public display of the poster required by 203.1004(b)(2)(ii), such as private employee written instructions and briefings.
              [77 FR 76937, Dec. 31, 2012, as amended at 81 FR 73005, Oct. 21, 2016; 84 FR 39202, Aug. 9, 2019]

              203.1004
              Contract clauses.
              (a) Use the clause at 252.203-7003, Agency Office of the Inspector General, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that include the FAR clause 52.203-13, Contractor Code of Business Ethics and Conduct.
              (b)(2)(ii) Unless the contract is for the acquisition of a commercial item, use the clause at 252.203-7004, Display of Hotline Posters, in lieu of the clause at FAR 52.203-14, Display of Hotline Poster(s), in solicitations and contracts, if the contract value exceeds $6 million. If the Department of Homeland Security (DHS) provides disaster relief funds for the contract, DHS will provide information on how to obtain and display the DHS fraud hotline poster (see FAR 3.1003).
              [73 FR 46815, Aug. 12, 2008, as amended at 74 FR 53413, Oct. 19, 2009; 75 FR 59101, Sept. 27, 2010, as amended at 76 FR 32840, June 6, 2011; 76 FR 57674, Sept. 16, 2011; 78 FR 37983, June 25, 2013; 80 FR 5000, Jan. 29, 2015; 80 FR 36904, June 26, 2015; 85 FR 61504, Sept. 29, 2020]

          Pt. 204
          PART 204—ADMINISTRATIVE AND INFORMATION MATTERS

              Subpart 204.1—Contract Execution
              Sec.
              204.101
              Contracting officer's signature.

              Subpart 204.2—Contract Distribution
              204.201
              Procedures.
              204.203
              Taxpayer identification information.
              204.270
              Electronic Document Access.
              204.270-1
              Policy.
              204.270-2
              Procedures.

              Subpart 204.4—Safeguarding Classified Information Within Industry
              204.402
              General.
              204.403
              Responsibilities of contracting officers.
              204.404
              Contract clause.
              204.404-70
              Additional contract clauses.
              204.470
              U.S.-International Atomic Energy Agency Additional Protocol.
              204.470-1
              General.
              204.470-2
              National security exclusion.
              204.470-3
              Contract clause.

              Subpart 204.6—Contract Reporting
              204.602
              General.
              204.604
              Responsibilities.
              204.606
              Reporting data.

              Subpart 204.8—Contract Files
              204.802
              Contract files.
              204.804
              Closeout of contract files.

              204.805
              Disposal of contract files.

              Subpart 204.9—Taxpayer Identification Number Information
              204.902
              General.

              Subpart 204.11—System For Award Management
              204.1103
              Procedures.

              Subpart 204.12—Annual Representations and Certifications
              204.1202
              Solicitation provision and contract clause.

              Subpart 204.16—Uniform Procurement Instrument Identifiers
              204.1601
              Policy.
              204.1603
              Procedures.
              204.1670
              Cross reference to Federal Procurement Data System.
              204.1671
              Order of application for modifications.

              Subpart 204.18—Commercial and Government Entity Code
              204.1870
              Procedures.

              Subpart 204.21—Prohibition on contracting for certain telecommunications and video surveillance services or equipment
              204.2100
              Scope of subpart.
              204.2101
              Definitions.
              204.2102
              Prohibition.
              204.2103
              Procedures.
              204.2104
              Waivers.
              204.2105
              Solicitation provisions and contract clause.

              Subpart 204.70—Procurement Acquisition Lead Time
              204.7001
              Procedures.

              Subpart 204.71—Uniform Contract Line Item Numbering System
              204.7100
              Scope.
              204.7101
              Definitions.
              204.7102
              Policy.
              204.7103
              Contract line items.
              204.7103-1
              Criteria for establishing.
              204.7103-2
              Numbering procedures.
              204.7104
              Contract subline items.
              204.7104-1
              Criteria for establishing.
              204.7104-2
              Numbering procedures.
              204.7105
              Contract exhibits and attachments.
              204.7106
              Contract modifications.
              204.7107
              Contract accounting classification reference number (ACRN) and agency accounting identifier (AAI).
              204.7108
              Payment instructions.
              204.7109
              Contract clauses.

              SUBPART 204.72—ANTITERRORISM AWARENESS TRAINING
              204.7200
              Scope of subpart.
              204.7201
              Definition.
              204.7202
              Policy.
              204.7203
              Contract clause.

              Subpart 204.73—Safeguarding Covered Defense Information and Cyber Incident Reporting
              204.7300
              Scope.
              204.7301
              Definitions.
              204.7302
              Policy.
              204.7303
              Procedures.
              204.7304
              Solicitation provision and contract clauses.

              Subpart 204.74—Disclosure of Information to Litigation Support Contractors
              204.7400
              Scope of subpart.
              204.7401
              Definitions.
              204.7402
              Policy.
              204.7403
              Contract clauses.

              Subpart 204.75—Cybersecurity Maturity Model Certification
              204.7500
              Scope of subpart.
              204.7501
              Policy.
              204.7502
              Procedures.
              204.7503
              Contract clause.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36289, July 31, 1991, unless otherwise noted.

            Subpart 204.1—Contract Execution

              204.101
              Contracting officer's signature.
              Follow the procedures at PGI 204.101 for signature of contract documents.
              [71 FR 9268, Feb. 23, 2006]

            Subpart 204.2—Contract Distribution

              204.201
              Procedures.
              Follow the procedures at PGI 204.201 for the distribution of contracts and modifications.

              (a) In lieu of the requirement at FAR 4.201 (a), contracting officers shall distribute one signed copy or reproduction of the signed contract to the contractor.
              [70 FR 58982, Oct. 11, 2005, as amended at 80 FR 58631, Sept. 30, 2015]

              204.203
              Taxpayer identification information.
              (b) The procedure at FAR 4.203(b) does not apply to contracts that include the provision at FAR 52.204-7, System for Award Management. The payment office obtains the taxpayer identification number and the type of organization from the System for Award Management database.
              [78 FR 28757, May 16, 2013]

              204.270
              Electronic Document Access.
              [75 FR 59102, Sept. 27, 2010, as amended at 80 FR 58631, Sept. 30, 2015]

              204.270-1
              Policy.

              (a) The Electronic Data Access (EDA) system, an online repository for contractual instruments and supporting documents, is DoD's primary tool for electronic distribution of contract documents and contract data. Contract attachments shall be uploaded to EDA, except for contract attachments that are classified, are too sensitive for widespread distribution (e.g., personally identifiable information and Privacy Act and Health Insurance Portability and Accountability Act, or cannot be practicably converted to electronic format (e.g., samples, drawings, and models). Section J (or similar location when the Uniform Contract Format is not used) shall include the annotation “provided under separate cover” for any attachment not uploaded to EDA.
              (b) Agencies are responsible for ensuring the following when posting documents, including contractual instruments, to EDA—
              (1) The timely distribution of documents; and
              (2) That internal controls are in place to ensure that—
              (i) The electronic version of a contract document in EDA is an accurate representation of the contract; and
              (ii) The contract data in EDA is an accurate representation of the underlying contract.
              [80 FR 58631, Sept. 30, 2015, as amended at 84 FR 48510, Sept. 13, 2019]

              204.270-2
              Procedures.
              (b) The procedures at PGI 204.270-2 provide details on how to record the results of data verification in EDA. When these procedures are followed, contract documents and data in EDA are an accurate representation of the contract and therefore may be used for audit purposes.
              (c) The procedures at PGI 204.270-2(c) provide details on the creation and processing of contract deficiency reports, which are used to correct problems with contracts distributed in EDA.
              [80 FR 58631, Sept. 30, 2015, as amended at 81 FR 72738, Oct. 21, 2016]

            Subpart 204.4—Safeguarding Classified Information Within Industry

              204.402
              General.
              DoD employees or members of the Armed Forces who are assigned to or visiting a contractor facility and are engaged in oversight of an acquisition program will retain control of their work products, both classified and unclassified (see PGI 204.402).
              [71 FR 9268, Feb. 23, 2006, as amended at 76 FR 76319, Dec. 7, 2011]

              204.403
              Responsibilities of contracting officers.
              (1) Contracting officers shall ensure that solicitations comply with PGI 204.403(1).
              (2) For additional guidance on determining a project to be fundamental research in accordance with 252.204-7000(a)(3), see PGI 204.403(2).
              [79 FR 56278, Sept. 19, 2014]

              204.404
              Contract clause.

              204.404-70
              Additional contract clauses.

              (a) Use the clause at 252.204-7000, Disclosure of Information, in solicitations and contracts when the contractor will have access to or generate unclassified information that may be sensitive and inappropriate for release to the public.
              (b) Use the clause at 252.204-7003, Control of Government Personnel Work Product, in all solicitations and contracts.
              [57 FR 14992, Apr. 23, 1992, as amended at 64 FR 45197, Aug. 19, 1999; 84 FR 12139, Apr. 1, 2019]

              204.470
              U.S.-International Atomic Energy Agency Additional Protocol.

              204.470-1
              General.
              Under the U.S.-International Atomic Energy Agency Additional Protocol (U.S.-IAEA AP), the United States is required to declare a wide range of public and private nuclear-related activities to the IAEA and potentially provide access to IAEA inspectors for verification purposes.
              [74 FR 2412, Jan. 15, 2009]

              204.470-2
              National security exclusion.
              (a) The U.S.-IAEA AP permits the United States unilaterally to declare exclusions from inspection requirements for activities, or locations or information associated with such activities, with direct national security significance.
              (b) In order to ensure that all relevant activities are reviewed for direct national security significance, both current and former activities, and associated locations or information, are to be considered for applicability for a national security exclusion.
              (c) If a DoD program manager receives notification from a contractor that the contractor is required to report any of its activities in accordance with the U.S.-IAEA AP, the program manager will—
              (1) Conduct a security assessment to determine if, and by what means, access may be granted to the IAEA; or
              (2) Provide written justification to the component or agency treaty office for application of the national security exclusion at that location to exclude access by the IAEA, in accordance with DoD Instruction 2060.03, Application of the National Security Exclusion to the Agreements Between the United States of America and the International Atomic Energy Agency for the Application of Safeguards in the United States of America.
              [74 FR 2412, Jan. 15, 2009]

              204.470-3
              Contract clause.
              Use the clause at 252.204-7010, Requirement for Contractor to Notify DoD if the Contractor's Activities are Subject to Reporting Under the U.S.-International Atomic Energy Agency Additional Protocol, in solicitations and contracts for research and development or major defense acquisition programs involving—
              (a) Any fissionable materials (e.g., uranium, plutonium, neptunium, thorium, americium);
              (b) Other radiological source materials; or
              (c) Technologies directly related to nuclear power production, including nuclear or radiological waste materials.
              [74 FR 2412, Jan. 15, 2009]

            Subpart 204.6—Contract Reporting

              204.602
              General.
              See PGI 204.602 for additional information on the Federal Procurement Data System (FPDS) and procedures for resolving technical or policy issues relating to FPDS.
              [74 FR 37644, July 29, 2009]

              204.604
              Responsibilities.
              (1) The process for reporting contract actions to FPDS should, where possible, be automated by incorporating it into contract writing systems.
              (2) Data in FPDS is stored indefinitely and is electronically retrievable. Therefore, the contracting officer may reference the contract action report (CAR) approval date in the associated Government contract file instead of including a paper copy of the electronically submitted CAR in the file. Such reference satisfies contract file documentation requirements of FAR 4.803(a).

              (3) By December 15th of each year, the chief acquisition officer of each DoD component required to report its contract actions shall submit to the Director, Defense Procurement and Acquisition Policy, its annual certification and data validation results for the preceding fiscal year in accordance with the DoD Data Improvement Plan requirements at http://www.acq.osd.mil/dpap/pdi/eb. The Director, Defense Procurement and Acquisition Policy, will submit a consolidated DoD annual certification to the Office of Management and Budget by January 5th of each year.
              [74 FR 37644, July 29, 2009]

              204.606
              Reporting data.
              In addition to FAR 4.606, follow the procedures at PGI 204.606 for reporting data to FPDS.
              [74 FR 37644, July 29, 2009]

            Subpart 204.8—Contract Files

              204.802
              Contract files.

              (a) Any document posted to the Electronic Data Access (EDA) system is part of the contract file and is accessible by multiple parties, including the contractor. Do not include in EDA contract documents that are classified, too sensitive for widespread distribution (e.g., personally identifiable information and Privacy Act and Health Insurance Portability and Accountability Act), or attachments that cannot be practicably converted to electronic format (e.g., samples, drawings, and models). Inclusion of any document in EDA other than contracts, modifications, and orders is optional.
              (f) A photocopy, facsimile, electronic, mechanically-applied and printed signature, seal, and date are considered to be an original signature, seal, and date.
              [80 FR 58631, Sept. 30, 2015, as amended at 84 FR 48510, Sept. 13, 2019]

              204.804
              Closeout of contract files.
              (1) Except as provided in paragraph (3) of this section, contracting officers shall close out contracts in accordance with the procedures at PGI 204.804. The closeout date for file purposes shall be determined and documented by the procuring contracting officer.

              (2) The head of the contracting activity shall assign the highest priority to closeout of contracts awarded for performance in a contingency area. Heads of contracting activities shall monitor and assess on a regular basis the progress of contingency contract closeout activities and take appropriate steps if a backlog occurs. For guidance on the planning and execution of closing out such contracts, see PGI 207.105(b)(20)(C)(8) and PGI 225.373(e).
              (3)(i) In accordance with section 836 of the National Defense Authorization Act for Fiscal Year 2017 (Pub. L. 114-328) and section 824 of the National Defense Authorization Act for Fiscal Year 2018 (Pub. L. 115-91), contracting officers may close out contracts or groups of contracts through issuance of one or more modifications to such contracts without completing a reconciliation audit or other corrective action in accordance with FAR 4.804-5(a)(3) through (15), as appropriate, if each contract—
              (A) Was entered into on a date that is at least 17 fiscal years before the current fiscal year;
              (B) Has no further supplies or services due under the terms of the contract; and
              (C) Has been determined by a contracting official, at least one level above the contracting officer, to be not otherwise reconcilable, because—
              (1) The contract or related payment records have been destroyed or lost; or
              (2) Although contract or related payment records are available, the time or effort required to establish the exact amount owed to the U.S. Government or amount owed to the contractor is disproportionate to the amount at issue.
              (ii) Any contract or group of contracts meeting the requirements of paragraph (3)(i) of this section may be closed out through a negotiated settlement with the contractor. Except as provided in paragraph (3)(ii)(B) of this section, the contract closeout process shall include a bilateral modification of the affected contract, including those contracts that are closed out in accordance with a negotiated settlement.

              (A) For a contract or groups of contracts, the contracting officer shall prepare a negotiation settlement memorandum that describes how the requirements of paragraph (3)(i) of this section have been met.
              (B) For a group of contracts, a bilateral modification of at least one contract shall be made to reflect the negotiated settlement for a group of contracts, and unilateral modifications may be made, as appropriate, to other contracts in the group to reflect the negotiated settlement.
              (iii) For contract closeout actions under paragraph (3) of this section, remaining contract balances—
              (A) May be offset with balances in other contract line items within the same contract, regardless of the year or type of appropriation obligated to fund each contract line item and regardless of whether the appropriation obligated to fund such contract line item has closed; and
              (B) May be offset with balances on other contracts, regardless of the year or type of appropriations obligated to fund each contract and regardless of whether such appropriations have closed.
              (iv) USD(A&S) is authorized to waive any provision of acquisition law or regulation in order to carry out the closeout procedures authorized in paragraph (3)(i) of this section (see procedures at PGI 204.804(3)(iv).
              [77 FR 30367, May 22, 2012, as amended at 80 FR 36901, June 26, 2015; 84 FR 18155, Apr. 30, 2019]

              204.805
              Disposal of contract files.
              (1) The sources of the period for which contract files must be retained are General Records Schedule 3 (Procurement, Supply, and Grant Records) and General Records Schedule 6 (Accountable Officers' Accounts Records). Copies of the General Records Schedule may be obtained from the National Archives and Records Administration, Washington, DC 20408.
              (2) Deviations from the periods cannot be granted by the Defense Acquisition Regulatory Council. Forward requests for deviations to both the Government Accountability Office and the National Archives and Records Administration.
              (3) Hold completed contract files in the office responsible for maintaining them for a period of 12 months after completion. After the initial 12 month period, send the records to the local records holding or staging area until they are eligible for destruction. If no space is available locally, transfer the files to the General Services Administration Federal Records Center that services the area.
              (4) Duplicate or working contract files should contain no originals of materials that properly belong in the official files. Destroy working files as soon as practicable once they are no longer needed.
              (5) Retain pricing review files, containing documents related to reviews of the contractor's price proposals, subject to certified cost or pricing data (see FAR 15.403-4), for six years. If it is impossible to determine the final payment date in order to measure the six year period, retain the files for nine years.
              [56 FR 36289, July 31, 1991, as amended at 62 FR 40472, July 29, 1997; 63 FR 11528, Mar. 9, 1998; 71 FR 53044, Sept. 8, 2006; 77 FR 76939, Dec. 31, 2012; 80 FR 58632, Sept. 30, 2015]

            Subpart 204.9—Taxpayer Identification Number Information

              Source:
              64 FR 43099, Aug. 9, 1999, unless otherwise noted.

              204.902
              General.
              (b) DoD uses the Federal Procurement Data System (FPDS) to meet these reporting requirements.
              [74 FR 37645, July 29, 2009]

            Subpart 204.11—System For Award Management

              Source:
              68 FR 64558, Nov. 14, 2003, unless otherwise noted.

              204.1103
              Procedures.
              See PGI 204.1103 for helpful information on navigation and data entry in the System for Award Management (SAM) database.
              (1) On contract award documents, use the contractor's legal or “doing business as” name and physical address information as recorded in the (SAM) database at the time of award.

              (2) When making a determination to exercise an option, or at any other time before issuing a modification other than a unilateral modification making an administrative change, ensure that—
              (i) The contractor's record is active in the SAM database; and
              (ii) The contractor's Data Universal Numbering System (DUNS) number, Commercial and Government Entity (CAGE) code, name, and physical address are accurately reflected in the contract document.
              (3) At any time, if the DUNS number, CAGE code, contractor name, or physical address on a contract no longer matches the information on the contractor's record in the SAM database, the contracting officer shall process a novation or change-of-name agreement, or an address change, as appropriate.
              (4) See PGI 204.1103 for additional requirements relating to use of information in the SAM database.
              (5) On contractual documents transmitted to the payment office, provide the CAGE code, instead of the DUNS number or DUNS+4 number, in accordance with agency procedures.
              [74 FR 37643, July 29, 2009, as amended at 78 FR 28757, May 16, 2013]

            Subpart 204.12—Annual Representations and Certifications

              Source:
              73 FR 1823, Jan. 10, 2008, unless otherwise noted.

              204.1202
              Solicitation provision and contract clause.
              When using the provision at FAR 52.204-8, Annual Representations and Certifications—
              (1) Use the provision with 252.204-7007, Alternate A, Annual Representations and Certifications; and
              (2) When the provision at FAR 52.204-7, System for Award Management, is included in the solicitation, do not include separately in the solicitation the following provisions, which are included in DFARS 252.204-7007:
              (i) 252.204-7016, Covered Defense Telecommunications Equipment or Services—Representation.
              (ii) 252.209-7002, Disclosure of Ownership or Control by a Foreign Government.
              (iii) 252.209-7003, Reserve Officer Training Corps and Military Recruiting on Campus—Representation.
              (iv) 252.216-7008, Economic Price Adjustment—Wage Rates or Material Prices Controlled by a Foreign Government—Representation.
              (v) 252.225-7000, Buy American—Balance of Payments Program Certificate.
              (vi) 252.225-7020, Trade Agreements Certificate.
              (vii) 252.225-7031, Secondary Arab Boycott of Israel.
              (viii) 252.225-7035, Buy American—Free Trade Agreements—Balance of Payments Program Certificate.
              (ix) 252.225-7042, Authorization to Perform.
              (x) 252.225-7049, Prohibition on Acquisition of Certain Foreign Commercial Satellite Services—Representations.
              (xi) 252.225-7050, Disclosure of Ownership or Control by the Government of a Country that is a State Sponsor of Terrorism.
              (xii) 252.226-7002, Representation for Demonstration Project for Contractors Employing Persons with Disabilities.
              (xiii) 252.229-7012, Tax Exemptions (Italy)—Representation.
              (xiv) 252.229-7013, Tax Exemptions (Spain)—Representation.
              (xv) 252.232-7015, Performance-Based Payments—Representation.
              (xvi) 252.247-7022, Representation of Extent of Transportation by Sea.
              [76 FR 58141, Sept. 20, 2011, as amended at 77 FR 19129, Mar. 30, 2012; 77 FR 35879, June 15, 2012; 78 FR 37983, June 25, 2013; 78 FR 40043, July 3, 2013; 79 FR 45664, Aug. 5, 2014; 79 FR 51264, Aug. 28, 2014; 79 FR 73489, Dec. 11, 2014; 80 FR 5000, Jan. 29, 2015; 83 FR 24888, May 30, 2018; 83 FR 66071, Dec. 21, 2018; 84 FR 30947, June 28, 2019; 84 FR 72236, 72559, Dec. 31, 2019; 85 FR 19687, Apr. 8, 2020]

            Subpart 204.16—Uniform Procurement Instrument Identifiers

              Source:
              81 FR 9785, Feb. 26, 2016, unless otherwise noted.

              204.1601
              Policy.
              (a) Establishment of a Procurement Instrument Identifier (PIID). Do not reuse a PIID once it has been assigned. Do not assign the same PIID to more than one task or delivery order, even if they are issued under different base contracts or agreements.
              (b) Transition of PIID numbering. Effective October 1, 2016, all DoD components shall comply with the PIID numbering requirements of FAR subpart 4.16 and this subpart for all new solicitations, contracts, orders, and agreements issued, and any amendments and modifications to those new actions. See also PGI 204.1601(b).
              (c) Change in the PIID after its assignment. When a PIID is changed after contract award, the new PIID is known as a continued contract.
              (i) A continued contract—
              (A) Does not constitute a new procurement;
              (B) Incorporates all prices, terms, and conditions of the predecessor contract effective at the time of issuance of the continued contract;
              (C) Operates as a separate contract independent of the predecessor contract once issued; and
              (D) Shall not be used to evade competition requirements, expand the scope of work, or extend the period of performance beyond that of the predecessor contract.
              (ii) When issuing a continued contract, the contracting officer shall—
              (A) Issue an administrative modification to the predecessor contract to clearly state that—
              (1) Any future awards provided for under the terms of the predecessor contract (e.g., issuance of orders or exercise of options) will be accomplished under the continued contract; and
              (2) Supplies and services already acquired under the predecessor contract shall remain solely under that contract for purposes of Government inspection, acceptance, payment, and closeout; and
              (B) Follow the procedures at PGI 204.1601(c).

              204.1603
              Procedures.
              (a) Elements of a PIID. DoD-issued PIIDs are thirteen characters in length. Use only alpha-numeric characters, as prescribed in FAR 4.1603 and this subpart. Do not use the letter I or O in any part of the PIID.
              (3) Position 9.

              (A) DoD will use three of the letters reserved for departmental or agency use in FAR 4.1603(a)(3) in this position as follows:
              (1) Use M to identify purchase orders and task or delivery orders issued by the enterprise FedMall system.
              (2) Use S to identify broad agency announcements.
              (3) Use T to identify automated requests for quotations by authorized legacy contract writing systems. See PGI 204.1603(a)(3)(A)(3) for the list of authorized systems.
              (B) Do not use other letters identified in FAR 4.1603(a)(3) as “Reserved for future Federal Governmentwide use” or “Reserved for departmental or agency use” in position 9 of the PIID.
              (C) Do not use the letter C or H for contracts or agreements with provisions for orders or calls.
              (4) Positions 10 through 17. In accordance with FAR 4.1603(a)(4), DoD-issued PIIDs shall only use positions 10 through 13 to complete the PIID. Enter the serial number of the instrument in these positions. A separate series of serial numbers may be used for any type of instrument listed in FAR 4.1603(a)(3). DoD components assign such series of PIID numbers sequentially. A DoD component may reserve blocks of numbers or alpha-numeric numbers for use by its various activities.
              (b) Elements of a supplementary PIID. In addition to the supplementary PIID numbering procedures in FAR 4.1603(b), follow the procedures contained in paragraphs (b)(2)(ii)(1) and (2) of this section. See PGI 204.1603(b) for examples of proper supplementary PIID numbering.
              (2)(ii) Positions 2 through 6. In accordance with FAR 4.1603(b)(2)(ii), DoD-issued supplementary PIIDs shall, for positions 2 through 6 of modifications to contracts and agreements, comply with the following:
              (1) Positions 2 and 3. These two digits may be either alpha or numeric characters, except—
              (i) Use K, L, M, N, P, and Q only in position 2, and only if the modification is issued by the Air Force and is a provisioned item order;
              (ii) Use S only in position 2, and only to identify modifications issued to provide initial or amended shipping instructions when—

              (a) The contract has either FOB origin or destination delivery terms; and
              (b) The price changes;
              (iii) Use T, U, V, W, X, or Y only in position 2, and only to identify modifications issued to provide initial or amended shipping instructions when—
              (a) The contract has FOB origin delivery terms; and
              (b) The price does not change; and
              (iv) Use Z only in position 2, and only to identify a modification which definitizes a letter contract or a previously issued undefinitized modification.
              (2) Positions 4 through 6. These positions are always numeric. Use a separate series of serial numbers for each type of modification listed in paragraph (b)(2)(ii) of this section.

              204.1670
              Cross reference to Federal Procurement Data System.
              Detailed guidance on mapping PIID and supplementary PIID numbers stored in the Electronic Data Access system to data elements reported in the Federal Procurement Data System can be found in PGI 204.1670.
              [81 FR 9785, Feb. 26, 2016, as amended at 84 FR 48510, Sept. 13, 2019]

              204.1671
              Order of application for modifications.
              (a) Circumstances may exist in which the numeric order of the modifications to a contract is not the order in which the changes to the contract actually take effect.
              (b) In order to determine the sequence of modifications to a contract or order, the modifications will be applied in the following order—
              (1) Modifications will be applied in order of the effective date on the modification;
              (2) In the event of two or more modifications with the same effective date, modifications will be applied in signature date order; and
              (3) In the event of two or more modifications with the same effective date and the same signature date, procuring contracting office modifications will be applied in numeric order, followed by contract administration office modifications in numeric order.

            Subpart 204.18—Commercial and Government Entity Code

              Source:
              79 FR 73492, Dec. 11, 2014, unless otherwise noted.

              204.1870
              Procedures.
              Follow the procedures and guidance at PGI 204-1870 concerning Commercial and Government Entity (CAGE) codes and CAGE file maintenance.

            Subpart 204.21—Prohibition on Contracting for Certain Telecommunications and Video Surveillance or Equipment

              Source:
              84 FR 72236, Dec. 31, 2019, unless otherwise noted.

              204.2100
              Scope of subpart.
              This subpart implements section 1656 of the National Defense Authorization Act for Fiscal Year 2018 (Pub. L. 115-91) and section 889(a)(1)(A) of the National Defense Authorization Act for Fiscal Year 2019 (Pub. L. 115-232).

              204.2101
              Definitions.
              As used in this subpart—

                Covered defense telecommunications equipment or services means—
              (1) Telecommunications equipment produced by Huawei Technologies Company or ZTE Corporation, or any subsidiary or affiliate of such entities;
              (2) Telecommunications services provided by such entities or using such equipment; or
              (3) Telecommunications equipment or services produced or provided by an entity that the Secretary of Defense reasonably believes to be an entity owned or controlled by, or otherwise connected to, the government of a covered foreign country.

                Covered foreign country means—
              (1) The People's Republic of China; or
              (2) The Russian Federation.

                Covered missions means—

              (1) The nuclear deterrence mission of DoD, including with respect to nuclear command, control, and communications, integrated tactical warning and attack assessment, and continuity of Government; or

              (2) The homeland defense mission of DoD, including with respect to ballistic missile defense.

              204.2102
              Prohibition.
              (a) Prohibited equipment, systems, or services. In addition to the prohibition at FAR 4.2102(a), unless the covered defense telecommunications equipment or services are subject to a waiver described in 204.2104, the contracting officer shall not procure or obtain, or extend or renew a contract (e.g., exercise an option) to procure or obtain, any equipment, system, or service to carry out covered missions that uses covered defense telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system.

              204.2103
              Procedures.
              (a) Representations.

              (1)(i) If the offeror selects “does not” in response to the provision at DFARS 252.204-7016, the contracting officer may rely on the representation, unless the contracting officer has an independent reason to question the representation. If the contracting officer has a reason to question the “does not” representation in FAR 52.204-26, FAR 52.212-3(v), or 252.204-7016, then the contracting officer shall consult with the requiring activity and legal counsel.
              (ii) If the offeror selects “does” in paragraph (c) of the provision at DFARS 252.204-7016, the offeror must complete the representation at DFARS 252.204-7017.
              (2)(i) If the offeror selects “will not” in paragraph (d) of the provision at DFARS 252.204-7017, the contracting officer may rely on the representation, unless the contracting officer has an independent reason to question the representation. If the contracting officer has a reason to question the “will not” representation in FAR 52.204-24 or DFARS 252.204-7017, then the contracting officer shall consult with the requiring activity and legal counsel.
              (ii) If an offeror selects “will” in paragraph (d) of the provision at DFARS 252.204-7017, the offeror must provide the information required by paragraph (e) of the provision. When an offeror completes paragraph (e) of either of the provisions at FAR 52.204-24 or DFARS 252.204-7017, the contracting officer shall—
              (A) Forward the offeror's representation and disclosure information to the requiring activity; and
              (B) Not award to the offeror unless the requiring activity advises—
              (1) For equipment, systems, or services that use covered telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system, that a waiver as described at FAR 4.2104 has been granted; or
              (2) For equipment, systems, or services to be used to carry out covered missions that use covered defense telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system, that a waiver as described at DFARS 204.2104 has been granted.
              (b) Reporting. If a contractor reports information to https://dibnet.dod.mil in accordance with the clause at FAR 52.204-25 or DFARS 252.204-7018, the Defense Cyber Crime Center will notify the contracting officer, who will consult with the requiring activity on how to proceed with the contract.

              204.2104
              Waivers.
              The Secretary of Defense may waive the prohibition in 204.2102(a) on a case-by-case basis for a single, one-year period, if the Secretary—
              (a) Determines such waiver to be in the national security interests of the United States; and
              (b) Certifies to the Congressional defense committees that—
              (1) There are sufficient mitigations in place to guarantee the ability of the Secretary to carry out the covered missions; and
              (2) The Secretary is removing the use of covered defense telecommunications equipment or services in carrying out such missions.

              204.2105
              Solicitation provisions and contract clause.

              (a) Use the provision at 252.204-7016, Covered Defense Telecommunications Equipment or Services—Representation, in all solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial items and, solicitations for task and delivery orders, basic ordering agreements (BOAs), orders against BOAs, blanket purchase agreements (BPAs), and calls against BPAs.
              (b) Use the provision at 252.204-7017, Prohibition on the Acquisition of Covered Defense Telecommunications Equipment or Services—Representation, in all solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial items, and solicitations for task and delivery orders, BOAs, orders against BOAs, BPAs, and calls against BPAs.
              (c) Use the clause at 252.204-7018, Prohibition on the Acquisition of Covered Defense Telecommunications Equipment or Services, in all solicitations and resultant awards, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, and solicitations and awards for task and delivery orders, BOAs, orders against BOAs, BPAs, and calls against BPAs.

            Subpart 204.70—Procurement Acquisition Lead Time

              Source:
              84 FR 72563, Dec. 31, 2019, unless otherwise noted.

              204.7001
              Procedures.
              Follow the procedures at PGI 204.7001 for reporting procurement acquisition lead time milestones in the Procurement Integrated Enterprise Environment module.

            Subpart 204.71—Uniform Contract Line Item Numbering System

              204.7100
              Scope.
              This subpart prescribes policies and procedures for assigning contract line item numbers.

              204.7101
              Definitions.

                Accounting classification reference number (ACRN) means any combination of a two position alpha/numeric code used as a method of relating the accounting classification citation to detailed line item information contained in the schedule.

                Attachment means any documentation, appended to a contract or incorporated by reference, which does not establish a requirement for deliverables.

                Definitized item, as used in this subpart, means an item for which a firm price has been established in the basic contract or by modification.

                Exhibit means a document, referred to in a contract, which is attached and establishes requirements for deliverables. The term shall not be used to refer to any other kind of attachment to a contract. The DD Form 1423, Contract Data Requirements List, is always an exhibit, rather than an attachment.

                Nonseverable deliverable, as used in this subpart, means a deliverable item that is a single end product or undertaking, entire in nature, that cannot be feasibly subdivided into discrete elements or phases without losing its identity.

                Undefinitized item, as used in this subpart, means an item for which a price has not been established in the basic contract or by modification.
              [56 FR 36289, July 31, 1991, as amended at 60 FR 34468, July 3, 1995; 70 FR 58982, Oct. 11, 2005]

              204.7102
              Policy.
              (a) The numbering procedures of this subpart shall apply to all—
              (1) Solicitations;
              (2) Solicitation line and subline item numbers;
              (3) Contracts as defined in FAR Subpart 2.1;
              (4) Contract line and subline item numbers;
              (5) Exhibits;
              (6) Exhibit line items; and
              (7) Any other document expected to become part of the contract.
              (b) The numbering procedures are mandatory for all contracts where separate contract line item numbers are assigned, unless—

              (1) The contract is an indefinite-delivery type for petroleum products against which posts, camps, and stations issue delivery orders for products to be consumed by them; or

              (2) The contract is a communications service authorization issued by the Defense Information Systems Agency's Defense Information Technology Contracting Organization.
              [71 FR 9269, Feb. 23, 2006, as amended at 77 FR 76937, Dec. 31, 2012]

              204.7103
              Contract line items.
              Follow the procedures at PGI 204.7103 for establishing contract line items.
              [56 FR 36284, July 31, 1991, as amended at 79 FR 51264, Aug. 28, 2014]

              204.7103-1
              Criteria for establishing.
              Contracts shall identify the items or services to be acquired as separate contract line items unless it is not feasible to do so.
              (a) Contract line items shall have all four of the following characteristics; however, there are exceptions within the characteristics, which may make establishing a separate contract line item appropriate even though one of the characteristics appears to be missing—
              (1) Single unit price. The item shall have a single unit price or a single total price, except—
              (i) If the item is not separately priced (NSP) but the price is included in the unit price of another contract line item, enter NSP instead of the unit price;
              (ii) When there are associated subline items, established for other than informational reasons, and those subline items are priced in accordance with 204.7104;
              (iii) When the items or services are being acquired on a cost-reimbursement contract;
              (iv) When the contract is for maintenance and repair services (e.g., a labor hour contract) and firm prices have been established for elements of the total price of an item but the actual number and quantity of the elements are not known until performance. The contracting officer may structure these contracts to reflect a firm or estimated total amount for each line item;
              (v) When the contract line item is established to refer to an exhibit or an attachment (if management needs dictate that a unit price be entered, the price shall be set forth in the item description block and enclosed in parentheses); or
              (vi) When the contract is an indefinite delivery type contract and provides that the price of an item shall be determined at the time a delivery order is placed and the price is influenced by such factors as the quantity ordered (e.g., 10-99 @ $1.00, 100-249 @ $.98, 250+ @ $.95), the destination, the FOB point, or the type of packaging required.
              (2) Separately identifiable. A contract line item must be identified separately from any other items or services on the contract.
              (i) Supplies are separately identifiable if they have no more than one—
              (A) National stock number (NSN);
              (B) Item description; or
              (C) Manufacturer's part number.
              (ii) Services are separately identifiable if they have no more than one—
              (A) Scope of work; or
              (B) Description of services.
              (iii) This requirement does not apply if there are associated subline items, established for other than informational reasons, and those subline items include the actual detailed identification in accordance with 204.7104. Where this exception applies, use a general narrative description instead of the contract item description.
              (3) Separate delivery schedule. Each contract line item or service shall have its own delivery schedule, period of performance, or completion date expressly stated (“as required” constitutes an expressly stated delivery term).
              (i) The fact that there is more than one delivery date, destination, performance date, or performance point may be a determining factor in the decision as to whether to establish more than one contract line item.
              (ii) If a contract line item has more than one destination or delivery date, the contracting officer may create individual contract line items for the different destinations or delivery dates, or may specify the different delivery dates for the units by destination in the delivery schedule.
              (4) Single accounting classification citation. (i) Each contract line item shall reference a single accounting classification citation except as provided in paragraph (a)(4)(ii) of this subsection.
              (ii) The use of multiple accounting classification citations for a contract line item is authorized in the following situations:
              (A) A single, nonseverable deliverable to be paid for with R&D or other funds properly incrementally obligated over several fiscal years in accordance with DoD policy;
              (B) A single, nonseverable deliverable to be paid for with different authorizations or appropriations, such as in the acquisition of a satellite or the modification of production tooling used to produce items being acquired by several activities; or
              (C) A modification to an existing contract line item for a nonseverable deliverable that results in the delivery of a modified item(s) where the item(s) and modification are to be paid for with different accounting classification citations.
              (iii) When the use of multiple accounting classification citations is authorized for a single contract line item, establish informational subline items for each accounting classification citation in accordance with 204.7104-1(a).
              (b) All subline items and exhibit line items under one contract line item shall be the same contract type as the contract line item.
              (c) For a contract that contains a combination of fixed-price line items, time-and-materials/labor-hour line items, and/or cost-reimbursement line items, identify the contract type for each contract line item in Section B, Supplies or Services and Prices/Costs, to facilitate appropriate payment.
              (d) Exhibits may be used as an alternative to putting a long list of contract line items in the schedule. If exhibits are used, create a contract line item citing the exhibit's identifier. See 204.7105.
              (e) If the contract involves a test model or a first article which must be approved, establish a separate contract line item or subline item for each item of supply or service which must be approved. If the test model or first article consists of a lot composed of a mixture of items, a single line item or subline item may be used for the lot.
              (f) If a supply or service involves ancillary functions, like packaging and handling, transportation, payment of state or local taxes, or use of reusable containers, and these functions are normally performed by the contractor and the contractor is normally entitled to reimbursement for performing these functions, do not establish a separate contract line item solely to account for these functions. However, do identify the functions in the contract schedule. If the offeror separately prices these functions, contracting officers may establish separate contract line items for the functions; however, the separate line items must conform to the requirements of paragraph (a) of this subsection.
              (g) Certain commercial items and initial provisioning spares for weapons systems are requested and subsequently solicited using units of measure such as kit, set, or lot. However, there are times when individual items within that kit, set, or lot are not grouped and delivered in a single shipment. This creates potential contract administration issues with inspection, acceptance, and payment. In such cases, solicitations should be structured to allow offerors to provide information about products that may not have been known to the Government prior to solicitation and propose an alternate line item structure as long as the alternate is consistent with the requirements of 204.71, which provides explicit guidance on the use of contract line items and subline items, and with PGI 204.71.
              [56 FR 36289, July 31, 1991, as amended at 60 FR 34468, July 3, 1995; 60 FR 43191, Aug. 18, 1995; 70 FR 58982, Oct. 11, 2005; 76 FR 58139, Sept. 20, 2011; 79 FR 11342, Feb. 28, 2014]

              204.7103-2
              Numbering procedures.
              Follow the procedures at PGI 204.7103-2 for numbering contract line items.
              [70 FR 58983, Oct. 11, 2005]

              204.7104
              Contract subline items.

              204.7104-1
              Criteria for establishing.

              Contract subline items provide flexibility to further identify elements within a contract line item for tracking performance or simplifying administration. There are only two kinds of subline items: those which are informational in nature and those which consist of more than one item that requires separate identification.
              (a) Informational subline items. (1) This type of subline item identifies information that relates directly to the contract line item and is an integral part of it (e.g., parts of an assembly or parts of a kit). These subline items shall not be scheduled separately for delivery, identified separately for shipment or performance, or priced separately for payment purposes.
              (2) The informational subline item may include quantities, prices, or amounts, if necessary to satisfy management requirements. However, these elements shall be included within the item description in the supplies/services column and enclosed in parentheses to prevent confusing them with quantities, prices, or amounts that have contractual significance. Do not enter these elements in the quantity and price columns.
              (3) Informational subline items shall be used to identify each accounting classification citation assigned to a single contract line item number when use of multiple citations is authorized (see 204.7103-1(a)(4)(ii)).
              (b) Separately identified subline items. (1) Subline items will be used instead of contract line items to facilitate payment, delivery tracking, contract funds accounting, or other management purposes. Such subline items shall be used when items bought under one contract line item number—
              (i) Are to be paid for from more than one accounting classification. A subline item shall be established for the quantity associated with the single accounting classification citation. Establish a line item rather than a subline item if it is likely that a subline item may be assigned additional accounting classification citations at a later date. Identify the funding as described in 204.7104-1(a)(3);
              (ii) Are to be packaged in different sizes, each represented by its own NSN;
              (iii) Have collateral costs, such as packaging costs, but those costs are not a part of the unit price of the contract line item;
              (iv) Have different delivery dates or destinations or requisitions, or a combination of the three; or
              (v) Identify parts of an assembly or kit which—
              (A) Have to be separately identified at the time of shipment or performance; and
              (B) Are separately priced.
              (2) Each separately identified contract subline item shall have its own—
              (i) Delivery schedule, period of performance, or completion date;
              (ii) Unit price or single total price or amount (not separately priced (NSP) is acceptable as an entry for price or amount if the price is included in another subline item or a different contract line item). This requirement does not apply—
              (A) If the subline item was created to refer to an exhibit or an attachment. If management needs dictate that a unit price be entered, the price shall be set forth in the item description block of the schedule and enclosed in parentheses; or
              (B) In the case of indefinite delivery contracts described at 204.7103-1(a)(1)(vi).
              (iii) Identification (e.g., NSN, item description, manufacturer's part number, scope of work, description of services).
              (3) Unit prices and extended amounts.
              (i) The unit price and total amount for all subline items may be entered at the contract line item number level if the unit price for the subline items is identical. If there is any variation, the subline item unit prices shall be entered at the subline item level only.
              (ii) The unit price and extended amounts may be entered at the subline items level.
              (iii) The two methods in paragraphs (b)(3) (i) and (ii) of this section shall not be combined in a contract line item.

              (iv) When the price for items not separately priced is included in the price of another contract line or subline item, it may be necessary to withhold payment on the priced contract line or subline item until the included line or subline items that are not separately priced have been delivered. See the clause at 252.204-7002, Payment for Contract Line or Subline Items Not Separately Priced.
              [56 FR 36289, July 31, 1991, as amended at 60 FR 34468, July 3, 1995; 68 FR 75200, Dec. 30, 2003; 85 FR 19692, Apr. 8, 2020]

              204.7104-2
              Numbering procedures.
              Follow the procedures at PGI 204.7104-2 for numbering contract subline items.
              [70 FR 58983, Oct. 11, 2005]

              204.7105
              Contract exhibits and attachments.
              Follow the procedures at PGI 204.7105 for use and numbering of contract exhibits and attachments.
              [71 FR 9269, Feb. 23, 2006]

              204.7106
              Contract modifications.
              (a) If new items are added, assign new contract line or subline item numbers or exhibit line item numbers, in accordance with the procedures established at 204.7103, 204.7104, and 204.7105.
              (b) Modifications to existing contract line items or exhibit line items. (1) If the modification relates to existing contract line items or exhibit line items, the modification shall refer to those item numbers.
              (2) If the contracting officer decides to assign new identifications to existing contract or exhibit line items, the following rules apply—
              (i) Definitized and undefinitized items. (A) The original line item or subline item number may be used if the modification applies to the total quantity of the original line item or subline.
              (B) The original line item or subline item number may be used if the modification makes only minor changes in the specifications of some of the items ordered on the original line item or subline item and the resulting changes in unit price can be averaged to provide a new single unit price for the total quantity. If the changes in the specifications make the item significantly distinguishable from the original item or the resulting changes in unit price cannot be averaged, create a new line item.
              (C) If the modification affects only a partial quantity of an existing contract line item or subline item or exhibit line item and the change does not involve either the delivery date or the ship-to/mark-for data, the original contract line item or subline item or exhibit line item number shall remain with the unchanged quantity. Assign the changed quantity the next available number.
              (ii) Undefinitized items. In addition to the rules in paragraph (b)(2)(i), the following additional rules apply to undefinitized items—
              (A) If the modification is undefinitized and increases the quantity of an existing definitized item, assign the undefinitized quantity the next available number.
              (B) If the modification increases the quantity of an existing undefinitized item, the original contract line item or subline item or exhibit line item may be used if the unit price for the new quantity is expected to be the same as the price for the original quantity. If the unit prices of the two quantities will be different, assign the new quantity the next available number.
              (C) If the modification both affects only a partial quantity of the existing contract line item or subline item or exhibit line item and definitizes the price for the affected portion, the definitized portion shall retain the original item number. If there is any undefinitized portion of the item, assign it the next available number. However, if the modification definitizes the price for the whole quantity of the line item, and price impact of the changed work can be apportioned equally over the whole to arrive at a new unit price, the quantity with the changes can be added into the quantity of the existing item.
              (D) If the modification affects only a partial quantity of an existing contract line item or subline item or exhibit line item but does not change the delivery schedule or definitize price, the unchanged portion shall retain the original contract line item or subline item or exhibit line item number. Assign the changed portion the next available number.

              (3) If the modification will decrease the amount obligated—

              (i) There shall be coordination between the administrative and procuring contracting offices before issuance of the modification; and
              (ii) The contracting officer shall not issue the modification unless sufficient unliquidated obligation exists or the purpose is to recover monies owed to the Government.
              [56 FR 36289, July 31, 1991, as amended at 70 FR 58983, Oct. 11, 2005; 77 FR 76937, Dec. 31, 2012; 78 FR 13543, Feb. 28, 2013]

              204.7107
              Contract accounting classification reference number (ACRN) and agency accounting identifier (AAI).
              Traceability of funds from accounting systems to contract actions is accomplished using ACRNs and AAIs. Follow the procedures at PGI 204.7107 for use of ACRNs and AAIs.
              [74 FR 52895, Oct. 15, 2009]

              204.7108
              Payment instructions.
              Follow the procedures at PGI 204.7108 for inclusion of payment instructions in contracts.
              [70 FR 58983, Oct. 11, 2005]

              204.7109
              Contract clauses.
              (a) Use the clause at 252.204-7002, Payment for Contract Line or Subline Items Not Separately Priced, in solicitations and contracts when the price for items not separately priced is included in the price of another contract line or subline item.
              (b) Use the clause at 252.204-7006, Billing Instructions, in solicitations and contracts if Section G includes—
              (1) Any of the standard payment instructions at PGI 204.7108(b)(2); or
              (2) Other payment instructions, in accordance with PGI 204.7108(d)(12), that require contractor identification of the contract line item(s) on the payment request.
              [85 FR 19692, Apr. 8, 2020]

            Subpart 204.72—Antiterrorism Awareness Training

              Source:
              84 FR 4363, Feb. 15, 2019, unless otherwise noted.

              204.7200
              Scope of subpart.
              This subpart provides policy and guidance related to antiterrorism awareness training for contractor personnel who require routine physical access to a Federally-controlled facility or military installation.

              204.7201
              Definition.
              As used in this subpart—

                Military installation means a base, camp, post, station, yard, center, or other activity under the jurisdiction of the Secretary of a military department or, in the case of an activity in a foreign country, under the operational control of the Secretary of a military department or the Secretary of Defense (see 10 U.S.C. 2801(c)(4)).

              204.7202
              Policy.
              It is DoD policy that—
              (a) Contractor personnel who, as a condition of contract performance, require routine physical access to a Federally-controlled facility or military installation are required to complete Level I antiterrorism awareness training within 30 days of requiring access and annually thereafter; and
              (b) In accordance with Department of Defense Instruction O-2000.16, Volume 1, DoD Antiterrorism (AT) Program Implementation: DoD AT Standards, Level I antiterrorism awareness training may be completed—
              (1) Through a DoD-sponsored and certified computer or web-based distance learning instruction for Level I antiterrorism awareness; or
              (2) Under the instruction of a qualified Level I antiterrorism awareness instructor.

              204.7203
              Contract clause.
              Include the clause at 252.204-7004, DoD Antiterrorism Awareness Training for Contractors, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, when contractor personnel require routine physical access to a Federally-controlled facility or military installation.

            Subpart 204.73—Safeguarding Covered Defense Information and Cyber Incident Reporting

              Source:
              78 FR 69279, Nov. 18, 2013, unless otherwise noted.

              204.7300
              Scope.
              (a) This subpart applies to contracts and subcontracts requiring contractors and subcontractors to safeguard covered defense information that resides in or transits through covered contractor information systems by applying specified network security requirements. It also requires reporting of cyber incidents.
              (b) This subpart does not abrogate any other requirements regarding contractor physical, personnel, information, technical, or general administrative security operations governing the protection of unclassified information, nor does it affect requirements of the National Industrial Security Program.
              [80 FR 51742, Aug. 26, 2015, as amended at 81 FR 72998, Oct. 21, 2016]

              204.7301
              Definitions.
              As used in this subpart—

                Adequate security means protective measures that are commensurate with the consequences and probability of loss, misuse, or unauthorized access to, or modification of information.

                Contractor attributional/proprietary information means information that identifies the contractor(s), whether directly or indirectly, by the grouping of information that can be traced back to the contractor(s) (e.g., program description, facility locations), personally identifiable information, as well as trade secrets, commercial or financial information, or other commercially sensitive information that is not customarily shared outside of the company.

                Controlled technical information means technical information with military or space application that is subject to controls on the access, use, reproduction, modification, performance, display, release, disclosure, or dissemination. Controlled technical information would meet the criteria, if disseminated, for distribution statements B through F using the criteria set forth in DoD Instruction 5230.24, Distribution Statements on Technical Documents. The term does not include information that is lawfully publicly available without restrictions.

                Covered contractor information system means an unclassified information system that is owned, or operated by or for, a contractor and that processes, stores, or transmits covered defense information.

                Covered defense information means unclassified controlled technical information or other information (as described in the Controlled Unclassified Information (CUI) Registry at http://www.archives.gov/cui/registry/category-list.html) that requires safeguarding or dissemination controls pursuant to and consistent with law, regulations, and Governmentwide policies, and is—
              (1) Marked or otherwise identified in the contract, task order, or delivery order and provided to the contractor by or on behalf of DoD in support of the performance of the contract; or
              (2) Collected, developed, received, transmitted, used, or stored by or on behalf of the contractor in support of the performance of the contract.

                Information system means a discrete set of information resources organized for the collection, processing, maintenance, use, sharing, dissemination, or disposition of information.

                Media means physical devices or writing surfaces including, but not limited to, magnetic tapes, optical disks, magnetic disks, large-scale integration memory chips, and printouts onto which covered defense information is recorded, stored, or printed within a covered contractor information system.

                Rapidly report means within 72 hours of discovery of any cyber incident.

                Technical information means technical data or computer software, as those terms are defined in the clause at DFARS 252.227-7013, Rights in Technical Data—Non Commercial Items, regardless of whether or not the clause is incorporated in this solicitation or contract. Examples of technical information include research and engineering data, engineering drawings, and associated lists, specifications, standards, process sheets, manuals, technical reports, technical orders, catalog-item identifications, data sets, studies and analyses and related information, and computer software executable code and source code.
              [78 FR 69279, Nov. 18, 2013, as amended at 80 FR 51742, Aug. 26, 2015; 81 FR 72998, Oct. 21, 2016]

              204.7302
              Policy.
              (a) Contractors and subcontractors are required to provide adequate security on all covered contractor information systems.

              (b) Contractors and subcontractors are required to rapidly report cyber incidents directly to DoD at http://dibnet.dod.mil. Subcontractors provide the incident report number automatically assigned by DoD to the prime contractor. Lower-tier subcontractors likewise report the incident report number automatically assigned by DoD to their higher-tier subcontractor, until the prime contractor is reached.
              (1) If a cyber incident occurs, contractors and subcontractors submit to DoD—
              (i) A cyber incident report;
              (ii) Malicious software, if detected and isolated; and
              (iii) Media (or access to covered contractor information systems and equipment) upon request.
              (2) Contracting officers shall refer to PGI 204.7303-4(c) for instructions on contractor submissions of media and malicious software.
              (c) Information shared by the contractor may include contractor attributional/proprietary information that is not customarily shared outside of the company, and that the unauthorized use or disclosure of such information could cause substantial competitive harm to the contractor that reported the information. The Government shall protect against the unauthorized use or release of information that includes contractor attributional/proprietary information.
              (d) A cyber incident that is reported by a contractor or subcontractor shall not, by itself, be interpreted as evidence that the contractor or subcontractor has failed to provide adequate security on their covered contractor information systems, or has otherwise failed to meet the requirements of the clause at 252.204-7012, Safeguarding Covered Defense Information and Cyber Incident Reporting. When a cyber incident is reported, the contracting officer shall consult with the DoD component Chief Information Officer/cyber security office prior to assessing contractor compliance (see PGI 204.7303-3(a)(3)). The contracting officer shall consider such cyber incidents in the context of an overall assessment of a contractor's compliance with the requirements of the clause at 252.204-7012.

              (e) Support services contractors directly supporting Government activities related to safeguarding covered defense information and cyber incident reporting (e.g., forensic analysis, damage assessment,, or other services that require access to data from another contractor) are subject to restrictions on use and disclosure of reported information.
              [80 FR 51742, Aug. 26, 2015, as amended at 81 FR 72998, Oct. 21, 2016]

                Effective Date Note:
                At 85 FR 61519, Sept. 29, 2020,  § 204.7302 was amended by revising paragraph (a), effective Nov. 30, 2020. For the convenience of the user, the revised text is set forth as follows:

                    204.7302
                    Policy.
                    (a)(1) Contractors and subcontractors are required to provide adequate security on all covered contractor information systems.

                    (2) Contractors required to implement NIST SP 800-171, in accordance with the clause at 252.204-7012, Safeguarding Covered Defense Information and Cyber incident Reporting, are required at time of award to have at least a Basic NIST SP 800-171 DoD Assessment that is current (i.e., not more than 3 years old unless a lesser time is specified in the solicitation) (see 252.204-7019).

                    (3) The NIST SP 800-171 DoD Assessment Methodology is located at https://www.acq.osd.mil/dpap/pdi/cyber/strategically_assessing_contractor_ implementation_of_ NIST_SP_800-171.html.

                    (4) High NIST SP 800-171 DoD Assessments will be conducted by Government personnel using NIST SP 800-171A, “Assessing Security Requirements for Controlled Unclassified Information.”

                    (5) The NIST SP 800-171 DoD Assessment will not duplicate efforts from any other DoD assessment or the Cybersecurity Maturity Model Certification (CMMC) (see subpart 204.75), except for rare circumstances when a re-assessment may be necessary, such as, but not limited to, when cybersecurity risks, threats, or awareness have changed, requiring a re-assessment to ensure current compliance.

              204.7303
              Procedures.
              Follow the procedures relating to safeguarding covered defense information at PGI 204.7303.
              [79 FR 74652, Dec. 16, 2014, as amended at 80 FR 51743, Aug. 26, 2015]
              § 204.7303, Nt.

                Effective Date Note:
                At 85 FR 61519, Sept. 29, 2020, § 204.7303 was revised, effective Nov. 30, 2020. For the convenience of the user, the revised text is set forth as follows:

                    204.7303
                    Procedures.
                    (a) Follow the procedures relating to safeguarding covered defense information at PGI 204.7303.

                    (b) The contracting officer shall verify that the summary level score of a current NIST SP 800-171 DoD Assessment (i.e., not more than 3 years old, unless a lesser time is specified in the solicitation) (see 252.204-7019) for each covered contractor information system that is relevant to an offer, contract, task order, or delivery order are posted in Supplier Performance Risk System (SPRS) (https://www.sprs.csd.disa.mil/), prior to—
                    (1) Awarding a contract, task order, or delivery order to an offeror or contractor that is required to implement NIST SP 800-171 in accordance with the clause at 252.204-7012; or
                    (2) Exercising an option period or extending the period of performance on a contract, task order, or delivery order with a contractor that is that is required to implement the NIST SP 800-171 in accordance with the clause at 252.204-7012.

              204.7304
              Solicitation provision and contract clauses.
              (a) Use the provision at 252.204-7008, Compliance with Safeguarding Covered Defense Information Controls, in all solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial items, except for solicitations solely for the acquisition of commercially available off-the-shelf (COTS) items.
              (b) Use the clause at 252.204-7009, Limitations on the Use or Disclosure of Third-Party Contractor Reported Cyber Incident Information, in all solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, for services that include support for the Government's activities related to safeguarding covered defense information and cyber incident reporting.
              (c) Use the clause at 252.204-7012, Safeguarding Covered Defense Information and Cyber Incident Reporting, in all solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, except for solicitations and contracts solely for the acquisition of COTS items.
              [80 FR 51743, Aug. 26, 2015, as amended at 80 FR 56929, Sept. 21, 2015; 81 FR 72999, Oct. 21, 2016; 82 FR 61480, Dec. 28, 2017]
              § 204.7304, Nt.

                Effective Date Note:
                At 85 FR 61519, Sept. 29, 2020, § 204.7304 was amended by revising the section heading and adding paragraphs (d) and (e), effective Nov. 30, 2020. For the convenience of the user, the added and revised text is set forth as follows:

                    204.7304
                    Solicitation provisions and contract clauses.

                    (d) Use the provision at 252.204-7019, Notice of NIST SP 800-171 DoD Assessment Requirements, in all solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial items, except for solicitations solely for the acquisition of commercially available off-the-shelf (COTS) items.
                    (e) Use the clause at 252.204-7020, NIST SP 800-171 DoD Assessment Requirements, in all solicitations and contracts, task orders, or delivery orders, including those using FAR part 12 procedures for the acquisition of commercial items, except for those that are solely for the acquisition of COTS items.

            Subpart 204.74—Disclosure of information to litigation support contractors

              Source:
              79 FR 11339, Feb. 28, 2014, unless otherwise noted.

              204.7400
              Scope of subpart.
              This subpart prescribes policies and procedures for the release and safeguarding of information to litigation support contractors. It implements the requirements at 10 U.S.C. 129d.

              204.7401
              Definitions.
              As used in this subpart—

                Computer software means computer programs, source code, source code listings, object code listings, design details, algorithms, processes, flow charts, formulae, and related material that would enable the software to be reproduced, recreated, or recompiled. Computer software does not include computer data bases or computer software documentation.

                Litigation information means any information, including sensitive information, that is furnished to the contractor by or on behalf of the Government, or that is generated or obtained by the contractor in the performance of litigation support under a contract. The term does not include information that is lawfully, publicly available without restriction, including information contained in a publicly available solicitation.

                Litigation support means administrative, technical, or professional services provided in support of the Government during or in anticipation of litigation.

                Litigation support contractor means a contractor (including its experts, technical consultants, subcontractors, and suppliers) providing litigation support under a contract that contains the clause at 252.204-7014, Limitations on the Use or Disclosure of Information by Litigation Support Contractors.

                Sensitive information means controlled unclassified information of a commercial, financial, proprietary, or privileged nature. The term includes technical data and computer software, but does not include information that is lawfully, publicly available without restriction.

                Technical data means recorded information, regardless of the form or method of the recording, of a scientific or technical nature (including computer software documentation). The term does not include computer software or data incidental to contract administration, such as financial and/or management information.
              [81 FR 28727, May 10, 2016]

              204.7402
              Policy.
              (a) Any release or disclosure of litigation information that includes sensitive information to a litigation support contractor, and the litigation support contractor's use and handling of such information, shall comply with the requirements of 10 U.S.C. 129d.
              (b) To the maximum extent practicable, DoD will provide notice to an offeror or contractor submitting, delivering, or otherwise providing information to DoD in connection with an offer or performance of a contract that such information may be released or disclosed to litigation support contractors.
              (c) Information that is publicly available without restriction, including publicly available solicitations for litigation support services, will not be protected from disclosure as litigation information.

              (d) When sharing sensitive information with a litigation support contractor, contracting officers shall ensure that all other applicable requirements for handling and safeguarding the relevant types of sensitive information are included in the contract (e.g., FAR subparts 4.4 and 24.1; DFARS subparts 204.4 and 224.1).
              [79 FR 11339, Feb. 28, 2014, as amended at 81 FR 28728, May 10, 2016]

              204.7403
              Contract clauses.
              (a) Use the clause at 252.204-7014, Limitations on the Use or Disclosure of Information by Litigation Support Contractors, in all solicitations and contracts that involve litigation support services, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items.
              (b) Use the clause at 252.204-7015, Notice of Authorized Disclosure of Information for Litigation Support, in all solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items.
              [81 FR 28728, May 10, 2016, as amended at 84 FR 58332, Oct. 31, 2019]

            Subpart 204.75—Cybersecurity Maturity Model Certification

              Source:
              85 FR 61519, Sept. 29, 2020, unless otherwise noted.

              Effective Date Note:
              At 85 FR 61519, Sept. 29, 2020, Subpart 204.75, consisting of 204.7500 through 204.7503, was added, effective Nov. 30, 2020.

              204.7500
              Scope of subpart.

              (a) This subpart prescribes policies and procedures for including the Cybersecurity Maturity Model Certification (CMMC) level requirements in DoD contracts. CMMC is a framework that measures a contractor's cybersecurity maturity to include the implementation of cybersecurity practices and institutionalization of processes (see https://www.acq.osd.mil/cmmc/index.html).
              (b) This subpart does not abrogate any other requirements regarding contractor physical, personnel, information, technical, or general administrative security operations governing the protection of unclassified information, nor does it affect requirements of the National Industrial Security Program.

              204.7501
              Policy.

              (a) The contracting officer shall include in the solicitation the required CMMC level, if provided by the requiring activity. Contracting officers shall not award a contract, task order, or delivery order to an offeror that does not have a current (i.e., not more than 3 years old) CMMC certificate at the level required by the solicitation.

              (b) Contractors are required to achieve, at time of award, a CMMC certificate at the level specified in the solicitation. Contractors are required to maintain a current (i.e., not more than 3 years old) CMMC certificate at the specified level, if required by the statement of work or requirement document, throughout the life of the contract, task order, or delivery order. Contracting officers shall not exercise an option period or extend the period of performance on a contract, task order, or delivery order, unless the contract has a current (i.e., not more than 3 years old) CMMC certificate at the level required by the contract, task order, or delivery order.
              (c) The CMMC Assessments shall not duplicate efforts from any other comparable DoD assessment, except for rare circumstances when a re-assessment may be necessary such as, but not limited to when there are indications of issues with cybersecurity and/or compliance with CMMC requirements.

              204.7502
              Procedures.
              (a) When a requiring activity identifies a requirement for a contract, task order, or delivery order to include a specific CMMC level, the contracting officer shall not—
              (1) Award to an offeror that does not have a CMMC certificate at the level required by the solicitation; or
              (2) Exercise an option or extend any period of performance on a contract, task order, or delivery order unless the contractor has a CMMC certificate at the level required by the contract.

              (b) Contracting officers shall use Supplier Performance Risk System (SPRS) (https://www.sprs.csd.disa.mil/) to verify an offeror or contractor's CMMC level.

              204.7503
              Contract clause.
              Use the clause at 252.204-7021, Cybersecurity Maturity Model Certification Requirements, as follows:
              (a) Until September 30, 2025, in solicitations and contracts or task orders or delivery orders, including those using FAR part 12 procedures for the acquisition of commercial items, except for solicitations and contracts or orders solely for the acquisition of commercially available off-the-shelf (COTS) items, if the requirement document or statement of work requires a contractor to have a specific CMMC level. In order to implement a phased rollout of CMMC, inclusion of a CMMC requirement in a solicitation during this time period must be approved by OUSD(A&S).
              (b) On or after October 1, 2025, in all solicitations and contracts or task orders or delivery orders, including those using FAR part 12 procedures for the acquisition of commercial items, except for solicitations and contracts or orders solely for the acquisition of COTS items.

        SUBCHAPTER B—ACQUISITION PLANNING

          Pt. 205
          PART 205—PUBLICIZING CONTRACT ACTIONS

              Subpart 205.2—Synopses of Proposed Contract Actions
              Sec.
              205.203
              Publicizing and response time.
              205.205
              Special situations.
              205.205-71
              Only one responsible source.
              205.207
              Preparation and transmittal of synopses.

              Subpart 205.3—Synopses of Contract Awards
              205.301
              General.
              205.303
              Announcement of contract awards.

              Subpart 205.4—Release of Information
              205.470
              Contract clause.

              Subpart 205.5—Paid Advertisements
              205.502
              Authority.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36302, July 31, 1991, unless otherwise noted.

            Subpart 205.2—Synopses of Proposed Contract Actions

              205.203
              Publicizing and response time.
              (b) Allow at least 45 days response time when requested by a qualifying or designated country source (as these terms are used in part 225) and the request is consistent with the Government's requirement.
              (S-70) When using competitive procedures, if a solicitation allowed fewer than 30 days for receipt of offers and resulted in only one offer, the contracting officer shall resolicit, allowing an additional period of at least 30 days for receipt of offers, except as provided in 215.371-4 and 215.371-5.
              [56 FR 36302, July 31, 1991, as amended at 77 FR 39137, June 29, 2012]

              205.205-70
              Notification of bundling of DoD contracts.

              (a) When a proposed acquisition is funded entirely using DoD funds and potentially involves bundling, the contracting officer shall, at least 30 days prior to the release of a solicitation or 30 days prior to placing an order without a solicitation, publish in FedBizOpps.gov (or any successor site) a notification of the intent to bundle the requirement. In addition, if the agency has determined that measurably substantial benefits are expected to be derived as a result of bundling, the notification shall include a brief description of those benefits (see FAR 7.107).
              (b) This requirement is in addition to the notification requirements at FAR 10.001(c)(2)(i) and (ii).
              [75 FR 40716, July 13, 2010]

              205.205-71
              Only one responsible source.
              Follow the procedures at PGI 206.302-1(d) prior to soliciting a proposal without providing for full and open competition under the authority at FAR 6.302-1.
              [80 FR 21657, Apr. 20, 2015]

              205.207
              Preparation and transmittal of synopses.
              (a)(i) For numbering synopsis notices, follow the procedures at PGI 205.207(a)(i).
              (d) For special notices for small business events, follow the procedures at PGI 205.207(d).
              [69 FR 63328, Nov. 1, 2004, as amended at 70 FR 73149, Dec. 9, 2005, 76 FR 76319, Dec. 7, 2011; 79 FR 61581, Oct. 14, 2014]

            Subpart 205.3—Synopses of Contract Awards

              205.301
              General.
              (a)(S-70) Synopsis of exceptions to domestic source requirements.

              (i) In accordance with 10 U.S.C. 2533a(k), contracting officers also must synopsize through the GPE, awards exceeding the simplified acquisition threshold that are for the acquisition of any clothing, fiber, yarn, or fabric items described in 225.7002-1(a)(1)(ii) through (x), if—

              (A) The Secretary concerned has determined that domestic items are not available, in accordance with 225.7002-2(b); or
              (B) The acquisition is for chemical warfare protective clothing, and the contracting officer has determined that an exception to domestic source requirements applies because the acquisition furthers an agreement with a qualifying country, in accordance with 225.7002-2(n).
              (ii) The synopsis must be submitted in sufficient time to permit its publication not later than 7 days after contract award.
              (iii) In addition to the information otherwise required in a synopsis of contract award, the synopsis must include one of the following statements as applicable:
              (A) “The exception at DFARS 225.7002-2(b) applies to this acquisition, because the Secretary concerned has determined that items grown, reprocessed, reused, or produced in the United States cannot be acquired as and when needed in satisfactory quality and sufficient quantity at U.S. market prices.”
              (B) “The exception at DFARS 225.7002-2(n) applies to this acquisition, because the contracting officer has determined that this acquisition of chemical warfare protective clothing furthers an agreement with a qualifying country identified in DFARS 225.003(10).”
              [71 FR 58536, Oct. 4, 2006, as amended at 74 FR 52895, Oct. 15, 2009; 74 FR 59914, Nov. 19, 2009; 80 FR 51749, Aug. 26, 2015]

              205.303
              Announcement of contract awards.
              (a) Public announcement. (i) The threshold for DoD awards is $7.5 million. Report all contractual actions, including modifications, that have a face value, excluding unexercised options, of more than $7.5 million.
              (A) For undefinitized contractual actions, report the not-to-exceed (NTE) amount. Later, if the definitized amount exceeds the NTE amount by more than $7.5 million, report only the amount exceeding the NTE.
              (B) For indefinite delivery, time and material, labor hour, and similar contracts, report the initial award if the estimated face value, excluding unexercised options, is more than $7.5 million. Do not report orders up to the estimated value, but after the estimated value is reached, report subsequent modifications and orders that have a face value of more than $7.5 million.
              (C) Do not report the same work twice.
              (ii) Departments and agencies submit the information—
              (A) To the Office of the Assistant Secretary of Defense (Public Affairs);
              (B) By the close of business the day before the date of the proposed award;
              (C) Using report control symbol DD-LA-(AR) 1279;
              (D) Including, as a minimum, the following—
              (1) Contract data. Contract number, modification number, or delivery order number, face value of this action, total cumulative face value of the contract, description of what is being bought, contract type, whether any of the buy was for foreign military sales (FMS) and identification of the FMS customer;
              (2) Competition information. Number of solicitations mailed and number of offers received;
              (3) Contractor data. Name, address, and place of performance (if significant work is performed at a different location);
              (4) Funding data. Type of appropriation and fiscal year of the funds, and whether the contract is multiyear (see FAR Subpart 17.1); and
              (5) Miscellaneous data. Identification of the contracting office, the contracting office point of contact, known congressional interest, and the information release date.
              (iii) Departments and agencies, in accordance with department/agency procedures and concurrent with the public announcement, shall provide information similar to that required by paragraph (a)(ii) of this section to members of Congress in whose state or district the contractor is located and the work is to be performed.
              [56 FR 36302, July 31, 1991, as amended at 56 FR 67212, Dec. 30, 1991; 71 FR 75892, Dec. 19, 2006; 75 FR 45073, Aug. 2, 2010; 80 FR 36904, June 26, 2015; 85 FR 61504, Sept. 29, 2020]

            Subpart 205.4—Release of Information

              205.470
              Contract clause.
              Use the clause at 252.205-7000, Provision of Information to Cooperative Agreement Holders, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that are expected to exceed $1.5 million. This clause implements 10 U.S.C. 2416.
              [69 FR 63328, Nov. 1, 2004, as amended at 70 FR 8537, Feb. 22, 2005; 78 FR 37983, June 25, 2013; 85 FR 61504, Sept. 29, 2020]

            Subpart 205.5—Paid Advertisements

              205.502
              Authority.
              (a) Newspapers. Heads of contracting activities are delegated authority to approve the publication of paid advertisements in newspapers.
              [69 FR 63328, Nov. 1, 2004]

          Pt. 206
          PART 206—COMPETITION REQUIREMENTS

            Sec.
            206.000
            Scope of part.
            206.001
            Applicability.

              Subpart 206.1—Full and Open Competition
              206.102
              Use of competitive procedures.

              Subpart 206.2—Full and Open Competition After Exclusion of Sources
              206.202
              Establishing or maintaining alternative sources.

              Subpart 206.3—Other Than Full and Open Competition
              206.302
              Circumstances permitting other than full and open competition.
              206.302-1
              Only one responsible source and no other supplies or services will satisfy agency requirements.
              206.302-2
              Unusual and compelling urgency.
              206.302-3
              Industrial mobilization, engineering, developmental, or research capability, or expert services.
              206.302-3-70
              Solicitation provision.
              206.302-4
              International agreement.
              206.302-5
              Authorized or required by statute.
              206.302-7
              Public interest.
              206.303
              Justifications.
              206.303-1
              Requirements.
              206.303-2
              Content.
              206.303-70
              Acquisitions in support of operations in Afghanistan.
              206.304
              Approval of the justification.
              206.305
              Availability of the justification.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36303, July 31, 1991, unless otherwise noted.

            206.000
            Scope of part.
            For information on the various approaches that may be used to competitively fulfill DoD requirements, see PGI 206.000.
            [80 FR 21657, Apr. 20, 2015]

            206.001
            Applicability.
            (b) As authorized by 10 U.S.C. 1091, contracts awarded to individuals using the procedures at 237.104(b)(ii) are exempt from the competitive requirements of FAR part 6.
            (S-70) Also excepted from this part are follow-on production contracts for products developed pursuant to the “other transactions” authority of 10 U.S.C. 2371 for prototype projects when—
            (1) The other transaction agreement includes provisions for a follow-on production contract;

            (2) The contracting officer receives sufficient information from the agreements officer and the project manager for the prototype other transaction agreement, which documents that the conditions set forth in 10 U.S.C. 2371 note, subsections (f)(2) (A) and (B) (see 32 CFR 3.9(d)), have been met; and
            (3) The contracting officer establishes quantities and prices for the follow-on production contract that do not exceed the quantities and target prices established in the other transaction agreement.
            [70 FR 2361, Jan. 13, 2005]

            Subpart 206.1—Full and Open Competition

              Source:
              84 FR 4365, Feb. 15, 2019, unless otherwise noted.

              206.102
              Use of competitive procedures.
              (d) Other competitive procedures.

              (2) In lieu of FAR 6.102(d)(2), competitive selection of science and technology proposals resulting from a broad agency announcement with peer or scientific review, as described in 235.016(a) (10 U.S.C. 2302(2)(B)).

            Subpart 206.2—Full and Open Competition After Exclusion of Sources

              206.202
              Establishing or maintaining alternative sources.
              (a) Agencies may use this authority to totally or partially exclude a particular source from a contract action.
              (b) The determination and findings (D&F) and the documentation supporting the D&F shall identify the source to be excluded from the contract action. Include the information at PGI 206.202(b), as applicable, and any other information that may be pertinent, in the supporting documentation.
              [69 FR 74991, Dec. 15, 2004]

            Subpart 206.3—Other Than Full and Open Competition

              206.302
              Circumstances permitting other than full and open competition.

              206.302-1
              Only one responsible source and no other supplies or services will satisfy agency requirements.
              (a) Authority. (2)(i) Section 8059 of Pub. L. 101-511 and similar sections in subsequent defense appropriations acts prohibit departments and agencies from entering into contracts for studies, analyses, or consulting services (see FAR subpart 37.2) on the basis of an unsolicited proposal without providing for full and open competition, unless—
              (1) The head of the contracting activity, or a designee no lower than chief of the contracting office, determines that—
              (i) Following thorough technical evaluation, only one source is fully qualified to perform the proposed work;
              (ii) The unsolicited proposal offers significant scientific or technological promise, represents the product of original thinking, and was submitted in confidence; or
              (iii) The contract benefits the national defense by taking advantage of a unique and significant industrial accomplishment or by ensuring financial support to a new product or idea;
              (2) A civilian official of the DoD, whose appointment has been confirmed by the Senate, determines the award to be in the interest of national defense; or
              (3) The contract is related to improvement of equipment that is in development or production.
              (b) Application. This authority may be used for acquisitions of test articles and associated support services from a designated foreign source under the DoD Foreign Comparative Testing Program.
              (c) Application for brand-name descriptions.

              (2) Notwithstanding FAR 6.302-1(c)(2), in accordance with section 888(a) of the National Defense Authorization Act for Fiscal Year 2017 (Pub. L. 114-328), the justification and approval addressed in FAR 6.303 is required in order to use brand name or equal descriptions.
              (d) Limitations. Follow the procedures at PGI 206.302-1(d) prior to soliciting a proposal without providing for full and open competition under this authority.
              (S-70) Application for proprietary specifications or standards. In accordance with section 888(a) of the National Defense Authorization Act for Fiscal Year 2017 (Pub. L. 114-328), the justification and approval addressed in FAR 6.303 is required in order to use proprietary specifications and standards.
              [56 FR 36303, July 31, 1991, as amended at 57 FR 14992, Apr. 23, 1992; 58 FR 28463, May 13, 1993; 69 FR 74991, Dec. 15, 2004; 80 FR 21657, Apr. 20, 2015; 84 FR 25192, May 31, 2019]

              206.302-2
              Unusual and compelling urgency.
              (b) Application. For guidance on circumstances under which use of this authority may be appropriate, see PGI 206.302-2(b).
              [69 FR 74991, Dec. 15, 2004]

              206.302-3
              Industrial mobilization, engineering, developmental, or research capability, or expert services.

              206.302-3-70
              Solicitation provision.
              Use the provision at 252.206-7000, Domestic Source Restriction, in all solicitations that are restricted to domestic sources under the authority of FAR 6.302-3.

              206.302-4
              International agreement.
              (c) Limitations. Pursuant to 10 U.S.C. 2304(f)(2)(E), the justifications and approvals described in FAR 6.303 and 6.304 are not required if the head of the contracting activity prepares a document that describes the terms of an agreement or treaty or the written directions, such as a Letter of Offer and Acceptance, that have the effect of requiring the use of other than competitive procedures for the acquisition.
              [63 FR 67803, Dec. 9, 1998]

              206.302-5
              Authorized or required by statute.
              (b) Application. Agencies may use this authority to—
              (i) Acquire supplies and services from military exchange stores outside the United States for use by the armed forces outside the United States in accordance with 10 U.S.C. 2424(a) and subject to the limitations of 10 U.S.C. 2424(b). The limitations of 10 U.S.C. 2424(b) (1) and (2) do not apply to the purchase of soft drinks that are manufactured in the United States. For the purposes of 10 U.S.C. 2424, soft drinks manufactured in the United States are brand name carbonated sodas, manufactured in the United States, as evidenced by product markings.
              (ii) Acquire police, fire protection, airfield operation, or other community services from local governments at military installations to be closed under the circumstances in 237.7401 (Section 2907 of Fiscal Year 1994 Defense Authorization Act (Pub. L. 103-160)).
              (c) Limitations. (i) 10 U.S.C. 2361 precludes use of this exception for awards to colleges or universities for the performance of research and development, or for the construction of any research or other facility, unless—
              (A) The statute authorizing or requiring award specifically—
              (1) States that the statute modifies or supersedes the provisions of 10 U.S.C. 2361,
              (2) Identifies the particular college or university involved, and
              (3) States that award is being made in contravention of 10 U.S.C. 2361(a); and
              (B) The Secretary of Defense provides Congress written notice of intent to award. The contract cannot be awarded until 180 days have elapsed since the date Congress received the notice of intent to award. Contracting activities must submit a draft notice of intent with supporting documentation through channels to the Director of Defense Procurement and Acquisition Policy, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics).
              (ii) The limitation in paragraph (c)(i) of this subsection applies only if the statute authorizing or requiring award was enacted after September 30, 1989.
              (iii) Subsequent statutes may provide different or additional constraints on the award of contracts to specified colleges and universities. Contracting officers should consult legal counsel on a case-by-case basis.
              [56 FR 36303, July 31, 1991, as amended at 57 FR 14992, Apr. 23, 1992; 58 FR 28463, May 13, 1993; 59 FR 36089, July 15, 1994; 60 FR 29497, June 5, 1995; 60 FR 40107, Aug. 7, 1995; 65 FR 39704, June 27, 2000; 68 FR 7439, Feb. 14, 2003]

              206.302-7
              Public interest.
              (c) Limitations. For the defense agencies, the written determination to use this authority must be made by the Secretary of Defense.

              206.303
              Justifications.

              206.303-1
              Requirements.
              (a) In accordance with section 823 of the National Defense Authorization Act for Fiscal Year 2020 (Pub. L. 116-92), no justification and approval is required for a sole-source contract under the 8(a) authority (15 U.S.C. 637(a)) for an amount not exceeding $100 million.

              (b) In lieu of FAR 6.303-1(b), in accordance with section 823 of the National Defense Authorization Act for Fiscal Year 2020 (Pub. L. 116-92), contracting officers shall not award a sole source contract under the 8(a) authority (15 U.S.C. 637(a)) for an amount exceeding $100 million unless—
              (1) The contracting officer justifies the use of a sole source contract in writing in accordance with FAR 6.303-2;
              (2) The justification is approved in accordance with 206.304(a)(S-71); and
              (3) The justification and related information are made public after award in accordance with FAR 6.305.
              [85 FR 34529, June 5, 2020]

              206.303-2
              Content.
              (b)(i) In lieu of the threshold at FAR 6.303-2(b), each justification shall include the information at FAR 6.303-2(b), except for sole-source 8(a) contracts over $100 million (see paragraph (d) of this section).
              (ii) Include the information required by PGI 206.303-2(b)(i) in justifications citing the authority at FAR 6.302-1.
              (d) In lieu of the threshold at FAR 6.303-2(d), each justification for a sole-source 8(a) contract over $100 million shall include the information at FAR 6.303-2(d).
              [80 FR 21657, Apr. 20, 2015, as amended at 85 FR 34529, June 5, 2020]

              206.303-70
              Acquisitions in support of operations in Afghanistan.
              The justification and approval addressed in FAR 6.303 is not required for acquisitions conducted using a procedure specified in 225.7703-1(a).
              [73 FR 53152, Sept. 15, 2008, as amended at 78 FR 59856, Sept. 30, 2013]

              206.304
              Approval of the justification.
              (a)(4) The Under Secretary of Defense (Acquisition, Technology, and Logistics) may delegate this authority to—
              (A) An Assistant Secretary of Defense; or
              (B) For a defense agency, an officer or employee serving in, assigned, or detailed to that agency who—
              (1) If a member of the armed forces, is serving in a rank above brigadier general or rear admiral (lower half); or
              (2) If a civilian, is serving in a position with a grade under the General Schedule (or any other schedule for civilian officers or employees) that is comparable to or higher than the grade of major general or rear admiral.
              (S-70) For a noncompetitive follow-on acquisition to a previous award for the same supply or service supported by a justification for other than full and open competition citing the authority at FAR 6.302-1, follow the procedures at PGI 206.304(a)(S-70).
              (S-71) In accordance with section 823 of the National Defense Authorization Act for Fiscal Year 2020 (Pub. L. 116-92), the head of the procuring activity is the approval authority for a proposed sole-source 8(a) contract exceeding $100 million. This authority may only be delegated to an officer or employee who—
              (1) If a member of the armed forces, is serving in a rank above brigadier general or rear admiral (lower half); or
              (2) If a civilian, is serving in a position with a grade under the General Schedule (or any other schedule for civilian officers or employees) that is comparable to or higher than the grade of major general or rear admiral.
              [61 FR 10285, Mar. 13, 1995, as amended at 61 FR 50451, Sept. 26, 1996; 65 FR 39704, June 27, 2000; 80 FR 21657, Apr. 20, 2015; 85 FR 34529, June 5, 2020]

              206.305
              Availability of the justification.
              See PGI 206.305 for further guidance on the requirements for preparing, obtaining approval, and posting justification and approval documents for contracts awarded using the authority of FAR 6.302-2.
              [80 FR 67255, Oct. 30, 2015]

          Pt. 207
          PART 207—ACQUISITION PLANNING

              Subpart 207.1—Acquisition Plans
              Sec.
              207.102
              Policy.
              207.103
              Agency-head responsibilities.
              207.104
              General procedures.
              207.105
              Contents of written acquisition plans.
              207.106
               Additional requirements for major systems.
              207.170
              [Reserved]
              207.171
              Component breakout.
              207.171-1
              Scope.
              207.171-2
              Definition.
              207.171-3
              Policy.

              207.171-4
              Procedures.
              207.172
              Human research.

              Subpart 207.3—Contractor Versus Government Performance
              207.302
              Policy.

              Subpart 207.4—Equipment Lease or Purchase
              207.401
              Acquisition considerations.
              207.470
              Statutory requirements.
              207.471
              Funding requirements.

              Subpart 207.5—Inherently Governmental Functions
              207.500
              Scope of subpart.
              207.503
              Policy.

              Subpart 207.70—Buy-to-Budget—Additional Quantities of End Items
              207.7001
              Definition.
              207.7002
              Authority to acquire additional quantities of end items.
              207.7003
              Limitation.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36305, July 31, 1991, unless otherwise noted.

            Subpart 207.1—Acquisition Plans

              207.102
              Policy.
              (a)(1) See 212.102 regarding requirements for a written determination that the commercial item definition has been met when using FAR Part 12 procedures.
              [73 FR 4114, Jan. 24, 2008]

              207.103
              Agency-head responsibilities.
              (d)(i) Prepare written acquisition plans for—
              (A) Acquisitions for development, as defined in FAR 35.001, when the total cost of all contracts for the acquisition program is estimated at $10 million or more;
              (B) Acquisitions for production or services when the total cost of all contracts for the acquisition program is estimated at $50 million or more for all years or $25 million or more for any fiscal year; and
              (C) Any other acquisition considered appropriate by the department or agency.
              (ii) Written plans are not required in acquisitions for a final buy out or one-time buy. The terms “final buy out” and “one-time buy” refer to a single contract that covers all known present and future requirements. This exception does not apply to a multiyear contract or a contract with options or phases.
              (e) Prepare written acquisition plans for acquisition programs meeting the thresholds of paragraphs (d)(i)(A) and (B) of this section on a program basis. Other acquisition plans may be written on either a program or an individual contract basis.
              (g) The program manager, or other official responsible for the program, has overall responsibility for acquisition planning.
              (h) For procurement of conventional ammunition, as defined in DoDD 5160.65, Single Manager for Conventional Ammunition (SMCA), the SMCA will review the acquisition plan to determine if it is consistent with retaining national technology and industrial base capabilities in accordance with 10 U.S.C. 2304(c)(3) and Section 806 of Public Law 105-261. The department or agency—
              (i) Shall submit the acquisition plan to the address in PGI 207.103(h); and
              (ii) Shall not proceed with the procurement until the SMCA provides written concurrence with the acquisition plan. In the case of a non-concurrence, the SMCA will resolve issues with the Army Office of the Executive Director for Conventional Ammunition.
              [71 FR 53045, Sept. 8, 2006, as amended at 71 FR 58537, Oct. 4, 2006]

              207.104
              General procedures.
              In developing an acquisition plan, agency officials shall take into account the requirement for scheduling and conducting a Peer Review in accordance with 201.170.
              [74 FR 37626, July 29, 2009]

              207.105
              Contents of written acquisition plans.
              In addition to the requirements of FAR 7.105, planners shall follow the procedures at PGI 207.105.
              [71 FR 53045, Sept. 8, 2006]

              207.106
              Additional requirements for major systems.
              (b)(1)(A) The contracting officer is prohibited by 10 U.S.C. 2305(d)(4)(A) from requiring offers for development or production of major systems that would enable the Government to use technical data to competitively reprocure identical items or components of the system if the item or component were developed exclusively at private expense, unless the contracting officer determines that—
              (1) The original supplier of the item or component will be unable to satisfy program schedule or delivery requirements;
              (2) Proposals by the original supplier of the item or component to meet mobilization requirements are insufficient to meet the agency's mobilization needs; or
              (3) The Government is otherwise entitled to unlimited rights in technical data.

              (B) If the contracting officer makes a determination, under paragraphs (b)(1)(A) (1) and (2) of this section, for a competitive solicitation, 10 U.S.C. 2305(d)(4)(B) requires that the evaluation of items developed at private expense be based on an analysis of the total value, in terms of innovative design, life-cycle costs, and other pertinent factors, of incorporating such items in the system.
              (S-70)(1) In accordance with section 802(a) of the National Defense Authorization Act for Fiscal Year 2007 (Pub. L. 109-364) and DoD policy requirements, acquisition plans for major weapon systems and subsystems of major weapon systems shall—
              (i) Assess the long-term technical data and computer software needs of those systems and subsystems; and
              (ii) Establish acquisition strategies that provide for the technical data and computer software deliverables and associated license rights needed to sustain those systems and subsystems over their life cycle. The strategy may include—
              (A) The development of maintenance capabilities within DoD; or
              (B) Competition for contracts for sustainment of the systems or subsystems.
              (2) Assessments and corresponding acquisition strategies developed under this section shall—
              (i) Be developed before issuance of a solicitation for the weapon system or subsystem;

              (ii) In accordance with 10 U.S.C. 2443, to emphasize reliability and maintainability in weapon system design, ensure that reliability and maintainability are included in the performance attributes of the key performance parameters on sustainment during the development of capabilities requirements. For additional guidance see PGI 207.105(b)(14)(ii)(2);

              (iii) Address the merits of including a priced contract option for the future delivery of technical data and computer software, and associated license rights, that were not acquired upon initial contract award;
              (iv) Address the potential for changes in the sustainment plan over the life cycle of the weapon system or subsystem; and
              (v) Apply to weapon systems and subsystems that are to be supported by performance-based logistics arrangements as well as to weapon systems and subsystems that are to be supported by other sustainment approaches.

              (ii) In accordance with 10 U.S.C. 2443, to emphasize reliability and maintainability in weapon system design, ensure that reliability and maintainability are included in the performance attributes of the key performance parameters on sustainment during the development of capabilities requirements. For additional guidance see PGI 207.105(b)(14)(ii)(2);

              (S-71) See 209.570 for policy applicable to acquisition strategies that consider the use of lead system integrators.
              (S-72)(1) In accordance with section 202 of the Weapon Systems Acquisition Reform Act of 2009 (Pub. L. 111-23), acquisition plans for major defense acquisition programs as defined in 10 U.S.C. 2430, shall include measures that—

              (i) Ensure competition, or the option of competition, at both the prime contract level and subcontract level (at such tier or tiers as are appropriate) throughout the program life cycle as a means to improve contractor performance; and
              (ii) Document the rationale for the selection of the appropriate subcontract tier or tiers under paragraph (S-72)(1)(i) of this section, and the measures which will be employed to ensure competition, or the option of competition.
              (2) Measures to ensure competition, or the option of competition, may include, but are not limited to, cost-effective measures intended to achieve the following:
              (i) Competitive prototyping.
              (ii) Dual-sourcing.
              (iii) Unbundling of contracts.
              (iv) Funding of next-generation prototype systems or subsystems.
              (v) Use of modular, open architectures to enable competition for upgrades.
              (vi) Use of build-to-print approaches to enable production through multiple sources.
              (vii) Acquisition of complete technical data packages.
              (viii) Periodic competitions for subsystem upgrades.
              (ix) Licensing of additional suppliers.
              (x) Periodic system or program reviews to address long-term competitive effects of program decisions.
              (3) In order to ensure fair and objective “make-or-buy” decisions by prime contractors, acquisition strategies and resultant solicitations and contracts shall—
              (i) Require prime contractors to give full and fair consideration to qualified sources other than the prime contractor for the development or construction of major subsystems and components of major weapon systems;
              (ii) Provide for Government surveillance of the process by which prime contractors consider such sources and determine whether to conduct such development or construction in-house or through a subcontract; and
              (iii) Provide for the assessment of the extent to which the prime contractor has given full and fair consideration to qualified sources in sourcing decisions as a part of past performance evaluations.
              (4) Whenever a source-of-repair decision results in a plan to award a contract for the performance of maintenance and sustainment services on a major weapon system, to the maximum extent practicable and consistent with statutory requirements, the acquisition plan shall prescribe that award will be made on a competitive basis after giving full consideration to all sources (including sources that partner or subcontract with public or private sector repair activities).
              (5) In accordance with 10 U.S.C. 2443, acquisition plans for engineering manufacturing and development and production of major systems as defined in 10 U.S.C. 2302 and 2302d and for major defense acquisition programs as defined in 202.101, shall include performance measures that are developed using best practices for responding to the positive or negative performance of a contractor for the engineering and manufacturing development or production of a weapon system, including embedded software. At a minimum the contracting officer shall—
              (i) Encourage the use of incentive fees and penalties as appropriate; and
              (ii) Allow the program manager or comparable requiring activity official exercising program management responsibilities, to base determinations of a contractor's performance on reliability and maintainability data collected during the program. Such data collection and associated evaluation metrics shall be described in detail in the contract; and to the maximum extent practicable, the data shall be shared with appropriate contractor and Government organizations.

              (S-73) In accordance with section 815 of the National Defense Authorization Act for Fiscal Year 2009 (Pub. L. 110-417) and DoD policy requirements, acquisition plans for major weapons systems shall include a plan for the preservation and storage of special tooling associated with the production of hardware for major defense acquisition programs through the end of the service life of the related weapons system. The plan shall include the identification of any contract clauses, facilities, and funding required for the preservation and storage of such tooling. The Undersecretary of Defense for Acquisition, Technology, and Logistics (USD (AT&L)) may waive this requirement if USD (AT&L) determines that it is in the best interest of DoD.
              (S-74) When selecting contract type, see 234.004 (section 811 of the National Defense Authorization Act for Fiscal Year 2013 (Pub. L. 112-239)).
              [56 FR 36305, July 31, 1991, as amended at 72 FR 51188, Sept. 6, 2007; 73 FR 1824, Jan. 10, 2008; 74 FR 68701, Dec. 29, 2009; 75 FR 8273, Feb. 24, 2010; 76 FR 11363, Mar. 2, 2011; 79 FR 4632, Jan. 29, 2014; 84 FR 58333, Oct. 31, 2019]

              207.170
              [Reserved]

              207.171
              Component breakout.

              207.171-1
              Scope.
              (a) This section provides policy for breaking out components of end items for future acquisitions so that the Government can purchase the components directly from the manufacturer or supplier and furnish them to the end item manufacturer as Government-furnished material.
              (b) This section does not apply to—
              (1) The initial decisions on Government-furnished equipment or contractor-furnished equipment that are made at the inception of an acquisition program; or
              (2) Breakout of parts for replenishment (see appendix E).
              [71 FR 14102, Mar. 21, 2006]

              207.171-2
              Definition.

                Component, as used in this section, includes subsystems, assemblies, subassemblies, and other major elements of an end item; it does not include elements of relatively small annual acquisition value.
              [71 FR 14102, Mar. 21, 2006]

              207.171-3
              Policy.
              DoD policy is to break out components of weapons systems or other major end items under certain circumstances.
              (a) When it is anticipated that a prime contract will be awarded without adequate price competition, and the prime contractor is expected to acquire any component without adequate price competition, the agency shall break out that component if—
              (1) Substantial net cost savings probably will be achieved; and
              (2) Breakout action will not jeopardize the quality, reliability, performance, or timely delivery of the end item.
              (b) Even when either or both the prime contract and the component will be acquired with adequate price competition, the agency shall consider breakout of the component if substantial net cost savings will result from—
              (1) Greater quantity acquisitions; or
              (2) Such factors as improved logistics support (through reduction in varieties of spare parts) and economies in operations and training (through standardization of design).
              (c) Breakout normally is not justified for a component that is not expected to exceed $1 million for the current year's requirement.
              [71 FR 14102, Mar. 21, 2006]

              207.171-4
              Procedures.
              Agencies shall follow the procedures at PGI 207.171-4 for component breakout.
              [71 FR 14102, Mar. 21, 2006]

              207.172
              Human research.
              Any DoD component sponsoring research involving human subjects—
              (a) Is responsible for oversight of compliance with 32 CFR Part 219, Protection of Human Subjects; and
              (b) Must have a Human Research Protection Official, as defined in the clause at 252.235-7004, Protection of Human Subjects, and identified in the DoD component's Human Research Protection Management Plan. This official is responsible for the oversight and execution of the requirements of the clause at 252.235-7004 and shall be identified in acquisition planning.
              [74 FR 37648, July 29, 2009]

            Subpart 207.3—Contractor Versus Government Performance

              Source:
              81 FR 36473, June 7, 2016, unless otherwise noted.

              207.302
              Policy.

              See PGI 207.302 for information on the Governmentwide moratorium and restrictions on public-private competitions conducted pursuant to Office of Management and Budget (OMB) Circular A-76.

            Subpart 207.4—Equipment Lease or Purchase

              207.401
              Acquisition considerations.
              If the equipment will be leased for more than 60 days, the requiring activity must prepare and provide the contracting officer with the justification supporting the decision to lease or purchase.

              207.470
              Statutory requirements.
              (a) Requirement for authorization of certain contracts relating to vessels, aircraft, and combat vehicles. The contracting officer shall not enter into any contract for the lease or charter of any vessel, aircraft, or combat vehicle, or any contract for services that would require the use of the contractor's vessel, aircraft, or combat vehicle, unless the Secretary of the military department concerned has satisfied the requirements of 10 U.S.C. 2401, when—
              (1) The contract will be a long-term lease or charter as defined in 10 U.S.C. 2401(d)(1); or
              (2) The terms of the contract provide for a substantial termination liability as defined in 10 U.S.C. 2401(d)(2). Also see PGI 207.470.
              (b) Limitation on contracts with terms of 18 months or more. As required by 10 U.S.C. 2401a, the contracting officer shall not enter into any contract for any vessel, aircraft, or vehicle, through a lease, charter, or similar agreement with a term of 18 months or more, or extend or renew any such contract for a term of 18 months or more, unless the head of the contracting activity has—
              (1) Considered all costs of such a contract (including estimated termination liability); and
              (2) Determined in writing that the contract is in the best interest of the Government.
              (c) Leasing of commercial vehicles and associated equipment. Except as provided in paragraphs (a) and (b) of this section, the contracting officer may use leasing in the acquisition of commercial vehicles and associated equipment whenever the contracting officer determines that leasing of such vehicles is practicable and efficient (10 US.C. 2401a).
              [61 FR 16879, Apr. 18, 1996, as amended at 61 FR 50451, Sept. 26, 1996; 74 FR 34266, July 15, 2009]

              207.471
              Funding requirements.
              (a) Fund leases in accordance with DoD Financial Management Regulation (FMR) 7000.14-R, Volume 2A, Chapter 1.
              (b) DoD leases are either capital leases or operating leases. See FMR 7000.14-R, Volume 4, Chapter 6, section 060206.
              (c) Use procurement funds for capital leases, as these are essentially installment purchases of property.
              [64 FR 31732, June 14, 1999, as amended at 66 FR 55121, Nov. 1, 2001; 71 FR 53045, Sept. 8, 2006; 76 FR 76319, Dec. 7, 2011]

            Subpart 207.5—Inherently Governmental Functions

              Source:
              70 FR 14573, Mar. 23, 2005, unless otherwise noted.

              207.500
              Scope of subpart.
              This subpart also implements 10 U.S.C. 2383.

              207.503
              Policy.
              (e) The written determination required by FAR 7.503(e), that none of the functions to be performed by contract are inherently governmental—
              (i) Shall be prepared using DoD Instruction 1100.22, Guidance for Determining Workforce Mix; and
              (ii) Shall include a determination that none of the functions to be performed are exempt from private sector performance, as addressed in DoD Instruction 1100.22.
              (S-70) Contracts for acquisition functions.

              (1) In accordance with 10 U.S.C. 2383, the head of an agency may enter into a contract for performance of the acquisition functions closely associated with inherently governmental functions that are listed at FAR 7.503(d) only if—
              (i) The contracting officer determines that appropriate military or civilian DoD personnel—

              (A) Cannot reasonably be made available to perform the functions;

              (B) Will oversee contractor performance of the contract; and
              (C) Will perform all inherently governmental functions associated with the functions to be performed under the contract; and
              (ii) The contracting officer ensures that the agency addresses any potential organizational conflict of interest of the contractor in the performance of the functions under the contract (see FAR Subpart 9.5).
              (2) See related information at PGI 207.503(S-70).
              [70 FR 14573, Mar. 23, 2005, as amended at 71 FR 14101, Mar. 21, 2006; 73 FR 1826, Jan. 10, 2008]

            Subpart 207.70—Buy-to-Budget—Additional Quantities of End Items

              Source:
              68 FR 43331, July 22, 2003, unless otherwise noted.

              207.7001
              Definition.

                End item, as used in this subpart, means a production product assembled, completed, and ready for issue or deployment.

              207.7002
              Authority to acquire additional quantities of end items.
              10 U.S.C. 2308 authorizes DoD to use funds available for the acquisition of an end item to acquire a higher quantity of the end item than the quantity specified in a law providing for the funding of that acquisition, if the head of an agency determines that—
              (a) The agency has an established requirement for the end item that is expected to remain substantially unchanged throughout the period of the acquisition;
              (b) It is possible to acquire the higher quantity of the end item without additional funding because of production efficiencies or other cost reductions;
              (c) The amount of funds used for the acquisition of the higher quantity of the end item will not exceed the amount provided under that law for the acquisition of the end item; and
              (d) The amount provided under that law for the acquisition of the end item is sufficient to ensure that each unit of the end item acquired within the higher quantity is fully funded as a complete end item.

              207.7003
              Limitation.
              For noncompetitive acquisitions, the acquisition of additional quantities is limited to not more than 10 percent of the quantity approved in the justification and approval prepared in accordance with FAR part 6 for the acquisition of the end item.

          Pt. 208
          PART 208—REQUIRED SOURCES OF SUPPLIES AND SERVICES

            Sec.
            208.002
            Priorities for use of mandatory Government sources.

              Subpart 208.4—Federal Supply Schedules
              208.404
              Use of Federal Supply Schedules.
              208.405
              Ordering procedures for Federal Supply Schedules.
              208.405-6
              Limiting sources.
              208.406
              Ordering activity responsibilities.
              208.406-1
              Order placement.

              Subpart 208.6—Acquisition From Federal Prison Industries, Inc.
              208.602-70
              Acquisition of items for which FPI has a significant market share.

              Subpart 208.7—Acquisition From Nonprofit Agencies Employing People Who Are Blind or Severely Disabled
              208.705
              Procedures.

              Subpart 208.70—Coordinated Acquisition
              208.7000
              Scope of subpart.
              208.7001
              Definitions.
              208.7002
              Assignment authority.
              208.7002-1
              Acquiring department responsibilities.
              208.7002-2
              Requiring department responsibilities.
              208.7003
              Applicability.
              208.7003-1
              Assignments under integrated materiel management (IMM).
              208.7003-2
              Assignments under coordinated acquisition.
              208.7004
              Procedures.
              208.7005
              Military interdepartmental purchase requests.
              208.7006
              Coordinated acquisition assignments.

              Subpart 208.71—Acquisition for National Aeronautics and Space Administration (NASA)
              208.7100
              Authorization.

              208.7101
              Policy.
              208.7102
              Procedures.

              Subpart 208.72 [Reserved]
              208.7201
              Definitions.
              208.7202
              General.
              208.7203
              Authority.
              208.7204
              Procedures.

              Subpart 208.73—Use of Government-Owned Precious Metals
              208.7301
              Definitions.
              208.7302
              Policy.
              208.7303
              Procedures.
              208.7304
              Refined precious metals.
              208.7305
              Contract clause.

              Subpart 208.74—Enterprise Software Agreements
              208.7400
              Scope of subpart.
              208.7401
              Definitions.
              208.7402
              General.
              208.7403
              Acquisition procedures.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36306, July 31, 1991, unless otherwise noted.

            208.002
            Priorities for use of mandatory Government sources.
            (a)(1) Supplies. (i) See the guidance at PGI 208.002(a)(1)(i) to obtain information on available items in DoD's property inventories.
            (v) See subpart 208.70, Coordinated Acquisition, and subpart 208.74, Enterprise Software Agreements.
            [85 FR 34530, June 5, 2020]

            Subpart 208.4—Federal Supply Schedules

              208.404
              Use of Federal Supply Schedules.
              (a)(i) If only one offer is received in response to an order exceeding the simplified acquisition threshold that is placed on a competitive basis, the procedures at 215.371 apply.
              (ii) Departments and agencies shall comply with the review, approval, and reporting requirements established in accordance with subpart 217.7 when placing orders for supplies or services in amounts exceeding the simplified acquisition threshold.
              (iii) When a schedule lists both foreign and domestic items that will meet the needs of the requiring activity, the ordering office must apply the procedures of part 225 and FAR part 25, Foreign Acquisition. When purchase of an item of foreign origin is specifically required, the requiring activity must furnish the ordering office sufficient information to permit the determinations required by part 225 and FAR part 25 to be made.
              (iv) Use the provisions at 252.215-7007, Notice of Intent to Resolicit, and 252.215-7008, Only One Offer, as prescribed at 215.371-6 and 215.408(3), respectively.
              [77 FR 39137, June 29, 2012, as amended at 78 FR 38235, June 26, 2013; 80 FR 67255, Oct. 30, 2015; 83 FR 30825, June 29, 2018]

              208.405
              Ordering procedures for Federal Supply Schedules.
              (1) Include an evaluation factor regarding supply chain risk (see subpart 239.73) when acquiring information technology, whether as a service or as a supply, that is a covered system, is a part of a covered system, or is in support of a covered system, as defined in 239.7301.
              (2) See 215.101-2-70 for the limitations and prohibitions on the use of the lowest price technically acceptable source selection process, which are applicable to orders placed under Federal Supply Schedules.
              (3) See 217.7801 for the prohibition on the use of reverse auctions for personal protective equipment and aviation critical safety items.
              [80 FR 67251, Oct. 30, 2015, as amended at 84 FR 50788, Sept. 26, 2019]

              208.405-6
              Limiting sources.
              For an order or blanket purchase agreement (BPA) exceeding the simplified acquisition threshold that is a follow-on to an order or BPA for the same supply or service previously issued based on a limiting sources justification citing the authority at FAR 8.405-6(a)(1)(i)(B) or (C), follow the procedures at PGI 208.405-6.
              [80 FR 21657, Apr. 20, 2015]

              § 208.406
              Ordering activity responsibilities.

              § 208.406-1
              Order placement.
              Follow the procedures at PGI 208.406-1 when ordering from schedules.
              [71 FR 14107, Mar. 21, 2006]

            Subpart 208.6—Acquisition From Federal Prison Industries, Inc.

              208.602-70
              Acquisition of items for which FPI has a significant market share.
              (a) Scope. This subsection implements Section 827 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181).
              (b) Definition. Item for which FPI has a significant market share, as used in this subsection, means an item for which FPI's share of the DoD market for the federal supply class including that item is greater than 5 percent, as determined by DoD in consultation with the Office of Federal Procurement Policy. A list of the federal supply classes of items for which FPI has a significant market share is maintained at http://www.acq.osd.mil/dpap/cpic/cp/specific_policy_areas.html#federal_prison.

              (c) Policy. (1) When acquiring an item for which FPI has a significant market share—
              (i) Acquire the item using—
              (A) Competitive procedures (e.g., the procedures in FAR 6.102, the set-aside procedures in FAR Subpart 19.5, or competition conducted in accordance with FAR Part 13); or
              (B) The fair opportunity procedures in FAR 16.505, if placing an order under a multiple award delivery-order contract; and
              (ii) Include FPI in the solicitation process, consider a timely offer from FPI, and make an award in accordance with the policy at FAR 8.602(a)(4)(ii) through (v).
              (2) When acquiring an item for which FPI does not have a significant market share, acquire the item in accordance with the policy at FAR 8.602.
              [73 FR 46817, Aug. 12, 2008]

            Subpart 208.7—Acquisition From Nonprofit Agencies Employing People Who Are Blind or Severely Disabled

              208.705
              Procedures.
              Follow the procedures at PGI 208.705 when placing orders with central nonprofit agencies.
              [71 FR 39004, July 11, 2006]

            Subpart 208.70—Coordinated Acquisition

              208.7000
              Scope of subpart.
              This subpart prescribes policy and procedures for acquisition of items for which contracting responsibility is assigned to one or more of the departments/agencies or the General Services Administration. Contracting responsibility is assigned through—
              (a) The Coordinated Acquisition Program (commodity assignments are listed in PGI 208.7006); or
              (b) The Integrated Materiel Management Program (assignments are in DoD 4140.26-M, Defense Integrated Materiel Management Manual for Consumable Items).
              [56 FR 36306, July 31, 1991, as amended at 67 FR 77936, Dec. 20, 2002; 71 FR 39004, July 11, 2006]

              208.7001
              Definitions.
              For purposes of this subpart—

                Acquiring department means the department, agency, or General Services Administration which has contracting responsibility under the Coordinated Acquisition Program.

                Integrated materiel management means assignment of acquisition management responsibility to one department, agency, or the General Services Administration for all of DoD's requirements for the assigned item. Acquisition management normally includes computing requirements, funding, budgeting, storing, issuing, cataloging, standardizing, and contracting functions.

                Requiring department means the department or agency which has the requirement for an item.

              208.7002
              Assignment authority.
              (a) Under the DoD Coordinated Acquisition Program, contracting responsibility for certain commodities is assigned to a single department, agency, or the General Services Administration (GSA). Commodity assignments are made—
              (1) To the departments and agencies, by the Deputy Under Secretary of Defense (Logistics);
              (2) To GSA, through agreement with GSA, by the Deputy Under Secretary of Defense (Logistics);
              (3) Outside the contiguous United States, by the Unified Commanders; and
              (4) For acquisitions to be made in the contiguous United States for commodities not assigned under paragraphs (a)(1), (2), or (3) of this section, by agreement of agency heads (10 U.S.C. 2311).
              (i) Agreement may be on either a one-time or a continuing basis. The submission of a military interdepartmental purchase request (MIPR) by a requiring activity and its acceptance by the contracting activity of another department, even though based on an oral communication, constitutes a one-time agreement.
              (ii) Consider repetitive delegated acquisition responsibilities for coordinated acquisition assignment. If not considered suitable for coordinated acquisition assignment, formalize continuing agreements and distribute them to all activities concerned.
              (b) Under the Integrated Materiel Management Program, assignments are made by the Deputy Under Secretary of Defense (Logistics)—
              (1) To the departments and agencies; and
              (2) To GSA, through agreement with GSA.
              [56 FR 36306, July 31, 1991, as amended at 64 FR 51075, Sept. 21, 1999; 70 FR 35544, June 21, 2005]

              208.7002-1
              Acquiring department responsibilities.
              See PGI 208.7002-1 for the acquiring department's responsibilities.
              [71 FR 39004, July 11, 2006]

              208.7002-2
              Requiring department responsibilities.
              See PGI 208.7002-2 for the requiring department's responsibilities.
              [71 FR 39004, July 11, 2006]

              208.7003
              Applicability.

              208.7003-1
              Assignments under integrated materiel management (IMM).
              (a) Acquire all items assigned for IMM from the IMM manager except—
              (1) Items purchased under circumstances of unusual and compelling urgency as defined in FAR 6.302-2. After such a purchase is made, the requiring activity must send one copy of the contract and a statement of the emergency to the IMM manager;
              (2) Items for which the IMM manager assigns a supply system code for local purchase or otherwise grants authority to purchase locally; or
              (3) When purchase by the requiring activity is in the best interest of the Government in terms of the combination of quality, timeliness, and cost that best meets the requirement. This exception does not apply to items—
              (i) Critical to the safe operation of a weapon system;
              (ii) With special security characteristics; or
              (iii) Which are dangerous (e.g., explosives, munitions).
              (b) Follow the procedures at PGI 208.7003-1(b) when an item assigned for IMM is to be acquired by the requiring department in accordance with paragraph (a)(3) of this subsection.
              [60 FR 61593, Nov. 30, 1995, as amended at 64 FR 51075, Sept. 21, 1999; 64 FR 61031, Nov. 9, 1999; 71 FR 39004, July 11, 2006]

              208.7003-2
              Assignments under coordinated acquisition.
              Requiring departments must submit to the acquiring department all contracting requirements for items assigned for coordinated acquisition, except—
              (a) Items obtained through the sources in FAR 8.002(a)(1) (i) through (vii);
              (b) Items obtained under 208.7003-1(a);

              (c) Requirements not in excess of the simplified acquisition threshold in FAR part 2, when contracting by the requiring department is in the best interest of the Government;
              (d) In an emergency. When an emergency purchase is made, the requiring department must send one copy of the contract and a statement of the emergency to the contracting activity of the acquiring department;
              (e) Requirements for which the acquiring department's contracting activity delegates contracting authority to the requiring department;
              (f) Items in a research and development stage (as described in FAR part 35). Under this exception, the military departments may contract for research and development requirements, including quantities for testing purposes and items undergoing in-service evaluation (not yet in actual production, but beyond prototype). Generally, this exception applies only when research and development funds are used.
              (g) Items peculiar to nuclear ordnance material where design characteristics or test-inspection requirements are controlled by the Department of Energy (DoE) or by DoD to ensure reliability of nuclear weapons.
              (1) This exception applies to all items designed for and peculiar to nuclear ordnance regardless of agency control, or to any item which requires test or inspection conducted or controlled by DoE or DoD.
              (2) This exception does not cover items used for both nuclear ordnance and other purposes if the items are not subject to the special testing procedures.
              (h) Items to be acquired under FAR 6.302-6 (national security requires limitation of sources);
              (i) Items to be acquired under FAR 6.302-1 (supplies available only from the original source for follow-on contract);
              (j) Items directly related to a major system and which are design controlled by and acquired from either the system manufacturer or a manufacturer of a major subsystem;
              (k) Items subject to rapid design changes, or to continuous redesign or modification during the production and/or operational use phases, which require continual contact between industry and the requiring department to ensure that the item meets the requirements:
              (1) This exception permits the requiring department to contract for items of highly unstable design. For use of this exception, it must be clearly impractical, both technically and contractually, to refer the acquisition to the acquiring department. Anticipation that contracting by negotiation will be appropriate, or that a number of design changes may occur during contract performance is not in itself sufficient reason for using this exception.
              (2) This exception also applies to items requiring compatibility testing, provided such testing requires continual contact between industry and the requiring department;
              (l) Containers acquired only with items for which they are designed;
              (m) One-time buy of a noncataloged item.
              (1) This exception permits the requiring departments to contract for a nonrecurring requirement for a noncataloged item. This exception could cover a part or component for a prototype which may be stock numbered at a later date.
              (2) This exception does not permit acquisitions of recurring requirements for an item, based solely on the fact that the item is not stock numbered, nor may it be used to acquire items which have only slightly different characteristics than previously cataloged items.
              [56 FR 36306, July 31, 1991, as amended at 60 FR 61593, Nov. 30, 1995; 64 FR 51075, Sept. 21, 1999; 71 FR 69489, Dec. 1, 2006]

              208.7004
              Procedures.
              Follow the procedures at PGI 208.7004 for processing coordinated acquisition requirements.
              [71 FR 39005, July 11, 2006]

              208.7005
              Military interdepartmental purchase requests.
              Follow the procedures at—
              (a) PGI 253.208-1 when using DD Form 448, Military Interdepartmental Purchase Request; and
              (b) PGI 253.208-2 when using DD Form 448-2, Acceptance of MIPR.
              [71 FR 39005, July 11, 2006]

              208.7006
              Coordinated acquisition assignments.
              See PGI 208.7006 for coordinated acquisition assignments.
              [71 FR 39005, July 11, 2006]

            Subpart 208.71—Acquisition for National Aeronautics and Space Administration (NASA)

              208.7100
              Authorization.
              NASA is authorized by Public Law 85-568 to use the acquisition services, personnel, equipment, and facilities of DoD departments and agencies with their consent, with or without reimbursement, and on a similar basis to cooperate with the departments/agencies in the use of acquisition services, equipment, and facilities.

              208.7101
              Policy.
              Departments and agencies shall cooperate fully with NASA in making acquisition services, equipment, personnel, and facilities available on the basis of mutual agreement.
              [71 FR 39005, July 11, 2006]

              208.7102
              Procedures.
              Follow the procedures at PGI 208.7102 when contracting or performing services for NASA.
              [71 FR 39005, July 11, 2006]

            Subpart 208.72 [Reserved]

            Subpart 208.73—Use of Government-Owned Precious Metals

              208.7301
              Definitions.
              As used in this subpart—

                Defense Supply Center, Philadelphia (DSCP) means the Defense Logistics Agency field activity located at 700 Robbins Avenue, Philadelphia, PA 19111-5096, which is the assigned commodity integrated material manager for refined precious metals and is responsible for the storage and issue of such material.

                Refined precious metal means recovered silver, gold, platinum, palladium, iridium, rhodium, or ruthenium, in bullion, granulation or sponge form, which has been purified to at least .999 percentage of fineness.
              [56 FR 36306, July 31, 1991, as amended at 65 FR 14398, Mar. 16, 2000; 65 FR 52951, Aug. 31, 2000; 65 FR 58607 Sept. 29, 2000; 71 FR 39005, July 11, 2006]

              208.7302
              Policy.
              DoD policy is for maximum participation in the Precious Metals Recovery Program. DoD components shall furnish recovered precious metals contained in the DSCP inventory to production contractors rather than use contractor-furnished precious metals whenever the contracting officer determines it to be in the Government's best interest.
              [56 FR 36306, July 31, 1991, as amended at 65 FR 52951, Aug. 31, 2000; 71 FR 39005, July 11, 2006]

              208.7303
              Procedures.
              Follow the procedures at PGI 208.7303 for use of the Precious Metals Recovery Program.
              [71 FR 39005, July 11, 2006]

              208.7304
              Refined precious metals.
              See PGI 208.7304 for a list of refined precious metals managed by DSCP.
              [71 FR 39005, July 11, 2006]

              208.7305
              Contract clause.
              (a) Use the clause at 252.208-7000, Intent to Furnish Precious Metals as Government-Furnished Material, in all solicitations and contracts except—
              (1) When the contracting officer has determined that the required precious metals are not available from DSCP;
              (2) When the contracting officer knows that the items being acquired do not require precious metals in their manufacture; or
              (3) For acquisitions at or below the simplified acquisition threshold.
              (b) To make the determination in paragraph (a)(1) of this section, the contracting officer shall consult with the end item inventory manager and comply with the procedures in Chapter 11, DoD 4160.21-M, Defense Materiel Disposition Manual.
              [56 FR 36306, July 31, 1991, as amended at 64 FR 2596, Jan. 15, 1999; 65 FR 14398, Mar. 16, 2000; 65 FR 52952, Aug. 31, 2000]

            Subpart 208.74—Enterprise Software Agreements

              Source:
              67 FR 65511, Oct. 25, 2002, unless otherwise noted.

              208.7400
              Scope of subpart.
              This subpart prescribes policy and procedures for acquisition of commercial software and software maintenance, including software and software maintenance that is acquired—
              (a) As part of a system or system upgrade, where practicable;
              (b) Under a service contract;

              (c) Under a contract or agreement administered by another agency (e.g., under an interagency agreement);
              (d) Under a Federal Supply Schedule contract or blanket purchase agreement established in accordance with FAR 8.405; or
              (e) By a contractor that is authorized to order From a Government supply source pursuant to FAR 51.101.
              [67 FR 65511, Oct. 25, 2002, as amended at 71 FR 62559, Oct. 26, 2006; 78 FR 38235, June 26, 2013]

              208.7401
              Definitions.
              As used in this subpart—

                Enterprise software agreement means an agreement or a contract that is used to acquire designated commercial software or related services such as software maintenance.

                Enterprise Software Initiative means an initiative led by the DoD Chief Information Officer to develop processes for DoD-wide software asset management.

                Software maintenance means services normally provided by a software company as standard services at established catalog or market prices, e.g., the right to receive and use upgraded versions of software, updates, and revisions.
              [67 FR 65511, Oct. 25, 2002, as amended at 71 FR 39005, July 11, 2006]

              208.7402
              General.

              (1) Departments and agencies shall fulfill requirements for commercial software and related services, such as software maintenance, in accordance with the DoD Enterprise Software Initiative (ESI) (see Web site at http://www.don-imit.navy.mil/esi). ESI promotes the use of enterprise software agreements (ESAs) with contractors that allow DoD to obtain favorable terms and pricing for commercial software and related services. ESI does not dictate the products or services to be acquired.
              (2) Include an evaluation factor regarding supply chain risk (see subpart 239.73) when acquiring information technology, whether as a service or as a supply, that is a covered system, is a part of a covered system, or is in support of a covered system, as defined in 239.7301.
              [67 FR 65511, Oct. 25, 2002, as amended at 78 FR 69270, Nov. 18, 2013; 80 FR 67251, Oct. 30, 2015]

              208.7403
              Acquisition procedures.
              Follow the procedures at PGI 208.7403 when acquiring commercial software and related services.
              [71 FR 39005, July 11, 2006]

          Pt. 209
          PART 209—CONTRACTOR QUALIFICATIONS

              Subpart 209.1—Responsible Prospective Contractors
              Sec.
              209.101
              Definitions.
              209.104
              Standards.
              209.104-1
              General standards.
              209.104-4
              Subcontractor responsibility.
              209.104-70
              Solicitation provision.
              209.105
              Procedures.
              209.105-1
              Obtaining information.
              209.105-2
              Determinations and documentation.
              209.105-2-70
              Inclusion of determination of contractor fault in Federal Awardee Performance and Integrity Information System (FAPIIS).
              209.106
              Preaward surveys.

              Subpart 209.2—Qualifications Requirements
              209.202
              Policy.
              209.270
              Aviation critical safety items.
              209.270-1
              Scope.
              209.270-2
              Definitions.
              209.270-3
              Policy.
              209.270-4
              Procedures.
              209.270-5
              Contract clause.

              Subpart 209.3 [Reserved]

              Subpart 209.4—Debarment, Suspension, and Ineligibility
              209.402
              Policy.
              209.403
              Definitions.
              209.405
              Effect of listing.
              209.405-2
              Restrictions on subcontracting.
              209.406
              Debarment.
              209.406-1
              General.
              209.406-2
              Causes for debarment.
              209.406-3
              Procedures.
              209.407
              Suspension.
              209.407-3
              Procedures.
              209.409
              Solicitation provision and contract clause.
              209.470
              Reserve Officer Training Corps and military recruiting on campus.
              209.470-1
              Definition.
              209.470-2
              Policy.
              209.470-3
              Procedures.
              209.470-4
              Contract clause.
              209.471
              Congressional Medal of Honor.

              Subpart 209.5—Organizational and Consultant Conflicts of Interest
              209.505
              General rules.
              209.505-4
              Obtaining access to proprietary information.
              209.570
              Limitations on contractors acting as lead system integrators.
              209.570-1
              Definitions.
              209.570-2
              Policy.
              209.570-3
              Procedures.
              209.570-4
              Solicitation provision and contract clause.
              209.571
              Organizational conflicts of interest in major defense acquisition programs.
              209.571-0
              Scope of subpart.
              209.571-1
              Definitions.
              209.571-2
              Applicability.
              209.571-4
              Mitigation.
              209.571-5
              Lead system integrators.
              209.571-6
              Identification of organizational conflicts of interest.
              209.571-7
              Systems engineering and technical assistance contracts.
              209.571-8
              Solicitation provision and contract clause.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36313, July 31, 1991, unless otherwise noted.

            Subpart 209.1—Responsible Prospective Contractors

              209.101
              Definitions.
              “Entity controlled by a foreign government,” “foreign government,” and “proscribed information,” are defined in the provision at 252.209-7002, Disclosure of Ownership or Control by a Foreign Government.
              [59 FR 51132, Oct. 7, 1994]

              209.104
              Standards.

              209.104-1
              General standards.
              (e) For cost-reimbursement or incentive type contracts, or contracts which provide for progress payments based on costs or on a percentage or stage of completion, the prospective contractor's accounting system and related internal controls must provide reasonable assurance that—
              (i) Applicable laws and regulations are complied with;
              (ii) The accounting system and cost data are reliable;
              (iii) Risk of misallocations and mischarges are minimized; and
              (iv) Contract allocations and charges are consistent with invoice procedures.
              (g)(i) Ownership or control by the government of a country that is a state sponsor of terrorism. (See 225.771.)
              (1) Either directly or indirectly, has a significant interest—
              (i) In the firm; or
              (ii) In the subsidiary or the firm that owns the subsidiary; and
              (2) Has been determined by the Secretary of State under 50 U.S.C. App. 2405(j)(1)(A) to be a government of a country that has repeatedly provided support for acts of international terrorism.
              (B) The Secretary of Defense may waive the prohibition in paragraph (g)(i)(A) of this subsection in accordance with 10 U.S.C. 2327(c). This waiver authority may not be delegated.
              (C) Forward any information indicating that a firm or a subsidiary of a firm may be owned or controlled by the government of a terrorist country, through agency channels, to: Deputy Director, Defense Procurement (Contract Policy and International Contracting, OUSD(AT&L)DPAP(CPIC)), 3060 Defense Pentagon, Washington, DC 20301-3060.
              (ii) Ownership or control by a foreign government when access to proscribed information is required to perform the contract. (A) Under 10 U.S.C. 2536(a), no DoD contract under a national security program may be awarded to an entity controlled by a foreign government if that entity requires access to proscribed information to perform the contract.
              (B) Whenever the contracting officer has a question about application of the provision at 252.209-7002, the contracting officer may seek advice from the Security Directorate, Office of the Deputy Under Secretary of Defense, Human Intelligence, Counterintelligence, and Security.
              (C) In accordance with 10 U.S.C. 2536(b)(1)(A), the Secretary of Defense may waive the prohibition in paragraph (g)(ii)(A) of this subsection upon determining that the waiver is essential to the national security interests of the United States. The Secretary has delegated authority to grant this waiver to the Undersecretary of Defense for Intelligence. Waiver requests, prepared by the requiring activity in coordination with the contracting officer, shall be processed through the Director of Defense Procurement and Acquisition Policy, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics), and shall include a proposed national interest determination. The proposed national interest determination, prepared by the requiring activity in coordination with the contracting officer, shall include:
              (1) Identification of the proposed awardee, with a synopsis of its foreign ownership (include solicitation and other reference numbers to identify the action);
              (2) General description of the acquisition and performance requirements;
              (3) Identification of the national security interests involved and the ways award of the contract helps advance those interests;
              (4) The availability of another entity with the capacity, capability and technical expertise to satisfy defense acquisition, technology base, or industrial base requirements; and
              (5) A description of any alternate means available to satisfy the requirement, e.g., use of substitute products or technology or alternate approaches to accomplish the program objectives.
              (D) In accordance with 10 U.S.C. 2536(b)(1)(B), the Secretary of Defense may, in the case of a contract awarded for environmental restoration, remediation, or waste management at a DoD facility, waive the prohibition in paragraph (g)(ii)(A) of this subsection upon—
              (1) Determining that—
              (i) The waiver will advance the environmental restoration, remediation, or waste management objectives of DoD and will not harm the national security interests of the United States; and
              (ii) The entity to which the contract is awarded is controlled by a foreign government with which the Secretary is authorized to exchange Restricted Data under section 144c. of the Atomic Energy Act of 1954 (42 U.S.C. 2164(c)); and
              (2) Notifying Congress of the decision to grant the waiver. The contract may be awarded only after the end of the 45-day period beginning on the date the notification is received by the appropriate Congressional committees.
              [58 FR 28464, May 13, 1993, as amended at 59 FR 51131, 51132, Oct. 7, 1994; 60 FR 29497, June 5, 1995; 62 FR 34121, June 24, 1997; 63 FR 11851, Mar. 11, 1998; 63 FR 14837, Mar. 27, 1998; 65 FR 39704, June 27, 2000; 67 FR 4208, Jan. 29, 2002; 68 FR 7439, Feb. 14, 2003; 74 FR 2413, Jan. 15, 2009; 75 FR 35685, June 23, 2010; 75 FR 45073, Aug. 2, 2010; 79 FR 73489, Dec. 11, 2014]

              209.104-4
              Subcontractor responsibility.
              Generally, the Canadian Commercial Corporation's (CCC) proposal of a firm as its subcontractor is sufficient basis for an affirmative determination of responsibility. However, when the CCC determination of responsibility is not consistent with other information available to the contracting officer, the contracting officer shall request from CCC and any other sources whatever additional information is necessary to make the responsibility determination.

              209.104-70
              Solicitation provision.
              Use the provision at 252.209-7002, Disclosure of Ownership or Control by a Foreign Government, in all solicitations, including those subject to the procedures in FAR part 13, when access to proscribed information is necessary for contract performance. If the solicitation includes the provision at FAR 52.204-7, do not separately list the provision 252.209-7002 in the solicitation.
              [79 FR 73489, Dec. 11, 2014]

              209.105
              Procedures.

              209.105-1
              Obtaining information.
              (1) For guidance on using the Exclusions section of the System for Award Management, see PGI 209.105-1.

              (2) A satisfactory performance record is a factor in determining contractor responsibility (see FAR 9.104-1(c)). One source of information relating to contractor performance is the Contractor Performance Assessment Reporting System (CPARS) available at https://www.cpars.gov/. Information relating to contract terminations for cause and for default is also available through the Federal Awardee Performance and Integrity Information System (FAPIIS) module of CPARS, available at https://www.fapiis.gov (see subpart 42.15). This termination information is just one consideration in determining contractor responsibility.
              [74 FR 2415, Jan. 15, 2009, as amended at 76 FR 76319, Dec. 7, 2011; 78 FR 28757, May 16, 2013; 79 FR 17445, Mar. 28, 2014; 84 FR 48508, Sept. 13, 2019]

              209.105-2
              Determinations and documentation.
              (a) The contracting officer shall submit a copy of a determination of nonresponsibility to the appropriate debarring and suspending official listed in 209.403.
              [71 FR 62559, Oct. 26, 2006]

              209.105-2-70
              Inclusion of determination of contractor fault in Federal Awardee Performance and Integrity Information System (FAPIIS).
              If the contractor or a subcontractor at any tier is not subject to the jurisdiction of the U.S. courts and the DoD appointing official that requested a DoD investigation makes a final determination that a contractor's or subcontractor's gross negligence or reckless disregard for the safety of civilian or military personnel of the Government caused serious bodily injury or death of such personnel, the contracting officer shall enter in FAPIIS the appropriate information regarding such determination within three days of receiving notice of the determination, pursuant to section 834 of the National Defense Authorization Act for Fiscal Year 2011 (Pub. L. 111-383). Information posted in FAPIIS regarding such determinations will be publicly available.
              [76 FR 57677, Sept. 16, 2011]

              209.106
              Preaward surveys.
              When requesting a preawared survey, follow the procedures at PGI 209.106.
              [69 FR 65089, Nov. 10, 2004]

            Subpart 209.2—Qualifications Requirements

              209.202
              Policy.
              (a)(1) Except for aviation or ship critical safety items, obtain approval in accordance with PGI 209.202(a)(1) when establishing qualification requirements. See 209.270 for approval of qualification requirements for aviation or ship critical safety items.
              [73 FR 1827, Jan. 10, 2008]

              209.270
              Aviation and ship critical safety items.

              209.270-1
              Scope.
              This section—
              (a) Implements—
              (1) Section 802 of the National Defense Authorization Act for Fiscal Year 2004 (Pub. L. 108-136); and
              (2) Section 130 of the National Defense Authorization Act for Fiscal Year 2007 (Pub. L. 109-364); and
              (b) Prescribes policy and procedures for qualification requirements in the procurement of aviation and ship critical safety items and the modification, repair, and overhaul of those items.
              [73 FR 1827, Jan. 10, 2008]

              209.270-2
              Definitions.
              As used in this section—

                Aviation critical safety item means a part, an assembly, installation equipment, launch equipment, recovery equipment, or support equipment for an aircraft or aviation weapon system if the part, assembly, or equipment contains a characteristic any failure, malfunction, or absence of which could cause—

              (1) A catastrophic or critical failure resulting in the loss of or serious damage to the aircraft or weapon system;

              (2) An unacceptable risk of personal injury or loss of life; or
              (3) An uncommanded engine shutdown that jeopardizes safety.

                Design control activity—(1) With respect to an aviation critical safety item, means the systems command of a military department that is specifically responsible for ensuring the air worthiness of an aviation system or equipment in which an aviation critical safety item is to be used; and
              (2) With respect to a ship critical safety item, means the systems command of a military department that is specifically responsible for ensuring the seaworthiness of a ship or ship equipment in which a ship critical safety item is to be used.

                Ship critical safety item means any ship part, assembly, or support equipment containing a characteristic the failure, malfunction, or absence of which could cause—
              (1) A catastrophic or critical failure resulting in loss of or serious damage to the ship; or
              (2) An unacceptable risk of personal injury or loss of life.
              [69 FR 55988, Sept. 17, 2004, as amended at 73 FR 1827, Jan. 10, 2008]

              209.270-3
              Policy.
              (a) The head of the contracting activity responsible for procuring an aviation or ship critical safety item may enter into a contract for the procurement, modification, repair, or overhaul of such an item only with a source approved by the head of the design control activity.
              (b) The approval authorities specified in this section apply instead of those otherwise specified in FAR 9.202(a)(1), 9.202(c), or 9.206-1(c), for the procurement, modification, repair, and overhaul of aviation or ship critical safety items.
              [73 FR 1827, Jan. 10, 2008]

              209.270-4
              Procedures.
              (a) The head of the design control activity shall—
              (1) Identify items that meet the criteria for designation as aviation or ship critical safety items. See additional information at PGI 209.270-4;
              (2) Approve qualification requirements in accordance with procedures established by the design control activity; and
              (3) Qualify and identify aviation and ship critical safety item suppliers and products.
              (b) The contracting officer shall—
              (1) Ensure that the head of the design control activity has determined that a prospective contractor or its product meets or can meet the established qualification standards before the date specified for award of the contract;
              (2) Refer any offers received from an unapproved source to the head of the design control activity for approval. The head of the design control activity will determine whether the offeror or its product meets or can meet the established qualification standards before the date specified for award of the contract; and
              (3) Refer any requests for qualification to the design control activity.
              (c) See 246.407 (S-70) and 246.504 for quality assurance requirements.
              [69 FR 55988, Sept. 17, 2004, as amended at 70 FR 57190, Sept. 30, 2005; 73 FR 1827, Jan. 10, 2008]

              209.270-5
              Contract clause.
              The contracting officer shall insert the clause at 252.209-7010, Critical Safety Items, in solicitations and contracts when the acquisition includes one or more items designated by the design control activity as critical safety items.
              [76 FR 52139, Aug. 19, 2011]

            Subpart 209.3 [Reserved]

            Subpart 209.4—Debarment, Suspension, and Ineligibility

              209.402
              Policy.
              (d) The uniform suspension and debarment procedures to be followed by all debarring and suspending officials are set out in appendix H to this chapter.

              (e) The department or agency shall provide a copy of the Debarment and Suspension Procedures at DFARS appendix H to this chapter to contractors at the time of their suspension or when they are proposed for debarment, and upon request to other interested parties.
              [59 FR 27668, May 27, 1994]

              209.403
              Definitions.

                Debarring and suspending official. (1) For DoD, the designees are—

                Army—Director, Soldier & Family Legal Services
                Navy/Marine Corps—The Assistant General Counsel (Acquisition Integrity)
                Air Force—Deputy General Counsel (Contractor Responsibility)
                Defense Advanced Research Projects Agency—The Director
                Defense Information Systems Agency—The General Counsel
                Defense Intelligence Agency—The Senior Procurement Executive
                Defense Logistics Agency—The Special Assistant for Contracting Integrity
                National Geospatial—Intelligence Agency—The General Counsel
                Defense Threat Reduction Agency—The Director
                National Security Agency—The Senior Acquisition Executive
                Missile Defense Agency—The General Counsel
                United States Cyber Command—The Staff Judge Advocate
                Defense Health Agency—The General Counsel
                Overseas installations—as designated by the agency head

              (2) Overseas debarring and suspending officials—
              (i) Are authorized to debar or suspend contractors located within the official's geographic area of responsibility under any delegation of authority they receive from their agency head.
              (ii) Debar or suspend in accordance with the procedures in FAR subpart 9.4 or under modified procedures approved by the agency head based on consideration of the laws or customs of the foreign countries concerned.
              (iii) In addition to the bases for debarment in FAR 9.406-2, may consider the following additional bases—
              (A) The foreign country concerned determines that a contractor has engaged in bid-rigging, price-fixing, or other anti-competitive behavior; or
              (B) The foreign country concerned declares the contractor to be formally debarred, suspended, or otherwise ineligible to contract with that foreign government or its instrumentalities.
              (3) The Defense Logistics Agency Special Assistant for Contracting Integrity is the exclusive representative of the Secretary of Defense to suspend and debar contractors from the purchase of Federal personal property under the Federal Property Management Regulations (41 CFR 101-45.6) and the Defense Materiel Disposition Manual (DoD 4160.21-M).
              [56 FR 36313, July 31, 1991, as amended at 56 FR 67212, Dec. 30, 1991; 59 FR 27669, May 27, 1994; 60 FR 61593, Nov. 30, 1995; 61 FR 50452, Sept. 26, 1996; 63 FR 11528, Mar. 9, 1998; 64 FR 51075, Sept. 21, 1999; 64 FR 62985, Nov. 18, 1999; 68 FR 7439, Feb. 14, 2003; 70 FR 14573, Mar. 23, 2005; 74 FR 42780, Aug. 25, 2009; 74 FR 52895, Oct. 15, 2009; 76 FR 11367, Mar. 2, 2011; 76 FR 76319, Dec. 7, 2011; 77 FR 23631, Apr. 20, 2012; 77 FR 52253, Aug. 29, 2012; 84 FR 18155, Apr. 30, 2019]

              209.405
              Effect of listing.
              (a) Under 10 U.S.C. 2393(b), when a department or agency determines that a compelling reason exists for it to conduct business with a contractor that is debarred or suspended from procurement programs, it must provide written notice of the determination to the General Services Administration (GSA), GSA Suspension and Debarment Official, Office of Acquisition Policy, 1275 First Street, NE., Washington, DC 20417. Examples of compelling reasons are—
              (i) Only a debarred or suspended contractor can provide the supplies or services;
              (ii) Urgency requires contracting with a debarred or suspended contractor;
              (iii) The contractor and a department or agency have an agreement covering the same events that resulted in the debarment or suspension and the agreement includes the department or agency decision not to debar or suspend the contractor; or
              (iv) The national defense requires continued business dealings with the debarred or suspended contractor.

              (b)(i) The Procurement Cause and Treatment Code “H” annotation in the Exclusions section of the System for Award Management (SAM Exclusions) identifies contractor facilities where no part of a contract or subcontract may be performed because of a violation of the Clean Air Act (42 U.S.C. 7606) or the Clean Water Act (33 U.S.C. 1368).
              (ii) Under the authority of Section 8 of Executive Order 11738, the agency head may grant an exemption permitting award to a contractor using a Code “H” ineligible facility if the agency head determines that such an exemption is in the paramount interest of the United States.
              (A) The agency head may delegate this exemption authority to a level no lower than a general or flag officer or a member of the Senior Executive Service.
              (B) The official granting the exemption—
              (1) Shall promptly notify the Environmental Protection Agency suspending and debarring official of the exemption and the corresponding justification; and
              (2) May grant a class exemption only after consulting with the Environmental Protection Agency suspending and debarring official.
              (C) Exemptions shall be for a period not to exceed one year. The continuing necessity for each exemption shall be reviewed annually and, upon the making of a new determination, may be extended for periods not to exceed one year.
              (D) All exemptions must be reported annually to the Environmental Protection Agency suspending and debarring official.
              (E) See PGI 209.405 for additional procedures and information.
              [74 FR 2414, Jan. 15, 2009, as amended at 76 FR 27274, May 11, 2011; 79 FR 73489, Dec. 11, 2014]

              209.405-2
              Restrictions on subcontracting.
              (a) The contracting officer shall not consent to any subcontract with a firm, or a subsidiary of a firm, that is identified by the Secretary of Defense in SAM Exclusions as being owned or controlled by the government of a country that is a state sponsor of terrorism unless the agency head states in writing the compelling reasons for the subcontract. (See also 225.771.)
              [79 FR 73489, Dec. 11, 2014]

              209.406
              Debarment.

              209.406-1
              General.
              (a)(i) When the debarring official decides that debarment is not necessary, the official may require the contractor to enter into a written agreement which includes—
              (A) A requirement for the contractor to establish, if not already established, and to maintain the standards of conduct and internal control systems prescribed by FAR subpart 3.10; and
              (B) Other requirements the debarring official considers appropriate.
              (ii) Before the debarring official decides not to suspend or debar in the case of an indictment or conviction for a felony, the debarring official must determine that the contractor has addressed adequately the circumstances that gave rise to the misconduct, and that appropriate standards of ethics and integrity are in place and are working.
              [57 FR 14992, Apr. 23, 1992, as amended at 76 FR 76319, Dec. 7, 2011]

              209.406-2
              Causes for debarment.
              (1) Any person shall be considered for debarment if criminally convicted of intentionally affixing a label bearing a “Made in America” inscription to any product sold in or shipped to the United States or its outlying areas that was not made in the United States or its outlying areas (10 U.S.C. 2410f).
              (i) The debarring official will make a determination concerning debarment not later than 90 days after determining that a person has been so convicted.
              (ii) In cases where the debarring official decides not to debar, the debarring official will report that decision to the Director of Defense Procurement and Acquisition Policy who will notify Congress within 30 days after the decision is made.

              (2) Any contractor that knowingly provides compensation to a former DoD official in violation of section 847 of the National Defense Authorization Act for Fiscal Year 2008 may face suspension and debarment proceedings in accordance with 41 U.S.C. 2105(c)(1)(C).
              [58 FR 28464, May 13, 1993, as amended at 68 FR 7439, Feb. 14, 2003; 70 FR 35544, June 21, 2005; 74 FR 2409, Jan. 15, 2009; 76 FR 58136, Sept. 20, 2011]

              209.406-3
              Procedures.
              Refer all matters appropriate for consideration by an agency debarring and suspending official as soon as practicable to the appropriate debarring and suspending official identified in 209.403. Any person may refer a matter to the debarring and suspending official. Follow the procedures at PGI 209.406-3.
              [69 FR 74990, Dec. 15, 2004]

              209.407
              Suspension.

              209.407-3
              Procedures.
              Refer all matters appropriate for consideration by an agency debarring and suspending official as soon as practicable to the appropriate debarring and suspending official identified in 209.403. Any person may refer a matter to the debarring and suspending official. Follow the procedures at PGI 209.407-3.
              [69 FR 74990, Dec. 15, 2004]

              209.409
              Solicitation provision and contract clause.
              Use the clause at 252.209-7004, Subcontracting with Firms that are Owned or Controlled by the Government of a Country that is a State Sponsor of Terrorism, in solicitations and contracts with a value of $150,000 or more.
              [79 FR 73489, Dec. 11, 2014]

              209.470
              Reserve Officer Training Corps and military recruiting on campus.

              209.470-1
              Definition.

                Institution of higher education, as used in this section, means an institution that meets the requirements of 20 U.S.C. 1001 and includes all subelements of such an institution.
              [65 FR 2056, Jan. 13, 2000]

              209.470-2
              Policy.
              (a) Except as provided in paragraph (b) of this subsection, 10 U.S.C. 983 prohibits DoD from providing funds by contract or grant to an institution of higher education if the Secretary of Defense determines that the institution has a policy or practice that prohibits or in effect prevents—
              (1) The Secretary of a military department from maintaining, establishing, or operating a unit of the Senior Reserve Officer Training Corps (ROTC) at that institution;
              (2) A student at that institution from enrolling in a unit of the senior ROTC at another institution of higher education;
              (3) The Secretary of a military department or the Secretary of Transportation from gaining entry to campuses, or access to students on campuses, for purposes of military recruiting; or
              (4) Military recruiters from accessing certain information pertaining to students enrolled at that institution.
              (b) The prohibition in paragraph (a) of this subsection does not apply to an institution of higher education if the Secretary of Defense determines that—
              (1) The institution has ceased the policy or practice described in paragraph (a) of this subsection; or
              (2) The institution has a long-standing policy of pacifism based on historical religious affiliation.
              [65 FR 2056, Jan. 13, 2000]

              209.470-3
              Procedures.
              If the Secretary of Defense determines that an institution of higher education is ineligible to receive DoD funds because of a policy or practice described in 209.470-2(a)—
              (a) The Secretary of Defense will list the institution on the List of Parties Excluded from Federal Procurement and Nonprocurement Programs published by General Services Administration (also see FAR 9.404 and 32 CFR part 216); and
              (b) DoD components—
              (1) Shall not solicit offers from, award contracts to, or consent to subcontracts with the institution;

              (2) Shall make no further payments under existing contracts with the institution; and

              (3) Shall terminate existing contracts with the institution.
              [65 FR 2057, Jan. 13, 2000, as amended at 67 FR 49254, July 30, 2002]

              209.470-4
              Solicitation provision and contract clause.
              (a) Use the provision at 252.209-7003, Reserve Officer Training Corps and Military Recruiting on Campus—Representation, in all solicitations with institutions of higher education. If the solicitation includes the provision at FAR 52.204-7, do not separately list the provision 252.209-7003 in the solicitation.
              (b) Use the clause at 252.209-7005, Reserve Officer Training Corps and Military Recruiting on Campus, in all solicitations and contracts with institutions of higher education.
              [77 FR 19129, Mar. 30, 2012, as amended at 78 FR 37984, June 25, 2013; 78 FR 40043, July 3, 2013]

              209.471
              Congressional Medal of Honor.
              In accordance with Section 8118 of Pub. L. 105-262, do not award a contract to, extend a contract with, or approve the award of a subcontract to any entity that, within the preceding 15 years, has been convicted under 18 U.S.C. 704 of the unlawful manufacture or sale of the Congressional Medal of Honor. Any entity so convicted will be listed as ineligible on the List of Parties Excluded from Federal Procurement and Nonprocurement Programs published by the General Services Administration.
              [64 FR 31733, June 14, 1999]

            Subpart 209.5—Organizational and Consultant Conflicts of Interest

              Source:
              73 FR 1824, Jan. 10, 2008, unless otherwise noted.

              209.505
              General rules.

              209.505-4
              Obtaining access to proprietary information.
              (b)(i) For contractors, other than litigation support contractors, accessing third party proprietary technical data or computer software, non-disclosure requirements are addressed at 227.7103-7(b), through use of the clause at 252.227-7025 as prescribed at 227.7103-6(c) and 227.7203-6(d). Pursuant to that clause, covered Government support contractors may be required to enter into non-disclosure agreements directly with the third party asserting restrictions on limited rights technical data, commercial technical data, or restricted rights computer software. The contracting officer is not required to obtain copies of these agreements or to ensure that they are properly executed.
              (ii) For litigation support contractors accessing litigation information, including that originating from third parties, use and non-disclosure requirements are addressed through the use of the clause at 252.204-7014, as prescribed at 204.7403(a). Pursuant to the clause, litigation support contractors are not required to enter into non-disclosure agreements directly with any third party asserting restrictions on any litigation information.
              [78 FR 30238, May 22, 2013, as amended at 81 FR 28728, May 10, 2016; 81 FR 36473, June 7, 2016; 84 FR 58332, Oct. 31, 2019]

              209.570
              Limitations on contractors acting as lead system integrators.

              209.570-1
              Definitions.

                Lead system integrator, as used in this section, is defined in the clause at 252.209-7007, Prohibited Financial Interests for Lead System Integrators. See PGI 209.570-1 for additional information.

              209.570-2
              Policy.
              (a) Except as provided in paragraph (b) of this subsection, 10 U.S.C. 2410p prohibits any entity performing lead system integrator functions in the acquisition of a major system by DoD from having any direct financial interest in the development or construction of any individual system or element of any system of systems.
              (b) The prohibition in paragraph (a) of this subsection does not apply if—
              (1) The Secretary of Defense certifies to the Committees on Armed Services of the Senate and the House of Representatives that—

              (i) The entity was selected by DoD as a contractor to develop or construct the system or element concerned through the use of competitive procedures; and
              (ii) DoD took appropriate steps to prevent any organizational conflict of interest in the selection process; or
              (2) The entity was selected by a subcontractor to serve as a lower-tier subcontractor, through a process over which the entity exercised no control.
              (c) In accordance with Section 802 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181), DoD may award a new contract for lead system integrator functions in the acquisition of a major system only if—
              (1) The major system has not yet proceeded beyond low-rate initial production; or

              (2) The Secretary of Defense determines in writing that it would not be practicable to carry out the acquisition without continuing to use a contractor to perform lead system integrator functions and that doing so is in the best interest of DoD. The authority to make this determination may not be delegated below the level of the Under Secretary of Defense for Acquisition, Technology, and Logistics. (Also see 209.570-3(b).)
              (d) Effective October 1, 2010, DoD is prohibited from awarding a new contract for lead system integrator functions in the acquisition of a major system to any entity that was not performing lead system integrator functions in the acquisition of the major system prior to January 28, 2008.
              [73 FR 1824, Jan. 10, 2008, as amended at 74 FR 34268, July 15, 2009]

              209.570-3
              Procedures.
              (a) In making a responsibility determination before awarding a contract for the acquisition of a major system, the contracting officer shall—
              (1) Determine whether the prospective contractor meets the definition of “lead system integrator”;
              (2) Consider all information regarding the prospective contractor's direct financial interests in view of the prohibition at 209.570-2(a); and
              (3) Follow the procedures at PGI 209.570-3.
              (b) A determination to use a contractor to perform lead system integrator functions in accordance with 209.570-2(c)(2)—
              (1) Shall specify the reasons why it would not be practicable to carry out the acquisition without continuing to use a contractor to perform lead system integrator functions, including a discussion of alternatives, such as use of the DoD workforce or a system engineering and technical assistance contractor;
              (2) Shall include a plan for phasing out the use of contracted lead system integrator functions over the shortest period of time consistent with the interest of the national defense; and
              (3) Shall be provided to the Committees on Armed Services of the Senate and the House of Representatives at least 45 days before the award of a contract pursuant to the determination.
              [74 FR 34268, July 15, 2009]

              209.570-4
              Solicitation provision and contract clause.
              (a) Use the provision at 252.209-7006, Limitations on Contractors Acting as Lead System Integrators, in solicitations for the acquisition of a major system when the acquisition strategy envisions the use of a lead system integrator.
              (b) Use the clause at 252.209-7007, Prohibited Financial Interests for Lead System Integrators—
              (1) In solicitations that include the provision at 252.209-7006; and
              (2) In contracts when the contractor will fill the role of a lead system integrator for the acquisition of a major system.

              209.571
              Organizational conflicts of interest in major defense acquisition programs.

              209.571-0
              Scope of subpart.
              This subpart implements section 207 of the Weapons System Acquisition Reform Act of 2009 (Pub. L. 111-23).
              [75 FR 81913, Dec. 29, 2010]

              209.571-1
              Definitions.
              As used in this section—
              “Lead system integrator” includes lead system integrator with system responsibility and lead system integrator without system responsibility.
              (i) Lead system integrator with system responsibility means a prime contractor for the development or production of a major system, if the prime contractor is not expected at the time of award to perform a substantial portion of the work on the system and the major subsystems.
              (ii) Lead system integrator without system responsibility means a prime contractor under a contract for the procurement of services, the primary purpose of which is to perform acquisition functions closely associated with inherently governmental functions (see section 7.503(d) of the Federal Acquisition Regulation) with respect to the development or production of a major system.
              “Major subcontractor” means a subcontractor that is awarded a subcontract that equals or exceeds—
              (i) Both the certified cost or pricing data threshold and 10 percent of the value of the contract under which the subcontract is awarded; or
              (ii) $55 million.
              “Pre-Major Defense Acquisition Program” means a program that is in the Materiel Solution Analysis or Technology Development Phases preceding Milestone B of the Defense Acquisition System and has been identified to have the potential to become a major defense acquisition program.
              “Systems engineering and technical assistance.”
              (1) “Systems engineering” means an interdisciplinary technical effort to evolve and verify an integrated and total life cycle balanced set of system, people, and process solutions that satisfy customer needs.
              (2) “Technical assistance” means the acquisition support, program management support, analyses, and other activities involved in the management and execution of an acquisition program.
              (3) “Systems engineering and technical assistance”—
              (i) Means a combination of activities related to the development of technical information to support various acquisition processes. Examples of systems engineering and technical assistance activities include, but are not limited to, supporting acquisition efforts such as—
              (A) Deriving requirements;
              (B) Performing technology assessments;
              (C) Developing acquisition strategies;
              (D) Conducting risk assessments;
              (E) Developing cost estimates;
              (F) Determining specifications;
              (G) Evaluating contractor performance and conducting independent verification and validation;
              (H) Directing other contractors' (other than subcontractors) operations;
              (I) Developing test requirements and evaluating test data;
              (J) Developing work statements (but see paragraph (ii)(B) of this definition).
              (ii) Does not include—
              (A) Design and development work of design and development contractors, in accordance with FAR 9.505-2(a)(3) or FAR 9.505-2(b)(3), and the guidance at PGI 209.571-7; or
              (B) Preparation of work statements by contractors, acting as industry representatives, under the supervision and control of Government representatives, in accordance with FAR 9.505-2(b)(1)(ii).
              [75 FR 81913, Dec. 29, 2010, as amended at 79 FR 4632, Jan. 29, 2014; 84 FR 25187, May 31, 2019]

              209.571-2
              Applicability.
              (a) This subsection applies to major defense acquisition programs.
              (b) To the extent that this section is inconsistent with FAR subpart 9.5, this section takes precedence.
              [75 FR 81913, Dec. 29, 2010]

              209.571-3
              Policy.
              It is DoD policy that—
              (a) Agencies shall obtain advice on major defense acquisition programs and pre-major defense acquisition programs from sources that are objective and unbiased; and

              (b) Contracting officers generally should seek to resolve organizational conflicts of interest in a manner that will promote competition and preserve DoD access to the expertise and experience of qualified contractors. Accordingly, contracting officers should, to the extent feasible, employ organizational conflict of interest resolution strategies that do not unnecessarily restrict the pool of potential offerors in current or future acquisitions. Further, contracting activities shall not impose across-the-board restrictions or limitations on the use of particular resolution methods, except as may be required under 209.571-7 or as may be appropriate in particular acquisitions.
              [75 FR 81913, Dec. 29, 2010]

              209.571-4
              Mitigation.
              (a) Mitigation is any action taken to minimize an organizational conflict of interest. Mitigation may require Government action, contractor action, or a combination of both.
              (b) If the contracting officer and the contractor have agreed to mitigation of an organizational conflict of interest, a Government-approved Organizational Conflict of Interest Mitigation Plan, reflecting the actions a contractor has agreed to take to mitigate a conflict, shall be incorporated into the contract.

              (c) If the contracting officer determines, after consultation with agency legal counsel, that the otherwise successful offeror is unable to effectively mitigate an organizational conflict of interest, then the contracting officer, taking into account both the instant contract and longer term Government needs, shall use another approach to resolve the organizational conflict of interest, select another offeror, or request a waiver in accordance with FAR 9.503 (but see statutory prohibition in 209.571-7, which cannot be waived).
              (d) For any acquisition that exceeds $1 billion, the contracting officer shall brief the senior procurement executive before determining that an offeror's mitigation plan is unacceptable.
              [75 FR 81913, Dec. 29, 2010]

              209.571-5
              Lead system integrators.

              For limitations on contractors acting as lead systems integrators, see 209.570.
              [75 FR 81913, Dec. 29, 2010]

              209.571-6
              Identification of organizational conflicts of interest.
              When evaluating organizational conflicts of interest for major defense acquisition programs or pre-major defense acquisition programs, contracting officers shall consider—
              (a) The ownership of business units performing systems engineering and technical assistance, professional services, or management support services to a major defense acquisition program or a pre-major defense acquisition program by a contractor who simultaneously owns a business unit competing (or potentially competing) to perform as—
              (1) The prime contractor for the same major defense acquisition program; or
              (2) The supplier of a major subsystem or component for the same major defense acquisition program.
              (b) The proposed award of a major subsystem by a prime contractor to business units or other affiliates of the same parent corporate entity, particularly the award of a subcontract for software integration or the development of a proprietary software system architecture; and
              (c) The performance by, or assistance of, contractors in technical evaluation.
              [75 FR 81913, Dec. 29, 2010]

              209.571-7
              Systems engineering and technical assistance contracts.
              (a) Agencies shall obtain advice on systems architecture and systems engineering matters with respect to major defense acquisition programs or pre-major defense acquisition programs from Federally Funded Research and Development Centers or other sources independent of the major defense acquisition program contractor.
              (b) Limitation on Future Contracting. (1) Except as provided in paragraph (c) of this subsection, a contract for the performance of systems engineering and technical assistance for a major defense acquisition program or a pre-major defense acquisition program shall prohibit the contractor or any affiliate of the contractor from participating as a contractor or major subcontractor in the development or production of a weapon system under such program.
              (2) The requirement in paragraph (b)(1) of this subsection cannot be waived.
              (c) Exception. (1) The requirement in paragraph (b)(1) of this subsection does not apply if the head of the contracting activity determines that—

              (i) An exception is necessary because DoD needs the domain experience and expertise of the highly qualified, apparently successful offeror; and

              (ii) Based on the agreed-to resolution strategy, the apparently successful offeror will be able to provide objective and unbiased advice, as required by 209.571-3(a), without a limitation on future participation in development and production.
              (2) The authority to make this determination cannot be delegated.
              [75 FR 81913, Dec. 29, 2010]

              209.571-8
              Solicitation provision and contract clause.
              (a) Use the provision at 252.209-7008, Notice of Prohibition Relating to Organizational Conflict of Interest—Major Defense Acquisition Program, if the solicitation includes the clause at 252.209-7009, Organizational Conflict of Interest—Major Defense Acquisition Program; and
              (b) Use the clause at 252.209-7009, Organizational Conflict of Interest—Major Defense Acquisition Program, in solicitations and contracts for systems engineering and technical assistance for major defense acquisition programs or pre-major defense acquisition programs.
              [75 FR 81913, Dec. 29, 2010]

          Pt. 210
          PART 210—MARKET RESEARCH

            Sec.
            210.001
            Policy.
            210.002
            Procedures.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            71 FR 53043, Sept. 8, 2006, unless otherwise noted.

            210.001
            Policy.
            (a) In addition to the requirements of FAR 10.001(a)—
            (i)(A) Agencies shall conduct market research appropriate to the circumstances before issuing a solicitation with tiered evaluation of offers (section 816 of Pub. L. 109-163); and
            (B) Use the results of market research to determine whether the criteria in FAR part 19 are met for setting aside the acquisition for small business or, for a task or delivery order, whether there are a sufficient number of qualified small business concerns available to justify limiting competition under the terms of the contract. If the contracting officer cannot determine whether the criteria are met, the contracting officer shall include a written explanation in the contract file as to why such a determination could not be made (section 816 of Pub. L. 109-163); and
            (ii) Contracting officers shall use market research, where appropriate, to inform price reasonableness determinations (see 212.209 and 234.7002).
            (c)(2) In addition to the notification requirements at FAR 10.001(c)(2)(i) and (ii), see 205.205-70 for the bundling notification publication requirement.
            [71 FR 53043, Sept. 8, 2006, as amended at 75 FR 40716, July 13, 2010; 83 FR 15996, Apr. 13, 2018; 85 FR 34531, June 5, 2020]

            210.002
            Procedures.
            (e)(i) When contracting for services, see PGI 210.070 for the “Market Research Report Guide for Improving the Tradecraft in Services Acquisition”.
            (ii) See PGI 210.002(e)(ii) regarding potential offerors that express an interest in an acquisition.
            (iii) Follow the procedures at PGI 210.002(e)(iii) regarding contract file documentation.
            [80 FR 21657, Apr. 20, 2015, as amended at 81 FR 65563, Sep. 23, 2016]

          Pt. 211
          PART 211—DESCRIBING AGENCY NEEDS

            Sec.
            211.002
            Policy.

              Subpart 211.1—Selecting and Developing Requirements Documents
              211.104
              Use of brand name or equal purchase descriptions.
              211.105
              Items peculiar to one manufacturer.
              211.106
              Purchase descriptions for service contracts.
              211.107
              Solicitation provision.
              211.170
              Use of proprietary specifications or standards.

              Subpart 211.2—Using and Maintaining Requirements Documents
              211.201
              Identification and availability of specifications.
              211.204
              Solicitation provisions and contract clauses.
              211.270
              [Reserved]
              211.271

              Elimination of use of class I ozone-depleting substances.

              211.272
              [Reserved]
              211.273
              [Reserved]
              211.274
              Item identification and valuation requirements.
              211.274-1
              General.
              211.274-2
              Policy for item unique identification.
              211.274-3
              Policy for valuation.
              211.274-4
              Policy for reporting of Government-furnished property.
              211.274-5
              Policy for assignment of Government-assigned serial numbers.
              211.274-6
              Contract clauses.
              211.275
              Passive radio frequency identification.
              211.275-1
              Definitions.
              211.275-2
              Policy.
              211.275-3
              Contract clause.

              Subpart 211.5—Liquidated Damages
              211.500
              Scope.
              211.503
              Contract clauses.

              Subpart 211.6—Priorities and Allocations
              211.602
              General.

              Subpart 211.70—Purchase Requests
              211.7001
              [Reserved].

            Authority:
            41 U.S.C. 1303 and 48 CFR Chapter 1.

            Source:
            60 FR 61594, Nov. 30, 1995, unless otherwise noted.

            211.002
            Policy.
            All defense technology and acquisition programs in DoD are subject to the policies and procedures in DoDD 5000.01, The Defense Acquisition System, and DoDI 5000.02, Operation of the Defense Acquisition System.
            [71 FR 27641, May 12, 2006, as amended at 76 FR 76319, Dec. 7, 2011]

            Subpart 211.1—Selecting and Developing Requirements Documents

              211.104
              Use of brand name or equal purchase descriptions.
              A justification and approval is required to use brand name or equal purchase descriptions—
              (1) When using sealed bidding or negotiated acquisition procedures (see 206.302-1(c)(2) for justification requirements); or
              (2) When using the simplified procedures for certain commercial items at FAR 13.5 (see 213.501(a)(ii) for justification requirement).
              [84 FR 25192, May 31, 2019]

              211.105
              Items peculiar to one manufacturer.
              Follow the publication requirements at PGI 211.105.
              [70 FR 23804, May 5, 2005]

              211.106
              Purchase descriptions for service contracts.
              Agencies shall require that purchase descriptions for service contracts and resulting requirements documents, such as statements of work or performance work statements, include language to provide a clear distinction between Government employees and contractor employees. Agencies shall be guided by the characteristics and descriptive elements of personal-services contracts at FAR 37.104. Service contracts shall require contractor employees to identify themselves as contractor personnel by introducing themselves or being introduced as contractor personnel and displaying distinguishing badges or other visible identification for meetings with Government personnel. In addition, contracts shall require contractor personnel to appropriately identify themselves as contractor employees in telephone conversations and in formal and informal written correspondence.
              [76 FR 25566, May 5, 2011]

              211.107
              Solicitation provision.
              (b) To comply with section 875(c) of the National Defense Authorization Act for Fiscal Year 2017 (Pub. L. 114-328), use the provision at FAR 52.211-7, Alternatives to Government-Unique Standards, in DoD solicitations that include military or Government-unique specifications and standards.
              [84 FR 4368, Feb. 15, 2019]

              211.170
              Use of proprietary specifications or standards.
              A justification and approval is required to use proprietary specifications and standards—

              (1) When using sealed bidding or negotiated acquisition procedures (see 206.302-1(S-70) for justification requirements); or,
              (2) When using the simplified procedures for certain commercial items at FAR 13.5 (see 213.501(a)(ii) for justification requirements).
              [84 FR 25192, May 31, 2019]

            Subpart 211.2—Using and Maintaining Requirements Documents

              211.201
              Identification and availability of specifications.
              Follow the procedures at PGI 211.201 for obtaining specifications, standards, and data item descriptions from the ASSIST database, including DoD adoption notices on voluntary consensus standards.
              [84 FR 4368, Feb. 15, 2019]

              211.204
              Solicitation provisions and contract clauses.
              (c) When contract performance requires use of specifications, standards, and data item descriptions that are not listed in the Acquisition Streamlining and Standardization Information System database, use a provision, as appropriate, substantially the same as 252.211-7002, Availability for Examination of Specifications, Standards, Plans, Drawings, Data Item Descriptions, and Other Pertinent Documents.
              [84 FR 25193, May 31, 2019]

              211.270
              [Reserved]

              211.271
              Elimination of use of class I ozone-depleting substances.
              See subpart 223.8 for restrictions on contracting for ozone-depleting substances.
              [70 FR 73150, Dec. 9, 2005]

              211.272
              [Reserved]

              211.273
              [Reserved]

              211.274
              Item identification and valuation requirements.

              211.274-1
              General.
              Item unique identification and valuation is a system of marking, valuing, and tracking items delivered to DoD that enhances logistics, contracting, and financial business transactions supporting the United States and coalition troops. Through item unique identification policy, which capitalizes on leading practices and embraces open standards, DoD—
              (a) Achieves lower life-cycle cost of item management and improves life-cycle property management;
              (b) Improves operational readiness;
              (c) Provides reliable accountability of property and asset visibility throughout the life cycle;
              (d) Reduces the burden on the workforce through increased productivity and efficiency; and
              (e) Ensures item level traceability throughout lifecycle to strengthen supply chain integrity, enhance cyber security, and combat counterfeiting.
              [78 FR 76071, Dec. 16, 2013]

              211.274-2
              Policy for item unique identification.
              (a) It is DoD policy that DoD item unique identification, or a DoD recognized unique identification equivalent, is required for all delivered items, including items of contractor-acquired property delivered on contract line items (see PGI 245.402-71 for guidance when delivery of contractor acquired property is required)—
              (1) For which the Government's unit acquisition cost is $5,000 or more;
              (2) For which the Government's unit acquisition cost is less than $5,000 when the requiring activity determines that item unique identification is required for mission essential or controlled inventory items; or
              (3) Regardless of value for any—
              (i) DoD serially managed item (reparable or nonreparable) or subassembly, component, or part embedded within a subassembly, component, or part;
              (ii) Parent item (as defined in 252.211-7003(a)) that contains the embedded subassembly, component, or part;
              (iii) Warranted serialized item;

              (iv) Item of special tooling or special test equipment, as defined at FAR 2.101, for a major defense acquisition program that is designated for preservation and storage in accordance with the requirements of section 815 of the National Defense Authorization Act for Fiscal Year 2009 (Pub. L. 110-417); and

              (v) High risk item identified by the requiring activity as vulnerable to supply chain threat, a target of cyber threats, or counterfeiting.
              (b) Exceptions. The contractor will not be required to provide DoD item unique identification if—
              (1) The items, as determined by the head of the contracting activity, are to be used to support a contingency or humanitarian or peacekeeping operation; to facilitate defense against or recovery from nuclear, biological, chemical, or radiological attack; to facilitate the provision of international disaster assistance; or to support response to an emergency or major disaster; or
              (2) A determination and findings has been executed concluding that it is more cost effective for the Government requiring activity to assign, mark, and register the unique item identifier after delivery, and the item is either acquired from a small business concern, or is a commercial item acquired under FAR part 12 or part 8.
              (i) The determination and findings shall be executed by—
              (A) The Component Acquisition Executive for an acquisition category (ACAT) I program; or
              (B) The head of the contracting activity for all other programs.
              (ii) The DoD Unique Identification Policy Office must receive a copy of the determination and findings required by paragraph (b)(2)(i) of this subsection. Follow the procedures at PGI 211.274-2.
              [70 FR 20836, Apr. 22, 2005, as amended at 76 FR 33168, June 8, 2011; 77 FR 52257, Aug. 29, 2012; 78 FR 76071, Dec. 16, 2013; 83 FR 24889, May 30, 2018]

              211.274-3
              Policy for valuation.
              (a) It is DoD policy that contractors shall be required to identify the Government's unit acquisition cost for all deliverable end items to which item unique identification applies.
              (b) The Government's unit acquisition cost is—
              (1) For fixed-price type line, subline, or exhibit line items, the unit price identified in the contract at the time of delivery;
              (2) For cost-type or undefinitized line, subline, or exhibit line items, the contractor's estimated fully burdened unit cost to the Government at the time of delivery; and
              (3) For items delivered under a time-and-materials contract, the contractor's estimated fully burdened unit cost to the Government at the time of delivery.
              (c) The Government's unit acquisition cost of subassemblies, components, and parts embedded in delivered items shall not be separately identified.
              [70 FR 20836, Apr. 22, 2005, as amended at 78 FR 76072, Dec. 16, 2013]

              211.274-4
              Policy for reporting of Government-furnished property.
              (a) It is DoD policy that all Government-furnished property be recorded in the DoD Item Unique Identification (IUID) Registry, as defined in the clause at 252.211-7007, Reporting of Government-Furnished Property.
              (b) The following items are not required to be reported:
              (1) Contractor-acquired property, as defined in FAR part 45.
              (2) Property under any statutory leasing authority.
              (3) Property to which the Government has acquired a lien or title solely because of partial, advance, progress, or performance-based payments.
              (4) Intellectual property or software.
              (5) Real property.
              (6) Property released as work in process.
              (7) Non-serial managed items (reporting is limited to receipt transactions only).
              [77 FR 52257, Aug. 29, 2012]

              211.274-5
              Policy for assignment of Government-assigned serial numbers.
              It is DoD policy that contractors apply Government-assigned serial numbers, such as tail numbers/hull numbers and equipment registration numbers, in human-readable format on major end items when required by law, regulation, or military operational necessity. The latest version of MIL-STD-130, Marking of U.S. Military Property, shall be used for the marking of human-readable information.
              [75 FR 59103, Sept. 27, 2010]

              211.274-6
              Contract clauses.
              (a)(1) Use the clause at 252.211-7003, Item Unique Identification and Valuation, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, for supplies, and for services involving the furnishing of supplies, unless the conditions in 211.274-2(b) apply.
              (2) Identify in paragraph (c)(1)(ii) of the clause the contract line, subline, or exhibit line item number and description of any item(s) below $5,000 in unit acquisition cost for which DoD item unique identification or a DoD recognized unique identification equivalent is required in accordance with 211.274-2(a)(2).
              (3) Identify in paragraph (c)(1)(iii) of the clause the applicable attachment number, when DoD item unique identification or a DoD recognized unique identification equivalent is required in accordance with 211.274-2(a)(3)(i) through (v).
              (b) Use the clause at 252.211-7007, Reporting of Government-Furnished Property, in solicitations and contracts that contain the clause at FAR 52.245-1, Government Property.
              (c) Use the clause at 252.211-7008, Use of Government-Assigned Serial Numbers, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that—
              (1) Contain the clause at 252.211-7003, Item Unique Identification and Valuation; and
              (2) Require the contractor to mark major end items under the terms and conditions of the contract.
              [72 FR 52298, Sept. 13, 2007, as amended at 73 FR 70908, Nov. 24, 2008. Redesignated and amended at 75 FR 59103, Sept. 27, 2010; 77 FR 52257, Aug. 29, 2012; 78 FR 37984, June 25, 2012; 78 FR 76072, Dec. 16, 2013; 79 FR 44313, July 31, 2014; 80 FR 51750, Aug. 26, 2015]

              211.275
              Passive radio frequency identification.

              211.275-1
              Definitions.

                Bulk commodities, case, palletized unit load, passive RFID tag, and radio frequency identification are defined in the clause at 252.211-7006, Passive Radio Frequency Identification.
              [70 FR 53968, Sept. 13, 2005, as amended at 76 FR 58143, Sept. 20, 2011]

              211.275-2
              Policy.
              (a) Except as provided in paragraph (b) of this section, radio frequency identification (RFID), in the form of a passive RFID tag, is required for cases and palletized unit loads packaging levels and any additional consolidation level(s) deemed necessary by the requiring activity for shipments of items that—
              (1) Contain items in any of the following classes of supply, as defined in DoD Manual 4140.01, Volume 6, DoD Supply Chain Materiel Management Procedures: Materiel Returns, Retention, and Disposition:
              (i) Subclass of Class I—Packaged operational rations.
              (ii) Class II—Clothing, individual equipment, tentage, organizational tool kits, hand tools, and administrative and housekeeping supplies and equipment.
              (iii) Class IIIP—Packaged petroleum, lubricants, oils, preservatives, chemicals, and additives.
              (iv) Class IV—Construction and barrier materials.
              (v) Class VI—Personal demand items (non-military sales items).
              (vi) Subclass of Class VIII—Medical materials (excluding pharmaceuticals, biologicals, and reagents—suppliers should limit the mixing of excluded and non-excluded materials).
              (vii) Class IX—Repair parts and components including kits, assemblies and subassemblies, reparable and consumable items required for maintenance support of all equipment, excluding medical-peculiar repair parts; and

              (2) Will be shipped to one of the locations listed at https://www.acq.osd.mil/log/sci/RFID_ship-to-locations.html or to—
              (i) A location outside the contiguous United States when the shipment has been assigned Transportation Priority 1; or

              (ii) Any additional location(s) deemed necessary by the requiring activity.

              (b) The following are excluded from the requirements of paragraph (a) of this subsection:
              (1) Shipments of bulk commodities.
              (2) Shipments to locations other than Defense Distribution Depots when the contract includes the clause at FAR 52.213-1, Fast Payment Procedures.
              [72 FR 6483, Feb. 12, 2007, as amended at 76 FR 58143, Sept. 20, 2011; 81 FR 36473, June 7, 2016; 82 FR 61480, Dec. 28, 2017; 83 FR 12681, Mar. 23, 2018]

              211.275-3
              Contract clause.
              Use the clause at 252.211-7006, Passive Radio Frequency Identification, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that will require shipment of items meeting the criteria at 211.275-2, and complete paragraph (b)(1)(ii) of the clause at 252.211-7006 as appropriate.
              [76 FR 58143, Sept. 20, 2011, as amended at 78 FR 37984, June 25, 2013]

            Subpart 211.5—Liquidated Damages

              211.500
              Scope.
              This subpart and FAR subpart 11.5 do not apply to liquidated damages for comprehensive subcontracting plans under the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans. See 219.702-70 for coverage of liquidated damages for comprehensive subcontracting plans.
              [83 FR 15998, Apr. 13, 2018]

              211.503
              Contract clauses.
              (b) Use the clause at FAR 52.211-12, Liquidated Damages—Construction, in all construction contracts exceeding $750,000, except cost-plus-fixed-fee contracts or contracts where the contractor cannot control the pace of the work. Use of the clause in contracts of $750,000 or less is optional.
              [60 FR 61594, Nov. 30, 1995. Redesignated at 66 FR 49861, Oct. 1, 2001; 71 FR 75892, Dec. 19, 2006; 75 FR 45073, Aug. 2, 2010; 80 FR 36904, June 26, 2015; 85 FR 61504, Sept. 29, 2020]

            Subpart 211.6—Priorities and Allocations

              211.602
              General.
              DoD implementation of the Defense Priorities and Allocations System is in DoDD 4400.1, Defense Production Act Programs.
              [64 FR 51075, Sept. 21, 1999]

            Subpart 211.70—Purchase Requests

              211.7001
              [Reserved]

          Pt. 212
          PART 212—ACQUISITION OF COMMERCIAL ITEMS

            212.001
            Definitions.

              Subpart 212.1—Acquisition of Commercial Items—General
              Sec.
              212.102
              Applicability.

              Subpart 212.2—Special Requirements for the Acquisition of Commercial Items
              212.203
              Procedures for solicitation, evaluation, and award.
              212.205
              Offers.
              212.207
              Contract type.
              212.209
              Determination of price reasonableness.
              212.211
              Technical data.
              212.212
              Computer software.
              212.270
              Major weapon systems as commercial items.
              212.271
              Limitation on acquisition of right-hand drive passenger sedans.
              212.272
              Preference for certain commercial products and services.

              Subpart 212.3—Solicitation Provisions and Contract Clauses for the Acquisition of Commercial Items
              212.301
              Solicitation provisions and contract clauses for the acquisition of commercial items.
              212.302
              Tailoring of provisions and clauses for the acquisition of commercial items.

              Subpart 212.5—Applicability of Certain Laws to the Acquisition of Commercial Items
              212.503

              Applicability of certain laws to executive agency contracts for the acquisition of commercial items.

              212.504
              Applicability of certain laws to subcontracts for the acquisition of commercial items.
              212.570
              Applicability of certain laws to contracts and subcontracts for the acquisition of commercially available off-the-shelf items.

              Subpart 212.6—Streamlined Procedures for Evaluation and Solicitation for Commercial Items
              212.602
              Streamlined evaluation of offers.

              Subpart 212.70—Limitation on Conversion of Procurement from Commercial Acquisition Procedures
              212.7000
              Scope.
              212.7001
              Procedures.

              Subpart 212.71—Pilot Program for Acquisition of Military-Purpose Nondevelopmental Items
              212.7100
              Scope.
              212.7101
              Definitions.
              212.7102
              Pilot program.
              212.7102-1
              Contracts under the program.
              212.7102-2
              Reporting requirements.
              212.7102-3
              Sunset of the pilot authority.
              212.7103
              Solicitation provision.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            60 FR 61595, Nov. 30, 1995, unless otherwise noted.

            212.001
            Definitions.
            As used in this part—

              Market research means a review of existing systems, subsystems, capabilities, and technologies that are available or could be made available to meet the needs of DoD in whole or in part. The review shall include, at a minimum, contacting knowledgeable individuals in Government and industry regarding existing market capabilities and pricing information, and may include any of the techniques for conducting market research provided in FAR 10.002(b)(2) (section 855 of the National Defense Authorization Act for Fiscal Year 2016 (Pub. L. 114-92)).
            [83 FR 4442, Jan. 31, 2018, as amended at 85 FR 19688, Apr. 8, 2020]

            Subpart 212.1—Acquisition of Commercial Items—General

              Source:
              73 FR 4114, Jan. 24, 2008, unless otherwise noted.

              212.102
              Applicability.
              (a)(i) Commercial item determination. When using FAR part 12 procedures for acquisitions exceeding $1 million in value, except for acquisitions made pursuant to FAR 12.102(f)(1), the contracting officer shall—
              (A) Determine in writing that the acquisition meets the commercial item definition in FAR 2.101;
              (B) Include the written determination in the contract file; and
              (C) Obtain approval at one level above the contracting officer when a commercial item determination relies on subsections (1)(ii), (3), (4), or (6) of the “commercial item” definition at FAR 2.101.
              (D) Follow the procedures and guidance at PGI 212.102(a)(i) regarding file documentation and commercial item determinations.
              (ii) Prior commercial item determination. This section implements 10 U.S.C. 2306a(b)(4) and 10 U.S.C. 2380(b).
              (A) The contracting officer may presume that a prior commercial item determination made by a military department, a defense agency, or another component of DoD shall serve as a determination for subsequent procurements of such item. See PGI 212.102(a)(ii) for information about items that the Department has historically acquired as military unique, noncommercial items.

              (B) If the contracting officer does not make the presumption that a prior commercial item determination is valid, and instead chooses to proceed with a procurement of an item previously determined to be a commercial item using procedures other than the procedures authorized for the procurement of a commercial item, the contracting officer shall request a review of the commercial item determination by the head of the contracting activity that will conduct the procurement. Not later than 30 days after receiving a request for review of a commercial item determination, the head of a contracting activity shall—

              (1) Confirm that the prior determination was appropriate and still applicable; or
              (2) Issue a determination that the prior use of FAR part 12 procedures was improper or that it is no longer appropriate to acquire the item using FAR part 12 procedures, with a written explanation of the basis for the determination (see 212.70).
              (iii) Nontraditional defense contractors. In accordance with 10 U.S.C. 2380a, contracting officers—
              (A) Except as provided in paragraph (a)(iii)(B) of this section, may treat supplies and services provided by nontraditional defense contractors as commercial items. This permissive authority is intended to enhance defense innovation and investment, enable DoD to acquire items that otherwise might not have been available, and create incentives for nontraditional defense contractors to do business with DoD. It is not intended to recategorize current noncommercial items; however, when appropriate, contracting officers may consider applying commercial item procedures to the procurement of supplies and services from business segments that meet the definition of “nontraditional defense contractor” even though they have been established under traditional defense contractors. The decision to apply commercial item procedures to the procurement of supplies and services from nontraditional defense contractors does not require a commercial item determination and does not mean the item is commercial;
              (B) Shall treat services provided by a business unit that is a nontraditional defense contractor as commercial items, to the extent that such services use the same pool of employees as used for commercial customers and are priced using methodology similar to methodology used for commercial pricing; and
              (C) Shall document the file when treating supplies or services from a nontraditional defense contractor as commercial items in accordance with paragraph (a)(iii)(A) or (B) of this section.
              [77 FR 14480, Mar. 12, 2012, as amended at 80 FR 10390, Feb. 26, 2015; 81 FR 65563, Sept. 23, 2016; 83 FR 4442, Jan. 31, 2018; 85 FR 60921, Sept. 29, 2020]

            Subpart 212.2—Special Requirements for the Acquisition of Commercial Items

              212.203
              Procedures for solicitation, evaluation, and award
              (1) See 215.101-2-70 for the limitations and prohibitions on the use of the lowest price technically acceptable source selection process, which are applicable to the acquisition of commercial items.
              (2) See 217.7801 for the prohibition on the use of reverse auctions for personal protective equipment and aviation critical safety items.
              [84 FR 50788, Sept. 26, 2019]

              212.205
              Offers.
              (c) When using competitive procedures, if only one offer is received, the contracting officer shall follow the procedures at 215.371.
              [77 FR 39138, June 29, 2012]

              212.207
              Contract type.
              (b) In accordance with section 805 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181), use of time-and-materials and labor-hour contracts for the acquisition of commercial items is authorized only for the following:

              (i) Services acquired for support of a commercial item, as described in paragraph (5) of the definition of commercial item at FAR 2.101 (41 U.S.C. 103.
              (ii) Emergency repair services.
              (iii) Any other commercial services only to the extent that the head of the agency concerned approves a written determination by the contracting officer that—

              (A) The services to be acquired are commercial services as defined in paragraph (6) of the definition of commercial item at FAR 2.101 (41 U.S.C. 103);
              (B) If the services to be acquired are subject to FAR 15.403-1(c)(3)(ii), the offeror of the services has submitted sufficient information in accordance with that subsection;

              (C) Such services are commonly sold to the general public through use of time-and-materials or labor-hour contracts; and

              (D) The use of a time-and-materials or labor-hour contract type is in the best interest of the Government.
              [74 FR 34264, July 15, 2009, as amended at 74 FR 35826, July 21, 2009; 76 FR 21812, Apr. 19, 2011; 76 FR 58136, Sept. 20, 2011]

              212.209
              Determination of price reasonableness.
              (a) In accordance with 10 U.S.C. 2377(d), agencies shall conduct or obtain market research to support the determination of the reasonableness of price for commercial items contained in any bid or offer submitted in response to an agency solicitation. To the extent necessary to support such market research, the contracting officer—
              (1) In the case of major weapon systems items acquired as commercial items in accordance with subpart 234.70, shall use information submitted under 234.7002(d); and
              (2) In the case of other items, may require the offeror to submit other relevant information.
              (b) If the contracting officer determines that the information obtained through market research pursuant to paragraph (a) of this section, is insufficient to determine the reasonableness of price, the contracting officer shall consider information submitted by the offeror of recent purchase prices paid by the Government and commercial customers for the same or similar commercial items under comparable terms and conditions in establishing price reasonableness on a subsequent purchase if the contracting officer is satisfied that the prices previously paid remain a valid reference for comparison. In assessing whether the prices previously paid remain a valid reference for comparison, the contracting officer shall consider the totality of other relevant factors such as the time elapsed since the prior purchase and any differences in the quantities purchased (10 U.S.C. 2306a(b)).
              (c) If the contracting officer determines that the offeror cannot provide sufficient information as described in paragraph (b) of this section to determine the reasonableness of price, the contracting officer should request the offeror to submit information on—
              (1) Prices paid for the same or similar items sold under different terms and conditions;
              (2) Prices paid for similar levels of work or effort on related products or services;
              (3) Prices paid for alternative solutions or approaches; and
              (4) Other relevant information that can serve as the basis for determining the reasonableness of price.
              (d) Nothing in this section shall be construed to preclude the contracting officer from requiring the contractor to supply information that is sufficient to determine the reasonableness of price, regardless of whether or not the contractor was required to provide such information in connection with any earlier procurement. If the contracting officer determines that the pricing information submitted is not sufficient to determine the reasonableness of price, the contracting officer may request other relevant information regarding the basis for price or cost, including uncertified cost data such as labor costs, material costs, and other direct and indirect costs.
              [83 FR 4442, Jan. 31, 2018, as amended at 85 FR 34531, June5, 2020]

              212.211
              Technical data.
              The DoD policy for acquiring technical data for commercial items is at 227.7102.

              212.212
              Computer software.
              (1) Departments and agencies shall identify and evaluate, at all stages of the acquisition process (including concept refinement, concept decision, and technology development), opportunities for the use of commercial computer software and other non-developmental software in accordance with Section 803 of the National Defense Authorization Act for Fiscal Year 2009 (Pub. L. 110-417).

              (2) See Subpart 208.74 when acquiring commercial software or software maintenance. See 227.7202 for policy on the acquisition of commercial computer software and commercial computer software documentation.
              [74 FR 34270, July 15, 2009]

              212.270
              Major weapon systems as commercial items.
              The DoD policy for acquiring major weapon systems as commercial items is in Subpart 234.70.
              [71 FR 58538, Oct. 4, 2006]

              212.271
              Limitation on acquisition of right-hand drive passenger sedans.
              10 U.S.C. 2253(a)(2) limits the authority to purchase right-hand drive passenger sedans to a cost of not more than $45,000 per vehicle.
              [77 FR 19128, Mar. 30, 2012, as amended at 85 FR 61504, Sept. 29, 2020]

              212.272
              Preference for certain commercial products and services.
              (a) As required by section 855 of the National Defense Authorization Act for Fiscal Year 2016 (Pub. L. 114-92), for requirements relating to the acquisition of commercial information technology products and services, see 239.101.
              (b)(1) As required by section 876 of the National Defense Authorization Act of Fiscal Year 2017 (Pub. L. 114-328), a contracting officer may not enter into a contract above the simplified acquisition threshold for facilities-related services, knowledge-based services (except engineering services), medical services, or transportation services that are not commercial services, unless the appropriate official specified in paragraph (b)(2) of this section determines in writing that no commercial services are suitable to meet the agency's needs as provided in section 10 U.S.C. 2377(c)(2).
              (2) The following officials are authorized to make the determination specified in paragraph (b)(1) of this section:
              (i) For contracts above $10 million, the head of the contracting activity, the combatant commander of the combatant command concerned, or the Under Secretary of Defense for Acquisition and Sustainment (as applicable).
              (ii) For contracts in an amount above the simplified acquisition threshold and at or below $10 million, the contracting officer.
              [84 FR 39204, Aug. 9, 2019]

            Subpart 212.3—Solicitation Provisions and Contract Clauses for the Acquisition of Commercial Items

              212.301
              Solicitation provisions and contract clauses for the acquisition of commercial items.
              (c) Include an evaluation factor regarding supply chain risk (see subpart 239.73) when acquiring information technology, whether as a service or as a supply, that is a covered system, is a part of a covered system, or is in support of a covered system, as defined in 239.7301.

              (f) The following additional provisions and clauses apply to DoD solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items. If the offeror has completed any of the following provisions listed in this paragraph electronically as part of its annual representations and certifications at https://www.acquisition.gov, the contracting officer shall consider this information instead of requiring the offeror to complete these provisions for a particular solicitation.
              (i) Part 203—Improper Business Practices and Personal Conflicts of Interest. (A) Use the FAR clause at 52.203-3, Gratuities, as prescribed in FAR 3.202, to comply with 10 U.S.C. 2207.
              (B) Use the clause at 252.203-7000, Requirements Relating to Compensation of Former DoD Officials, as prescribed in 203.171-4(a), to comply with section 847 of Pub. L. 110-181.
              (C) Use the clause at 252.203-7003, Agency Office of the Inspector General, as prescribed in 203.1004(a), to comply with section 6101 of Pub. L. 110-252 and 41 U.S.C. 3509.
              (D) Use the provision at 252.203-7005, Representation Relating to Compensation of Former DoD Officials, as prescribed in 203.171-4(b).
              (ii) Part 204-Administrative and Information Matters.

              (A) Use the clause at 252.204-7004, Antiterrorism Awareness Training for Contractors, as prescribed in 204.7203.

              (B) Use the provision at 252.204-7008, Compliance with Safeguarding Covered Defense Information Controls, as prescribed in 204.7304(a).

              (C) Use the clause at 252.204-7009, Limitations on the Use or Disclosure of Third-Party Contractor Reported Cyber Incident Information, as prescribed in 204.7304(b).
              (D) Use the clause at 252.204-7012, Safeguarding Covered Defense Information and Cyber Incident Reporting, as prescribed in 204.7304(c).
              (E) Use the clause at 252.204-7014, Limitations on the Use or Disclosure of Information by Litigation Support Contractors, as prescribed in204.7403(a), to comply with 10 U.S.C. 129d.
              (F) Use the clause at 252.204-7015, Notice of Authorized Disclosure of Information for Litigation Support, as prescribed in 204.7403(b), to comply with 10 U.S.C. 129d.
              (H) Use the provision at 252.204-7016, Covered Defense Telecommunications Equipment or Services—Representation, as prescribed in 204.2105(a), to comply with section 1656 of the National Defense Authorization Act for Fiscal Year 2018 (Pub. L. 115-91).
              (I) Use the provision at 252.204-7017, Prohibition on the Acquisition of Covered Defense Telecommunications Equipment or Services—Representation, as prescribed in 204.2105(b), to comply with section 1656 of the National Defense Authorization Act for Fiscal Year 2018 (Pub. L. 115-91).
              (J) Use the clause at 252.204-7018, Prohibition on the Acquisition of Covered Defense Telecommunications Equipment or Services, as prescribed in 204.2105(c), to comply with section 1656 of the National Defense Authorization Act for Fiscal Year 2018 (Pub. L. 115-91).
              (iii) Part 205—Publicizing Contract Actions. Use the clause at 252.205-7000, Provision of Information to Cooperative Agreement Holders, as prescribed in 205.470, to comply with 10 U.S.C. 2416.
              (iv) Part 211—Describing Agency Needs. (A) Use the clause at 252.211-7003, Item Unique Identification and Valuation, as prescribed in 211.274-6(a)(1).
              (B) Use the provision at 252.211-7006, Passive Radio Frequency Identification, as prescribed in 211.275-3.
              (C) Use the clause at 252.211-7007, Reporting of Government-Furnished Property, as prescribed in 211.274-6.
              (D) Use the clause at 252.211-7008, Use of Government-Assigned Serial Numbers, as prescribed in 211.274-6(c).
              (v) Part 213—Simplified Acquisition Procedures. Use the provision at 252.213-7000, Notice to Prospective Suppliers on Use of Supplier Performance Risk System in Past Performance Evaluations, as prescribed in 213.106-2-70.
              (vi) Part 215—Contracting by Negotiation. (A) Use the provision at 252.215-7003, Requirements for Submission of Data Other Than Certified Cost or Pricing Data—Canadian Commercial Corporation, as prescribed at 215.408(2)(i).
              (B) Use the clause at 252.215-7004, Requirement for Submission of Data other Than Certified Cost or Pricing Data—Modifications—Canadian Commercial Corporation, as prescribed at 215.408(2)(ii).
              (C) Use the provision at 252.215-7007, Notice of Intent to Resolicit, as prescribed in 215.371-6.
              (D) Use the provision 252.215-7008, Only One Offer, as prescribed at 215.408(3).
              (E) Use the provision 252.215-7010, Requirements for Certified Cost or Pricing Data and Data Other Than Certified Cost or Pricing Data, as prescribed at 215.408(5)(i) to comply with section 831 of the National Defense Authorization Act for Fiscal Year 2013 (Pub. L. 112-239) and sections 851 and 853 of the National Defense Authorization Act for Fiscal Year 2016 (Pub. L. 114-92).
              (1) Use the basic provision as prescribed at 215.408(5)(i)(A).
              (2) Use the alternate I provision as prescribed at 215.408(5)(i)(B).
              (vii) Part 219—Small Business Programs. (A) Use the clause at 252.219-7003, Small Business Subcontracting Plan (DoD Contracts), to comply with 15 U.S.C. 637.
              (1) Use the basic clause as prescribed in 219.708(b)(1)(A)(1).
              (2) Use the alternate I clause as prescribed in 219.708(b)(1)(A)(2).
              (3) Use the alternate II clause as prescribed in 219.708(b)(1)(A)(3).

              (B) Use the clause at 252.219-7004, Small Business Subcontracting Plan (Test Program), as prescribed in 219.708(b)(1)(B), to comply with 15 U.S.C. 637 note.

              (C) Use the provision at 252.219-7000, Advancing Small Business Growth, as prescribed in 219.309(1), to comply with 10 U.S.C. 2419.
              (D) Use the provision at 252.219-7012, Competition for Religious-Related Services, as prescribed in 219.270-3.
              (viii) Part 223—Environment, Energy and Water Efficiency, Renewable Energy Technologies, Occupational Safety, and Drug-Free Workplace. Use the clause at 252.223-7008, Prohibition of Hexavalent Chromium, as prescribed in 223.7306.
              (ix) Part 225—Foreign Acquisition. (A) Use the provision at 252.225-7000, Buy American—Balance of Payments Program Certificate, to comply with 41 U.S.C. chapter 83 and Executive Order 10582 of December 17, 1954, Prescribing Uniform Procedures for Certain Determinations Under the Buy-American Act.
              (1) Use the basic provision as prescribed in 225.1101(1)(i).
              (2) Use the alternate I provision as prescribed in 225.1101(1)(ii).
              (B) Use the clause at 252.225-7001, Buy American and Balance of Payments Program, to comply with 41 U.S.C. chapter 83 and Executive Order 10582 of December 17, 1954, Prescribing Uniform Procedures for Certain Determinations Under the Buy-American Act.
              (1) Use the basic clause as prescribed in 225.1101(2)(ii).
              (2) Use the alternate I clause as prescribed in 225.1101(2)(iii).
              (C) Use the clause at 252.225-7006, Acquisition of the American Flag, as prescribed in 225.7002-3(c), to comply with section 8123 of the DoD Appropriations Act, 2014 (Pub. L. 113-76, division C, title VIII), and the same provision in subsequent DoD appropriations acts.
              (D) Use the clause at 252.225-7007, Prohibition on Acquisition of Certain Items from Communist Chinese Military Companies, as prescribed in 225.1103(4), to comply with section 1211 of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2006 (Pub. L. 109-163) as amended by the NDAAs for FY 2012 and FY 2017.
              (E) Use the clause at 252.225-7008, Restriction on Acquisition of Specialty Metals, as prescribed in 225.7003-5(a)(1), to comply with 10 U.S.C. 2533b.
              (F) Use the clause at 252.225-7009, Restriction on Acquisition of Certain Articles Containing Specialty Metals, as prescribed in 225.7003-5(a)(2), to comply with 10 U.S.C. 2533b.
              (G) Use the provision at 252.225-7010, Commercial Derivative Military Article—Specialty Metals Compliance Certificate, as prescribed in 225.7003-5(b), to comply with 10 U.S.C. 2533b.
              (H) Use the clause at 252.225-7012, Preference for Certain Domestic Commodities, as prescribed in 225.7002-3(a), to comply with 10 U.S.C. 2533a.
              (I) Use the clause at 252.225-7015, Restriction on Acquisition of Hand or Measuring Tools, as prescribed in 225.7002-3(b), to comply with 10 U.S.C. 2533a.
              (J) Use the clause at 252.225-7016, Restriction on Acquisition of Ball and Roller Bearings, as prescribed in 225.7009-5, to comply with section 8065 of Pub. L. 107-117 and the same restriction in subsequent DoD appropriations acts.
              (K) Use the clause at 252.225-7017, Photovoltaic Devices, as prescribed in 225.7017-4(a), to comply with section 846 of Public Law 111-383.
              (L) Use the provision at 252.225-7018, Photovoltaic Devices—Certificate, as prescribed in 225.7017-4(b), to comply with section 846 of Public Law 111-383.
              (M) Use the provision at 252.225-7020, Trade Agreements Certificate, to comply with 19 U.S.C. 2501-2518 and 19 U.S.C. 3301 note. Alternate I also implements section 886 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181).
              (1) Use the basic provision as prescribed in 225.1101(5)(i).
              (2) Use the alternate I provision as prescribed in 225.1101(5)(ii).
              (N) Use the clause at 252.225-7021, Trade Agreements to comply with 19 U.S.C. 2501-2518 and 19 U.S.C. 3301 note.
              (1) Use the basic clause as prescribed in 225.1101(6)(i).
              (2) Use the alternate II clause as prescribed in 225.1101(6)(iii).
              (O) Use the provision at 252.225-7023, Preference for Products or Services from Afghanistan, as prescribed in 225.7703-4(a), to comply with section 886 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181).

              (P) Use the clause at 252.225-7024, Requirement for Products or Services from Afghanistan, as prescribed in 225.7703-4(b), to comply with section 886 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181).
              (Q) Use the clause at 252.225-7026, Acquisition Restricted to Products or Services from Afghanistan, as prescribed in 225.7703-4(c), to comply with section 886 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181).
              (R) Use the clause at 252.225-7027, Restriction on Contingent Fees for Foreign Military Sales, as prescribed in 225.7307(a), to comply with 22 U.S.C. 2779.
              (S) Use the clause at 252.225-7028, Exclusionary Policies and Practices of Foreign Governments, as prescribed in 225.7307(b), to comply with 22 U.S.C. 2755.
              (T) Use the clause at 252.225-7029, Acquisition of Uniform Components for Afghan Military or Afghan National Police, as prescribed in 225.7703-4(d).
              (U) Use the provision at 252.225-7031, Secondary Arab Boycott of Israel, as prescribed in 225.7605, to comply with 10 U.S.C. 2410i.
              (V) Use the provision at 252.225-7035, Buy American—Free Trade Agreements—Balance of Payments Program Certificate, to comply with 41 U.S.C. chapter 83 and 19 U.S.C. 3301 note. Alternates II, III, and V also implement section 886 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181).
              (1) Use the basic provision as prescribed in 225.1101(9)(i).
              (2) Use the alternate I provision as prescribed in 225.1101(9)(ii).
              (3) Use the alternate II provision as prescribed in 225.1101(9)(iii).
              (4) Use the alternate III provision as prescribed in 225.1101(9)(iv).
              (5) Use the alternate IV provision as prescribed in 225.1101(9)(v).
              (6) Use the alternate V provision as prescribed in 225.1101(9)(vi).
              (W) Use the clause at 252.225-7036, Buy American—Free Trade Agreements—Balance of Payments Program to comply with 41 U.S.C. chapter 83 and 19 U.S.C. 3301 note. Alternates II, III, and V also implement section 886 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181).
              (1) Use the basic clause as prescribed in 225.1101(10)(i)(A).
              (2) Use the alternate I clause as prescribed in 225.1101(10)(i)(B).
              (3) Use the alternate II clause as prescribed in 225.1101(10)(i)(C).
              (4) Use the alternate III clause as prescribed in 225.1101(10)(i)(D).
              (5) Use the alternate IV clause as prescribed in 225.1101(10)(i)(E).
              (6) Use the alternate V clause as prescribed in 225.1101(10)(i)(F).
              (X) Use the provision at 252.225-7037, Evaluation of Offers for Air Circuit Breakers, as prescribed in 225.7006-4(a), to comply with 10 U.S.C. 2534(a)(3).
              (Y) Use the clause at 252.225-7038, Restriction on Acquisition of Air Circuit Breakers, as prescribed in 225.7006-4(b), to comply with 10 U.S.C. 2534(a)(3).
              (Z) Use the clause at 252.225-7039, Defense Contractors Performing Private Security Functions Outside the United States, as prescribed in 225.302-6, to comply with section 2 of Pub. L. 110-181, as amended.
              (AA) Use the clause at 252.225-7040, Contractor Personnel Supporting U.S. Armed Forces Deployed Outside the United States, as prescribed in 225.371-5(a).
              (BB) Use the clause at 252.225-7043, Antiterrorism/Force Protection Policy for Defense Contractors Outside the United States, as prescribed in 225.372-2.
              (CC) Use the provision at 252.225-7049, Prohibition on Acquisition of Certain Foreign Commercial Satellite Services—Representations, as prescribed in 225.772-5(a), to comply with 10 U.S.C. 2279.
              (DD) Use the provision at 252.225-7050, Disclosure of Ownership or Control by the Government of a Country that is a State Sponsor of Terrorism, as prescribed in 225.771-5, to comply with 10 U.S.C. 2327(b).
              (EE) Use the clause at 252.225-7051, Prohibition on Acquisition for Certain Foreign Commercial Satellite Services, as prescribed in 225.772-5(b), to comply with 10 U.S.C. 2279.
              (FF) Use the clause at 252.225-7052, Restriction on the Acquisition of Certain Magnets, Tantalum, and Tungsten, as prescribed in 225.7018-5.
              (x) Part 226—Other Socioeconomic Programs. (A) Use the clause at 252.226-7001, Utilization of Indian Organizations, Indian-Owned Economic Enterprises, and Native Hawaiian Small Business Concerns, as prescribed in 226.104, to comply with section 8021 of Pub. L. 107-248 and similar sections in subsequent DoD appropriations acts.
              (B) Use the provision at 252.226-7002, Representation for Demonstration Project for Contractors Employing Persons with Disabilities, as prescribed in 226.7203.
              (xi) Part 227—Patents, Data, and Copyrights. (A) Use the clause at 252.227-7013, Rights in Technical Data-Noncommercial Items, as prescribed in 227.7103-6(a). Use the clause with its Alternate I as prescribed in 227.7103-6(b)(1). Use the clause with its Alternate II as prescribed in 227.7103-6(b)(2), to comply with 10 U.S.C. 7317 and 17 U.S.C. 1301, et seq.

              (B) Use the clause at 252.227-7015, Technical Data-Commercial Items, as prescribed in 227.7102-4(a)(1), to comply with 10 U.S.C. 2320. Use the clause with its Alternate I as prescribed in 227.7102-4(a)(2), to comply with 10 U.S.C. 7317 and 17 U.S.C. 1301, et seq.

              (C) Use the clause at 252.227-7037, Validation of Restrictive Markings on Technical Data, as prescribed in 227.7102-4(c).
              (xii) Part 229—Taxes. (A) Use the clause at 252.229-7014, Taxes—Foreign Contracts in Afghanistan, as prescribed at 229.402-70(k).
              (B) Use the clause at 252.229-7015, Taxes—Foreign Contracts in Afghanistan (North Atlantic Treaty Organization Status of Forces Agreement), as prescribed at 229.402-70(l).
              (xiii) Part 232—Contract Financing. (A) Use the clause at 252.232-7003, Electronic Submission of Payment Requests and Receiving Reports, as prescribed in 232.7004, to comply with 10 U.S.C. 2227.
              (B) Use the clause at 252.232-7006, Wide Area WorkFlow Payment Instructions, as prescribed in 232.7004(b).
              (C) Use the clause at 252.232-7009, Mandatory Payment by Governmentwide Commercial Purchase Card, as prescribed in 232.1110.
              (D) Use the clause at 252.232-7010, Levies on Contract Payments, as prescribed in 232.7102.
              (E) Use the clause at 252.232-7011, Payments in Support of Emergencies and Contingency Operations, as prescribed in 232.908.
              (F) Use the provision at 252.232-7014, Notification of Payment in Local Currency (Afghanistan), as prescribed in 232.7202.
              (G) Use the clause at 252.232-7017, Accelerating Payments to Small Business Subcontractors—Prohibition on Fees and Consideration, as prescribed in 232.009-2(2), to comply with 10 U.S.C. 2307(a).
              (xiv) Part 237—Service Contracting. (A) Use the clause at 252.237-7010, Prohibition on Interrogation of Detainees by Contractor Personnel, as prescribed in 237.173-5, to comply with section 1038 of Pub. L. 111-84.
              (B) Use the clause at 252.237-7019, Training for Contractor Personnel Interacting with Detainees, as prescribed in 237.171-4, to comply with section 1092 of Pub. L. 108-375.
              (xv) Part 239—Acquisition of Information Technology. (A) Use the provision 252.239-7009, Representation of Use of Cloud Computing, as prescribed in 239.7604(a).
              (B) Use the clause 252.239-7010, Cloud Computing Services, as prescribed in 239.7604(b).
              (C) Use the provision at 252.239-7017, Notice of Supply Chain Risk, as prescribed in 239.7306(a), to comply with 10 U.S.C. 2339a.
              (D) Use the clause at 252.239-7018, Supply Chain Risk, as prescribed in 239.7306(b), to comply with 10 U.S.C. 2339a.
              (xvi) Part 243—Contract Modifications. Use the clause at 252.243-7002, Requests for Equitable Adjustment, as prescribed in 243.205-71, to comply with 10 U.S.C. 2410.
              (xvii) Part 244—Subcontracting Policies and Procedures. Use the clause at 252.244-7000, Subcontracts for Commercial Items, as prescribed in 244.403.
              (xviii) Part 246—Quality Assurance. (A) Use the clause at 252.246-7003, Notification of Potential Safety Issues, as prescribed in246.370(a).

              (B) Use the clause at 252.246-7004, Safety of Facilities, Infrastructure, and Equipment for Military Operations, as prescribed in 246.270-4, to comply with section 807 of Pub. L. 111-84.
              (C) Use the clause at 252.246-7008, Sources of Electronic Parts, as prescribed in 246.870-3(b), to comply with section 818(c)(3) of Public Law 112-81, as amended by section 817 of the National Defense Authorization Act for Fiscal Year 2015 (Pub. L. 113-291 and section 885 of the National Defense Authorization Act for Fiscal Year 2016 (Pub. L. 114-92).
              (xix) Part 247—Transportation. (A) Use the clause at 252.247-7003, Pass-Through of Motor Carrier Fuel Surcharge Adjustment to the Cost Bearer, as prescribed in 247.207, to comply with section 884 of Pub. L. 110-417.
              (B) Use the provision at 252.247-7022, Representation of Extent of Transportation by Sea, as prescribed in 247.574(a).
              (C) Use the basic or one of the alternates of the clause at 252.247-7023, Transportation of Supplies by Sea, as prescribed in 247.574(b), to comply with the Cargo Preference Act of 1904 (10 U.S.C. 2631(a)).
              (1) Use the basic clause as prescribed in 247.574(b)(1).
              (2) Use the alternate I clause as prescribed in 247.574(b)(2).
              (3) Use the alternate II clause as prescribed in 247.574(b)(3).
              (D) Use the clause 252.247-7025, Reflagging or Repair Work, as prescribed in 247.574(c), to comply with 10 U.S.C. 2631(b).
              (E) Use the provision at 252.247-7026, Evaluation Preference for Use of Domestic Shipyards—Applicable to Acquisition of Carriage by Vessel for DoD Cargo in the Coastwise or Noncontiguous Trade, as prescribed in 247.574(d), to comply with section 1017 of Pub. L. 109-364.
              (F) Use the clause at 252.247-7027, Riding Gang Member Requirements, as prescribed in 247.574(e), to comply with section 3504 of the National Defense Authorization Act for Fiscal Year 2009 (Pub. L. 110-417).
              (G) Use the clause at 252.247-7028, Application for U.S. Government Shipping Documentation/Instructions, as prescribed in 247.207.
              [80 FR 2019, Jan. 15, 2015, as amended at 80 FR 4999, Jan. 29, 2015; 80 FR 30116, 30118, May 26, 2015; 80 FR 36901, June 26, 2015; 80 FR 51743, 51749, Aug. 26, 2015; 80 FR 56929, Sept. 21, 2015; 80 FR 67251, Oct. 30, 2015; 80 FR 72603, Nov. 20, 2015; 80 FR 81469, Dec. 30, 2015; 81 FR 17046, Mar. 25, 2016; 81 FR 28728, 28730, May 10, 2016; 81 FR 50647, Aug. 2, 2016; 82 FR 61480, Dec. 28, 2017; 83 FR 4443, Jan. 31, 2018; 83 FR 16002, Apr. 13, 2018; 83 FR 19645, May 4, 2018; 83 FR 24887, 24888, May 30, 2018; 83 FR 30825, June 29, 2018; 83 FR 62499, Dec. 4, 2018; 83 FR 66063, 66071, Dec. 21, 2018; 84 FR 4363, 4369, 4371, Feb. 15, 2019; 84 FR 18158, Apr. 30, 2019; 84 FR 48508, 48510, Sept. 13, 2019; 84 FR 58332, Oct. 31, 2019; 84 FR 72237, 72559, Dec. 31, 2019; 85 FR 19697, Apr. 8, 2020; 85 FR 61501, 61520, Sept. 29, 2020]
              § 212.301, Nt.

                Effective Date Note:
                At 85 FR 61520, Sept. 29, 2020, § 212.301 was amended by adding paragraphs (f)(ii)(K), (L), and (M), effective Nov. 30, 2020. For the convenience of the user, the added text is set forth as follows:

                    212.301
                    Solicitation provisions and contract clauses for acquisition of commercial items.

                    (f) * * *
                    (ii) * * *
                    (K) Use the provision at 252.204-7019, Notice of NIST SP 800-171 DoD Assessment Requirements, as prescribed in 204.7304(d).
                    (L) Use the clause at 252.204-7020, NIST SP 800-171 DoD Assessment Requirements, as prescribed in 204.7304(e).
                    (M) Use the clause at 252.204-7021, Cybersecurity Maturity Model Certification Requirements, as prescribed in 204.7503(a) and (b).

              212.302
              Tailoring of provisions and clauses for the acquisition of commercial items.
              (c) Tailoring inconsistent with customary commercial practice. The head of the contracting activity is the approval authority within the DoD for waivers under FAR 12.302(c).

            Subpart 212.5—Applicability of Certain Laws to the Acquisition of Commercial Items

              212.503
              Applicability of certain laws to executive agency contracts for the acquisition of commercial items.
              (a) The following laws are not applicable to contracts for the acquisition of commercial items:
              (i) 10 U.S.C. 2306(b), Prohibition on Contingent Fees.
              (ii) 10 U.S.C. 2324, Allowable Costs Under Defense Contracts.
              (iii) 10 U.S.C. 2384(b), Requirement to Identify Suppliers.
              (iv) 10 U.S.C. 2397(a)(1), Reports by Employees or Former Employees of Defense Contractors.
              (v) 10 U.S.C. 2397b(f), Limits on Employment for Former DoD Officials.
              (vi) 10 U.S.C. 2397c, Defense Contractor Requirements Concerning Former DoD Officials.
              (vii) 10 U.S.C. 2408(a), Prohibition on Persons Convicted of Defense Related Felonies.
              (viii) 10 U.S.C. 2410b, Contractor Inventory Accounting System Standards (see 252.242-7004).
              (ix) 107 Stat 1720 (Section 843(a), Public Law 103-160), Reporting Requirement Regarding Dealings with Terrorist Countries.
              (x) Domestic Content Restrictions in the National Defense Appropriations Acts for Fiscal Years 1996 and Subsequent Years, unless the restriction specifically applies to commercial items. For the restriction that specifically applies to commercial ball or roller bearings as end items, see 225.7009-3 (section 8065 of Pub. L. 107-117).
              (xi) Section 8116 of the Defense Appropriations Act for Fiscal Year 2010 (Pub. L. 111-118) and similar sections in subsequent DoD appropriations acts.
              (c) The applicability of the following laws has been modified in regard to contracts for the acquisition of commercial items:
              (i) 10 U.S.C. 2402, Prohibition on Limiting Subcontractor Direct Sales to the United States (see FAR 3.503 and 52.203-6).
              (ii) 10 U.S.C. 2306a, Truth in Negotiations Act (see FAR 15.403-1(b)(3)).
              [60 FR 61595, Nov. 30, 1995, as amended at 63 FR 11851, Mar. 11, 1998; 63 FR 55040, Oct. 14, 1998; 65 FR 77828, Dec. 13, 2000; 67 FR 4208, Jan. 29, 2002; 69 FR 65089, Nov. 10, 2004; 73 FR 76970, Dec. 18, 2008; 75 FR 27947, May 19, 2010; 76 FR 38047, June 29, 2011; 76 FR 76319, Dec. 7, 2011; 79 FR 73489, Dec. 11, 2014]

              212.504
              Applicability of certain laws to subcontracts for the acquisition of commercial items.
              (a) The following laws are not applicable to subcontracts at any tier for the acquisition of commercial items or commercial components:
              (i) 10 U.S.C. 2306(b) Prohibition on Contingent Fees.
              (ii) 10 U.S.C. 2313(c), Examination of Records of a Contractor.
              (iii) 10 U.S.C. 2324, Allowable Costs Under Defense Contracts.
              (iv) 10 U.S.C. 2327, Reporting Requirement Regarding Dealings with Terrorist Countries.
              (v) 10 U.S.C. 2384(b), Requirement to Identify Suppliers.
              (vi) 10 U.S.C. 2391 note, Notification of Substantial Impact on Employment.
              (vii) 10 U.S.C. 2393, Prohibition Against Doing Business with Certain Offerors or Contractors.
              (viii) 10 U.S.C. 2397(a)(1), Reports by Employees or Former Employees of Defense Contractors.
              (ix) 10 U.S.C. 2397b(f), Limits on Employment for Former DoD Officials.
              (x) 10 U.S.C. 2397c, Defense Contractor Requirements Concerning Former DoD Officials.
              (xi) 10 U.S.C. 2408(a) Prohibition on Persons Convicted of Defense Related Felonies.
              (xii) 10 U.S.C. 2410b, Contractor Inventory Accounting System Standards.
              (xiii) 10 U.S.C. 2501 note, Notification of Proposed Program Termination.
              (xiv) 10 U.S.C. 2534, Miscellaneous Limitations on the Procurement of Goods Other Than United States Goods.
              (xv) 10 U.S.C. 2631, Transportation of Supplies by Sea (except as provided in the clause at 252.247-7023, Transportation of Supplies by Sea).

              (xvi) Domestic Content Restrictions in the National Defense Appropriations Acts for Fiscal Years 1996 and Subsequent Years, unless the restriction specifically applies to commercial items. For the restriction that specifically applies to commercial ball or roller bearings as end items, see 225.7009-3 (section 8065 of Pub. L. 107-117).
              (xvii) Section 8116 of the Defense Appropriations Act for Fiscal Year 2010 (Pub. L. 111-118) and similar sections in subsequent DoD appropriations acts.
              (b) Certain requirements of the following laws have been eliminated for subcontracts at any tier for the acquisition of commercial items or commercial components:
              (i) 10 U.S.C. 2393(d), Subcontractor Reports Under Prohibition Against Doing Business with Certain Offerors (see FAR 52.209-6).
              (ii) 10 U.S.C. 2402, Prohibition on Limiting Subcontractor Direct Sales to the United States (see FAR 3.503 and 52.203-6).
              [60 FR 61595, Nov. 30, 1995, as amended at 61 FR 58488, Nov. 15, 1996; 62 FR 5780, Feb. 7, 1997; 65 FR 14401, Mar. 16, 2000; 65 FR 39704, June 27, 2000; 65 FR 77828, Dec. 13, 2000; 69 FR 63331, Nov. 1, 2004; 73 FR 76970, Dec. 18, 2008; 75 FR 27947, May 19, 2010; 76 FR 38048, June 29, 2011; 76 FR 58146, Sept. 20, 2011; 76 FR 76319, Dec. 7, 2011]

              212.570
              Applicability of certain laws to contracts and subcontracts for the acquisition of commercially available off-the-shelf items.
              Paragraph (a)(1) of 10 U.S.C. 2533b, Requirement to buy strategic materials critical to national security from American sources, is not applicable to contracts and subcontracts for the acquisition of commercially available off-the-shelf items, except as provided at 225.7003-3(b)(2)(i).
              [74 FR 37636, July 29, 2009]

            Subpart 212.6—Streamlined Procedures for Evaluation and Solicitation for Commercial Items

              212.602
              Streamlined evaluation of offers.
              (b)(i) For the acquisition of transportation and transportation-related services, also consider evaluating offers in accordance with the criteria at 247.206(1).
              (ii) For the acquisition of transportation in supply contracts that will include a significant requirement for transportation of items outside the contiguous United States, also evaluate offers in accordance with the criterion at 247.301-71.
              (iii) For the direct purchase of ocean transportation services, also evaluate offers in accordance with the criteria at 247.573-2(c).
              [65 FR 50143, Aug. 17, 2000, as amended at 70 FR 35544, June 21, 2005; 72 FR 49205, Aug. 28, 2007]

            Subpart 212.70—Limitation on Conversion of Procurement from Commercial Acquisition Procedures

              Source:
              83 FR 4443, Jan. 31, 2018, unless otherwise noted.

              212.7000
              Scope.
              This subpart implements section 856 of the National Defense Authorization Act for Fiscal Year 2016 (Pub. L. 114-92).

              212.7001
              Procedures.
              (a) Limitation. (1) For a procurement valued at more than $1 million, but less than $100 million, previously procured under a prime contract using FAR part 12 procedures based on a commercial item determination made by a military department, a defense agency, or another DoD component, prior to converting the procurement from commercial acquisition procedures to noncommercial acquisition procedures under FAR part 15, the head of the contracting activity shall determine in writing, upon recommendation from the contracting officer for the procurement that—
              (i) The earlier use of commercial acquisition procedures under FAR part 12 was in error or based on inadequate information; and
              (ii) DoD will realize a cost savings compared to the cost of procuring a similar quantity or level of such item or service using commercial acquisition procedures.

              (2) In the case of a procurement valued at $100 million or more, a contract may not be awarded pursuant to a conversion of the procurement described in paragraph (a)(1) of this section until a copy of the head of contracting activity determination is provided to the Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics.
              (b) In making a determination under paragraph (a) of this section, the determining official shall, at a minimum, consider the following factors:
              (1) The estimated cost of research and development to be performed by the existing contractor to improve future products or services.
              (2) The costs for DoD and the contractor in assessing and responding to data requests to support a conversion to noncommercial acquisition procedures.
              (3) Changes in purchase quantities.
              (4) Costs associated with potential procurement delays resulting from the conversion.
              (c) The requirements of this subpart terminate November 25, 2020.

            Subpart 212.71—Pilot Program for Acquisition of Military-Purpose Nondevelopmental Items

              Source:
              76 FR 38049, June 29, 2011, unless otherwise noted.

              212.7100
              Scope.
              This subpart establishes the pilot program authorized by section 866 of the National Defense Authorization Act for Fiscal Year 2011 (Pub. L. 111-383), as modified by section 892 of the National Defense Authorization Act for Fiscal Year 2016 (Pub. L. 114-92) .
              [76 FR 38049, June 29, 2011, as amended at 81 FR 42559, June 30, 2016]

              212.7101
              Definitions.
              As used in this subpart—

                Military-purpose nondevelopmental item means a nondevelopmental item that meets a validated military requirement, as determined in writing by the responsible program manager, and has been developed exclusively at private expense. An item shall not be considered to be developed at private expense if development of the item was paid for in whole or in part through—
              (1) Independent research and development costs or bid and proposal costs, per the definition in FAR 31.205-18, that have been reimbursed directly or indirectly by a Federal agency or have been submitted to a Federal agency for reimbursement; or
              (2) Foreign government funding.

                Nondevelopmental item is defined in FAR 2.101 and also includes previously developed items of supply that require modifications other than those customarily available in the commercial marketplace if such modifications are consistent with the requirement at 212.7102-1(c)(1).
              [81 FR 42559, June 30, 2016]

              212.7102
              Pilot program.

              212.7102-1
              Contracts under the program.
              The contracting officer may utilize this pilot program to enter into contracts for the acquisition of military-purpose nondevelopmental items. See PGI 212.7102 for file documentation requirements. Each contract entered into under the pilot program shall—
              (a) Be a firm-fixed-price contract, or a fixed-price contract with an economic price adjustment clause;
              (b) Be in an amount not in excess of $100 million;
              (c) Provide—
              (1) For the delivery of an initial lot of production quantities of completed items not later than nine months after the date of the award of such contract; and
              (2) That failure to make delivery as provided for under paragraph (c)(1) may result in termination for cause; and
              (d) Be—
              (1) Exempt from the requirement to submit certified cost or pricing data;
              (2) Exempt from the cost accounting standards under 41 U.S.C. 1502; and
              (3) Subject to the requirement to provide data other than certified cost or pricing data for the purpose of price reasonableness determinations.
              [76 FR 38049, June 29, 2011, as amended at 77 FR 35880, June 15, 2012; 80 FR 36904, June 26, 2015; 81 FR 42559, June 30, 2016]

              212.7102-2
              Reporting requirements.

              Departments and agencies shall prepare a consolidated annual report to provide information about contracts awarded under this pilot authority. The report shall be submitted to the Office of the Deputy Director, Defense Procurement and Acquisition Policy (Contract Policy and International Contracting), by October 31 each year in accordance with the procedures at PGI 212.7102. See PGI 212.7102 for annual reporting format.

              212.7102-3
              Sunset of the pilot authority.
              (a) The authority to carry out the pilot program described in this subpart expires on December 31, 2019.
              (b) The expiration under paragraph (a) of this section of the authority to carry out the pilot program will not affect the validity of any contract awarded under the pilot program before the expiration of the pilot program under that paragraph.
              [76 FR 38049, June 29, 2011, as amended at 79 FR 17447, Mar. 28, 2014]

              212.7103
              Solicitation provision.
              Use the provision at 252.212-7002, Pilot Program for Acquisition of Military-Purpose Nondevelopmental Items, in solicitations when use of the pilot program is planned and the applicability criteria of 212.7102-1 are met.
              [81 FR 78013, Nov. 4, 2016]

        SUBCHAPTER C—CONTRACTING METHODS AND CONTRACT TYPES

          Pt. 213
          PART 213—SIMPLIFIED ACQUISITION PROCEDURES

              Subpart 213.1—Procedures
              Sec.
              213.101
              General.
              213.104
              Promoting competition.
              213.106-1
              Soliciting competition.
              213.106-1-70
              Soliciting competition—tiered evaluation of offers.
              213.106-2
              Evaluation of quotations or offers.
              213.106-2-70
              Solicitation provision.

              Subpart 213.2—Actions at or Below the Micro-Purchase Threshold
              213.201
              General.
              213.270
              Use of the Governmentwide commercial purchase card.

              Subpart 213.3—Simplified Acquisition Methods
              213.301
              Governmentwide commercial purchase card.
              213.302
              Purchase orders.
              213.302-3
              Obtaining contractor acceptance and modifying purchase orders.
              213.302-5
              Clauses.
              213.303
              Blanket purchase agreements (BPAs).
              213.303-5
              Purchases under BPAs.
              213.305
              Imprest funds and third party drafts.
              213.305-3
              Conditions for use.
              213.306
              SF 44, Purchase Order-Invoice-Voucher.
              213.307
              Forms.

              Subpart 213.4—Fast Payment Procedure
              213.402
              Conditions for use.

              Subpart 213.5—Simplified Procedures for Certain Commercial Items
              213.500-70
              Only one offer.
              213.501
              Special documentation requirement.

              Subpart 213.70—Simplified Acquisition Procedures Under the 8(a) Program
              213.7001
              Procedures.
              213.7002
              Purchase orders.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            64 FR 2596, Jan. 15, 1999, unless otherwise noted.

            Subpart 213.1—Procedures

              213.101
              General.

              Structure awards valued above the micro-purchase threshold (e.g., contract line items, delivery schedule, and invoice instructions) in a manner that will minimize the generation of invoices valued at or below the micro-purchase threshold.
              [65 FR 46625, July 31, 2000]

              213.104
              Promoting competition.
              For information on the various approaches that may be used to competitively fulfill DoD requirements, see PGI 213.104.
              [80 FR 21657, Apr. 20, 2015]

              213.106-1
              Soliciting competition.
              (a) Considerations.

              (2)(i) Include an evaluation factor regarding supply chain risk (see subpart 239.73) when acquiring information technology, whether as a service or as a supply, that is a covered system, is a part of a covered system, or is in support of a covered system, as defined in 239.7301.
              (ii) See 215.101-2-70 for limitations and prohibitions on the use of the lowest price technically acceptable source selection process, which are applicable to simplified acquisitions.
              (iii) See 217.7801 for the prohibition on the use of reverse auctions for personal protective equipment and aviation critical safety items.
              [84 FR 50788, Sept. 26, 2019]

              213.106-1-70
              Soliciting competition—tiered evaluation of offers.
              See limitations on the use of tiered evaluation of offers at 215.203-70.
              [72 FR 42314, Aug. 2, 2007]

              213.106-2
              Evaluation of quotations or offers.

              (b)(i) For competitive solicitations for supplies using FAR part 13 simplified acquisition procedures, including acquisitions valued at less than or equal to $1 million under the authority at FAR subpart 13.5, the contracting officer shall—

              (A) Consider data available in the statistical reporting module of the Supplier Performance Risk System (SPRS) regarding the supplier's past performance history for the Federal supply class (FSC) and product or service code (PSC) of the supplies being purchased. Procedures for the use of SPRS in the evaluation of quotations or offers are provided in the SPRS User's Manual available under the references section of the SPRS website at https://www.sprs.csd.disa.mil/reference.htm.

              (B) Ensure the basis for award includes an evaluation of each supplier's past performance history in SPRS for the FSC and PSC of the supplies being purchased; and
              (C) In the case of a supplier without a record of relevant past performance history in SPRS for the FSC or PSC of the supplies being purchased, the supplier may not be evaluated favorably or unfavorably for its past performance history.
              [80 FR 30118, May 26, 2015, as amended at 83 FR 12681, Mar. 23, 2018; 84 FR 48508, Sept. 13, 2019]

              213.106-2-70
              Solicitation provision.
              Use the provision at 252.213-7000, Notice to Prospective Suppliers on Use of Supplier Performance Risk System in Past Performance Evaluations, in competitive solicitations for supplies when using FAR part 13 simplified acquisition procedures, including competitive solicitations using FAR part 12 procedures for the acquisition of commercial items and acquisitions valued at less than or equal to $1 million under the authority at FAR subpart 13.5.
              [80 FR 30118, May 26, 2015, as amended at 84 FR 48508, Sept. 13, 2019]

            Subpart 213.2—Actions at or Below the Micro-Purchase Threshold

              213.201
              General.
              (g) See PGI 213.201(g) for guidance on use of the higher micro-purchase thresholds prescribed in FAR 13.201(g) to support a declared contingency operation or to facilitate defense against or recovery from nuclear, biological, chemical, or radiological attack.
              (j) Do not procure or obtain, or extend or renew a contract to procure or obtain, any equipment, system, or service to carry out covered missions that use covered defense telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system, unless a waiver is granted. (See subpart 204.21.)
              [81 FR 53045, Aug. 11, 2016, as amended at 84 FR 72237, Dec. 31, 2019]

              213.270
              Use of the Governmentwide commercial purchase card.
              Use the Governmentwide commercial purchase card as the method of purchase and/or method of payment for purchases valued at or below the micro-purchase threshold. This policy applies to all types of contract actions authorized by the FAR unless—
              (a) The Deputy Secretary of Defense has approved an exception for an electronic commerce/electronic data interchange system or operational requirement that results in a more cost-effective payment process;
              (b)(1) A general or flag officer or a member of the Senior Executive Service (SES) makes a written determination that—
              (i) The source or sources available for the supply or service do not accept the purchase card; and
              (ii) The contracting office is seeking a source that accepts the purchase card.
              (2) To prevent mission delays, if an activity does not have a resident general or flag officer of SES member, delegation of this authority to the level of the senior local commander or director is permitted; or
              (c) The purchase or payment meets one or more of the following criteria:
              (1) The place of performance is entirely outside the United States and its outlying areas.

              (2) The purchase is a Standard Form 44 purchase for aviation fuel or oil.

              (3) The purchase is an overseas transaction by a contracting officer in support of a contingency operation as defined in 10 U.S.C. 101(a)(13) or a humanitarian or peacekeeping operation as defined in 10 U.S.C. 2302(8).
              (4) The purchase is a transaction in support of intelligence or other specialized activities addressed by Part 2.7 of Executive Order 12333.
              (5) The purchase is for training exercises in preparation for overseas contingency, humanitarian, or peacekeeping operations.
              (6) The payment is made with an accommodation check.
              (7) The payment is for a transportation bill.
              (8) The purchase is under a Federal Supply Schedule contract that does not permit use of the Governmentwide commercial purchase card.
              (9) The purchase is for medical services and—
              (i) It involves a controlled substance or narcotic;
              (ii) It requires the submission of a Health Care Summary Record to document the nature of the care purchased;
              (iii) The ultimate price of the medical care is subject to an independent determination that changes the price paid based on application of a mandatory CHAMPUS Maximum Allowable Charge determination that reduces the Government liability below billed charges;
              (iv) The Government already has entered into a contract to pay for the services without the use of a purchase card;
              (v) The purchaser is a beneficiary seeking medical care; or
              (vi) The senior local commander or director of a hospital or laboratory determines that use of the purchase card is not appropriate or cost-effective. The Medical Prime Vendor Program and the DoD Medical Electronic Catalog Program are two examples where use of the purchase card may not be cost-effective.
              [65 FR 46626, July 31, 2000, as amended at 70 FR 35544, June 21, 2005]

            Subpart 213.3—Simplified Acquisition Methods

              213.301
              Governmentwide commercial purchase card.
              Follow the procedures at PGI 213.301 for authorizing, establishing, and operating a Governmentwide commercial purchase card program.
              (1) “United States,” as used in this section, means the 50 States and the District of Columbia, the Commonwealth of Puerto Rico, the Virgin Islands, the Commonwealth of the Northern Mariana Islands, Guam, American Samoa, Wake Island, Johnston Island, Canton Island, the outer Continental Shelf, and any other place subject to the jurisdiction of the United States (but not including leased bases).
              (2) An individual appointed in accordance with 201.603-3(a) also may use the Governmentwide commercial purchase card to make a purchase that exceeds the micro-purchase threshold but does not exceed $25,000, if—
              (i) The purchase—
              (A) Is made outside the United States for use outside the United States; and
              (B) Is for a commercial item; but
              (C) Is not for work to be performed by employees recruited within the United States;
              (D) Is not for supplies or services originating from, or transported from or through, sources identified in FAR Subpart 25.7;
              (E) Is not for ball or roller bearings as end items;
              (F) Does not require access to classified or Privacy Act information; and
              (G) Does not require transportation of supplies by sea; and
              (ii) The individual making the purchase—
              (A) Is authorized and trained in accordance with agency procedures;
              (B) Complies with the requirements of FAR 8.002 in making the purchase; and
              (C) Seeks maximum practicable competition for the purchase in accordance with FAR 13.104(b).

              (3) A contracting officer supporting a contingency operation as defined in 10 U.S.C. 101(a)(13) or a humanitarian or peacekeeping operation as defined in 10 U.S.C. 2302(8) also may use the Governmentwide commercial purchase card to make a purchase that exceeds the micro-purchase threshold but does not exceed the simplified acquisition threshold, if—
              (i) The supplies or services being purchased are immediately available;
              (ii) One delivery and one payment will be made; and
              (iii) The requirements of paragraphs (2)(i) and (ii) of this section are met.

              (4) Guidance on DoD purchase, travel, and fuel card programs is available in the “Department of Defense Government Charge Card Guidebook for Establishing and Managing Purchase, Travel, and Fuel Card Programs” at http://www.acq.osd.mil/dpap/pdi/pc/policy/_documents.html. Additional guidance on the fuel card programs is available at http://www.energy.dla.mil.

              [64 FR 56705, Oct. 21, 1999; 64 FR 63380, Nov. 19, 1999, as amended at 66 FR 55123, Nov. 1, 2001; 66 FR 56902, Nov. 13, 2001; 67 FR 38021, May 31, 2002; 68 FR 56561, Oct. 1, 2003; 70 FR 75411, Dec. 20, 2005; 72 FR 6484, Feb. 12, 2007; 73 FR 70906, Nov. 24, 2008; 76 FR 76319, Dec. 7, 2011; 77 FR 23631, Apr. 20, 2012; 77 FR 35880, June 15, 2012; 79 FR 56278, Sept. 19, 2014]

              213.302
              Purchase orders.

              213.302-3
              Obtaining contractor acceptance and modifying purchase orders.
              (1) Require written acceptance of purchase orders for classified acquisitions.
              (2) See PGI 213.302-3 for guidance on the use of unilateral modifications.
              (3) A supplemental agreement converts a unilateral purchase order to a bilateral agreement. If not previously included in the purchase order, incorporate the clause at 252.243-7001, Pricing of Contract Modifications, in the Standard Form 30, and obtain the contractor's acceptance by signature on the Standard Form 30.
              [64 FR 2596, Jan. 15, 1999, as amended at 71 FR 3413, Jan. 23, 2006]

              213.302-5
              Clauses.
              (a) Use the clause at 252.243-7001, Pricing of Contract Modifications, in all bilateral purchase orders.
              (d) When using the clause at FAR 52.213-4, delete the reference to the clause at FAR 52.225-1, Buy American—Supplies. Instead, if the Buy American Act applies to the acquisition, use the clause at—
              (i) 252.225-7001, Buy American Act and Balance of Payments Program, as prescribed at 225.1101(2); or
              (ii) 252.225-7036, Buy American Act—Free Trade Agreements—Balance of Payments Program, as prescribed at 225.1101(10).
              [64 FR 24528, May 7, 1999, as amended at 65 FR 19850, Apr. 13, 2000; 65 FR 39704, June 27, 2000; 68 FR 56561, Oct. 1, 2003; 69 FR 1927, Jan. 13, 2004; 77 FR 35880, June 15, 2012]

              213.303
              Blanket purchase agreements (BPAs).

              213.303-5
              Purchases under BPAs.
              (b) Individual purchases for subsistence may be made at any dollar value; however, the contracting officer must satisfy the competition requirements of FAR Part 6 for any action not using simplified acquisition procedures.

              213.305
              Imprest funds and third party drafts.

              213.305-3
              Conditions for use.
              (d)(i) On a very limited basis, installation commanders and commanders of other activities with contracting authority may be granted authority to establish imprest funds and third party draft (accommodation check) accounts. Use of imprest funds and third party drafts must comply with—
              (A) DoD 7000.14-R, DoD Financial Management Regulation, Volume 5, Disbursing Policy and Procedures; and
              (B) The Treasury Financial Manual, Volume I, Part 4, Chapter 3000.
              (ii) Use of imprest funds requires approval by the Director for Financial Commerce, Office of the Deputy Chief Financial Officer, Office of the Under Secretary of Defense (Comptroller), except as provided in paragraph (d)(iii) of this subsection.
              (iii) Imprest funds are authorized for use without further approval for—
              (A) Overseas transactions at or below the micro-purchase threshold in support of a contingency operation as defined in 10 U.S.C. 101(a)(13) or a humanitarian or peacekeeping operation as defined in 10 U.S.C. 2302(8); and
              (B) Classified transactions.
              [71 FR 3413, Jan. 23, 2006]

              213.306
              SF 44, Purchase Order-Invoice-Voucher.
              (a)(1) The micro-purchase limitation applies to all purchases, except that purchases not exceeding the simplified acquisition threshold may be made for—
              (A) Fuel and oil. U.S. Government fuel cards may be used in lieu of an SF 44 for fuel, oil, and authorized refueling-related items (see PGI 213.306 for procedures on use of fuel cards);
              (B) Overseas transactions by contracting officers in support of a contingency operation as defined in 10 U.S.C. 101(a)(13) or a humanitarian or peacekeeping operation as defined in 10 U.S.C. 2302(8); and
              (C) Transactions in support of intelligence and other specialized activities addressed by Part 2.7 of Executive Order 12333.
              [64 FR 2596, Jan. 15, 1999, as amended at 71 FR 3413, Jan. 23, 2006; 72 FR 6484, Feb. 12, 2007; 76 FR 58150, Sept. 20, 2011]

              213.307
              Forms.
              See PGI 213.307 for procedures on use of forms for purchases made using simplified acquisition procedures.
              [71 FR 3413, Jan. 23, 2006]

            Subpart 213.4—Fast Payment Procedure

              213.402
              Conditions for use.
              (a) Individual orders may exceed the simplified acquisition threshold for—
              (i) Brand-name commissary resale subsistence; and
              (ii) Medical supplies for direct shipment overseas.

            Subpart 213.5—Simplified Procedures for Certain Commercial Items

              Source:
              80 FR 21657, Apr. 20, 2015, unless otherwise noted.

              213.500-70
              Only one offer.
              If only one offer is received in response to a competitive solicitation issued using simplified acquisition procedures authorized under FAR subpart 13.5, follow the procedures at 215.371-2.
              [80 FR 21657, Apr. 20, 2015, as amended at 80 FR 36718, June 26, 2015]

              213.501
              Special documentation requirements.
              (a)(i) Sole source (including brand name) acquisitions. For noncompetitive follow-on acquisitions of supplies or services previously awarded on a noncompetitive basis, include the additional documentation required by PGI 206.303-2(b)(i) and follow the procedures at PGI 206.304(a)(S-70).
              (ii) In accordance with section 888(a) of the National Defense Authorization Act for Fiscal Year 2017 (Pub. L. 114-328), the justification and approval addressed in FAR 13.501(a) is required in order to use brand name or equal descriptions or proprietary specifications and standards.
              [80 FR 21657, Apr. 20, 2015, as amended at 84 FR 25192, May 31, 2019]

            Subpart 213.70—Simplified Acquisition Procedures Under the 8(a) Program

              213.7001
              Procedures.
              (a)(1) For acquisitions that are otherwise appropriate to be conducted using procedures set forth in this part, and also eligible for the 8(a) Program, contracting officers may use—
              (i) For sole source purchase orders not exceeding the simplified acquisition threshold, the procedures in PGI 219.804-2(2); or
              (ii) For other types of acquisitions, the procedures in PGI 219.8, excluding the procedures in PGI 219.804-2(2); or
              (2) The procedures for award to the Small Business Administration in FAR subpart 19.8.

              (b) To comply with section 898 of the National Defense Authorization Act for Fiscal Year 2016 (Pub. L. 114-92), contracting officers shall not use the sole source authority at FAR 6.302-5(b)(4) to purchase religious-related services to be performed on a U.S. military installation. For competitive purchases under the 8(a) program, contracting officers shall not exclude a nonprofit organization from the competition. See 219.270 for additional procedures.
              [64 FR 2596, Jan. 15, 1999. Redesignated at 71 FR 3413, Jan. 23, 2006; 81 FR 65563, Sept. 23, 2016; 83 FR 16002, Apr. 13, 2018]

              213.7002
              Purchase orders.
              The contracting officer need not obtain a contractor's written acceptance of a purchase order or modification of a purchase order for an acquisition under the 8(a) Program pursuant to 219.804-2(2).
              [71 FR 3413, Jan. 23, 2006]

          Pt. 214
          PART 214—SEALED BIDDING

            Sec.
            214.201-5
            Part IV—Representations and instructions.
            214.201-6
            Solicitation provisions.

              Subpart 214.2—Solicitation of Bids
              214.202
              General rules for solicitation of bids.
              214.202-5
              Descriptive literature.
              214.209
              Cancellation of invitations before opening.

              Subpart 214.4—Opening of Bids and Award of Contract
              214.404
              Rejection of bids.
              214.404-1
              Cancellation of invitations after opening.
              214.407
              Mistakes in bids.
              214.407-3
              Other mistakes disclosed before award.
              214.408
              Award.
              214.408-1
              General.

              Subpart 214.5—Two-Step Sealed Bidding
              214.503
              Procedures.
              214.503-1
              Step one.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36326, July 31, 1991, unless otherwise noted.

            Subpart 214.2—Solicitation of Bids

              214.201-5
              Part IV—Representations and instructions.
              (c) Include an evaluation factor regarding supply chain risk (see subpart 239.73) when acquiring information technology, whether as a service or as a supply, that is a covered system, is a part of a covered system, or is in support of a covered system, as defined in 239.7301.
              [80 FR 67251, Oct. 30, 2015]

              214.201-6
              Solicitation provisions.
              (2) Use the provisions at 252.215-7007, Notice of Intent to Resolicit, and 252.215-7008, Only One Offer, as prescribed at 215.371-6 and 215.408(3), respectively.
              [77 FR 39138, June 29, 2012, as amended at 83 FR 30825, June 29, 2018]

              214.202
              General rules for solicitation of bids.

              214.202-5
              Descriptive literature.
              (c) Requirements of invitation for bids. When brand name or equal purchase descriptions are used, use of the provision at FAR 52.211-6, Brand Name or Equal, satisfies this requirement.
              [56 FR 36326, July 31, 1991, as amended at 63 FR 11528, Mar. 9, 1998; 64 FR 55633, Oct. 14, 1999; 69 FR 65090, Nov. 10, 2004]

              214.209
              Cancellation of invitations before opening.
              If an invitation for bids allowed fewer than 30 days for receipt of offers, and resulted in only one offer, the contracting officer shall cancel and resolicit, allowing an additional period of at least 30 days for receipt of offers, as provided in 215.371.
              [77 FR 39138, June 29, 2012]

            Subpart 214.4—Opening of Bids and Award of Contract

              214.404
              Rejection of bids.

              214.404-1
              Cancellation of invitations after opening.
              (1) The contracting officer shall make the written determinations required by FAR 14.404-1(c) and (e)(1).
              (2) If only one offer is received, follow the procedures at 215.371 in lieu of the procedures at FAR 14.404-1(f).
              [77 FR 39138, June 29, 2012]

              214.407
              Mistakes in bids.

              214.407-3
              Other mistakes disclosed before award.
              (e) Authority for making a determination under FAR 14.407-3(a), (b) and (d) is delegated for the defense agencies, without power of redelegation, as follows:
              (i) Defense Advanced Research Projects Agency: General Counsel, DARPA.
              (ii) Defense Information Systems Agency: General Counsel, DISA.
              (iii) Defense Intelligence Agency: Principal Assistant for Acquisition.
              (iv) Defense Logistics Agency:
              (A) General Counsel, DLA; and
              (B) Associate General Counsel, DLA.
              (v) National Geospatial-Intelligence Agency: General Counsel, NGA.
              (vi) Defense Threat Reduction Agency: General Counsel, DTRA.
              (vii) National Security Agency: Director of Procurement, NSA.
              (viii) Missile Defense Agency: General Counsel, MDA.
              (ix) Defense Contract Management Agency: General Counsel, DCMA.
              [57 FR 42629, Sept. 15, 1992, as amended at 59 FR 27669, May 27, 1994; 61 FR 50452, Sept. 26, 1996. Redesignated and amended at 62 FR 34122, June 24, 1997; 64 FR 51076, Sept. 21, 1999; 68 FR 7439, Feb. 14, 2003; 69 FR 65090, Nov. 10, 2004; 74 FR 42780, Aug. 25, 2009]

              214.408
              Award.

              214.408-1
              General.
              (b) For acquisitions that exceed the simplified acquisition threshold, if only one offer is received, follow the procedures at 215.371.
              [77 FR 39138, June 29, 2012]

            Subpart 214.5—Two-Step Sealed Bidding

              Source:
              80 FR 67251, Oct. 30, 2015, unless otherwise noted.

              214.503
              Procedures.

              214.503-1
              Step one.
              (a)(4) Include an evaluation factor regarding supply chain risk (see subpart 239.73) when acquiring information technology, whether as a service or as a supply, that is a covered system, is a part of a covered system, or is in support of a covered system, as defined in 239.7301.

          Pt. 215
          PART 215—CONTRACTING BY NEGOTIATION

              Subpart 215.1—Source Selection Processes and Techniques
              Sec.
              215.101
              Best value continuum.
              215.101-2
              Lowest price technically acceptable source selection process.
              215.101-2-70
              Limitations and prohibitions.
              215.101-70
              Best value when acquiring tents or other temporary structures.

              Subpart 215.2—Solicitation and Receipt of Proposals and Information
              215.203-70
              Requests for proposals—tiered evaluation of offers.
              215.209
              Solicitation provisions and contract clauses.
              215.270
              Peer Reviews.

              Subpart 215.3—Source Selection
              215.300
              Scope of subpart.
              215.303
              Responsibilities.
              215.304
              Evaluation factors and significant subfactors.
              215.305
              Proposal evaluation.
              215.306
              Exchanges with offerors after receipt of proposals.
              215.370
              Evaluation factor for employing or subcontracting with members of the Selected Reserve.
              215.370-1
              Definition.
              215.370-2
              Evaluation factor.
              215.370-3
              Solicitation provision and contract clause.
              215.371
              Only one offer.
              215.371-1
              Policy.
              215.371-2
              Promote competition.
              215.371-3
              Fair and reasonable price and the requirement for additional cost or pricing data.
              215.371-4
              Exceptions.
              215.371-5
              Waiver.
              215.371-6
              Solicitation provision.

              Subpart 215.4—Contract Pricing
              215.401
              Definitions.
              215.402
              Pricing policy.
              215.403
              Obtaining certified cost or pricing data.
              215.403-1
              Prohibition on obtaining certified cost or pricing data (10 U.S.C. 2306a and 41 U.S.C. chapter 35).
              215.403-3

              Requiring data other than certified cost or pricing data.

              215.403-5
              Instructions for submission of certified cost or pricing data and data other than certified cost or pricing data.
              215.404
              Proposal analysis.
              215.404-1
              Proposal analysis techniques.
              215.404-2
              Data to support proposal analysis.
              215.404-3
              Subcontract pricing considerations.
              215.404-4
              Profit.
              215.404-70
              DD Form 1547, Record of Weighted Guidelines Method Application.
              215.404-71
              Weighted guidelines method.
              215.404-71-1
              General.
              215.404-71-2
              Performance risk.
              215.404-71-3
              Contract type risk and working capital adjustment.
              215.404-71-4
              Facilities capital employed.
              215.404-71-5
              Cost efficiency factor.
              215.404-72
              Modified weighted guidelines method for nonprofit organizations other than FFRDCs.
              215.404-73
              Alternate structure approaches.
              215.404-74
              Fee requirements for cost-plus-award-fee contracts.
              215.404-75
              Fee requirements for FFRDCs.
              215.406-1
              Prenegotiation objectives.
              215.406-2
              Certificate of Current Cost or Pricing Data.
              215.406-3
              Documenting the negotiation.
              215.407
              Special cost or pricing areas.
              215.407-1
              Defective certified cost or pricing data.
              215.407-2
              Make-or-buy programs.
              215.407-3
              Forward pricing rate agreements.
              215.407-4
              Should-cost review.
              215.407-5
              Estimating systems.
              215.407-5-70
              Disclosure, maintenance, and review requirements.
              215.408
              Solicitation provisions and contract clauses.
              215.470
              Estimated data prices.

              Subpart 215.5—Preaward, Award, and Postaward Notifications, Protests, and Mistakes
              215.503
              Notifications to unsuccessful offerors.
              215.506
              Postaward debriefing of offerors.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            63 FR 55040, Oct. 14, 1998, unless otherwise noted.

            215.101
            Best value continuum.

            215.101-2
            Lowest price technically acceptable source selection process.
            [84 FR 50788, Sept. 26, 2019]

            215.101-2-70
            Limitations and prohibitions.
            The following limitations and prohibitions apply when considering the use of the lowest price technically acceptable source selection procedures.
            (a) Limitations.

            (1) In accordance with section 813 of the National Defense Authorization Act for Fiscal Year 2017 (Pub. L. 114-328) as amended by section 822 of the National Defense Authorization Act for Fiscal Year 2018 (Pub. L. 115-91) (see 10 U.S.C. 2305 note), the lowest price technically acceptable source selection process shall only be used when—
            (i) Minimum requirements can be described clearly and comprehensively and expressed in terms of performance objectives, measures, and standards that will be used to determine the acceptability of offers;
            (ii) No, or minimal, value will be realized from a proposal that exceeds the minimum technical or performance requirements;
            (iii) The proposed technical approaches will require no, or minimal, subjective judgment by the source selection authority as to the desirability of one offeror's proposal versus a competing proposal;
            (iv) The source selection authority has a high degree of confidence that reviewing the technical proposals of all offerors would not result in the identification of characteristics that could provide value or benefit;
            (v) No, or minimal, additional innovation or future technological advantage will be realized by using a different source selection process;
            (vi) Goods to be procured are predominantly expendable in nature, are nontechnical, or have a short life expectancy or short shelf life (See PGI 215.101-2-70(a)(1)(vi) for assistance with evaluating whether a requirement satisfies this limitation);
            (vii) The contract file contains a determination that the lowest price reflects full life-cycle costs (as defined at FAR 7.101) of the product(s) or service(s) being acquired (see PGI 215.101-2-70(a)(1)(vii) for information on obtaining this determination); and
            (viii) The contracting officer documents the contract file describing the circumstances justifying the use of the lowest price technically acceptable source selection process.

            (2) In accordance with section 813 of the National Defense Authorization Act for Fiscal Year 2017, as amended by section 822 of the National Defense Authorization Act for Fiscal Year 2018 (Pub. L. 115-91) (see 10 U.S.C. 2305 note), contracting officers shall avoid, to the maximum extent practicable, using the lowest price technically acceptable source selection process in the case of a procurement that is predominately for the acquisition of—
            (i) Information technology services, cybersecurity services, systems engineering and technical assistance services, advanced electronic testing, or other knowledge-based professional services;
            (ii) Items designated by the requiring activity as personal protective equipment (except see paragraph (b)(1) of this section); or
            (iii) Services designated by the requiring activity as knowledge-based training or logistics services in contingency operations or other operations outside the United States, including in Afghanistan or Iraq.
            (b) Prohibitions.

            (1) In accordance with section 814 of the National Defense Authorization Act for Fiscal Year 2017 as amended by section 882 of the National Defense Authorization Act for Fiscal Year 2018 (see 10 U.S.C. 2302 note), contracting officers shall not use the lowest price technically acceptable source selection process to procure items designated by the requiring activity as personal protective equipment or an aviation critical safety item, when the requiring activity advises the contracting officer that the level of quality or failure of the equipment or item could result in combat casualties. See 252.209-7010 for the definition and identification of critical safety items.
            (2) In accordance with section 832 of the National Defense Authorization Act for Fiscal Year 2018 (see 10 U.S.C. 2442 note), contracting officers shall not use the lowest price technically acceptable source selection process to acquire engineering and manufacturing development for a major defense acquisition program for which budgetary authority is requested beginning in fiscal year 2019.
            (3) Contracting officers shall make award decisions based on best value factors and criteria, as determined by the resource sponsor (in accordance with agency procedures), for an auditing contract. The use of the lowest price technically acceptable source selection process is prohibited (10 U.S.C. 254b).
            [84 FR 50788, Sept. 26, 2019]

            215.101-70
            Best value when acquiring tents or other temporary structures.
            (a) In accordance with section 368 of the National Defense Authorization Act for Fiscal Year 2012 (Pub. L. 112-81), when acquiring tents or other temporary structures for use by the Armed Forces, the contracting officer shall award contracts that provide the best value. Temporary structures covered by this paragraph are nonpermanent buildings, including tactical shelters, nonpermanent modular or pre-fabricated buildings, or portable or relocatable buildings, such as trailers or equipment configured for occupancy (see also 246.270-2). Determination of best value includes consideration of the total life-cycle costs of such tents or structures, including the costs associated with any equipment, fuel, or electricity needed to heat, cool, or light such tents or structures (see FAR 7.105(a)(3)(i) and PGI 207.105(a)(3)(i)).
            (b) The requirements of this section apply to any agency or department that acquires tents or other temporary structures on behalf of DoD (see FAR 17.503(d)(2)).
            [78 FR 13545, Feb. 28, 2013]

            Subpart 215.2—Solicitation and Receipt of Proposals and Information

              215.203-70
              Requests for proposals—tiered evaluation of offers.
              (a) The tiered or cascading order of precedence used for tiered evaluation of offers shall be consistent with FAR part 19.

              (b) Consideration shall be given to the tiers of small businesses (e.g., 8(a), HUBZone small business, service-disabled veteran-owned small business, small business) before evaluating offers from other than small business concerns.

              (c) The contracting officer is prohibited from issuing a solicitation with a tiered evaluation of offers unless—
              (1) The contracting officer conducts market research, in accordance with FAR Part 10 and Part 210, to determine—
              (i) Whether the criteria in FAR part 19 are met for setting aside the acquisition for small business; or
              (ii) For a task or delivery order, whether there are a sufficient number of qualified small business concerns available to justify limiting competition under the terms of the contract; and
              (2) If the contracting officer cannot determine whether the criteria in paragraph (c)(1) of this section are met, the contracting officer includes a written explanation in the contract file as to why such a determination could not be made (Section 816 of Public Law 109-163).
              [71 FR 53043, Sept. 8, 2006, as amended at 72 FR 42314, Aug. 2, 2007]

              215.209
              Solicitation provisions and contract clauses.
              (a) For source selections when the procurement is $100 million or more, contracting officers should use the provision at FAR 52.215-1, Instructions to Offerors—Competitive Acquisition, with its Alternate I.
              [76 FR 58152, Sept. 20, 2011]

              215.270
              Peer Reviews.
              Agency officials shall conduct Peer Reviews in accordance with 201.170.
              [74 FR 37626, July 29, 2009]

            Subpart 215.3—Source Selection

              215.300
              Scope of subpart.
              Contracting officers shall follow the principles and procedures in Director, Defense Procurement and Acquisition Policy memorandum dated April 1, 2016, entitled “Department of Defense Source Selection Procedures,” when conducting negotiated, competitive acquisitions utilizing FAR part 15 procedures. See PGI 215.300.
              [81 FR 28730, May 10, 2016]

              215.303
              Responsibilities.
              (b)(2) For high-dollar value and other acquisitions, as prescribed by agency procedures, the source selection authority shall approve a source selection plan before the solicitation is issued. Follow the procedures at PGI 215.303(b)(2) for preparation of the source selection plan.
              [71 FR 3414, Jan. 23, 2006]

              215.304
              Evaluation factors and significant subfactors.
              (c)(i) In acquisitions that require use of the clause at FAR 52.219-9, Small Business Subcontracting Plan, other than those based on the lowest price technically acceptable source selection process (see FAR 15.101-2), the extent of participation of small businesses (to include service-disabled veteran-owned small business concerns, HUBZone small business concerns, small disadvantaged business concerns, and women-owned small business concerns) in performance of the contract shall be addressed in source selection. The contracting officer shall evaluate the extent to which offerors identify and commit to small business performance of the contract, whether as a joint venture, teaming arrangement, or subcontractor.
              (A) See PGI 215.304(c)(i)(A) for examples of evaluation factors.
              (B) Proposals addressing the extent of small business performance shall be separate from subcontracting plans submitted pursuant to the clause at FAR 52.219-9 and shall be structured to allow for consideration of offers from small businesses.
              (C) When an evaluation assesses the extent that small businesses are specifically identified in proposals, the small businesses considered in the evaluation shall be listed in any subcontracting plan submitted pursuant to FAR 52.219-9 to facilitate compliance with 252.219-7003(e).

              (ii) In accordance with 10 U.S.C. 2436, consider the purchase of capital assets (including machine tools) manufactured in the United States, in source selections for all major defense acquisition programs as defined in 10 U.S.C. 2430.

              (iii) See 247.573-2(c) for additional evaluation factors required in solicitations for the direct purchase of ocean transportation services.
              (iv) In accordance with section 812 of the National Defense Authorization Act for Fiscal Year 2011, consider the manufacturing readiness and manufacturing-readiness processes of potential contractors and subcontractors as a part of the source selection process for major defense acquisition programs.
              (v) Include an evaluation factor regarding supply chain risk (see subpart 239.73) when acquiring information technology, whether as a service or as a supply, that is a covered system, is a part of a covered system, or is in support of a covered system, as defined in 239.7301. For additional guidance see PGI 215.304(c)(v).
              (vi) Ensure source selections emphasize sustainment factors and objective reliability and maintainability evaluation criteria in competitive contracts for the—

              (A) Technical maturation and risk reduction phase of weapon system design (see guidance at PGI 207.105(b)(14)(ii)(2));
              (B) Engineering and manufacturing development phase of a weapon system, including embedded software (10 U.S.C. 2443); or
              (C) Production and deployment phase of a weapon system, including embedded software (10 U.S.C. 2443).
              (vii) See 226.7202 for an additional evaluation factor required in solicitations when using the Demonstration Project for Contractors Employing Persons with Disabilities.
              [71 FR 3414, Jan. 23, 2006, as amended at 71 FR 14109, Mar. 21, 2006; 72 FR 49205, Aug. 28, 2007; 76 FR 38051, June 29, 2011; 78 FR 69270, Nov. 18, 2013; 79 FR 61581, Oct. 14, 2014; 80 FR 67251, Oct. 30, 2015; 84 FR 58333, Oct. 31, 2019; 84 FR 72560, Dec. 31, 2019]

              215.305
              Proposal evaluation.
              (a)(2)(A) Past performance evaluation. When a past performance evaluation is required by FAR 15.304, and the solicitation includes the clause at FAR 52.219-8, Utilization of Small Business Concerns, the evaluation factors shall include the past performance of offerors in complying with requirements of that clause. When a past performance evaluation is required by FAR 15.304, and the solicitation includes the clause at FAR 52.219-9, Small Business Subcontracting Plan, the evaluation factors shall include the past performance of offerors in complying with requirements of that clause.
              (B) Contracting officers shall consider an offeror's failure to make a good faith effort to comply with its comprehensive subcontracting plan under the Test Program described at 219.702-70 as part of the evaluation of the past performance.
              [71 FR 3414, Jan. 23, 2006, as amended at 83 FR 15998, Apr. 13, 2018]

              215.306
              Exchanges with offerors after receipt of proposals.
              (c) Competitive range.

              (1) For acquisitions with an estimated value of $100 million or more, contracting officers should conduct discussions. Follow the procedures at FAR 15.306(c) and (d).
              [76 FR 58152, Sept. 20, 2011]

              215.370
              Evaluation factor for employing or subcontracting with members of the Selected Reserve.

              215.370-1
              Definition.

                Selected Reserve, as used in this section, is defined in the provision at 252.215-7005, Evaluation Factor for Employing or Subcontracting with Members of the Selected Reserve.
              [73 FR 62211, Oct. 20, 2008]

              215.370-2
              Evaluation factor.
              In accordance with Section 819 of the National Defense Authorization Act for Fiscal Year 2006 (Pub. L. 109-163), the contracting officer may use an evaluation factor that considers whether an offeror intends to perform the contract using employees or individual subcontractors who are members of the Selected Reserve. See PGI 215.370-2 for guidance on use of this evaluation factor.
              [73 FR 62211, Oct. 20, 2008]

              215.370-3
              Solicitation provision and contract clause.

              (a) Use the provision at 252.215-7005, Evaluation Factor for Employing or Subcontracting with Members of the Selected Reserve, in solicitations that include an evaluation factor considering whether an offeror intends to perform the contract using employees or individual subcontractors who are members of the Selected Reserve.
              (b) Use the clause at 252.215-7006, Use of Employees or Individual Subcontractors Who are Members of the Selected Reserve, in solicitations that include the provision at 252.215-7005. Include the clause in the resultant contract only if the contractor stated in its proposal that it intends to perform the contract using employees or individual subcontractors who are members of the Selected Reserve, and that statement was used as an evaluation factor in the award decision.
              [73 FR 62211, Oct. 20, 2008]

              215.371
              Only one offer.

              215.371-1
              Policy.
              It is DoD policy, if only one offer is received in response to a competitive solicitation—
              (a) To take the required actions to promote competition (see 215.371-2); and
              (b) To ensure that the price is fair and reasonable (see 215.371-3) and to comply with the statutory requirement for certified cost or pricing data (see FAR 15.403-4).
              [77 FR 39138, June 29, 2012]

              215.371-2
              Promote competition.
              Except as provided in sections 215.371-4 and 215.371-5—
              (a) If only one offer is received when competitive procedures were used and the solicitation allowed fewer than 30 days for receipt of proposals, the contracting officer shall—
              (1) Consult with the requiring activity as to whether the requirements document should be revised in order to promote more competition (see FAR 6.502(b) and 11.002); and
              (2) Resolicit, allowing an additional period of at least 30 days for receipt of proposals; and
              (b) For competitive solicitations in which more than one potential offeror expressed an interest in an acquisition, but only one offer was ultimately received, follow the procedures at PGI 215.371-2.
              [80 FR 21657, Apr. 20, 2015]

              215.371-3
              Fair and reasonable price and the requirement for additional cost or pricing data.
              For acquisitions that exceed the simplified acquisition threshold, if only one offer is received when competitive procedures were used and it is not necessary to resolicit in accordance with 215.371-2(a), then then the contracting officer shall comply with the following:
              (a) If no additional cost or pricing data are required to determine through cost or price analysis that the offered price is fair and reasonable, the contracting officer shall require that any cost or pricing data provided in the proposal be certified if the acquisition exceeds the certified cost or pricing data threshold and an exception to the requirement for certified cost or pricing data at FAR 15.403-1(b)(2) through (5) does not apply.
              (b) Otherwise, the contracting officer shall obtain additional cost or pricing data to determine a fair and reasonable price. If the acquisition exceeds the certified cost or pricing data threshold and an exception to the requirement for certified cost or pricing data at FAR 15.403-1(b)(2) through (5) does not apply, the cost or pricing data shall be certified.
              (c) If the contracting officer is still unable to determine that the offered price is fair and reasonable, the contracting officer shall enter into negotiations with the offeror to establish a fair and reasonable price. The negotiated price should not exceed the offered price.
              (d) If the contracting officer is unable to negotiate a fair and reasonable price, see FAR 15.405(d).
              [84 FR 30949, June 28, 2019]

              215.371-4
              Exceptions.
              (a) The requirements at section 215.371-2 do not apply to—
              (1) Acquisitions at or below the simplified acquisition threshold;

              (2) Acquisitions, as determined by the head of the contracting activity, in support of contingency or humanitarian or peacekeeping operations; to facilitate defense against or recovery from cyber, nuclear, biological, chemical, or radiological attack; to facilitate the provision of international disaster assistance; or to support response to an emergency or major disaster;
              (3) Small business set-asides under FAR subpart 19.5, set asides offered and accepted into the 8(a) Program under FAR subpart 19.8, or set-asides under the HUBZone Program (see FAR 19.1305(c)), the Service-Disabled Veteran-Owned Small Business Procurement Program (see FAR 19.1405(c)), or the Women-Owned Small Business Program (see FAR 19.1505(d));
              (4) Acquisitions of science and technology, as specified in 235.016(a); or
              (5) Acquisitions of architect-engineer services (see FAR 36.601-2).
              (b) The applicability of an exception in paragraph (a) of this section does not eliminate the need for the contracting officer to seek maximum practicable competition and to ensure that the price is fair and reasonable.
              [78 FR 65216, Oct. 31, 2013, as amended at 83 FR 24889, May 30, 2018; 84 FR 4365, Feb. 15, 2019]

              215.371-5
              Waiver.
              (a) The head of the contracting activity is authorized to waive the requirement at 215.371-2 to resolicit for an additional period of at least 30 days.
              (b) This waiver authority cannot be delegated below one level above the contracting officer.
              [77 FR 39138, June 29, 2012]

              215.371-6
              Solicitation provision.
              Use the provision at 252.215-7007, Notice of Intent to Resolicit, in competitive solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial items, that will be solicited for fewer than 30 days, unless an exception at 215.371-4 applies or the requirement is waived in accordance with 215.371-5.
              [78 FR 65216, Oct. 31, 2013]

            Subpart 215.4—Contract Pricing

              215.401
              Definitions.
              As used in this subpart—

                Market prices means current prices that are established in the course of ordinary trade between buyers and sellers free to bargain and that can be substantiated through competition or from sources independent of the offerors.

                Relevant sales data means information provided by an offeror of sales of the same or similar items that can be used to establish price reasonableness taking into consideration the age, volume, and nature of the transactions (including any related discounts, refunds, rebates, offsets, or other adjustments).
              [83 FR 4443, Jan. 31, 2018]

              215.402
              Pricing policy.
              (a)(i) Pursuant to section 831 of the National Defense Authorization Act for Fiscal Year 2013 (Pub. L. 112-239)—
              (A) The contracting officer is responsible for determining if the information provided by the offeror is sufficient to determine price reasonableness. This responsibility includes determining whether information on the prices at which the same or similar items have previously been sold is adequate for evaluating the reasonableness of price, and determining the extent of uncertified cost data that should be required in cases in which price information is not adequate;
              (B) The contracting officer shall not limit the Government's ability to obtain any data that may be necessary to support a determination of fair and reasonable pricing by agreeing to contract terms that preclude obtaining necessary supporting information; and
              (C) When obtaining uncertified cost data, the contracting officer shall require the offeror to provide the information in the form in which it is regularly maintained in the offeror's business operations.
              (ii) Follow the procedures at PGI 215.402 when conducting cost or price analysis, particularly with regard to acquisitions for sole source commercial items.
              [72 FR 30278, May 31, 2007, as amended at 83 FR 4443, Jan. 31, 2018]

              215.403
              Obtaining certified cost or pricing data.

              215.403-1
              Prohibition on obtaining certified cost or pricing data (10 U.S.C. 2306a and 41 U.S.C. chapter 35).
              (b) Exceptions to certified cost or pricing data requirements. (i) Follow the procedures at PGI 215.403-1(b).
              (ii) Submission of certified cost or pricing data shall not be required in the case of a contract, subcontract, or modification of a contract or subcontract to the extent such data relates to an indirect offset.
              (c) Standards for exceptions from certified cost or pricing data requirements—(1) Adequate price competition.

              (A) For acquisitions under dual or multiple source programs—
              (1) The determination of adequate price competition must be made on a case-by-case basis. Even when adequate price competition exists, in certain cases it may be appropriate to obtain additional data to assist in price analysis; and
              (2) Adequate price competition normally exists when—
              (i) Prices are solicited across a full range of step quantities, normally including a 0-100 percent split, from at least two offerors that are individually capable of producing the full quantity; and
              (ii) The reasonableness of all prices awarded is clearly established on the basis of price analysis (see FAR 15.404-1(b)).
              (B) If only one offer is received in response to a competitive solicitation, see 215.371-3.
              (3) Commercial items. (A) Follow the procedures at PGI 215.403-1(c)(3) for pricing commercial items.
              (B) When applying the commercial item exception under FAR 15.403-1(b)(3), see 212.102(a)(ii) regarding prior commercial item determinations.
              (4) Waivers. (A) The head of the contracting activity may, without power of delegation, apply the exceptional circumstances authority when a determination is made that—
              (1) The property or services cannot reasonably be obtained under the contract, subcontract, or modification, without the granting of the waiver;
              (2) The price can be determined to be fair and reasonable without the submission of certified cost or pricing data; and
              (3) There are demonstrated benefits to granting the waiver. Follow the procedures at PGI 215.403-1(c)(4)(A) for determining when an exceptional case waiver is appropriate, for approval of such waivers, for partial waivers, and for waivers applicable to unpriced supplies or services.
              (B) By November 30th of each year, departments and agencies shall provide a report to the Director, Defense Pricing and Contracting, Pricing and Contracting Initiatives (DPC/PCI), of all waivers granted under FAR 15.403-1(b)(4), during the previous fiscal year, for any contract, subcontract, or modification expected to have a value of $20 million or more. See PGI 215.403-1(c)(4)(B) for the format and guidance for the report.
              (C) DoD has waived the requirement for submission of certified cost or pricing data for the Canadian Commercial Corporation and its subcontractors (but see 215.408(3) and 225.870-4(c)).
              (D) DoD has waived certified cost or pricing data requirements for nonprofit organizations (including education institutions) on cost-reimbursement-no-fee contracts. The contracting officer shall require—
              (1) Submission of data other than certified cost or pricing data to the extent necessary to determine reasonableness and cost realism; and
              (2) Certified cost or pricing data from subcontractors that are not nonprofit organizations when the subcontractor's proposal exceeds the certified cost or pricing data threshold at FAR 15.403-4(a)(1).
              [63 FR 55040, Oct. 14, 1998, as amended at 71 FR 69493, Dec. 1, 2006; 72 FR 30278, May 31, 2007; 76 FR 58137, Sept. 20, 2011; 77 FR 39139, June 29, 2012; 77 FR 43472, July 24, 2012; 77 FR 52253, Aug. 29, 2012; 77 FR 76937, 76939, Dec. 31, 2012; 78 FR 13543, Feb. 28, 2013; 78 FR 65216, Oct. 31, 2013; 80 FR 36904, June 26, 2015; 83 FR 4444, Jan. 31, 2018; 83 FR 30828, June 29, 2018; 85 FR 34532, June 5, 2020; 85 FR 61504, Sept. 29, 2020]

              215.403-3
              Requiring data other than certified cost or pricing data.
              Follow the procedures at PGI 215.403-3.

              (c) Commercial items. For determinations of price reasonableness of major weapon systems acquired as commercial items, see 234.7002(d).
              [72 FR 30278, May 31, 2007, as amended at 77 FR 76940, Dec. 31, 2012; 85 FR 34532, June 5, 2020]

              215.403-5
              Instructions for submission of certified cost or pricing data and data other than certified cost or pricing data.
              (b)(3) For contractors following the contract cost principles in FAR subpart 31.2, Contracts With Commercial Organizations, pursuant to the procedures in FAR 42.1701(b), the administrative contracting officer shall require contractors to comply with the submission items in Table 215.403-1 in order to ensure that their forward pricing rate proposal is submitted in an acceptable form in accordance with FAR 15.403-5(b)(3). The contracting officer should request that the proposal be submitted to the Government at least 90 days prior to the proposed effective date of the rates. To ensure the proposal is complete, the contracting officer shall request that the contractor complete the Contractor Forward Pricing Rate Proposal Adequacy Checklist at Table 215.403-1, and submit it with the forward pricing rate proposal.
              Table 215.403-1—Contractor Forward Pricing Rate Proposal Adequacy Checklist

                Complete the following checklist, providing the location of requested information, or an explanation of why the requested information is not provided, and submit it with the forward pricing rate proposal.

                Contractor Forward Pricing Rate Proposal Adequacy Checklist

                  Submission item
                  Proposal page No.(if applicable)

                  If not provided,explain (may use
                    continuation pages)

                    General Instructions

                  1. Is there a properly completed first page of the proposal as specified by the contracting officer?
                  Proposal Cover Page

                  Initial proposal elements include:

                  a. Name and address of contractor;

                  b. Name and telephone number of point of contact;

                  c. Period covered;

                  d. The page of the proposal that addresses—

                  1. Whether your organization is subject to cost accounting standards (CAS);

                  2. Whether your organization has submitted a CAS Disclosure Statement, and whether it has been determined adequate;

                  3. Whether you have been notified that you are or may be in noncompliance with your Disclosure Statement or CAS (other than a noncompliance that the cognizant Federal agency official had determined to have an immaterial cost impact), and if yes, an explanation;

                  4. Whether any aspect of this proposal is inconsistent with your disclosed practices or applicable CAS, and, if so, an explanation; and whether the proposal is consistent with established estimating and accounting principles and procedures and FAR part 31, Cost Principles, and, if not, an explanation;

                  e. The following statement: “This forward pricing rate proposal reflects our estimates, as of the date of submission entered in (f) below and conforms with Table 215.403-1. By submitting this proposal, we grant the Contracting Officer and authorized representative(s) the right to examine those records, which include books, documents, accounting procedures and practices, and other data, regardless of type and form or whether such supporting information is specifically referenced or included in the proposal as the basis for each estimate, that will permit an adequate evaluation of the proposed rates and factors.”;

                  f. Date of submission; and

                  g. Name, title, and signature of authorized representative.

                  2. Summary of proposed direct and indirect rates and factors, including the proposed pool and base costs for each proposed indirect rate and factor.
                  Immediately following the proposal cover page

                  3. Table of Contents or index.

                  a. Does the proposal include a table of contents or index identifying and referencing all supporting data accompanying or identified in the proposal?

                  b. For supporting documentation not provided with the proposal, does the basis of each estimate in the proposal include the location of the documentation and the point of contact (custodian) name, phone number, and email address? Does the proposal disclose known or anticipated changes in business activities or processes that could materially impact the proposed rates (if not previously provided)? For example—

                  4.  a. Management initiatives to reduce costs;

                  b. Changes in management objectives as a result of economic conditions and increased competitiveness;

                  c. Changes in accounting policies, procedures, and practices including (i) reclassification of expenses from direct to indirect or vice versa; (ii) new methods of accumulating and allocating indirect costs and the related impact; and (iii) advance agreements;

                  d. Company reorganizations (including acquisitions or divestitures);

                  e. Shutdown of facilities; or

                  f. Changes in business volume and/or contract mix/type.

                  5. Do proposed costs based on judgmental factors include an explanation of the estimating processes and methods used, including those used in projecting from known data?

                  6. Does the proposal show trends and budgetary data? Does the proposal provide an explanation of how the data, as well as any adjustments to the data, were used?

                  7. The proposal should reconcile to the supporting data referenced. If the proposal does not reconcile to the supporting data referenced, identify applicable page(s) and explain.

                  8. The proposal should be internally consistent. If the proposal is not internally consistent, identify applicable page(s) and explain.

                    Direct Labor

                  Direct Labor Rates Methodology and Basis of Each Estimate

                  9.  a. Does the proposal include an explanation of the methodology used to develop the direct labor rates and identify the basis of each estimate?

                  b. Does the proposal include or identify the location of the supporting documents for the base-period labor rates (e.g., payroll records)?

                  10. Does the proposal identify escalation factors for the out-year labor rates, the costs to which escalation is applicable, and the basis of each factor used?

                  11. Does the proposal identify planned or anticipated changes in the composition of labor rates, labor categories, union agreements, headcounts, or other factors that could significantly impact the direct labor rates?

                    Indirect Rates (Fringe, Overhead, G&A, etc.)

                  12. Indirect Rates Methodology and Basis of Each Estimate.

                  a. Does the proposal identify the basis of each estimate and provide an explanation of the methodology used to develop the indirect rates?

                  b. Does the proposal include or identify the location of the supporting documents for the proposed rates?

                  13. Does the proposal identify indirect expenses by burden center, by cost element, by year (including any voluntary deletions, if applicable) in a format that is consistent with the accounting system used to accumulate actual expenses?

                  14. Does the proposal identify any contingencies?

                  15. Does the proposal identify planned or anticipated changes in the nature, type, or level of indirect costs, including fringe benefits?

                  16. Does the proposal identify corporate, home office, shared services, or other incoming allocated costs and the source for those costs, including location and point of contact (custodian) name, phone number, and email address?

                  17. Does the proposal separately identify all intermediate cost pools and provide a reconciliation to show where the costs will be allocated?

                  18. Does the proposal identify the escalation factors used to escalate indirect costs for the out-years, the costs to which escalation is applicable, and the basis of each factor used?

                  19. Does the proposal provide details of the development of the allocation base?

                  20. Does the proposal include or reference the supporting data for the allocation base such as program budgets, negotiation memoranda, proposals, contract values, etc.?

                  21. Does the proposal identify how the proposed allocation bases reconcile with its long range plans, strategic plan, operating budgets, sales forecasts, program budgets, etc.?

                    Cost of Money (COM)

                  22. Cost of Money.

                  a. Are Cost of Money rates submitted on Form CASB-CMF, with the Treasury Rate used to compute COM identified and a summary of the net book value of assets, identified as distributed and non-distributed?

                  b. Does the proposal identify the support for the Form CASB-CMF, for example, the underlying reports and records supporting the net book value of assets contained in the form?

                    Other

                  23. Does the proposal include a comparison of prior forecasted costs to actual results in the same format as the proposal and an explanation/analysis of any differences?

                  24. If this is a revision to a previous rate proposal or a forward pricing rate agreement, does the new proposal provide a summary of the changes in the circumstances or the facts that the contractor asserts require the change to the rates?

              [79 FR 73496, Dec. 11, 2014]

              215.404
              Proposal analysis.

              215.404-1
              Proposal analysis techniques.
              (a) General. (i) Follow the procedures at PGI 215.404-1 for proposal analysis.
              (ii) For spare parts or support equipment, perform an analysis of—
              (A) Those line items where the proposed price exceeds by 25 percent or more the lowest price the Government has paid within the most recent 12-month period based on reasonably available data;
              (B) Those line items where a comparison of the item description and the proposal price indicates a potential for overpricing;
              (C) Significant high-dollar-value items. If there are no obvious high-dollar-value items, include an analysis of a random sample of items; and
              (D) A random sample of the remaining low-dollar value items. Sample size may be determined by subjective judgment, e.g., experience with the offeror and the reliability of its estimating and accounting systems.
              (b) Price analysis for commercial and noncommercial items. (i) In the absence of adequate price competition in response to the solicitation, pricing based on market prices is the preferred method to establish a fair and reasonable price (see PGI 215.404-1(b)(i)).
              (ii) If the contracting officer determines that the information obtained through market research is insufficient to determine the reasonableness of price, the contracting officer shall consider information submitted by the offeror of recent purchase prices paid by the Government and commercial customers for the same or similar commercial items under comparable terms and conditions in establishing price reasonableness on a subsequent purchase if the contracting officer is satisfied that the prices previously paid remain a valid reference for comparison. The contracting officer shall consider the totality of other relevant factors such as the time elapsed since the prior purchase and any differences in the quantities purchased (section 853 of the National Defense Authorization Act for Fiscal Year 2016 (Pub. L. 114-92)).
              (iii) If the contracting officer determines that the offeror cannot provide sufficient information as described in paragraph (b)(ii) of this section to determine the reasonableness of price, the contracting officer should request the offeror to submit information on—
              (A) Prices paid for the same or similar items sold under different terms and conditions;
              (B) Prices paid for similar levels of work or effort on related products or services;
              (C) Prices paid for alternative solutions or approaches; and
              (D) Other relevant information that can serve as the basis for determining the reasonableness of price.
              (iv) If the contracting officer determines that the pricing information submitted is not sufficient to determine the reasonableness of price, the contracting officer shall request other relevant information, to include cost data. However, no cost data may be required in any case in which there are sufficient non-Government sales of the same item to establish reasonableness of price (section 831 of the National Defense Authorization Act for Fiscal Year 2013 (Pub. L. 112-239)).
              (v) When evaluating pricing data, the contracting officer shall consider materially differing terms and conditions, quantities, and market and economic factors. For similar items, the contracting officer shall also consider material differences between the similar item and the item being procured (see FAR 15.404-1(b)(2)(ii)(B) and PGI 215.404-1(b)(v)). Material differences are those that could reasonably be expected to influence the contracting officer's determination of price reasonableness. The contracting officer shall consider the following factors when evaluating the relevance of the information available:
              (A) Market prices.

              (B) Age of data.

              (1) Whether data is too old to be relevant depends on the industry (e.g., rapidly evolving technologies), product maturity (e.g., stable), economic factors (e.g., new sellers in the marketplace), and various other considerations.
              (2) A pending sale may be relevant if, in the judgement of the contracting officer, it is probable at the anticipated price, and the sale could reasonably be expected to materially influence the contracting officer's determination of price reasonableness. The contracting officer may consult with the cognizant administrative contracting officers (ACOs) as they may have information about pending sales.
              (C) Volume and completeness of transaction data. Data must include a sufficient number of transactions to represent the range of relevant sales to all types of customers. The data must also include key information, such as date, quantity sold, part number, part nomenclature, sales price, and customer. If the number of transactions is insufficient or the data is incomplete, the contracting officer shall request additional sales data to evaluate price reasonableness. If the contractor cannot provide sufficient sales data, the contracting officer shall request other relevant information.
              (D) Nature of transactions. The nature of a sales transaction includes the information necessary to understand the transaction, such as terms and conditions, date, quantity sold, sale price, unique requirements, the type of customer (government, distributor, retail end-user, etc.), and related agreements. It also includes warranties, key product technical specifications, maintenance agreements, and preferred customer rewards.
              (vi) The contracting officer shall consider catalog prices to be reliable when they are regularly maintained and supported by relevant sales data (including any related discounts, refunds, rebates, offsets, or other adjustments). The contracting officer may request that the offeror support differences between the proposed price(s), catalog price(s), and relevant sales data.
              (vii) The contracting officer may consult with the DoD cadre of experts who are available to provide expert advice to the acquisition workforce in assisting with commercial item and price reasonableness determinations. The DoD cadre of experts is identified at PGI 215.404-1(b)(vii).
              (h) Review and justification of pass-through contracts. Follow the procedures at PGI 215.404-1(h)(2) when considering alternative approaches or making the determination that the contracting approach selected is in the best interest of the Government, as required by FAR 15.404-1(h)(2).
              [63 FR 55040, Oct. 14, 1998, as amended at 71 FR 69494, Dec. 1, 2006; 72 FR 30278, May 31, 2007; 77 FR 76940, Dec. 31, 2012; 83 FR 4444, Jan. 31, 2018; 84 FR 72563, Dec. 31, 2019]

              215.404-2
              Data to support proposal analysis.
              See PGI 215.404-2 for guidance on obtaining field pricing or audit assistance.
              [71 FR 69494, Dec. 1, 2006]

              215.404-3
              Subcontract pricing considerations.
              Follow the procedures at PGI 215.404-3 when reviewing a subcontractor's proposal.
              [71 FR 69494, Dec. 1, 2006]

              215.404-4
              Profit.
              (b) Policy. (1) Contracting officers shall use a structured approach for developing a prenegotiation profit or fee objective on any negotiated contract action when certified cost or pricing data is obtained, except for cost-plus-award-fee contracts (see 215.404-74, 216.405-2, and FAR 16.405-2) or contracts with Federally Funded Research and Development Centers (FFRDCs) (see 215.404-75). There are three structured approaches—
              (A) The weighted guidelines method;
              (B) The modified weighted guidelines method; and
              (C) An alternate structured approach.
              (c) Contracting officer responsibilities. (1) Also, do not perform a profit analysis when assessing cost realism in competitive acquisitions.
              (2) When using a structured approach, the contracting officer—
              (A) Shall use the weighted guidelines method (see 215.404-71), except as provided in paragraphs (c)(2)(B) and (c)(2)(C) of this subsection.
              (B) Shall use the modified weighted guidelines method (see 215.404-72) on contract actions with nonprofit organizations other than FFRDCs.
              (C) May use an alternate structured approach (see 215.404-73) when—
              (1) The contract action is—
              (i) At or below the certified cost or pricing data threshold (see FAR 15.403-4(a)(1));
              (ii) For architect-engineer or construction work;
              (iii) Primarily for delivery of material from subcontractors; or
              (iv) A termination settlement; or
              (2) The weighted guidelines method does not produce a reasonable overall profit objective and the head of the contracting activity approves use of the alternate approach in writing.
              (D) Shall use the weighted guidelines method to establish a basic profit rate under a formula-type pricing agreement, and may then use the basic rate on all actions under the agreement, provided that conditions affecting profit do not change.
              (E) Shall document the profit analysis in the contract file.
              (5) Although specific agreement on the applied weights or values for individual profit factors shall not be attempted, the contracting officer may encourage the contractor to—
              (A) Present the details of its proposed profit amounts in the weighted guidelines format or similar structured approached; and

              (B) Use the weighted guidelines method in developing profit objectives for negotiated subcontracts.

              (6) The contracting officer must also verify that relevant variables have not materially changed (e.g., performance risk, interest rates, progress payment rates, distribution of facilities capital).
              (d) Profit-analysis factors—(1) Common factors. The common factors are embodied in the DoD structured approaches and need not be further considered by the contracting officer.
              [63 FR 55040, Oct. 14, 1998, as amended at 63 FR 63799, Nov. 17, 1998; 65 FR 77829, Dec. 13, 2000; 66 FR 49863, Oct. 1, 2001; 71 FR 69494, Dec. 1, 2006; 77 FR 76940, Dec. 31, 2012]

              215.404-70
              DD Form 1547, Record of Weighted Guidelines Method Application.
              Follow the procedures at PGI 215.404-70 for use of DD Form 1547 whenever a structured approach to profit analysis is required.
              [71 FR 69494, Dec. 1, 2006]

              215.404-71
              Weighted guidelines method.

              215.404-71-1
              General.
              (a) The weighted guidelines method focuses on four profit factors—
              (1) Performance risk;
              (2) Contract type risk;
              (3) Facilities capital employed; and
              (4) Cost efficiency.
              (b) The contracting officer assigns values to each profit factor; the value multiplied by the base results in the profit objective for that factor. Except for the cost efficiency special factor, each profit factor has a normal value and a designated range of values. The normal value is representative of average conditions on the prospective contract when compared to all goods and services acquired by DoD. The designated range provides values based on above normal or below normal conditions. In the price negotiation documentation, the contracting officer need not explain assignment of the normal value, but should address conditions that justify assignment of other than the normal value. The cost efficiency special factor has no normal value. The contracting officer shall exercise sound business judgment in selecting a value when this special factor is used (see 215.404-71-5).
              [67 FR 20689, Apr. 26, 2002]

              215.404-71-2
              Performance risk.
              (a) Description. This profit factor addresses the contractor's degree of risk in fulfilling the contract requirements. The factor consists of two parts:
              (1) Technical—the technical uncertainties of performance.
              (2) Management/cost control—the degree of management effort necessary—
              (i) To ensure that contract requirements are met; and
              (ii) To reduce and control costs.
              (b) Determination. The following extract from the DD Form 1547 is annotated to describe the process.

                  Item
                  Contractor risk factors
                  Assigned weighting
                  Assigned value
                  Base (item 20)
                  Profit objective

                  21
                  Technical
                  (1)
                  (2)
                  N/A
                  N/A

                  22
                  Management/Cost Control
                  (1)
                  (2)
                  N/A
                  N/A

                  23
                  Performance Risk (Composite)
                  N/A
                  (3)
                  (4)
                  (5)

              (1) Assign a weight (percentage) to each element according to its input to the total performance risk. The total of the two weights equals 100 percent.
              (2) Select a value for each element from the list in paragraph (c) of this subsection using the evaluation criteria in paragraphs (d) and (e) of this subsection.
              (3) Compute the composite as shown in the following example:

                  Assigned weighting(percent)

                  Assignedvalue
                    (percent)

                  Weightedvalue
                    (percent)

                  Technical
                  60
                  5.0
                  3.0

                  Management/Cost Control
                  40
                  4.0
                  1.6

                  Composite Value
                  100

                  4.6

              (4) Insert the amount from Block 20 of the DD Form 1547. Block 20 is total contract costs, excluding facilities capital cost of money.
              (5) Multiply (3) by (4).
              (c) Values: Normal and designated ranges.

                  Normalvalue
                    (percent)

                  Designatedrange

                  Standard
                  5
                  3% to 7%

                  Technology Incentive
                  9
                  7% to 11%

              (1) Standard. The standard designated range should apply to most contracts.
              (2) Technology incentive. For the technical factor only, contracting officers may use the technology incentive range for acquisitions that include development, production, or application of innovative new technologies. The technology incentive range does not apply to efforts restricted to studies, analyses, or demonstrations that have a technical report as their primary deliverable.
              (d) Evaluation criteria for technical. (1) Review the contract requirements and focus on the critical performance elements in the statement of work or specifications. Factors to consider include—
              (i) Technology being applied or developed by the contractor;
              (ii) Technical complexity;
              (iii) Program maturity;
              (iv) Performance specifications and tolerances;
              (v) Delivery schedule; and
              (vi) Extent of a warranty or guarantee.
              (2) Above normal conditions. (i) The contracting officer may assign a higher than normal value in those cases where there is a substantial technical risk. Indicators are—
              (A) Items are being manufactured using specifications with stringent tolerance limits;
              (B) The efforts require highly skilled personnel or require the use of state-of-the-art machinery;
              (C) The services and analytical efforts are extremely important to the Government and must be performed to exacting standards;
              (D) The contractor's independent development and investment has reduced the Government's risk or cost;
              (E) The contractor has accepted an accelerated delivery schedule to meet DoD requirements; or
              (F) The contractor has assumed additional risk through warranty provisions.
              (ii) Extremely complex, vital efforts to overcome difficult technical obstacles that require personnel with exceptional abilities, experience, and professional credentials may justify a value significantly above normal.
              (iii) The following may justify a maximum value—
              (A) Development or initial production of a new item, particularly if performance or quality specifications are tight; or
              (B) A high degree of development or production concurrency.
              (3) Below normal conditions. (i) The contracting officer may assign a lower than normal value in those cases where the technical risk is low. Indicators are—
              (A) Requirements are relatively simple;
              (B) Technology is not complex;
              (C) Efforts do not require highly skilled personnel;
              (D) Efforts are routine;
              (E) Programs are mature; or
              (F) Acquisition is a follow-on effort or a repetitive type acquisition.
              (ii) The contracting officer may assign a value significantly below normal for—
              (A) Routine services;
              (B) Production of simple items;
              (C) Rote entry or routine integration of Government-furnished information; or
              (D) Simple operations with Government-furnished property.
              (4) Technology incentive range. (i) The contracting officer may assign values within the technology incentive range when contract performance includes the introduction of new, significant technological innovation. Use the technology incentive range only for the most innovative contract efforts. Innovation may be in the form of—

              (A) Development or application of new technology that fundamentally changes the characteristics of an existing product or system and that results in increased technical performance, improved reliability, or reduced costs; or
              (B) New products or systems that contain significant technological advances over the products or systems they are replacing.
              (ii) When selecting a value within the technology incentive range, the contracting officer should consider the relative value of the proposed innovation to the acquisition as a whole. When the innovation represents a minor benefit, the contracting officer should consider using values less than the norm. For innovative efforts that will have a major positive impact on the product or program, the contracting officer may use values above the norm.
              (e) Evaluation criteria for management/cost control. (1) The contracting officer should evaluate—
              (i) The contractor's management and internal control systems using contracting office data, information and reviews made by field contract administration offices or other DoD field offices;
              (ii) The management involvement expected on the prospective contract action;
              (iii) The degree of cost mix as an indication of the types of resources applied and value added by the contractor;
              (iv) The contractor's support of Federal socioeconomic programs;
              (v) The expected reliability of the contractor's cost estimates (including the contractor's cost estimating system);
              (vi) The adequacy of the contractor's management approach to controlling cost and schedule; and
              (vii) Any other factors that affect the contractor's ability to meet the cost targets (e.g., foreign currency exchange rates and inflation rates).
              (2) Above normal conditions. (i) The contracting officer may assign a higher than normal value when there is a high degree of management effort. Indicators of this are—
              (A) The contractor's value added is both considerable and reasonably difficult;
              (B) The effort involves a high degree of integration or coordination;
              (C) The contractor has a good record of past performance;
              (D) The contractor has a substantial record of active participation in Federal socioeconomic programs;
              (E) The contractor provides fully documented and reliable cost estimates;
              (F) The contractor makes appropriate make-or-buy decisions; or
              (G) The contractor has a proven record of cost tracking and control.
              (ii) The contracting officer may justify a maximum value when the effort—
              (A) Requires large scale integration of the most complex nature;
              (B) Involves major international activities with significant management coordination (e.g., offsets with foreign vendors); or
              (C) Has critically important milestones.
              (iii) If the contractor demonstrates efficient management and cost control through the submittal of a timely, qualifying proposal (as defined in217.7401) in furtherance of definitization of an undefinitized contract action, and the proposal demonstrates effective cost control from the time of award to the present, the contracting officer may add 1 percentage point to the value determined for management/cost control up to the maximum of 7 percent.
              (3) Below normal conditions. (i) The contracting officer may assign a lower than normal value when the management effort is minimal. Indicators of this are—
              (A) The program is mature and many end item deliveries have been made;
              (B) The contractor adds minimal value to an item;
              (C) The efforts are routine and require minimal supervision;
              (D) The contractor provides poor quality, untimely proposals;
              (E) The contractor fails to provide an adequate analysis of subcontractor costs;
              (F) The contractor does not cooperate in the evaluation and negotiation of the proposal;
              (G) The contractor's cost estimating system is marginal;
              (H) The contractor has made minimal effort to initiate cost reduction programs;

              (I) The contractor's cost proposal is inadequate;

              (J) The contractor has a record of cost overruns or another indication of unreliable cost estimates and lack of cost control; or
              (K) The contractor has a poor record of past performance.
              (ii) The following may justify a value significantly below normal—
              (A) Reviews performed by the field contract administration offices disclose unsatisfactory management and internal control systems (e.g., quality assurance, property control, safety, security); or
              (B) The effort requires an unusually low degree of management involvement.
              [67 FR 20689, Apr. 26, 2002, as amended at 67 FR 49254, July 30, 2002; 78 FR 13543, Feb. 28, 2013; 83 FR 30586, June 29, 2018; 84 FR 39205, Aug. 9, 2019]

              215.404-71-3
              Contract type risk and working capital adjustment.
              (a) Description. The contract type risk factor focuses on the degree of cost risk accepted by the contractor under varying contract types. The working capital adjustment is an adjustment added to the profit objective for contract type risk. It only applies to fixed-price contracts that provide for progress payments. Though it uses a formula approach, it is not intended to be an exact calculation of the cost of working capital. Its purpose is to give general recognition to the contractor's cost of working capital under varying contract circumstances, financing policies, and the economic environment.
              (b) Determination. The following extract from the DD 1547 is annotated to explain the process.

                  Item
                  Contractor risk factors
                  Assignedvalue

                  Base
                  Profitobjective

                  24a
                  Contract Type Risk (based on incurred costs at the time of qualifying proposal submission)
                  (1)
                  (2)(i)
                  (3)

                  24b
                  Contract Type Risk (based on Government estimated cost to complete)
                  (1)
                  (2)(ii)
                  (3)

                  24c
                  Totals

                  (3)
                  (3)

                  Item
                  Contractor risk factors
                  Costsfinanced

                  Lengthfactor

                  Interestrate

                  Profitobjective

                  25
                  Working Capital (4)
                  (5)
                  (6)
                  (7)
                  (8)

              (1) Select a value from the list of contract types in paragraph (c) of this section using the evaluation criteria in paragraph (d) of this section. See paragraph (d)(2) of this section.
              (2)(i) Insert the amount of costs incurred as of the date the contractor submits a qualifying proposal, such as under an undefinitized contract action, (excluding facilities capital cost of money) into the Block 24a column titled Base.
              (ii) Insert the amount of Government estimated cost to complete (excluding facilities capital cost of money) into the Block 24b column titled Base.
              (3) Multiply (1) by (2)(i) and (2)(ii), respectively for Blocks 24a and 24b. Add Blocks 24a and 24b and insert the totals in Block 24c.
              (4) Only complete this block when the prospective contract is a fixed-price contract containing provisions for progress payments.
              (5) Insert the amount computed per paragraph (e) of this subsection.
              (6) Insert the appropriate figure from paragraph (f) of this subsection.

              (7) Use the interest rate established by the Secretary of the Treasury (see https://www.fiscal.treasury.gov/fsservices/gov/pmt/promptPayment/rates.htm). Do not use any other interest rate.
              (8) Multiply (5) by (6) by (7). This is the working capital adjustment. It shall not exceed 4 percent of the contract costs in Block 20.
              (c) Values: Normal and designated ranges.

                  Contract type
                  Notes
                  Normal value(percent)

                  Designated range(percent)

                  Firm-fixed-price, no financing
                  (1)
                  5.0
                  4 to 6.

                  Firm-fixed-price, with performance-based payments
                  (6)
                  4.0
                  2.5 to 5.5

                  Firm-fixed-price, with progress payments
                  (2)
                  3.0
                  2 to 4.

                  Fixed-price incentive, no financing
                  (1)
                  3.0
                  2 to 4.

                  Fixed-price incentive, with performance-based payments
                  (6)
                  2.0
                  0.5 to 3.5.

                  Fixed-price with redetermination provision
                  (3)

                  Fixed-price incentive, with progress payments
                  (2)
                  1.0
                  0 to 2.

                  Cost-plus-incentive-free
                  (4)
                  1.0
                  0 to 2.

                  Cost-plus-fixed-fee
                  (4)
                  0.5
                  0 to 1.

                  Time-and-materials (including overhaul contracts priced on time-and-materials basis)
                  (5)
                  0.5
                  0 to 1.

                  Labor-hour
                  (5)
                  0.5
                  0 to 1.

                  Firm-fixed-price, level-of-effort
                  (5)
                  0.5
                  0 to 1.

              (1) “No financing” means either that the contract does not provide progress payments or performance-based payments, or that the contract provides them only on a limited basis, such as financing of first articles. Do not compute a working capital adjustment.
              (2) When the contract contains provisions for progress payments, compute a working capital adjustment (Block 25).
              (3) For the purposes of assigning profit values, treat a fixed-price contract with redetermination provisions as if it were a fixed-price incentive contract with below normal conditions.
              (4) Cost-plus contracts shall not receive the working capital adjustment.
              (5) These types of contracts are considered cost-plus-fixed-fee contracts for the purposes of assigning profit values. They shall not receive the working capital adjustment in Block 25. However, they may receive higher than normal values within the designated range to the extent that portions of cost are fixed.
              (6) When the contract contains provisions for performance-based payments, do not compute a working capital adjustment.
              (d) Evaluation criteria—(1) General. The contracting officer should consider elements that affect contract type risk such as—
              (i) Length of contract;
              (ii) Adequacy of cost data for projections;
              (iii) Economic environment;
              (iv) Nature and extent of subcontracted activity;
              (v) Protection provided to the contractor under contract provisions (e.g., economic price adjustment clauses);
              (vi) The ceilings and share lines contained in incentive provisions;
              (vii) Risks associated with contracts for foreign military sales (FMS) that are not funded by U.S. appropriations; and
              (viii) When the contract contains provisions for performance-based payments—
              (A) The frequency of payments;
              (B) The total amount of payments compared to the maximum allowable amount specified at FAR 32.1004(b)(2); and
              (C) The risk of the payment schedule to the contractor.
              (2) Mandatory.(i) The contracting officer shall assess the extent to which costs have been incurred prior to definitization of the contract action (also see 217.7404-6(a) and 243.204-70-6). When costs have been incurred prior to definitization, generally regard the contract type risk to be in the low end of the designated range. If a substantial portion of the costs have been incurred prior to definitization, the contracting officer may assign a value as low as zero percent, regardless of contract type. However, if a contractor submits a qualifying proposal to definitize an undefinitized contract action and the contracting officer for such action definitizes the contract after the end of the 180-day period beginning on the date on which the contractor submitted the qualifying proposal (as defined in 217.7401), the profit allowed on the contract shall accurately reflect the cost risk of the contractor as such risk existed on the date the contractor submitted the qualifying proposal.

              (ii) Contracting officers shall document in the price negotiation memorandum the reason for assigning a specific contract type risk value, to include the extent to which any reduced cost risk during the undefinitized period of performance was considered, in determining the negotiation objective.
              (3) Above normal conditions. The contracting officer may assign a higher than normal value when there is substantial contract type risk. Indicators of this are—
              (i) Efforts where there is minimal cost history;
              (ii) Long-term contracts without provisions protecting the contractor, particularly when there is considerable economic uncertainty;
              (iii) Incentive provisions (e.g., cost and performance incentives) that place a high degree of risk on the contractor;
              (iv) FMS sales (other than those under DoD cooperative logistics support arrangements or those made from U.S. Government inventories or stocks) where the contractor can demonstrate that there are substantial risks above those normally present in DoD contracts for similar items; or
              (v) An aggressive performance-based payment schedule that increases risk.
              (4) Below normal conditions. The contracting officer may assign a lower than normal value when the contract type risk is low. Indicators of this are—
              (i) Very mature product line with extensive cost history;
              (ii) Relative short-term contracts;
              (iii) Contractual provisions that substantially reduce the contractor's risk;
              (iv) Incentive provisions that place a low degree of risk on the contractor;
              (v) Performance-based payments totaling the maximum allowable amount(s) specified at FAR 32.1004(b)(2); or
              (vi) A performance-based payment schedule that is routine with minimal risk.
              (e) Costs financed. (1) Costs financed equal total costs multiplied by the portion (percent) of costs financed by the contractor.
              (2) Total costs equal Block 20 (i.e., all allowable costs excluding facilities capital cost of money), reduced as appropriate when—
              (i) The contractor has little cash investment (e.g., subcontractor progress payments liquidated late in period of performance);
              (ii) Some costs are covered by special financing provisions, such as advance payments; or
              (iii) The contract is multiyear and there are special funding arrangements.
              (3) The portion that the contractor finances is generally the portion not covered by progress payments, i.e., 100 percent minus the customary progress payment rate (see FAR 32.501). For example, if a contractor receives progress payments at 80 percent, the portion that the contractor finances is 20 percent. On contracts that provide progress payments to small businesses, use the customary progress payment rate for large businesses.
              (f) Contract length factor. (1) This is the period of time that the contractor has a working capital investment in the contract. It—
              (i) Is based on the time necessary for the contractor to complete the substantive portion of the work;
              (ii) Is not necessarily the period of time between contract award and final delivery (or final payment), as periods of minimal effort should be excluded;
              (iii) Should not include periods of performance contained in option provisions; and
              (iv) Should not, for multiyear contracts, include periods of performance beyond that required to complete the initial program year's requirements.
              (2) The contracting officer—
              (i) Should use the following table to select the contract length factor;
              (ii) Should develop a weighted average contract length when the contract has multiple deliveries; and
              (iii) May use sampling techniques provided they produce a representative result.

                Table

                  Period to perform substantive portion (in months)
                  Contract length factor

                  21 or less
                  .40

                  22 to 27
                  .65

                  28 to 33
                  .90

                  34 to 39
                  1.15

                  40 to 45
                  1.40

                  46 to 51
                  1.65

                  52 to 57
                  1.90

                  58 to 63
                  2.15

                  64 to 69
                  2.40

                  70 to 75
                  2.65

                  76 or more
                  2.90

              (3) Example: A prospective contract has a performance period of 40 months with end items being delivered in the 34th, 36th, 38th, and 40th months of the contract. The average period is 37 months and the contract length factor is 1.15.
              [63 FR 55040, Oct. 14, 1998, as amended at 64 FR 61032, Nov. 9, 1999; 66 FR 63335, Dec. 6, 2001; 67 FR 20691, Apr. 26, 2002; 67 FR 49255, July 30, 2002; 72 FR 14239, Mar. 27, 2007; 75 FR 48277, Aug. 10, 2010; 80 FR 56929, Sept. 21, 2015; 83 FR 30586, June 29, 2018; 84 FR 39205, Aug. 9, 2019]

              215.404-71-4
              Facilities capital employed.
              (a) Description. This factor focuses on encouraging and rewarding capital investment in facilities that benefit DoD. It recognizes both the facilities capital that the contractor will employ in contract performance and the contractor's commitment to improving productivity.
              (b) Contract facilities capital estimates. The contracting officer shall estimate the facilities capital cost of money and capital employed using—
              (1) An analysis of the appropriate Forms CASB-CMF and cost of money factors (48 CFR 9904.414 and FAR 31.205-10); and
              (2) DD Form 1861, Contract Facilities Capital Cost of Money.
              (c) Use of DD Form 1861. See PGI 215.404-71-4(c) for obtaining field pricing support for preparing DD Form 1861.
              (1) Purpose. The DD Form 1861 provides a means of linking the Form CASB-CMF and DD Form 1547, Record of Weighted Guidelines Application. It—
              (i) Enables the contracting officer to differentiate profit objectives for various types of assets (land, buildings, equipment). The procedure is similar to applying overhead rates to appropriate overhead allocation bases to determine contract overhead costs.
              (ii) Is designed to record and compute the contract facilities capital cost of money and capital employed which is carried forward to DD Form 1547.
              (2) Completion instructions. Complete a DD Form 1861 only after evaluating the contractor's cost proposal, establishing cost of money factors, and establishing a prenegotiation objective on cost. Complete the form as follows:
              (i) List overhead pools and direct-charging service centers (if used) in the same structure as they appear on the contractor's cost proposal and Form CASB-CMF. The structure and allocation base units-of-measure must be compatible on all three displays.
              (ii) Extract appropriate contract overhead allocation base data, by year, from the evaluated cost breakdown or prenegotiation cost objective and list against each overhead pool and direct-charging service center.
              (iii) Multiply each allocation base by its corresponding cost of money factor to get the facilities capital cost of money estimated to be incurred each year. The sum of these products represents the estimated contract facilities capital cost of money for the year's effort.
              (iv) Total contract facilities cost of money is the sum of the yearly amounts.
              (v) Since the facilities capital cost of money factors reflect the applicable cost of money rate in Column 1 of Form CASB-CMF, divide the contract cost of money by that same rate to determine the contract facilities capital employed.
              (d) Preaward facilities capital applications. To establish cost and price objectives, apply the facilities capital cost of money and capital employed as follows:
              (1) Cost of Money. (i) Cost Objective. Use the imputed facilities capital cost of money, with normal, booked costs, to establish a cost objective or the target cost when structuring an incentive type contract. Do not adjust target costs established at the outset even though actual cost of money rates become available during the period of contract performance.
              (ii) Profit Objective. When measuring the contractor's effort for the purpose of establishing a prenegotiation profit objective, restrict the cost base to normal, booked costs. Do not include cost of money as part of the cost base.
              (2) Facilities Capital Employed. Assess and weight the profit objective for risk associated with facilities capital employed in accordance with the profit guidelines at 215.404-71-4.
              (e) Determination. The following extract from the DD Form 1547 has been annotated to explain the process.

                  Item
                  Contractor facilities capital employed
                  Assigned value
                  Amount employed
                  Profit objective

                  26
                  Land
                  N/A
                  (2)
                  N/A

                  27
                  Buildings
                  N/A
                  (2)
                  N/A

                  28
                  Equipment
                  (1)
                  (2)
                  (3)

              (1) Select a value from the list in paragraph (f) of this subsection using the evaluation criteria in paragraph (g) of this subsection.
              (2) Use the allocated facilities capital attributable to land, buildings, and equipment, as derived in DD Form 1861, Contract Facilities Capital Cost of Money.
              (i) In addition to the net book value of facilities capital employed, consider facilities capital that is part of a formal investment plan if the contractor submits reasonable evidence that—
              (A) Achievable benefits to DoD will result from the investment; and
              (B) The benefits of the investment are included in the forward pricing structure.
              (ii) If the value of intracompany transfers has been included in Block 20 at cost (i.e., excluding general and administrative (G&A) expenses and profit), add to the contractor's allocated facilities capital, the allocated facilities capital attributable to the buildings and equipment of those corporate divisions supplying the intracompany transfers. Do not make this addition if the value of intracompany transfers has been included in Block 20 at price (i.e., including G&A expenses and profit).
              (3) Multiply (1) by (2).
              (f) Values: Normal and designated ranges.

                  Asset type
                  Normalvalue
                    (percent)

                  Designatedrange

                  Land
                  0
                  N/A

                  Buildings
                  0
                  N/A

                  Equipment
                  17.5
                  10 to 25

              (g) Evaluation criteria. (1) In evaluating facilities capital employed, the contracting officer—
              (i) Should relate the usefulness of the facilities capital to the goods or services being acquired under the prospective contract;
              (ii) Should analyze the productivity improvements and other anticipated industrial base enhancing benefits resulting from the facilities capital investment, including—
              (A) The economic value of the facilities capital, such as physical age, undepreciated value, idleness, and expected contribution to future defense needs; and
              (B) The contractor's level of investment in defense related facilities as compared with the portion of the contractor's total business that is derived from DoD; and
              (iii) Should consider any contractual provisions that reduce the contractor's risk of investment recovery, such as termination protection clauses and capital investment indemnification.
              (2) Above normal conditions. (i) The contracting officer may assign a higher than normal value if the facilities capital investment has direct, identifiable, and exceptional benefits. Indicators are—
              (A) New investments in state-of-the-art technology that reduce acquisition cost or yield other tangible benefits such as improved product quality or accelerated deliveries; or
              (B) Investments in new equipment for research and development applications.

              (ii) The contracting officer may assign a value significantly above normal when there are direct and measurable benefits in efficiency and significantly reduced acquisition costs on the effort being priced. Maximum values apply only to those cases where the benefits of the facilities capital investment are substantially above normal.
              (3) Below normal conditions. (i) The contracting officer may assign a lower than normal value if the facilities capital investment has little benefit to DoD. Indicators are—
              (A) Allocations of capital apply predominantly to commercial item lines;
              (B) Investments are for such things as furniture and fixtures, home or group level administrative offices, corporate aircraft and hangars, gymnasiums; or
              (C) Facilities are old or extensively idle.
              (ii) The contracting officer may assign a value significantly below normal when a significant portion of defense manufacturing is done in an environment characterized by outdated, inefficient, and labor-intensive capital equipment.
              [63 FR 55040, Oct. 14, 1998, as amended at 67 FR 20691, Apr. 26, 2002; 67 FR 49255, July 30, 2002; 71 FR 69494, Dec. 1, 2006; 72 FR 14239, Mar. 27, 2007; 73 FR 70906, Nov. 24, 2008]

              215.404-71-5
              Cost efficiency factor.
              (a) This special factor provides an incentive for contractors to reduce costs. To the extent that the contractor can demonstrate cost reduction efforts that benefit the pending contract, the contracting officer may increase the prenegotiation profit objective by an amount not to exceed 4 percent of total objective cost (Block 20 of the DD Form 1547) to recognize these efforts (Block 29).
              (b) To determine if using this factor is appropriate, the contracting officer shall consider criteria, such as the following, to evaluate the benefit the contractor's cost reduction efforts will have on the pending contract:
              (1) The contractor's participation in Single Process Initiative improvements;
              (2) Actual cost reductions achieved on prior contracts;
              (3) Reduction or elimination of excess or idle facilities;
              (4) The contractor's cost reduction initiatives (e.g., competition advocacy programs, technical insertion programs, obsolete parts control programs, spare parts pricing reform, value engineering, outsourcing of functions such as information technology). Metrics developed by the contractor such as fully loaded labor hours (i.e., cost per labor hour, including all direct and indirect costs) or other productivity measures may provide the basis for assessing the effectiveness of the contractor's cost reduction initiatives over time;
              (5) The contractor's adoption of process improvements to reduce costs;
              (6) Subcontractor cost reduction efforts;
              (7) The contractor's effective incorporation of commercial items and processes; or
              (8) The contractor's investment in new facilities when such investments contribute to better asset utilization or improved productivity.
              (c) When selecting the percentage to use for this special factor, the contracting officer has maximum flexibility in determining the best way to evaluate the benefit the contractor's cost reduction efforts will have on the pending contract. However, the contracting officer shall consider the impact that quantity differences, learning, changes in scope, and economic factors such as inflation and deflation will have on cost reduction.
              [67 FR 20692, Apr. 26, 2002, as amended at 67 FR 49255, July 30, 2002]

              215.404-72
              Modified weighted guidelines method for nonprofit organizations other than FFRDCs.
              (a) Definition. As used in this subpart, a nonprofit organization is a business entity—
              (1) That operates exclusively for charitable, scientific, or educational purposes;
              (2) Whose earnings do not benefit any private shareholder or individual;
              (3) Whose activities do not involve influencing legislation or political campaigning for any candidate for public office; and
              (4) That is exempted from Federal income taxation under section 501 of the Internal Revenue Code.

              (b) For nonprofit organizations that are entities that have been identified by the Secretary of Defense or a Secretary of a Department as receiving sustaining support on a cost-plus-fixed-fee basis from a particular DoD department or agency, compute a fee objective for covered actions using the weighted guidelines method in 215.404-71, with the following modifications:
              (1) Modifications to performance risk (Blocks 21-23 of the DD Form 1547). (i) If the contracting officer assigns a value from the standard designated range (see 215.404-71-2(c)), reduce the fee objective by an amount equal to 1 percent of the costs in Block 20 of the DD Form 1547. Show the net (reduced) amount on the DD Form 1547.
              (ii) Do not assign a value from the technology incentive designated range.
              (2) Modifications to contract type risk (Block 24 of the DD Form 1547). Use a designated range of −1 percent to 0 percent instead of the values in 215.404-71-3. There is no normal value.
              (c) For all other nonprofit organizations except FFRDCs, compute a fee objective for covered actions using the weighted guidelines method in 215.404-71, modified as described in paragraph (b)(1) of this subsection.
              [63 FR 63799, Nov. 17, 1998, as amended at 65 FR 77831, Dec. 13, 2000; 67 FR 20692, Apr. 26, 2002; 67 FR 49255, July 30, 2002]

              215.404-73
              Alternate structured approaches.
              (a) The contracting officer may use an alternate structured approach under 215.404-4(c).
              (b) The contracting officer may design the structure of the alternate, but it shall include—
              (1) Consideration of the three basic components of profit—performance risk, contract type risk (including working capital), and facilities capital employed. However, the contracting officer is not required to complete Blocks 21 through 30 of the DD Form 1547.
              (2) Offset for facilities capital cost of money.
              (i) The contracting officer shall reduce the overall prenegotiation profit objective by the amount of facilities capital cost of money under Cost Accounting Standard (CAS) 414, Cost of Money as an Element of the Cost of Facilities Capital (48 CFR 9904.414). Cost of money under CAS 417, Cost of Money as an Element of the Cost of Capital Assets Under Construction (48 CFR 9904.417), should not be used to reduce the overall prenegotiation profit objective. The profit amount in the negotiation summary of the DD Form 1547 must be net of the offset.
              (ii) This adjustment is needed for the following reason: The values of the profit factors used in the weighted guidelines method were adjusted to recognize the shift in facilities capital cost of money from an element of profit to an element of contract cost (see FAR 31.205-10) and reductions were made directly to the profit factors for performance risk. In order to ensure that this policy is applied to all DoD contracts that allow facilities capital cost of money, similar adjustments shall be made to contracts that use alternate structured approaches.
              [63 FR 55040, Oct. 14, 1998, as amended at 67 FR 20692, Apr. 26, 2002; 71 FR 69494, Dec. 1, 2006]

              215.404-74
              Fee requirements for cost-plus-award-fee contracts.
              In developing a fee objective for cost-plus-award-fee contracts, the contracting officer shall—
              (a) Follow the guidance in FAR 16.405-2 and 216.405-2;
              (b) Not use the weighted guidelines method or alternate structured approach;
              (c) Apply the offset policy in 215.404-73(b)(2) for facilities capital cost of money, i.e., reduce the base fee by the amount of facilities capital cost of money; and
              (d) Not complete a DD Form 1547.
              [63 FR 55040, Oct. 14, 1998, as amended at 67 FR 20692, Apr. 26, 2002]

              215.404-75
              Fee requirements for FFRDCs.
              For nonprofit organizations that are FFRDCs, the contracting officer—
              (a) Should consider whether any fee is appropriate. Considerations shall include the FFRDC's—
              (1) Proportion of retained earnings (as established under generally accepted accounting methods) that relates to DoD contracted effort;
              (2) Facilities capital acquisition plans;

              (3) Working capital funding as assessed on operating cycle cash needs; and

              (4) Provision for funding unreimbursed costs deemed ordinary and necessary to the FFRDC.
              (b) Shall, when a fee is considered appropriate, establish the fee objective in accordance with FFRDC fee policies in the DoD FFRDC Management Plan.
              (c) Shall not use the weighted guidelines method or an alternate structured approach.
              [63 FR 63800, Nov. 17, 1998]

              215.406-1
              Prenegotiation objectives.
              Follow the procedures at PGI 215.406-1 for establishing prenegotiation objectives.
              [71 FR 69494, Dec. 1, 2006]

              215.406-2
              Certificate of Current Cost or Pricing Data.
              See PGI 215.406-2 for additional information and guidance on Certificates of Current Cost or Pricing Data.
              [84 FR 25194, May 31, 2019]

              215.406-3
              Documenting the negotiation.
              Follow the procedures at PGI 215.406-3 for documenting the negotiation and uploading sole source business clearance documentation into the Contract Business Analysis Repository.
              [78 FR 21850, Apr. 12, 2013]

              215.407
              Special cost or pricing areas.

              215.407-1
              Defective certified cost or pricing data.

              (c)(i) When a contractor voluntarily discloses defective pricing after contract award, the contracting officer shall discuss the disclosure with the Defense Contract Audit Agency (DCAA). This discussion will assist in the contracting officer determining the involvement of DCAA, which could be a limited-scope audit (e.g., limited to the affected cost elements of the defective pricing disclosure), a full-scope audit, or technical assistance as appropriate for the circumstances (e.g., nature or dollar amount of the defective pricing disclosure). At a minimum, the contracting officer shall discuss with DCAA the following:
              (A) Completeness of the contractor's voluntary disclosure on the affected contract.
              (B) Accuracy of the contractor's cost impact calculation for the affected contract.
              (C) Potential impact on existing contracts, task or deliver orders, or other proposals the contractor has submitted to the Government.
              (ii) Voluntary disclosure of defective pricing is not a voluntary refund as defined in 242.7100 and does not waive the Government entitlement to the recovery of any overpayment plus interest on the overpayments in accordance with FAR 15.407-1(b)(7).
              (iii) Voluntary disclosure of defective pricing does not waive the Government's rights to pursue defective pricing claims on the affected contract or any other Government contract.
              [83 FR 19647, May 4, 2018]

              215.407-2
              Make-or-buy programs.
              (a) General. See PGI 215.407-2 for guidance on factors to consider when deciding whether to request a make-or-buy plan and for factors to consider when evaluating make-or-buy plan submissions.
              (e) Program requirements—(1) Items and work included. The minimum dollar amount is $1.5 million.
              [63 FR 55040, Oct. 14, 1998, as amended at 75 FR 45073, Aug. 2, 2010; 76 FR 76319, Dec. 7, 2011]

              215.407-3
              Forward pricing rate agreements.
              (b)(i) Use forward pricing rate agreement (FPRA) rates when such rates are available, unless waived on a case-by-case basis by the head of the contracting activity.
              (ii) Advise the ACO of each case waived.
              (iii) Contact the ACO for questions on FPRAs or recommended rates.

              215.407-4
              Should-cost review.
              (a) General. See PGI 215.407-4 for guidance on determining whether to perform a program or overhead should-cost review.
              (b) Program should-cost review. Major weapon system should-cost program reviews shall be conducted in a manner that is transparent, objective, and provides for the efficiency of the DoD systems acquisition process (section 837 of the National Defense Authorization Act for Fiscal Year 2018 (Pub. L. 115-91)).
              (i) Major weapon system should-cost reviews may include the following features:
              (A) A thorough review of each contributing element of the program cost and the justification for each cost.
              (B) An analysis of non-value added overhead and unnecessary reporting requirements.
              (C) Benchmarking against similar DoD programs, similar commercial programs (where appropriate), and other programs by the same contractor at the same facility.
              (D) An analysis of supply chain management to encourage competition and incentive cost performance at lower tiers.
              (E) A review of how to restructure the program (Government and contractor) team in a streamlined manner, if necessary.
              (F) Identification of opportunities to break out Government-furnished equipment versus prime contractor-furnished materials.
              (G) Identification of items or services contracted through third parties that result in unnecessary pass-through costs.
              (H) Evaluation of ability to use integrated developmental and operational testing and modeling and simulation to reduce overall costs.
              (I) Identification of alternative technology and materials to reduce developmental or lifecycle costs for a program.
              (J) Identification and prioritization of cost savings opportunities.
              (K) Establishment of measurable targets and ongoing tracking systems.
              (ii) The should-cost review shall provide for sufficient analysis while minimizing the impact on program schedule by engaging stakeholders early, relying on information already available before requesting additional data, and establishing a team with the relevant expertise early.
              (iii) The should-cost review team shall be comprised of members, including third-party experts if necessary, with the training, skills, and experience in analysis of cost elements, production or sustainment processes, and technologies relevant to the program under review. The review team may include members from the Defense Contract Management Agency, the department or agency's cost analysis center, and appropriate functional organizations, as necessary.
              (iv) The should-cost review team shall establish a process for communicating and collaborating with the contractor throughout the should-cost review, including notification to the contractor regarding which elements of the contractor's operations will be reviewed and what information will be necessary to perform the review, as soon as practicable, both prior to and during the review.
              (v) The should-cost review team report shall ensure, to the maximum extent practicable, review of current, accurate, and complete data, and shall identify cost savings opportunities associated with specific engineering or business changes that can be quantified and tracked.
              [71 FR 69495, Dec. 1, 2006, as amended at 84 FR 65309, Nov. 27, 2019]

              215.407-5
              Estimating systems.

              215.407-5-70
              Disclosure, maintenance, and review requirements.
              (a) Definitions. (1) Acceptable estimating system is defined in the clause at 252.215-7002, Cost Estimating System Requirements.
              (2) Contractor means a business unit as defined in FAR 2.101.
              (3) Estimating system is as defined in the clause at 252.215-7002, Cost Estimating System Requirements.
              (4) Significant deficiency is defined in the clause at 252.215-7002, Cost Estimating System Requirements.
              (b) Applicability. (1) DoD policy is that all contractors have acceptable estimating systems that consistently produce well-supported proposals that are acceptable as a basis for negotiation of fair and reasonable prices.

              (2) A large business contractor is subject to estimating system disclosure, maintenance, and review requirements if—

              (i) In its preceding fiscal year, the contractor received DoD prime contracts or subcontracts totaling $50 million or more for which certified cost or pricing data were required; or
              (ii) In its preceding fiscal year, the contractor received DoD prime contracts or subcontracts totaling $10 million or more (but less than $50 million) for which certified cost or pricing data were required and the contracting officer, with concurrence or at the request of the ACO, determines it to be in the best interest of the Government (e.g., significant estimating problems are believed to exist or the contractor's sales are predominantly Government).
              (c) Policy. (1) The contracting officer shall—
              (i) Through use of the clause at 252.215-7002, Cost Estimating System Requirements, apply the disclosure, maintenance, and review requirements to large business contractors meeting the criteria in paragraph (b)(2)(i) of this section;
              (ii) Consider whether to apply the disclosure, maintenance, and review requirements to large business contractors under paragraph (b)(2)(ii) of this section; and
              (iii) Not apply the disclosure, maintenance, and review requirements to other than large business contractors.
              (2) The cognizant contracting officer, in consultation with the auditor, for contractors subject to paragraph (b)(2) of this section, shall—
              (i) Determine the acceptability of the disclosure and approve or disapprove the system: and
              (ii) Pursue correction of any deficiencies.
              (3) The auditor conducts estimating system reviews.
              (4) An acceptable system shall provide for the use of appropriate source data, utilize sound estimating techniques and good judgment, maintain a consistent approach, and adhere to established policies and procedures.
              (5) In evaluating the acceptability of a contractor's estimating system, the contracting officer, in consultation with the auditor, shall determine whether the contractor's estimating system complies with the system criteria for an acceptable estimating system as prescribed in the clause at 252.215-7002, Cost Estimating System Requirements.
              (d) Disposition of findings—(1) Reporting of findings. The auditor shall document findings and recommendations in a report to the contracting officer. If the auditor identifies any significant estimating system deficiencies, the report shall describe the deficiencies in sufficient detail to allow the contracting officer to understand the deficiencies.
              (2) Initial determination. (i) The contracting officer shall review all findings and recommendations and, if there are no significant deficiencies, shall promptly notify the contractor, in writing, that the contractor's estimating system is acceptable and approved; or
              (ii) If the contracting officer finds that there are one or more significant deficiencies (as defined in the clause at 252.215-7002, Cost Estimating System Requirements) due to the contractor's failure to meet one or more of the estimating system criteria in the clause at 252.215-7002, the contracting officer shall—
              (A) Promptly make an initial written determination on any significant deficiencies and notify the contractor, in writing, providing a description of each significant deficiency in sufficient detail to allow the contractor to understand the deficiency;
              (B) Request the contractor to respond in writing to the initial determination within 30 days; and
              (C) Promptly evaluate the contractor's responses to the initial determination, in consultation with the auditor or functional specialist, and make a final determination.
              (3) Final determination. (i) The contracting officer shall make a final determination and notify the contractor in writing that—
              (A) The contractor's estimating system is acceptable and approved, and no significant deficiencies remain, or

              (B) Significant deficiencies remain. The notice shall identify any remaining significant deficiencies, and indicate the adequacy of any proposed or completed corrective action. The contracting officer shall—

              (1) Request that the contractor, within 45 days of receipt of the final determination, either correct the deficiencies or submit an acceptable corrective action plan showing milestones and actions to eliminate the deficiencies;
              (2) Disapprove the system in accordance with the clause at 252.215-7002, Cost Estimating System Requirements; and
              (3) Withhold payments in accordance with the clause at 252.242-7005, Contractor Business Systems, if the clause is included in the contract.
              (ii) Follow the procedures relating to monitoring a contractor's corrective action and the correction of significant deficiencies in PGI 215.407-5-70(e).
              (e) System approval. The contracting officer shall promptly approve a previously disapproved estimating system and notify the contractor when the contracting officer determines that there are no remaining significant deficiencies.
              (f) Contracting officer notifications. The cognizant contracting officer shall promptly distribute copies of a determination to approve a system, disapprove a system and withhold payments, or approve a previously disapproved system and release withheld payments, to the auditor; payment office; affected contracting officers at the buying activities; and cognizant contracting officers in contract administration activities.
              [63 FR 55040, Oct. 14, 1998, as amended at 67 FR 49252, July 30, 2002; 71 FR 69495, Dec. 1, 2006; 76 FR 28866, May 18, 2011; 77 FR 11365, Feb. 24, 2012; 77 FR 76940, Dec. 31, 2012]

              215.408
              Solicitation provisions and contract clauses.
              (1) Use the clause at 252.215-7002, Cost Estimating System requirements, in all solicitations and contracts to be awarded on the basis of certified cost or pricing data.
              (2) When contracting with the Canadian Commercial Corporation—
              (i)(A) Use the provision at 252.215-7003, Requirement for Submission of Data Other Than Certified Cost or Pricing Data—Canadian Commercial Corporation—
              (1) In lieu of DFARS 252.215-7010, Requirements for Certified Cost or Pricing Data and Data Other Than Certified Cost or Pricing Data, in a solicitation, including solicitations using FAR part 12 procedures for the acquisition of commercial items, for a sole source acquisition from the Canadian Commercial Corporation that is—
              (i) Cost-reimbursement, if the contract value is expected to exceed $700,000; or
              (ii) Fixed-price, if the contract value is expected to exceed $500 million; or
              (2) In lieu of DFARS 252.215-7010, in a solicitation, including solicitations using FAR part 12 procedures for the acquisition of commercial items, for a sole source acquisition from the Canadian Commercial Corporation that does not meet the thresholds specified in paragraph (2)(i)(A)(1) of this section, if approval is obtained as required at 225.870-4(c)(2)(ii); and
              (B) Do not use 252.225-7003 in lieu of DFARS 252.215-7010 in competitive acquisitions; and
              (ii)(A) Use the clause at 252.215-7004, Requirement for Submission of Data Other Than Certified Cost or Pricing Data—Modifications—Canadian Commercial Corporation—
              (1) In a solicitation, including solicitations using FAR part 12 procedures for the acquisition of commercial items, for a sole source acquisition, from the Canadian Commercial Corporation and resultant contract that is—
              (i) Cost-reimbursement, if the contract value is expected to exceed $700,000; or
              (ii) Fixed-price, if the contract value is expected to exceed $500 million;
              (2) In a solicitation, including solicitations using FAR part 12 procedures for the acquisition of commercial items, for a sole source acquisition from the Canadian Commercial Corporation and resultant contract that does not meet the thresholds specified in paragraph (2)(ii)(A)(1) of this section, if approval is obtained as required at 225.870-4(c)(2)(ii); or
              (3)(i) In a solicitation, including solicitations using FAR part 12 procedures for the acquisition of commercial items, for a competitive acquisition that includes FAR 52.215-21, Requirement for Data Other Than Certified Cost or Pricing Data—Modifications, or that meets the thresholds specified in paragraph (2)(ii)(A)(1) of this section.
              (ii) The contracting officer shall then select the appropriate clause to include in the contract (52.215-21 only if award is not to the Canadian Commercial Corporation; or 252.215-7004 if award is to the Canadian Commercial Corporation and necessary approval is obtained in accordance with 225.870-4(c)(2)(ii)); and
              (B) The contracting officer may specify a higher threshold in paragraph (b) of the clause 252.215-7004.
              (3) Use the provision at 252.215-7008, Only One Offer, in competitive solicitations that exceed the simplified acquisition threshold, including solicitations using FAR part 12 procedures for the acquisition of commercial items.
              (4) When the solicitation requires the submission of certified cost or pricing data, the contracting officer should include 252.215-7009, Proposal Adequacy Checklist, in the solicitation to facilitate submission of a thorough, accurate, and complete proposal.
              (5) When reasonably certain that the submission of certified cost or pricing data or data other than certified cost or pricing data will be required or when using the provision at 252.215-7008—
              (i) Use the basic or alternate of the provision at 252.215-7010, Requirements for Certified Cost or Pricing Data and Data Other Than Certified Cost or Pricing Data, in lieu of the provision at FAR 52.215-20, Requirements for Certified Cost or Pricing Data and Data Other Than Certified Cost or Pricing Data, in solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial items.
              (A) Use the basic provision when submission of certified cost or pricing data is required to be in the FAR Table 15-2 format, or if it is anticipated, at the time of solicitation, that the submission of certified cost or pricing data may not be required.
              (B) Use the alternate I provision to specify a format for certified cost or pricing data other than the format required by FAR Table 15-2;
              (ii) Use the provision at 252.215-7011, Requirements for Submission of Proposals to the Administrative Contracting Officer and Contract Auditor, when using the basic or alternate of the provision at 252.215-7010 and copies of the proposal are to be sent to the ACO and contract auditor; and
              (iii) Use the provision at 252.215-7012, Requirements for Submission of Proposals via Electronic Media, when using the basic or alternate of the provision at 252.215-7010 and submission via electronic media is required.
              (6) Use the provision at 252.215-7013, Supplies and Services Provided by Nontraditional Defense Contractors, in all solicitations.
              (7) Use the clause at 252.215-7014, Exception from Certified Cost or Pricing Data Requirements for Foreign Military Sales Indirect Offsets, in solicitations and contracts that contain the provision at 252.215-7010, Requirements for Certified Cost or Pricing Data and Data Other Than Certified Cost or Pricing Data, when it is reasonably certain that—
              (i) The contract is expected to include costs associated with an indirect offset; and
              (ii) The submission of certified cost or pricing data or data other than certified cost or pricing data will be required.
              (8) Use the clause at 252.215-7015, Program Should-Cost Review, in all solicitations and contracts for the development or production of a major weapon system, as defined in 234.7001.
              [63 FR 55040, Oct. 14, 1998, as amended at 72 FR 20760, Apr. 26, 2007; 73 FR 27472, May 13, 2008; 75 FR 48279, Aug. 10, 2010; 77 FR 39139, June 29, 2012; 77 FR 43472, July 24, 2012; 77 FR 76940, Dec. 31, 2012; 78 FR 13543, Feb. 28, 2013; 78 FR 18872, Mar. 28, 2013; 78 FR 37986, June 25, 2013; 78 FR 65216, Oct. 31, 2013; 81 FR 28730, May 10, 2016; 81 FR 36473, June 7, 2016; 83 FR 4444, Jan. 31, 2018; 83 FR 30825, 30828, June 29, 2018; 84 FR 30949, June 28, 2019; 84 FR 65309, Nov. 27, 2019]

              215.470
              Estimated data prices.
              (a) DoD requires estimates of the prices of data in order to evaluate the cost to the Government of data items in terms of their management, product, or engineering value.

              (b) When data are required to be delivered under a contract, include DD Form 1423, Contract Data Requirements List, in the solicitation. See PGI 215.470(b) for guidance on the use of DD Form 1423.

              (c) The contracting officer shall ensure that the contract does not include a requirement for data that the contractor has delivered or is obligated to deliver to the government under another contract or subcontract, and that the successful offeror identifies any such data required by the solicitation. However, where duplicate data are desired, the contract price shall include the costs of duplication, but not of preparation, of such data.
              [63 FR 55040, Oct. 14, 1998, as amended at 71 FR 69495, Dec. 1, 2006]

            Subpart 215.5—Preaward, Award, and Postaward Notifications, Protests, and Mistakes

              Source:
              78 FR 69270, Nov. 18, 2013, unless otherwise noted.

              215.503
              Notifications to unsuccessful offerors.
              If the Government exercises the authority provided in 239.7305(d), the notifications to unsuccessful offerors, either preaward or postaward, shall not reveal any information that is determined to be withheld from disclosure in accordance with 10 U.S.C. 2339a (see subpart 239.73).
              [78 FR 69270, Nov. 18, 2013, as amended at 84 FR 4369, Feb. 15, 2019]

              215.506
              Postaward debriefing of offerors.
              (e) If the Government exercises the authority provided in 239.7305(d), the debriefing shall not reveal any information that is determined to be withheld from disclosure in accordance with 10 U.S.C. 2339a (see subpart 239.73).
              [78 FR 69270, Nov. 18, 2013, as amended at 84 FR 4369, Feb. 15, 2019]

          Pt. 216
          PART 216—TYPES OF CONTRACTS

              Subpart 216.1—Selecting Contract Types
              Sec.
              216.102
              Policies.
              216.104
              Factors in selecting contract type.
              216.104-70
              Research and development.

              Subpart 216.2—Fixed-Price Contracts
              216.203
              Fixed-price contracts with economic price adjustment.
              216.203-4
              Contract clauses.
              216.203-4-70
              Additional provisions and clauses.

              Subpart 216.3—Cost-Reimbursement Contracts
              216.301-3
              Limitations.
              216.306
              Cost-plus-fixed-fee contracts.
              216.307
              Contract clauses.

              Subpart 216.4—Incentive Contracts
              216.401
              General.
              216.401-71
              Objective criteria.
              216.402
              Application of predetermined, formula-type incentives.
              216.402-2
              Technical performance incentives.
              216.403
              Fixed-price incentive contracts.
              216.403-1
              Fixed-price incentive (firm target) contracts.
              216.403-2
              Fixed-price incentive (successive targets) contracts.
              216.405
              Cost-reimbursement incentive contracts.
              216.405-1
              Cost-plus-incentive-fee contracts.
              216.405-2
              Cost-plus-award-fee contracts.
              216.405-2-70
              Award fee reduction or denial for jeopardizing the health or safety of Government personnel.
              216.405-2-71
              Award fee reduction or denial for failure to comply with requirements relating to performance of private security functions.
              216.406
              Contract clauses.
              216.470
              Other applications of award fees.

              Subpart 216.5—Indefinite-Delivery Contracts
              216.501-2-70
              General.
              216.504
              Indefinite-quantity contracts.
              216.505
              Ordering.
              216.505-70
              Orders under multiple-award contracts.
              216.506
              Solicitation provisions and contract clauses.

              Subpart 216.6—Time-and-Materials, Labor-Hour, and Letter Contracts
              216.601
              Time-and-materials contracts.
              216.603
              Letter contracts.
              216.603-2
              Application.
              216.603-3
              Limitations.
              216.603-4
              Contract clauses.

              Subpart 216.7—Agreements
              216.703
              Basic ordering agreements.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36340, July 31, 1991, unless otherwise noted.

            Subpart 216.1—Selecting Contract Types

              216.102
              Policies.
              (1) In accordance with section 829 of the National Defense Authorization Act for Fiscal Year 2017 (Pub. L. 114-328), the contracting officer shall first consider the use of fixed-price contracts, including fixed-price incentive contracts, in the determination of contract type. See 216.301-3(2) for approval requirements for certain cost-reimbursement contracts.
              (2) In accordance with section 811 of the National Defense Authorization Act for Fiscal Year 2013 (Pub. L. 112-239), use of any cost-reimbursement line item for the acquisition of production of major defense acquisition programs is prohibited unless the exception at 234.004(2)(ii) applies.
              (3) See 225.7301-1 for the requirement to use fixed-price contracts for acquisitions for foreign military sales.
              [79 FR 4632, Jan. 29, 2014, as amended at 84 FR 65307, Nov. 27, 2019]

              216.104
              Factors in selecting contract type.
              Contracting officers shall follow the principles and procedures in Director, Defense Procurement and Acquisition Policy memorandum dated April 1, 2016, entitled “Guidance on Using Incentive and Other Contract Types,” when selecting and negotiating the most appropriate contract type for a given procurement. See PGI 216.104.
              [81 FR 28730, May 10, 2016]

              216.104-70
              Research and development.
              Follow the procedures at PGI 216.104-70 for selecting the appropriate research and development contract type, and see 235.006(b) for additional approval requirements.
              [71 FR 39007, July 11, 2006, as amended at 84 FR 65307, Nov. 27, 2019]

            Subpart 216.2—Fixed-Price Contracts

              216.203
              Fixed-price contracts with economic price adjustment.

              216.203-4
              Contract clauses.
              (1) Generally, use the clauses at FAR 52.216-2, Economic Price Adjustment—Standard Supplies, FAR 52.216-3, Economic Price Adjustment—Semistandard Supplies, and FAR 52.216-4, Economic Price Adjustment—Labor and Material, only when—
              (i) The total contract price exceeds the simplified acquisition threshold; and
              (ii) Delivery or performance will not be completed within 6 months after contract award.
              (2) Follow the procedures at PGI 216.203-4 when using an economic price adjustment clause based on cost indexes of labor or material.
              [71 FR 39007, July 11, 2006]

              216.203-4-70
              Additional provisions and clauses.
              (a) Price adjustment for basic steel, aluminum, brass, bronze, or copper mill products. (1)(i) The price adjustment clause at 252.216-7000, Economic Price Adjustment—Basic Steel, Aluminum, Brass, Bronze, or Copper Mill Products, may be used in fixed-price supply solicitations and contracts for basic steel, aluminum, brass, bronze, or copper mill products, such as sheets, plates, and bars, when an established catalog or market price exists for the particular product being acquired.
              (ii) The 10 percent figure in paragraph (d)(1) of the clause shall not be exceeded unless approval is obtained at a level above the contracting officer.
              (2) Use the price adjustment provision at 252.216-7007, Economic Price Adjustment—Basic Steel, Aluminum, Brass, Bronze, or Copper Mill Products—Representation, in solicitations that include the clause at 252.216-7000, Economic Price Adjustment—Basic Steel, Aluminum, Brass, Bronze, or Copper Mill Products.
              (b) Price adjustment for nonstandard steel items. (1) The price adjustment clause at 252.216-7001, Economic Price Adjustment—Nonstandard Steel Items, may be used in fixed-price supply contracts when—
              (i) The contractor is a steel producer and actually manufacture the standard steel mill item referred to in the “base steel index” definition of the clause; and
              (ii) The items being acquired are nonstandard steel items made wholly or in part of standard steel mill items.
              (2) When this clause is included in invitations for bids, omit Note 6 of the clause and all references to Note 6.
              (3) Solicitations shall instruct offerors to complete all blanks in accordance with the applicable notes.
              (4) When the clause is to provide for adjustment on a basis other than “established price” (see Note 6 of the clause), that price must be verified.
              (5) The ten percent figure in paragraph (e)(4) of the clause shall not be exceeded unless approval is obtained at a level above the contracting officer.
              (c) Price adjustment for wage rates or material prices controlled by a foreign government. (1)(i) The price adjustment clause at 252.216-7003, Economic Price Adjustment—Wage Rates or Material Prices Controlled by a Foreign Government, may be used in fixed-price supply and service solicitations and contracts when—
              (A) The contract is to be performed wholly or in part in a foreign country; and
              (B) A foreign government controls wage rates or material prices and may, during contract performance, impose a mandatory change in wages or prices of material.
              (ii) Verify the base wage rates and material prices prior to contract award and prior to making any adjustment in the contract price.
              (2) Use the provision at 252.216-7008, Economic Price Adjustment-Wage Rates or Material Prices Controlled by a Foreign Government—Representation, in solicitations that include the clause at 252.216-7003, Economic Price Adjustment-Wage Rates or Material Prices Controlled by a Foreign Government. If the solicitation includes the provision at FAR 52.204-7, do not separately list the provision 252.216-7008 in the solicitation.
              [56 FR 36340, July 31, 1991, as amended at 62 FR 34122, June 24, 1997; 62 FR 40472, July 29, 1997; 77 FR 19129, Mar. 30, 2012; 78 FR 37986, June 25, 2013, 78 FR 40043, July 3, 2013]

            Subpart 216.3—Cost-Reimbursement Contracts

              216.301-3
              Limitations.
              (1) For contracts in connection with a military construction project or a military family housing project, contracting officers shall not use cost-plus-fixed-fee, cost-plus-award-fee, or cost-plus-incentive-fee contract types (10 U.S.C. 2306(c)). This applies notwithstanding a declaration of war or the declaration by the President of a national emergency under section 201 of the National Emergencies Act (50 U.S.C. 1621) that includes the use of the Armed Forces.
              (2) Except as provided in 235.006(b), in accordance with section 829 of the National Defense Authorization Act for Fiscal Year 2017 (Pub. L. 114-328), approval of the head of the contracting activity is required prior to awarding cost-reimbursement contracts in excess of $25 million.
              [81 FR 65564, Sept. 23, 2016, as amended at 84 FR 65307, Nov. 27, 2019]

              216.306
              Cost-plus-fixed-fee contracts.
              (c) Limitations. For contracts in connection with a military construction project or military family housing project, see the prohibition at 216.301-3.
              (i) Except as provided in paragraph (c)(ii) of this section, annual military construction appropriations acts prohibit the use of cost-plus-fixed-fee contracts that—
              (A) Are funded by a military construction appropriations act;
              (B) Are estimated to exceed $25,000; and
              (C) Will be performed within the United States, except Alaska.
              (ii) The prohibition in paragraph (c)(i) of this section does not apply to contracts specifically approved in writing, setting forth the reasons therefor, in accordance with the following:

              (A) The Secretaries of the military departments are authorized to approve such contracts that are for environmental work only, provided the environmental work is not classified as construction, as defined by 10 U.S.C. 2801.
              (B) The Secretary of Defense or designee must approve such contracts that are not for environmental work only or are for environmental work classified as construction.
              [62 FR 1058, Jan. 8, 1997; 62 FR 1817, Jan. 13, 1997; 62 FR 49305, Sept. 19, 1997; 71 FR 39007, July 11, 2006; 81 FR 65564, Sept. 23, 2016]

              216.307
              Contract clauses.
              (a) As required by section 827 of the National Defense Authorization Act for Fiscal Year 2013 (Pub. L. 112-239), use the clause at 252.216-7009, Allowability of Costs Incurred in Connection With a Whistleblower Proceeding—
              (1) In task orders entered pursuant to contracts awarded before September 30, 2013, that include the clause at FAR 52.216-7, Allowable Cost and Payment; and
              (2) In contracts awarded before September 30, 2013, that—
              (i) Include the clause at FAR 52.216-7, Allowable Cost and Payment; and
              (ii) Are modified to include the clause at DFARS 252.203-7002, Requirement to Inform Employees of Whistleblower Rights, dated September 2013 or later.
              [78 FR 59861, Sept. 30, 2013]

            Subpart 216.4—Incentive Contracts

              216.401
              General.
              (c) See PGI 216.401(c) for information on the Defense Acquisition University Award and Incentive Fees Community of Practice.
              (d)(i) Except as provided in paragraph (d)(ii), the determination and findings justifying that the use of an incentive- or award-fee contract is in the best interest of the Government, may be signed by the head of contracting activity or a designee—
              (A) No lower than one level below the head of the contracting activity for award fee contracts; or
              (B) One level above the contracting officer for incentive fee contracts.
              (ii) For cost-reimbursement incentive- or award fee contracts valued in excess of $25 million, the determination and findings justifying that the use of this type of contract is in the best interest of the Government shall be signed by the head of the contracting activity. See DFARS 216.301-3(2).
              (e) Award-fee plans required in FAR 16.401(e) shall be incorporated into all award-fee type contracts. Follow the procedures at PGI 216.401(e) when planning to award an award-fee contract.
              [75 FR 78619, Dec. 16, 2010, as amended at 76 FR 8305, Feb. 14, 2011, 84 FR 65307, Nov. 27, 2019]

              216.401-71
              Objective criteria.
              (1) Contracting officers shall use objective criteria to the maximum extent possible to measure contract performance. Objective criteria are associated with cost-plus-incentive-fee and fixed-price-incentive contracts.
              (2) When objective criteria exist but the contracting officer determines that it is in the best interest of the Government also to incentivize subjective elements of performance, the most appropriate contract type is a multiple-incentive contract containing both objective incentives and subjective award-fee criteria (i.e., cost-plus-incentive-fee/award-fee or fixed-price-incentive/award-fee).
              (3) See PGI 216.401(e) for guidance on the use of award-fee contracts.
              [76 FR 8305, Feb. 14, 2011]

              216.402
              Application of predetermined, formula-type incentives.

              216.402-2
              Technical performance incentives.
              (1) See PGI 216.402-2 for guidance on establishing performance incentives.

              (2) Contracting officers shall ensure requirements about the payment of incentive fees or the imposition of penalties are included in the solicitation for a contract for the engineering and manufacturing development or production of a weapon system, including embedded software, if the program manager or comparable requiring activity official exercising program manager responsibilities includes—

              (i) Provisions for the payment of incentive fees to the contractor, based on achievement of design specification requirements for reliability and maintainability of weapons systems under the contract; or
              (ii) The imposition of penalties to be paid by the contractor to the Government for faile to achieve such design specification requirements (10 U.S.C. 2443).
              [71 FR 39007, July 11, 2006, as amended at 84 FR 58333, Oct. 31, 2019]

              216.403
              Fixed-price incentive contracts.

              216.403-1
              Fixed-price incentive (firm target) contracts.
              (b) Application.

              (1) The contracting officer shall give particular consideration to the use of fixed-price incentive (firm target) contracts, especially for acquisitions moving from development to production.
              (2) The contracting officer shall pay particular attention to share lines and ceiling prices for fixed-price incentive (firm target) contracts, with a 120 percent ceiling and a 50/50 share ratio as the point of departure for establishing the incentive arrangement.
              (3) See PGI 216.403-1 for guidance on the use of fixed-price incentive (firm target) contracts.
              [76 FR 57679, Sept. 16, 2011]

              216.403-2
              Fixed-price incentive (successive targets) contracts.
              See PGI 216.403-2 for guidance on the use of fixed-price incentive (successive targets) contracts.
              [71 FR 39007, July 11, 2006]

              216.405
              Cost-reimbursement incentive contracts.

              216.405-1
              Cost-plus-incentive-fee contracts.
              See PGI 216.405-1 for guidance on the use of cost-plus-incentive-fee contracts.
              [71 FR 39007, July 11, 2006]

              216.405-2
              Cost-plus-award-fee contracts.
              (1) Award-fee pool. The award-fee pool is the total available award fee for each evaluation period for the life of the contract. The contracting officer shall perform an analysis of appropriate fee distribution to ensure at least 40 percent of the award fee is available for the final evaluation so that the award fee is appropriately distributed over all evaluation periods to incentivize the contractor throughout performance of the contract. The percentage of award fee available for the final evaluation may be set below 40 percent if the contracting officer determines that a lower percentage is appropriate, and this determination is approved by the head of the contracting activity (HCA). The HCA may not delegate this approval authority.
              (2) Award-fee evaluation and payments. Award-fee payments other than payments resulting from the evaluation at the end of an award-fee period are prohibited. (This prohibition does not apply to base-fee payments.) The fee-determining official's rating for award-fee evaluations will be provided to the contractor within 45 calendar days of the end of the period being evaluated. The final award-fee payment will be consistent with the fee-determining official's final evaluation of the contractor's overall performance against the cost, schedule, and performance outcomes specified in the award-fee plan.
              (3) Limitations.

              (i) The cost-plus-award-fee contract shall not be used—
              (A) To avoid—
              (1) Establishing cost-plus-fixed-fee contracts when the criteria for cost-plus-fixed-fee contracts apply; or
              (2) Developing objective targets so a cost-plus-incentive-fee contract can be used; or
              (B) For either engineering development or operational system development acquisitions that have specifications suitable for simultaneous research and development and production, except a cost-plus-award-fee contract may be used for individual engineering development or operational system development acquisitions ancillary to the development of a major weapon system or equipment, where—
              (1) It is more advantageous; and
              (2) The purpose of the acquisition is clearly to determine or solve specific problems associated with the major weapon system or equipment.
              (ii) Do not apply the weighted guidelines method to cost-plus-award-fee contracts for either the base (fixed) fee or the award fee.
              (iii) The base fee shall not exceed three percent of the estimated cost of the contract exclusive of the fee.
              (4) See PGI 216.405-2 for guidance on the use of cost-plus-award-fee contracts.
              [76 FR 8305, Feb. 14, 2011]

              216.405-2-70
              Award fee reduction or denial for jeopardizing the health or safety of Government personnel.
              (a) Definitions.

                Covered incident and serious bodily injury
                , as used in this section, are defined in the clause at 252.216-7004, Award Fee Reduction or Denial for Jeopardizing the Health or Safety of Government Personnel.
              (b) The contracting officer shall include in the evaluation criteria of any award-fee plan, a review of contractor and subcontractor actions that jeopardized the health or safety of Government personnel, through gross negligence or reckless disregard for the safety of such personnel, as determined through—
              (1) Conviction in a criminal proceeding, or finding of fault and liability in a civil or administrative proceeding (in accordance with section 823 of the National Defense Authorization Act for Fiscal Year 2010 (Pub. L. 111-84)); or
              (2) If a contractor or a subcontractor at any tier is not subject to the jurisdiction of the U.S. courts, a final determination of contractor or subcontractor fault resulting from a DoD investigation (in accordance with section 834 of the National Defense Authorization Act for Fiscal Year 2011 (Pub. L. 111-383)).
              (c) In evaluating the contractor's performance under a contract that includes the clause at 252.216-7004, Award Fee Reduction or Denial for Jeopardizing the Health or Safety of Government Personnel, the contracting officer shall consider reducing or denying award fees for a period if contractor or subcontractor actions cause serious bodily injury or death of civilian or military Government personnel during such period. The contracting officer's evaluation also shall consider recovering all or part of award fees previously paid for such period.
              [75 FR 69361, Nov. 12, 2010. Redesignated at 76 FR 52135, Aug. 19, 2011]

              216.405-2-71
              Award fee reduction or denial for failure to comply with requirements relating to performance of private security functions.
              (a) In accordance with section 862 of the National Defense Authorization Act for Fiscal Year 2008, as amended, the contracting officer shall include in any award-fee plan a requirement to review contractor compliance with, or violation of, applicable requirements of the contract with regard to the performance of private security functions in an area of contingency operations, complex contingency operations, or other military operations or exercises that are designated by the combatant commander (see 225.370).
              (b) In evaluating the contractor's performance under a contract that includes the clause at 252.225-7039, Defense Contractors Performing Private Security Functions Outside the United States, the contracting officer shall consider reducing or denying award fees for a period if the contractor fails to comply with the requirements of the clause during such period. The contracting officer's evaluation also shall consider recovering all or part of award fees previously paid for such period.
              [76 FR 52135, Aug. 19, 2011, as amended at 78 FR 73450, Dec. 6, 2013; 81 FR 42560, June 30, 2016]

              216.406
              Contract clauses.
              (e) Use the clause at 252.216-7004, Award Fee Reduction or Denial for Jeopardizing the Health or Safety of Government Personnel, in all solicitations and contracts containing award-fee provisions.
              [76 FR 8305, Feb. 14, 2011, as amended at 83 FR 49181, Sept. 28, 2018]

              216.470
              Other applications of award fees.
              See PGI 216.470 for guidance on other applications of award fees.
              [71 FR 39008, July 11, 2006]

            Subpart 216.5—Indefinite-Delivery Contracts

              216.501-2-70
              General.
              (a)(i) For items with a shelf-life of less than 6 months, consider the use of indefinite-delivery type contracts with orders to be placed either—
              (A) Directly by the users; or
              (B) By central purchasing offices with deliveries direct to users.
              (ii) Whenever an indefinite-delivery contract is issued, the issuing office must furnish all ordering offices sufficient information for the ordering office to complete its contract reporting responsibilities under 204.670-2. This data must be furnished to the ordering activity in sufficient time for the activity to prepare its report for the action within 3 working days of the order.
              (b) See 217.204(e)(i) for limitations on the period for task order or delivery order contracts awarded by DoD pursuant to 10 U.S.C. 2304a.
              [56 FR 36340, July 31, 1991, as amended at 57 FR 42630, Sept. 15, 1992; 63 FR 11529, Mar. 9, 1998. Redesignated and amended at 78 FR 38235, June 26, 2013]

              216.504
              Indefinite-quantity contracts.
              (c) Multiple award preference—(1) Planning the acquisition. (ii)(D)(1) The senior procurement executive has the authority to make the determination authorized in FAR 16.504(c)(1)(ii)(D)(1).
              (i) In accordance with section 816 of the National Defense Authorization Act for Fiscal Year 2019 (Pub. L. 115-232), when making the determination at FAR 16.504(c)(1)(ii)(D)(1)(i), the senior procurement executive shall determine that the task or delivery orders expected under the contract are so integrally related that only a single source can “efficiently perform the work,” instead of “reasonably perform the work” as required by the FAR.
              (2) The congressional notification requirement at FAR 16.504(c)(1)(ii)(D)(2) does not apply to DoD.
              (3)(i) In accordance with section 816 of the National Defense Authorization Act for Fiscal Year 2020 (Pub. L. 116-92), the determination at FAR 16.504(c)(1)(ii)(D) is not required if a justification has been executed, in accordance with FAR subpart 6.3 and subpart 206.3.
              [84 FR 12139, Apr. 1, 2019, as amended at 85 FR 60922, Sept. 29, 2020]

              216.505
              Ordering.
              (a) General.

              (6) Orders placed under indefinite-delivery contracts may be issued on DD Form 1155, Order for Supplies or Services.
              (S-70) Departments and agencies shall comply with the review, approval, and reporting requirements established in accordance with subpart 217.7 when placing orders under non-DoD contracts in amounts exceeding the simplified acquisition threshold.
              (b) Orders under multiple-award contracts.

              (1) Fair opportunity.

              (A) See 215.101-2-70 for the limitations and prohibitions on the use of the lowest price technically acceptable source selection process, which are applicable to orders placed against multiple award indefinite delivery contracts.
              (B) See 217.7801 for the prohibition on the use of reverse auctions for personal protective equipment and aviation critical safety items.
              (b)(2) Exceptions to the fair opportunity process. For an order exceeding the simplified acquisition threshold, that is a follow-on to an order previously issued for the same supply or service based on a justification for an exception to fair opportunity citing the authority at FAR 16.505(b)(2)(i)(B) or (C), follow the procedures at PGI 216.505(b)(2).
              [63 FR 11529, Mar. 9, 1998, as amended at 70 FR 29642, May 24, 2005; 71 FR 14103, Mar. 21, 2006; 80 FR 21657, Apr. 20, 2015; 80 FR 67255, Oct. 30, 2015; 84 FR 50789, Sept. 26, 2019]

              216.505-70
              Orders under multiple-award contracts.

              (a) If only one offer is received in response to an order exceeding the simplified acquisition threshold that is placed on a competitive basis, the contracting officer shall follow the procedures at 215.371.

              (b) See PGI 216.505-70 for guidance regarding minimum labor category qualifications for orders issued under multiple-award services contracts.
              [78 FR 38235, June 26, 2013, as amended at 84 FR 48510, Sept. 13, 2019]

              216.506
              Solicitation provisions and contract clauses.
              (S-70) Use the provisions at 252.215-7007, Notice of Intent to Resolicit, and 252.215-7008, Only One Offer, as prescribed at 215.371-6 and 215.408(3), respectively.
              [63 FR 11529, Mar. 9, 1998, as amended at 76 FR 25568, May 5, 2011; 77 FR 23631, Apr. 20, 2012; 77 FR 39139, June 29, 2012; 79 FR 22037, Apr. 21, 2014; 83 FR 30588, 30825, June 29, 2018; 85 FR 53682, Aug. 31, 2020]

            Subpart 216.6—Time-And-Materials, Labor-Hour, and Letter Contracts

              216.601
              Time-and-materials contracts.
              (d) Limitations. (i)(A) Approval of determination and findings for time-and-materials or labor-hour contracts.

              (1) Base period plus any option periods is three years or less.

              (i) For contracts (including indefinite-delivery contracts) and orders in which the portion of the requirement performed on a time-and-materials or labor-hour basis exceeds $1 million, the approval authority for the determination and findings shall be the senior contracting official within the contracting activity. This authority may not be delegated.
              (ii) For contracts (including indefinite-delivery contracts) and orders in which the portion of the requirement performed on a time-and-materials or labor-hour basis is less than or equal to $1 million, the determination and findings shall be approved one level above the contracting officer.
              (2) Base period plus any option periods exceeds three years. The authority of the head of the contracting activity to approve the determination and findings may not be delegated.
              (3) Exception. The approval requirements in paragraphs (d)(i)(A)(1) and (2) of this section do not apply to contracts that, as determined by the head of the contracting activity—
              (i) Support contingency or humanitarian or peacekeeping operations;
              (ii) Facilitate defense against or recovery from conventional, cyber, nuclear, biological, chemical or radiological attack;
              (iii) Facilitate the provision of international disaster assistance; or
              (iv) Support response to an emergency or major disaster.
              (B) Content of determination and findings. The determination and findings shall contain sufficient facts and rationale to justify that no other contract type is suitable. At a minimum, the determination and findings shall—
              (1) Include a description of the market research conducted;
              (2) Establish that it is not possible at the time of placing the contract or order to accurately estimate the extent or duration of the work or to anticipate costs with any reasonable degree of certainty;
              (3) Address why a cost-plus-fixed-fee term or other cost-reimbursement, incentive, or fixed-price contract or order is not appropriate; for contracts (including indefinite-delivery contracts) and orders for noncommercial items awarded to contractors with adequate accounting systems, a cost-plus-fixed-fee term contract type shall be preferred over a time-and-materials or labor-hour contract type;
              (4) Establish that the requirement has been structured to minimize the use of time-and-materials and labor-hour requirements (e.g., limiting the value or length of the time-and-materials or labor-hour portion of the contract or order; establishing fixed prices for portions of the requirement); and
              (5) Describe the actions planned to minimize the use of time-and-materials and labor-hour contracts on future acquisitions for the same requirements.
              (C) Indefinite-delivery contracts. For indefinite-delivery contracts, the contracting officer shall structure contracts that authorize time-and-materials orders or labor-hour orders to also authorize orders on a cost-reimbursement, incentive, or fixed-price basis, to the maximum extent practicable.

              (e) Solicitation provisions. Use the provision at FAR 52.216-29, Time-and-Materials/Labor-Hour Proposal Requirements—Non-Commercial Item Acquisition with Adequate Price Competition, with 252.216-7002, Alternate A, in solicitations contemplating the use of a time-and-materials or labor-hour contract type for non-commercial items if the price is expected to be based on adequate competition.
              [71 FR 74471, Dec. 12, 2006, as amended at 73 FR 70912, Nov. 24, 2008; 80 FR 29980, May 26, 2015; 83 FR 24890, May 30, 2018]

              216.603
              Letter contracts.

              216.603-2
              Application.
              (c)(3) In accordance with 10 U.S.C. 2326, establish definitization schedules for letter contracts following the requirements at 217.7404-3(a) instead of the requirements at FAR 16.603-2(c)(3).
              [75 FR 32642, June 8, 2010]

              216.603-3
              Limitations.
              See subpart 217.74 for additional limitations on the use of letter contracts.

              216.603-4
              Contract clauses.
              (b)(2) See 217.7405(a) for additional guidance regarding use of the clause at FAR 52.216-24, Limitation of Government Liability.
              (3) Use the clause at 252.217-7027, Contract Definitization, in accordance with its prescription at 217.7406(b), instead of the clause at FAR 52.216-25, Contract Definitization.
              [61 FR 7743, Feb. 29, 1996, as amended at 71 FR 58537, Oct. 4, 2006; 72 FR 69159, Dec. 7, 2007; 76 FR 76319, Dec. 7, 2011]

            Subpart 216.7—Agreements

              216.703
              Basic ordering agreements.
              (c) Limitations. The period during which orders may be placed against a basic ordering agreement may not exceed 5 years.
              (d) Orders. Follow the procedures at PGI 216.703(d) for issuing orders under basic ordering agreements.
              [71 FR 39008, July 11, 2006]

          Pt. 217
          PART 217—SPECIAL CONTRACTING METHODS

              Subpart 217.1—Multiyear Contracting
              Sec.
              217.103
              Definitions.
              217.170
              General.
              217.171
              Multiyear contracts for services.
              217.172
              Multiyear contracts for supplies.
              217.173
              Multiyear contracts for military family housing.
              217.174
              Multiyear contracts for electricity from renewable energy sources.

              Subpart 217.2—Options
              217.202
              Use of options.
              217.204
              Contracts.
              217.207
              Exercise of options.
              217.208
              Solicitation provisions and contract clauses.
              217.208-70
              Additional clauses.

              Subpart 217.5—Interagency Acquisitions
              217.500
              Scope of subpart.
              217.502
              Procedures.
              217.502-1
              General.
              217.503
              Ordering procedures.

              Subpart 217.6—Management and Operating Contracts
              217.600
              Scope of subpart.

              Subpart 217.7—Interagency Acquisitions: Acquisitions by Nondefense Agencies on Behalf of the Department of Defense
              217.700
              Scope of subpart.
              217.701
              Definitions.
              217.770
              Procedures.

              Subpart 217.70—Exchange of Personal Property
              217.7000
              Scope of subpart.
              217.7001
              Definitions.
              217.7002
              Policy.
              217.7003
              Purchase request.
              217.7004
              Solicitation and award.
              217.7005
              Solicitation provision.

              Subpart 217.71—Master Agreement for Repair and Alteration of Vessels
              217.7100
              Scope of subpart.
              217.7101
              Definitions.
              217.7102
              General.
              217.7103
              Master agreements and job orders.
              217.7103-1
              Content and format of master agreements.
              217.7103-2
              Period of agreement.
              217.7103-3
              Solicitations for job orders.
              217.7103-4
              Emergency work.

              217.7103-5
              Repair costs not readily ascertainable.
              217.7103-6
              Modification of master agreements.
              217.7104
              Contract clauses.

              Subpart 217.72 [Reserved]

              Subpart 217.73—Identification of Sources of Supply
              217.7300
              Scope.
              217.7301
              Policy.
              217.7302
              Procedures.
              217.7303
              Solicitation provision.

              Subpart 217.74—Undefinitized Contract Actions
              217.7400
              Scope.
              217.7401
              Definitions.
              217.7402
              Exceptions.
              217.7403
              Policy.
              217.7404
              Limitations.
              217.7404-1
              Authorization.
              217.7404-2
              Price ceiling.
              217.7404-3
              Definitization schedule.
              217.7404-4
              Limitations on obligations.
              217.7404-5
              Exceptions.
              217.7404-6
              Allowable profit.
              217.7405
              Plans and reports.
              217.7406
              Contract clauses.

              Subpart 217.75—Acquisition of Replenishment Parts
              217.7500
              Scope of subpart.
              217.7501
              Definition.
              217.7502
              General.
              217.7503
              Spares acquisition integrated with production.
              217.7504
              Acquisition of parts when data is not available.
              217.7505
              Limitations on price increases.
              217.7506
              Spare parts breakout program.

              Subpart 217.76—Contracts with Provisioning Requirements
              217.7601
              Provisioning.

              Subpart 217.77—Over and Above Work
              217.7701
              Procedures.
              217.7702
              Contract clause.

              Subpart 217.78—Reverse Auctions
              217.7801
              Prohibition.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36345, July 31, 1991, unless otherwise noted.

            Subpart 217.1—Mulityear Contracting

              Source:
              63 FR 11529, Mar. 9, 1998, unless otherwise noted.

              217.103
              Definitions.
              As used in this subpart—

                Advance procurement means an exception to the full funding policy that allows acquisition of long lead time items (advance long lead acquisition) or economic order quantities (EOQ) of items (advance EOQ acquisition) in a fiscal year in advance of that in which the related end item is to be acquired. Advance procurements may include materials, parts, components, and effort that must be funded in advance to maintain a planned production schedule.

                Congressional defense committees means—
              (1) The Committee on Armed Services of the Senate;
              (2) The Committee on Appropriations of the Senate;
              (3) The Subcommittee on Defense of the Committee on Appropriations of the Senate;
              (4) The Committee on Armed Services of the House of Representatives;
              (5) The Committee on Appropriations of the House of Representatives; and
              (6) The Subcommittee on Defense of the Committee on Appropriations of the House of Representatives.

                Military installation means a base, camp, post, station, yard, center, or other activity under the jurisdiction of the Secretary of a military department or, in the case of an activity in a foreign country, under the operational control of the Secretary of a military department or the Secretary of Defense (10 U.S.C. 2801(c)(4)).
              [68 FR 43332, July 22, 2003, as amended at 79 FR 35700, June 24, 2014; 80 FR 29982, May 26, 2015]

              217.170
              General.

              (a) Before awarding a multiyear contract, the head of the agency must compare the cost of that contract to the cost of an annual procurement approach, using a present value analysis. Do not award the multiyear contract unless the analysis shows that the multiyear contract will result in the lower cost (10 U.S.C. 2306b(l)(7); section 8008(a) of Pub. L. 105-56 and similar sections in subsequent DoD appropriations acts).
              (b) The head of the agency must provide written notice to the congressional defense committees at least 30 days before termination of any multiyear contract (section 8010 of Division C, Title VIII, of the Consolidated and Further Continuing Appropriations Act, 2015 (Pub. L. 113-235) and similar sections in subsequent DoD appropriations acts).
              (c) Every multiyear contract must comply with FAR 17.104(c), unless an exception is approved through the budget process in coordination with the cognizant comptroller.
              (d)(1) DoD must provide notification to the congressional defense committees at least 30 days before entering into a multiyear contract for certain procurements, including those expected to—
              (i) Employ an unfunded contingent liability in excess of $20 million (see 10 U.S.C. 2306b(l)(1)(B)(i)(II), 10 U.S.C. 2306c(d)(1), and section 8008(a) of Pub. L. 105-56 and similar sections in subsequent DoD appropriations acts);
              (ii) Employ economic order quantity procurement in excess of $20 million in any one year of the contract (see 10 U.S.C. 2306b(l)(1)(B)(i)(I) and section 8008(a) of Pub. L. 105-56 and similar sections in subsequent DoD appropriations acts);
              (iii) Involve a contract for advance procurement leading to a multiyear contract that employs economic order quantity procurement in excess of $20 million in any one year (see 10 U.S.C. 2306b(l)(1)(B)(ii) and section 8008(a) of Pub. L. 105-56 and similar sections in subsequent DoD appropriations acts); or
              (iv) Include a cancellation ceiling in excess of $150 million (see 10 U.S.C. 2306c(d)(4) and 10 U.S.C. 2306b(g)(1)).
              (2) A DoD component must submit a request for authority to enter into a multiyear contract described in paragraphs (d)(1)(i) through (iv) of this section as part of the component's budget submission for the fiscal year in which the multiyear contract will be initiated. DoD will include the request, for each candidate it supports, as part of the President's budget for that year and in the Appendix to that budget as part of proposed legislative language for the appropriations bill for that year (section 8008(b) of Pub. L. 105-56).
              (3) If the advisability of using a multiyear contract becomes apparent too late to satisfy the requirements in paragraph (d)(2) of this section, the request for authority to enter into a multiyear contract must be—
              (i) Formally submitted by the President as a budget amendment; or
              (ii) Made by the Secretary of Defense, in writing, to the congressional defense committees (see section 8008(b) of Pub. L. 105-56).
              (4) Agencies must establish reporting procedures to meet the congressional notification requirements of paragraph (d)(1) of this section. The head of the agency must submit a copy of each notice to the Director of Defense Procurement and Acquisition Policy, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics) (OUSD(AT&L)DPAP), and to the Deputy Under Secretary of Defense (Comptroller) (Program/Budget) (OUSD(C)(P/B)).
              (5) If the budget for a contract that contains a cancellation ceiling in excess of $150 million does not include proposed funding for the costs of contract cancellation up to the cancellation ceiling established in the contract—
              (i) The notification required by paragraph (d)(1) of this section shall include—
              (A) The cancellation ceiling amounts planned for each program year in the proposed multiyear contract, together with the reasons for the amounts planned;
              (B) The extent to which costs of contract cancellation are not included in the budget for the contract; and
              (C) A financial risk assessment of not including budgeting for costs of contract cancellation (10 U.S.C. 2306b(g) and 10 U.S.C. 2306c(d)); and

              (ii) The head of the agency shall provide copies of the notification to the Office of Management and Budget at least 14 days before contract award.
              [66 FR 63337, Dec. 6, 2001, as amended at 68 FR 7439, Feb. 14, 2003; 70 FR 24324, May 9, 2005; 71 FR 75892, Dec. 19, 2006; 75 FR 9115, Mar. 1, 2010; 75 FR 54526, Sept. 8, 2010; 75 FR 45073, Aug. 2, 2010; 76 FR 58152, Sept. 20, 2011; 80 FR 29982, May 26, 2015; 80 FR 36904, June 26, 2015; 81 FR 28731, May 10, 2016; 85 FR 61504, Sept. 29, 2020]

              217.171
              Multiyear contracts for services.
              (a) The head of the agency may enter into a multiyear contract for a period of not more than 5 years for the following types of services (and items of supply relating to such services), even though funds are limited by statute to obligation only during the fiscal year for which they were appropriated (10 U.S.C. 2306c(a)) . Covered services are—
              (1) Operation, maintenance, and support of facilities and installations;
              (2) Maintenance or modification of aircraft, ships, vehicles, and other highly complex military equipment;

              (3) Specialized training requiring high-quality instructor skills (e.g., training for pilots and aircrew members or foreign language training);
              (4) Base services (e.g., ground maintenance, in-plane refueling, bus transportation, and refuse collection and disposal); and
              (5) Environmental remediation services for—
              (i) An active military installation;
              (ii) A military installation being closed or realigned under a base closure law as defined in 10 U.S.C. 2667(h)(2); or
              (iii) A site formerly used by DoD (10 U.S.C. 2306c(b)).
              (b) The head of the agency must be guided by the following principles when entering into a multiyear contract for services:
              (1) The portion of the cost of any plant or equipment amortized as a cost of contract performance should not exceed the ratio between the period of contract performance and the anticipated useful commercial life of the plant or equipment. As used in this section, “useful commercial life” means the commercial utility of the facilities rather than the physical life, with due consideration given to such factors as the location, specialized nature, and obsolescence of the facilities.
              (2) Consider the desirability of obtaining an option to extend the term of the contract for a reasonable period not to exceed 3 years at prices that do not include charges for plant, equipment, or other nonrecurring costs already amortized.
              (3) Consider the desirability of reserving the right to take title, under the appropriate circumstances, to the plant or equipment upon payment of the unamortized portion of the cost (10 U.S.C. 2306c(c)).
              (c) Before entering into a multiyear contract for services, the head of the agency must make a written determination that—
              (1) There will be a continuing requirement for the services consistent with current plans for the proposed contract period;
              (2) Furnishing the services will require—
              (i) A substantial initial investment in plant or equipment; or
              (ii) The incurrence of substantial contingent liabilities for the assembly, training, or transportation of a specialized work force; and
              (3) Using a multiyear contract will promote the best interests of the United States by encouraging effective competition and promoting economies in operations (10 U.S.C. 2306c(a)).
              (d) The head of an agency may not initiate a multiyear contract for services if the value of the multiyear contract exceeds $750 million unless a law specifically provides authority for the contract (10 U.S.C. 2306c(d)(2))().
              [66 FR 63337, Dec. 6, 2001, as amended at 68 FR 43333, July 22, 2003; 70 FR 24324, May 9, 2005; 71 FR 75892, Dec. 19, 2006; 75 FR 45073, Aug. 2, 2010; 76 FR 58153, Sept. 20, 2011; 76 FR 76319, Dec. 7, 2011; 80 FR 29982, May 26, 2015; 80 FR 36904, June 26, 2015; 85 FR 61504, Sept. 29, 2020]

              217.172
              Multiyear contracts for supplies.
              (a) This section applies to all multiyear contracts for supplies, including weapon systems and other multiyear acquisitions specifically authorized by law (10 U.S.C. 2306b).

              (b) The head of the agency may enter into a multiyear contract for supplies if, in addition to the conditions listed in FAR 17.105-1(b), the use of such a contract will promote the national security of the United States (10 U.S.C. 2306b(a)(6)).
              (c) Multiyear contracts in amounts exceeding $750 million must be specifically authorized by law in an act other than an appropriations act (10 U.S.C. 2306b(i)(1)).
              (d) The head of the agency may not initiate a multiyear procurement contract for any system (or component thereof) if the value of the multiyear contract would exceed $750 million unless authority for the contract is specifically provided in an appropriations act (10 U.S.C. 2306b(l)(3)).
              (e) The head of the agency shall not enter into a multiyear contract unless—
              (1) The Secretary of Defense has submitted to Congress a budget request for full funding of units to be procured through the contract;
              (2) In the case of a contract for procurement of aircraft, the budget request includes full funding of procurement funds for production beyond advance procurement activities of aircraft units to be produced in the fiscal year covered by the budget;
              (3) Cancellation provisions in the contract do not include consideration of recurring manufacturing costs of the contractor associated with the production of unfunded units to be delivered under the contract;
              (4) The contract provides that payments to the contractor under the contract shall not be made in advance of incurred costs on funded units; and
              (5) The contract does not provide for a price adjustment based on a failure to award a follow-on contract (section 8010 of Division C, Title VIII, of the Consolidated and Further Continuing Appropriations Act, 2015 (Pub. L. 113-235) and similar sections in subsequent DoD appropriations acts).
              (f)(1) The head of the agency must not enter into or extend a multiyear contract that exceeds $750 million (when entered into or extended) until the Secretary of Defense identifies the contract and any extension in a report submitted to the congressional defense committees (10 U.S.C. 2306b(l)(5)).
              (2) In addition, for contracts equal to or greater than $750 million, the head of the contracting activity must determine that the conditions required by paragraph (h)(2)(i) through (vii) of this section will be met by such contract, in accordance with the Secretary's certification and determination required by paragraph (h)(2) of this section .
              (g) The head of the agency may enter into a multiyear contract for—
              (1) A weapon system and associated items, services, and logistics support for a weapon system (10 U.S.C. 2306b(h)(1)); and

              (2) Advance procurement of components, parts, and materials necessary to manufacture a weapon system, including advance procurement to achieve economic lot purchases or more efficient production rates (see paragraphs (h)(3) and (4) of this section regarding economic order quantity procurements) (10 U.S.C. 2306b(h)(2)). Before initiating an advance procurement, the contracting officer must verify that it is consistent with DoD policy (e.g., the full funding policy in Volume 2A, chapter 1, of DoD 7000.14-R, Financial Management Regulation).
              (h) The head of the agency shall ensure that the following conditions are satisfied before awarding a multiyear contract for a defense acquisition program that has been specifically authorized by law to be carried out using multiyear contract authority:
              (1) The multiyear exhibits required by DoD 7000.14-R, Financial Management Regulation, are included in the agency's budget estimate submission and the President's budget request.
              (2) The Secretary of Defense certifies to Congress in writing, by no later than 30 days before entry into such contracts, that each of the conditions in paragraphs (h)(2)(i) through (vii) of this section is satisfied (10 U.S.C. 2306b(i)(3).
              (i) The Secretary has determined that each of the requirements in FAR 17.105-1, paragraphs (b)(1) through (5), will be met by such contract and has provided the basis for such determination to the congressional defense committees (10 U.S.C. 2306b(i)(3)(A)).

              (ii) The Secretary's determination under paragraph (h)(2)(i) of this section was made after the completion of a cost analysis performed by the Defense Cost and Resource Center of the Department of Defense and such analysis supports the findings (10 U.S.C. 2306b(i)(3)(B)).
              (iii) The system being acquired pursuant to such contract has not been determined to have experienced cost growth in excess of the critical cost growth threshold pursuant to 10 USC 2433(d) within 5 years prior to the date the Secretary anticipates such contract (or a contract for advance procurement entered into consistent with the authorization for such contract) will be awarded (10 U.S.C. 2306b(i)(3)(C)).
              (iv) A sufficient number of end items of the system being acquired under such contract have been delivered at or within the most current estimates of the program acquisition unit cost or procurement unit cost for such system to determine that current estimates of such unit costs are realistic (10 U.S.C. 2306b(i)(3)(D)).
              (v) Sufficient funds will be available in the fiscal year in which the contract is to be awarded to perform the contract, and the future-years defense program for such fiscal year will include the funding required to execute the program without cancellation (10 U.S.C. 2306b(i)(3)(E)).
              (vi) The contract is a fixed price type contract (10 U.S.C. 2306b(i)(3)(F)).
              (vii) The proposed multiyear contract provides for production at not less than minimum economic rates, given the existing tooling and facilities (10 U.S.C. 2306b(i)(3)(G)). The head of the agency shall submit to OUSD(C)(P/B) information supporting the agency's determination that this requirement has been met .
              (viii) The head of the agency shall submit information supporting this certification to OUSD(C)(P/B)& for transmission to Congress through the Secretary of Defense.
              (A) The head of the agency shall, as part of this certification, give written notification to the congressional defense committees of—
              (1) The cancellation ceiling amounts planned for each program year in the proposed multiyear contract, together with the reasons for the amounts planned;
              (2) The extent to which costs of contract cancellation are not included in the budget for the contract; and
              (3) A financial risk assessment of not including the budgeting for costs of contract cancellation (10 U.S.C. 2306b(g)); and
              (B) The head of the agency shall provide copies of the notification to the Office of Management and Budget at least 14 days before contract award.
              (3) The contract is for the procurement of a complete and usable end item (10 U.S.C. 2306b(i)(5)(A)).
              (4) Funds appropriated for any fiscal year for advance procurement are obligated only for the procurement of those long-lead items that are necessary in order to meet a planned delivery schedule for complete major end items that are programmed under the contract to be acquired with funds appropriated for a subsequent fiscal year (including an economic order quantity of such long-lead items when authorized by law (10 U.S.C. 2306b(i)(5)(B)).
              (5) The Secretary may make the certification under paragraph (h)(2) of this section notwithstanding the fact that one or more of the conditions of such certification are not met if the Secretary determines that, due to exceptional circumstances, proceeding with a multiyear contract under this section is in the best interest of the Department of Defense and the Secretary provides the basis for such determination with the certification (10 U.S.C. 2306b(i)(6)).
              (6) The Secretary of Defense may not delegate this authority to make the certification under paragraph (h)(2) of this section or the determination under paragraph (h)(5) of this section to an official below the level of the Under Secretary of Defense for Acquisition, Technology, and Logistics (10 U.S.C. 2306b(i)(7)).

              (7) All other requirements of law are met and there are no other statutory restrictions on using a multiyear contract for the specific system or component . One such restriction may be the achievement of specified cost savings. If the agency finds, after negotiations with the contractor(s), that the specified savings cannot be achieved, the head of the agency shall assess the savings that, nevertheless, could be achieved by using a multiyear contract. If the savings are substantial, the head of the agency may request relief from the law's specific savings requirement (10 U.S.C. 2306b(i)(4)). The request shall—
              (i) Quantify the savings that can be achieved;
              (ii) Explain any other benefits to the Government of using the multiyear contract;
              (iii) Include details regarding the negotiated contract terms and conditions; and
              (iv) Be submitted to OUSD(AT&L)DPAP for transmission to Congress via the Secretary of Defense and the President.
              (i) The Secretary of Defense may instruct the head of the agency proposing a multiyear contract to include in that contract negotiated priced options for varying the quantities of end items to be procured over the life of the contract (10 U.S.C. 2306b(j)).
              (j) Any requests for increased funding or reprogramming for procurement of a major system under a multiyear contract shall be accompanied by an explanation of how the request for increased funding affects the determinations made by the Secretary of Defense under 217.172(h)(2) (10 U.S.C. 2306b(m)).
              [76 FR 58153, Sept. 20, 2011, as amended at 80 FR 29982, May 26, 2015; 80 FR 36904, June 26, 2015; 81 FR 28731, May 10, 2016; 85 FR 61504, Sept. 29, 2020]

              217.173
              Multiyear contracts for military family housing.
              The head of the agency may enter into multiyear contracts for periods up to 4 years for supplies and services required for management, maintenance, and operation of military family housing and may pay the costs of such contracts for each year from annual appropriations for that year (10 U.S.C. 2829).
              [76 FR 58154, Sept. 20, 2011]

              217.174
              Multiyear contracts for electricity from renewable energy sources.
              (a) The head of the contracting activity may enter into a contract for a period not to exceed 10 years for the purchase of electricity from sources of renewable energy, as that term is defined in section 203(b)(2) of the Energy Policy Act of 2005 (42 U.S.C. 15852(b)(2)).
              (b) Limitations. The head of the contracting activity may exercise the authority in paragraph (a) of this section to enter into a contract for a period in excess of 5 years only if the head of the contracting activity determines, on the basis of a business case analysis (see PGI 217.174 for a business case analysis template and guidance) prepared by the requiring activity, that—
              (1) The proposed purchase of electricity under such contract is cost effective; and
              (2) It would not be possible to purchase electricity from the source in an economical manner without the use of a contract for a period in excess of 5 years.
              (c) Nothing in this section shall be construed to preclude the DoD from using other multiyear contracting authority of DoD to purchase renewable energy.
              [75 FR 34943, June 21, 2010. Redesignated and amended at 76 FR 58154, Sept. 20, 2011]

            Subpart 217.2—Options

              217.202
              Use of options.
              (1) See PGI 217.202 for guidance on the use of options.
              (i) See PGI 217.202(1) for guidance on the use of options with foreign military sales (FMS).
              (ii) See PGI 217.202(2) for the use options with sole source major systems for U.S. and U.S./FMS combined procurements.
              (2) See 234.005-1 for limitations on the use of contract options for the provision of advanced component development, prototype, or initial production of technology developed under the contract or the delivery of initial or additional items.
              [75 FR 32638, June 8, 2010, as amended at 81 FR 17045, Mar. 25, 2016, 84 FR 65307, Nov. 27, 2019]

              217.204
              Contracts.
              (e)(i) Notwithstanding FAR 17.204(e), the ordering period of a task order or delivery order contract (including a contract for information technology) awarded by DoD pursuant to 10 U.S.C. 2304a—
              (A) May be for any period up to 5 years;

              (B) May be subsequently extended for one or more successive periods in accordance with an option provided in the contract or a modification of the contract; and
              (C) Shall not exceed 10 years unless the head of the agency determines in writing that exceptional circumstances require a longer ordering period.
              (ii) Paragraph (e)(i) of this section does not apply to the following:
              (A) Contracts, including task or delivery order contracts, awarded under other statutory authority.
              (B) Advisory and assistance service task order contracts (authorized by 10 U.S.C. 2304b that are limited by statute to 5 years, with the authority to extend an additional 6 months (see FAR 16.505(c)).
              (C) Definite-quantity contracts.
              (D) GSA schedule contracts.
              (E) Multi-agency contracts awarded by agencies other than NASA, DoD, or the Coast Guard.
              (iii) Obtain approval from the senior procurement executive before issuing an order against a task or delivery order contract subject to paragraph (e)(i) of this section, if performance under the order is expected to extend more than 1 year beyond the 10-year limit or extended limit described in paragraph (e)(i)(C) of this section (see FAR 37.106 for funding and term of service contracts).
              [70 FR 73152, Dec. 9, 2005, as amended at 79 FR 58696, Sept. 30, 2014]

              217.207
              Exercise of options.
              (c) In addition to the requirements at FAR 17.207(c), exercise an option only after determining that the contractor's record in the System for Award Management database is active and the contractor's Data Universal Numbering System (DUNS) number, Commercial and Government Entity (CAGE) code, name, and physical address are accurately reflected in the contract document. See PGI 217.207 for the requirement to perform cost or price analysis of spare parts prior to exercising any option for firm-fixed-price contracts containing spare parts.
              [79 FR 67356, Nov. 13, 2014]
              § 217.207, Nt.

                Effective Date Note:
                At 85 FR 61520, Sept. 29, 2020, § 217.207 was amended by revising paragraph (c), effective Nov. 30, 2020. For the convenience of the user, the revised text is set forth as follows:

                    217.207
                    Exercise of options.
                    (c) In addition to the requirements at FAR 17.207(c), exercise an option only after:
                    (1) Determining that the contractor's record in the System for Award Management database is active and the contractor's Data Universal Numbering System (DUNS) number, Commercial and Government Entity (CAGE) code, name, and physical address are accurately reflected in the contract document. See PGI 217.207 for the requirement to perform cost or price analysis of spare parts prior to exercising any option for firm-fixed-price contracts containing spare parts.

                    (2) Verifying in the Supplier Performance Risk System (SPRS) (https://www.sprs.csd.disa.mil/) that—

                    (i) The summary level score of a current NIST SP 800-171 DoD Assessment (i.e., not more than 3 years old, unless a lesser time is specified in the solicitation) for each covered contractor information system that is relevant to an offer, contract, task order, or delivery order are posted (see 204.7303).

                    (ii) The contractor has a CMMC certificate at the level required by the contract, and that it is current (i.e., not more than 3 years old) (see 204.7502).

              217.208
              Solicitation provisions and contract clauses.
              Sealed bid solicitations shall not include provisions for evaluations of options unless the contracting officer determines that there is a reasonable likelihood that the options will be exercised (10 U.S.C. 2305(a)(5)). This limitation also applies to sealed bid solicitations for the contracts excluded by FAR 17.200.
              [63 FR 11529, Mar. 9, 1998, as amended at 71 FR 27642, May 12, 2006]

              217.208-70
              Additional clauses.

              (a) Use the basic or the alternate of the clause at 252.217-7000, Exercise of Option to Fulfill Foreign Military Sales Commitments, in solicitations and contracts when an option may be used for foreign military sales requirements. Do not use the basic or the alternate of this clause in contracts for establishment or replenishment of DoD inventories or stocks, or acquisitions made under DoD cooperative logistics support arrangements.

              (1) Use the basic clause when the foreign military sales country is known at the time of solicitation or award.
              (2) Use the alternate I clause when the foreign military sale country is not known at the time of solicitation or award.
              (b) When a surge option is needed in support of industrial capability production planning, use the clause at 252.217-7001, Surge Option, in solicitations and contracts.
              (1) Insert the percentage or quantity of increase the option represents in paragraph (a) of the clause to ensure adequate quantities are available to meet item requirements.
              (2) Change 30 days in paragraphs (b)(2) and (d)(1) to longer periods, if appropriate.
              (3) Change the 24-month period in paragraph (c)(3), if appropriate.
              [63 FR 11529, Mar. 9, 1998, as amended at 71 FR 27642, May 12, 2006; 79 FR 65593, Nov. 5, 2014; 83 FR 62503, Dec. 4, 2018]

            Subpart 217.5—Interagency Acquisitions

              Source:
              63 FR 11530, Mar. 9, 1998, unless otherwise noted.

              217.500
              Scope of subpart.
              (a) Unless more specific statutory authority exists, the procedures in FAR subpart 17.5 and this subpart apply to all purchases, except micro-purchases, made for DoD by another agency. This includes orders under a task or delivery order contract entered into by the other agency. (Pub. L. 105-261, Section 814.)
              (b) A contracting activity from one DoD Component may provide acquisition assistance to deployed DoD units or personnel from another DoD Component. See PGI 217.502-1 for guidance and procedures.
              [64 FR 14400, Mar. 25, 1999, as amended at 76 FR 76319, Dec. 7, 2011; 80 FR 36718, June 26, 2015; 80 FR 74695, Nov. 30, 2015]

              217.502
              Procedures.

              217.502-1
              General.
              (a) Written agreement on responsibility for management and administration—
              (1) Assisted acquisitions. Follow the procedures at PGI 217.502-1(a)(1), when a contracting activity from a DoD Component provides acquisition assistance to deployed DoD units or personnel from another DoD Component.
              [83 FR 62502, Dec. 4, 2018]

              217.503
              Ordering procedures.
              (a) When the requesting agency is within DoD, a copy of the executed determination and findings required by FAR 17.502-2 shall be furnished to the servicing agency as an attachment to the order. When a DoD contracting office is acting as the servicing agency, a copy of the executed determination and findings shall be obtained from the requesting agency and placed in the contract file for the Economy Act order.
              [76 FR 76319, Dec. 7, 2011]

            Subpart 217.6—Management and Operating Contracts

              217.600
              Scope of subpart.
              FAR subpart 17.6 does not apply to DoD.

            Subpart 217.7—Interagency Acquisitions: Acquisitions by Nondefense Agencies on Behalf of the Department of Defense
            [80 FR 51751, Aug. 26, 2015]

              217.700
              Scope of subpart.
              This subpart—
              (a) Implements section 854 of the National Defense Authorization Act for Fiscal Year 2005 (Pub. L. 108-375), section 801 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181), and section 806 of the National Defense Authorization Act for Fiscal Year 2010 (Pub. L. 111-84); and
              (b) Prescribes policy for the acquisition of supplies and services through the use of contracts or orders issued by non-DoD agencies.

              217.701
              Definitions.
              As used in this subpart—

                Assisted acquisition means the type of interagency contracting through which acquisition officials of a non-DoD agency award a contract or a task or delivery order for the acquisition of supplies or services on behalf of DoD.

                Direct acquisition means the type of interagency contracting through which DoD orders a supply or service from a Governmentwide acquisition contract maintained by a non-DoD agency.

                Governmentwide acquisition contract means a task or delivery order contract that—
              (1) Is entered into by a non-defense agency; and
              (2) May be used as the contract under which property or services are procured for one or more other departments or agencies of the Federal Government.

              217.770
              Procedures.
              Departments and agencies shall establish and maintain procedures for reviewing and approving orders placed for supplies and services under non-DoD contracts, whether through direct acquisition or assisted acquisition, when the amount of the order exceeds the simplified acquisition threshold. These procedures shall include—
              (a) Evaluating whether using a non-DoD contract for the acquisition is in the best interest of DoD. Factors to be considered include—
              (1) Satisfying customer requirements;
              (2) Schedule;
              (3) Cost effectiveness (taking into account discounts and fees). In order to ensure awareness of the total cost of fees associated with use of a non-DoD contract, follow the procedures at PGI 217.770(a)(3); and
              (4) Contract administration (including oversight);
              (b) Determining that the tasks to be accomplished or supplies to be provided are within the scope of the contract to be used;
              (c) Reviewing funding to ensure that it is used in accordance with appropriation limitations; and
              (d) Collecting and reporting data on the use of assisted acquisition for analysis. Follow the reporting requirements in subpart 204.6.
              [80 FR 51751, Aug. 26, 2015, as amended at 80 FR 56930, Sept. 21, 2015]

            Subpart 217.70—Exchange of Personal Property

              217.7000
              Scope of subpart.
              This subpart prescribes policy and procedures for exchange of nonexcess personal property concurrent with an acquisition. 40 U.S.C. 503 permits exchange of personal property and application of the exchange allowance to the acquisition of similar property. This subpart does not authorize the sale of nonexcess personal property.
              [63 FR 11529, Mar. 9, 1998, as amended at 77 FR 35880, June 15, 2012]

              217.7001
              Definitions.
              As used in this subpart—
              (a) Exchange (trade-in) property means property which—
              (1) Is not excess but is eligible for replacement (because of obsolescence, unserviceability, or other reason); and
              (2) Is applied as whole or partial payment toward the acquisition of similar items (i.e., items designed and constructed for the same purpose).
              (b) Property means items that fall within one of the generic categories listed in DoD Manual 4140.01, Volume 9, DoD Supply Chain Materiel Management Procedures: Materiel Programs.
              [56 FR 36345, July 31, 1991, as amended at 65 FR 39705, June 27, 2000; 77 FR 23631, Apr. 20, 2012; 82 FR 61480, Dec. 28, 2017]

              217.7002
              Policy.
              DoD policy is to exchange, rather than replace, eligible nonexcess property whenever exchange promotes economical and efficient program accomplishment. Exchange policy, authority, and applicability are governed by—
              (a) The Federal Property Management Regulations issued by the Administrator of the General Services Administration; and
              (b) DoD Manual 4140.01, Volume 9, DoD Supply Chain Materiel Management Procedures: Materiel Programs.
              [56 FR 36345, July 31, 1991, as amended at 65 FR 39705, June 27, 2000; 77 FR 23631, Apr. 20, 2012; 82 FR 61480, Dec. 28, 2017]

              217.7003
              Purchase request.

              Ensure that the requiring activity provides all of the following in support of the purchase request—

              (a) A certification that the property is eligible for exchange and complies with all conditions and limitations of DoD Manual 4140.01, Volume 9, DoD Supply Chain Materiel Management Procedures: Materiel Programs.
              (b) A written determination of economic advantage indicating—
              (1) The anticipated economic advantage to the Government from use of the exchange authority;
              (2) That exchange allowances shall be applied toward, or in partial payment of, the items to be acquired; and
              (3) That, if required, the exchange property has been rendered safe or innocuous or has been demilitarized;
              (c) All applicable approvals for the exchange; and
              (d) A description of the property available for exchange (e.g., nomenclature, location, serial number, estimated travel value).
              [56 FR 36345, July 31, 1991, as amended at 65 FR 39705, June 27, 2000; 77 FR 23632, Apr. 20, 2012; 82 FR 61480, Dec. 28, 2017]

              217.7004
              Solicitation and award.
              (a) Solicitations shall include a request for offerors to state prices—
              (1) For the new items being acquired without any exchange; and
              (2) For the new items with the exchange (trade-in allowance) for the exchange property listed.
              (b) The contracting officer is not obligated to award on an exchange basis. If the lowest evaluated offer is an offer for the new items without any exchange, the contracting officer may award on that basis and forgo the exchange.
              (c) Exchanges may be made only with the successful offeror. When the successful offer includes an exchange, award one contract for both the acquisition of the new property and the trade-in of the exchange property. The only exception is when the items must be acquired against a mandatory Federal supply schedule contract, in which case, award a separate contract for the exchange.

              217.7005
              Solicitation provision.
              Use the provision at 252.217-7002, Offering Property for Exchange, when offering nonexcess personal property for exchange. Allow a minimum of 14 calendar days for the inspection period in paragraph (b) of the clause if the exchange property is in the contiguous United States. Allow at least 21 calendar days outside the contiguous United States.
              [70 FR 35544, June 21, 2005]

            Subpart 217.71—Master Agreement for Repair and Alteration of Vessels

              217.7100
              Scope of subpart.
              This subpart contains acquisition policies and procedures for master agreements for repair and alteration of vessels.

              217.7101
              Definitions.
              (a) Master agreement for repair and alteration of vessels—
              (1) Is a written instrument of understanding, negotiated between a contracting activity and a contractor that—
              (A) Contains contract clauses, terms, and conditions applying to future contracts for repairs, alterations, and/or additions to vessels; and
              (B) Contemplates separate future contracts that will incorporate by reference or attachment the required and applicable clauses agreed upon in the master agreement.
              (2) Is not a contract.
              (b) Job order—
              (1) Is a fixed price contract incorporating, by reference or attachment, a master agreement for repair and alteration of vessels;
              (2) May include clauses pertaining to subjects not covered by the master agreement; but applicable to the job order being awarded; and
              (3) Applies to a specific acquisition and sets forth the scope of work, price, delivery date, and other appropriate terms that apply to the particular job order.

              217.7102
              General.
              (a) Activities shall enter into master agreements for repair and alteration of vessels with all prospective contractors located within the United States or its outlying areas, which—
              (1) Request ship repair work; and

              (2) Possess the organization and facilities to perform the work satisfactorily. (Issuance of a master agreement does not indicate approval of the contractor's facility for any particular acquisition and is not an affirmative determination of responsibility under FAR subpart 9.1 for any particular acquisition.)
              (b) Activities may use master agreements in work with prospective contractors located outside the United States and its outlying areas.
              (c) Activities may issue job orders under master agreements to effect repairs, alterations, and/or additions to vessels belonging to foreign governments.
              (1) Contractors shall treat vessels of a foreign government as if they were vessels of the U.S. Government whenever requested to do so by the contracting officer.
              (2) Identify the vessel and the foreign government in the solicitation and job order.
              [56 FR 36345, July 31, 1991, as amended at 70 FR 35544, June 21, 2005]

              217.7103
              Master agreements and job orders.

              217.7103-1
              Content and format of master agreements.
              Follow the procedures at PGI 217.7103-1 for preparation of master agreements.
              [71 FR 27642, May 12, 2006]

              217.7103-2
              Period of agreement.
              (a) Master agreements remain in effect until canceled by either the contractor or the contracting officer.
              (b) Master agreements can be canceled by either the contractor or the contracting officer by giving 30 days written notice to the other.
              (c) Cancellation of a master agreement does not affect the rights and liabilities under any job order existing at the time of cancellation. The contractor must continue to perform all work covered by any job order issued before the effective date of cancellation of the master agreement.

              217.7103-3
              Solicitations for job orders.
              (a) When a requirement arises within the United States or its outlying areas for the type of work covered by the master agreement, solicit offers from prospective contractors that—
              (1) Previously executed a master agreement; or
              (2) Have not previously executed a master agreement, but possess the necessary qualifications to perform the work and agree to execute a master agreement before award of a job order.
              (b) Follow the procedures at PGI 217.7103-3 when preparing solicitations for job orders.
              [56 FR 36345, July 31, 1991, as amended at 63 FR 55052, Oct. 14, 1998; 63 FR 56290, Oct. 21, 1998; 70 FR 35545, June 21, 2005; 71 FR 27642, May 12, 2006]

              217.7103-4
              Emergency work.
              (a) The contracting officer, without soliciting offers, may issue a written job order to a contractor that has previously executed a master agreement when—
              (i) Delay in the performance of necessary repair work would endanger a vessel, its cargo or stores; or
              (ii) Military necessity requires immediate work on a vessel.
              (b) Follow the procedures at PGI 217.7103-4 when processing this type of undefinitized contract action.
              [56 FR 36345, July 31, 1991. Redesignated and amended at 71 FR 27643, May 12, 2006]

              217.7103-5
              Repair costs not readily ascertainable.
              Follow the procedures at PGI 217.7103-5 if the nature of any repairs is such that their extent and probable cost cannot be ascertained readily.
              [71 FR 27643, May 12, 2006]

              217.7103-6
              Modification of master agreements.
              (a) Review each master agreement at least annually before the anniversary of its effective date and revise it as necessary to conform to the requirements of the FAR and DFARS. Statutory or other mandatory changes may require review and revision earlier than one year.

              (b) A master agreement shall be changed only by modifying the master agreement itself. It shall not be changed through a job order.

              (c) A modification to a master agreement shall not affect job orders issued before the effective date of the modification.
              [63 FR 11529, Mar. 9, 1998. Redesignated at 71 FR 27643, May 12, 2006]

              217.7104
              Contract clauses.
              (a) Use the following clauses in solicitations for, and in, master agreements for repair and alteration of vessels:
              (1) 252.217-7003, Changes.
              (2) 252.217-7004, Job Orders and Compensation.
              (3) 252.217-7005, Inspection and Manner of Doing Work.
              (4) 252.217-7006, Title.
              (5) 252.217-7007, Payments.
              (6) 252.217-7008, Bonds.
              (7) 252.217-7009, Default.
              (8) 252.217-7010, Performance.
              (9) 252.217-7011, Access to Vessel.
              (10) 252.217-7012, Liability and Insurance.
              (11) 252.217-7013, Guarantees.
              (12) 252.217-7014, Discharge of Liens.
              (13) 252.217-7015, Safety and Health.
              (14) 252.217-7016, Plant Protection, as applicable.
              (b)(1) Incorporate in solicitations for, and in, job orders, the clauses in the master agreement, and any other clauses on subjects not covered by the master agreement, but applicable to the job order to be awarded.
              (2) Use the clause at 252.217-7016, Plant Protection, in job orders where performance is to occur at the contractor's facility.

            Subpart 217.72 [Reserved]

            Subpart 217.73—Identification of Sources of Supply

              217.7300
              Scope.
              This subpart implements 10 U.S.C. 2384. It contains policy and procedures for requiring contractors to identify the actual manufacturer of supplies furnished to DoD.

              217.7301
              Policy.
              Contractors shall identify their sources of supply in contracts for supplies. Contractor identification of sources of supply enables solicitation, in subsequent acquisitions, of actual manufacturers or other suppliers of items. This enhances competition and potentially avoids payment of additional costs for no significant added value.

              217.7302
              Procedures.
              (a) Whenever practicable, include a requirement for contractor identification of sources of supply in all contracts for the delivery of supplies. The identification shall include—
              (1) The item's actual manufacturer or producer, or all the contractor's sources for the item;
              (2) The item's national stock number (if there is one);
              (3) The item identification number used by—
              (i) The actual manufacturer or producer of the item; or
              (ii) Each of the contractor's sources for the item; and
              (4) The source of any technical data delivered under the contract.
              (b) The requirement in paragraph (a) of this section does not apply to contracts that are—
              (1) For commercial items; or
              (2) Valued at or below the simplified acquisition threshold.
              [56 FR 36345, July 31, 1991, as amended at 64 FR 2597, Jan. 15, 1999]

              217.7303
              Solicitation provision.
              (a) Use the provision at 252.217-7026, Identification of Sources of Supply, or one substantially the same, in all solicitations for supplies when the acquisition is being conducted under other than full and open competition, except when—
              (1) Using FAR 6.302-5;
              (2) The contracting officer already has the information required by the provision (e.g., the information was obtained under other acquisitions);
              (3) The contract is for subsistence, clothing or textiles, fuels, or supplies purchased and used outside the United States;
              (4) The contracting officer determines that it would not be practicable to require offerors/contractors to provide the information, e.g., nonrepetitive local purchases; or

              (5) The contracting officer determines that the exception at 217.7302(b) applies to all items under the solicitation.
              (b) If appropriate, use the provision at 252.217-7026, Identification of Sources of Supply, or one substantially the same, in service contracts requiring the delivery of supplies.

            Subpart 217.74—Undefinitized Contract Actions

              217.7400
              Scope.
              This subpart prescribes policies and procedures implementing 10 U.S.C. 2326.

              217.7401
              Definitions.
              As used in this subpart—

                Contract action means an action which results in a contract.
              (1) It includes contract modifications for additional supplies or services.
              (2) It includes task orders and delivery orders.

              (3) It does not include change orders, administrative changes, funding modifications, or any other contract modifications that are within the scope and under the terms of the contract, e.g., engineering change proposals, value engineering change proposals, and over and above work requests as described in subpart 217.77. For policy relating to definitization of change orders, see 243.204-70.

                Definitization means the agreement on, or determination of, contract terms, specifications, and price, which converts the undefinitized contract action to a definitive contract.

                Qualifying proposal means a proposal that contains sufficient information to enable DoD to conduct meaningful analyses and audits of the information contained in the proposal.

                Undefinitized contract action means any contract action for which the contract terms, specifications, or price are not agreed upon before performance is begun under the action. Examples are letter contracts, orders under basic ordering agreements, and provisioned item orders, for which the price has not been agreed upon before performance has begun. For policy relating to definitization of change orders, see 243.204-70.
              [56 FR 36345, July 31, 1991, as amended at 75 FR 10191, Mar. 5, 2010; 75 FR 48277, Aug. 10, 2010; 77 FR 76940, Dec. 31, 2012; 84 FR 39206, Aug. 9, 2019]

              217.7402
              Exceptions.
              (a) The following undefinitized contract actions (UCAs) are not subject to this subpart. However, the contracting officer shall apply the policy and procedures to them to the maximum extent practicable (also see paragraph (b) of this section):
              (1) Purchases at or below the simplified acquisition threshold.
              (2) Special access programs.
              (3) Congressionally mandated long-lead procurement contracts.

              (b) If the contracting officer determines that it is impracticable to adhere to the procedures of this subpart for a particular contract action that falls within one of the categories in paragraph (a) of this section, the contracting officer shall provide prior notice, through agency channels, electronically via email to the Principal Director, Defense Pricing and Contracting (Contract Policy), at osd.pentagon.ousd-a-s.mbx.dpc-cp@mail.mil.

              [75 FR 48277, Aug. 10, 2010, as amended at 80 FR 72607, Nov. 20, 2015; 84 FR 39206, Aug. 9, 2019; 84 FR 48510, Sept. 13, 2019]

              217.7403
              Policy.
              DoD policy is that undefinitized contract actions shall—
              (a) Be used only when—
              (1) The negotiation of a definitive contract action is not possible in sufficient time to meet the Government's requirements; and
              (2) The Government's interest demands that the contractor be given a binding commitment so that contract performance can begin immediately.
              (b) Be as complete and definite as practicable under the particular circumstances.

              217.7404
              Limitations.

              See PGI 217.7404 for additional guidance on obtaining approval to authorize use of an undefinitized contact action, documentation requirements, and other limitations on their use.

              (a) Foreign military sales contracts.

              (1) A contracting officer may not enter into a UCA for a foreign military sale unless—
              (i) The UCA provides for agreement upon contractual terms, specifications, and price by the end of the 180-day period beginning on the date on which the contractor submits a qualifying proposal; and
              (ii) The contracting officer obtains approval from the head of the contracting activity to enter into a UCA in accordance with 217.7404-1.
              (2) The head of the contracting activity may waive the requirements of paragraph (a)(1) of this section, if a waiver is necessary in order to support any of the following operations:
              (i) A contingency operation.
              (ii) A humanitarian or peacekeeping operation.
              (b) Unilateral definitization by a contracting officer. Any UCA with a value greater than $50 million may not be unilaterally definitized until—
              (1) The earlier of—
              (i) The end of the 180-day period, beginning on the date on which the contractor submits a qualifying proposal to definitize the contractual terms, specifications, and price; or
              (ii) The date on which the amount of funds expended under the contractual action is equal to more than 50 percent of the negotiated overall not-to-exceed price for the contractual action;
              (2) The head of the contracting activity, without power of redelegation, approves the definitization in writing;
              (3) The contracting officer provides a copy of the written approval to the contractor; and
              (4) A period of 30 calendar days has elapsed after the written approval is provided to the contractor.
              [84 FR 39206, Aug. 9, 2019]

              217.7404-1
              Authorization.
              The contracting officer shall obtain approval from the head of the contracting activity before—
              (a) Entering into a UCA. The request for approval must fully explain the need to begin performance before definitization, including the adverse impact on agency requirements resulting from delays in beginning performance.
              (b) Including requirements for non-urgent spare parts and support equipment in a UCA. The request should show that inclusion of the non-urgent items is consistent with good business practices and in the best interest of the United States.
              (c) Modifying the scope of a UCA when performance has already begun. The request should show that the modification is consistent with good business practices and in the best interests of the United States.

              217.7404-2
              Price ceiling.
              UCAs shall include a not-to-exceed price.

              217.7404-3
              Definitization schedule.
              (a) UCAs shall contain definitization schedules that provide for definitization by the earlier of—
              (1) The date that is 180 days after the contractor submits a qualifying proposal. This date may not be extended beyond an additional 90 days without a written determination by the head of the contracting activity without power of redelegation, the commander of the combatant command concerned, or the Under Secretary of Defense for Acquisition and Sustainment that it is in the best interests of the military department or the defense agency, the combatant command, or the Department of Defense, respectively, to continue the action; or
              (2) The date on which the amount of funds obligated under the contract action is equal to more than 50 percent of the not-to-exceed price.
              (b) Submission of a qualifying proposal in accordance with the definitization schedule is a material element of the contract. If the contractor does not submit a timely qualifying proposal, the contracting officer may suspend or reduce progress payments under FAR 32.503-6, or take other appropriate action.
              [56 FR 36345, July 31, 1991, as amended at 60 FR 29498, June 5, 1995; 63 FR 67803, Dec. 9, 1998; 84 FR 39206, Aug. 9, 2019]

              217.7404-4
              Limitations on obligations.

              (a) The Government shall not obligate more than 50 percent of the not-to-exceed price before definitization. However, if a contractor submits a qualifying proposal before 50 percent of the not-to-exceed price has been obligated by the Government, then the limitation on obligations before definitization may be increased to no more than 75 percent (see 232.102-70 for coverage on provisional delivery payments).
              (b) In determining the appropriate amount to obligate, the contracting officer shall assess the contractor's proposal for the undefinitized period and shall obligate funds only in an amount consistent with the contractor's requirements for the undefinitized period.
              [60 FR 29498, June 5, 1995, as amended at 74 FR 37650, July 29, 2009]

              217.7404-5
              Exceptions.
              (a) The limitations in 217.7404-2, 217.7404-3, and 217.7404-4 do not apply to UCAs for the purchase of initial spares.
              (b) The head of an agency may waive the limitations in 217.7404(a), 217.7404-2, 217.7404-3, and 217.7404-4 for UCAs if the head of the agency determines that the waiver is necessary to support—
              (1) A contingency operation; or
              (2) A humanitarian or peacekeeping operation.
              [60 FR 29498, June 5, 1995, as amended at 63 FR 67804, Dec. 9, 1998; 71 FR 27643, May 12, 2006; 84 FR 39206, Aug. 9, 2019]

              217.7404-6
              Allowable profit.
              When the final price of a UCA is negotiated after a substantial portion of the required performance has been completed, the head of the contracting activity shall ensure the profit allowed reflects—
              (a) Any reduced cost risk to the contractor for costs incurred during contract performance before negotiation of the final price. However, if a contractor submits a qualifying proposal to definitize a UCA, and the contracting officer for such action definitizes the contract after the end of the 180-day period beginning on the date on which the contractor submitted the qualifying proposal, the profit allowed on the contract shall accurately reflect the cost risk of the contractor as such risk existed on the date the contractor submitted the qualifying proposal;
              (b) Any reduced cost risk to the contractor for costs expected to be incurred during performance of the remainder of the contract after negotiation of the final price; and
              (c) The requirements at 215.404-71-3(d)(2). The risk assessment shall be documented in the price negotiation memorandum.
              [74 FR 37650, July 29, 2009, as amended at 83 FR 30586, June 29, 2018; 84 FR 39206, Aug. 9, 2019]

              217.7405
              Plans and reports.
              (a) To provide for enhanced management and oversight of UCAs, departments and agencies shall—
              (1) Prepare and maintain a Consolidated UCA Management Plan; and
              (2) Prepare semi-annual Consolidated UCA Management Reports addressing each UCA with an estimated value exceeding $5 million.
              (b) Consolidated UCA Management Reports and Consolidated UCA Management Plan updates shall be submitted to the Office of the Director, Defense Procurement and Acquisition Policy, by October 31 and April 30 of each year in accordance with the procedures at PGI 217.7405.

              (c) Consolidated UCA Management Reports shall include information about all change orders that are not forward priced (i.e., unpriced) and have an estimated value exceeding $5 million.
              [74 FR 37650, July 29, 2009, as amended at 75 FR 48277, Aug. 10, 2010]

              217.7406
              Contract clauses.
              (a) Use the clause at FAR 52.216-24, Limitation of Government Liability, in—
              (1) All UCAs;
              (2) Solicitations associated with UCAs;
              (3) Basic ordering agreements;
              (4) Indefinite-delivery contracts;
              (5) Any other type of contract providing for the use of UCAs; and
              (6) Unpriced change orders with an estimated value exceeding $5 million.
              (b)(1) Use the clause at 252.217-7027, Contract Definitization, in—
              (i) All UCAs;
              (ii) Solicitations associated with UCAs;
              (iii) Basic ordering agreements;

              (iv) Indefinite-delivery contracts;
              (v) Any other type of contract providing for the use of UCAs; and
              (vi) Unpriced change orders with an estimated value exceeding $5 million.
              (2) Insert the applicable information in paragraphs (a), (b), and (d) of the clause.
              (3) If, at the time of entering into the UCA or unpriced change order, the contracting officer knows that the definitive contract action will meet the criteria of FAR 15.403-1, 15.403-2, or 15.403-3 for not requiring submission of certified cost or pricing data, the words “and certified cost or pricing data” may be deleted from paragraph (a) of the clause.
              [75 FR 48277, Aug. 10, 2010, as amended at 77 FR 76940, Dec. 31, 2012]

            Subpart 217.75—Acquisition of Replenishment Parts

              217.7500
              Scope of subpart.
              This subpart provides guidance on additional requirements related to acquisition of replenishment parts.
              [56 FR 36345, July 31, 1991, as amended at 71 FR 27643, May 12, 2006]

              217.7501
              Definition.

                Replenishment parts, as used in this subpart, means repairable or consumable parts acquired after the initial provisioning process.
              [71 FR 27643, May 12, 2006]

              217.7502
              General.
              Departments and agencies—
              (a) May acquire replenishment parts concurrently with production of the end item.
              (b) Shall provide for full and open competition when fully adequate drawings and any other needed data are available with the right to use for acquisition purposes (see part 227). However—
              (1) When data is not available for a competitive acquisition, use one of the procedures in PGI 217.7504.
              (2) Replenishment parts must be acquired so as to ensure the safe, dependable, and effective operation of the equipment. Where this assurance is not possible with new sources, competition may be limited to the original manufacturer of the equipment or other sources that have previously manufactured or furnished the parts as long as the action is justified. See 209.270 for requirements applicable to replenishment parts for aviation or ship critical safety items.
              (c) Shall follow the limitations on price increases in 217.7505.
              [56 FR 36345, July 31, 1991, as amended at 69 FR 55989, Sept. 17, 2004. Redesignated and amended at 71 FR 27643, May 12, 2006; 73 FR 1827, Jan. 10, 2008]

              217.7503
              Spares acquisition integrated with production.
              Follow the procedures at PGI 217.7503 for acquiring spare parts concurrently with the end item.
              [71 FR 27643, May 12, 2006]

              217.7504
              Acquisition of parts when data is not available.
              Follow the procedures at PGI 217.7504 when acquiring parts for which the Government does not have the necessary data.
              [71 FR 27643, May 12, 2006]

              217.7505
              Limitations on price increases.
              This section provides implementing guidance for section 1215 of Public Law 98-94 (10 U.S.C. 2452 note).
              (a) The contracting officer shall not award, on a sole source basis, a contract for any centrally managed replenishment part when the price of the part has increased by 25 percent or more over the most recent 12-month period.
              (1) Before computing the percentage difference between the current price and the prior price, adjust for quantity, escalation, and other factors necessary to achieve comparability.
              (2) Departments and agencies may specify an alternate percentage or percentages for contracts at or below the simplified acquisition threshold.

              (b) The contracting officer may award a contract for a part, the price of which exceeds the limitation in paragraph (a) of this section, if the contracting officer certifies in writing to the head of the contracting activity before award that—

              (1) The contracting officer has evaluated the price of the part and concluded that the price increase is fair and reasonable; or
              (2) The national security interests of the United States require purchase of the part despite the price increase.
              (c) The fact that a particular price has not exceeded the limitation in paragraph (a) of this section does not relieve the contracting officer of the responsibility for obtaining a fair and reasonable price.
              (d) Contracting officers may include a provision in sole source solicitations requiring that the offeror supply with its proposal, price and quantity data on any government orders for the replenishment part issued within the most recent 12 months.
              [56 FR 36345, July 31, 1991, as amended at 64 FR 2598, Jan. 15, 1999. Redesignated at 71 FR 27643, May 12, 2006]

              217.7506
              Spare parts breakout program.
              See PGI 217.7506 and DoD Manual 4140.01, Volume 9, DoD Supply Chain Materiel Management Procedures: Materiel Programs, for spare parts breakout requirements.
              [71 FR 27643, May 12, 2006, as amended at 82 FR 61480, Dec. 28, 2017]

            Subpart 217.76—Contracts with Provisioning Requirements

              217.7601
              Provisioning.
              (a) Follow the procedures at PGI 217.7601 for contracts with provisioning requirements.
              (b) For technical requirements of provisioning, see DoD Manual 4140.01, Volume 2, DoD Supply Chain Materiel Management Procedures: Demand and Supply Planning.
              [71 FR 27643, May 12, 2006, as amended at 82 FR 61480, Dec. 28, 2017]

            Subpart 217.77—Over and Above Work

              217.7701
              Procedures.
              Follow the procedures at PGI 217.7701 when acquiring over and above work.
              [71 FR 27643, May 12, 2006]

              217.7702
              Contract clause.
              Use the clause at 252.217-7028, Over and Above Work, in solicitations and contracts containing requirements for over and above work, except as provided for in subpart 217.71.

            217.78—Reverse Auctions

              217.7801
              Prohibition.
              In accordance with section 814 of the National Defense Authorization Act for Fiscal Year 2017 (Pub. L. 114-328) as amended by section 882 of the National Defense Authorization Act for Fiscal Year 2018 (Pub. L. 115-91) (see 10 U.S.C. 2302 note), contracting officers shall not use reverse auctions when procuring items designated by the requiring activity as personal protective equipment or an aviation critical safety item, when the requiring activity advises the contracting officer that the level of quality or failure of the equipment or item could result in combat casualties. See 252.209-7010 for the definition and identification of critical safety items.
              [84 FR 50789, Sept. 26, 2019]

          Pt. 218
          PART 218—EMERGENCY ACQUISITIONS

              Subpart 218.1—Available Acquisition Flexibilities
              Sec.
              218.170
              Additional acquisition flexibilities.

              Subpart 218.2—Emergency Acquisition Flexibilities
              218.201
              Contingency operation.
              218.202
              Defense or recovery from certain events.
              218.203
              Incidents of national significance, emergency declaration, or major disaster declaration.
              218.204
              Humanitarian or peacekeeping operation.
              218.270
              Head of contracting activity determinations.
              218.271
              Use of electronic business tools.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            72 FR 2632, Jan. 22, 2007, unless otherwise noted.

            Subpart 218.1—Available Acquisition Flexibilities

              218.170
              Additional acquisition flexibilities.
              Additional acquisition flexibilities available to DoD are as follows:
              (a) Circumstances permitting other than full and open competition. Use of the authority at FAR 6.302-2, Unusual and compelling urgency, may be appropriate under certain circumstances. See PGI 206.302-2.
              (b) Use of advance Military Interdepartmental Purchase Request (MIPR). For urgent requirements, the advance MIPR may be transmitted electronically. See PGI 208.7004-3.
              (c) Use of the Governmentwide commercial purchase card. Governmentwide commercial purchase cards do not have to be used for purchases valued at or below the micro-purchase threshold if the place of performance is entirely outside the United States. See 213.270(c)(1).
              (d) Master agreement for repair and alteration of vessels. The contracting officer, without soliciting offers, may issue a written job order for emergency work to a contractor that has previously executed a master agreement, when delay would endanger a vessel, its cargo or stores, or when military necessity requires immediate work on a vessel. See 217.7103-4, 252.217-7010, and PGI 217.7103-4.
              (e) Spare parts breakout program. An urgent immediate buy need not be delayed if an evaluation of the additional information cannot be completed in time to meet the required delivery date. See PGI 217.7506, paragraph 1-105(e).
              (f) Storage and disposal of toxic and hazardous materials. Under certain emergency situations, exceptions apply with regard to the prohibition on storage or disposal of non-DoD-owned toxic or hazardous materials on DoD installations. See 223.7102(a)(3) and (7).
              (g) Authorization Acts, Appropriations Acts, and other statutory restrictions on foreign acquisition. Acquisitions in the following categories are not subject to the restrictions of 225.7002, Restrictions on food, clothing, fabrics, specialty metals, and hand or measuring tools: (1) Acquisitions at or below the simplified acquisition threshold; (2) Acquisitions outside the United States in support of combat operations; (3) Acquisitions of perishable foods by or for activities located outside the United States for personnel of those activities; (4) Acquisitions of food, specialty metals, or hand or measuring tools in support of contingency operations, or for which the use of other than competitive procedures has been approved on the basis of unusual and compelling urgency in accordance with FAR 6.302-2; (5) Emergency acquisitions by activities located outside the United States for personnel of those activities; and (6) Acquisitions by vessels in foreign waters. See 225.7002-2.
              (h) Rights in technical data. The agency head may notify a person asserting a restriction that urgent or compelling circumstances (e.g., emergency repair or overhaul) do not permit the Government to continue to respect the asserted restriction. See 227.7102-2; 227.7103-5; 227.7103-13; 227.7104; 227.7203-13; 252.227-7013; 252.227-7014; 252.227-7015; 252.227-7018; and 252.227-7037.
              (i) Tax exemption in Spain. If copies of a contract are not available and duty-free import of equipment or materials is urgent, the contracting officer may send the Joint United States Military Group copies of the Letter of Intent or a similar document indicating the pending award. See PGI 229.7001.
              (j) Electronic submission and processing of payment requests. Exceptions to the use of Wide Area WorkFlow are at 232.7002(a).
              (k) Mortuary services. In an epidemic or other emergency, the contracting activity may obtain services beyond the capacity of the contractor's facilities from other sources. See 237.7003(a) and 252.237-7003.
              [72 FR 2632, Jan. 22, 2007, as amended at 77 FR 38733, June 29, 2012; 84 FR 48505, Sept. 13, 2019]

            Subpart 218.2—Emergency Acquisition Flexibilities

              218.201
              Contingency operation.
              (1) Selection, appointment, and termination of appointment. Contracting officer qualification requirements pertaining to a baccalaureate degree do not apply to DoD employees or members of the armed forces who are in a contingency contracting force. See 201.603-2(2).
              (2) Policy for item unique identification. Contractors will not be required to provide DoD item unique identification if the items, as determined by the head of the contracting activity, are to be used to support a contingency operation. See 211.274-2(b).
              (3) Use of the Governmentwide commercial purchase card. Governmentwide commercial purchase cards do not have to be used for purchases valued at or below the micro-purchase threshold if the purchase or payment is for an overseas transaction by a contracting officer in support of a contingency operation, or for training exercises in preparation for overseas contingency, humanitarian, or peacekeeping operations. See 213.201(g) and 213.270(c)(3) and (5).
              (4) Governmentwide commercial purchase card. A contracting office supporting a contingency operation or a humanitarian or peacekeeping operation may use the Governmentwide commercial purchase card to make a purchase that exceeds the micro-purchase threshold but does not exceed the simplified acquisition threshold if certain conditions are met. See 213.301(3).
              (5) Imprest funds and third party drafts. Imprest funds are authorized for use without further approval for overseas transactions at or below the micro-purchase threshold in support of a contingency operation or a humanitarian or peacekeeping operation. See 213.305-3(d)(iii)(A).
              (6) Standard Form (SF) 44, Purchase Order-Invoice-Voucher. SF 44s may be used for purchases not exceeding the simplified acquisition threshold for overseas transactions by contracting officers in support of a contingency operation or a humanitarian or peacekeeping operation. See 213.306(a)(1)(B).
              (7) Only one offer. The requirements at sections 215.371-2 do not apply to acquisitions, as determined by the head of the contracting activity, in support of a contingency operation. See 215.371-4(a)(2).
              (8) Approval of determination and findings for time-and-materials or labor-hour contracts. The approval requirements in paragraphs (d)(i)(A)(1) and (2) of this section do not apply to contracts that, as determined by the head of the contracting activity, support contingency. See 216.601(d)(3).
              (9) Undefinitized contract actions. The head of the agency may waive certain limitations for undefinitized contract actions if the head of the agency determines that the waiver is necessary to support a contingency operation or a humanitarian or peacekeeping operation. See 217.7404-5(b).
              (10) Prohibited sources. DoD personnel are authorized to make emergency acquisitions in direct support of U.S. or allied forces deployed in military contingency, humanitarian, or peacekeeping operations in a country or region subject to economic sanctions administered by the Department of the Treasury, Office of Foreign Assets Control. See 225.701-70.
              (11) Authorization Acts, Appropriations Acts, and other statutory restrictions on foreign acquisition. Acquisitions in the following categories are not subject to the restrictions of 225.7002, Restrictions on food, clothing, fabrics, specialty metals, and hand or measuring tools: (1) Acquisitions at or below the simplified acquisition threshold; (2) Acquisitions outside the United States in support of combat operations; (3) Acquisitions of perishable foods by or for activities located outside the United States for personnel of those activities; (4) Acquisitions of food, specialty metals, or hand or measuring tools in support of contingency operations, or for which the use of other than competitive procedures has been approved on the basis of unusual and compelling urgency in accordance with FAR 6.302-2; (5) Emergency acquisitions by activities located outside the United States for personnel of those activities; and (6) Acquisitions by vessels in foreign waters. See 225.7002-2.
              (12) Electronic submission and processing of payment requests. Contractors do not have to submit payment requests in electronic form for contracts awarded by deployed contracting officers in the course of military operations, including contingency operations or humanitarian or peacekeeping operations. See 232.7002(a)(4).
              [72 FR 2632, Jan. 22, 2007, as amended at 78 FR 76072, Dec. 16, 2013; 81 FR 53045, Aug. 11, 2016; 83 FR 24890, May 30, 2018; 85 FR 34528, June 5, 2020]

              218.202
              Defense or recovery from certain events.
              For acquisitions that, as determined by the head of the contracting activity, are to facilitate defense against or recovery from cyber, nuclear, biological, chemical, or radiological attack; to facilitate provision of international disaster assistance; or to support response to an emergency or major disaster, the following requirements do not apply:
              (1) Policy for unique item identification at 211.274-2(a). Contractors are not required to provide DoD unique item identification if the items are to be used to facilitate defense against or recovery from nuclear, biological, chemical, or radiological attack. However, contractors are not exempt from this requirement if the items are to be used to facilitate defense against or recovery from cyber attack. See 211.274-2(b).
              (2) Only one offer requirements at section 215.371-2. See 215.371-4(a)(2).
              (3) Approval of determination and findings for time-and-materials or labor-hour contracts at 216.601(d)(i)(A)(1) and (2). See 216.601(d)(3).
              [83 FR 24890, May 30, 2018]

              218.203
              Incidents of national significance, emergency declaration, or major disaster declaration.
              (1) Establishing or maintaining alternative sources. PGI contains a sample format for Determination and Findings citing the authority of FAR 6.202(a), regarding exclusion of a particular source in order to establish or maintain an alternative source or sources. Alternate 2 of the sample format addresses having a supplier available for furnishing supplies or services in case of a national emergency. See PGI 206.202.
              (2) Electronic submission and processing of payment requests. Contractors do not have to submit payment requests in electronic form for contracts awarded by contracting officers in the conduct of emergency operations, such as responses to natural disasters or national or civil emergencies. See 232.7002(a)(4).

              218.204
              Humanitarian or peacekeeping operation.
              The following requirements do not apply to acquisitions that, as determined by the head of the contracting activity, are in support of humanitarian or peacekeeping operations:
              (1) Policy for item unique identification at 211.274-2(a). See 211.274-2(b).
              (2) Only one offer requirements at sections 215.371-2. See 215.371-4(a)(2).
              (3) Approval of determination and findings for time-and-materials or labor-hour contracts at 216.601(d)(i)(A)(1) and (2). See 216.601(d)(3).
              [83 FR 24890, May 30, 2018]

              218.270
              Head of contracting activity determinations.
              The term “head of the agency” is replaced with “head of the contracting activity,” as defined in FAR 2.101, in the following locations:
              (a) FAR 2.101: definition of “simplified acquisition threshold.”
              (b) FAR 12.102(f).
              (c) FAR 13.201(g).
              (d) FAR 13.500(c)(1).
              (e) FAR 18.2.
              [74 FR 2407, Jan. 15, 2009. Redesignated at 76 FR 44281, July 25, 2011; 82 FR 61480, Dec. 28, 2017. Redesignated and amended at 83 FR 24890, May 30, 2018]

              218.271
              Use of electronic business tools.
              When supporting a contingency operation or humanitarian or peacekeeping operation, follow the procedures at PGI 218.271 concerning the use of electronic business tools.
              [80 FR 10390, Feb. 26, 2015. Redesignated and amended at 83 FR 24890, May 30, 2018]

        SUBCHAPTER D—SOCIOECONOMIC PROGRAMS

          Pt. 219
          PART 219—SMALL BUSINESS PROGRAMS

            Sec.

              Subpart 219.2—Policies
              219.201
              General policy.
              219.202
              Specific policies.
              219.202-1
              Encouraging small business participation in acquisitions.
              219.270
              Religious-related services—inclusion of nonprofit organizations.
              219.270-1
              Definition.
              219.270-2
              Procedures.
              219.270-3
              Solicitation provision.

              Subpart 219.3—Determination of Small Business Status for Small Business Programs
              219.301-2
              Rerepresentation by a contractor that represented itself as a small business concern.
              219.301-3
              Rerepresentation by a contractor that represented itself as other than a small business concern.
              219.309
              Solicitation provisions and contract clauses.

              Subpart 219.4—Cooperation With the Small Business Administration
              219.401
              General.
              219.402
              Small Business Administration procurement center representatives.

              Subpart 219.5—Small Business Total Set-Asides, Partial Set-Asides, and Reserves
              219.502
              Setting aside acquisitions.
              219.502-1
              Requirements for setting aside acquisitions.
              219.502-2
              Total small business set-asides.
              219.502-8
              Rejecting Small Business Administration recommendations.

              Subpart 219.6—Certificates of Competency and Determinations of Responsibility
              219.602
              Procedures.

              Subpart 219.7—The Small Business Subcontracting Program
              219.702-70
              Statutory requirements for the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans.
              219.703
              Eligibility requirements for participating in the program.
              219.704
              Subcontracting plan requirements.
              219.705
              Responsibilities of the contracting officer under the subcontracting assistance program.
              219.705-4
              Reviewing the subcontracting plan.
              219.705-6
              Postaward responsibilities of the contracting officer.
              219.706
              Responsibilities of the cognizant administrative contracting officer.
              219.708
              Contract clauses.

              Subpart 219.8—Contracting With the Small Business Administration (The 8(a) Program)
              219.800
              General.
              219.803
              Selecting acquisitions for the 8(a) Program.
              219.804
              Evaluation, offering, and acceptance.
              219.804-1
              Agency evaluation.
              219.805
              Competitive 8(a).
              219.805-1
              General.
              219.805-2
              Procedures.
              219.806
              Pricing the 8(a) contract.
              219.808
              Contract negotiation.
              219.808-1
              Sole source.
              219.811
              Preparing the contracts.
              219.811-3
              Contract clauses.

              Subpart 219.13—Historically Underutilized Business Zone (HUBZone) Program
              219.1307
              Price evaluation preference for HUBZone small business concerns.

              Subpart 219.70 [Reserved]

              Subpart 219.71—Pilot Mentor-Protégé Program
              219.7100
              Scope.
              219.7101
              Policy.
              219.7102
              General.
              219.7103
              Procedures.
              219.7103-1
              General.
              219.7103-2
              Contracting officer responsibilities.
              219.7104
              Developmental assistance costs eligible for reimbursement or credit.
              219.7105
              Reporting.
              219.7106
              Performance reviews.

            Authority:
            41. U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36353, July 31, 1991, unless otherwise noted.

            Subpart 219.2—Policies

              219.201
              General policy.

              (c) For the defense agencies, the director of the Office of Small Business Programs must be appointed by, be responsible to, and report directly to the director or deputy director of the defense agency.
              (8) The responsibility for assigning small business technical advisors is delegated to the head of the contracting activity.
              (10) Contracting activity small business specialists perform this function by—
              (A) Reviewing and making recommendations for all acquisitions (including orders placed against Federal Supply Schedule contracts) over $10,000, except those under the simplified acquisition threshold that are totally set aside for small business concerns in accordance with FAR 19.502-2. Follow the procedures at PGI 219.201(c)(10) regarding such reviews.
              (B) Making the review before issuance of the solicitation or contract modification and documenting it on DD Form 2579, Small Business Coordination Record (see PGI 253.219-70 for instructions on completing the form); and
              (C) Referring recommendations that have been rejected by the contracting officer to the Small Business Administration (SBA) procurement center representative. If an SBA procurement center representative is not assigned, see FAR 19.402(a).
              (11) Also conduct annual reviews to assess—
              (A) The extent of consolidation of contract requirements that has occurred (see FAR 7.107); and
              (B) The impact of those consolidations on the availability of small business concerns to participate in procurements as both contractors and subcontractors.
              (d) For information on the appointment and functions of small business specialists, see PGI 219.201(d).
              [56 FR 36353, July 31, 1991, as amended at 63 FR 41973, Aug. 6, 1998; 64 FR 2598, Jan. 15, 1999; 65 FR 39705, June 27, 2000; 65 FR 50149, Aug. 17, 2000; 65 FR 63807, Oct. 25, 2000; 69 FR 55987, Sept. 17, 2004; 71 FR 44927, Aug. 8, 2006; 73 FR 46813, Aug. 12, 2008; 75 FR 45074, Aug. 2, 2010; 79 FR 61582, Oct. 14, 2014; 79 FR 67356, Nov. 13, 2014; 79 FR 68635, Nov. 18, 2014; 80 FR 56930, Sept. 21, 2015; 83 FR 15996, Apr. 13, 2018]

              219.202
              Specific policies.

              219.202-1
              Encouraging small business participation in acquisitions.
              See PGI 205.207(d) for information on how to advertise a small business event on the Government point of entry.
              [76 FR 76319, Dec. 7, 2011, as amended at 77 FR 76937, Dec. 31, 2012; 79 FR 61582, Oct. 14, 2014]

              219.270
              Religious-related services—inclusion of nonprofit organizations.

              Source:
              83 FR 16002, Apr. 13, 2018, unless otherwise noted.

              219.270-1
              Definition.
              As used in this section—

                Nonprofit organization means any organization that is—
              (1) Described in section 501(c) of the Internal Revenue Code of 1986; and
              (2) Exempt from tax under section 501(a) of that Code.

              219.270-2
              Procedures.
              (a) To comply with section 898 of the National Defense Authorization Act for Fiscal Year 2016 (Pub. L. 114-92), when acquiring religious-related services to be performed on a U.S. military installation—
              (1) Do not preclude a nonprofit organization from competing, even when the acquisition is set aside for small businesses as identified in FAR 19.000(a)(3); and
              (2) Do not use any of the sole source exceptions at FAR 6.302-5(b)(4) through (7) for such acquisitions.
              (b) If the apparently successful offeror has not represented in its quotation or offer that it is one of the small business concerns identified in FAR 19.000(a)(3), the contracting officer shall verify that the offeror is registered in the System for Award Management database as a nonprofit organization.

              219.270-3
              Solicitation provision.

              Use the provision 252.219-7012, Competition for Religious-Related Services, in solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial items, for the acquisition of religious-related services to be performed on U.S. military installations, when the acquisition is set aside for any of the small business concerns identified in FAR 19.000(a)(3).

            Subpart 219.3—Determination of Small Business Status for Small Business Programs

              219.301-2
              Rerepresentation by a contractor that represented itself as a small business concern.
              Follow the procedures at PGI 204.606(4)(vii) for reporting modifications for rerepresentation actions.
              [76 FR 76320, Dec. 7, 2011]

              219.301-3
              Rerepresentation by a contractor that represented itself as other than a small business concern.
              Follow the procedures at PGI 204.606(4)(vii) for reporting modifications for rerepresentation actions.
              [76 FR 76320, Dec. 7, 2011]

              219.309
              Solicitation provisions and contract clauses.
              (1) Use the provision at 252.219-7000, Advancing Small Business Growth, in solicitations, including solicitations using FAR part 12 procedures for acquisition of commercial items, when the estimated annual value of the contract is expected to exceed—
              (i) The small business size standard, if expressed in dollars, for the North American Industry Classification System (NAICS) code assigned by the contracting officer; or
              (ii) $70 million, if the small business size standard is expressed as number of employees for the NAICS code assigned by the contracting officer.
              [80 FR 30116, May 26, 2015]

            Subpart 219.4—Cooperation With the Small Business Administration

              219.401
              General.
              (b) The contracting activity small business specialist is the primary activity focal point for interface with the SBA.

              219.402
              Small Business Administration procurement center representatives.
              (c)(i) Authority. This section implements section 1811 of the National Defense Authorization Act for Fiscal Year 2017 (Pub. L. 114-328).
              (ii) Definition. As used in this section—

                Humanitarian and civic assistance means any of the following activities carried out in conjunction with authorized military operations in a foreign country:
              (A) Medical, surgical, dental, and veterinary care provided in areas of a country that are rural or underserved by professionals in those fields, including education, training, and technical assistance related to the care provided.
              (B) Construction of rudimentary surface transportation systems.
              (C) Well drilling and construction of basic sanitation facilities.
              (D) Rudimentary construction and repair of public facilities. (10 U.S.C. 401(e))
              (iii) Exclusions. Unless the contracting activity requests a review, SBA procurement center representatives will not review acquisitions conducted by or for DoD if the acquisition is—
              (A) For foreign military sales (see 225.7300);
              (B) In support of humanitarian and civic assistance;
              (C) In support of a contingency operation;
              (D) Awarded pursuant to a Status of Forces Agreement or other agreement with the government of a foreign country in which U.S. Armed Forces are deployed; or
              (E) Both awarded and performed outside the United States and its outlying areas.
              [84 FR 72562, Dec. 31, 2019]

            Subpart 219.5—Small Business Total Set-Asides, Partial Set-Asides, and Reserves

              219.502
              Setting aside acquisitions.

              219.502-1
              Requirements for setting aside acquisitions.
              Do not set aside acquisitions—

              (1) For supplies that were developed and financed, in whole or in part, by Canadian sources under the U.S.-Canadian Defense Development Sharing Program; or
              (2) Excluded from procurement center representative review (see 219.402(c)(iii)).
              [84 FR 72563, Dec. 31, 2019]

              219.502-2
              Total small business set-asides.
              Unless the contracting officer determines that the criteria for set-aside cannot be met, set aside for small business concerns acquisitions for—
              (1) Construction, including maintenance and repairs, under $3 million;
              (2) Dredging under $1.5 million; and
              (3) Architect-engineer services for military construction or family housing projects under $1 million (10 U.S.C. 2855).
              [85 FR 53683, Aug. 31, 2020, as amended at 85 FR 61504, Sept. 29, 2020]

              219.502-8
              Rejecting Small Business Administration recommendations.
              (b) The designee shall be at a level no lower than chief of the contracting office.
              [56 FR 36353, July 31, 1991. Redesignated at 85 FR 53683, Aug. 31, 2020]

            Subpart 219.6—Certificates of Competency and Determinations of Responsibility

              219.602
              Procedures.
              When making a nonresponsibility determination for a small business concern, follow the procedures at PGI 219.602.
              [72 FR 20762, Apr. 26, 2007]

            Subpart 219.7—The Small Business Subcontracting Program

              219.702-70
              Statutory requirements for the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans.
              (a) Test Program. In accordance with 15 U.S.C. 637 note, DoD has established a test program to determine whether comprehensive subcontracting plans on a corporate, division, or plant-wide basis will reduce administrative burdens while enhancing subcontracting opportunities for small and small disadvantaged business concerns. This program is referred to as the Test Program for Negotiation of Comprehensive Small Business Subcontracting Plans (Test Program).
              (b) Eligibility requirements. To become and remain eligible to participate in the Test Program, a business concern is required to have furnished supplies or services (including construction) under at least three DoD contracts during the preceding fiscal year, having an aggregate value of at least $100 million.
              (c) Comprehensive subcontracting plans. (1) The Defense Contract Management Agency will designate the contracting officer who shall negotiate and approve comprehensive subcontracting plans with eligible participants on an annual basis.
              (2) Test Program participants use their comprehensive subcontracting plans, in lieu of individual subcontracting plans, when performing any DoD contract or subcontract that requires a subcontracting plan.
              (d) Assessment. The contracting officer designated to manage the comprehensive subcontracting plan shall conduct a compliance review during the fiscal year after the close of the fiscal year for which the plan is applicable. The contracting officer shall compare the approved percentage or dollar goals to the total, actual subcontracting dollars covered by the comprehensive subcontracting plan.
              (1) If the contractor has failed to meet its approved subcontracting goal(s), the contracting officer shall give the contractor written notice specifying the failure, advising of the potential for assessment of liquidated damages, permitting the contractor to demonstrate what good faith efforts have been made, and providing a period of 15 working days (or longer period at the contracting officer's discretion) within which to respond. The contracting officer may take the contractor's failure to respond to the notice as an admission that no valid explanation exists.

              (2) The contracting officer shall review all available information to determine whether the contractor has failed to make a good faith effort to comply with the plan.
              (3) If, after consideration of all relevant information, the contracting officer determines that the contractor failed to make a good faith effort to comply with the comprehensive subcontracting plan, the contracting officer shall issue a final decision. The contracting officer's final decision shall include the right of the contractor to appeal under the Disputes clause. The contracting officer shall distribute a copy of the final decision to all cognizant contracting officers for the contracts covered under the plan.
              (e) Liquidated damages. The amount of liquidated damages shall be the amount of anticipated damages sustained by the Government, including but not limited to additional expenses of administration, reporting, and contract monitoring, and shall be identified in the comprehensive subcontracting plan. Liquidated damages shall be in addition to any other remedies the Government may have.
              (f) Expiration date. The Test Program expires on December 31, 2017.
              [83 FR 15998, Apr. 13, 2018]

              219.703
              Eligibility requirements for participating in the program.
              (a) Qualified nonprofit agencies for the blind and other severely disabled, that have been approved by the Committee for Purchase from People Who Are Blind or Severely Disabled under 41 U.S.C. chapter 85, are eligible to participate in the program as a result of 10 U.S.C. 2410d and section 9077 of Pub. L. 102-396 and similar sections in subsequent Defense appropriations acts. Under this authority, subcontracts awarded to such entities may be counted toward the prime contractor's small business subcontracting goal.
              (b) A contractor may also rely on the written representation as to status of—
              (i) A historically black college or university or minority institution; or
              (ii) A qualified nonprofit agency for the blind or other severely disabled approved by the Committee for Purchase from People Who Are Blind or Severely Disabled.
              [57 FR 42630, Sept. 15, 1992, as amended at 58 FR 28465, May 13, 1993; 60 FR 13075, Mar. 10, 1995; 60 FR 41157, Aug. 11, 1995; 60 FR 61596, Nov. 30, 1995; 61 FR 50535, Sept. 26, 1996; 63 FR 11530, Mar. 9, 1998; 63 FR 41974, Aug. 6, 1998; 64 FR 51076, Sept. 21, 1999; 64 FR 62986, Nov. 18, 1999; 72 FR 20762, Apr. 26, 2007; 76 FR 58137, Sept. 20, 2011; 77 FR 35880, June 15, 2012; 79 FR 61582, Oct. 14, 2014]

              219.704
              Subcontracting plan requirements.
              (1) In those subcontracting plans which specifically identify small businesses, prime contractors shall notify the administrative contracting officer of any substitutions of firms that are not small business firms, for the small business firms specifically identified in the subcontracting plan. Notifications shall be in writing and shall occur within a reasonable period of time after award of the subcontract. Contractor-specified formats shall be acceptable.
              (2) See 215.304 for evaluation of offers in acquisitions that require a subcontracting plan.
              [72 FR 20762, Apr. 26, 2007, as amended at 79 FR 61582, Oct. 14, 2014]

              219.705
              Responsibilities of the contracting officer under the subcontracting assistance program.

              219.705-4
              Reviewing the subcontracting plan.
              (d)(i) Challenge any subcontracting plan that does not contain positive goals. A small disadvantaged business goal of less than five percent must be approved one level above the contracting officer.
              (ii) The contracting officer may use the checklist at PGI 219.705-4 when reviewing subcontracting plans in accordance with FAR 19.705-4.
              [82 FR 61480, Dec. 28, 2017]

              219.705-6
              Postaward responsibilities of the contracting officer.
              (f) See PGI 219.705-6(f) for guidance on reviewing subcontracting reports.
              [82 FR 61480, Dec. 28, 2017]

              219.706
              Responsibilities of the cognizant administrative contracting officer.
              (a)(i) The contract administration office also is responsible for reviewing, evaluating, and approving master subcontracting plans.
              (ii) The small business specialist supports the administrative contracting officer in evaluating a contractor's performance and compliance with its subcontracting plan.

              219.708
              Contract clauses.
              (b)(1)(A) Use the basic, alternate I, or alternate II clause at 252.219-7003, Small Business Subcontracting Plan (DoD Contracts), in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that contain the clause at FAR 52.219-9, Small Business Subcontracting Plan.
              (1) Use the basic clause at 252.219-7003, when using the basic, alternate I, or alternate II of FAR 52.219-9.
              (2) Use the alternate I clause at 252.219-7003, when using Alternate III of FAR 52.219-9.
              (3) Use the alternate II clause at 252.219-7003 when using the Demonstration Project described at 226.72.
              (B) In contracts with contractors that have comprehensive subcontracting plans approved under the Test Program described in 219.702-70, including contracts using FAR part 12 procedures for the acquisition of commercial items, use the clause at 252.219-7004, Small Business Subcontracting Plan (Test Program), instead of the clauses at 252.219-7003, Small Business Subcontracting Plan (DoD Contracts), FAR 52.219-9, Small Business Subcontracting Plan, and FAR 52.219-16, Liquidated Damages—Subcontracting Plan.
              (2) In contracts with contractors that have comprehensive subcontracting plans approved under the Test Program described in 219.702-70, do not use the clause at FAR 52.219-16, Liquidated Damages—Subcontracting Plan.
              (c)(1) Do not use the clause at FAR 52.219-10, Incentive Subcontracting Program, in contracts with contractors that have comprehensive subcontracting plans approved under the Test Program described in 219.702-70.
              [78 FR 37986, June 25, 2013, as amended at 81 FR 17046, Mar. 25, 2016; 83 FR 15999, Apr. 13, 2018; 84 FR 72560, Dec. 31, 2019]

            Subpart 219.8—Contracting With the Small Business Administration (The 8(a) Program)

              219.800
              General.
              (a) By Partnership Agreement (PA) between the Small Business Administration (SBA) and the Department of Defense (DoD), the SBA has delegated to the Under Secretary of Defense (Acquisition, Technology, and Logistics) its authority under paragraph 8(a)(1)(A) of the Small Business Act (15 U.S.C. 637(a)) to enter into 8(a) prime contracts, and its authority under 8(a)(1)(B) of the Small Business Act to award the performance of those contracts to eligible 8(a) Program participants. However, the SBA remains the prime contractor on all 8(a) contracts, continues to determine eligibility of concerns for contract award, and retains appeal rights under FAR 19.810. The SBA delegates only the authority to sign contracts on its behalf. Consistent with the provisions of the PA, this authority is hereby redelegated to DoD contracting officers. A copy of the PA, which includes the PA's expiration date, is available at PGI 219.800.
              (b) Contracts awarded under the PA may be awarded directly to the 8(a) participant on either a sole source or competitive basis. An SBA signature on the contract is not required.
              (c) Notwithstanding the PA, the contracting officer may elect to award a contract pursuant to the provisions of FAR Subpart 19.8.
              [67 FR 11436, Mar. 14, 2002, as amended at 72 FR 20762, Apr. 26, 2007]

              219.803
              Selecting acquisitions for the 8(a) Program.
              When selecting acquisitions for the 8(a) Program, follow the procedures at PGI 219.803.
              [72 FR 20762, Apr. 26, 2007]

              219.804
              Evaluation, offering, and acceptance.
              When processing requirements under the PA, follow the procedures at PGI 219.804.
              [72 FR 20762, Apr. 26, 2007]

              219.804-1
              Agency evaluation.
              (f) The 8(a) firms should be offered the opportunity to give a technical presentation.
              [63 FR 41974, Aug. 6, 1998]

              219.805
              Competitive 8(a).

              219.805-1
              General.
              (b)(2)(A) For acquisitions that exceed the competitive threshold, the SBA also may accept the requirement for a sole source 8(a) award on behalf of a small business concern owned by a Native Hawaiian Organization (Section 8020 of Pub. L. 109-148).
              (B) Native Hawaiian Organization, as used in this subsection and as defined by 15 U.S.C. 637(a)(15) and 13 CFR 124.3, means any community service organization serving Native Hawaiians in the State of Hawaii—
              (1) That is a not-for-profit organization chartered by the State of Hawaii;
              (2) That is controlled by Native Hawaiians; and
              (3) Whose business activities will principally benefit such Native Hawaiians.
              [70 FR 43073, July 26, 2005, as amended at 71 FR 34832, June 16, 2006]

              219.805-2
              Procedures.
              When processing requirements under the PA, follow the procedures at PGI 219.805-2 for requesting eligibility determinations.
              [72 FR 20762, Apr. 26, 2007]

              219.806
              Pricing the 8(a) contract.
              For requirements processed under the PA cited in 219.800—
              (1) The contracting officer shall obtain certified cost or pricing data from the 8(a) contractor, if required by FAR subpart 15.4; and
              (2) SBA concurrence in the negotiated price is not required. However, except for purchase orders not exceeding the simplified acquisition threshold, the contracting officer shall notify the SBA prior to withdrawing a requirement from the 8(a) Program due to failure to agree on price or other terms and conditions.
              [63 FR 33588, June 19, 1998, as amended at 67 FR 11437, Mar. 14, 2002; 67 FR 49256, July 30, 2002; 77 FR 76940, Dec. 31, 2012]

              219.808
              Contract negotiation.

              219.808-1
              Sole source.
              For sole source requirements processed under the PA, follow the procedures at PGI 219.808-1.
              (a) In lieu of the threshold at FAR 19.808-1(a), the SBA may not accept for negotiation a DoD sole-source 8(a) contract exceeding $100 million unless DoD has completed a justification in accordance with FAR 6.303 and 206.303-1(b).
              [72 FR 20762, Apr. 26, 2007, as amended at 85 FR 34530, June 5, 2020]

              219.811
              Preparing the contracts.
              When preparing awards under the PA, follow the procedures at PGI 219.811.
              [72 FR 20762, Apr. 26, 2007]

              219.811-3
              Contract clauses.
              (1) Use the clause at 252.219-7009, Section 8(a) Direct Award, instead of the clauses at FAR 52.219-11, Special 8(a) Contract Conditions, FAR 52.219-12, Special 8(a) Subcontract Conditions, and FAR 52.219-17, Section 8(a) Award, in solicitations and contracts processed in accordance with the PA cited in 219.800.

              (2) Use the clause at 252.219-7010, Notification of Competition Limited to Eligible 8(a) Participants—Partnership Agreement, in lieu of the clause at FAR 52.219-18, Notification of Competition Limited to Eligible 8(a) Participants, in competitive solicitations and contracts when the acquisition is accomplished using the procedures of FAR 19.805 and processed in accordance with the PA cited in 219.800.

              (3) Use the clause at 252.219-7011, Notification to Delay Performance, in solicitations and purchase orders issued under the PA cited in 219.800.
              [63 FR 33588, June 19, 1998, as amended at 67 FR 11437, Mar. 14, 2002; 72 FR 20762, Apr. 26, 2007; 81 FR 17046, Mar. 25, 2016; 84 FR 58336, Oct. 31, 2019]

            Subpart 219.13—Historically Underutilized Business Zone (HUBZone) Program

              219.1307
              Price evaluation preference for HUBZone small business concerns.
              (a) Also, do not use the price evaluation preference in acquisitions that use tiered evaluation of offers, until a tier is reached that considers offers from other than small business concerns.
              [71 FR 53043, Sept. 8, 2006]

            Subpart 219.70 [Reserved]

            Subpart 219.71—Pilot Mentor-Protégé Program

              Source:
              65 FR 6555, Feb. 10, 2000, unless otherwise noted.

              219.7100
              Scope.
              This subpart implements the Pilot Mentor-Protégé Program (hereafter referred to as the “Program”) established under section 831 of the National Defense Authorization Act for Fiscal Year 1991 (Public Law 101-510; 10 U.S.C. 2302 note), as amended through December 23, 2016. The purpose of the Program is to provide incentives for DoD contractors to assist protégé firms in enhancing their capabilities and to increase participation of such firms in Government and commercial contracts.
              [66 FR 47108, Sept. 11, 2001, as amended at 69 FR 74995, Dec. 15, 2004; 83 FR 12683, Mar. 23, 2018; 83 FR 54678, Oct. 31, 2018]

              219.7101
              Policy.
              DoD policy and procedures for implementation of the Program are contained in Appendix I, Policy and Procedures for the DoD Pilot Mentor-Protégé Program.

              219.7102
              General.
              The Program includes—
              (a) Mentor firms and protégé firms that meet the criteria in Appendix I, section I-102.
              (b) Mentor-protégé agreements that establish a developmental assistance program for a protégé firm.
              (c) Incentives that DoD may provide to mentor firms, including—
              (1) Reimbursement for developmental assistance costs through—
              (i) A separately priced contract line item on a DoD contract; or
              (ii) A separate contract, upon written determination by the cognizant Component Director, Small Business Programs (SBP), that unusual circumstances justify reimbursement using a separate contract; or
              (2) Credit toward applicable subcontracting goals, established under a subcontracting plan negotiated under FAR subpart 19.7 or under the DoD Comprehensive Subcontracting Test Program, for developmental assistance costs that are not reimbursed.
              [65 FR 6555, Feb. 10, 2000; 65 FR 30191, May 10, 2000, as amended at 66 FR 47108, Sept. 11, 2001; 69 FR 74995, Dec. 15, 2004; 70 FR 29645, May 24, 2005; 73 FR 46813, Aug. 12, 2008; 83 FR 12683, Mar. 23, 2018]

              219.7103
              Procedures.

              219.7103-1
              General.
              The procedures for application, acceptance, and participation in the Program are in Appendix I, Policy and Procedures for the DoD Pilot Mentor-Protégé Program. The Director, SBP, of each military department or defense agency has the authority to approve contractors as mentor firms, approve mentor-protégé agreements, and forward approved mentor-protégé agreements to the contracting officer when funding is available.
              [69 FR 74995, Dec. 15, 2004, as amended at 73 FR 46813, Aug. 12, 2008]

              219.7103-2
              Contracting officer responsibilities.
              Contracting officers must—

              (a) Negotiate an advance agreement on the treatment of developmental assistance costs for either credit or reimbursement if the mentor firm proposes such an agreement, or delegate authority to negotiate to the administrative contracting officer (see FAR 31.109).
              (b) Modify (without consideration) applicable contract(s) to incorporate the clause at 252.232-7005, Reimbursement of Subcontractor Advance Payments—DoD Pilot Mentor-Protégé Program, when a mentor firm provides advance payments to a protégé firm under the Program and the mentor firm requests reimbursement of advance payments.
              (c) Modify (without consideration) applicable contract(s) to incorporate other than customary progress payments for protégé firms in accordance with FAR 32.504(c) if a mentor firm provides such payments to a protégé firm and the mentor firm requests reimbursement.
              (d) Modify applicable contract(s) to establish a contract line item for reimbursement of developmental assistance costs if—
              (1) A DoD program manager or the cognizant Component Director, SBP, has made funds available for that purpose; and
              (2) The contractor has an approved mentor-protégé agreement.
              (e) Negotiate and award a separate contract for reimbursement of developmental assistance costs only if—
              (1) Funds are available for that purpose;
              (2) The contractor has an approved mentor-protégé agreement; and
              (3) The cognizant Component Director, SBP, has made a determination in accordance with 219.7102(c)(1)(ii).
              (f) Not authorize reimbursement for costs of assistance furnished to a protégé firm in excess of $1,000,000 in a fiscal year unless a written determination from the cognizant Component Director, SBP, is obtained.
              (g) Advise contractors of reporting requirements in Appendix I.
              (h) Provide a copy of the approved Mentor-Protégé agreement to the Defense Contract Management Agency administrative contracting officer responsible for conducting the annual performance review (see appendix I, section I-113).
              [65 FR 6555, Feb. 10, 2000; 65 FR 30191, May 10, 2000, as amended at 65 FR 50150, Aug. 17, 2000; 66 FR 47109, Sept. 11, 2001; 69 FR 74995, Dec. 15, 2004; 73 FR 46814, Aug. 12, 2008; 83 FR 12683, Mar. 23, 2018]

              219.7104
              Developmental assistance costs eligible for reimbursement or credit.
              (a) Developmental assistance provided under an approved mentor-protégé agreement is distinct from, and must not duplicate, any effort that is the normal and expected product of the award and administration of the mentor firm's subcontracts. The mentor firm must accumulate and charge costs associated with the latter in accordance with its approved accounting practices. Mentor firm costs that are eligible for reimbursement are set forth in appendix I.
              (b) Before incurring any costs under the Program, mentor firms must establish the accounting treatment of developmental assistance costs eligible for reimbursement or credit. To be eligible for reimbursement under the Program, the mentor firm must incur the costs not later than September 30, 2021.
              (c) If the mentor firm is suspended or debarred while performing under an approved mentor-protégé agreement, the mentor firm may not be reimbursed or credited for developmental assistance costs incurred more than 30 days after the imposition of the suspension or debarment.
              (d) Developmental assistance costs incurred by a mentor firm not later than September 30, 2021, that are eligible for crediting under the Program, may be credited toward subcontracting plan goals as set forth in appendix I.
              [65 FR 6555, Feb. 10, 2000; 65 FR 30191, May 10, 2000, as amended at 67 FR 77937, Dec. 20, 2002; 70 FR 29645, May 24, 2005; 76 FR 71467, Nov. 18, 2011; 77 FR 11367, Feb. 24, 2012; 83 FR 12683, Mar. 23, 2018]

              219.7105
              Reporting.
              Mentor and protégé firms must report on the progress made under mentor-protégé agreements as indicated in appendix I, section I-112.
              [65 FR 6555, Feb. 10, 2000, as amended at 69 FR 74996, Dec. 15, 2004]

              219.7106
              Performance reviews.
              The Defense Contract Management Agency will conduct annual performance reviews of all mentor-protégé agreements as indicated in appendix I, section I-113. The determinations made in these reviews should be a major factor in determinations of amounts of reimbursement, if any, that the mentor firm is eligible to receive in the remaining years of the Program participation term under the agreement.
              [65 FR 50150, Aug. 17, 2000, as amended at 69 FR 74996, Dec. 15, 2004]

          Pt. 222
          PART 222—APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS

            Sec.
            222.001
            Definitions.

              Subpart 222.1—Basic Labor Policies
              222.101
              Labor relations.
              222.101-1
              General.
              222.101-3
              Reporting labor disputes.
              222.101-3-70
              Impact of labor disputes on defense programs.
              222.101-4
              Removal of items from contractors' facilities affected by work stoppages.
              222.101-70
              Acquisition of stevedoring services during labor disputes.
              222.102
              Federal and State labor requirements.
              222.102-1
              Policy.
              222.103
              Overtime.
              222.103-4
              Approvals.

              Subpart 222.3—Contract Work Hours and Safety Standards
              222.302
              Liquidated damages and overtime pay.

              Subpart 222.4—Labor Standards for Contracts Involving Construction
              222.402
              Applicability.
              222.402-70
              Installation support contracts.
              222.403
              Statutory and regulatory requirements.
              222.403-4
              Department of Labor regulations.
              222.404
              Construction Wage Rate Requirements statute wage determinations.
              222.404-2
              General requirements.
              222.406
              Administration and enforcement.
              222.406-1
              Policy.
              222.406-6
              Payrolls and statements.
              222.406-8
              Investigations.
              222.406-9
              Withholding from or suspension of contract payments.
              222.406-10
              Disposition of disputes concerning construction contract labor standards enforcement.
              222.406-13
              Semiannual enforcement reports.

              Subpart 222.6—Contracts for Materials, Supplies, Articles, and Equipment Exceeding $15,000
              222.604
              Exemptions.
              222.604-2
              Regulatory exemptions.

              Subpart 222.8—Equal Employment Opportunity
              222.806
              Inquiries.
              222.807
              Exemptions.

              Subpart 222.10—Service Contract Labor Standards
              222.1003
              Applicability.
              222.1003-1
              General.
              222.1008
              Procedures for obtaining wage determinations.
              222.1008-1
              Obtaining wage determinations.

              Subpart 222.13—Equal Opportunity for Veterans
              222.1305
              Waivers.
              222.1308
              Complaint procedures.
              222.1310
              Solicitation provision and contract clauses.

              Subpart 222.14—Employment of Workers with Disabilities
              222.1403
              Waivers.
              222.1406
              Complaint procedures.

              Subpart 222.17—Combating Trafficking in Persons
              222.1703
              Policy.
              222.1704
              Violations and remedies.
              222.1770
              Procedures.

              Subpart 222.70—Restrictions on the Employment of Personnel for Work on Construction and Service Contracts in Noncontiguous States
              222.7000
              Scope of subpart.
              222.7001
              Definition.
              222.7002
              General.
              222.7003
              Waivers.
              222.7004
              Contract clause.

              Subpart 222.71 [Reserved]

              Subpart 222.72—Compliance with Labor Laws of Foreign Governments
              222.7201
              Contract clauses.

              Subpart 222.73—Limitations Applicable to Contracts Performed on Guam
              222.7300
              Scope of subpart.
              222.7301
              Prohibition on use of nonimmigrant aliens.
              222.7302
              Contract clause.

              Subpart 222.74—Restrictions on the Use of Mandatory Arbitration Agreements
              222.7400
              Scope of subpart.
              222.7401
              Definition.
              222.7402
              Policy.
              222.7403
              Applicability.
              222.7404
              Waiver.
              222.7405
              Contract clause.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36358, July 31, 1991, unless otherwise noted.

            222.001
            Definitions.

              Labor advisor, as used in this part, means the departmental or agency headquarters labor advisor.
            [56 FR 36358, July 31, 1991, as amended at 72 FR 20763, Apr. 26, 2007]

            Subpart 222.1—Basic Labor Policies

              222.101
              Labor relations.

              222.101-1
              General.
              Follow the procedures at PGI 222.101-1 for referral of labor relations matters to the appropriate authorities.
              [71 FR 18670, Apr. 12, 2006]

              222.101-3
              Reporting labor disputes.
              Follow the procedures at PGI 222.101-3 for reporting labor disputes.
              [71 FR 18670, Apr. 12, 2006]

              222.101-3-70
              Impact of labor disputes on defense programs.
              (a) Each department and agency shall determine the degree of impact of potential or actual labor disputes on its own programs and requirements. For guidance on determining the degree of impact, see PGI 222.101-3-70(a).
              (b) Each contracting activity shall obtain and develop data reflecting the impact of a labor dispute on its requirements and programs. Upon determining that the impact of the labor dispute is significant, the head of the contracting activity shall submit a report of findings and recommendations to the labor advisor in accordance with departmental procedures.
              [71 FR 18670, Apr. 12, 2006, as amended at 80 FR 67255, Oct. 30, 2015]

              222.101-4
              Removal of items from contractors' facilities affected by work stoppages.
              (a) When a contractor is unable to deliver urgent and critical items because of a work stoppage at its facility, the contracting officer, before removing any items from the facility, shall—
              (i) Before initiating any action, contact the labor advisor to obtain the opinion of the national office of the Federal Mediation and Conciliation Service or other mediation agency regarding the effect movement of the items would have on labor negotiations. Normally removals will not be made if they will adversely affect labor negotiations.
              (ii) Upon the recommendation of the labor advisor, provide a written request for removal of the material to the cognizant contract administration office. Include in the request the information specified at PGI 222.101-4(a)(ii).
              (iii) With the assistance of the labor advisor or the commander of the contract administration office, attempt to have both the management and the labor representatives involved agree to shipment of the material by normal means.
              (iv) If agreement for removal of the needed items cannot be reached following the procedures in paragraphs (a) (i) through (iii) of this subsection, the commander of the contract administration office, after obtaining approval from the labor advisor, may seek the concurrence of the parties to the dispute to permit movement of the material by military vehicles with military personnel. On receipt of such concurrences, the commander may proceed to make necessary arrangements to move the material.

              (v) If agreement for removal of the needed items cannot be reached following any of the procedures in paragraphs (a) (i) through (iv) of this subsection, refer the matter to the labor advisor with the information required by 222.101-3-70(b). If the labor advisor is unsuccessful in obtaining concurrence of the parties for the movement of the material and further action to obtain the material is deemed necessary, refer the matter to the agency head. Upon review and verification that the items are urgently or critically needed and cannot be moved with the consent of the parties, the agency head, on a nondelegable basis, may order removal of the items from the facility.
              [56 FR 36358, July 31, 1991, as amended at 71 FR 18670, Apr. 12, 2006]

              222.101-70
              Acquisition of stevedoring services during labor disputes.
              (a) Use the following procedures only in the order listed when a labor dispute delays performance of a contract for stevedoring services which are urgently needed.
              (1) Attempt to have management and labor voluntarily agree to exempt military supplies from the labor dispute by continuing the movement of such material.
              (2) Divert vessels to alternate ports able to provide necessary stevedoring services.
              (3) Consider contracting with reliable alternative sources of supply within the stevedoring industry.
              (4) Utilize civil service stevedores to perform the work performed by contract stevedores.
              (5) Utilize military personnel to handle the cargo which was being handled by contract stevedores prior to the labor dispute.
              (b) Notify the labor advisor when a deviation from the procedures in paragraph (a) of this subsection is required.

              222.102
              Federal and State labor requirements.

              222.102-1
              Policy.
              (1) Direct all inquiries from contractors or contractor employees regarding the applicability or interpretation of Occupational Safety and Health Act (OSHA) regulations to the Department of Labor.
              (2) Upon request, provide the address of the appropriate field office of the Occupational Safety and Health Administration of the Department of Labor.
              (3) Do not initiate any application for the suspension or relaxation of labor requirements without prior coordination with the labor advisor. Any requests for variances or alternative means of compliance with OSHA requirements must be approved by the Occupational Safety and Health Administration of the Department of Labor.
              [71 FR 18670, Apr. 12, 2006]

              222.103
              Overtime.

              222.103-4
              Approvals.
              (a) The department/agency approving official shall—
              (i) Obtain the concurrence of other appropriate approving officials; and
              (ii) Seek agreement as to the contracts under which overtime premiums will be approved when—
              (A) Two or more contracting offices have current contracts at the same contractor facility; and
              (B) The approval of overtime by one contracting office will affect the performance or cost of contracts of another office. In the absence of evidence to the contrary, a contracting officer may rely on a contractor's statement that approval of overtime premium pay for one contract will not affect performance or payments under any other contract.

            Subpart 222.3—Contract Work Hours and Safety Standards

              222.302
              Liquidated damages and overtime pay.
              Upon receipt of notification of Contract Work Hours and Safety Standards violations, the contracting officer shall—
              (1) Immediately withhold such funds as are available;
              (2) Give the contractor written notification of the withholding and a statement of the basis for the liquidated damages assessment. The written notification shall also inform the contractor of its 60 days right to appeal the assessment, through the contracting officer, to the agency official responsible for acting on such appeals; and

              (3) If funds available for withholding are insufficient to cover liquidated damages, ask the contractor to pay voluntarily such funds as are necessary to cover the total liquidated damage assessment.
              (d)(i) The assessment shall become the final administrative determination of contractor liability for liquidated damages when—
              (A) The contractor fails to appeal to the contracting agency within 60 days from the date of the withholding of funds;
              (B) The department agency, following the contractor's appeals, issues a final order which affirms the assessment of liquidated damages or waives damages of $500 or less; or
              (C) The Secretary of Labor takes final action on a recommendation of the agency head to waive or adjust liquidated damages in excess of $500.
              (ii) Upon final administrative determination of the contractor's liability for liquidated damages, the contracting officer shall transmit withheld or collected funds determined to be owed the Government as liquidated damages to the servicing finance and accounting officer for crediting to the appropriate Government Treasury account. The contracting officer shall return any excess withheld funds to the contractor.
              [56 FR 36358, July 31, 1991, as amended at 77 FR 35880, June 15, 2012]

            Subpart 222.4—Labor Standards for Contracts Involving Construction

              222.402
              Applicability.

              222.402-70
              Installation support contracts.
              (a) Apply both the Service Contract Labor Standards statute and the Construction Wage Rate Requirements statute to installation support contracts if—
              (1) The contract is principally for services but also requires a substantial and segregable amount of construction, alteration, renovation, painting, or repair work; and
              (2) The aggregate dollar value of such construction work exceeds or is expected to exceed $2,000.
              (b) Service Contract Labor Standards statute coverage under the contract. Contract installation support requirements, such as plant operation and installation services (i.e., custodial, snow removal, etc.) are subject to the Service Contract Labor Standards. Apply Service Contract Labor Standards clauses and minimum wage and fringe benefit requirements to all contract service calls or orders for such maintenance and support work.
              (c) Construction Wage Rate Requirements statute coverage under the contract. Contract construction, alteration, renovation, painting, and repair requirements (i.e., roof shingling, building structural repair, paving repairs, etc.) are subject to the Construction Wage Rate Requirements statute. Apply Construction Wage Rate Requirements clauses and minimum wage requirements to all contract service calls or orders for construction, alteration, renovation, painting, or repairs to buildings or other works.
              (d) Repairs versus maintenance. Some contract work may be characterized as either Construction Wage Rate Requirements painting/repairs or Service Contract Labor Standards maintenance. For example, replacing broken windows, spot painting, or minor patching of a wall could be covered by either the Construction Wage Rate Requirements or the Service Contract Labor Standards. In those instances where a contract service call or order requires construction trade skills (i.e., carpenter, plumber, painter, etc.), but it is unclear whether the work required is Service Contract Labor Standards maintenance or Construction Wage Rate Requirements painting/repairs, apply the following rules:
              (1) Individual service calls or orders which will require a total of 32 or more work hours to perform shall be considered to be repair work subject to the Construction Wage Rate Requirements.
              (2) Individual service calls or orders which will require less than 32 work hours to perform shall be considered to be maintenance subject to the Service Contract Labor Standards.

              (3) Painting work of 200 square feet or more to be performed under an individual service call or order shall be considered to be subject to the Construction Wage Rate Requirements statute regardless of the total work hours required.

              (e) The determination of labor standards application shall be made at the time the solicitation is prepared in those cases where requirements can be identified. Otherwise, the determination shall be made at the time the service call or order is placed against the contract. The service call or order shall identify the labor standards law and contract wage determination which will apply to the work required.
              (f) Contracting officers may not avoid application of the Construction Wage Rate Requirements statute by splitting individual tasks between orders or contracts.
              [56 FR 36358, July 31, 1991, as amended at 77 FR 35880, June 15, 2012]

              222.403
              Statutory and regulatory requirements.

              222.403-4
              Department of Labor regulations.
              Direct all questions regarding Department of Labor regulations to the labor advisor.

              222.404
              Construction Wage Rate Requirements statute wage determinations.
              Not later than April 1 of each year, each department and agency shall furnish the Administrator, Wage and Hour Division, with a general outline of its proposed construction program for the coming fiscal year. The Department of Labor uses this information to determine where general wage determination surveys will be conducted.
              (1) Indicate by individual project of $500,000 or more—
              (i) The anticipated type of construction;
              (ii) The estimated dollar value; and
              (iii) The location in which the work is to be performed (city, town, village, county, or other civil subdivision of the state).
              (2) The report format is contained in Department of Labor All Agency Memo 144, December 27, 1985.
              (3) The report control number is 1671-DOL-AN.
              [56 FR 36358, July 31, 1991, as amended at 77 FR 35880, June 15, 2012]

              222.404-2
              General requirements.
              (c)(5) Follow the procedures at PGI 222.404-2(c)(5) when seeking clarification of the proper application of construction wage rate schedules.
              [72 FR 20764, Apr. 26, 2007]

              222.406
              Administration and enforcement.

              222.406-1
              Policy.
              (a) General. The program shall also include—
              (i) Training appropriate contract administration, labor relations, inspection, and other labor standards enforcement personnel in their responsibilities; and
              (ii) Periodic review of field enforcement activities to ensure compliance with applicable regulations and instructions.
              (b) Preconstruction letters and conferences. (1) Promptly after award of the contract, the contracting officer shall provide a preconstruction letter to the prime contractor. This letter should accomplish the following, as appropriate—
              (A) Indicate that the labor standards requirements contained in the contract are based on the following statutes and regulations—
              (1) Construction Wage Rate Requirements statute.
              (2) Contract Work Hours and Safety Standards statute;
              (3) Copeland (Anti-Kickback) Act;
              (4) Parts 3 and 5 of the Secretary of Labor's Regulations (parts 3 and 5, subtitle A, title 29, CFR); and
              (5) Executive Order 11246 (Equal Employment Opportunity);
              (B) Call attention to the labor standards requirements in the contract which relate to—
              (1) Employment of foremen, laborers, mechanics, and others;
              (2) Wages and fringe benefits payments, payrolls, and statements;
              (3) Differentiation between subcontractors and suppliers;
              (4) Additional classifications;
              (5) Benefits to be realized by contractors and subcontractors in keeping complete work records;
              (6) Penalties and sanctions for violations of the labor standards provisions; and

              (7) The applicable provisions of FAR 22.403; and
              (C) Ensure that the contractor sends a copy of the preconstruction letter to each subcontractor.
              (2) Before construction begins, the contracting officer shall confer with the prime contractor and any subcontractor designated by the prime to emphasize their labor standards obligations under the contract when—
              (A) The prime contractor has not performed previous Government contracts;
              (B) The prime contractor experienced difficulty in complying with labor standards requirements on previous contracts; or
              (C) It is necessary to determine whether the contractor and its subcontractors intend to pay any required fringe benefits in the manner specified in the wage determination or to elect a different method of payment. If the latter, inform the contractor of the requirements of FAR 22.406-2.
              [56 FR 36358, July 31, 1991, as amended at 77 FR 35880, June 15, 2012]

              222.406-6
              Payrolls and statements.
              (a) Submission. Contractors who do not use Department of Labor Form WH 347 or its equivalent must submit a DD Form 879, Statement of Compliance, with each payroll report.

              222.406-8
              Investigations.
              (a) Before beginning an investigation, the investigator shall inform the contractor of the general scope of the investigation, and that the investigation will include examining pertinent records and interviewing employees. In conducting the investigation, follow the procedures at PGI 222.406-8(a).
              (c) Contractor notification. (4)(A) Notify the contractor by certified mail of any finding that it is liable for liquidated damages under the Contract Work Hours and Safety Standards (CWHSS) statute. The notification shall inform the contractor that—
              (1) It has 60 days after receipt of the notice to appeal the assessment of liquidated damages; and
              (2) The appeal must demonstrate either that the alleged violations did not occur at all, occurred inadvertently notwithstanding the exercise of due care, or the assessment was computed improperly.
              (B) If an appeal is received, the contracting officer shall process the appeal in accordance with department or agency regulations.
              (d) Contracting officer's report. Forward a detailed enforcement report or summary report to the agency head in accordance with agency procedures. Include in the report, as a minimum, the information specified at PGI 222.406-8(d).
              [56 FR 36358, July 31, 1991, as amended at 71 FR 18670, Apr. 12, 2006; 77 FR 35880, June 15, 2012]

              222.406-9
              Withholding from or suspension of contract payments.
              (a) Withholding from contract payments. The contracting officer shall contact the labor advisor for assistance when payments due a contractor are not available to satisfy that contractor's liability for Construction Wage Rate Requirements or CWHSS statute wage underpayments or liquidated damages.
              (c) Disposition of contract payments withheld or suspended—(3) Limitation on forwarding or returning funds. When disposition of withheld funds remains the final action necessary to close out a contract, the Department of Labor will retain withheld funds pending completion of an investigation or other administrative proceedings.
              (4) Liquidated damages. (A) The agency head may adjust liquidated damages of $500 or less when the amount assessed is incorrect or waive the assessment when the violations—
              (1) Were nonwillful or inadvertent; and
              (2) Occurred notwithstanding the exercise of due care by the contractor, its subcontractor, or their agents.
              (B) The agency head may recommend to the Administrator, Wage and Hour Division, that the liquidated damages over $500 be adjusted because the amount assessed is incorrect. The agency head may also recommend the assessment be waived when the violations—
              (1) Were nonwillful or inadvertent; and

              (2) Occurred notwithstanding the exercise of due care by the contractor, the subcontractor, or their agents.
              [56 FR 36358, July 31, 1991, as amended at 77 FR 35880, June 15, 2012; 82 FR 61480, Dec. 28, 2017]

              222.406-10
              Disposition of disputes concerning construction contract labor standards enforcement.
              (d) Forward the contracting officer's findings and the contractor's statement through the labor advisor.

              222.406-13
              Semiannual enforcement reports.
              Forward these reports through the head of the contracting activity to the labor advisor within 15 days following the end of the reporting period. These reports shall not include information from investigations conducted by the Department of Labor. These reports shall contain the following information, as applicable, for construction work subject to the Construction Wage Rate Requirements statute and the CWSS statute—
              (1) Period covered;
              (2) Number of prime contracts awarded;
              (3) Total dollar amount of prime contracts awarded;
              (4) Number of contractors/subcontractors against whom complaints were received;
              (5) Number of investigations conducted;
              (6) Number of contractors/subcontractors found in violation;
              (7) Amount of wage restitution found due under—
              (i) Construction Wage Rate Requirements statute; and
              (ii) CWSS statute;
              (8) Number of employees due wage restitution under—
              (i) Construction Wage Rate Requirements statute; and
              (ii) CWHSS statute;
              (9) Amount of liquidated damages assessed under the CWSS statute—
              (i) Total amount; and
              (ii) Number of contracts involved;
              (10) Number of employees and amount paid/withheld under—
              (i) Construction Wage Rate Requirements statute;
              (ii) CWSS statute;
              (iii) Copeland Act; and
              (11) Preconstruction activities—
              (i) Number of compliance checks performed
              (ii) Preconstruction letters sent.
              [56 FR 36358, July 31, 1991, as amended at 77 FR 35880, June 15, 2012]

            Subpart 222.6—Contracts for Materials, Supplies, Articles, and Equipment Exceeding $15,000

              222.604
              Exemptions.

              222.604-2
              Regulatory exemptions.
              (b) Submit all applications for such exemptions through contracting channels to the labor advisor.
              [56 FR 36358, July 31, 1991, as amended at 65 FR 14398, Mar. 16, 2000]

            Subpart 222.8—Equal Employment Opportunity

              222.806
              Inquiries.
              (b) Refer inquiries through the labor advisor.

              222.807
              Exemptions.
              (c) Follow the procedures at PGI 222.807(c) when submitting a request for an exemption.
              [71 FR 18670, Apr. 12, 2006]

            Subpart 222.10—Service Contract Labor Standards

              222.1003
              Applicability.

              222.1003-1
              General.
              For contracts having a substantial amount of construction, alteration, renovation, painting, or repair work, see 222.402-70.

              222.1008
              Procedures for obtaining wage determinations.

              222.1008-1
              Obtaining wage determinations.
              Follow the procedures at PGI 222.1008-1 regarding use of the Service Contract Act Directory of Occupations when preparing the e98.
              [72 FR 20764, Apr. 26, 2007]

            Subpart 222.13—Equal Opportunity for Veterans

              Source:
              71 FR 18670, Apr. 12, 2006, unless otherwise noted.

              222.1305
              Waivers.
              (c) Follow the procedures at PGI 222.1305(c) for submission of waiver requests.

              222.1308
              Complaint procedures.
              The contracting officer shall—
              (1) Forward each complaint received as indicated in FAR 22.1308; and
              (2) Notify the complainant of the referral. The contractor in question shall not be advised in any manner or for any reason of the complainant's name, the nature of the complaint, or the fact that the complaint was received.

              222.1310
              Solicitation provision and contract clauses.
              (a)(1) Use of the clause at FAR 52.222-35, Equal Opportunity for Veterans, with its paragraph (c), Listing Openings, also satisfies the requirement of 10 U.S.C. 2410k.
              [71 FR 18670, Apr. 12, 2006, as amended at 80 FR 67255, Oct. 30, 2015]

            Subpart 222.14—Employment of Workers with Disabilities

              222.1403
              Waivers.
              (c) The contracting officer shall submit a waiver request through contracting channels to the labor advisor. If the request is justified, the labor advisor will endorse the request and forward it for action to—
              (i) The agency head for waivers under FAR 22.1403(a). For the defense agencies, waivers must be approved by the Under Secretary of Defense for Acquisition.
              (ii) The Secretary of Defense, without the power of redelegation, for waivers under FAR 22.1403(b).

              222.1406
              Complaint procedures.
              The contracting officer shall notify the complainant of such referral. The contractor in question shall not be advised in any manner or for any reason of the complainant's name, the nature of the complaint, or the fact that the complaint was received.
              [71 FR 18671, Apr. 12, 2006]

            Subpart 222.17—Combating Trafficking in Persons

              Source:
              71 FR 62563, Oct. 26, 2006, unless otherwise noted.

              222.1703
              Policy.
              See PGI 222.1703 for additional information regarding DoD policy for combating trafficking in persons outside the United States.
              [73 FR 4115, Jan. 24, 2008]

              222.1704
              Violations and remedies.
              Follow the procedures at PGI 222.1704 for notifying the Combatant Commander if a violation occurs.
              [73 FR 4115, Jan. 24, 2008]

              222.1770
              Procedures.
              For a sample checklist for auditing compliance with Combating Trafficking in Persons policy, see the Defense Contract Management Agency checklist, Afghanistan Universal Examination Record Combating Trafficking in Persons, available at DFARS Procedures Guidance and Information 222.17.
              [80 FR 5001, Jan. 29, 2015]

            Subpart 222.70—Restrictions on the Employment of Personnel for Work on Construction and Service Contracts in Noncontiguous States

              Source:
              65 FR 14403, Mar. 16, 2000, unless otherwise noted.

              222.7000
              Scope of subpart.
              (a) This subpart implements Section 8071 of the Fiscal Year 2000 Defense Appropriations Act, Public Law 106-79, and similar sections in subsequent Defense Appropriations Acts.
              (b) This subpart applies only—
              (1) To construction and service contracts to be performed in whole or in part within a noncontiguous State; and

              (2) When the unemployment rate in the noncontiguous State is in excess of the national average rate of unemployment as determined by the Secretary of Labor.

              222.7001
              Definition.
              “Noncontiguous State,” as used in this subpart, means Alaska, Hawaii, Puerto Rico, the Northern Mariana Islands, American Samoa, Guam, the U.S. Virgin Islands, Baker Island, Howland Island, Jarvis Island, Johnston Atoll, Kingman Reef, Midway Islands, Navassa Island, Palmyra Atoll, and Wake Island.
              [65 FR 50151, Aug. 17, 2000]

              222.7002
              General.
              A contractor awarded a contract subject to this subpart must employ, for the purpose of performing that portion of the contract work within the noncontiguous State, individuals who are residents of that noncontiguous State and who, in the case of any craft or trade, possess or would be able to acquire promptly the necessary skills to perform this contract.

              222.7003
              Waivers.
              The head of the agency may waive the requirements of 222.7002 on a case-by-case basis in the interest of national security.
              [65 FR 50151, Aug. 17, 2000]

              222.7004
              Contract clause.
              Use the clause at 252.222-7000, Restrictions on Employment of Personnel, in all solicitations and contracts subject to this subpart. Insert the name of the appropriate noncontiguous State in paragraph (a) of the clause.

            Subpart 222.71 [Reserved]

            Subpart 222.72—Compliance with Labor Laws of Foreign Governments

              222.7201
              Contract clauses.
              (a) Use the clause at 252.222-7002, Compliance with Local Labor Laws (Overseas), in solicitations and contracts for services or construction to be performed outside the United States and its outlying areas.
              (b) Use the clause at 252.222-7003, Permit from Italian Inspectorate of Labor, in solicitations and contracts for porter, janitorial, or ordinary facility and equipment maintenance services to be performed in Italy.
              (c) Use the clause at 252.222-7004, Compliance with Spanish Social Security Laws and Regulations, in solicitations and contracts for services or construction to be performed in Spain.
              [62 FR 34122, June 24, 1997, as amended at 70 FR 35545, June 21, 2005]

            Subpart 222.73—Limitations Applicable to Contracts Performed on Guam

              Source:
              64 FR 52672, Sept. 30, 1999, unless otherwise noted.

              222.7300
              Scope of subpart.
              This subpart—
              (a) Implements Section 390 of the National Defense Authorization Act for Fiscal Year 1998 (Pub. L. 105-85); and
              (b) Applies to contracts for base operations support on Guam that—
              (1) Are awarded as a result of a competition conducted under OMB Circular A-76; and
              (2) Are entered into or modified on or after November 18, 1997.
              [72 FR 20764, Apr. 26, 2007]

              222.7301
              Prohibition on use of nonimmigrant aliens.
              (a) Any alien who is issued a visa or otherwise provided nonimmigrant status under Section 101(a)(15)(H)(ii) of the Immigration and Nationality Act (8 U.S.C. 1101(a)(15)(H)(ii)) is prohibited from performing work under a contract for base operations support on Guam.
              (b) Lawfully admitted citizens of the freely associated states of the Republic of the Marshall Islands, the Federated States of Micronesia, or the Republic of Palau are not subject to the prohibition in paragraph (a) of this section.
              [64 FR 52672, Sept. 30, 1999, as amended at 72 FR 20764, Apr. 26, 2007]

              222.7302
              Contract clause.

              Use the clause at 252.222-7005, Prohibition on Use of Nonimmigrant Aliens—Guam, in solicitations and contracts subject to this subpart.
              [72 FR 20764, Apr. 26, 2007]

            Subpart 222.74—Restrictions on the Use of Mandatory Arbitration Agreements

              Source:
              75 FR 27947, May 19, 2010, unless otherwise noted.

              222.7400
              Scope of subpart.
              This subpart implements section 8116 of the Defense Appropriations Act for Fiscal Year 2010 (Pub. L. 111-118) and similar sections in subsequent DoD appropriations acts.
              [76 FR 38048, June 29, 2011]

              222.7401
              Definition.

                Covered subcontractor, as used in this subpart, is defined in the clause at 252.222-7006, Restrictions on the Use of Mandatory Arbitration Agreements.
              [75 FR 76297, Dec. 8, 2010]

              222.7402
              Policy.
              (a) Departments and agencies are prohibited from using funds appropriated or otherwise made available by the Fiscal Year 2010 Defense Appropriations Act (Pub. L. 111-118) or subsequent DoD appropriations acts for any contract (including task or delivery orders and bilateral modifications adding new work) in excess of $1 million, unless the contractor agrees not to—
              (1) Enter into any agreement with any of its employees or independent contractors that requires, as a condition of employment, that the employee or independent contractor agree to resolve through arbitration—
              (i) Any claim under title VII of the Civil Rights Act of 1964; or
              (ii) Any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention; or
              (2) Take any action to enforce any provision of an existing agreement with an employee or independent contractor that mandates that the employee or independent contractor resolve through arbitration—
              (i) Any claim under title VII of the Civil Rights Act of 1964; or
              (ii) Any tort related to or arising out of sexual assault or harassment, including assault and battery, intentional infliction of emotional distress, false imprisonment, or negligent hiring, supervision, or retention.
              (b) No funds appropriated or otherwise made available by the Fiscal Year 2010 Defense Appropriations Act (Pub. L. 111-118) or subsequent DoD appropriations acts may be expended unless the contractor certifies that it requires each covered subcontractor to agree not to enter into, and not to take any action to enforce, any provision of any agreement, as described in paragraph (a) of this section, with respect to any employee or independent contractor performing work related to such subcontract.
              [75 FR 27947, May 19, 2010. Redesignated at 75 FR 76297, Dec. 8, 2010; 76 FR 38048, June 29, 2011]

              222.7403
              Applicability.
              This requirement does not apply to the acquisition of commercial items (including commercially available off-the-shelf items).
              [75 FR 76297, Dec. 8, 2010]

              222.7404
              Waiver.
              (a) The Secretary of Defense may waive, in accordance with paragraphs (b) through (d) of this section, the applicability of paragraphs (a) or (b) of 222.7402 to a particular contract or subcontract, if the Secretary or the Deputy Secretary personally determines that the waiver is necessary to avoid harm to national security interests of the United States, and that the term of the contract or subcontract is not longer than necessary to avoid such harm.
              (b) The waiver determination shall set forth the grounds for the waiver with specificity, stating any alternatives considered, and explain why each of the alternatives would not avoid harm to national security interests.

              (c) The contracting officer shall submit requests for waivers in accordance with agency procedures and PGI 222.7404(c).

              (d) The Secretary of Defense will transmit the determination to Congress and simultaneously publish it in the Federal Register, not less than 15 business days before the contract or subcontract addressed in the determination may be awarded.
              [75 FR 76297, Dec. 8, 2010, as amended at 78 FR 36113, June 17, 2013]

              222.7405
              Contract clause.
              Use the clause at 252.222-7006, Restrictions on the Use of Mandatory Arbitration Agreements, in all solicitations and contracts (including task or delivery orders and bilateral modifications adding new work) valued in excess of $1 million utilizing funds appropriated or otherwise made available by the Defense Appropriations Act for Fiscal Year 2010 (Pub. L. 111-118) or subsequent DoD appropriations acts, except in contracts for the acquisition of commercial items, including commercially available off-the-shelf items.
              [76 FR 38048, June 29, 2011]

          Pt. 223
          PART 223—ENVIRONMENT, ENERGY AND WATER EFFICIENCY, RENEWABLE ENERGY TECHNOLOGIES, OCCUPATIONAL SAFETY, AND DRUG-FREE WORKPLACE

              Subpart 223.3—Hazardous Material Identification and Material Safety Data
              Sec.
              223.302
              Policy.
              223.303
              Contract clause.
              223.370
              Safety precautions for ammunition and explosives.
              223.370-1
              Scope.
              223.370-2
              Definition.
              223.370-3
              Policy.
              223.370-4
              Procedures.
              223.370-5
              Contract clauses.

              Subpart 223.4—Use of Recovered Materials
              223.405
              Procedures.

              Subpart 223.5—Drug-Free Workplace
              223.570
              Drug-free work force.
              223.570-1
              Policy.
              223.570-2
              Contract clause.

              Subpart 223.8—Ozone-Depleting Substances
              223.803
              Policy.

              Subpart 223.70 [Reserved]

              Subpart 223.71—Storage, Treatment, and Disposal of Toxic or Hazardous Materials
              223.7101
              Definitions.
              223.7102
              Policy.
              223.7103
              Procedures.
              223.7104
              Exceptions.
              223.7105
              Reimbursement.
              223.7106
              Contract clause.

              Subpart 223.72—Safeguarding Sensitive Conventional Arms, Ammunition, and Explosives
              223.7200
              Definition.
              223.7201
              Policy.
              223.7202
              Preaward responsibilities.
              223.7203
              Contract clause.

              Subpart 223.73—Minimizing the Use of Materials Containing Hexavalent Chromium
              223.7300
              Definition.
              223.7301
              Policy.
              223.7302
              Authorities.
              223.7303
              Prohibition.
              223.7304
              Exceptions.
              223.7305
              Authorization and approval.
              223.7306
              Contract clause.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36365, July 31, 1991, unless otherwise noted.

            Subpart 223.3—Hazardous Material Identification and Material Safety Data

              223.302
              Policy.
              (e) The contracting officer shall also provide hazard warning labels, that are received from apparent successful offerors, to the cognizant safety officer.
              [70 FR 73150, Dec. 9, 2005]

              223.303
              Contract clause.
              Use the clause at 252.223-7001, Hazard Warning Labels, in solicitations and contracts which require submission of hazardous material data sheets (see FAR 23.302(c)).
              [56 FR 67215, Dec. 30, 1991]

              223.370
              Safety precautions for ammunition and explosives.

              223.370-1
              Scope.
              (a) This section applies to all acquisitions involving the use of ammunition and explosives, including acquisitions for—
              (1) Development;
              (2) Testing;
              (3) Research;
              (4) Manufacturing;
              (5) Handling or loading;
              (6) Assembling;
              (7) Packaging;
              (8) Storage;
              (9) Transportation;
              (10) Renovation;
              (11) Demilitarization;
              (12) Modification;
              (13) Repair;
              (14) Disposal;
              (15) Inspection; or
              (16) Any other use, including acquisitions requiring the use or the incorporation of materials listed in paragraph (b) of this subsection for initiation, propulsion, or detonation as an integral or component part of an explosive, an ammunition, or explosive end item or weapon system.
              (b) This section does not apply to acquisitions solely for—
              (1) Inert components containing no explosives, propellants, or pyrotechnics;
              (2) Flammable liquids;
              (3) Acids;
              (4) Oxidizers;
              (5) Powdered metals; or
              (6) Other materials having fire or explosive characteristics.

              223.370-2
              Definition.

                Ammunition and explosives, as used in this section, is defined in the clause at 252.223-7002, Safety Precautions for Ammunition and Explosives.

              223.370-3
              Policy.
              (a) DoD policy is to ensure that its contractors take reasonable precautions in handling ammunition and explosives so as to minimize the potential for mishaps.
              (b) This policy is implemented by DoD Manual 4145.26-M, DoD Contractors' Safety Manual for Ammunition and Explosives, which is incorporated into contracts under which ammunition and explosives are handled. The manual contains mandatory safety requirements for contractors. When work is to be performed on a Government-owned installation, the contracting officer may use the ammunition and explosives regulation of the DoD component or installation as a substitute for, or supplement to, DoD Manual 4145.26-M, as long as the contract cites these regulations.
              [56 FR 36365, July 31, 1991, as amended at 70 FR 73150, Dec. 9, 2005]

              223.370-4
              Procedures.
              Follow the procedures at PGI 223.370-4.
              [70 FR 73151, Dec. 9, 2005]

              223.370-5
              Contract clauses.
              Use the clauses at 252.223-7002, Safety Precautions for Ammunition and Explosives, and 252.223-7003, Change in Place of Performance—Ammunition and Explosives, in all solicitations and contracts for acquisition to which this section applies.

            Subpart 223.4—Use of Recovered Materials

              223.405
              Procedures.
              Follow the procedures at PGI 223.405.
              [70 FR 73151, Dec. 9, 2005]

            Subpart 223.5—Drug-Free Workplace

              Source:
              57 FR 32737, July 23, 1992, unless otherwise noted.

              223.570
              Drug-free work force.

              223.570-1
              Policy.
              DoD policy is to ensure that its contractors maintain a program for achieving a drug-free work force.
              [57 FR 32737, July 23, 1992. Redesignated at 70 FR 73151, Dec. 9, 2005]

              223.570-2
              Contract clause.
              (a) Use the clause at 252.223-7004, Drug-Free Work Force, in all solicitations and contracts—

              (1) That involve access to classified information; or

              (2) When the contracting officer determines that the clause is necessary for reasons of national security or for the purpose of protecting the health or safety of those using or affected by the product of, or performance of, the contract.
              (b) Do not use the clause in solicitations and contracts—
              (1) For commercial items;
              (2) When performance or partial performance will be outside the United States and its outlying areas, unless the contracting officer determines such inclusion to be in the best interest of the Government; or
              (3) When the value of the acquisition is at or below the simplified acquisition threshold.
              [57 FR 32737, July 23, 1992, as amended at 64 FR 2598, Jan. 15, 1999; 70 FR 35545, June 21, 2005. Redesignated at 70 FR 73151, Dec. 9, 2005]

            Subpart 223.8—Ozone-Depleting Substances

              223.803
              Policy.
              No DoD contract may include a specification or standard that requires the use of a class I ozone-depleting substance or that can be met only through the use of such a substance unless the inclusion of the specification or standard is specifically authorized at a level no lower than a general or flag officer or a member of the Senior Executive Service of the requiring activity in accordance with Section 326, Public Law 102-484 (10 U.S.C. 2301 (repealed) note). This restriction is in addition to any imposed by the Clean Air Act and applies after June 1, 1993, to all DoD contracts, regardless of place of performance.
              [71 FR 75892, Dec. 19, 2006]

            Subpart 223.70 [Reserved]

            Subpart 223.71—Storage, Treatment, and Disposal of Toxic or Hazardous Materials

              Source:
              79 FR 58697, Sept. 30, 2014, unless otherwise noted.

              223.7101
              Definitions.
              As used in this subpart, the terms storage and toxic or hazardous materials are defined in the clause at 252.223-7006, Prohibition on Storage, Treatment, and Disposal of Toxic or Hazardous Materials.

              223.7102
              Policy.
              (a) 10 U.S.C. 2692 prohibits storage, treatment, or disposal on DoD installations of toxic or hazardous materials that are not owned either by DoD or by a member of the armed forces (or a dependent of the member) assigned to or provided military housing on the installation, unless an exception in 223.7104 applies.
              (b) When storage of toxic or hazardous materials is authorized based on an imminent danger, the storage provided shall be temporary and shall cease once the imminent danger no longer exists. In all other cases of storage or disposal, the storage or disposal shall be terminated as determined by the Secretary of Defense.

              223.7103
              Procedures.
              (a)(1) Storage, treatment, or disposal of toxic or hazardous materials not owned by DoD on a DoD installation is prohibited unless—
              (i) One or more of the exceptions set forth in 223.7104(a) is met including requisite approvals; or
              (ii) Secretary of Defense authorization is obtained under the conditions set forth in 223.7104(b).
              (2) When storage, treatment, or disposal of toxic or hazardous materials not owned by DoD is authorized in accordance with this subpart, the contract shall specify the types and quantities of toxic or hazardous materials that may be temporarily stored, treated, or disposed of in connection with the contract or as a result of the authorized use of a DoD facility or space launch facility. All solicitations and contracts shall specify the conditions under which storage, treatment, or disposal is authorized.
              (b) If the contracting officer is uncertain as to whether particular activities are prohibited or fall under one of the exceptions in 223.7104, the contracting officer should seek advice from the cognizant office of counsel.

              223.7104
              Exceptions.
              (a) The prohibition of 10 U.S.C. 2692 does not apply to any of the following:
              (1) The storage, treatment, or disposal of materials that will be or have been used in connection with an activity of DoD or in connection with a service to be performed on a DoD installation for the benefit of DoD.
              (2) The storage of strategic and critical materials in the National Defense Stockpile under an agreement for such storage with the Administrator of General Services Administration.
              (3) The temporary storage or disposal of explosives in order to protect the public or to assist agencies responsible for Federal, State, or local law enforcement in storing or disposing of explosives when no alternative solution is available, if such storage or disposal is made in accordance with an agreement between the Secretary of Defense and the head of the Federal, State, or local agency concerned.
              (4) The temporary storage or disposal of explosives in order to provide emergency lifesaving assistance to civil authorities.
              (5) The disposal of excess explosives produced under a DoD contract, if the head of the military department concerned determines, in each case, that an alternative feasible means of disposal is not available to the contractor, taking into consideration public safety, available resources of the contractor, and national defense production requirements.
              (6) The temporary storage of nuclear materials or nonnuclear classified materials in accordance with an agreement with the Secretary of Energy.
              (7) The storage of materials that constitute military resources intended to be used during peacetime civil emergencies in accordance with applicable DoD regulations.
              (8) The temporary storage of materials of other Federal agencies in order to provide assistance and refuge for commercial carriers of such material during a transportation emergency.
              (9) The storage of any material that is not owned by DoD, if the Secretary of the military department concerned determines that the material is required or generated in connection with the authorized and compatible use of a facility of DoD, including the use of such a facility for testing material or training personnel.
              (10) The treatment and disposal of any toxic or hazardous materials not owned by DoD, if the Secretary of the military department concerned determines that the material is required or generated in connection with the authorized and compatible use of a facility of that military department and the Secretary enters into a contract or agreement with the prospective user that—
              (i) Is consistent with the best interest of national defense and environmental security; and
              (ii) Provides for the prospective user's continued financial and environmental responsibility and liability with regard to the material.
              (11) The storage of any material that is not owned by DoD if the Secretary of the military department concerned determines that the material is required or generated in connection with the use of a space launch facility located on a DoD installation or on other land controlled by the United States.
              (b) The Secretary of Defense may grant an exception to the prohibition in 10 U.S.C. 2692 when essential to protect the health and safety of the public from imminent danger if the Secretary otherwise determines the exception is essential and if the storage or disposal authorized does not compete with private enterprise.

              223.7105
              Reimbursement.
              The Secretary of Defense may assess a charge for any storage or disposal provided under this subpart. If a charge is to be assessed, then such assessment shall be identified in the contract with payment to the Government on a reimbursable cost basis.

              223.7106
              Contract clause.
              Use the basic or the alternate of the clause at 252.223-7006, Prohibition on Storage, Treatment, and Disposal of Toxic or Hazardous Materials, in all solicitations and contracts which require, may require, or permit contractor access to a DoD installation.

              (a) Use the basic clause, unless a determination is made under 223.7104(a)(10).

              (b) Use the alternate I clause when the Secretary of the military department issues a determination under the exception at 223.7104(a)(10).

            Subpart 223.72—Safeguarding Sensitive Conventional Arms, Ammunition, and Explosives

              Source:
              61 FR 7743, Feb. 29, 1996, unless otherwise noted.

              223.7200
              Definition.
              “Arms, ammunition, and explosives (AA&E),” as used in this subpart, means those items within the scope (chapter 1, paragraph B) of DoD 5100.76-M, Physical Security of Sensitive Conventional Arms, Ammunition, and Explosives.

              223.7201
              Policy.
              (a) The requirements of DoD 5100.76-M, Physical Security of Sensitive Conventional Arms, Ammunition, and Explosives, shall be applied to contracts when—
              (1) AA&E will be provided to the contractor or subcontractor as Government-furnished property; or
              (2) The principal development, production, manufacture, or purchase of AA&E is for DoD use.
              (b) The requirements of DoD 5100.76-M need not be applied to contracts when—
              (1) The AA&E to be acquired under the contract is a commercial item within the meaning of FAR 2.101; or
              (2) The contract will be performed in a Government-owned contractor-operated ammunition production facility. However, if subcontracts issued under such a contract will meet the criteria of paragraph (a) of this section, the requirements of DoD 5100.76-M shall apply.

              223.7202
              Preaward responsibilities.
              When an acquisition involves AA&E, technical or requirements personnel shall specify in the purchase request—
              (a) That AA&E is involved; and
              (b) Which physical security requirements of DoD 5100.76-M apply.

              223.7203
              Contract clause.
              Use the clause at 252.223-7007, Safeguarding Sensitive Conventional Arms, Ammunition, and Explosives, in all solicitations and contracts to which DoD 5100.76-M applies, in accordance with the policy at 223.7201. Complete paragraph (b) of the clause based on information provided by cognizant technical or requirements personnel.
              [61 FR 7743, Feb. 29, 1996; 61 FR 18195, Apr. 24, 1996]

            Subpart 223.73—Minimizing the Use of Materials Containing Hexavalent Chromium

              Source:
              76 FR 25575, May 5, 2011, unless otherwise noted.

              223.7300
              Definition.

                Legacy system, as used in this subpart, means any program that has passed Milestone A in the defense acquisition management system, as defined in DoD Instruction 5000.02.

              223.7301
              Policy.
              It is DoD policy to minimize hexavalent chromium (an anti-corrosive) in items acquired by DoD (deliverables and construction material), due to the serious human health and environmental risks related to its use. Executive Order 13423, section 3, paragraph (a) requires that the heads of agencies reduce or eliminate the acquisition and use of toxic or hazardous chemicals. Executive Order 13514 requires that the heads of agencies are responsible for “reducing and minimizing the quantity of toxic and hazardous chemicals and materials acquired, used, or disposed of.”

              223.7302
              Authorities.
              (a) Executive Order 13423 of January 24, 2007, Strengthening Federal Environmental, Energy, and Transportation Management.
              (b) Executive Order 13514 of October 5, 2009, Federal Leadership in Environmental, Energy, and Economic Performance.

              223.7303
              Prohibition.
              (a) Except as provided in 223.7304 and 223.7305, no contract may include a specification or standard that results in a deliverable or construction material containing more than 0.1 percent hexavalent chromium by weight in any homogeneous material in the deliverable or construction material where proven substitutes are available that provide acceptable performance for the application.
              (b) This prohibition is in addition to any imposed by the Clean Air Act regardless of the place of performance.

              223.7304
              Exceptions.
              The prohibition in 223.7303 does not apply to—
              (a) Legacy systems and their related parts, subsystems, and components that already contain hexavalent chromium. However, alternatives to hexavalent chromium shall be considered by the appropriate official during system modifications, follow-on procurements of legacy systems, or maintenance procedure updates; and
              (b) Additional sustainment related contracts (e.g., parts, services) for a system in which use of hexavalent chromium was previously approved.

              223.7305
              Authorization and approval.
              (a) The prohibition in 223.7303 does not apply to critical defense applications if no substitute can meet performance requirements. The DoD policy of April 8, 2009, “Minimizing the Use of Hexavalent Chromium,” contains requirements for weighing hexavalent chromium versus substitutes. DoD Program Managers must consider the following factors—
              (1) Cost effectiveness of alternative materials or processes;
              (2) Technical feasibility of alternative materials or processes;
              (3) Environment, safety, and occupational health risks associated with the use of the hexavalent chromium or substitute materials in each specific application;
              (4) Achieving a DoD Manufacturing Readiness Level of at least eight for any qualified alternative;
              (5) Materiel availability of hexavalent chromium and the proposed alternatives over the projected life span of the system; and
              (6) Corrosion performance difference of alternative materials or processes as determined by agency corrosion subject matter experts.
              (b) However, unless an exception in 223.7304 applies, the incorporation of hexavalent chromium in items acquired by DoD shall be specifically authorized at a level no lower than a general or flag officer or a member of the Senior Executive Service from the Program Executive Office or equivalent level, in coordination with the component Corrosion Control and Prevention Executive. Follow the procedures in PGI 223.7305.

              223.7306
              Contract clause.
              Unless an exception in 223.7304 applies, or use has been authorized in accordance with 223.7305, use the clause at 252.223-7008, Prohibition of Hexavalent Chromium, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that are for supplies, maintenance and repair services, or construction. .
              [76 FR 25575, May 5, 2011, as amended at 78 FR 37986, June 25, 2013]

          Pt. 224
          PART 224—PROTECTION OF PRIVACY AND FREEDOM OF INFORMATION

              Subpart 224.1—Protection of Individual Privacy
              Sec.
              224.103
              Procedures.

              Subpart 224.2—Freedom of Information Act
              224.203
              Policy.

            Authority:
            41 U.S.C. 421 and 48 CFR chapter 1.

            Source:
            56 FR 36367, July 31, 1991, unless otherwise noted.

            Subpart 224.1—Protection of Individual Privacy

              224.103
              Procedures.

              (b)(2) DoD rules and regulations are contained in DoDD 5400.11, Department of Defense Privacy Program, and DoD 5400.11-R, Department of Defense Privacy Program.

            Subpart 224.2—Freedom of Information Act

              224.203
              Policy.
              (a) DoD implementation is in DoDD 5400.7, DoD Freedom of Information Act Program, and DoD 5400.7-R, DoD Freedom of Information Act Program.
              [56 FR 36367, July 31, 1991. Redesignated at 62 FR 34122, June 24, 1997]

          Pt. 225
          PART 225—FOREIGN ACQUISITION

            Sec.
            225.001
            General.
            225.003
            Definitions.
            225.070
            Reporting of acquisition of end products manufactured outside the United States.

              Subpart 225.1—Supplies
              225.101
              General.
              225.103
              Exceptions.
              225.105
              Determining reasonableness of cost.
              225.170
              Acquisition from or through other Government agencies.

              Subpart 225.2—Construction Materials
              225.202
              Exceptions.
              225.206
              Noncompliance.

              Subpart 225.3—Contracts Performed Outside the United States
              225.301
              Contractor personnel in a designated operational area or supporting a diplomatic or consular mission outside the United States.
              225.301-1
              Scope.
              225.301-4
              Contract clause.
              225.302
              Contractors performing private security functions outside the United States.
              225.302-6
              Contract clause.
              225.370
              Contracts requiring performance or delivery in a foreign country.
              225.371
              Contractor personnel supporting U.S. Armed Forces deployed outside the United States.
              225.371-1
              Scope.
              225.371-2
              Definition.
              225.371-3
              Government support.
              225.371-4
              Law of war training.
              225.371-5
              Contract clauses.
              225.372
              Antiterrorism/force protection.
              225.372-1
              General.
              225.372-2
              Contract clause.
              225.373
              Contract administration in support of contingency operations.
              225.374
              Use of electronic business tools.

              Subpart 225.4—Trade Agreements
              225.401
              Exceptions.
              225.401-70
              End products subject to trade agreements.
              225.401-71
              Products or services in support of operations in Afghanistan.
              225.402
              General.
              225.403
              World Trade Organization Government Procurement Agreement and Free Trade Agreements.
              225.408
              Procedures.

              Subpart 225.5—Evaluating Foreign Offers—Supply Contracts
              225.502
              Application.
              225.503
              Group offers.
              225.504
              Evaluation examples.

              Subpart 225.7—Prohibited Sources
              225.701
              [Reserved]
              225.701-70
              Exception.
              225.770
              Prohibition on acquisition of certain items from Communist Chinese military companies.
              225.770-1
              Definitions.
              225.770-2
              Prohibition.
              225.770-3
              Exceptions.
              225.770-4
              Identifying items covered by the USML or the 600 series of the CCL.
              225.770-5
              Waiver of prohibition.
              225.771
              Prohibition on contracting or subcontracting with a firm that is owned or controlled by the government of a country that is a state sponsor of terrorism.
              225.771-0
              Scope.
              225.771-1
              Definition.
              225.771-2
              Prohibition.
              225.771-3
              Notification.
              225.771-4
              Waiver of prohibition.
              225.771-5
              Solicitation provision.
              225.772
              Prohibition on acquisition of certain foreign commercial satellite services.
              225.772-0
              Scope.
              225.772-1
              Definitions.
              225.772-2
              Prohibitions.
              225.772-3
              Procedures.
              225.772-4
              Exception.
              225.772-5
              Solicitation provision and contract clauses.

              Subpart 225.8—Other International Agreements and Coordination
              225.802
              Procedures.
              225.802-70
              Contracts for performance outside the United States and Canada.
              225.802-71
              End use certificates.
              225.870
              Contracting with Canadian contractors.
              225.870-1
              General.
              225.870-2
              Solicitation of Canadian contractors.
              225.870-3
              Submission of offers.
              225.870-4
              Contracting procedures.

              225.870-5
              Contract administration.
              225.870-6
              Termination procedures.
              225.870-7
              Acceptance of Canadian supplies.
              225.870-8
              Industrial security.
              225.871
              North Atlantic Treaty Organization (NATO) cooperative projects.
              225.871-1
              Scope.
              225.871-2
              Definitions.
              225.871-3
              General.
              225.871-4
              Statutory waivers.
              225.871-5
              Directed subcontracting.
              225.871-6
              Disposal of property.
              225.871-7
              Congressional notification.
              225.872
              Contracting with qualifying country sources.
              225.872-1
              General.
              225.872-2
              Applicability.
              225.872-3
              Solicitation procedures.
              225.872-4
              Individual determinations.
              225.872-5
              Contract administration.
              225.872-6
              Request for audit services.
              225.872-7
              Industrial security for qualifying countries.
              225.872-8
              Subcontracting with qualifying country sources.
              225.873
              Waiver of United Kingdom commercial exploitation levies.
              225.873-1
              Policy.
              225.873-2
              Procedures.

              Subpart 225.9—Customs and Duties
              225.900-70
              Definition.
              225.901
              Policy.
              225.902
              Procedures.
              225.903
              Exempted supplies.

              Subpart 225.10—Additional Foreign Acquisition Regulations
              225.1070
              Clause deviations in overseas contracts.

              Subpart 225.11—Solicitation Provisions and Contract Clauses
              225.1100
              Scope of subpart.
              225.1101
              Acquisition of supplies.
              225.1103
              Other provisions and clauses.

              Subpart 225.70—Authorization Acts, Appropriations Acts, and Other Statutory Restrictions on Foreign Acquisition
              225.7000
              Scope of subpart.
              225.7001
              Definitions.
              225.7002
              Restrictions on food, clothing, fabrics, and hand or measuring tools.
              225.7002-1
              Restrictions.
              225.7002
              Restrictions on food, clothing, fabrics, hand or measuring tools, and flags.
              225.7002-3
              Contract clauses.
              225.7003
              Restrictions on acquisition of specialty metals.
              225.7003-1
              Definitions.
              225.7003-2
              Restrictions.
              225.7003-3
              Exceptions.
              225.7003-4
              [Reserved]
              225.7003-5
              Solicitation provision and contract clauses.
              225.7004
              Restriction on acquisition of foreign buses.
              225.7004-1
              Restriction.
              225.7004-2
              Applicability.
              225.7004-3
              Exceptions.
              225.7004-4
              Waiver.
              225.7005
              [Reserved]
              225.7006
              Restrictions on air circuit breakers for naval vessels.
              225.7006-1
              Restriction.
              225.7006-2
              Exceptions.
              225.7006-3
              Waiver.
              225.7006-4
              Solicitation provision and contract clause.
              225.7007
              Restrictions on anchor and mooring chain.
              225.7007-1
              Restrictions.
              225.7007-2
              Waiver.
              225.7007-3
              Contract clause.
              225.7008
              Waiver of restrictions of 10 U.S.C. 2534.
              225.7009
              Restriction on ball and roller bearings.
              225.7009-1
              Scope.
              225.7009-2
              Restriction.
              225.7009-3
              Exception.
              225.7009-4
              Waiver.
              225.7009-5
              Contract clause.
              225.7010
              Restriction on certain naval vessel components.
              225.7010-1
              Restriction.
              225.7010-2
              Exceptions.
              225.7010-3
              Waiver.
              225.7010-4
              Implementation.
              225.7011
              Restriction on carbon, alloy, and armor steel plate.
              225.7011-1
              Restriction.
              225.7011-2
              Waiver.
              225.7011-3
              Contract clause.
              225.7012
              Restriction on supercomputers.
              225.7012-1
              Restriction.
              225.7012-2
              Waiver.
              225.7012-3
              Contract clause.
              225.7013
              Restrictions on construction or repair of vessels in foreign shipyards.
              225.7014
              Restrictions on military construction.
              225.7015
              Restriction on overseas architect-engineer services.
              225.7017
              Utilization of domestic photovoltaic devices.
              225.7017-1
              Definitions.
              225.7017-2
              Restriction.
              225.7017-3
              Exceptions.
              225.7017-4
              Solicitation provision and contract clause.
              225.7018
              Restriction on acquisition of certain magnets, tantalum, and tungsten.
              225.7018-1
              Definitions.
              225.7018-2
              Restriction.
              225.7018-3
              Exceptions.
              225.7018-4
              Nonavailability determination.
              225.7018-5
              Contract clause.

              Subpart 225.71—Other Restrictions on Foreign Acquisition
              225.7100
              Scope of subpart.
              225.7101
              Definitions.
              225.7102
              Forgings.
              225.7102-1
              Policy.
              225.7102-2
              Exceptions.
              225.7102-3
              Waiver.
              225.7102-4
              Contract clause.

              Subpart 225.72—Reporting Contract Performance Outside the United States
              225.7201
              Policy.
              225.7202
              Exception.
              225.7203
              Contracting officer distribution of reports.
              225.7204
              Solicitation provision and contract clauses.

              Subpart 225.73—Acquisitions for Foreign Military Sales
              225.7300
              Scope of subpart.
              225.7301
              General.
              225.7301-1
              Requirement to use firm-fixed-price contracts.
              225.7301-2
              Solicitation approval for sole source contracts.
              225.7302
              Preparation of letter of offer and acceptance.
              225.7303
              Pricing acquisitions for FMS.
              225.7303-1
              Contractor sales to other foreign customers.
              225.7303-2
              Cost of doing business with a foreign government or an international organization.
              225.7303-3
              Government-to-government agreements.
              225.7303-4
              Contingent fees.
              225.7303-5
              Acquisitions wholly paid for from nonrepayable funds.
              225.7304
              FMS customer involvement.
              225.7305
              Limitation of liability.
              225.7306
              Offset arrangements.
              225.7307
              Contract clauses.

              Subpart 225.74 [Reserved]

              Subpart 225.75—Balance of Payments Program
              225.7500
              Scope of subpart.
              225.7501
              Policy.
              225.7502
              Procedures.
              225.7503
              Contract clauses.

              Subpart 225.76—Secondary Arab Boycott of Israel
              225.7601
              Restriction.
              225.7602
              Procedures.
              225.7603
              Exceptions.
              225.7604
              Waivers.
              225.7605
              Solicitation provision.

              Subpart 225.77—Acquisitions in Support of Operations in Afghanistan
              225.7700
              Scope.
              225.7701
              Definitions.
              225.7702
              Acquisitions not subject to the enhanced authority to acquire products or services from Afghanistan.
              225.7702-1
              Acquisition of small arms.
              225.7702-2
              Acquisition of uniform components for the Afghan military or the Afghan police.
              225.7703
              Enhanced authority to acquire products or services from Afghanistan.
              225.7703-1
              Acquisition procedures.
              225.7703-2
              Determination requirements.
              225.7703-3
              Evaluating offers.
              225.7703-4
              Solicitation provisions and contract clauses.
              225.7704
              Acquisitions of products and services from South Caucasus/Central and South Asian (SC/CASA) state in support of operations in Afghanistan.
              225.7704-1
              Applicability of trade agreements.
              225.7704-2
              Applicability of Balance of Payments Program.
              225.7704-3
              Solicitation provisions and contract clauses.
              225.7705
              Prohibition on use of funds for contracts of certain programs and projects in Afghanistan that cannot be safely accessed.
              225.7705-1
              Prohibition.
              225.7705-2
              Waiver of prohibition.
              225.7705-3
              Procedures.

              Subpart 225.78—Acquisitions in Support of Geographic Combatant Command's Theater Security Cooperation Efforts
              225.7801
              Policy.

              Subpart 225.79—EXPORT CONTROL
              225.7900
              Scope of subpart.
              225.7901
              Export-controlled items.
              225.7901-1
              Definitions.
              225.7901-2
              General.
              225.7901-3
              Policy.
              225.7901-4
              Contract clause.
              225.7902
              Defense Trade Cooperation Treaties.
              225.7902-1
              Definitions.
              225.7902-2
              Purpose.
              225.7902-3
              Policy.
              225.7902-4
              Procedures.
              225.7902-5
              Solicitation provision and contract clause.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36367, July 31, 1991, unless otherwise noted.

            225.001
            General.
            For guidance on evaluating offers of foreign end products, see PGI 225.001.
            [70 FR 73154, Dec. 9, 2005]

            225.003
            Definitions.
            As used in this part—

              600 series of the Commerce Control List means the series of 5-character export control classification numbers (ECCNs) of the Commerce Control List of the Export Administration Regulations in 15 CFR part 774, supplement no. 1, that have a “6” as the third character. The 600 series constitutes the munitions and munitions-related ECCNs within the larger Commerce Control List. (See definition of “600 series” in 15 CFR 772.)

              Caribbean Basin country end product includes petroleum or any product derived from petroleum.

              Communist Chinese military company means any entity, regardless of geographic location, that is—
            (1) A part of the commercial or defense industrial base of the People's Republic of China (including a subsidiary or affiliate of such entity); or
            (2) Owned or controlled by, or affiliated with, an element of the Government or armed forces of the People's Republic of China.

              Defense equipment means any equipment, item of supply, component, or end product purchased by DoD.

              Domestic concern means—
            (1) A concern incorporated in the United States (including a subsidiary that is incorporated in the United States, even if the parent corporation is a foreign concern; or
            (2) An unincorporated concern having its principal place of business in the United States.

              Domestic end product has the meaning given in the clauses at 252.225-7001, Buy American and Balance of Payments Program; and 252.225-7036, Buy American —Free Trade Agreements—Balance of Payments Program, instead of the meaning in FAR 25.003.

              Eligible product means, instead of the definition in FAR 25.003—
            (1) A foreign end product that—
            (i) Is in a category listed in 225.401-70; and
            (ii) Is not subject to discriminatory treatment, due to the applicability of a trade agreement to a particular acquisition;
            (2) A foreign construction material that is not subject to discriminatory treatment, due to the applicability of a trade agreement to a particular acquisition; or
            (3) A foreign service that is not subject to discriminatory treatment, due to the applicability of a trade agreement to a particular acquisition.

              Foreign concern means any concern other than a domestic concern.

              Free Trade Agreement country does not include Oman.

              Nonqualifying country means a country other than the United States or a qualifying country.

              Nonqualifying country component means a component mined, produced, or manufactured in a nonqualifying country.

              Qualifying country means a country with a reciprocal defense procurement memorandum of understanding or international agreement with the United States in which both countries agree to remove barriers to purchases of supplies produced in the other country or services performed by sources of the other country, and the memorandum or agreement complies, where applicable, with the requirements of section 36 of the Arms Export Control Act (22 U.S.C. 2776) and with 10 U.S.C. 2457. Accordingly, the following are qualifying countries:

                Australia
                Austria
                Belgium
                Canada
                Czech Republic
                Denmark
                Egypt
                Estonia
                Finland
                France
                Germany
                Greece
                Israel
                Italy
                Japan
                Latvia
                Luxembourg
                Netherlands
                Norway
                Poland
                Portugal
                Slovenia
                Spain
                Sweden
                Switzerland
                Turkey
                United Kingdom of Great Britain and Northern Ireland.

              Qualifying country component and qualifying country end product are defined in the clauses at 252.225-7001, Buy American and Balance of Payments Program; and 252.225-7036, Buy American —Free Trade Agreements—Balance of Payments Program. Qualifying country end product is also defined in the clause at 252.225-7021, Trade Agreements.

              Qualifying country offer means an offer of a qualifying country end product, including the price of transportation to destination.

              Source, when restricted by words such as foreign, domestic, or qualifying country, means the actual manufacturer or producer of the end product or component.

              South Caucasus/Central and South Asian (SC/CASA) state means Armenia, Azerbaijan, Georgia, Kazakhstan, Kyrgyzstan, Pakistan, Tajikistan, Turkmenistan, or Uzbekistan.

              South Caucasus/Central and South Asian (SC/CASA) state construction material means construction material that—
            (1) Is wholly the growth, product, or manufacture of an SC/CASA state; or
            (2) In the case of a construction material that consists in whole or in part of materials from another country, has been substantially transformed in an SC/CASA state into a new and different construction material distinct from the material from which it was transformed.

              South Caucasus/Central and South Asian (SC/CASA) state end product means an article that—
            (1) Is wholly the growth, product, or manufacture of an SC/CASA state; or
            (2) In the case of an article that consists in whole or in part of materials from another country, has been substantially transformed in an SC/CASA state into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed. The term refers to a product offered for purchase under a supply contract, but for purposes of calculating the value of the end product, includes services (except transportation services) incidental to its supply, provided that the value of those incidental services does not exceed the value of the product itself.

              United States Munitions List means the munitions list of the International Traffic in Arms Regulation in 22 CFR part 121.
            [68 FR 15618, Mar. 31, 2003, as amended at 69 FR 1927, Jan. 13, 2004; 70 FR 73153, Dec. 9, 2005; 73 FR 76971, Dec. 18, 2008; 74 FR 37651, July 29, 2009; 75 FR 34945, June 21, 2010; 75 FR 81916, Dec. 29, 2010; 77 FR 35880, June 15, 2012; 77 FR 38737, June 29, 2012; 77 FR 76942, Dec. 31, 2012; 81 FR 50651, Aug. 2, 2016; 81 FR 93840, Dec. 22, 2016; 82 FR 61484, Dec. 28, 2017; 83 FR 66071, Dec. 21, 2018]

            225.070
            Reporting of acquisition of end products manufactured outside the United States.
            Follow the procedures at PGI 225.070 for entering the data on the acquisition of end products manufactured outside the United States.
            [79 FR 11342, Feb. 28, 2014]

            Subpart 225.1—Supplies

              Source:
              68 FR 15618, Mar. 31, 2003, unless otherwise noted.

              225.101
              General.
              (a) For DoD, the following two-part test determines whether a manufactured end product is a domestic end product:
              (i) The end product is manufactured in the United States; and
              (ii) The cost of its U.S. and qualifying country components exceeds 50 percent of the cost of all its components. This test is applied to end products only and not to individual components.
              (c) Additional exceptions that allow the purchase of foreign end products are listed at 225.103.

              225.103
              Exceptions.
              (a)(i)(A) Public interest exceptions for certain countries are in 225.872.
              (B) For procurements covered by the World Trade Organization Government Procurement Agreement, the Under Secretary of Defense (Acquisition, Technology, and Logistics) has determined that it is inconsistent with the public interest to apply the Buy American statute to end products that are substantially transformed in the United States.

              (ii)(A) Normally, use the evaluation procedures in subpart 225.5, but consider recommending a public interest exception if the purposes of the Buy American statute are not served, or in order to meet a need set forth in 10 U.S.C. 2533. For example, a public interest exception may be appropriate—
              (1) If accepting the low domestic offer will involve substantial foreign expenditures, or accepting the low foreign offer will involve substantial domestic expenditures;
              (2) To ensure access to advanced state-of-the-art commercial technology; or
              (3) To maintain the same source of supply for spare and replacement parts (also see paragraph (b)(iii)(B) of this section)—
              (i) For an end item that qualifies as a domestic end product; or
              (ii) In order not to impair integration of the military and commercial industrial base.
              (B) Except as provided in PGI 225.872-4, process a determination for a public interest exception after consideration of the factors in 10 U.S.C. 2533—
              (1) At a level above the contracting officer for acquisitions valued at or below the simplified acquisition threshold;
              (2) By the head of the contracting activity for acquisitions with a value greater than the simplified acquisition threshold but less than $1.5 million; or
              (3) By the agency head for acquisitions valued at $1.5 million or more.
              (b)(i) A determination that an article, material, or supply is not reasonably available is required when domestic offers are insufficient to meet the requirement and award is to be made on other than a qualifying country or eligible end product.
              (ii) Except as provided in FAR 25.103(b)(3), the determination shall be approved—
              (A) At a level above the contracting officer for acquisitions valued at or below the simplified acquisition threshold;
              (B) By the chief of the contracting office for acquisitions with a value greater than the simplified acquisition threshold but less than $1.5 million; or
              (C) By the head of the contracting activity or immediate deputy for acquisitions valued at $1.5 million or more.
              (iii) A separate determination as to whether an article is reasonably available is not required for the following articles. DoD has already determined that these articles are not reasonably available from domestic sources:
              (A) Spare or replacement parts that must be acquired from the original foreign manufacturer or supplier.
              (B) Foreign drugs acquired by the Defense Supply Center, Philadelphia, when the Director, Pharmaceuticals Group, Directorate of Medical Materiel, determines that only the requested foreign drug will fulfill the requirements.
              (iv) Under coordinated acquisition (see Subpart 208.70), the determination is the responsibility of the requiring department when the requiring department specifies acquisition of a foreign end product.
              (c) The cost of a domestic end product is unreasonable if it is not the low evaluated offer when evaluated under Subpart 225.5.
              [68 FR 15618, Mar. 31, 2003, as amended at 70 FR 2362, Jan. 13, 2005; 73 FR 4113, Jan. 24, 2008; 75 FR 45074, Aug. 2, 2010; 77 FR 35880, June 15, 2012; 80 FR 15912, Mar. 26, 2015]

              225.105
              Determining reasonableness of cost.
              (b) Use an evaluation factor of 50 percent instead of the factors specified in FAR 25.105(b).

              225.170
              Acquisition from or through other Government agencies.
              Contracting activities must apply the evaluation procedures in Subpart 225.5 when using Federal supply schedules.

            Subpart 225.2—Construction Materials

              225.202
              Exceptions.
              (a)(2) A nonavailability determination is not required for construction materials listed in FAR 25.104(a). For other materials, a nonavailability determination shall be approved at the levels specified in 225.103(b)(ii). Use the estimated value of the construction materials to determine the approval level.
              [65 FR 19851, Apr. 13, 2000, as amended at 68 FR 15619, Mar. 31, 2003; 80 FR 15912, Mar. 26, 2015]

              225.206
              Noncompliance.
              (c)(4) Prepare any report of noncompliance in accordance with the procedures at 209.406-3 or 209.407-3.
              [64 FR 62986, Nov. 18, 1999]

            Subpart 225.3—Contracts Performed Outside the United States

              Source:
              73 FR 16774, Mar. 31, 2008, unless otherwise noted.

              225.301
              Contractor personnel in a designated operational area or supporting a diplomatic or consular mission outside the United States.

              225.301-1
              Scope.
              (a) Performance in a designated operational area, as used in this section, means performance of a service or construction, as required by the contract. For supply contracts, the term includes services associated with the acquisition of supplies (e.g., installation or maintenance), but does not include production of the supplies or associated overhead functions.
              (c) For DoD, this section also applies to all personal services contracts.

              225.301-4
              Contract clause.
              (1) Use the clause at FAR 52.225-19, Contractor Personnel in a Designated Operational Area or Supporting a Diplomatic or Consular Mission Outside the United States, in accordance with the prescription at FAR 25.301-4, except that—
              (i) The clause shall also be used in personal services contracts with individuals; and
              (ii) The clause shall not be used when all contractor personnel performing outside the United States will be covered by the clause at 252.225-7040.

              (2) When using the clause at FAR 52.225-19, the contracting officer shall inform the contractor that the Synchronized Predeployment and Operational Tracker (SPOT) is the appropriate automated system to use for the list of contractor personnel required by paragraph (g) of the clause. Information on the SPOT system is available at  https://spot.dmdc.mil and http://www.acq.osd.mil/log/PS/ctr_mgt_accountability.html.

              [73 FR 16774, Mar. 31, 2008, as amended at 74 FR 34265, July 15, 2009; 80 FR 67255, Oct. 30, 2015]

              225.302
              Contractors performing private security functions outside the United States.

              225.302-6
              Contract clause.
              Use the clause at 252.225-7039, Defense Contractors Performing Private Security Functions Outside the United States, instead of FAR clause 52.225-26, Contractors Performing Private Security Functions Outside the United States, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, when private security functions are to be performed outside the United States in—
              (1) Contingency operations;
              (2) Combat operations, as designated by the Secretary of Defense;
              (3) Other significant military operations (as defined in 32 CFR part 159), designated by the Secretary of Defense, and only upon agreement of the Secretary of Defense and the Secretary of State;
              (4) Peace operations, consistent with Joint Publication 3-07.3; or
              (5) Other military operations or military exercises, when designated by the Combatant Commander.
              [80 FR 4999, Jan. 29, 2015, as amended at 81 FR 42560, June 30, 2016]

              225.370
              Contracts requiring performance or delivery in a foreign country.
              (a) If the acquisition requires the performance of services or delivery of supplies in an area outside the United States, follow the procedures at PGI 225.370(a).

              (b) For work performed in Germany, eligibility for logistics support or base privileges of contractor employees is governed by U.S.-German bilateral agreements. Follow the procedures at Army in Europe Regulation 715-9, available at http://www.eur.army.mil/g1/content/CPD/docper/docper_germanyLinks.html under “AE Regs & Resources.”

              (c) For work performed in Japan or Korea, see PGI 225.370(b) for information on bilateral agreements and policy relating to contractor employees in Japan or Korea.
              (d) For work performed in the U.S. Central Command area of responsibility, follow the procedures for theater business clearance/contract administration delegation instructions at PGI 225.370(d).
              [80 FR 36901, June 26, 2015, as amended at 80 FR 56930, Sept. 21, 2015]

              225.371
              Contractor personnel supporting U.S. Armed Forces deployed outside the United States.
              For additional information on contractor personnel supporting U.S. Armed Forces, see PGI 225.371.
              [80 FR 36901, June 26, 2015]

              225.371-1
              Scope.
              (a) This section applies to contracts that involve contractor personnel supporting U.S. Armed Forces deployed outside the United States in—
              (1) Contingency operations;
              (2) Humanitarian or peacekeeping operations; or
              (3) Other military operations or military exercises, when designated by the combatant commander.
              (b) Any of the types of operations listed in paragraph (a) of this section may include stability operations such as—
              (1) Establishment or maintenance of a safe and secure environment; or
              (2) Provision of emergency infrastructure reconstruction, humanitarian relief, or essential governmental services (until feasible to transition to local government).
              [80 FR 36901, June 26, 2015]

              225.371-2
              Definition.
              “Designated operational area” is defined in the clause at 252.225-7040. See PGI 225.371-2 for additional information on designated operational areas.
              [80 FR 36901, June 26, 2015]

              225.371-3
              Government support.
              (a) Government support that may be authorized or required for contractor personnel performing in a designated operational area may include, but is not limited to, the types of support listed in PGI 225.371-3(a).
              (b) The agency shall provide logistical or security support only when the appropriate agency official, in accordance with agency guidance, determines in coordination with the combatant commander that—
              (1) Such Government support is available and is needed to ensure continuation of essential contractor services; and
              (2) The contractor cannot obtain adequate support from other sources at a reasonable cost.
              (c) The contracting officer shall specify in the solicitation and contract—
              (1) Valid terms, approved by the combatant commander, that specify the responsible party, if a party other than the combatant commander is responsible for providing protection to the contractor personnel performing in the designated operational area; and
              (2) Any other Government support to be provided, and whether this support will be provided on a reimbursable basis, citing the authority for the reimbursement.
              (d) Medical support of contractor personnel. The contracting officer shall provide direction to the contractor when the contractor is required to reimburse the Government for medical treatment or transportation of contractor personnel to a selected civilian facility in accordance with paragraph (c)(2)(ii) of the clause at 252.225-7040. For additional information, see PGI 225.371-3(d).
              (e) Letter of authorization. Contractor personnel must have a Synchronized Predeployment and Operational Tracker (SPOT)-generated letter of authorization (LOA) signed by the contracting officer in order to process through a deployment center or to travel to, from, or within the designated operational area. The LOA also will identify any additional authorizations, privileges, or Government support that the contractor personnel are entitled to under the contract. For additional information on LOAs, see PGI 225.371-3(e).
              [80 FR 36901, June 26, 2015]

              225.371-4
              Law of war training.
              (a) Basic training. Basic law of war training is required for all contractor personnel supporting U.S. Armed Forces deployed outside the United States. The basic training normally will be provided through a military-run training center. The contracting officer may authorize the use of an alternate basic training source, provided the servicing DoD legal advisor concurs with the course content. An example of an alternate source of basic training is the web-based training provided by the Defense Acquisition University at https://acc.dau.mil/CommunityBrowser.aspx?id=18014&lang=en-US.

              (b) Advanced law of war training. (1) The types of personnel that must obtain advanced law of war training include the following:
              (i) Private security contractors.
              (ii) Security guards in or near areas of military operations.
              (iii) Interrogators, linguists, interpreters, guards, report writers, information technology technicians, or others who will come into contact with enemy prisoners of war, civilian internees, retained persons, other detainees, terrorists, or criminals who are captured, transferred, confined, or detained during or in the aftermath of hostilities.
              (iv) Other personnel when deemed necessary by the contracting officer.
              (2) If contractor personnel will be required to obtain advanced law of war training, the solicitation and contract shall specify—
              (i) The types of personnel subject to advanced law of war training requirements;
              (ii) Whether the training will be provided by the Government or the contractor;
              (iii) If the training will be provided by the Government, the source of the training; and
              (iv) If the training will be provided by the contractor, a requirement for coordination of the content with the servicing DoD legal advisor to ensure that training content is commensurate with the duties and responsibilities of the personnel to be trained.
              [80 FR 36901, June 26, 2015]

              225.371-5
              Contract clauses.
              (a) Use the clause at 252.225-7040, Contractor Personnel Supporting U.S. Armed Forces Deployed Outside the United States, instead of the clause at FAR 52.225-19, Contractor Personnel in a Designated Operational Area or Supporting a Diplomatic or Consular Mission Outside the United States, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, for performance in a designated operational area that authorize contractor personnel (including both contractors authorized to accompany the Force (CAAF) and non-CAAF) to support U.S. Armed Forces deployed outside the United States in—
              (1) Contingency operations;
              (2) Peace operations consistent with Joint Publication 3-07.3; or
              (3) Other military operations or military exercises, when designated by the combatant commander or as directed by the Secretary of Defense.
              (b) For additional guidance on clauses to consider when using the clause at 252.225-7040, see PGI 225.371-5(b).
              [80 FR 36901, June 26, 2015, as amended at 80 FR 51753, Aug. 26, 2015]

              225.372
              Antiterrorism/force protection.

              225.372-1
              General.
              Information and guidance pertaining to DoD antiterrorism/force protection policy for contracts that require performance or travel outside the United States can be obtained from the offices listed in PGI 225.372-1.
              [80 FR 36902, June 26, 2015]

              225.372-2
              Contract clause.
              Use the clause at 252.225-7043, Antiterrorism/Force Protection Policy for Defense Contractors Outside the United States, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that require performance or travel outside the United States, except for contracts with—
              (a) Foreign governments;
              (b) Representatives of foreign governments; or

              (c) Foreign corporations wholly owned by foreign governments.
              [80 FR 36902, June 26, 2015]

              225.373
              Contract administration in support of contingency operations.
              For additional guidance on contract administration considerations when supporting contingency operations, see PGI 225.373.
              [80 FR 36902, June 26, 2015]

              225.374
              Use of electronic business tools.
              See 218.271 concerning the use of electronic business tools in support of a contingency operation or humanitarian or peacekeeping operation.
              [80 FR 36902, June 26, 2015, as amended at 83 FR 24890, May 30, 2018]

            Subpart 225.4—Trade Agreements

              Source:
              65 FR 19852, Apr. 13, 2000, unless otherwise noted.

              225.401
              Exceptions.
              (a)(2)(A) If a department or agency considers an individual acquisition of a product to be indispensable for national security or national defense purposes and appropriate for exclusion from the provisions of FAR subpart 25.4, it may submit a request with supporting rationale to the Director of Defense Procurement and Acquisition Policy (OUSD(AT&L)DPAP). Approval by OUSD(AT&L)DPAP is not required if—
              (1) Purchase from foreign sources is restricted by statute (see subpart 225.70);
              (2) Another exception in FAR 25.401 applies to the acquisition; or
              (3) Competition from foreign sources is restricted under subpart 225.71.
              (B) Public interest exceptions for certain countries when acquiring products or services in support of operations in Afghanistan are in 225.7704-1.
              [75 FR 81916, Dec. 29, 2010]

              225.401-70
              End products subject to trade agreements.
              Acquisitions of end products in the following product service groups (PSGs) are covered by trade agreements if the value of the acquisition is at or above the applicable trade agreement threshold and no exception applies. If an end product is not in one of the listed groups, the trade agreements do not apply. The definition of Caribbean Basin country end products in FAR 25.003 excludes those end products that are not eligible for duty-free treatment under 19 U.S.C. 2703(b). Therefore certain watches, watch parts, and luggage from certain Caribbean Basin countries are not eligible products. However, 225.003 expands the definition of Caribbean Basin country end products to include petroleum and any product derived from petroleum, in accordance with Section 8094 of Pub. L. 103-139.

                  PSG
                  Category/Description

                  22
                  Railway equipment

                  23
                  Motor vehicles, trailers, and cycles (except 2305, 2350, and buses under 2310)

                  24
                  Tractors

                  25
                  Vehicular equipment components

                  26
                  Tires and tubes

                  29
                  Engine accessories

                  30
                  Mechanical power transmission equipment

                  32
                  Woodworking machinery and equipment

                  34
                  Metalworking machinery

                  35
                  Service and trade equipment

                  36
                  Special industry machinery (except 3690)

                  37
                  Agricultural machinery and equipment

                  38
                  Construction, mining, excavating, and highway maintenance equipment

                  39
                  Materials handling equipment

                  40
                  Rope, cable, chain, and fittings

                  41
                  Refrigeration, air conditioning, and air circulating equipment

                  42
                  Fire fighting, rescue, and safety equipment; and environmental protection equipment and materials

                  43
                  Pumps and compressors

                  44
                  Furnace, steam plant, and drying equipment (except 4470)

                  45
                  Plumbing, heating, and waste disposal equipment

                  46
                  Water purification and sewage treatment equipment

                  47
                  Pipe, tubing, hose, and fittings

                  48
                  Valves

                  49
                  Maintenance and repair shop equipment (except 4920-4927, 4931-4935, 4960, 4970)

                  53
                  Hardware and abrasives

                  54
                  Prefabricated structures and scaffolding

                  55
                  Lumber, millwork, plywood, and veneer

                  56
                  Construction and building materials

                  61
                  Electric wire, and power and distribution equipment

                  62
                  Lighting fixtures and lamps

                  63
                  Alarm, signal, and security detection systems

                  65
                  Medical, dental, and veterinary equipment and supplies

                  66
                  Instruments and laboratory equipment (except aircraft clocks under 6645)—See FAR 25.003 exclusion of certain watches and watch parts for certain Caribbean Basin countries

                  67
                  Photographic equipment

                  68
                  Chemicals and chemical products

                  69
                  Training aids and devices

                  70
                  Automatic data processing equipment (including firmware), software, supplies and support equipment

                  71
                  Furniture

                  72
                  Household and commercial furnishings and appliances

                  73
                  Food preparation and serving equipment

                  74
                  Office machines, text processing systems and visible record equipment

                  75
                  Office supplies and devices

                  76
                  Books, maps, and other publications

                  77
                  Musical instruments, phonographs, and home-type radios

                  78
                  Recreational and athletic equipment

                  79
                  Cleaning equipment and supplies

                  80
                  Brushes, paints, sealers, and adhesives

                  81
                  Containers, packaging, and packing supplies (except 8140)

                  83
                  Pins, needles, and sewing kits (only part of 8315) and flagstaffs, flagpoles, and flagstaff trucks (only part of 8345)

                  84
                  Luggage (only 8460)—See FAR 25.003 for exclusion of luggage for Caribbean Basin countries

                  85
                  Toiletries

                  87
                  Agricultural supplies

                  88
                  Live animals

                  89
                  Tobacco products (only 8975)

                  91
                  Fuels, lubricants, oils, and waxes

                  93
                  Nonmetallic fabricated materials

                  94
                  Nonmetallic crude materials

                  96
                  Ores, minerals, and their primary products

                  99
                  Miscellaneous

              [65 FR 19852, Apr. 13, 2000, as amended at 68 FR 15619, Mar. 31, 2003; 69 FR 1927, Jan. 13, 2004; 70 FR 2363, Jan. 13, 2005; 70 FR 73154, Dec. 9, 2005; 71 FR 9270, Feb. 23, 2006; 80 FR 4805, Jan. 29, 2015]

              225.401-71
              Products or services in support of operations in Afghanistan.
              When acquiring products or services, other than small arms, in support of operations in Afghanistan, if using a procedure specified in 225.7703-1(a)(2) or (3), the procedures of subpart 25.4 are not applicable.
              [78 FR 59857, Sept. 30, 2013]

              225.402
              General.

              To estimate the value of the acquisition, use the total estimated value of end products covered by trade agreements (see 225.401-70).
              [70 FR 2363, Jan. 13, 2005]

              225.403
              World Trade Organization Government Procurement Agreement and Free Trade Agreements.
              (c) For acquisitions of supplies covered by the World Trade Organization Government Procurement Agreement, acquire only U.S.-made, qualifying country, or designated country end products unless—
              (i) The contracting officer determines that offers of U.S.-made, qualifying country, or designated country end products from responsive, responsible offerors are either—
              (A) Not received; or
              (B) Insufficient to fill the Government's requirements. In this case, accept all responsive, responsible offers of U.S.-made, qualifying country, and eligible products before accepting any other offers;
              (ii) A national interest waiver under 19 U.S.C. 2512(b)(2) is granted on a case-by-case basis. Except as delegated in paragraphs (c)(i)(A) and (B) of this section, submit any request for a national interest waiver to the Director of Defense Procurement and Acquisition Policy in accordance with department or agency procedures. Include supporting rationale with the request.
              (A) The head of the contracting activity may approve a national interest waiver for a purchase by an overseas purchasing activity, if the waiver is supported by a written statement from the requiring activity that the products being acquired are critical for the support of U.S. forces stationed abroad.

              (B) The Commander or Director, Defense Energy Support Center, may approve national interest waivers for purchases of fuel for use by U.S. forces overseas; or

              (iii) The acquisition is in support of operations in Afghanistan (see 225.7704-1).
              [68 FR 15619, Mar. 31, 2003, as amended at 70 FR 2363, Jan. 13, 2005; 75 FR 81916, Dec. 29, 2010; 76 FR 76320, Dec. 7, 2011]

              225.408
              Procedures.
              (a)(4) The requirements of FAR 25.408(a)(4), on submission of offers in U.S. dollars, do not apply to overseas acquisitions or to Defense Energy Support Center post, camp, or station overseas requirements.
              [70 FR 73154, Dec. 9, 2005]

            Subpart 225.5—Evaluating Foreign Offers—Supply Contracts

              Source:
              68 FR 15620, Mar. 31, 2003, unless otherwise noted.

              225.502
              Application.
              (a) Whenever the acquisition is in support of operations in Afghanistan, treat the offers of end products from South Caucasus or Central and South Asian states listed in 225.401-70 the same as qualifying country offers.
              (b) Use the following procedures instead of the procedures in FAR 25.502(b) for acquisitions subject to the World Trade Organization Government Procurement Agreement:
              (i) Consider only offers of U.S.-made, qualifying country, or designated country end products, except as permitted by 225.403 or 225.7703-1.
              (ii) If price is the determining factor, award on the low offer.
              (c) Use the following procedures instead of those in FAR 25.502(c) for acquisitions subject to the Buy American statute or the Balance of Payments Program:
              (i)(A) If the acquisition is subject only to the Buy American or Balance of Payments Program, then only qualifying country end products are exempt from application of the Buy American or Balance of Payments Program evaluation factor.
              (B) If the acquisition is also subject to a Free Trade Agreement, then eligible products of the applicable Free Trade Agreement country are also exempt from application of the Buy American or Balance of Payments Program evaluation factor.
              (ii) If price is the determining factor, use the following procedures:
              (A) If the low offer is a domestic offer, award on that offer.
              (B) If there are no domestic offers, award on the low offer (see example in 225.504(1)).
              (C) If the low offer is a foreign offer that is exempt from application of the Buy American or Balance of Payments Program evaluation factor, award on that offer. (If the low offer is a qualifying country offer from a country listed at 225.872-1(b), execute a determination in accordance with 225.872-4.)
              (D) If the low offer is a foreign offer that is not exempt from application of the Buy American or Balance of Payments Program evaluation factor, and there is another foreign offer that is exempt and is lower than the lowest domestic offer, award on the low foreign offer (see example in 225.504(2)).
              (E) Otherwise, apply the 50 percent evaluation factor to the low foreign offer.
              (1) If the price of the low domestic offer is less than the evaluated price of the low foreign offer, award on the low domestic offer (see example in 225.504(3)).
              (2) If the evaluated price of the low foreign offer remains less than the low domestic offer, award on the low foreign offer (see example in 225.504(4)).
              (iii) If price is not the determining factor, use the following procedures:
              (A) If there are domestic offers, apply the 50 percent Buy American or Balance of Payments Program evaluation factor to all foreign offers unless an exemption applies.
              (B) Evaluate in accordance with the criteria of the solicitation.

              (C) If these procedures will not result in award on a domestic offer, reevaluate offers without the 50 percent factor. If this will result in award on an offer to which the Buy American statute or Balance of Payments Program applies, but evaluation in accordance with paragraph (c)(ii) of this section would result in award on a domestic offer, proceed with award only after execution of a determination in accordance with 225.103(a)(ii)(B), that domestic preference would be inconsistent with the public interest.
              (iv) If the solicitation includes the provision at 252.225-7023, Preference for Products or Services from Afghanistan, use the evaluation procedures at 225.7703-3.
              [68 FR 15620, Mar. 31, 2003, as amended at 69 FR 1928, Jan. 13, 2004; 69 FR 74992, Dec. 15, 2004; 70 FR 2363, Jan. 13, 2005; 73 FR 53152, Sept. 15, 2008; 75 FR 81916, Dec. 29, 2010; 77 FR 35881, June 15, 2012; 78 FR 59857, Sept. 30, 2013]

              225.503
              Group offers.
              Evaluate group offers in accordance with FAR 25.503, but apply the evaluation procedures of 225.502.

              225.504
              Evaluation examples.
              For examples that illustrate the evaluation procedures in 225.502(c)(ii), see PGI 225.504.
              [70 FR 73154, Dec. 9, 2005]

            Subpart 225.7—Prohibited Sources

              225.701
              [Reserved]

              225.701-70
              Exception.
              DoD personnel are authorized to make emergency acquisitions in direct support of U.S. or allied forces deployed in military contingency, humanitarian, or peacekeeping operations in a country or region subject to economic sanctions administered by the Department of the Treasury, Office of Foreign Assets Control.
              [68 FR 7441, Feb. 14, 2003]

              225.770
              Prohibition on acquisition of certain items from Communist Chinese military companies.
              This section implements section 1211 of the National Defense Authorization Act for Fiscal Year 2006 (Pub. L. 109-163), section 1243 of the National Defense Authorization Act for Fiscal Year 2012 (Pub. L. 112-81), and section 1296 of the National Defense Authorization Act for Fiscal Year 2017 (Pub. L. 114-328). See PGI 225.770 for additional information relating to this statute, the terms used in this section, the United States Munitions List (USML), and the 600 series of the Commerce Control List (CCL).
              [83 FR 66071, Dec. 21, 2018]

              225.770-1
              Definitions.
              As used in this section—

                Component means an item that is useful only when used in conjunction with an end item (15 CFR 772.1 and 22 CFR 120.45(b)).

                Item means—
              (1) A USML defense article, as defined at 22 CFR 120.6;
              (2) A USML defense service, as defined at 22 CFR 120.9; or
              (3) A 600 series item, as defined at 15 CFR 772.1.

                Part means any single unassembled element of a major or minor component, accessory, or attachment, that is not normally subject to disassembly without the destruction or impairment of designed use (15 CFR 772.1 and 22 CFR 120.45(d)).
              [83 FR 66072, Dec. 21, 2018]

              225.770-2
              Prohibition.
              Do not acquire items covered by the USML or the 600 series of the CCL, through a contract or subcontract at any tier, from any Communist Chinese military company. This prohibition does not apply to components and parts of covered items unless the components and parts are themselves covered by the USML or the 600 series of the CCL.
              [83 FR 66072, Dec. 21, 2018]

              225.770-3
              Exceptions.
              The prohibition in 225.770-2 does not apply to items acquired—
              (a) In connection with a visit to the People's Republic of China by a vessel or an aircraft of the U.S. armed forces;
              (b) For testing purposes; or
              (c) For the purpose of gathering intelligence.
              [71 FR 53046, Sept. 8, 2006, as amended at 83 FR 66072, Dec. 21, 2018]

              225.770-4
              Identifying items covered by the USML or the 600 series of the CCL.

              (a) Before issuance of a solicitation, the requiring activity will notify the contracting officer in writing whether the items to be acquired are covered by the USML or the 600 series of the CCL. The notification will identify any covered item(s) and will provide the pertinent USML reference(s) from 22 CFR part 121 or the 600 series of the CCL references from 15 CFR part 774, supplement no. 1.

              (b) The USML includes defense articles and defense services that fall into 21 categories. The CCL includes ten categories and five product groups in each category, many of which contain 600 series items. Since not all items covered by the USML or 600 series of the CCL are themselves munitions (e.g., protective personnel equipment, military training equipment), the requiring activity should consult the USML and the 600 series of the CCL before concluding that an item is or is not covered. See PGI 225.770-4.
              [83 FR 66072, Dec. 21, 2018]

              225.770-5
              Waiver of prohibition.
              (a) The prohibition in 225.770-2 may be waived, on a case-by-case basis, if an official identified in paragraph (b) of this subsection determines that a waiver is necessary for national security purposes.
              (b) The following officials are authorized, without power of delegation, to make the determination specified in paragraph (a) of this subsection:
              (1) The Under Secretary of Defense (Acquisition and Sustainment).
              (2) The Secretaries of the military departments.
              (3) The Component Acquisition Executive of the Defense Logistics Agency.
              (c)(1) The official granting a waiver shall submit a report to the congressional defense committees, with a copy to the Director of Defense Procurement and Acquisition Policy (see PGI 225.770-5), not less than 15 days before issuing the waiver.
              (2) In the report, the official shall—
              (i) Identify the specific reasons for the waiver; and
              (ii) Include recommendations as to what actions may be taken to develop alternative sourcing capabilities in the future.
              [71 FR 53046, Sept. 8, 2006, as amended at 77 FR 30366, May 22, 2012; 83 FR 66072, Dec. 21, 2018]

              225.771
              Prohibition on contracting or subcontracting with a firm that is owned or controlled by the government of a country that is a state sponsor of terrorism.
              [79 FR 73489, Dec. 11, 2014]

              225.771-0
              Scope.
              This section implements 10 U.S.C. 2327(b).
              [79 FR 73489, Dec. 11, 2014]

              225.771-1
              Definition.
              “State sponsor of terrorism,” as used in this section, is defined in the provision at 252.225-7050, Disclosure of Ownership or Control by the Government of a Country that is a State Sponsor of Terrorism.
              [79 FR 73489, Dec. 11, 2014]

              225.771-2
              Prohibition.
              (a) The contracting officer shall not award a contract of $150,000 or more to a firm when a foreign government that is a state sponsor of terrorism owns or controls, either directly or indirectly, a significant interest in—
              (i) The firm;
              (ii) A subsidiary of the firm; or
              (iii) Any other firm that owns or controls the firm.
              (b) For restrictions on subcontracting with a firm, or a subsidiary of a firm, that is identified by the Secretary of Defense as being owned or controlled by the government of a country that is a state sponsor of terrorism, see 209.405-2.
              [79 FR 73489, Dec. 11, 2014]

              225.771-3
              Notification.
              Any disclosure that the government of a country that is a state sponsor of terrorism has a significant interest in an offeror, a subsidiary of an offeror, or any other firm that owns or controls an offeror shall be forwarded through agency channels to the address at PGI 225.771-3.
              [79 FR 73489, Dec. 11, 2014]

              225.771-4
              Waiver of prohibition.
              The prohibition in 225.771-2 may be waived if the Secretary of Defense determines that a waiver is not inconsistent with the national security objectives of the United States in accordance with 10 U.S.C. 2327(c).
              [79 FR 73489, Dec. 11, 2014]

              225.771-5
              Solicitation provision.
              Use the provision at 252.225-7050, Disclosure of Ownership or Control by the Government of a Country that is a State Sponsor of Terrorism, in solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial items (other than commercial satellite services), that are expected to result in contracts of $150,000 or more. If the solicitation includes the provision at FAR 52.204-7, do not separately list the provision 252.225-7050 in the solicitation.
              [79 FR 73489, Dec. 11, 2014]

              225.772
              Prohibition on acquisition of certain foreign commercial satellite services.

              225.772-0
              Scope.
              This section implements 10 U.S.C. 2279.
              [79 FR 45664, Aug. 5, 2014]

              225.772-1
              Definitions.
              As used in this section—

                Covered foreign country means—
              (1) The People's Republic of China;
              (2) North Korea;
              (3) The Russian Federation; or
              (4) Any country that is a state sponsor of terrorism. (10 U.S.C. 2279)

                Cybersecurity risk means threats to and vulnerabilities of information or information systems and any related consequences caused by or resulting from unauthorized access, use, disclosure, degradation, disruption, modification, or destruction of such information or information systems, including such related consequences caused by an act of terrorism. (10 U.S.C. 2279)

                Foreign entity means—
              (1) Any branch, partnership, group or sub-group, association, estate, trust, corporation or division of a corporation, or organization organized under the laws of a foreign state if either its principal place of business is outside the United States or its equity securities are primarily traded on one or more foreign exchanges.
              (2) Notwithstanding paragraph (1) of this definition, any branch, partnership, group or sub-group, association, estate, trust, corporation or division of a corporation, or organization that demonstrates that a majority of the equity interest in such entity is ultimately owned by U.S. nationals is not a foreign entity. (31 CFR 800.212)

                Government of a covered foreign country includes the state and the government of a covered foreign country, as well as any political subdivision, agency, or instrumentality thereof.

                Launch vehicle means a fully integrated space launch vehicle. (10 U.S.C. 2279)

                Satellite services means communications capabilities that utilize an on-orbit satellite for transmitting the signal from one location to another.

                State sponsor of terrorism means a country determined by the Secretary of State, under section 1754(c)(1)(A)(i) of the Export Control Reform Act of 2018 (Title XVII, Subtitle B, of the National Defense Authorization Act for Fiscal Year 2019, Pub. L. 115-232), to be a country the government of which has repeatedly provided support for acts of international terrorism. As of December 21, 2018, state sponsors of terrorism include: Iran, North Korea, Sudan, and Syria. (10 U.S.C. 2327)
              [83 FR 66072, Dec. 21, 2018]

              225.772-2
              Prohibitions.
              Except as provided in 225.772-4, the contracting officer shall not award a contract for commercial satellite services to—
              (a)(1) A foreign entity if the Under Secretary of Defense for Acquisition and Sustainment or the Under Secretary of Defense for Policy reasonably believes that—
              (i) The foreign entity is an entity in which the government of a covered foreign country has an ownership interest that enables the government to affect satellite operations;

              (ii) The foreign entity plans to or is expected to provide satellite services under the contract from a covered foreign country; or

              (iii) Entering into such contract would create an unacceptable cybersecurity risk for DoD, as determined by the Under Secretary of Defense for Acquisition and Sustainment or the Under Secretary of Defense for Policy; or
              (2) An offeror that is offering commercial satellite services provided by a foreign entity as described in paragraph (a) of this section; or
              (b)(1) Any entity, except as provided in paragraph (b)(2) of this section, for a launch that occurs on or after December 31, 2022, if the Under Secretary of Defense for Acquisition and Sustainment or the Under Secretary of Defense for Policy reasonably believes that such satellite services will be provided using satellites that will be—
              (i) Designed or manufactured—
              (A) In a covered foreign country; or
              (B) By an entity controlled in whole or in part by, or acting on behalf of, the government of a covered foreign country; or
              (ii) Launched outside the United States using a launch vehicle that is—
              (A) Designed or manufactured in a covered foreign country; or
              (B) Provided by—
              (1) The government of a covered foreign country; or
              (2) An entity controlled in whole or in part by, or acting on behalf of, the government of a covered foreign country.
              (2) The prohibition in paragraph (b)(1) of this section does not apply with respect to launch services for which a satellite service provider has a contract or other agreement that, prior to June 10, 2018, was either fully paid for by the satellite service provider or covered by a legally binding commitment of the satellite service provider to pay for such services.
              [83 FR 66072, Dec. 21, 2018]

              225.772-3
              Procedures.
              (a)(1) The contracting officer shall not award to any source that is a foreign satellite service provider or is offering satellite services provided by a foreign entity if such award presents an unacceptable cybersecurity risk, as determined by the Under Secretary of Defense for Acquisition and Sustainment or the Under Secretary of Defense for Policy.
              (2) When procuring commercial satellite services from a foreign entity, the contracting officer shall review the exclusion records in the System for Award Management (SAM) database as required at FAR 9.405, to ensure that an entity identified in, or otherwise known to be involved in, the otherwise successful offer is not listed as ineligible in the SAM database (see FAR 9.405).
              (b) If an offeror discloses information in accordance with paragraph (c) of the provision 252.225-7049, Prohibition on Acquisition of Certain Foreign Commercial Satellite Services—Representations, the contracting officer—
              (1) Shall forward the information regarding the offeror through agency channels to the address at PGI 225.772-3; and
              (2) Shall not award to that offeror, unless an exception is determined to apply in accordance with 225.772-4.
              (c)(1) If the otherwise successful offeror provides negative responses to all representations in the provision at 252.225-7049, the contracting officer may rely on the representations, unless the contracting officer has an independent reason to question the representations.
              (2) If the contracting officer has an independent reason to question a negative representation of the otherwise successful offeror, the contracting officer shall consult with the office specified in PGI 225.772-3, prior to deciding whether to award to that offeror.
              [79 FR 45664, Aug. 5, 2014, as amended at 83 FR 66073, Dec. 21, 2018]

              225.772-4
              Exception.
              (a) The prohibitions in 225.772-2(a) and (b) do not apply if—
              (1) The Under Secretary of Defense for Acquisition and Sustainment, or the Under Secretary of Defense for Policy, without power of redelegation, determines that it is in the national security interest of the United States to enter into such contract; and

              (2) Not later than seven days before entering into such contract, the Under Secretary of Defense making the determination in paragraph (a)(1) of this section, in consultation with the Director of National Intelligence, submits to the congressional defense committees a national security assessment, in accordance with 10 U.S.C. 2279.
              (b) If requesting an exception pursuant to paragraph (a) of this section, the contracting officer shall forward the request through agency channels to the address at PGI 225.772-3, providing any available information necessary for the Under Secretary of Defense making the determination in paragraph (a)(1) of this section to evaluate the request and perform a national security assessment, in accordance with 10 U.S.C. 2279.
              [79 FR 45664, Aug. 5, 2014, as amended at 83 FR 66073, Dec. 21, 2018]

              225.772-5
              Solicitation provision and contract clauses.
              (a) Use the provision at 252.225-7049, Prohibition on Acquisition of Certain Foreign Commercial Satellite Services—Representations, in solicitations that include the clause at 252.225-7051, Prohibition on Acquisition of Certain Foreign Commercial Satellite Services. If the solicitation includes the provision at FAR 52.204-7, do not separately list the provision 252.225-7049 in the solicitation.
              (b) Use the clause at 252.225-7051, Prohibition on Acquisition of Certain Foreign Commercial Satellite Services, in solicitations and contracts for the acquisition of commercial satellite services, including solicitation and contracts using FAR part 12 procedures for the acquisition of commercial items.
              (c) Use the clause at 252.239-7018, Supply Chain Risk, as prescribed at 239.7306(b), when applicable.
              [83 FR 66073, Dec. 21, 2018]

            Subpart 225.8—Other International Agreements and Coordination

              Source:
              68 FR 15621, Mar. 31, 2003, unless otherwise noted.

              225.802
              Procedures.
              (b) Information on memoranda of understanding and other international agreements is available at PGI 225.802(b).
              [70 FR 73154, Dec. 9, 2005]

              225.802-70
              Contracts for performance outside the United States and Canada.
              Follow the procedures at PGI 225.802-70 when placing a contract requiring performance outside the United States and Canada. Also see subpart 225.3, Contracts Performed Outside the United States.
              [70 FR 23801, May 5, 2005, as amended at 77 FR 43472, July 24, 2012; 80 FR 36902, June 26, 2015]

              225.802-71
              End use certificates.
              Contracting officers considering the purchase of an item from a foreign source may encounter a request for the signing of a certificate to indicate that the Armed Forces of the United States is the end user of the item, and that the U.S. Government will not transfer the item to third parties without authorization from the Government of the country selling the item. When encountering this situation, refer to DoD Directive 2040.3, End Use Certificates, for guidance.

              225.870
              Contracting with Canadian contractors.

              225.870-1
              General.
              (a) The Canadian government guarantees to the U.S. Government all commitments, obligations, and covenants of the Canadian Commercial Corporation under any contract or order issued to the Corporation by any contracting office of the U.S. Government. The Canadian government has waived notice of any change or modification that may be made, from time to time, in these commitments, obligations, or covenants.
              (b) For production planning purposes, Canada is part of the defense industrial base (see 225.870-2(b)).
              (c) The Canadian Commercial Corporation will award and administer contracts with contractors located in Canada, except for—

              (1) Negotiated acquisitions for experimental, developmental, or research work under projects other than the Defense Development Sharing Program;

              (2) Acquisitions of unusual or compelling urgency;
              (3) Acquisitions at or below the simplified acquisition threshold; or
              (4) Acquisitions made by DoD activities located in Canada.
              (d) For additional information on production rights, data, and information; services provided by Canadian Commercial Corporation; audit; and inspection, see PGI 225.870-1(d).
              [68 FR 15621, Mar. 31, 2003, as amended at 70 FR 73154, Dec. 9, 2005; 77 FR 43472, July 24, 2012]

              225.870-2
              Solicitation of Canadian contractors.
              (a) If requested, furnish a solicitation to the Canadian Commercial Corporation even if no Canadian firm is solicited.
              (b) Handle acquisitions at or below the simplified acquisition threshold directly with Canadian firms and not through the Canadian Commercial Corporation.
              [68 FR 15621, Mar. 31, 2003, as amended at 72 FR 20758, Apr. 26, 2007]

              225.870-3
              Submission of offers.
              (a) As indicated in 225.870-4, the Canadian Commercial Corporation is the prime contractor. To indicate acceptance of offers by individual Canadian companies, the Canadian Commercial Corporation issues a letter supporting the Canadian offer and containing the following information:
              (1) Name of the Canadian offeror.
              (2) Confirmation and endorsement of the offer in the name of the Canadian Commercial Corporation.
              (3) A statement that the Corporation shall subcontract 100 percent with the offeror.
              (b) When a Canadian offer cannot be processed through the Canadian Commercial Corporation in time to meet the date for receipt of offers, the Corporation may permit Canadian firms to submit offers directly. However, the contracting officer shall receive the Canadian Commercial Corporation's endorsement before contract award.
              (c) The Canadian Commercial Corporation will submit all sealed bids in terms of U.S. currency. Do not adjust contracts awarded under sealed bidding for losses or gains from fluctuation in exchange rates.
              (d) Except for sealed bids, the Canadian Commercial Corporation normally will submit offers and quotations in terms of Canadian currency. The Corporation may, at the time of submitting an offer, elect to quote and receive payment in terms of U.S. currency, in which case the contract—
              (1) Shall provide for payment in U.S. currency; and
              (2) Shall not be adjusted for losses or gains from fluctuation in exchange rates.

              225.870-4
              Contracting procedures.
              (a) Except for contracts described in 225.870-1(c)(1) through (4), award individual contracts covering purchases from suppliers located in Canada to the Canadian Commercial Corporation, 350 Albert Street, Suite 700, Ottawa, ON K1R 1A4.
              (b) Direct communication with the Canadian supplier is authorized and encouraged in connection with all technical aspects of the contract, provided the Corporation's approval is obtained on any matters involving changes to the contract.
              (c) Requirement for data other than certified cost or pricing data. (1) DoD has waived the requirement for submission of certified cost or pricing data for the Canadian Commercial Corporation and its subcontractors (see 215.403-1(c)(4)(C)).
              (2) The Canadian Commercial Corporation is not exempt from the requirement to submit data other than certified cost or pricing data, as defined in FAR 2.101. In accordance with FAR 15.403-3(a)(1)(ii), the contracting officer shall require submission of data other than certified cost or pricing data from the offeror, to the extent necessary to determine a fair and reasonable price.
              (i) No further approval is required to request data other than certified cost or pricing data from the Canadian Commercial Corporation in the following circumstances:
              (A) In a solicitation for a sole source acquisition that is—
              (1) Cost-reimbursement, if the contract value is expected to exceed $700,000; or

              (2) Fixed-price, if the contract value is expected to exceed $500 million.
              (B) If the Canadian Commercial Corporation submits the only offer in response to a competitive solicitation that meets the thresholds specified in paragraph (c)(2)(i)(A) of this section.
              (C) For modifications that exceed $150,000 in contracts that meet the criteria in paragraph (c)(2)(i)(A) or (B) of this section.
              (D) In competitive solicitations in which data other than certified cost or pricing data are required from all offerors.
              (ii) In any circumstances other than those specified in paragraph (c)(2)(i) of this section, the contracting officer shall only require data other than certified cost or pricing data from the Canadian Commercial Corporation if the head of the contracting activity, or designee no lower than two levels above the contracting officer, determines that data other than certified cost or pricing data are needed (or in the case of modifications that it is reasonably certain that data other than certified cost or pricing data will be needed) in order to determine that the price is fair and reasonable) (see FAR 15.403-3(a).
              (3) The contracting officer shall use the provision at 252.215-7003, Requirement for Submission of Data Other Than Certified Cost or Pricing Data—Canadian Commercial Corporation, and the clause at 252.215-7004, Requirement for Submission of Data Other Than Certified Cost or Pricing Data—Modifications—Canadian Commercial Corporation, as prescribed at 215.408(2)(i) and (ii), respectively.
              (4) Except for contracts described in 225.870-1(c)(1) through (4), Canadian suppliers will provide required data other than certified cost or pricing data exclusively through the Canadian Commercial Corporation.
              (5) As specified in FAR 15.403-3(a)(4), an offeror who does not comply with a requirement to submit data that the contracting officer has deemed necessary to determine price reasonableness or cost realism is ineligible for award, unless the head of the contracting activity determines that it is in the best interest of the Government to make the award to that offeror, based on consideration of the following:
              (i) The effort made to obtain the data.
              (ii) The need for the item or service.
              (iii) Increased cost or significant harm to the Government if award is not made.
              (d) Identify in the contract, the type of currency, i.e., U.S. or Canadian. Contracts that provide for payment in Canadian currency shall—

              (1) Quote the contract price in terms of Canadian dollars and identify the amount by the initials “CN”, e.g., $1,647.23CN; and
              (2) Clearly indicate on the face of the contract the U.S./Canadian conversion rate at the time of award and the U.S. dollar equivalent of the Canadian dollar contract amount.
              [68 FR 15621, Mar. 31, 2003, as amended at 77 FR 43472, July 24, 2012; 78 FR 65217, Oct. 31, 2013; 80 FR 36718, June 26, 2015; 82 FR 61480, Dec. 28, 2017; 83 FR 30825, June 29, 2018]

              225.870-5
              Contract administration.
              Follow the contract administration procedures at PGI 225.870-5.
              [70 FR 73155, Dec. 9, 2005]

              225.870-6
              Termination procedures.
              When contract termination is necessary, follow the procedures at 249.7000.
              [71 FR 27645, May 12, 2006]

              225.870-7
              Acceptance of Canadian supplies.
              For information on the acceptance of Canadian supplies, see PGI 225.870-7.
              [70 FR 73155, Dec. 9, 2005]

              225.870-8
              Industrial security.
              Industrial security for Canada shall be in accordance with the U.S.-Canada Industrial Security Agreement of March 31, 1952, as amended.

              225.871
              North Atlantic Treaty Organization (NATO) cooperative projects.

              225.871-1
              Scope.
              This section implements 22 U.S.C. 2767 and 10 U.S.C. 2350b.
              [70 FR 73155, Dec. 9, 2005]

              225.871-2
              Definitions.
              As used in this section—
              (a) Cooperative project means a jointly managed arrangement—
              (1) Described in a written agreement between the parties;
              (2) Undertaken to further the objectives of standardization, rationalization, and interoperability of the armed forces of NATO member countries; and
              (3) Providing for—
              (i) One or more of the other participants to share with the United States the cost of research and development, testing, evaluation, or joint production (including follow-on support) of certain defense articles;
              (ii) Concurrent production in the United States and in another member country of a defense article jointly developed; or
              (iii) Acquisition by the United States of a defense article or defense service from another member country.
              (b) Other participant means a cooperative project participant other than the United States.

              225.871-3
              General.
              (a) Cooperative project authority. (1) Departments and agencies, that have authority to do so, may enter into cooperative project agreements with NATO or with one or more member countries of NATO under DoDD 5530.3, International Agreements.
              (2) Under laws and regulations governing the negotiation and implementation of cooperative project agreements, departments and agencies may enter into contracts, or incur other obligations, on behalf of other participants without charge to any appropriation or contract authorization.
              (3) Agency heads are authorized to solicit and award contracts to implement cooperative projects.
              (b) Contracts implementing cooperative projects shall comply with all applicable laws relating to Government acquisition, unless a waiver is granted under 225.871-4. A waiver of certain laws and regulations may be obtained if the waiver—
              (1) Is required by the terms of a written cooperative project agreement;
              (2) Will significantly further NATO standardization, rationalization, and interoperability; and
              (3) Is approved by the appropriate DoD official.

              225.871-4
              Statutory waivers.
              (a) For contracts or subcontracts placed outside the United States, the Deputy Secretary of Defense may waive any provision of law that specifically prescribes—
              (1) Procedures for the formation of contracts;
              (2) Terms and conditions for inclusion in contracts;
              (3) Requirements or preferences for—
              (i) Goods grown, produced, or manufactured in the United States or in U.S. Government-owned facilities; or
              (ii) Services to be performed in the United States; or
              (4) Requirements regulating the performance of contracts.
              (b) There is no authority for waiver of—
              (1) Any provision of the Arms Export Control Act (22 U.S.C. 2751);
              (2) Any provision of 10 U.S.C. 2304;
              (3) The cargo preference laws of the United States, including the Military Cargo Preference Act of 1904 (10 U.S.C. 2631) and the Cargo Preference Act of 1954 (46 U.S.C. 1241(b)); or
              (4) Any of the financial management responsibilities administered by the Secretary of the Treasury.
              (c) To request a waiver under a cooperative project, follow the procedures at PGI 225.871-4.
              (d) Obtain the approval of the Deputy Secretary of Defense before committing to make a waiver in an agreement or a contract.
              [68 FR 15621, Mar. 31, 2003, as amended at 71 FR 62565, Oct. 26, 2006]

              225.871-5
              Directed Subcontracting.
              (a) The Director of Defense Procurement and Acquisition Policy may authorize the direct placement of subcontracts with particular subcontractors. Directed subcontracting is not authorized unless specifically addressed in the cooperative project agreement.

              (b) In some instances, it may not be feasible to name specific subcontractors at the time the agreement is concluded. However, the agreement shall clearly state the general provisions for work sharing at the prime and subcontract level. For additional information on cooperative project agreements, see PGI 225.871-5.
              [68 FR 15621, Mar. 31, 2003, as amended at 70 FR 73155, Dec. 9, 2005]

              225.871-6
              Disposal of property.
              Dispose of property that is jointly acquired by the members of a cooperative project under the procedures established in the agreement or in a manner consistent with the terms of the agreement, without regard to any laws of the United States applicable to the disposal of property owned by the United States.
              [70 FR 73155, Dec. 9, 2005]

              225.871-7
              Congressional notification.
              (a) Congressional notification is required when DoD makes a determination to award a contract or subcontract to a particular entity, if the determination was not part of the certification made under 22 U.S.C. 2767(f) before finalizing the cooperative agreement.
              (1) Departments and agencies shall provide a proposed Congressional notice to the Director of Defense Procurement and Acquisition Policy in sufficient time to forward to Congress before the time of contract award.
              (2) The proposed notice shall include the reason it is necessary to use the authority to designate a particular contractor or subcontractor.
              (b) Congressional notification is also required each time a statutory waiver under 225.871-4 is incorporated in a contract or a contract modification, if such information was not provided in the certification to Congress before finalizing the cooperative agreement.

              225.872
              Contracting with qualifying country sources.

              225.872-1
              General.

              (a) As a result of memoranda of understanding and other international agreements, DoD has determined it inconsistent with the public interest to apply restrictions of the Buy American statute or the Balance of Payments Program to the acquisition of qualifying country end products from the following qualifying countries:

                  Australia
                  Belgium
                  Canada
                  Czech Republic
                  Denmark
                  Egypt
                  Estonia
                  Federal Republic of Germany
                  Finland
                  France
                  Greece
                  Israel
                  Italy
                  Japan
                  Latvia
                  Luxembourg
                  Netherlands
                  Norway
                  Poland
                  Portugal
                  Slovenia
                  Spain
                  Sweden
                  Switzerland
                  Turkey
                  United Kingdom of Great Britain and Northern Ireland.

              (b) Individual acquisitions of qualifying country end products from the following qualifying country may, on a purchase-by-purchase basis (see 225.872-4), be exempted from application of the Buy American statute and the Balance of Payments Program as inconsistent with the public interest: Austria.
              (c) The determination in paragraph (a) of this subsection does not limit the authority of the Secretary concerned to restrict acquisitions to domestic sources or reject an otherwise acceptable offer from a qualifying country source when considered necessary for national defense reasons.
              [68 FR 15621, Mar. 31, 2003, as amended at 69 FR 8116, Feb. 23, 2004; 75 FR 32641, June 8, 2010; 77 FR 35880, June 15, 2012; 77 FR 76942, Dec. 31, 2012; 81 FR 50651, Aug. 2, 2016; 81 FR 93840, Dec. 22, 2016; 82 FR 61484, Dec. 28, 2017]

              225.872-2
              Applicability.
              (a) This section applies to all acquisitions of supplies except those restricted by—
              (1) U.S. National Disclosure Policy, DoDD 5230.11, Disclosure of Classified Military Information to Foreign Governments and International Organizations;
              (2) U.S. defense mobilization base requirements purchased under the authority of FAR 6.302-3(a)(2)(i), except for quantities in excess of that required to maintain the defense mobilization base. This restriction does not apply to Canadian planned producers.
              (i) Review individual solicitations to determine whether this restriction applies.

              (ii) Information concerning restricted items may be obtained from the Deputy Under Secretary of Defense (Industrial Affairs);
              (3) Other U.S. laws or regulations (e.g., the annual DoD appropriations act); and
              (4) U.S. industrial security requirements.
              (b) This section does not apply to construction contracts.

              225.872-3
              Solicitation procedures.
              (a) Except for items developed under the U.S./Canadian Development Sharing Program, use the criteria for soliciting and awarding contracts to small business concerns under FAR Part 19 without regard to whether there are potential qualifying country sources for the end product. Do not consider an offer of a qualifying country end product if the solicitation is identified for the exclusive participation of small business concerns.
              (b) Send solicitations directly to qualifying country sources. Solicit Canadian sources through the Canadian Commercial Corporation in accordance with 225.870.
              (c) Use international air mail if solicitation destinations are outside the United States and security classification permits such use.
              (d) If unusual technical or security requirements preclude the acquisition of otherwise acceptable defense equipment from qualifying country sources, review the need for such requirements. Do not impose unusual technical or security requirements solely for the purpose of precluding the acquisition of defense equipment from qualifying countries.
              (e) Do not automatically exclude qualifying country sources from submitting offers because their supplies have not been tested and evaluated by the department or agency.
              (1) Consider the adequacy of qualifying country service testing on a case-by-case basis. Departments or agencies that must limit solicitations to sources whose items have been tested and evaluated by the department or agency shall consider supplies from qualifying country sources that have been tested and accepted by the qualifying country for service use.
              (2) The department or agency may perform a confirmatory test, if necessary.
              (3) Apply U.S. test and evaluation standards, policies, and procedures when the department or agency decides that confirmatory tests of qualifying country end products are necessary.
              (4) If it appears that these provisions might adversely delay service programs, obtain the concurrence of the Under Secretary of Defense (Acquisition, Technology, and Logistics), before excluding the qualifying country source from consideration.
              (f) Permit industry representatives from a qualifying country to attend symposia, program briefings, prebid conferences (see FAR 14.207 and 15.201(c)), and similar meetings that address U.S. defense equipment needs and requirements. When practical, structure these meetings to allow attendance by representatives of qualifying country concerns.
              [68 FR 15621, Mar. 31, 2003, as amended at 72 FR 20758, Apr. 26, 2007]

              225.872-4
              Individual determinations.
              If the offer of an end product from a qualifying country source listed in 225.872-1(b), as evaluated, is low or otherwise eligible for award, prepare a determination and findings exempting the acquisition from the Buy American statute and the Balance of Payments Program as inconsistent with the public interest, unless another exception such as the Trade Agreements Act applies. Follow the procedures at PGI 225.872-4.
              [70 FR 73155, Dec. 9, 2005, as amended at 77 FR 35880, June 15, 2012]

              225.872-5
              Contract administration.

              (a) Arrangements exist with some qualifying countries to provide reciprocal contract administration services. Some arrangements are at no cost to either government. To determine whether such an arrangement has been negotiated and what contract administration functions are covered, contact the Deputy Director of Defense Procurement and Acquisition Policy (Contract Policy and International Contracting), ((703) 697-9351, DSN 227-9351).

              (b) Follow the contract administration procedures at PGI 225.872-5(b).
              (c) Information on quality assurance delegations to foreign governments is in Subpart 246.4, Government Contract Quality Assurance.
              [68 FR 15621, Mar. 31, 2003, as amended at 70 FR 73155, Dec. 9, 2005; 72 FR 30278, May 31, 2007]

              225.872-6
              Request for audit services.
              Handle requests for audit services in France, Germany, the Netherlands, or the United Kingdom in accordance with PGI 215.404-2(c), but follow the additional procedures at PGI 225.872-6.
              [81 FR 59510, Aug. 30, 2016]

              225.872-7
              Industrial security for qualifying countries.
              The required procedures for safeguarding classified defense information necessary for the performance of contracts awarded to qualifying country sources are in the DoD Industrial Security Regulation DoD 5220.22-R (implemented for the Army by AR 380-49; for the Navy by SECNAV Instruction 5510.1H; for the Air Force by AFI 31-601; for the Defense Information Systems Agency by DCA Instruction 240-110-8; and for the National Imagery and Mapping Agency by NIMA Instruction 5220.22).

              225.872-8
              Subcontracting with qualifying country sources.
              In reviewing contractor subcontracting procedures, the contracting officer shall ensure that the contract does not preclude qualifying country sources from competing for subcontracts, except when restricted by national security interest reasons, mobilization base considerations, or applicable U.S. laws or regulations (see the clause at 252.225-7002, Qualifying Country Sources as Subcontractors).

              225.873
              Waiver of United Kingdom commercial exploitation levies.

              225.873-1
              Policy.
              DoD and the Government of the United Kingdom (U.K.) have agreed to waive U.K. commercial exploitation levies and U.S. nonrecurring cost recoupment charges on a reciprocal basis. For U.K. levies to be waived, the offeror or contractor shall identify the levies and the contracting officer shall request a waiver before award of the contract or subcontract under which the levies are charged.

              225.873-2
              Procedures.
              When an offeror or a contractor identifies a levy included in an offered or contract price, follow the procedures at PGI 225.873-2.
              [70 FR 73155, Dec. 9, 2005]

            Subpart 225.9—Customs and Duties

              Source:
              68 FR 15626, Mar. 31, 2003, unless otherwise noted.

              225.900-70
              Definition.
              “Component,” as used in this subpart, means any item supplied to the Government as part of an end product or of another component.
              [74 FR 68383, Dec. 24, 2009]

              225.901
              Policy.

              Unless the supplies are entitled to duty-free treatment under a special category in the Harmonized Tariff Schedule of the United States (e.g., the Caribbean Basin Economic Recovery Act or a Free Trade Agreement), or unless the supplies already have entered into the customs territory of the United States and the contractor already has paid the duty, DoD will issue duty-free entry certificates for—
              (1) Qualifying country supplies (end products and components);
              (2) Eligible products (end products but not components) under contracts covered by the World Trade Organization Government Procurement Agreement or a Free Trade Agreement; and
              (3) Other foreign supplies for which the contractor estimates that duty will exceed $300 per shipment into the customs territory of the United States.
              [68 FR 15626, Mar. 31, 2003, as amended at 69 FR 1928, Jan. 13, 2004; 70 FR 2363, Jan. 13, 2005; 81 FR 28732, May 10, 2016]

              225.902
              Procedures.
              Follow the entry and release procedures at PGI 225.902.
              [70 FR 73155, Dec. 9, 2005]

              225.903
              Exempted supplies.
              (b)(i) For an explanation of the term “supplies,” see PGI 225.903(b)(i).
              (ii) The duty-free certificate shall be printed, stamped, or typed on the face of, or attached to, Customs Form 7501. A duly designated officer or civilian official of the appropriate department or agency shall execute the certificate in the format provided at PGI 225.903(b)(ii).
              [70 FR 73155, Dec. 9, 2005]

            Subpart 225.10—Additional Foreign Acquisition Regulations

              225.1070
              Clause deviations in overseas contracts.
              See 201.403(2) for approval authority for clause deviations in overseas contracts with governments of North Atlantic Treaty Organization (NATO) countries or other allies or with United Nations or NATO organizations.
              [65 FR 19856, Apr. 13, 2000]

            Subpart 225.11—Solicitation Provisions and Contract Clauses

              Source:
              68 FR 16526, Mar. 31, 2003, unless otherwise noted.

              225.1100
              Scope of subpart.
              This subpart prescribes the clauses that implement subparts 225.1 through 225.10. The clauses that implement subparts 225.70 through 225.75 are prescribed within those subparts.
              [68 FR 16526, Mar. 31, 2003, as amended at 81 FR 17048, Mar. 25, 2016]

              225.1101
              Acquisition of supplies.
              (1) Use the basic or the alternate of the provision at 252.225-7000, Buy American—Balance of Payments Program Certificate, instead of the provision at FAR 52.225-2, Buy American Certificate, in any solicitation, including solicitations using FAR part 12 procedures for the acquisition of commercial items, that includes the basic or the alternate of the clause at 252.225-7001, Buy American and Balance of Payments Program. If the solicitation includes the provision at FAR 52.204-7, do not separately list the provision 252.225-7000 in the solicitation.
              (i) Use the basic provision when the solicitation includes the basic clause at 252.225-7001.
              (ii) Use the alternate I provision when the solicitation includes alternate I of the clause at 252.225-7001.
              (2)(i) Use the basic or the alternate of the clause at 252.225-7001, Buy American Act and Balance of Payments Program, instead of the clause at FAR 52.225-1, Buy American —Supplies, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, unless—
              (A) All line items will be acquired from a particular source or sources under the authority of FAR 6.302-3;
              (B) All line items require domestic or qualifying country end products in accordance with subpart 225.70, but note that this exception does not apply if subpart 225.70 only requires manufacture of the end product in the United States or in the United States or Canada, without a corresponding requirement for use of domestic components;

              (C) The acquisition is for supplies for use within the United States and an exception to the Buy American statute applies, e.g., nonavailability or public interest (see FAR 25.103 and 225.103);
              (D) The acquisition is for supplies for use outside the United States and an exception to the Balance of Payments Program applies (see 225.7501);
              (E) One or more of the basic or the alternates of the following clauses will apply to all line items in the contract:
              (1) 252.225-7021, Trade Agreements.
              (2) 252.225-7036, Buy American —Free Trade Agreements—Balance of Payments Program; or
              (F) All line items will be acquired using a procedure specified in 225.7703-1(a).
              (ii) Use the basic clause if the acquisition is not of end products listed in 225.401-70 in support of operations in Afghanistan.
              (iii) Use the alternate I clause when the acquisition is of end products listed in 225.401-70 in support of operations in Afghanistan.

              (3) Use the clause at 252.225-7002, Qualifying Country Sources as Subcontractors, in solicitations and contracts that include the basic or one of the alternates of the following clauses:

              (i) 252.225-7001, Buy American and Balance of Payments Program.
              (ii) 252.225-7021, Trade Agreements.
              (iii) 252.225-7036, Buy American —Free Trade Agreements—Balance of Payments Program.
              (4) Use the clause at 252.225-7013, Duty-Free Entry, instead of the clause at FAR 52.225-8. Do not use the clause for acquisitions of supplies that will not enter the customs territory of the United States.
              (5) Use the basic or the alternate of the provision at 252.225-7020, Trade Agreements Certificate, instead of the provision at FAR 52.225-6, Trade Agreements Certificate, in solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial items, that include the basic or alternate II of the clause at 252.225-7021, Trade Agreements. If the solicitation includes the provision at FAR 52.204-7, do not separately list the provision 252.225-7020 in the solicitation.
              (i) Use the basic provision if the solicitation includes the basic clause at 252.225-7021.
              (ii) Use the alternate I provision if the solicitation includes alternate II of the clause at 252.225-7021.
              (6) Except as provided in paragraph (6)(iv) of this section, use the basic or an alternate of the clause at 252.225-7021, Trade Agreements, instead of the clause at FAR 52.225-5, Trade Agreements, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, if the World Trade Organization Government Procurement Agreement applies, i.e., the acquisition is of end products listed at 225.401-70, the value of the acquisition equals or exceeds $182,000, and none of the exceptions at 25.401(a) applies.
              (i) Use the basic clause in solicitations and contracts that are not of end products in support of operations in Afghanistan, or that include the clause at 252.225-7024, Requirement for Products or Services from Afghanistan.
              (ii) Use the alternate II clause in solicitations and contracts that do not include the clause at 252.225-7024, Requirement for Products or Services from Afghanistan, when the acquisition is of end products in support of operations in Afghanistan.
              (iii) Do not use the basic or an alternate of the clause if—
              (A) Purchase from foreign sources is restricted, unless the contracting officer anticipates a waiver of the restriction; or
              (B) The clause at 252.225-7026, Acquisition Restricted to Products or Services from Afghanistan, is included in the solicitation and contract.
              (iv) The acquisition of eligible and noneligible products under the same contract may result in the application of trade agreements to only some of the items acquired. In such case, indicate in the Schedule those items covered by the Trade Agreements clause.
              (7) Use the provision at 252.225-7032, Waiver of United Kingdom Levies—Evaluation of Offers, in solicitations if a U.K. firm is expected to—
              (i) Submit an offer; or
              (ii) Receive a subcontract exceeding $1 million.
              (8) Use the clause at 252.225-7033, Waiver of United Kingdom Levies, in solicitations and contracts if a U.K. firm is expected to—
              (i) Submit an offer; or
              (ii) Receive a subcontract exceeding $1 million.
              (9) Use the basic or an alternate of the provision at 252.225-7035, Buy American—Free Trade Agreements—Balance of Payments Program Certificate, instead of the provision at FAR 52.225-4, Buy American—Free Trade Agreements—Israeli Trade Act Certificate, in solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial items, that include the basic or an alternate of the clause at 252.225-7036, Buy American—Free Trade Agreements—Balance of Payments Program. If the solicitation includes the provision at FAR 52.204-7, do not separately list the provision 252.225-7035 in the solicitation.
              (i) Use the basic provision in solicitations when the basic of the clause at 252.225-7036 is used.
              (ii) Use the alternate I provision when the solicitation includes alternate I of the clause at 252.225-7036.

              (iii) Use the alternate II provision when the solicitation includes alternate II of the clause at 252.225-7036.

              (iv) Use the alternate III provision when the solicitation includes alternate III of the clause at 252.225-7036.
              (v) Use the alternate IV provision when the solicitation includes alternate IV of the clause at 252.225-7036.
              (vi) Use the alternate V provision when the solicitation includes alternate V of the clause at 252.225-7036.
              (10)(i) Except as provided in paragraph (10)(ii) of this section, use the basic or an alternate of the clause at 252.225-7036, Buy American—Free Trade Agreements—Balance of Payments Program, instead of the clause at FAR 52.225-3, Buy American—Free Trade Agreements—Israeli Trade Act, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, for the items listed at 225.401-70, when the estimated value equals or exceeds $25,000, but is less than $182,000, unless an exception at FAR 25.401 or 225.401 applies.
              (A) Use the basic clause in solicitations and contracts when the estimated value equals or exceeds $100,000, but is less than $182,000, except if the acquisition is of end products in support of operations in Afghanistan.
              (B) Use the alternate I clause in solicitations and contracts when the estimated value equals or exceeds $25,000, but is less than $83,099, except if the acquisition is of end products in support of operations in Afghanistan.
              (C) Use the alternate II clause in solicitations and contracts when the estimated value equals or exceeds $100,000, but is less than $182,000, and the acquisition is of end products in support of operations in Afghanistan.
              (D) Use the alternate III clause in solicitations and contracts when the estimated value equals or exceeds $25,000, but is less than $83,099, and the acquisition is of end products in support of operations in Afghanistan.
              (E) Use the alternate IV clause in solicitations and contracts when the estimated value equals or exceeds $83,099 but is less than $100,000, except if the acquisition is of end products in support of operations in Afghanistan.
              (F) Use the alternate V clause in solicitations and contracts when the estimated value equals or exceeds $83,099 but is less than $100,000 and the acquisition is of end products in support of operations in Afghanistan.
              (ii) Do not use the basic or an alternate of the clause in paragraph (10)(i) of this section if—
              (A) Purchase from foreign sources is restricted (see 225.401(a)(2)), unless the contracting officer anticipates a waiver of the restriction;
              (B) Acquiring information technology that is a commercial item, using fiscal year 2004 or subsequent funds (Section 535 of Division F of the Consolidated Appropriations Act, 2004 (Pub. L. 108-199), and the same provision in subsequent appropriations acts); or
              (C) Using a procedure specified in 225.7703-1(a).
              (iii) The acquisition of eligible and noneligible products under the same contract may result in the application of a Free Trade Agreement to only some of the items acquired. In such case, indicate in the Schedule those items covered by the Buy American —Free Trade Agreements—Balance of Payments Program clause.
              [75 FR 81916, Dec. 29, 2010, as amended at 77 FR 4630, Jan. 30, 2012; 77 FR 30357, May 22, 2012; 77 FR 35880, June 15, 2012; 78 FR 37986, June 25, 2013; 78 FR 40043, July 3, 2013; 78 FR 59857, Sept. 30, 2013; 78 FR 79621, Dec. 31, 2013; 79 FR 3520, Jan. 22, 2014; 79 FR 11342, Feb. 28, 2014; 79 FR 65817, Nov. 5, 2014; 80 FR 2021, Jan. 15, 2015; 80 FR 36898, June 26, 2015; 80 FR 81471, Dec. 30, 2015; 81 FR 17048, Mar. 25, 2016; 82 FR 61482, Dec. 28, 2017; 84 FR 72246, Dec. 31, 2019]

              225.1103
              Other provisions and clauses.
              (1) Unless the contracting officer knows that the prospective contractor is not a domestic concern, use the clause at 252.225-7005, Identification of Expenditures in the United States, in solicitations and contracts that—
              (i) Exceed the simplified acquisition threshold; and
              (ii) Are for the acquisition of—
              (A) Supplies for use outside the United States;
              (B) Construction to be performed outside the United States; or
              (C) Services to be performed primarily outside the United States.

              (2) Use the clause at 252.225-7041, Correspondence in English, in solicitations and contracts when contract performance will be wholly or in part in a foreign country.
              (3) Use the provision at 252.225-7042, Authorization to Perform, in solicitations when contract performance will be wholly or in part in a foreign country. If the solicitation includes the provision at FAR 52.204-7, do not separately list the provision 252.225-7042 in the solicitation.
              (4) Unless an exception in 225.770-3 applies, use the clause at 252.225-7007, Prohibition on Acquisition of Certain Items from Communist Chinese Military Companies, in solicitations and contracts involving the delivery of items covered by the United States Munitions List or the 600 series of the Commerce Control List.
              [68 FR 16526, Mar. 31, 2003, as amended at 71 FR 39006, July 11, 2006; 71 FR 53046, Sept. 8, 2006; 78 FR 37987, June 25, 2013; 78 FR 40043, July 3, 2013; 83 FR 66073, Dec. 21, 2018]

            Subpart 225.70—Authorization Acts, Appropriations Acts, and Other Statutory Restrictions on Foreign Acquisition

              225.7000
              Scope of subpart.
              (a) This subpart contains restrictions on the acquisition of foreign products and services, imposed by DoD appropriations and authorization acts and other statutes. Refer to the acts to verify current applicability of the restrictions.
              (b) Nothing in this subpart affects the applicability of the Buy American statute or the Balance of Payments Program.
              [56 FR 36367, July 31, 1991, as amended at 62 FR 2856, Jan. 17, 1997; 68 FR 15627, Mar. 31, 2003; 77 FR 35880, June 15, 2012]

              225.7001
              Definitions.
              As used in this subpart—

                Assembly means an item forming a portion of a system or subsystem that—
              (1) Can be provisioned and replaced as an entity; and
              (2) Incorporates multiple, replaceable parts.

                Bearing components means the bearing element, retainer, inner race, or outer race.

                Component means any item supplied to the Government as part of an end item or of another component except that for use in 225.7007, the term means an article, material, or supply incorporated directly into an end product.

                End item, as used in sections 225.7003 and 225.7018, means the final production product when assembled or completed and ready for delivery under a line item of the contract (10 U.S.C. 2533b(m)).

                End product means supplies delivered under a line item of the contract.

                Hand or measuring tools means those tools listed in Federal supply classifications 51 and 52, respectively.

                Structural component of a tent—

              (1) Means a component that contributes to the form and stability of the tent (e.g., poles, frames, flooring, guy ropes, pegs); and
              (2) Does not include equipment such as heating, cooling, or lighting.

                Subsystem means a functional grouping of items that combine to perform a major function within an end item, such as electrical power, altitude control, and propulsion.
              [84 FR 72243, Dec. 31, 2019]

              225.7002
              Restrictions on food, clothing, fabrics, hand or measuring tools, and flags.
              [80 FR 51749, Aug. 26, 2015]

              225.7002-1
              Restrictions.
              (a) The following restrictions implement 10 U.S.C. 2533a (the “Berry Amendment”). Except as provided in subsection 225.7002-2, do not acquire—
              (1) Any of the following items, either as end products or components, unless the items have been grown, reprocessed, reused, or produced in the United States:
              (i) Food.

              (ii) Clothing and the materials and components thereof, other than sensors, electronics, or other items added to, and not normally associated with, clothing and the materials and components thereof. Clothing includes items such as outerwear, headwear, underwear, nightwear, footwear, hosiery, handwear, belts, badges, and insignia. For additional guidance and examples, see PGI 225.7002-1(a)(1)(ii).

              (iii)(A) Tents and the structural components of tents;
              (B) Tarpaulins; or
              (C) Covers.
              (iv) Cotton and other natural fiber products.
              (v) Woven silk or woven silk blends.
              (vi) Spun silk yarn for cartridge cloth.
              (vii) Synthetic fabric or coated synthetic fabric, including all textile fibers and yarns that are for use in such fabrics.
              (viii) Canvas products.
              (ix) Wool (whether in the form of fiber or yarn or contained in fabrics, materials, or manufactured articles).
              (x) Any item of individual equipment (Product or Service Code (PSC) 8465) manufactured from or containing any of the fibers, yarns, fabrics, or materials listed in this paragraph (a)(1).
              (2) Hand or measuring tools, unless the tools were produced in the United States. For additional guidance, see PGI 225.7002-1(a)(2).

              (b) In accordance with section 8123 of the Department of Defense Appropriations Act, 2014 (Pub. L. 113-76, division C, title VIII), and the same provision in subsequent Defense appropriations acts, except as provided in 225.7002-2, do not acquire a flag of the United States (PSC 8345), unless such flag, including the materials and components thereof, is manufactured in the United States, consistent with the requirements at 10 U.S.C. 2533a. This restriction does not apply to the acquisition of any end-items or components related to flying or displaying the flag (e.g., flag poles and accessories).
              [67 FR 20697, Apr. 26, 2002, as amended at 71 FR 39009, July 11, 2006; 71 FR 58537, Oct. 4, 2006; 72 FR 2638, Jan. 22, 2007; 74 FR 37636, July 29, 2009; 76 FR 52133, Aug. 19, 2011; 77 FR 38736, June 29, 2012; 78 FR 13546, Feb. 28, 2013; 80 FR 51749, Aug. 26, 2015]

              225.7002-2
              Exceptions.
              Acquisitions in the following categories are not subject to the restrictions in 225.7002-1:
              (a) Acquisitions at or below the simplified acquisition threshold, except for athletic footwear purchased by DoD for use by members of the Army, Navy, Air Force, or Marine Corps upon their initial entry into the Armed Forces (section 817 of the National Defense Authorization Act for Fiscal Year 2017 (Pub. L. 114-328)).

              (b) Acquisitions of any of the items in 225.7002-1, if the Secretary concerned determines that items grown, reprocessed, reused, or produced in the United States cannot be acquired as and when needed in a satisfactory quality and sufficient quantity at U.S. market prices. (See the requirement in 205.301 for synopsis within 7 days after contract award when using this exception.)
              (1) The following officials are authorized, without power of redelegation, to make such a domestic nonavailability determination:
              (i) The Under Secretary of Defense (Acquisition, Technology, and Logistics).
              (ii) The Secretary of the Army.
              (iii) The Secretary of the Navy.
              (iv) The Secretary of the Air Force.
              (v) The Director of the Defense Logistics Agency.
              (2) The supporting documentation for the determination shall include an analysis and written certification by the requiring activity, with specificity, why alternatives that would not require a domestic nonavailability determination are unacceptable.
              (3) Defense agencies other than the Defense Logistics Agency shall follow the procedures at PGI 225.7002-2(b)(3) when submitting a request for a domestic nonavailability determination.
              (c) Acquisitions of items listed in FAR 25.104(a).
              (d) Acquisitions outside the United States in support of combat operations.
              (e) Acquisitions of perishable foods by or for activities located outside the United States for personnel of those activities.
              (f) Acquisitions of food or hand or measuring tools—
              (1) In support of contingency operations; or
              (2) For which the use of other than competitive procedures has been approved on the basis of unusual and compelling urgency in accordance with FAR 6.302-2.

              (g) Emergency acquisitions by activities located outside the United States for personnel of those activities.

              (h) Acquisitions by vessels in foreign waters.
              (i) Acquisitions of items specifically for commissary resale.
              (j) Acquisitions of incidental amounts of cotton, other natural fibers, or wool incorporated in an end product, for which the estimated value of the cotton, other natural fibers, or wool—
              (1) Is not more than 10 percent of the total price of the end product; and
              (2) Does not exceed the simplified acquisition threshold.
              (k) Acquisitions of waste and byproducts of cotton or wool fiber for use in the production of propellants and explosives.
              (l) Acquisitions of foods manufactured or processed in the United States, regardless of where the foods (and any component if applicable) were grown or produced. However, in accordance with section 8118 of the DoD Appropriations Act for Fiscal Year 2005 (Pub. L. 108-287), this exception does not apply to fish, shellfish, or seafood manufactured or processed in the United States or fish, shellfish, or seafood contained in foods manufactured or processed in the United States.
              (m) Acquisitions of fibers and yarns that are for use in synthetic fabric or coated synthetic fabric (but not the purchase of the synthetic or coated synthetic fabric itself), if—
              (1) The fabric is to be used as a component of an end product that is not a textile product. Examples of textile products, made in whole or in part of fabric, include—
              (i) Draperies, floor coverings, furnishings, and bedding (Product or Service Group (PSG) 72, Household and Commercial Furnishings and Appliances);
              (ii) Items made in whole or in part of fabric in Product or Service Group (PSG) 83, Textile/leather/furs/apparel/findings/tents/flags, or Federal Supply Group 84, Clothing, Individual Equipment and Insignia;
              (iii) Upholstered seats (whether for household, office, or other use); and
              (iv) Parachutes (Product or Service Group (PSG) 1670); or
              (2) The fibers and yarns are para-aramid fibers and continuous filament para-aramid yarns manufactured in a qualifying country.
              (n) Acquisitions of chemical warfare protective clothing when the acquisition furthers an agreement with a qualifying country. (See 225.003(10) and the requirement in 205.301 for synopsis within 7 days after contract award when using this exception.)
              (o) Acquisitions that are interagency, State, or local purchases that are executed by DoD as a result of the transfer of contracts from the General Services Administration or for which DoD serves as an item manager for products on behalf of the General Services Administration. According to section 897 of the National Defense Authorization Act for Fiscal Year 2016 (Pub. L. 114-92), such contracts shall not be subject to requirements under chapter 148 of title 10, United States Code (including 10 U.S.C. 2533a), to the extent such contracts are for purchases of products by other Federal agencies or State or local governments.
              [67 FR 20697, Apr. 26, 2002, as amended at 68 FR 7442, Feb. 14, 2003; 69 FR 26509, May 13, 2004; 69 FR 31910, June 8, 2004; 70 FR 43073, July 26, 2005; 71 FR 34833, June 16, 2006; 71 FR 58537, Oct. 4, 2006; 72 FR 20765, Apr. 26, 2007; 72 FR 63123, Nov. 8, 2007; 73 FR 11356, Mar. 3, 2008; 73 FR 76971, Dec. 18, 2008; 74 FR 37636, July 29, 2009; 74 FR 52896, Oct. 15, 2009; 75 FR 34945, June 21, 2010; 76 FR 14589, Mar. 17, 2011; 76 FR 52133, >Aug. 19, 2011; 80 FR 36718, June 26, 2015; 80 FR 51749, Aug. 26, 2015; 81 FR 42562, June 30, 2016; 83 FR 65562, Dec. 21, 2018; 85 FR 61501, Sept. 29, 2020]

              225.7002-3
              Contract clauses.
              Unless an exception at 225.7002-2 applies—
              (a) Use the clause at 252.225-7012, Preference for Certain Domestic Commodities, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items .

              (b) Use the clause at 252.225-7015, Restriction on Acquisition of Hand or Measuring Tools, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that exceed the simplified acquisition threshold that require delivery of hand or measuring tools.

              (c) Use the clause at 252.225-7006, Acquisition of the American Flag, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that are for the acquisition of the American flag, with an estimated value that exceeds the simplified acquisition threshold.
              [61 FR 50453, Sept. 26, 1996, as amended at 67 FR 20698, Apr. 26, 2002; 68 FR 15627, Mar. 31, 2003; 74 FR 37636, July 29, 2009; 78 FR 37987, June 25, 2013; 80 FR 51749, Aug. 26, 2015; 80 FR 67255, Oct. 30, 2015; 83 FR 65562, Dec. 21, 2018]

              225.7003
              Restrictions on acquisition of specialty metals.

              225.7003-1
              Definitions.
              As used in this section—

                Alloy means a metal consisting of a mixture of a basic metallic element and one or more metallic, or non-metallic, alloying elements.
              (1) For alloys named by a single metallic element (e.g., titanium alloy), it means that the alloy contains 50 percent or more of the named metal (by mass).
              (2) If two metals are specified in the name (e.g., nickel-iron alloy), those metals are the two predominant elements in the alloy, and together they constitute 50 percent or more of the alloy (by mass).

                Automotive item—
              (1) Means a self-propelled military transport tactical vehicle, primarily intended for use by military personnel or for carrying cargo, such as—
              (i) A high-mobility multipurpose wheeled vehicle;
              (ii) An armored personnel carrier; or
              (iii) A troop/cargo-carrying truckcar, truck, or van; and
              (2) Does not include—
              (i) A commercially available off-the-shelf vehicle; or
              (ii) Construction equipment (such as bulldozers, excavators, lifts, or loaders) or other self-propelled equipment (such as cranes or aircraft ground support equipment).

                Commercial derivative military article means an item acquired by the Department of Defense that is or will be produced using the same production facilities, a common supply chain, and the same or similar production processes that are used for the production of articles predominantly used by the general public or by nongovernmental entities for purposes other than governmental purposes.

                Electronic component means an item that operates by controlling the flow of electrons or other electrically charged particles in circuits, using interconnections of electrical devices such as resistors, inductors, capacitors, diodes, switches, transistors, or integrated circuits. The term does not include structural or mechanical parts of an assembly containing an electronic component and does not include any high performance magnets that may be used in the electronic component.

                High performance magnet means a permanent magnet that obtains a majority of its magnetic properties from rare earth metals (such as samarium).

                Produce means—
              (1) Atomization;
              (2) Sputtering; or
              (3) Final consolidation of non-melt derived metal powders.

                Specialty metal means—
              (1) Steel—
              (i) With a maximum alloy content exceeding one or more of the following limits: manganese, 1.65 percent; silicon, 0.60 percent; or copper, 0.60 percent; or
              (ii) Containing more than 0.25 percent of any of the following elements: aluminum, chromium, cobalt, molybdenum, nickel, niobium (columbium), titanium, tungsten, or vanadium;
              (2) Metal alloys consisting of—
              (i) Nickel or iron-nickel alloys that contain a total of alloying metals other than nickel and iron in excess of 10 percent; or
              (ii) Cobalt alloys that contain a total of alloying metals other than cobalt and iron in excess of 10 percent;
              (3) Titanium and titanium alloys; or
              (4) Zirconium and zirconium alloys.

                Steel means an iron alloy that includes between .02 and 2 percent carbon and may include other elements.
              [74 FR 37636, July 29, 2009, as amended at 84 FR 72243, Dec. 31, 2019]

              225.7003-2
              Restrictions.

              The following restrictions implement 10 U.S.C. 2533b. Except as provided in 225.7003-3—

              (1)(a) Do not acquire the following items, or any components of the following items, unless any specialty metals contained in the items or components are melted or produced in the United States (also see guidance at PGI 225.7003-2(a)):
              (i) Aircraft.
              (ii) Missile or space systems.
              (iii) Ships.
              (iv) Tank or automotive items.
              (v) Weapon systems.
              (vi) Ammunition.
              (2) Do not acquire a specialty metal (e.g., raw stock, including bar, billet, slab, wire, plate, and sheet; castings; and forgings) as an end item, unless the specialty metal is melted or produced in the United States. This restriction applies to specialty metal acquired by a contractor for delivery to DoD as an end item, in addition to specialty metal acquired by DoD directly from the entity that melted or produced the specialty metal.

              (b) For more information on specialty metals restrictions and reporting of noncompliances, see http://www.acq.osd.mil/dpap/cpic/ic/restrictions_on_specialty_metals_10_usc_2533b.html.

              [74 FR 37636, July 29, 2009, as amended at 81 FR 28730, May 10, 2016]

              225.7003-3
              Exceptions.
              (a) Acquisitions in the following categories are not subject to the restrictions in 225.7003-2:
              (1) Acquisitions at or below the simplified acquisition threshold.
              (2) Acquisitions outside the United States in support of combat operations.
              (3) Acquisitions in support of contingency operations.
              (4) Acquisitions for which the use of other than competitive procedures has been approved on the basis of unusual and compelling urgency in accordance with FAR 6.302-2.
              (5) Acquisitions of items specifically for commissary resale.
              (6) Acquisitions of items for test and evaluation under the foreign comparative testing program (10 U.S.C. 2350a(g)). However, this exception does not apply to any acquisitions under follow-on production contracts.
              (b) One or more of the following exceptions may apply to an end item or component that includes any of the following, under a prime contract or subcontract at any tier. The restrictions in 225.7003-2 do not apply to the following:
              (1) Electronic components, unless the Secretary of Defense, upon the recommendation of the Strategic Materials Protection Board pursuant to 10 U.S.C. 187, determines that the domestic availability of a particular electronic component is critical to national security.
              (2)(i) Commercially available off-the-shelf (COTS) items containing specialty metals, except the restrictions do apply to contracts or subcontracts for the acquisition of—
              (A) Specialty metal mill products, such as bar, billet, slab, wire, plate, and sheet, that have not been incorporated into end items, subsystems, assemblies, or components. Specialty metal supply contracts issued by COTS producers are not subcontracts for the purposes of this exception;
              (B) Forgings or castings of specialty metals, unless the forgings or castings are incorporated into COTS end items, subsystems, or assemblies;
              (C) Commercially available high performance magnets that contain specialty metal, unless such high performance magnets are incorporated into COTS end items or subsystems (see PGI 225.7003-3(b)(6) for a table of applicability of specialty metals restrictions to magnets); and
              (D) COTS fasteners, unless—
              (1) The fasteners are incorporated into COTS end items, subsystems, or assemblies; or
              (2) The fasteners qualify for the commercial item exception in paragraph (b)(3) of this subsection.
              (ii) If this exception is used for an acquisition of COTS end items valued at $5 million or more per item, the acquiring department or agency shall submit an annual report to the Director, Defense Procurement and Acquisition Policy, in accordance with the procedures at PGI 225.7003-3(b)(2).

              (3) Fasteners that are commercial items and are acquired under a contract or subcontract with a manufacturer of such fasteners, if the manufacturer has certified that it will purchase, during the relevant calendar year, an amount of domestically melted or produced specialty metal, in the required form, for use in the production of fasteners for sale to DoD and other customers, that is not less than 50 percent of the total amount of the specialty metal that the manufacturer will purchase to carry out the production of such fasteners for all customers.
              (4) Items listed in 225.7003-2(a), manufactured in a qualifying country or containing specialty metals melted or produced in a qualifying country.

              (5) Specialty metal in any of the items listed in 225.7003-2 if the USD(A&S), or an official authorized in accordance with paragraph (b)(5)(i) of this section, determines that specialty metal melted or produced in the United States cannot be acquired as and when needed at a fair and reasonable price in a satisfactory quality, a sufficient quantity, and the required form (i.e., a domestic nonavailability determination). In accordance with 10 U.S.C. 2533b(m)(4), the term “required form” in this section refers to the form of the mill product, such as bar, billet, wire, slab, plate, or sheet, in the grade appropriate for the production of a finished end item to be delivered to the Government under this contract; or a finished component assembled into an end item to be delivered to the Government under the contract. See guidance in PGI 225.7003-3(b)(5).
              (i) The Secretary of the military department concerned is authorized, without power of redelegation, to make a domestic nonavailability determination that applies to only one contract. The supporting documentation for the determination shall include an analysis and written documentation by the requiring activity, with specificity, why alternatives that would not require a domestic nonavailability determination are unacceptable.

              (ii) A domestic nonavailability determination that applies to more than one contract (i.e., a class domestic nonavailability determination), requires the approval of the USD(A&S).
              (A) At least 30 days before making a domestic nonavailability determination that would apply to more than one contract, the USD(A&S) will, to the maximum extent practicable, and in a manner consistent with the protection of national security and confidential business information—
              (1) Publish a notice on the Federal Business Opportunities Web site (http://www.FedBizOpps.gov or any successor site) of the intent to make the domestic nonavailability determination; and
              (2) Solicit information relevant to such notice from interested parties, including producers of specialty metal mill products.
              (B) The USD(A&S)—
              (1) Will take into consideration all information submitted in response to the notice in making a class domestic nonavailability determination;
              (2) May consider other relevant information that cannot be made part of the public record consistent with the protection of national security information and confidential business information; and
              (3) Will ensure that any such domestic nonavailability determination and the rationale for the determination are made publicly available to the maximum extent consistent with the protection of national security and confidential business information.

              (6) End items containing a minimal amount of otherwise noncompliant specialty metals (i.e., specialty metals not melted or produced in the United States that are not covered by another exception listed in this paragraph (b)), if the total weight of noncompliant specialty metal does not exceed 2 percent of the total weight of all specialty metal in the end item. This exception does not apply to high performance magnets containing specialty metals. See PGI 225.7003-3(b)(6) for a table of applicability of specialty metals restrictions to magnets.
              (c) Compliance for commercial derivative military articles. The restrictions at 225.7003-2(a) do not apply to an item acquired under a prime contract if—

              (1) The offeror has certified, and subsequently demonstrates, that the offeror and its subcontractor(s) will individually or collectively enter into a contractual agreement or agreements to purchase a sufficient quantity of domestically melted or produced specialty metal in accordance with the provision at 252.225-7010; and

              (2) The USD(A&S), or the Secretary of the military department concerned, determines that the item is a commercial derivative military article (defense agencies see procedures at PGI 225.7003-3(c)). The contracting officer shall submit the offeror's certification and a request for a determination to the appropriate official, through agency channels, and shall notify the offeror when a decision has been made.
              (d) National security waiver. The USD(A&S) may waive the restrictions at 225.7003-2 if the USD(A&S) determines in writing that acceptance of the item is necessary to the national security interests of the United States (see procedures at PGI 225.7003-3(d). This authority may not be delegated.
              (1) The written determination of the USD(A&S)—
              (i) Shall specify the quantity of end items to which the national security waiver applies;
              (ii) Shall specify the time period over which the national security waiver applies; and
              (iii) Shall be provided to the congressional defense committees before the determination is executed, except that in the case of an urgent national security requirement, the determination may be provided to the congressional defense committees up to 7 days after it is executed.
              (2) After making such a determination, the USD(A&S) will—
              (i) Ensure that the contractor or subcontractor responsible for the noncompliant specialty metal develops and implements an effective plan to ensure future compliance; and
              (ii) Determine whether or not the noncompliance was knowing and willful. If the USD(A&S) determines that the noncompliance was knowing and willful, the appropriate debarring and suspending official shall consider suspending or debarring the contractor or subcontractor until such time as the contractor or subcontractor has effectively addressed the issues that led to the noncompliance.
              (3) Because national security waivers will only be granted when the acquisition in question is necessary to the national security interests of the United States, the requirement for a plan will be applied as a condition subsequent, and not a condition precedent, to the granting of a waiver.
              [74 FR 37636, July 29, 2009, as amended at 75 FR 48280, Aug. 10, 2010; 79 FR 17446, Mar. 28, 2014; 84 FR 72244, Dec. 31, 2019; 85 FR 61502, Sept. 29, 2020]

              225.7003-4
              [Reserved]

              225.7003-5
              Solicitation provision and contract clauses.
              (a) Unless the acquisition is wholly exempt from the specialty metals restrictions at 225.7003-2 because the acquisition is covered by an exception in 225.7003-3(a) or (d) (but see paragraph (d) of this subsection)—
              (1) Use the clause at 252.225-7008, Restriction on Acquisition of Specialty Metals, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that—
              (i) Exceed the simplified acquisition threshold; and
              (ii) Require the delivery of specialty metals as end items.
              (2) Use the clause at 252.225-7009, Restriction on Acquisition of Certain Articles Containing Specialty Metals, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that—
              (i) Exceed the simplified acquisition threshold; and
              (ii) Require delivery of any of the following items, or components of the following items, if such items or components contain specialty metal:
              (A) Aircraft.
              (B) Missile or space systems.
              (C) Ships.
              (D) Tank or automotive items.
              (E) Weapon systems.
              (F) Ammunition.
              (b) Use the provision at 252.225-7010, Commercial Derivative Military Article—Specialty Metals Compliance Certificate, in solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial items, —
              (1) That contain the clause at 252.225-7009; and

              (2) For which the contracting officer anticipates that one or more offers of commercial derivative military articles may be received.
              (c) If an agency cannot reasonably determine at time of acquisition whether some or all of the items will be used in support of combat operations or in support of contingency operations, the contracting officer should not rely on the exception at 225.7003-3(a)(2) or (3), but should include the appropriate specialty metals clause or provision in the solicitation and contract.
              (d) If the solicitation and contract require delivery of a variety of contract line items containing specialty metals, but only some of the items are subject to domestic specialty metals restrictions, identify in the Schedule those items that are subject to the restrictions.
              [74 FR 37636, July 29, 2009; 75 FR 48280, Aug. 10, 2010; 78 FR 37987, June 25, 2013]

              225.7004
              Restriction on acquisition of foreign buses.

              225.7004-1
              Restriction.
              In accordance with 10 U.S.C. 2534, do not acquire a multipassenger motor vehicle (bus) unless it is manufactured in the United States, Australia, Canada, or the United Kingdom.
              [68 FR 15627, Mar. 31, 2003, as amended at 83 FR 65562, Dec. 21, 2018]

              225.7004-2
              Applicability.
              Apply this restriction if the buses are purchased, leased, rented, or made available under contracts for transportation services.
              [68 FR 15627, Mar. 31, 2003]

              225.7004-3
              Exceptions.
              This restriction does not apply in any of the following circumstances:
              (a) Buses manufactured outside the United States, Australia, Canada, or the United Kingdom are needed for temporary use because buses manufactured in the United States or Canada are not available to satisfy requirements that cannot be postponed. Such use may not, however, exceed the lead time required for acquisition and delivery of busesmanufactured in the United States, Australia, Canada, or the United Kingdom.
              (b) The requirement for buses is temporary in nature. For example, to meet a special, nonrecurring requirement or a sporadic and infrequent recurring requirement, buses manufactured outside the United States, Australia, Canada, or the United Kingdommay be used for temporary periods of time. Such use may not, however, exceed the period of time needed to meet the special requirement.
              (c) Buses manufactured outside the United States, Australia, Canada, or the United Kingdom are available at no cost to the U.S. Government.
              (d) The acquisition is for an amount at or below the simplified acquisition threshold.
              [68 FR 15627, Mar. 31, 2003, as amended at 83 FR 65562, Dec. 21, 2018]

              225.7004-4
              Waiver.
              The waiver criteria at 225.7008(a) apply to this restriction.
              [68 FR 15627, Mar. 31, 2003, as amended at 74 FR 37639, July 29, 2009]

              225.7005
              [Reserved]

              225.7006
              Restriction on air circuit breakers for naval vessels.

              225.7006-1
              Restriction.
              In accordance with 10 U.S.C. 2534, do not acquire air circuit breakers for naval vessels unless they are manufactured in the United States, Australia, Canada, or the United Kingdom.
              [68 FR 15627, Mar. 31, 2003, as amended at 83 FR 65562, Dec. 21, 2018]

              225.7006-2
              Exceptions.
              This restriction does not apply if the acquisition is—
              (a) For an amount at or below the simplified acquisition threshold; or
              (b) For spare or repair parts needed to support air circuit breakers manufactured outside the United States. Support includes the purchase of spare air circuit breakers when those from alternate sources are not interchangeable.
              [68 FR 15627, Mar. 31, 2003]

              225.7006-3
              Waiver.
              The waiver criteria at 225.7008(a) apply to this restriction.
              [83 FR 65562, Dec. 21, 2018]

              225.7006-4
              Solicitation provision and contract clause.
              (a) Use the provision at 252.225-7037, Evaluation of Offers for Air Circuit Breakers, in solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial items, that require air circuit breakers for naval vessels unless—
              (1) An exception applies; or
              (2) A waiver has been granted.
              (b) Use the clause at 252.225-7038, Restriction on Acquisition of Air Circuit Breakers, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that require air circuit breakers for naval vessels unless—
              (1) An exception at 225.7006-2 applies; or
              (2) A waiver has been granted.
              [68 FR 15627, Mar. 31, 2003, as amended at 78 FR 37988, June 25, 2013; 83 FR 65562, Dec. 21, 2018]

              225.7007
              Restrictions on anchor and mooring chain.

              225.7007-1
              Restrictions.
              (a) In accordance with Section 8041 of the Fiscal Year 1991 DoD Appropriations Act (Public Law 101-511) and similar sections in subsequent DoD appropriations acts, do not acquire welded shipboard anchor and mooring chain, four inches or less in diameter, unless—
              (1) It is manufactured in the United States, including cutting, heat treating, quality control, testing, and welding (both forging and shot blasting process); and
              (2) The cost of the components manufactured in the United States exceeds 50 percent of the total cost of components.
              (b) 10 U.S.C. 2534 also restricts acquisition of welded shipboard anchor and mooring chain, four inches or less in diameter, when used as a component of a naval vessel. However, the Appropriations Act restriction described in paragraph (a) of this subsection takes precedence over the restriction of 10 U.S.C. 2534.
              [68 FR 15627, Mar. 31, 2003]

              225.7007-2
              Waiver.
              (a) The Secretary of the department responsible for acquisition may waive the restriction in 225.7007-1(a), on a case-by-case basis, if—
              (1) Sufficient domestic suppliers are not available to meet DoD requirements on a timely basis; and
              (2) The acquisition is necessary to acquire capability for national security purposes.
              (b) Document the waiver in a written determination and findings containing—
              (1) The factors supporting the waiver; and
              (2) A certification that the acquisition must be made in order to acquire capability for national security purposes.
              (c) Provide a copy of the determination and findings to the House and Senate Committees on Appropriations.
              [68 FR 15627, Mar. 31, 2003]

              225.7007-3
              Contract clause.
              Unless a waiver has been granted, use the clause at 252.225-7019, Restriction on Acquisition of Anchor and Mooring Chain, in solicitations and contracts requiring welded shipboard anchor or mooring chain four inches or less in diameter.
              [68 FR 15627, Mar. 31, 2003]

              225.7008
              Waiver of restrictions of 10 U.S.C. 2534.
               When specifically authorized by reference elsewhere in this subpart, the restrictions on certain foreign purchases under 10 U.S.C. 2534(a) may be waived as follows:
              (a)(1) The Under Secretary of Defense (Acquisition and Sustainment) (USD(A&S)), without power of delegation, may waive a restriction for a particular item for a particular foreign country upon determination that—

              (i) United States producers of the item would not be jeopardized by competition from a foreign country, and that country does not discriminate against defense items produced in the United States to a greater degree than the United States discriminates against defense items produced in that country; or
              (ii) Application of the restriction would impede cooperative programs entered into between DoD and a foreign country, or would impede the reciprocal procurement of defense items under a memorandum of understanding providing for reciprocal procurement of defense items under 225.872, and that country does not discriminate against defense items produced in the United States to a greater degree than the United States discriminates against defense items produced in that country.

              (2) A notice of the determination to exercise the waiver authority shall be published in the Federal Register and submitted to the congressional defense committees at least 15 days before the effective date of the waiver.
              (3) The effective period of the waiver shall not exceed 1 year.
              (4) For contracts entered into prior to the effective date of a waiver, provided adequate consideration is received to modify the contract, the waiver shall be applied as directed or authorized in the waiver to—
              (i) Subcontracts entered into on or after the effective date of the waiver; and
              (ii) Options for the procurement of items that are exercised after the effective date of the waiver, if the option prices are adjusted for any reason other than the application of the waiver.
              (b) The head of the contracting activity may waive a restriction on a case-by-case basis upon execution of a determination and findings that any of the following applies:
              (1) The restriction would cause unreasonable delays.
              (2) Satisfactory quality items manufactured in the United States, Australia, or Canada, or the United Kingdom are not available.
              (3) Application of the restriction would result in the existence of only one source for the item in the United States, Australia, or Canada, or the United Kingdom.
              (4) Application of the restriction is not in the national security interests of the United States.
              (5) Application of the restriction would adversely affect a U.S. company.
              (c) A restriction is waived when it would cause unreasonable costs. The cost of an item of U.S., Australian, Canadian, or United Kingdom origin is unreasonable if it exceeds 150 percent of the offered price, inclusive of duty, of items that are not of U.S., Australian, Canadian, or United Kingdom origin.
              [74 FR 37639, July 29, 2009, as amended at 78 FR 13543, Feb. 28, 2013; 80 FR 10391, Feb. 26, 2015; 85 FR 34534, June 5, 2020]

              225.7009
              Restriction on ball and roller bearings.

              225.7009-1
              Scope.
              This section implements Section 8065 of the Fiscal Year 2002 DoD Appropriations Act (Pub. L. 107-117) and the same restriction in subsequent DoD appropriations acts.
              [71 FR 14111, Mar. 21, 2006]

              225.7009-2
              Restriction.
              (a) Do not acquire ball and roller bearings unless—
              (1) The bearings are manufactured in the United States or Canada; and
              (2) For each ball or roller bearing, the cost of the bearing components manufactured in the United States or Canada exceeds 50 percent of the total cost of the bearing components of that ball or roller bearing.
              (b) The restriction at 225.7003-2 may also apply to bearings that are made from specialty metals, such as high carbon chrome steel (bearing steel).
              [75 FR 76300, Dec. 8, 2010, as amended at 76 FR 32843, June 6, 2011]

              225.7009-3
              Exception.
              The restriction in 225.7009-2 does not apply to contracts or subcontracts for the acquisition of commercial items, except for commercial ball and roller bearings acquired as end items.
              [71 FR 14111, Mar. 21, 2006]

              225.7009-4
              Waiver.

              The Secretary of the department responsible for acquisition or, for the Defense Logistics Agency, the Component Acquisition Executive, may waive the restriction in 225.7009-2, on a case-by-case basis, by certifying to the House and Senate Committees on Appropriations that—
              (a) Adequate domestic supplies are not available to meet DoD requirements on a timely basis; and
              (b) The acquisition must be made in order to acquire capability for national security purposes.
              [71 FR 14111, Mar. 21, 2006]

              225.7009-5
              Contract clause.
              Use the clause at 252.225-7016, Restriction on Acquisition of Ball and Roller Bearings, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, unless—
              (a) The items being acquired are commercial items other than ball or roller bearings acquired as end items;
              (b) The items being acquired do not contain ball and roller bearings; or
              (c) A waiver has been granted in accordance with 225.7009-4.
              [71 FR 14112, Mar. 21, 2006, as amended at 78 FR 37988, June 25, 2013]

              225.7010
              Restriction on certain naval vessel components.

              225.7010-1
              Restriction.
              In accordance with 10 U.S.C. 2534, do not acquire the following components of naval vessels, to the extent they are unique to marine applications, unless manufactured in the United States, Australia, Canada, or the United Kingdom:
              (a) Gyrocompasses.
              (b) Electronic navigation chart systems.
              (c) Steering controls.
              (d) Pumps.
              (e) Propulsion and machinery control systems.
              (f) Totally enclosed lifeboats.
              [80 FR 10391, Feb. 26, 2015, as amended at 85 FR 34534, June 5, 2020]

              225.7010-2
              Exceptions.
              This restriction does not apply to—
              (a) Contracts or subcontracts that do not exceed the simplified acquisition threshold; or
              (b) Acquisition of spare or repair parts needed to support components for naval vessels manufactured outside the United States. Support includes the purchase of spare gyrocompasses, electronic navigation chart systems, steering controls, pumps, propulsion and machinery control systems, or totally enclosed lifeboats, when those from alternate sources are not interchangeable.
              [80 FR 10391, Feb. 26, 2015]

              225.7010-3
              Waiver.
              The waiver criteria at 225.7008(a) apply to this restriction.
              [85 FR 34534, June 5, 2020]

              225.7010-4
              Implementation.
              (a) 10 U.S.C. 2534(h) prohibits the use of contract clauses or certifications to implement this restriction.
              (b) Agencies shall accomplish implementation of this restriction through use of management and oversight techniques that achieve the objectives of this section without imposing a significant management burden on the Government or the contractor involved.
              [80 FR 10391, Feb. 26, 2015]

              225.7011
              Restriction on carbon, alloy, and armor steel plate.

              225.7011-1
              Restriction.

              (a) In accordance with Section 8111 of the Fiscal Year 1992 DoD Appropriations Act (Pub. L. 102-172) and similar sections in subsequent DoD appropriations acts, do not acquire any of the following types of carbon, alloy, or armor steel plate for use in a Government-owned facility or a facility under the control of (e.g., leased by) DoD, unless it is melted and rolled in the United States or Canada:
              (1) Carbon, alloy, or armor steel plate in Federal Supply Class 9515.
              (2) Carbon, alloy, or armor steel plate described by specifications of the American Society for Testing Materials or the American Iron and Steel Institute.
              (b) This restriction—

              (1) Applies to the acquisition of carbon, alloy, or armor steel plate as a finished steel mill product that may be used “as is” or may be used as an intermediate material for the fabrication of an end product; and

              (2) Does not apply to the acquisition of an end product (e.g., a machine tool), to be used in the facility, that contains carbon, alloy, or armor steel plate as a component.
              [71 FR 75894, Dec. 19, 2006]

              225.7011-2
              Waiver.
              The Secretary of the department responsible for acquisition may waive this restriction, on a case-by-case basis, by certifying to the House and Senate Committees on Appropriations that—
              (a) Adequate U.S. or Canadian supplies are not available to meet DoD requirements on a timely basis; and
              (b) The acquisition must be made in order to acquire capability for national security purposes.
              [68 FR 15627, Mar. 31, 2003]

              225.7011-3
              Contract clause.
              Unless a waiver has been granted, use the clause at 252.225-7030, Restriction on Acquisition of Carbon, Alloy, and Armor Steel Plate, in solicitations and contracts that'
              (a) Require the delivery to the Government of carbon, alloy, or armor steel plate that will be used in a Government-owned facility or a facility under the control of DoD; or
              (b) Require contractors operating in a Government-owned facility or a facility under the control of DoD to purchase carbon, alloy, or armor steel plate.
              [68 FR 15627, Mar. 31, 2003, as amended at 71 FR 75894, Dec. 19, 2006]

              225.7012
              Restriction on supercomputers.

              225.7012-1
              Restriction.
              In accordance with Section 8112 of Public Law 100-202, and similar sections in subsequent DoD appropriations acts, do not purchase a supercomputer unless it is manufactured in the United States.
              [68 FR 15627, Mar. 31, 2003]

              225.7012-2
              Waiver.
              The Secretary of Defense may waive this restriction, on a case-by-case basis, after certifying to the Armed Services and Appropriations Committees of Congress that—
              (a) Adequate U.S. supplies are not available to meet requirements on a timely basis; and
              (b) The acquisition must be made in order to acquire capability for national security purposes.
              [68 FR 15627, Mar. 31, 2003]

              225.7012-3
              Contract clause.
              Unless a waiver has been granted, use the clause at 252.225-7011, Restriction on Acquisition of Supercomputers, in solicitations and contracts for the acquisition of supercomputers.
              [68 FR 15627, Mar. 31, 2003]

              225.7013
              Restrictions on construction or repair of vessels in foreign shipyards.
              In accordance with 10 U.S.C. 7309 and 7310—
              (a) Do not award a contract to construct in a foreign shipyard—
              (1) A vessel for any of the armed forces; or
              (2) A major component of the hull or superstructure of a vessel for any of the armed forces; and
              (b) Do not overhaul, repair, or maintain in a foreign shipyard, a naval vessel (or any other vessel under the jurisdiction of the Secretary of the Navy) homeported in the United States. This restriction does not apply to voyage repairs.
              [68 FR 15627, Mar. 31, 2003, as amended at 71 FR 58537, Oct. 4, 2006]

              225.7014
              Restrictions on military construction.

              (a) For restriction on award of military construction contracts to be performed in the United States outlying areas in the Pacific and on Kwajalein Atoll, or in countries bordering the Arabian Gulf, see 236.273(a).

              (b) For restriction on acquisition of steel for use in military construction projects, see 236.274.
              [74 FR 2417, Jan. 15, 2009, as amended at 79 FR 44316, July 31, 2014; 80 FR 15911, Mar. 26, 2015]

              225.7015
              Restriction on overseas architect-engineer services.
              For restriction on award of architect-engineer contracts to be performed in Japan, in any North Atlantic Treaty Organization member country, or in countries bordering the Arabian Gulf, see 236.602-70.
              [68 FR 15627, Mar. 31, 2003, as amended at 79 FR 44316, July 31, 2014; 80 FR 15911, Mar. 26, 2015]

              225.7017
              Utilization of domestic photovoltaic devices.

              225.7017-1
              Definitions.
              As used in this section—

                Caribbean Basin country photovoltaic device means a photovoltaic device that—
              (1) Is wholly manufactured in a Caribbean Basin country; or
              (2) In the case of a photovoltaic device that consists in whole or in part of materials from another country, has been substantially transformed in a Caribbean Basin country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed, provided that the photovoltaic device is not subsequently substantially transformed outside of a Caribbean Basin country.

                Covered contract means an energy savings performance contract, a utility services contract, or a private housing contract awarded by DoD, to be performed in the United States, if such contract results in DoD ownership of photovoltaic devices, by means other than DoD purchase as end products. DoD is deemed to own a photovoltaic device if the device is—
              (1) Installed in the United States on DoD property or in a facility owned by DoD; and
              (2) Reserved for the exclusive use of DoD in the United States for the full economic life of the device.

                Designated country photovoltaic device means a World Trade Organization Government Procurement Agreement (WTO GPA) country photovoltaic device, a Free Trade Agreement country photovoltaic device, a least developed country photovoltaic device, or a Caribbean Basin country photovoltaic device.

                Domestic photovoltaic device means a photovoltaic device that is manufactured in the United States.

                Foreign photovoltaic device means a photovoltaic device other than a domestic photovoltaic device.

                Free Trade Agreement country photovoltaic device means a photovoltaic device that—
              (1) Is wholly manufactured in a Free Trade Agreement country; or
              (2) In the case of a photovoltaic device that consists in whole or in part of materials from another country, has been substantially transformed in a Free Trade Agreement country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed, provided that the photovoltaic device is not subsequently substantially transformed outside of a Free Trade Agreement country.

                Least developed country photovoltaic device means a photovoltaic device that—
              (1) Is wholly manufactured in a least developed country; or
              (2) In the case of a photovoltaic device that consists in whole or in part of materials from another country, has been substantially transformed in a least developed country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed, provided that the photovoltaic device is not subsequently substantially transformed outside of a least developed country.

                Photovoltaic device means a device that converts light directly into electricity through a solid-state, semiconductor process.

                Qualifying country photovoltaic device means a photovoltaic device manufactured in a qualifying country.

                U.S.-made photovoltaic device means a photovoltaic device that—
              (1) Is manufactured in the United States; or

              (2) Is substantially transformed in the United States into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed, provided that the photovoltaic device is not subsequently substantially transformed outside of the United States.

                WTO GPA country photovoltaic device means a photovoltaic device that—
              (1) Is wholly manufactured in a WTO GPA country; or
              (2) In the case of a photovoltaic device that consists in whole or in part of materials from another country, has been substantially transformed in a WTO GPA country into a new and different article of commerce with a name, character, or use distinct from that of the article or articles from which it was transformed, provided that the photovoltaic device is not subsequently substantially transformed outside of a WTO GPA country.
              [80 FR 72603, Nov. 20, 2015, as amended at 83 FR 62499, Dec. 4, 2018]

              225.7017-2
              Restriction.

              In accordance with section 846 of the National Defense Authorization Act for Fiscal Year 2011 (Pub. L. 111-383), photovoltaic devices provided under any covered contract shall comply with 41 U.S.C. chapter 83, Buy American, subject to the exceptions to that statute provided in the Trade Agreements Act of 1979 (19 U.S.C. 2501 et seq.).
              [83 FR 62500, Dec. 4, 2018]

              225.7017-3
              Exceptions.
              DoD requires the contractor to utilize domestic photovoltaic devices in covered contracts that exceed the simplified acquisition threshold, with the following exceptions:
              (a) Qualifying country. Qualifying country photovoltaic devices may be utilized in any covered contract, because 225.103(a)(i)(A) provides an exception to the Buy American statute for products of qualifying countries, as defined in 225.003.
              (b) Buy American—unreasonable cost. For a covered contract that utilizes photovoltaic devices valued at less than $182,000, the exception for unreasonable cost may apply (see FAR 25.103(c). If the cost of a foreign photovoltaic device plus 50 percent is less than the cost of a domestic photovoltaic device, then the foreign photovoltaic device may be utilized.
              (c) Trade agreements—(1) Free Trade Agreements. For a covered contract that utilizes photovoltaic devices valued at $25,000 or more, photovoltaic devices may be utilized from a country covered under the acquisition by a Free Trade Agreement, depending upon dollar threshold (see FAR subpart 25.4).
              (2) World Trade Organization—Government Procurement Agreement. For covered contracts that utilize photovoltaic devices that are valued at $180,000 or more, only U.S.-made photovoltaic devices, designated country photovoltaic devices, or qualifying country photovoltaic devices may be utilized.
              [83 FR 62500, Dec. 4, 2018, as amended at 84 FR 72247, Dec. 31, 2019]

              225.7017-4
              Solicitation provision and contract clause.

              (a)(1) Use the clause at 252.225-7017, Photovoltaic Devices, in solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial items, for a contract expected to exceed the simplified acquisition threshold that may be a covered contract, i.e., an energy savings performance contract, a utility service contract, or a private housing contract awarded by DoD, if such contract will result in DoD ownership of photovoltaic devices, by means other than DoD purchase as end products.
              (2) Use the clause in the resultant contract, including contracts using FAR part 12 procedures for the acquisition of commercial items, if it is a covered contract.
              (b) Use the provision at 252.225-7018, Photovoltaic Devices—Certificate, in solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial items, that contain the clause at 252.225-7017.
              [76 FR 78860, Dec. 20, 2011, as amended at 78 FR 37988, June 25, 2013. Redesignated and amended at 80 FR 72603, Nov. 20, 2015; Redesignated and amended at 83 FR 62500, Dec. 4, 2018]

              225.7018
              Restriction on acquisition of certain magnets, tantalum, and tungsten.
              [84 FR 18158, Apr. 30, 2019, as amended at 85 FR 61502, Sept. 29, 2020]

              225.7018-1
              Definitions.
              As used in this section—

                Covered country means—
              (1) The Democratic People's Republic of North Korea;
              (2) The People's Republic of China;
              (3) The Russian Federation; and
              (4) The Islamic Republic of Iran.

                Covered material means—
              (1) Samarium-cobalt magnets;
              (2) Neodymium-iron-boron magnets;
              (3) Tantalum metal and alloys;
              (4) Tungsten metal powder; and
              (5) Tungsten heavy alloy or any finished or semi-finished component containing tungsten heavy alloy.

                Electronic device means an item that operates by controlling the flow of electrons or other electrically charged particles in circuits, using interconnections such as resistors, inductors, capacitors, diodes, switches, transistors, or integrated circuits.

                Tungsten heavy alloy means a tungsten base pseudo alloy that—
              (1) Meets the specifications of ASTM B777 or SAE-AMS-T-21014 for a particular class of tungsten heavy alloy; or
              (2) Contains at least 90 percent tungsten in a matrix of other metals (such as nickel-iron or nickel-copper) and has density of at least 16.5 g/cm3).
              [84 FR 18158, Apr. 30, 2019, as amended at 84 FR 72244, Dec. 31, 2019; 85 FR 61502, Sept. 29, 2020]

              225.7018-2
              Restriction.
              (a) Except as provided in 225.7018-3 and 225.7018-4, do not acquire any covered material melted or produced in any covered country, or any end item, manufactured in any covered country, that contains a covered material (10 U.S.C. 2533c).
              (b)(1) For samarium-cobalt magnets and neodymium iron-boron magnets, this restriction includes—
              (i) Melting samarium with cobalt to produce the samarium-cobalt alloy or melting neodymium with iron and boron to produce the neodymium-iron-boron alloy; and
              (ii) All subsequent phases of production of the magnets, such as powder formation, pressing, sintering or bonding, and magnetization.
              (2) The restriction on melting and producing of samarium-cobalt magnets is in addition to any applicable restrictions on melting of specialty metals at 225.7003 and the clause at 252.225-7009, Restriction on Acquisition of Certain Articles Containing Specialty Metals.
              (c) For production of tantalum metal and alloys, this restriction includes the reduction of tantalum chemicals such as oxides, chlorides, or potassium salts, to metal powder and all subsequent phases of production of tantalum metal and alloys, such as consolidation of metal powders.
              (d) For production of tungsten metal powder and tungsten heavy alloy, this restriction includes—
              (1) Atomization;
              (2) Calcination and reduction into powder;
              (3) Final consolidation of non-melt derived metal powders; and
              (4) All subsequent phases of production of tungsten metal powder, tungsten heavy alloy, or any finished or semi-finished component containing tungsten heavy alloy.
              [84 FR 18158, Apr. 30, 2019, as amended at 84 FR 72244, Dec. 31, 2019; 85 FR 61502, Sept. 29, 2020]

              225.7018-3
              Exceptions.
              The restriction in section 225.7018-2 does not apply to an acquisition—
              (a) At or below the simplified acquisition threshold;
              (b) Outside the United States of an item for use outside the United States; or
              (c) Of an end item that is—
              (1) A commercially available off-the-shelf item (but see PGI 225.7018-3(c)(1)(i) with regard to commercially available samarium-cobalt magnets), other than—
              (i) A commercially available off-the-shelf item that is 50 percent or more tungsten by weight; or
              (ii) A tantalum metal, tantalum alloy, or tungsten heavy alloy mill product, such as bar, billet, slab, wire, cube, sphere, block, blank, plate, or sheet, that has not been incorporated into an end item, subsystem, assembly, or component;

              (2) An electronic device, unless the Secretary of Defense, upon the recommendation of the Strategic Materials Protection Board pursuant to 10 U.S.C. 187 determines that the domestic availability of a particular electronic device is critical to national security (but see PGI 225.7018-3(c)(2) with regard to samarium-cobalt magnets used in electronic components); or
              (3) A neodymium-iron-boron magnet manufactured from recycled material if the milling of the recycled material and sintering of the final magnet takes place in the United States.
              (d) If the authorized agency official concerned, as specified in 225.7018-4, determines that compliant covered materials of satisfactory quality and quantity, in the required form, cannot be procured as and when needed at a reasonable price.
              (1) For tantalum metal, tantalum alloy, or tungsten heavy alloy, the term “required form” refers to the form of the mill product, such as bar, billet, wire, slab, plate, or sheet, in the grade appropriate for the production of a finished end item to be delivered to the Government under this contract; or a finished component assembled into an end item to be delivered to the Government under the contract.
              (2) For samarium-cobalt magnets or neodymium-iron-boron magnets, the term “required form” refers to the form and properties of the magnets.
              [84 FR 18158, Apr. 30, 2019, as amended at 84 FR 72244, Dec. 31, 2019; 85 FR 61502, Sept. 29, 2020]

              225.7018-4
              Nonavailability determination.
              (a) Individual nonavailability determinations.(1) The head of the contracting activity is authorized to make a nonavailability determination described in 225.7018-3(d) on an individual basis (i.e., applies to only one contract).
              (2) The supporting documentation for the determination shall include an analysis and written certification by the requiring activity that describes, with specificity, why alternatives that would not require a nonavailability determination are unacceptable. The template for an individual nonavailability determination is available at PGI 225.7018-4(a)(2).
              (3) Provide to USD(A&S) DASD (Industrial Policy), in accordance with the procedures at PGI 225.7018-4(a)(3)—
              (i) A copy of individual nonavailability determinations with supporting documentation; and
              (ii) Notification when individual nonavailability determinations  are requested, but denied.
              (b) Class nonavailability determinations. A class nonavailability determination (i.e., a nonavailability determinations that applies to more than one contract) requires the approval of the USD(A&S). Follow the procedures at PGI 225.7018-4(b) when submitting a request for a class nonavailability determination.
              (1) At least 30 days before making a nonavailability determination that would apply to more than one contract, the USD(A&S) will, to the maximum extent practicable, and in a manner consistent with the protection of national security and confidential business information—

              (i) Publish a notice on the Federal Business Opportunities website (www.FedBizOpps.gov) of the intent to make the nonavailability determination; and
              (ii) Solicit information relevant to such notice from interested parties, including producers of mill products from covered materials.
              (2) The USD(A&S)—
              (i) Will take into consideration all information submitted in response to the notice in making a class nonavailability determination;
              (ii) May consider other relevant information that cannot be made part of the public record consistent with the protection of national security information and confidential business information; and
              (iii) Will ensure that any such nonavailability determination and the rationale for the determination are made publicly available to the maximum extent consistent with the protection of national security and confidential business information.
              [84 FR 18158, Apr. 30, 2019, as amended at 84 FR 72244, Dec. 31, 2019; 85 FR 61502, Sept. 29, 2020]

              225.7018-5
              Contract clause.

              Unless acquiring items outside the United States for use outside the United States or a nonavailability determination has been made in accordance with 225.7018-4, use the clause at 252.225-7052, Restriction on Acquisition of Certain Magnets, Tantalum, and Tungsten , in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that exceed the simplified acquisition threshold.
              [84 FR 18158, Apr. 30, 2019, as amended at 85 FR 61502, Sept. 29, 2020]

            Subpart 225.71—Other Restrictions on Foreign Acquisition

              Source:
              68 FR 15631, Mar. 31, 2003, unless otherwise noted.

              225.7100
              Scope of subpart.
              This subpart contains foreign product restrictions that are based on policies designed to protect the defense industrial base.

              225.7101
              Definitions.
              “Component” and “domestic manufacture,” as used in this subpart, are defined in the clause at 252.225-7025, Restriction on Acquisition of Forgings.
              [74 FR 68384, Dec. 24, 2009]

              225.7102
              Forgings.

              225.7102-1
              Policy.
              When acquiring the following forging items, whether as end items or components, acquire items that are of domestic manufacture to the maximum extent practicable:

                  Items
                  Categories

                  Ship propulsion shafts
                  Excludes service and landing craft shafts.

                  Periscope tubes
                  All.

                  Ring forgings for bull gears
                  All greater than 120 inches in diameter.

              225.7102-2
              Exceptions.
              The policy in 225.7102-1 does not apply to acquisitions—
              (a) Using simplified acquisition procedures, unless the restricted item is the end item being purchased;
              (b) Overseas for overseas use; or
              (c) When the quantity acquired exceeds the amount needed to maintain the U.S. defense mobilization base (provided the excess quantity is an economical purchase quantity). The requirement for domestic manufacture does not apply to the quantity above that required to maintain the base, in which case, qualifying country sources may compete.

              225.7102-3
              Waiver.
              Upon request from a contractor, the contracting officer may waive the requirement for domestic manufacture of the items listed in 225.7102-1.

              225.7102-4
              Contract clause.
              Use the clause at 252.225-7025, Restriction on Acquisition of Forgings, in solicitations and contracts, unless—
              (a) The supplies being acquired do not contain any of the items listed in 225.7102-1; or
              (b) An exception in 225.7102-2 applies. If an exception applies to only a portion of the acquisition, specify the excepted portion in the solicitation and contract.

            Subpart 225.72—Reporting Contract Performance Outside the United States

              Source:
              70 FR 20839, Apr. 22, 2005, unless otherwise noted.

              225.7201
              Policy.
              10 U.S.C. 2410g requires offerors and contractors to notify DoD of any intention to perform any part of a DoD contract outside the United States and Canada that—
              (a) Exceeds $750,000 in value; and
              (b) Could be performed inside the United States or Canada.
              [85 FR 61504, Sept. 29, 2020]

              225.7202
              Exception.
              This subpart does not apply to contracts for commercial items, construction, ores, natural gas, utilities, petroleum products and crudes, timber (logs), or subsistence.

              225.7203
              Contracting officer distribution of reports.

              Follow the procedures at PGI 225.7203 for distribution of reports submitted with offers in accordance with the provision at 252.225-7003, Report of Intended Performance Outside the United States and Canada—Submission with Offer.

              225.7204
              Solicitation provision and contract clauses.
              Except for acquisitions described in 225.7202—
              (a) Use the provision at 252.225-7003, Report of Intended Performance Outside the United States and Canada—Submission with Offer, in solicitations with a value exceeding $15 million; and
              (b) Use the clause at 252.225-7004, Report of Intended Performance Outside the United States and Canada—Submission after Award, in solicitations and contracts with a value exceeding $15 million.
              [70 FR 20839, Apr. 22, 2005, as amended at 71 FR 75892, Dec. 19, 2006; 75 FR 45074, Aug. 2, 2010; 79 FR 73500, Dec. 11, 2014; 80 FR 36904, June 26, 2015; 85 FR 61504, Sept. 29, 2020]

            Subpart 225.73—Acquisitions for Foreign Military Sales

              225.7300
              Scope of subpart.
              (a) This subpart contains policies and procedures for acquisitions for foreign military sales (FMS) under the Arms Export Control Act (22 U.S.C. Chapter 39). Section 22 of the Arms Export Control Act (22 U.S.C. 2762) authorizes DoD to enter into contracts for resale to foreign countries or international organizations.
              (b) This subpart does not apply to—
              (1) FMS made from inventories or stocks;
              (2) Acquisitions for replenishment of inventories or stocks; or
              (3) Acquisitions made under DoD cooperative logistic supply support arrangements.
              [63 FR 43889, Aug. 17, 1998]

              225.7301
              General.
              (a) The U.S. Government sells defense articles and services to foreign governments or international organizations through FMS agreements. The agreement is documented in a Letter of Offer and Acceptance (LOA) (see the Defense Security Cooperation Agency (DSCA) Security Assistance Management Manual (DSCA 5105.38-M)).
              (b) Conduct FMS acquisitions under the same acquisition and contract management procedures used for other defense acquisitions.
              (c) Follow the additional procedures at PGI 225.7301(c) for preparation of solicitations and contracts that include FMS requirements.
              (d) See 229.170 for policy on contracts financed under U.S. assistance programs that involve payment of foreign country value added taxes or customs duties.
              [70 FR 73155, Dec. 9, 2005, as amended at 80 FR 31310, June 2, 2015]

              225.7301-1
              Requirement to use firm-fixed-price contracts.
              (a) Requirement. In accordance with section 830 of the National Defense Authorization Act for Fiscal Year 2017 (Pub. L. 114-328), a firm-fixed-price contract shall be used for FMS, unless the foreign country that is the counterparty to FMS—
              (1) Has established in writing a preference for a different contract type; or
              (2) Requests in writing that a different contract type be used for a specific FMS. See PGI 217.202(2) on the use of priced options for FMS requirements.
              (b) Waiver. The requirement in paragraph (a) of this section may be waived, if the chief of the contracting office determines, on a case-by-case basis, that a different contract type is in the best interest of the United States and American taxpayers.
              [84 FR 65307, Nov. 27, 2019]

              225.7301-2
              Solicitation approval for sole source contracts.
              The contracting officer shall coordinate through agency channels with the Principal Director, Defense Pricing and Contracting, prior to issuing a solicitation for a sole source contract for U.S./FMS combined requirements for a major system that has an estimated contract value that exceeds $500 million. See also 201.170 and PGI 216.403-1(1)(ii)(B) and (C).
              [84 FR 65307, Nov. 27, 2019]

              225.7302
              Preparation of letter of offer and acceptance.
              For FMS programs that will require an acquisition, the contracting officer shall assist the DoD implementing agency responsible for preparing the Letter of Offer and Acceptance (LOA) by—
              (1) Working with prospective contractors to—
              (i) Identify, in advance of the LOA, any unusual provisions or deviations (such as those requirements for Pseudo LOAs identified at PGI 225.7301);
              (ii) Advise the contractor if the DoD implementing agency expands, modifies, or does not accept any key elements of the prospective contractor's proposal;
              (iii) Identify any logistics support necessary to perform the contract (such as those requirements identified at PGI 225.7301); and
              (iv) For noncompetitive acquisitions over $10,000, ask the prospective contractor for information on price, delivery, and other relevant factors. The request for information shall identify the fact that the information is for a potential foreign military sale and shall identify the foreign customer; and
              (2) Working with the DoD implementing agency responsible for preparing the LOA, as specified in PGI 225.7302.
              [78 FR 73451, Dec. 6, 2013]

              225.7303
              Pricing acquisitions for FMS.
              (a) Price FMS contracts using the same principles used in pricing other defense contracts. However, application of the pricing principles in FAR parts 15 and 31 to an FMS contract may result in prices that differ from other defense contract prices for the same item due to the considerations in this section.
              (b) If the foreign government has conducted a competition resulting in adequate price competition (see FAR 15.403-1(b)(1)), the contracting officer shall not require the submission of certified cost or pricing data. The contracting officer should consult with the foreign government through security assistance personnel to determine if adequate price competition has occurred.
              [64 FR 49683, Sept. 14, 1999, as amended at 68 FR 15632, Mar. 31, 2003; 77 FR 76940, Dec. 31, 2012]

              225.7303-1
              Contractor sales to other foreign customers.
              If the contractor has made sales of the item required for the foreign military sale to foreign customers under comparable conditions, including quantity and delivery, price the FMS contract in accordance with FAR part 15.

              225.7303-2
              Cost of doing business with a foreign government or an international organization.
              (a) In pricing FMS contracts where non-U.S. Government prices as described in 225.7303-1 do not exist, except as provided in 225.7303-5, recognize the reasonable and allocable costs of doing business with a foreign government or international organization, even though such costs might not be recognized in the same amounts in pricing other defense contracts. Examples of such costs include, but are not limited to, the following:
              (1) Selling expenses (not otherwise limited by FAR Part 31), such as—
              (i) Maintaining international sales and service organizations;
              (ii) Sales commissions and fees in accordance with FAR Subpart 3.4;
              (iii) Sales promotions, demonstrations, and related travel for sales to foreign governments. Section 126.8 of the International Traffic in Arms Regulations (22 CFR 126.8) may require Government approval for these costs to be allowable, in which case the appropriate Government approval shall be obtained; and
              (iv) Configuration studies and related technical services undertaken as a direct selling effort to a foreign country.
              (2) Product support and post-delivery service expenses, such as—
              (i) Operations or maintenance training, training or tactics films, manuals, or other related data; and

              (ii) Technical field services provided in a foreign country related to accident investigations, weapon system problems, or operations/tactics enhancement, and related travel to foreign countries.

              (3) Offsets. For additional information see 225.7306.

              (i) An offset agreement is the contractual arrangement between the FMS customer and the U.S. defense contractor that identifies the offset obligation imposed by the FMS customer that has been accepted by the U.S. defense contractor as a condition of the FMS customer's purchase. These agreements are distinct and independent of the LOA and the FMS contract. Further information about offsets and LOAs may be found in the Defense Security Cooperation Agency (DSCA) Security Assistance Management Manual (DSCA 5105.38-M), chapter 6, paragraph 6.3.9. (http://samm.dsca.mil/chapter/chapter-6).
              (ii) A U.S. defense contractor may recover all costs incurred for offset agreements with a foreign government or international organization if the LOA is financed wholly with foreign government or international organization customer cash or repayable foreign military finance credits.
              (iii) The U.S. Government assumes no obligation to satisfy or administer the offset agreement or to bear any of the associated costs.
              (iv) Indirect offset costs are deemed reasonable for purposes of FAR parts 15 and 31 with no further analysis necessary on the part of the contracting officer, provided that the U.S. defense contractor submits to the contracting officer a signed offset agreement or other documentation showing that the FMS customer has made the provision of an indirect offset a condition of the FMS acquisition. FMS customers are placed on notice through the LOA that indirect offset costs are deemed reasonable without any further analysis by the contracting officer.
              (4) Costs that are the subject of advance agreement under the appropriate provisions of FAR part 31; or where the advance understanding places a limit on the amounts of cost that will be recognized as allowable in defense contract pricing, and the agreement contemplated that it will apply only to DoD contracts for the U.S. Government's own requirement (as distinguished from contracts for FMS).
              (b) Costs not allowable under FAR Part 31 are not allowable in pricing FMS contracts, except as noted in paragraphs (c) and (e) of this subsection.
              (c) The limitations for major contractors on independent research and development and bid and proposal (IR&D/B&P) costs for projects that are of potential interest to DoD, in 231.205-18(c)(iii), do not apply to FMS contracts, except as provided in 225.7303-5. The allowability of IR&D/B&P costs on contracts for FMS not wholly paid for from funds made available on a nonrepayable basis is limited to the contract's allocable share of the contractor's total IR&D/B&P expenditures. In pricing contracts for such FMS—
              (1) Use the best estimate of reasonable costs in forward pricing; and
              (2) Use actual expenditures, to the extent that they are reasonable, in determining final cost.
              (d) Under paragraph (e)(1)(A) of Section 21 of the Arms Export Control Act (22 U.S.C. 2761), the United States must charge for administrative services to recover the estimated cost of administration of sales made under the Army Export Control Act.
              (e) The limitations in 231.205-1 on allowability of costs associated with leasing Government equipment do not apply to FMS contracts.
              [56 FR 36367, July 31, 1991, as amended at 56 FR 67216, Dec. 30, 1991; 57 FR 42631, Sept. 15, 1992; 57 FR 53600, Nov. 12, 1992; 59 FR 50511, Oct. 4, 1994; 61 FR 7744, Feb. 29, 1996; 61 FR 18987, Apr. 30, 1996; 63 FR 43889, Aug. 17, 1998; 64 FR 8729, Feb. 23, 1999; 64 FR 49684, Sept. 14, 1999; 68 FR 15632, Mar. 31, 2003; 70 FR 73155, Dec. 9, 2005; 74 FR 68382, Dec. 24, 2009; 80 FR 31310, June 2, 2015; 83 FR 30828, June 29, 2018]

              225.7303-3
              Government-to-government agreements.
              If a government-to-government agreement between the United States and a foreign government for the sale, coproduction, or cooperative logistic support of a specifically defined weapon system, major end item, or support item, contains language in conflict with the provisions of this section, the language of the government-to-government agreement prevails.

              225.7303-4
              Contingent fees.

              (a) Except as provided in paragraph (b) of this subsection, contingent fees are generally allowable under DoD contracts, provided—
              (1) The fees are paid to a bona fide employee or a bona fide established commercial or selling agency maintained by the prospective contractor for the purpose of securing business (see FAR Part 31 and FAR Subpart 3.4); and
              (2) The contracting officer determines that the fees are fair and reasonable.
              (b)(1) Under DoD 5105.38-M, LOAs for requirements for the governments of Australia, Taiwan, Egypt, Greece, Israel, Japan, Jordan, Republic of Korea, Kuwait, Pakistan, Philippines, Saudi Arabia, Turkey, Thailand, or Venezuela (Air Force) shall provide that all U.S. Government contracts resulting from the LOAs prohibit the reimbursement of contingent fees as an allowable cost under the contract, unless the contractor identifies the payments and the foreign customer approves the payments in writing before contract award (see 225.7307(a)).
              (2) For FMS to countries not listed in paragraph (b)(1) of this subsection, contingent fees exceeding $50,000 per FMS case are unallowable under DoD contracts, unless the contractor identifies the payment and the foreign customer approves the payment in writing before contract award.
              [68 FR 15633, Mar. 31, 2003, as amended at 70 FR 73155, Dec. 9, 2005]

              225.7303-5
              Acquisitions wholly paid for from nonrepayable funds.
              (a) In accordance with 22 U.S.C. 2762(d), price FMS wholly paid for from funds made available on a nonrepayable basis on the same costing basis with regard to profit, overhead, IR&D/B&P, and other costing elements as is applicable to acquisitions of like items purchased by DoD for its own use.
              (b) Direct costs associated with meeting a foreign customer's additional or unique requirements are allowable under such contracts. Indirect burden rates applicable to such direct costs are permitted at the same rates applicable to acquisitions of like items purchased by DoD for its own use.
              (c) A U.S. defense contractor may not recover costs incurred for offset agreements with a foreign government or international organization if the LOA is financed with funds made available on a nonrepayable basis.
              [61 FR 18988, Apr. 30, 1996; 61 FR 49531, Sept. 20, 1996, as amended at 63 FR 43890, Aug. 17, 1998; 64 FR 49684, Sept. 14, 1999; 68 FR 15633, Mar. 31, 2003]

              225.7304
              FMS customer involvement.
              (a) FMS customers may request that a defense article or defense service be obtained from a particular contractor. In such cases, FAR 6.302-4 provides authority to contract without full and open competition. The FMS customer may also request that a subcontract be placed with a particular firm. The contracting officer shall honor such requests from the FMS customer only if the LOA or other written direction sufficiently fulfills the requirements of FAR Subpart 6.3.
              (b) FMS customers should be encouraged to participate with U.S. Government acquisition personnel in discussions with industry to—
              (1) Develop technical specifications;
              (2) Establish delivery schedules;
              (3) Identify any special warranty provisions or other requirements unique to the FMS customer; and
              (4) Review prices of varying alternatives, quantities, and options needed to make price-performance tradeoffs.
              (c) Do not disclose to the FMS customer any data, including certified cost or pricing data, that is contractor proprietary unless the contractor authorizes its release.
              (d) Except as provided in paragraph (e)(3) of this section, the degree of FMS customer participation in contract negotiations is left to the discretion of the contracting officer after consultation with the contractor. The contracting officer shall provide an explanation to the FMS customer if its participation in negotiations will be limited. Factors that may limit FMS customer participation include situations where—
              (1) The contract includes requirements for more than one FMS customer;
              (2) The contract includes unique U.S. requirements; or

              (3) Contractor proprietary data is a subject of negotiations.

              (e) Do not allow representatives of the FMS customer to—
              (1) Direct the exclusion of certain firms from the solicitation process (they may suggest the inclusion of certain firms);
              (2) Interfere with a contractor's placement of subcontracts; or
              (3) Observe or participate in negotiations between the U.S. Government and the contractor involving certified cost or pricing data, unless a deviation is granted in accordance with subpart 201.4.
              (f) Do not accept directions from the FMS customer on source selection decisions or contract terms (except that, upon timely notice, the contracting officer may attempt to obtain any special contract provisions, warranties, or other unique requirements requested by the FMS customer).
              (g) Do not honor any requests by the FMS customer to reject any bid or proposal.
              (h) If an FMS customer requests additional data concerning FMS contract prices, the contracting officer shall, after consultation with the contractor, provide sufficient data to demonstrate the reasonableness of the price and reasonable responses to relevant questions concerning contract price. This data—
              (1) May include tailored responses, top-level pricing summaries, historical prices, or an explanation of any significant differences between the actual contract price and the estimated contract price included in the initial LOA; and
              (2) May be provided orally, in writing, or by any other method acceptable to the contracting officer.
              [67 FR 70325, Nov. 22, 2002, as amended at 77 FR 76940, Dec. 31, 2012]

              225.7305
              Limitation of liability.
              Advise the contractor when the foreign customer will assume the risk for loss or damage under the appropriate limitation of liability clause(s) (see FAR Subpart 46.8). Consider the costs of necessary insurance, if any, obtained by the contractor to cover the risk of loss or damage in establishing the FMS contract price.
              [56 FR 36367, July 31, 1991, as amended at 68 FR 15633, Mar. 31, 2003]

              225.7306
              Offset arrangements.
              In accordance with the Presidential policy statement of April 16, 1990, DoD does not encourage, enter into, or commit U.S. firms to FMS offset arrangements. The decision whether to engage in offsets, and the responsibility for negotiating and implementing offset arrangements, resides with the companies involved. (Also see 225.7303-2(a)(3).)
              [70 FR 73155, Dec. 9, 2005]

              225.7307
              Contract clauses.
              (a) Use the clause at 252.225-7027, Restriction on Contingent Fees for Foreign Military Sales, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that are for FMS. Insert in paragraph (b)(1) of the clause the name(s) of any foreign country customer(s) listed in 225.7303-4(b).
              (b) Use the clause at 252.225-7028, Exclusionary Policies and Practices of Foreign Governments, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that are for the purchase of supplies and services for international military education training and FMS.
              [68 FR 15633, Mar. 31, 2003. Redesignated at 70 FR 73155, Dec. 9, 2005. Amended at 78 FR 37988, June 25, 2013]

            Subpart 225.74 [Reserved]

            Subpart 225.75—Balance of Payments Program

              Source:
              67 FR 20694, Apr. 26, 2002, unless otherwise noted.

              225.7500
              Scope of subpart.
              This subpart provides policies and procedures implementing the Balance of Payments Program. It applies to contracts for the acquisition of—
              (a) Supplies for use outside the United States; and
              (b) Construction to be performed outside the United States.

              225.7501
              Policy.

              Acquire only domestic end products for use outside the United States, and use only domestic construction material for construction to be performed outside the United States, including end products and construction material for foreign military sales, unless—
              (a) Before issuing the solicitation—
              (1) The estimated cost of the acquisition or the value of a particular construction material is at or below the simplified acquisition threshold;
              (2) The end product or particular construction material is—
              (i) Listed in FAR 25.104;
              (ii) A petroleum product;
              (iii) A spare part for foreign-manufactured vehicles, equipment, machinery, or systems, provided the acquisition is restricted to the original manufacturer or its supplier;
              (iv) An industrial gas;
              (v) A brand drug specified by the Defense Medical Materiel Board; or
              (vi) Information technology that is a commercial item, using fiscal year 2004 or subsequent funds (Section 535 of Division F of the Consolidated Appropriations Act, 2004 (Pub. L. 108-199), and the same provision in subsequent appropriations acts);
              (3) The acquisition is covered by the World Trade Organization Government Procurement Agreement;
              (4) The acquisition of foreign end products or construction material is required by a treaty or executive agreement between governments;
              (5) Use of a procedure specified in 225.7703-1(a) is authorized for an acquisition in support of operations in Afghanistan;
              (6) The end product is acquired for commissary resale; or
              (7) The contracting officer determines that a requirement can best be filled by a foreign end product or construction material, including determinations that—
              (i) A subsistence product is perishable and delivery from the United States would significantly impair the quality at the point of consumption;
              (ii) An end product or construction material, by its nature or as a practical matter, can best be acquired in the geographic area concerned, e.g., ice or books; or bulk material, such as sand, gravel, or other soil material, stone, concrete masonry units, or fired brick;
              (iii) A particular domestic construction material is not available;
              (iv) The cost of domestic construction material would exceed the cost of foreign construction material by more than 50 percent, calculated on the basis of—
              (A) A particular construction material; or
              (B) The comparative cost of application of the Balance of Payments Program to the total acquisition; or
              (v) Use of a particular domestic construction material is impracticable;
              (b) After receipt of offers—
              (1) The evaluated low offer (see Subpart 225.5) is an offer of an end product that—
              (i) Is a qualifying country end product;
              (ii) Is an eligible product; or
              (iii) If the acquisition is in support of operations in Afghanistan, a South Caucasus/Central and South Asian state end product listed in 225.401-70 (see 225.7704-2); or
              (iv) Is a nonqualifying country end product, but application of the Balance of Payments Program evaluation factor would not result in award on a domestic offer; or
              (2) The construction material is an eligible product or, if the acquisition is in support of operations in Afghanistan, the construction material is a South Caucasus/Central and South Asian state construction material (see 225.7704-2); or
              (c) At any time during the acquisition process, the head of the agency determines that it is not in the public interest to apply the restrictions of the Balance of Payments Program to the end product or construction material.
              [67 FR 20694, Apr. 26, 2002, as amended at 67 FR 77939, Dec. 20, 2002; 69 FR 1928, Jan. 13, 2004; 70 FR 2363, Jan. 13, 2005; 70 FR 73155, Dec. 9, 2005; 71 FR 58540, Oct. 4, 2006; 73 FR 53153, Sept. 15, 2008; 75 FR 81917, Dec. 29, 2010; 76 FR 76320, Dec. 7, 2011; 78 FR 59857, Sept. 30, 2013; 82 FR 61481, Dec. 28, 2017]

              225.7502
              Procedures.
              If the Balance of Payments Program applies to the acquisition, follow the procedures at PGI 225.7502.
              [71 FR 62566, Oct. 26, 2006]

              225.7503
              Contract clauses.
              Unless the entire acquisition is exempt from the Balance of Payments Program—
              (a) Use the basic or an alternate of the clause at 252.225-7044, Balance of Payments Program—Construction Material, in solicitations and contracts for construction to be performed outside the United States, including acquisitions of commercial items or components, with an estimated value greater than the simplified acquisition threshold but less than $7,008,000.
              (1) Use the basic clause unless the acquisition is in support of operations in Afghanistan.
              (2) Use the alternate I clause if the acquisition is in support of operations in Afghanistan.
              (b) Use the basic or an alternate of the clause at 252.225-7045, Balance of Payments Program—Construction Material Under Trade Agreements, in solicitations and contracts for construction to be performed outside the United States with an estimated value of $7,008,000 or more, including acquisitions of commercial items or components.
              (1) Use the basic clause in solicitations and contracts with an estimated value of $10,802,884 or more, unless the acquisition is in support of operations in Afghanistan.
              (2) Use the alternate I clause in solicitations and contracts with an estimated value of $7,008,000 or more, but less than $10,802,884 unless the acquisition is in support of operations in Afghanistan.
              (3) Use the alternate II clause in solicitations and contracts with an estimated value of $10,802,884 or more and is in support of operations in Afghanistan.
              (4) Use the alternate III clause in solicitations and contracts with an estimated value of $7,008,000 or more, but less than $10,802,884, and is in support of operations in Afghanistan.
              [79 FR 65818, Nov. 5, 2014, as amended at 80 FR 81471, Dec. 30, 2015; 82 FR 61483, Dec. 28, 2017; 84 FR 72247, Dec. 31, 2019]

            Subpart 225.76—Secondary Arab Boycott of Israel

              Source:
              71 FR 39006, July 11, 2006, unless otherwise noted.

              225.7601
              Restriction.
              In accordance with 10 U.S.C. 2410i, do not enter into a contract with a foreign entity unless it has certified that it does not comply with the secondary Arab boycott of Israel.

              225.7602
              Procedures.
              For contracts awarded to the Canadian Commercial Corporation (CCC), the CCC will submit a certification from its proposed subcontractor with the other required precontractual information (see 225.870).

              225.7603
              Exceptions.
              This restriction does not apply to—
              (a) Purchases at or below the simplified acquisition threshold;
              (b) Contracts for consumable supplies, provisions, or services for the support of United States forces or of allied forces in a foreign country; or
              (c) Contracts pertaining to the use of any equipment, technology, data, or services for intelligence or classified purposes, or to the acquisition or lease thereof, in the interest of national security.

              225.7604
              Waivers.
              The Secretary of Defense may waive this restriction on the basis of national security interests. To request a waiver, follow the procedures at PGI 225.7604.
              [71 FR 62566, Oct. 26, 2006]

              225.7605
              Solicitation provision.
              Unless an exception at 225.7603 applies or a waiver has been granted in accordance with 225.7604, use the provision at 252.225-7031, Secondary Arab Boycott of Israel, in all solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial items. If the solicitation includes the provision at FAR 52.204-7, do not separately list 252.225-7031 in the solicitation.
              [71 FR 39006, July 11, 2006, as amended at 78 FR 37988, June 25, 2013; 78 FR 40043, July 3, 2013]

            Subpart 225.77—Acquisitions in Support of Operations in Afghanistan

              Source:
              73 FR 53153, Sept. 15, 2008, unless otherwise noted.

              225.7700
              Scope.
              This subpart implements—
              (a) Section 892 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181);
              (b) Section 886 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181), as amended by section 842 of the National Defense Authorization Act for Fiscal Year 2013 (Pub. L. 112-239);
              (c) Section 826 of the National Defense Authorization Act for Fiscal Year 2013 (Pub. L. 112-239); and
              (d) The determinations by the Deputy Secretary of Defense regarding participation of the countries of the South Caucasus or Central and South Asia in acquisitions in support of operations in Afghanistan.
              (e) Section 216 of the National Defense Authorization Act for Fiscal Year 2017 (Pub. L. 114-328).
              [78 FR 59857, Sept. 30, 2013, as amended at 83 FR 16004, Apr. 13, 2018]

              225.7701
              Definitions.
              As used in this subpart—

                Product from Afghanistan means a product that is mined, produced, or manufactured in Afghanistan.

                Service from Afghanistan means a service including construction that is performed in Afghanistan predominantly by citizens or permanent resident aliens of Afghanistan.

                Small arms means pistols and other weapons less than 0.50 caliber.

                Source from Afghanistan means a source that—
              (1) Is located in Afghanistan; and
              (2) Offers products or services from Afghanistan.

                Textile component is defined in the clause at 252.225-7029, Acquisition of Uniform Components for Afghan Military or Afghan National Police.
              [78 FR 59857, Sept. 30, 2013]

              225.7702
              Acquisitions not subject to the enhanced authority to acquire products or services from Afghanistan.

              225.7702-1
              Acquisition of small arms.
              (a) Except as provided in paragraph (b) of this section, when acquiring small arms for assistance to the Army of Afghanistan, the Afghani Police Forces, or other Afghani security organizations—
              (1) Use full and open competition to the maximum extent practicable, consistent with the provisions of 10 U.S.C. 2304;
              (2) If use of other than full and open competition is justified in accordance with FAR Subpart 6.3, ensure that—
              (i) No responsible U.S. manufacturer is excluded from competing for the acquisition; and
              (ii) Products manufactured in the United States are not excluded from the competition; and
              (3) If the exception at FAR 6.302-2 (unusual and compelling urgency) applies, do not exclude responsible U.S. manufacturers or products manufactured in the United States from the competition for the purpose of administrative expediency. However, such an offer may be rejected if it does not meet delivery schedule requirements.
              (b) Paragraph (a)(2) of this section does not apply when—
              (1) The exception at FAR 6.302-1 (only one or a limited number of responsible sources) applies, and the only responsible source or sources are not U.S. manufacturers or are not offering products manufactured in the United States; or
              (2) The exception at FAR 6.302-4 (international agreement) applies, and United States manufacturers or products manufactured in the United States are not the source(s) specified in the written directions of the foreign government reimbursing the agency for the cost of the acquisition of the property or services for such government.
              [73 FR 53153, Sept. 15, 2008. Redesignated and amended at 78 FR 59858, Sept. 30, 2013]

              225.7702-2
              Acquisition of uniform components for the Afghan military or the Afghan police.
              Any textile components supplied by DoD to the Afghan National Army or the Afghan National Police for purpose of production of uniforms shall be produced in the United States.
              [78 FR 59858, Sept. 30, 2013]

              225.7703
              Enhanced authority to acquire products or services from Afghanistan.

              225.7703-1
              Acquisition procedures.
              (a) Subject to the requirements of 225.7703-2, except as provided in 225.7702, a product or service (including construction)in support of operations in Afghanistan may be acquired by—
              (1) Providing a preference for products or services from Afghanistan in accordance with the evaluation procedures at 225.7703-3;
              (2) Limiting competition to products or services from Afghanistan; or
              (3) Using procedures other than competitive procedures to award a contract to a particular source or sources from Afghanistan. When other than competitive procedures are used, the contracting officer shall document the contract file with the rationale for selecting the particular source(s).
              (b) For acquisitions conducted using a procedure specified in paragraph (a) of this subsection, the justification and approval addressed in FAR Subpart 6.3 is not required.
              (c) When issuing solicitations and contracts for performance in Afghanistan, follow the procedures at PGI 225.7703-1(c).
              [73 FR 53153, Sept. 15, 2008, as amended at 78 FR 59858, Sept. 30, 2013; 79 FR 58695, Sept. 30, 2014]

              225.7703-2
              Determination requirements.
              Before use of a procedure specified in 225.7703-1(a), a written determination must be prepared and executed as follows:
              (a) For products or services to be used only by the military forces, police, or other security personnel of Afghanistan, the contracting officer shall—
              (1) Determine in writing that the product or service is to be used only by the military forces, police, or other security personnel of Afghanistan; and
              (2) Include the written determination in the contract file.
              (b) For products or services not limited to use by the military forces, police, or other security personnel of Afghanistan, the following requirements apply:
              (1) The appropriate official specified in paragraph (b)(2) of this subsection must determine in writing that it is in the national security interest of the United States to use a procedure specified in 225.7703-1(a), because—
              (i) The procedure is necessary to provide a stable source of jobs in Afghanistan; and
              (ii) Use of the procedure will not adversely affect—
              (A) Operations in Afghanistan (including security, transition, reconstruction, and humanitarian relief activities); or
              (B) The U.S. industrial base. The authorizing official generally may presume that there will not be an adverse effect on the U.S. industrial base. However, when in doubt, the authorizing official should coordinate with the applicable subject matter expert specified in PGI 225.7703-2(b).
              (2) Determinations may be made for an individual acquisition or a class of acquisitions meeting the criteria in paragraph (b)(1) of this subsection as follows:
              (i) The head of the contacting activity is authorized to make a determination that applies to an individual acquisition with a value of less than $100 million.
              (ii) The Principal Director, Defense Pricing and Contracting, and the following officials, without power of redelegation, are authrized to make a determination that applies to an individual acquisition with a value of $100 million or more or to a class of acquisitions:
              (A) Defense Logistics Agency Component Acquisition Executive.
              (B) Army Acquisition Executive.
              (C) Navy Acquisition Executive.
              (D) Air Force Acquisition Executive.

              (E) Commander of the United States Central Command Joint Theater Support Contracting Command (C-JTSCC).
              (3) The contracting officer—
              (i) Shall include the applicable written determination in the contract file; and
              (ii) Shall ensure that each contract action taken pursuant to the authority of a class determination is within the scope of the class determination, and shall document the contract file for each action accordingly.
              (c) See PGI 225.7703-2(c) for formats for use in preparation of the determinations required by this subsection.
              [73 FR 53153, Sept. 15, 2008, as amended at 75 FR 18039, Apr. 8, 2010; 75 FR 45074, Aug. 2, 2010; 78 FR 59858, Sept. 30, 2013; 80 FR 36905, June 26, 2015; 85 FR 61504, Sept. 29, 2020]

              225.7703-3
              Evaluating offers.
              Evaluate offers submitted in response to solicitations that include the provision at 252.225-7023, Preference for Products or Services from Afghanistan, as follows:
              (a) If the low offer is an offer of a product or service from Afghanistan, award on that offer.
              (b) If there are no offers of a product or service from Afghanistan, award on the low offer.
              (c) Otherwise, apply the evaluation factor specified in the solicitation to the low offer.
              (1) If the price of the low offer of a product or service from Afghanistan is less than the evaluated price of the low offer, award on the low offer of a product or service from Afghanistan.
              (2) If the evaluated price of the low offer remains less than the low offer of a product or service from Afghanistan, award on the low offer.
              [78 FR 59858, Sept. 30, 2013, as amended at 79 FR 56278, Sept. 19, 2014; 80 FR 72607, Nov. 20, 2015]

              225.7703-4
              Solicitation provisions and contract clauses.
              (a) Use the provision at 252.225-7023, Preference for Products or Services from Afghanistan, in solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial items, that provide a preference for products or services from Afghanistan in accordance with 225.7703-1(a)(1). The contracting officer may modify the 50 percent evaluation factor in accordance with contracting office procedures.
              (b) Use the clause at 252.225-7024, Requirement for Products or Services from Afghanistan, in solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial items, that include the provision at 252.225-7023, Preference for Products or Services from Afghanistan, and in the resulting contract.
              (c) Use the clause at 252.225-7026, Acquisition Restricted to Products or Services from Afghanistan, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that—
              (1) Are restricted to the acquisition of products or services from Afghanistan in accordance with 225.7703-1(a)(2); or
              (2) Will be directed to a particular source or sources from Afghanistan in accordance with 225.7703-1(a)(3).
              (d) Use the clause at 252.225-7029, Acquisition of Uniform Components for Afghan Military or Afghan National Police, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, for the acquisition of any textile components that DoD intends to supply to the Afghan National Army or the Afghan National Police for purposes of production of uniforms.
              (e) When the Trade Agreements Act applies to the acquisition, use the appropriate clause and provision as prescribed at 225.1101 (5) and (6).
              (f) Do not use any of the following provisions or clauses in solicitations or contracts that include the provision at 252.225-7023, the clause at 252.225-7024, or the clause at 252.225-7026:
              (1) 252.225-7000, Buy American—Balance of Payments Program Certificate.
              (2) 252.225-7001, Buy American and Balance of Payments Program.
              (3) 252.225-7002, Qualifying Country Sources as Subcontractors.

              (4) 252.225-7035, Buy American—Free Trade Agreements—Balance of Payments Program Certificate.

              (5) 252.225-7036, Buy American—Free Trade Agreements—Balance of Payments Program.
              (6) 252.225-7044, Balance of Payments Program—Construction Material.
              (7) 252.225-7045, Balance of Payments Program—Construction Material Under Trade Agreements.
              (g) Do not use the following clause or provision in solicitations or contracts that include the clause at 252.225-7026:
              (1) 252.225-7020, Trade Agreements Certificate.
              (2) 252.225-7021, Trade Agreements.
              [78 FR 59858, Sept. 30, 2013, as amended at 84 FR 12140, Apr. 1, 2019]

              225.7704
              Acquisitions of products and services from South Caucasus/Central and South Asian (SC/CASA) state in support of operations in Afghanistan.

              225.7704-1
              Applicability of trade agreements.
              As authorized by the United States Trade Representative, the Secretary of Defense has waived the prohibition in section 302(a) of the Trade Agreements Act (see subpart 225.4) for acquisitions by DoD, and by GSA on behalf of DoD, of products and services from SC/CASA states in direct support of operations in Afghanistan.
              [75 FR 81918, Dec. 29, 2010]

              225.7704-2
              Applicability of Balance of Payments Program.
              The Deputy Secretary of Defense has determined, because of importance to national security, that it would be inconsistent with the public interest to apply the provisions of the Balance of Payments Program (see subpart 225.75) to offers of end products other than arms, ammunition, and war materials (i.e., end products listed in 225.401-70) and construction materials from the SC/CASA states that are being acquired by or on behalf of DoD in direct support of operations in Afghanistan.
              [75 FR 81918, Dec. 29, 2010]

              225.7704-3
              Solicitation provisions and contract clauses.
              Appropriate solicitation provisions and contract clauses are prescribed as alternates to the Buy American-Trade Agreements-Balance of Payments Program solicitation provisions and contract clauses prescribed at 225.1101 and 225.7503.
              [75 FR 81918, Dec. 29, 2010]

              225.7705
              Prohibition on use of funds for contracts of certain programs and projects in Afghanistan that cannot be safely accessed.

              Source:
              83 FR 16004, Apr. 13, 2018, unless otherwise noted.
              This section implements section 1216 of the National Defense Authorization Act for Fiscal Year 2017 (Pub. L. 114-328).

              225.7705-1
              Prohibition.
              The contracting officer shall not obligate or expend funds for a construction or other infrastructure program or project of the Department in Afghanistan if military or civilian personnel of the United States Government or their representatives, with authority to conduct oversight of such program or project, cannot safely access such program or project. In limited circumstances, this prohibition may be waived in accordance with section 225.7705-2.

              225.7705-2
              Waiver of prohibition.
              (a) The prohibition in 225.7705-1 may be waived upon issuance of a determination, approved in accordance with paragraph (b) of this section, that—
              (1) The program or project clearly contributes to United States national interests or strategic objectives;
              (2) The Government of Afghanistan has requested or expressed a need for the program or project;
              (3) The program or project has been coordinated with the Government of Afghanistan, and with any other implementing agencies or international donors;
              (4) Security conditions permit effective implementation and oversight of the program or project;

              (5) Safeguards to detect, deter, and mitigate corruption and waste, fraud, and abuse of funds are in place;

              (6) Adequate arrangements have been made for the sustainment of the program or project following its completion, including arrangements with respect to funding and technical capacity for sustainment; and
              (7) Meaningful metrics have been established to measure the progress and effectiveness of the program or project in meeting its objectives.
              (b) The following officials are authorized to approve the determination described in paragraph (a) of this section:
              (1) In the case of a program or project with an estimated lifecycle cost of less than $1 million, by the contracting officer.
              (2) In the case of a program or project with an estimated lifecycle cost of $1 million or more, but less than $20 million, by the senior U.S. officer in the Combined Security Transition Command-Afghanistan.
              (3) In the case of a program or project with an estimated lifecycle cost of $20 million or more, but less than $40 million, by the Commander of United States Forces-Afghanistan.
              (4) In the case of a program or project with an estimated lifecycle cost of $40 million or more, by the Secretary of Defense.
              (c) Congressional notification is required within 15 days of issuance of a determination to waive the prohibition for programs or projects valued at $40 million or more in accordance with paragraph (b)(4) of this section.

              225.7705-3
              Procedures.
              (a) The contracting officer shall not obligate or expend funds for contracts for a construction or other infrastructure program or project in Afghanistan, awarded after December 23, 2016, unless the requiring activity provides the following documentation:
              (1) Written affirmation that military or civilian personnel of the United States Government or their representatives, with authority to conduct oversight of such program or project, can safely access such program or project; or
              (2)(i) For programs or projects valued at less than $1 million, sufficient information upon which to base the determination described in 225.7705-2(a); or
              (ii)(A) For programs or projects valued at $1 million or more, a copy of the approved determination described in 225.7705-2(a) and (b); and
              (B) For programs or projects valued at $40 million or more, a copy of the Congressional notification described in 225.7705-2(c).

              (b) After contract award, the contracting officer shall review the requiring activity's progress reports (e.g., contracting officer's representative reports) that addresses whether access continues to be safe or security conditions continue to permit effective implementation and oversight of the contract. If the requiring activity does not affirm continued safe access or, if a determination to waive the prohibition has been approved, that security conditions continue to permit effective implementation and oversight of the contract, then the contracting officer shall consult with the requiring activity to take any appropriate actions.

            Subpart 225.78—Acquisitions in Support of Geographic Combatant Command's Theater Security Cooperation Efforts

              § 225.7801
              Policy.
              For guidance on procurement support of the geographic combatant command's theater security cooperation efforts, see PGI 225.78.
              [76 FR 27274, May 11, 2011]

            Subpart 225.79—EXPORT CONTROL

              Source:
              78 FR 36110, June 17, 2013, unless otherwise noted.

              225.7900
              Scope of subpart.
              This subpart implements—
              (a) Section 890(a) of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181); and

              (b) The requirements regarding export control of Title I of the Security Cooperation Act of 2010 (Pub. L. 111-266); the Treaty Between the Government of the United States of America and the Government of Australia Concerning Defense Trade Cooperation (the U.S.-Australia DTC Treaty); and the Treaty Between the Government of the United States of America and the Government the United Kingdom of Great Britain and Northern Ireland Concerning Defense Trade Cooperation (the U.S.-U.K. DTC Treaty). See PGI 225.7902 for additional information.

              225.7901
              Export-controlled items.
              This section implements section 890(a) of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181).

              225.7901-1
              Definitions.

              “Export-controlled items,” as used in this section, is defined in the clause at 252.225-7048.

              225.7901-2
              General.

              Certain types of items are subject to export controls in accordance with the Arms Export Control Act (22 U.S.C. 2751, et seq.), the International Traffic in Arms Regulations (22 CFR parts 120-130), the Export Administration Act of 1979, as amended (50 U.S.C. App. 2401 et seq.), and the Export Administration Regulations (15 CFR parts 730-774). See PGI 225.7901-2 for additional information.

              225.7901-3
              Policy.
              (a) It is in the interest of both the Government and the contractor to be aware of export controls as they apply to the performance of DoD contracts.
              (b) It is the contractor's responsibility to comply with all applicable laws and regulations regarding export-controlled items. This responsibility exists independent of, and is not established or limited by, this section.

              225.7901-4
              Contract clause.
              Use the clause at 252.225-7048, Export-Controlled Items, in all solicitations and contracts.

              225.7902
              Defense Trade Cooperation Treaties.
              This section implements the Defense Trade Cooperation (DTC) Treaties with Australia and the United Kingdom and the associated Implementing Arrangements for DoD solicitations and contracts that authorize prospective contractors and contractors to use the DTC Treaties to respond to DoD solicitations and in the performance of DoD contracts.

              225.7902-1
              Definitions.

              “Approved community,” “defense articles,” “Defense Trade Cooperation (DTC) Treaty”, “export,” “Implementing Arrangement,” “qualifying defense articles,” “transfer,” and “U.S. DoD Treaty-eligible requirements” are defined in contract clause DFARS 252.225-7047, Exports by Approved Community Members in Performance of the Contract.

              225.7902-2
              Purpose.

              The DTC Treaties permit the export of certain U.S. defense articles, technical data, and defense services, without U.S. export licenses or other written authorization under the International Traffic in Arms Regulation (ITAR) into and within the Approved Community, as long as the exports are in support of purposes specified in the DTC Treaties. All persons must continue to comply with statutory and regulatory requirements outside of DFARS and ITAR concerning the import of defense articles and defense services or the possession or transfer of defense articles, including, but not limited to, regulations issued by the Bureau of Alcohol, Tobacco, Firearms and Explosives found at 27 CFR parts 447, 478, and 479, which are unaffected by the DTC Treaties. The Approved Community consists of U.S. entities that are registered with the Department of State and are eligible exporters, the U.S. Government, and certain governmental and commercial facilities in Australia and the United Kingdom that are approved and listed by the U.S. Government. See PGI 225.7902-2 for additional information.

              225.7902-3
              Policy.
              DoD will facilitate maximum use of the DTC Treaties by prospective contractors responding to DoD solicitations and by contractors eligible to export qualifying defense articles under DoD contracts in accordance with 22 CFR 126.16(g) and 22 CFR 126.17(g).

              225.7902-4
              Procedures.

              (a) For all solicitations and contracts that may be eligible for DTC Treaty coverage (see PGI 225.7902-4(1)), the program manager shall identify in writing and submit to the contracting officer prior to issuance of a solicitation and prior to award of a contract—
              (1) The qualifying DTC Treaty Scope paragraph (Article 3(1)(a), 3(1)(b), or 3(1)(d) of the U.S.-Australia DTC Treaty or Article (3)(1)(a), (3(1)(b), or 3(1)(d) of the U.S.-U.K. DTC Treaty); and
              (2) The qualifying defense article(s) using the categories described in 22 CFR 126.16(g) and 22 CFR 126.17(g).

              (b) If applicable, the program manager shall also identify in writing and submit to the contracting officer any specific Part C, DTC Treaty-exempted technology list items, terms and conditions for applicable contract line item numbers (See PGI 225.7902-4(2)).

              225.7902-5
              Solicitation provision and contract clause.
              (a) Use the provision at 252.225-7046, Exports by Approved Community Members in Response to the Solicitation, in solicitations containing the clause at 252.225-7047.

              (b)(1) Use the clause at 252.225-7047, Exports by Approved Community Members in Performance of the Contract, in solicitations and contracts when—
              (i) Export-controlled items are expected to be involved in the performance of the contract and the clause at 252.225-7048 is used; and
              (ii) At least one contract line item is intended to satisfy a U.S. DoD Treaty-eligible requirement.

              (2) The contracting officer shall complete paragraph (b) of the clause using information the program manager provided as required by 225.7902-4(a).
              [78 FR 36110, June 17, 2013, as amended at 78 FR 38235, June 26, 2013; 78 FR 40043, July 3, 2013]

          Pt. 226
          PART 226—OTHER SOCIOECONOMIC PROGRAMS

              Subpart 226.1—Indian Incentive Program
              Sec.
              226.103
              Procedures.
              226.104
              Contract clause.

              Subpart 226.70 [Reserved]

              Subpart 226.71—Preference for Local and Small Businesses
              226.7100
              Scope of subpart.
              226.7101
              Definition.
              226.7102
              Policy.
              226.7103
              Procedure.
              226.7104
              Other considerations.

              Subpart 226.72—Demonstration Project for Contractors Employing Persons With Disabilities
              226.7200
              Scope of subpart.
              226.7201
              Definitions.
              226.7202
              Policy and procedures.
              226.7203
              Solicitation provision.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36388, July 31, 1991, unless otherwise noted.

            Subpart 226.1—Indian Incentive Program

              226.103
              Procedures.
              Follow the procedures at PGI 226.103 when submitting a request for funding of an Indian incentive.
              [70 FR 73149, Dec. 9, 2005]

              226.104
              Contract clause.
              Use the clause at 252.226-7001, Utilization of Indian Organizations, Indian-Owned Economic Enterprises, and Native Hawaiian Small Business Concerns, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that are for supplies or services exceeding $500,000 in value.
              [68 FR 56562, Oct. 1, 2003, as amended at 69 FR 55991, Sept. 17, 2004; 78 FR 37988, June 25, 2013]

            Subpart 226.70 [Reserved]

            Subpart 226.71—Preference for Local and Small Businesses

              Source:
              59 FR 12192, Mar. 16, 1994, unless otherwise noted.

              226.7100
              Scope of subpart.
              This subpart implements section 2912 of the Fiscal Year 1994 Defense Authorization Act (Pub. L. 103-160) and section 817 of the Fiscal Year 1995 Defense Authorization Act (Pub. L. 103-337).
              [60 FR 5870, Jan. 31, 1995]

              226.7101
              Definition.

                Vicinity, as used in this subpart, means the county or counties in which the military installation to be closed or realigned is located and all adjacent counties, unless otherwise defined by the agency head.
              [60 FR 29499, June 5, 1995]

              226.7102
              Policy.
              Businesses located in the vicinity of a military installation that is being closed or realigned under a base closure law, including 10 U.S.C. 2687, and small and small disadvantaged businesses shall be provided maximum practicable opportunity to participate in acquisitions that support the closure or realignment, including acquisitions for environmental restoration and mitigation.

              226.7103
              Procedure.
              In considering acquisitions for award through the section 8(a) program (subpart 219.8 and FAR subpart 19.8) or in making set-aside decisions under subpart 219.5 and FAR subpart 19.5 for acquisitions in support of a base closure or realignment, the contracting officer shall—
              (a) Determine whether there is a reasonable expectation that offers will be received from responsible business concerns located in the vicinity of the military installation that is being closed or realigned.
              (b) If offers can not be expected from business concerns in the vicinity, proceed with section 8(a) or set-aside consideration as otherwise indicated in part 219 and FAR part 19.
              (c) If offers can be expected from business concerns in the vicinity—
              (1) Consider section 8(a) only if at least one eligible 8(a) contractor is located in the vicinity.
              (2) Set aside the acquisition for small business only if at least one of the expected offers is from a small business located in the vicinity.
              [60 FR 29499, June 5, 1995, as amended at 63 FR 41974, Aug. 6, 1998; 67 FR 11438, Mar. 14, 2002]

              226.7104
              Other considerations.
              When planning for contracts for services related to base closure activities at a military installation affected by a closure or realignment under a base closure law, contracting officers shall consider including, as a factor in source selection, the extent to which offerors specifically identify and commit, in their proposals, to a plan to hire residents of the vicinity of the military installation that is being closed or realigned.
              [60 FR 61598, Nov. 30, 1995]

            Subpart 226.72—Demonstration Project for Contractors Employing Persons With Disabilities

              Source:
              84 FR 72560, Dec. 31, 2019, unless otherwise noted.

              226.7200
              Scope of subpart.
              This subpart implements section 853 of the National Defense Authorization Act for Fiscal Year 2004 (Pub. L. 108-136, 10 U.S.C. 2302 note). Nothing in this subpart supersedes the requirement to use the mandatory sources in FAR part 8 or the small business programs in FAR part 19.

              226.7201
              Definitions.
              As used in this subpart—

                Eligible contractor means a business entity operated on a for-profit or nonprofit basis that—
              (1) Employs severely disabled individuals at a rate that averages not less than 33 percent of its total workforce over the 12-month period prior to issuance of the solicitation;
              (2) Pays not less than the minimum wage prescribed pursuant to 29 U.S.C. 206 to the employees who are severely disabled individuals; and
              (3) Provides, for its employees, health insurance and a retirement plan comparable to those provided for employees by business entities of similar size in its industrial sector or geographic region.

                Severely disabled individual means an individual with a disability (as defined in 42 U.S.C. 12102) who has a severe physical or mental impairment that seriously limits one or more functional capacities.

              226.7202
              Policy and procedures.
              (a)(1) Contracting officers may use this Demonstration Project to award one or more contracts to an eligible contractor for the purpose of providing defense contracting opportunities for entities that employ severely disabled individuals. To determine if there are eligible contractors capable of fulfilling the agency's requirement, conduct market research as described in 210.002 and FAR 10.002. For services, see also PGI 210.070.
              (2) If the contracting officer elects to use this Demonstration Project, FAR 6.302-5 requires a written justification and approval to limit competition to eligible contractors. In the justification, identify the statutory authority for the Demonstration Project (10 U.S.C. 2302 note).
              (b) When using this Demonstration Project, one of the evaluation factors shall be the percentage of the offeror's total workforce that consists of severely disabled individuals employed by the offeror. Contracting officers may use a rating method in which a higher percentage of the offeror's total workforce consisting of severely disabled individuals would result in a higher rating for this evaluation factor.
              (c)(1) Contracts awarded to eligible contractors under this Demonstration Project shall be counted toward DoD's small disadvantaged business goal. The contractor must be an eligible contractor when options under the contract are exercised, in order for DoD to continue to receive credit for the contract toward its small disadvantaged business goal.

              (2) Contracting officers shall verify the contractor's representation (e.g., by checking the System for Award Management) prior to exercising an option on a contract awarded under the Demonstration Project. Contracting officers may exercise the option if the contractor has represented that it is not an eligible contractor; however, the contract shall no longer be counted toward DoD's small disadvantaged business goal.

              226.7203
              Solicitation provision.
              Use the provision at 252.226-7002, Representation for Demonstration Project for Contractors Employing Persons with Disabilities, in solicitations when using this Demonstration Project, including solicitations using FAR part 12 procedures for the acquisition of commercial items.

        SUBCHAPTER E—GENERAL CONTRACTING REQUIREMENTS

          Pt. 227
          PART 227—PATENTS, DATA, AND COPYRIGHTS

              Subpart 227.3—Patent Rights Under Government Contracts
              Sec.
              227.303
              Contract clauses.
              227.304
              Procedures.
              227.304-1
              General.

              Subpart 227.4—Rights in Data and Copyrights
              227.400
              Scope of subpart.

              Subpart 227.6—Foreign License and Technical Assistance Agreements
              227.670
              Scope.
              227.671
              General.
              227.672
              Policy.
              227.673
              Foreign license and technical assistance agreements between the Government and domestic concerns.
              227.674
              Supply contracts between the Government and a foreign government or concern.
              227.675
              Foreign license and technical assistance agreements between a domestic concern and a foreign government or concern.
              227.675-1
              International Traffic in Arms Regulations.
              227.675-2
              Review of agreements.
              227.676
              Foreign patent interchange agreements.

              Subpart 227.70—Infringement Claims, Licenses, and Assignments
              227.7000
              Scope.
              227.7001
              Policy.
              227.7002
              Statutes pertaining to administrative claims of infringement.
              227.7003
              Claims for copyright infringement.
              227.7004
              Requirements for filing an administrative claim for patent infringement.
              227.7005
              Indirect notice of patent infringement claims.
              227.7006
              Investigation and administrative disposition of claims.
              227.7007
              Notification and disclosure to claimants.
              227.7008
              Settlement of indemnified claims.
              227.7009
              Patent releases, license agreements, and assignments.
              227.7009-1
              Required clauses.
              227.7009-2
              Clauses to be used when applicable.
              227.7009-3
              Additional clauses—contracts except running royalty contracts.
              227.7009-4
              Additional clauses—contracts providing for payment of a running royalty.
              227.7010
              Assignments.
              227.7011
              Procurement of rights in inventions, patents, and copyrights.
              227.7012
              Contract format.
              227.7013
              Recordation.

              Subpart 227.71—Rights in Technical Data
              227.7100
              Scope of subpart.
              227.7101
              Definitions.
              227.7102
              Commercial items, components, or processes.
              227.7102-1
              Policy.
              227.7102-2
              Rights in technical data.
              227.7102-3
              Government right to review, verify, challenge and validate asserted restrictions.
              227.7102-4
              Contract clauses.
              227.7103
              Noncommercial items or processes.
              227.7103-1
              Policy.
              227.7103-2
              Acquisition of technical data.
              227.7103-3
              Early identification of technical data to be furnished to the Government with restrictions on use, reproduction or disclosure.
              227.7103-4
              License rights.
              227.7103-5
              Government rights.
              227.7103-6
              Contract clauses.
              227.7103-7
              Use and non-disclosure agreement.
              227.7103-8
              Deferred delivery and deferred ordering of technical data.
              227.7103-9
              Copyright.
              227.7103-10
              Contractor identification and marking of technical data to be furnished with restrictive markings.
              227.7103-11
              Contractor procedures and records.
              227.7103-12
              Government right to establish conformity of markings.
              227.7103-13
              Government right to review, verify, challenge, and validate asserted restrictions.
              227.7103-14
              Conformity, acceptance, and warranty of technical data.
              227.7103-15
              Subcontractor rights in technical data.
              227.7103-16
              Providing technical data to foreign governments, foreign contractors, or international organizations.
              227.7103-17
              Overseas contracts with foreign sources.
              227.7104
              Contracts under the Small Business Innovation Research (SBIR) Program.
              227.7105
              Contracts for the acquisition of existing works.
              227.7105-1
              General.
              227.7105-2
              Acquisition of existing works without modification.
              227.7105-3
              Acquisition of modified existing works.

              227.7106
              Contracts for special works.
              227.7107
              Contracts for architect-engineer services.
              227.7107-1
              Architectural designs and data clauses for architect-engineer or construction contracts.
              227.7107-2
              Contracts for construction supplies and research and development work.
              227.7107-3
              Approval of restricted designs.
              227.7108
              Contractor data repositories.

              Subpart 227.72—Rights in Computer Software and Computer Software Documentation
              227.7200
              Scope of subpart.
              227.7201
              Definitions.
              227.7202
              Commercial computer software and commercial computer software documentation.
              227.7202-1
              Policy.
              227.7202-2
              [Reserved]
              227.7202-3
              Rights in commercial computer software or commercial computer software documentation.
              227.7202-4
              Contract clause.
              227.7203
              Noncommercial computer software and noncommercial computer software documentation.
              227.7203-1
              Policy.
              227.7203-2
              Acquisition of noncommercial computer software and computer software documentation.
              227.7203-3
              Early identification of computer software or computer software documentation to be furnished to the Government with restrictions on use, reproduction or disclosure.
              227.7203-4
              License rights.
              227.7203-5
              Government rights.
              227.7203-6
              Contract clauses.
              227.7203-8
              Deferred delivery and deferred ordering of computer software and computer software documentation.
              227.7203-9
              Copyright.
              227.7203-10
              Contractor identification and marking of computer software or computer software documentation to be furnished with restrictive markings.
              227.7203-11
              Contractor procedures and records.
              227.7203-12
              Government right to establish conformity of markings.
              227.7203-13
              Government right to review, verify, challenge, and validate asserted restrictions.
              227.7203-14
              Conformity, acceptance, and warranty of computer software and computer software documentation.
              227.7203-15
              Subcontractor rights in computer software or computer software documentation.
              227.7203-16
              Providing computer software or computer software documentation to foreign governments, foreign contractors, or international organizations.
              227.7203-17
              Overseas contracts with foreign sources.
              227.7204
              Contracts under the Small Business Innovative Research Program.
              227.7205
              Contracts for special works.
              227.7206
              Contracts for architect-engineer services.
              227.7207
              Contractor data repositories.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36389, July 31, 1991, unless otherwise noted.

            Subpart 227.3—Patent Rights Under Government Contracts

              227.303
              Contract clauses.
              (1) Use the clause at 252.227-7039, Patents—Reporting of Subject Inventions, in solicitations and contracts containing the clause at FAR 52.227-11, Patent Rights—Ownership by the Contractor.
              (2)(i) Use the clause at 252.227-7038, Patent Rights—Ownership by the Contractor (Large Business), instead of the clause at FAR 52.227-11, in solicitations and contracts for experimental, developmental, or research work if—
              (A) The contractor is other than a small business concern or nonprofit organization; and
              (B) No alternative patent rights clause is used in accordance with FAR 27.303(c) or (e).
              (ii) Use the clause with its Alternate I if—
              (A) The acquisition of patent rights for the benefit of a foreign government is required under a treaty or executive agreement;
              (B) The agency head determines at the time of award that it would be in the national interest to acquire the right to sublicense foreign governments or international organizations pursuant to any existing or future treaty or agreement; or
              (C) Other rights are necessary to effect a treaty or agreement, in which case Alternate I may be appropriately modified.
              (iii) Use the clause with its Alternate II in long-term contracts if necessary to effect treaty or agreements to be entered into.
              [72 FR 69159, Dec. 7, 2007]

              227.304
              Procedures.

              227.304-1
              General.
              Interim and final invention reports and notification of all subcontracts for experimental, developmental, or research work may be submitted on DD Form 882, Report of Inventions and Subcontracts.
              [56 FR 36389, July 31, 1991, as amended at 57 FR 53600, Nov. 12, 1992; 76 FR 76320, Dec. 7, 2011]

            Subpart 227.4—Rights in Data and Copyrights

              227.400
              Scope of subpart.
              DoD activities shall use the guidance in subparts 227.71 and 227.72 instead of the guidance in FAR subpart 27.4.
              [60 FR 33471, June 28, 1995]

            Subpart 227.6—Foreign License and Technical Assistance Agreements

              227.670
              Scope.
              This subpart prescribes policy with respect to foreign license and technical assistance agreements.

              227.671
              General.
              In furtherance of the Military Assistance Program or for other national defense purposes, the Government may undertake to develop or encourage the development of foreign additional sources of supply. The development of such sources may be accomplished by an agreement, often called a foreign licensing agreement or technical assistance agreement, wherein a domestic concern, referred to in this subpart as a “primary source,” agrees to furnish to a foreign concern or government, herein referred to as a “second source;” foreign patent rights; technical assistance in the form of data, know-how, trained personnel of the primary source, instruction and guidance of the personnel of the second source, jigs, dies, fixtures, or other manufacturing aids, or such other assistance, information, rights, or licenses as are needed to enable the second source to produce particular supplies or perform particular services. Agreements calling for one or more of the foregoing may be entered into between the primary source and the Government, a foreign government, or a foreign concern. The consideration for providing such foreign license and technical assistance may be in the form of a lump sum payment, payments for each item manufactured by the second source, an agreement to exchange data and patent rights on improvements made to the article or service, capital stock transactions, or any combination of these. The primary source's bases for computing such consideration may include actual costs; charges for the use of patents, data, or know-how reflecting the primary source's investment in developing and engineering and production techniques; and the primary source's “price” for setting up a second source. Such agreements often refer to the compensation to be paid as a royalty or license fee whether or not patent rights are involved.

              227.672
              Policy.
              It is Government policy not to pay in connection with its contracts, and not to allow to be paid in connection with contracts made with funds derived through the Military Assistance Program or otherwise through the United States Government, charges for use of patents in which it holds a royalty-free license or charges for data which it has a right to use and disclose to others, or which is in the public domain, or which the Government has acquired without restriction upon its use and disclosure to others. This policy shall be applied by the Departments in negotiating contract prices for foreign license technical assistance contracts (227.675) or supply contracts with second sources (227.674); and in commenting on such agreements when they are referred to the Department of Defense by the Department of State pursuant to section 414 of the Mutual Security Act of 1954 as amended (22 U.S.C. 1934) and the International Traffic in Arms Regulations (see 227.675).

              227.673
              Foreign license and technical assistance agreements between the Government and domestic concerns.
              (a) Contracts between the Government and a primary source to provide technical assistance or patent rights to a second source for the manufacture of supplies or performance of services shall, to the extent practicable, specify the rights in patents and data and any other rights to be supplied to the second source. Each contract shall provide, in connection with any separate agreement between the primary source and the second source for patent rights or technical assistance relating to the articles or services involved in the contract, that—
              (1) The primary source and his subcontractors shall not make, on account of any purchases by the Government or by others with funds derived through the Military Assistance Program or otherwise through the Government, any charge to the second source for royalties or amortization for patents or inventions in which the Government holds a royalty-free license; or data which the Government has the right to possess, use, and disclose to others; or any technical assistance provided to the second source for which the Government has paid under a contract between the Government and the primary source; and
              (2) The separate agreement between the primary and second source shall include a statement referring to the contract between the Government and the primary source, and shall conform to the requirements of the International Traffic in Arms Regulations (see 227.675-1).
              (b) The following factors, among others, shall be considered in negotiating the price to be paid the primary source under contracts within (a) of this section:
              (1) The actual cost of providing data, personnel, manufacturing aids, samples, spare parts, and the like;
              (2) The extent to which the Government has contributed to the development of the supplies or services, and to the methods of manufacture or performance, through past contracts for research and development or for manufacture of the supplies or performance of the services; and
              (3) The Government's patent rights and rights in data relating to the supplies or services and to the methods of manufacture or of performance.

              227.674
              Supply contracts between the Government and a foreign government or concern.
              In negotiating contract prices with a second source, including the redetermination of contract prices, or in determining the allowability of costs under a cost-reimbursement contract with a second source, the contracting officer:
              (a) Shall obtain from the second source a detailed statement (see FAR 27.204-1(a)(2)) of royalties, license fees, and other compensation paid or to be paid to a primary source (or any of his subcontractors) for patent rights, rights in data, and other technical assistance provided to the second source, including identification and description of such patents, data, and technical assistance; and
              (b) Shall not accept or allow charges which in effect are—
              (1) For royalties or amortization for patents or inventions in which the Government holds a royalty-free license; or
              (2) For data which the Government has a right to possess, use, and disclose to others; or
              (3) For any technical assistance provided to the second source for which the Government has paid under a contract between the Government and a primary source.

              227.675
              Foreign license and technical assistance agreements between a domestic concern and a foreign government or concern.

              227.675-1
              International Traffic in Arms Regulations.

              Pursuant to section 414 of the Mutual Security Act of 1954, as amended (22 U.S.C. 1934), the Department of State controls the exportation of data relating to articles designated in the United States Munitions List as arms, ammunition, or munitions of war. (The Munitions List and pertinent procedures are set forth in the International Traffic in Arms Regulations, 22 CFR, et seq.) Before authorizing such exportation, the Department of State generally requests comments from the Department of Defense. On request of the Office of the Assistant Secretary of Defense (International Security Affairs), each Department shall submit comments thereon as the basis for a Department of Defense reply to the Department of State.

              227.675-2
              Review of agreements.
              (a) In reviewing foreign license and technical assistance agreements between primary and second sources, the Department concerned shall, insofar as its interests are involved, indicate whether the agreement meets the requirements of §§ 124.07-124.10 of the International Traffic in Arms Regulations or in what respects it is deficient. Paragraphs (b) through (g) of this subsection provide general guidance.
              (b) When it is reasonably anticipated that the Government will purchase from the second source the supplies or services involved in the agreement, or that Military Assistance Program funds will be provided for the procurement of the supplies or services, the following guidance applies.
              (1) If the agreement specifies a reduction in charges thereunder, with respect to purchases by or for the Government or by others with funds derived through the Military Assistance Program or otherwise through the Government, in recognition of the Government's rights in patents and data, the Department concerned shall evaluate the amount of the reduction to determine whether it is fair and reasonable in the circumstances, before indicating its approval.
              (2) If the agreement does not specify any reduction in charges or otherwise fails to give recognition to the Government's rights in the patents or data involved, approval shall be conditioned upon amendment of the agreement to reflect a reduction, evaluated by the Department concerned as acceptable to the Government, in any charge thereunder with respect to purchases made by or for the Government or by others with funds derived through the Military Assistance Program or otherwise through the Government, in accordance with § 124.10 of the International Traffic in Arms Regulations.
              (3) If the agreement provides that no charge is to be made to the second source for data or patent rights to the extent of the Government's rights, the Department concerned shall evaluate the acceptability of the provision before indicating its approval.
              (4) If time or circumstances do not permit the evaluation called for in (b) (1), (2), or (3) of this subsection, the guidance in (c) of this subsection shall be followed.
              (c) When it is not reasonably anticipated that the Government will purchase from the second source the supplies or services involved in the agreement nor that Military Assistance Program funds will be provided for the purchase of the supplies or services, then the following guidance applies.
              (1) If the agreement provides for charges to the second source for data or patent rights, it may suffice to fulfill the requirements of § 124.10 insofar as the Department of Defense is concerned if:
              (i) The agreement requires the second source to advise the primary source when he has knowledge of any purchase made or to be made from him by or for the Government or by others with funds derived through the Military Assistance Program or otherwise through the Government;
              (ii) The primary source separately agrees with the Government that upon such advice to him from the second source or from the Government or otherwise as to any such a purchase or prospective purchase, he will negotiate with the Department concerned an appropriate reduction in his charges to the second source in recognition of any Government rights in patents or data; and
              (iii) The agreement between the primary and second sources further provides that in the event of any such purchase and resulting reduction in charges, the second source shall pass on this reduction to the Government by giving the Government a corresponding reduction in the purchase price of the article or service.

              (2) If the agreement provides that no charge is to be made to the second source for data or patent rights to the extent to which the Government has rights, the Department concerned shall:
              (i) Evaluate the acceptability of the provision before indicating its approval; or
              (ii) Explicitly condition its approval on the right to evaluate the acceptability of the provision at a later time.
              (d) When there is a technical assistance agreement between the primary source and the Government related to the agreement between the primary and second sources that is under review, the latter agreement shall reflect the arrangements contemplated with respect thereto by the Government's technical assistance agreement with the primary source.
              (e) Every agreement shall provide that any license rights transferred under the agreement are subject to existing rights of the Government.
              (f) In connection with every agreement referred to in (b) of this section, a request shall be made to the primary source—
              (1) To identify the patents, data, and other technical assistance to be provided to the second source by the primary source or any of his subcontractors,
              (2) To identify any such patents and data in which, to the knowledge of the primary source, the Government may have rights, and
              (3) To segregate the charges made to the second source for each such category or item of patents, data, and other technical assistance.
              Reviewing personnel shall verify this information or, where the primary source does not furnish it, obtain such information from Governmental sources so far as practicable.
              (g) The Department concerned shall make it clear that its approval of any agreement does not necessarily recognize the propriety of the charges or the amounts thereof, or constitute approval of any of the business arrangements in the agreement, unless the Department expressly intends by its approval to commit itself to the fairness and reasonableness of a particular charge or charges. In any event, a disclaimer should be made to charges or business terms not affecting any purchase made by or for the Government or by others with funds derived through the Military Assistance Program or otherwise through the Government.

              227.676
              Foreign patent interchange agreements.
              (a) Patent interchange agreements between the United States and foreign governments provide for the use of patent rights, compensation, free licenses, and the establishment of committees to review and make recommendations on these matters. The agreements also may exempt the United States from royalty and other payments. The contracting officer shall ensure that royalty payments are consistent with patent interchange agreements.
              (b) Assistance with patent rights and royalty payments in the United States European Command (USEUCOM) area of responsibility is available from HQ USEUCOM, ATTN: ECLA, Unit 30400, Box 1000, APO AE 09128; Telephone: DSN 430-8001/7263, Commercial 49-0711-680-8001/7263; Telefax: 49-0711-680-5732.
              [62 FR 34125, June 24, 1997, as amended at 63 FR 11534, Mar. 9, 1998]

            Subpart 227.70—Infringement Claims, Licenses, and Assignments

              227.7000
              Scope.
              This subpart prescribes policy, procedures, and instructions for use of clauses with respect to processing licenses, assignments, and infringement claims.

              227.7001
              Policy.
              Whenever a claim of infringement of privately owned rights in patented inventions or copyrighted works is asserted against any Department or Agency of the Department of Defense, all necessary steps shall be taken to investigate, and to settle administratively, deny, or otherwise dispose of such claim prior to suit against the United States. This subpart 227.70 does not apply to licenses or assignments acquired by the Department of Defense under the Patent Rights clauses.

              227.7002
              Statutes pertaining to administrative claims of infringement.
              Statutes pertaining to administrative claims of infringement in the Department of Defense include the following: the Foreign Assistance Act of 1961, 22 U.S.C. 2356 (formerly the Mutual Security Acts of 1951 and 1954); the Invention Secrecy Act, 35 U.S.C. 181-188; 10 U.S.C. 2386; 28 U.S.C. 1498; and 35 U.S.C. 286.

              227.7003
              Claims for copyright infringement.
              The procedures set forth herein will be followed, where applicable, in copyright infringement claims.

              227.7004
              Requirements for filing an administrative claim for patent infringement.
              (a) A patent infringement claim for compensation, asserted against the United States under any of the applicable statutes cited in 227.7002, must be actually communicated to and received by a Department, agency, organization, office, or field establishment within the Department of Defense. Claims must be in writing and should include the following:
              (1) An allegation of infringement;
              (2) A request for compensation, either expressed or implied;
              (3) A citation of the patent or patents alleged to be infringed;
              (4) A sufficient designation of the alleged infringing item or process to permit identification, giving the military or commercial designation, if known, to the claimant;
              (5) A designation of at least one claim of each patent alleged to be infringed; or
              (6) As an alternative to (a) (4) and (5) of this section, a declaration that the claimant has made a bona fide attempt to determine the item or process which is alleged to infringe, but was unable to do so, giving reasons, and stating a reasonable basis for his belief that his patent or patents are being infringed.
              (b) In addition to the information listed in (a) of this section, the following material and information is generally necessary in the course of processing a claim of patent infringement. Claimants are encouraged to furnish this information at the time of filing a claim to permit the most expeditious processing and settlement of the claim.
              (1) A copy of the asserted patent(s) and identification of all claims of the patent alleged to be infringed.
              (2) Identification of all procurements known to claimant which involve the alleged infringing item or process, including the identity of the vendor or contractor and the Government procuring activity.
              (3) A detailed identification of the accused article or process, particularly where the article or process relates to a component or subcomponent of the item procured, an element by element comparison of the representative claims with the accused article or process. If available, this identification should include documentation and drawings to illustrate the accused article or process in suitable detail to enable verification of the infringement comparison.
              (4) Names and addresses of all past and present licenses under the patent(s), and copies of all license agreements and releases involving the patent(s).
              (5) A brief description of all litigation in which the patent(s) has been or is now involved, and the present status thereof.
              (6) A list of all persons to whom notices of infringement have been sent, including all departments and agencies of the Government, and a statement of the ultimate disposition of each.
              (7) A description of Government employment or military service, if any, by the inventor and/or patent owner.
              (8) A list of all Government contracts under which the inventor, patent owner, or anyone in privity with him performed work relating to the patented subject matter.
              (9) Evidence of title to the patent(s) alleged to be infringed or other right to make the claim.
              (10) A copy of the Patent Office file of each patent if available to claimant.
              (11) Pertinent prior art known to claimant, not contained in the Patent Office file, particularly publications and foreign art.

              In addition in the foregoing, if claimant can provide a statement that the investigation may be limited to the specifically identified accused articles or processes, or to a specific procurement, it may materially expedite determination of the claim.
              (c) Any department receiving an allegation of patent infringement which meets the requirements of this paragraph shall acknowledge the same and supply the other departments that may have an interest therein with a copy of such communication and the acknowledgement thereof.
              (1) For the Department of the Army—Chief, Patents, Copyrights, and Trademarks Division, U.S. Army Legal Services Agency;
              (2) For the Department of the Navy—the Patent Counsel for Navy, Office of Naval Research;
              (3) For the Department of the Air Force—Chief, Patents Division, Office of the Judge Advocate General;
              (4) For the Defense Logistics Agency—the Office of Counsel;
              (5) For the National Security Agency—the General Counsel;
              (6) For the Defense Information Systems Agency—the Counsel;
              (7) For the Defense Threat Reduction Agency—the General Counsel; and
              (8) For the National Geospatial-Intelligence Agency—the Counsel.
              (d) If a communication alleging patent infringement is received which does not meet the requirements set forth in paragraph (c) of this section, the sender shall be advised in writing—
              (1) That his claim for infringement has not been satisfactorily presented, and
              (2) Of the elements considered necessary to establish a claim.
              (e) A communication making a proffer of a license in which no infringement is alleged shall not be considered as a claim for infringement.
              [56 FR 36389, July 31, 1991, as amended at 56 FR 67216, Dec. 30, 1991; 61 FR 50454, Sept. 26, 1996; 62 FR 2613, Jan. 17, 1997; 64 FR 51076, Sept. 21, 1999; 74 FR 42780, Aug. 25, 2009; 76 FR 3536, Jan. 20, 2011]

              227.7005
              Indirect notice of patent infringement claims.
              (a) A communication by a patent owner to a Department of Defense contractor alleging that the contractor has committed acts of infringement in performance of a Government contract shall not be considered a claim within the meaning of 227.7004 until it meets the requirements specified therein.
              (b) Any Department receiving an allegation of patent infringement which meets the requirements of 227.7004 shall acknowledge the same and supply the other Departments (see 227.7004(c)) which may have an interest therein with a copy of such communication and the acknowledgement thereof.
              (c) If a communication covering an infringement claim or notice which does not meet the requirements of 227.7004(a) is received from a contractor, the patent owner shall be advised in writing as covered by the instructions of 227.7004(d).

              227.7006
              Investigation and administrative disposition of claims.
              An investigation and administrative determination (denial or settlement) of each claim shall be made in accordance with instructions and procedures established by each Department, subject to the following:
              (a) When the procurement responsibility for the alleged infringing item or process is assigned to a single Department or only one Department is the purchaser of the alleged infringing item or process, and the funds of that Department only are to be charged in the settlement of the claim, that Department shall have the sole responsibility for the investigation and administrative determination of the claim and for the execution of any agreement in settlement of the claim. Where, however, funds of another Department are to be charged, in whole or in part, the approval of such Department shall be obtained as required by 208.7002. Any agreement in settlement of the claim, approved pursuant to 208.7002 shall be executed by each of the Departments concerned.

              (b) When two or more Departments are the respective purchasers of alleged infringing items or processes and the funds of those Departments are to be charged in the settlement of the claim, the investigation and administrative determination shall be the responsibility of the Department having the predominant financial interest in the claim or of the Department or Departments as jointly agreed upon by the Departments concerned. The Department responsible for negotiation shall, throughout the negotiation, coordinate with the other Departments concerned and keep them advised of the status of the negotiation. Any agreement in the settlement of the claim shall be executed by each Department concerned.

              227.7007
              Notification and disclosure to claimants.
              When a claim is denied, the Department responsible for the administrative determination of the claim shall so notify the claimant or his authorized representative and provide the claimant a reasonable rationale of the basis for denying the claim. Disclosure of information or the rationale referred to above shall be subject to applicable statutes, regulations, and directives pertaining to security, access to official records, and the rights of others.

              227.7008
              Settlement of indemnified claims.
              Settlement of claims involving payment for past infringement shall not be made without the consent of, and equitable contribution by, each indemnifying contractor involved, unless such settlement is determined to be in the best interests of the Government and is coordinated with the Department of Justice with a view to preserving any rights of the Government against the contractors involved. If consent of and equitable contribution by the contractors are obtained, the settlement need not be coordinated with the Department of Justice.

              227.7009
              Patent releases, license agreements, and assignments.
              This section contains clauses for use in patent release and settlement agreements, license agreements, and assignments, executed by the Government, under which the Government acquires rights. Minor modifications of language (e.g., pluralization of “Secretary” or “Contracting Officer”) in multi-departmental agreements may be made if necessary.

              227.7009-1
              Required clauses.
              (a) Covenant Against Contingent Fees. Insert the clause at FAR 52.203-5.
              (b) Gratuities. Insert the clause at FAR 52.203-3.
              (c) Assignment of Claims. Insert the clause at FAR 52.232-23.
              (d) Disputes. Pursuant to FAR 33.014, insert the clause at FAR 52.233-1.
              (e) Non-Estoppel. Insert the clause at 252.227-7000.
              [56 FR 36389, July 31, 1991, as amended at 61 FR 50454, Sept. 26, 1996]

              227.7009-2
              Clauses to be used when applicable.
              (a) Release of past infringement. The clause at 252.227-7001, Release of Past Infringement, is an example which may be modified or omitted as appropriate for particular circumstances, but only upon the advice of cognizant patent or legal counsel. (See footnotes at end of clause.)
              (b) Readjustment of payments. The clause at 252.227-7002, Readjustment of Payments, shall be inserted in contracts providing for payment of a running royalty.
              (c) Termination. The clause at 252.227-7003, Termination, is an example for use in contracts providing for the payment of a running royalty. This clause may be modified or omitted as appropriate for particular circumstances, but only upon the advice of cognizant patent or legal counsel (see 227.7004(c)).

              227.7009-3
              Additional clauses—contracts except running royalty contracts.
              The following clauses are examples for use in patent release and settlement agreements, and license agreements not providing for payment by the Government of a running royalty.
              (a) License Grant. Insert the clause at 252.227-7004.
              (b) License Term. Insert one of the clauses at 252.227-7005 Alternate I or Alternate II, as appropriate.

              227.7009-4
              Additional clauses—contracts providing for payment of a running royalty.

              The clauses set forth below are examples which may be used in patent release and settlement agreements, and license agreements, when it is desired to cover the subject matter thereof and the contract provides for payment of a running royalty.

              (a) License grant—running royalty. No Department shall be obligated to pay royalties unless the contract is signed on behalf of such Department. Accordingly, the License Grant clause at 252.227-7006 should be limited to the practice of the invention by or for the signatory Department or Departments.
              (b) License term—running royalty. The clause at 252.227-7007 is a sample form for expressing the license term.
              (c) Computation of royalties. The clause at 252.227-7008 providing for the computation of royalties, may be of varying scope depending upon the nature of the royalty bearing article, the volume of procurement, and the type of contract pursuant to which the procurement is to be accomplished.
              (d) Reporting and payment of royalties. (1) The contract should contain a provision specifying the office designated within the specific Department involved to make any necessary reports to the contractor of the extent of use of the licensed subject matter by the entire Department, and such office shall be charged with the responsibility of obtaining from all procuring offices of that Department the information necessary to make the required reports and corresponding vouchers necessary to make the required payments. The clause at 252.227-7009 is a sample for expressing reporting and payment of royalties requirements.
              (2) Where more than one Department or Government Agency is licensed and there is a ceiling on the royalties payable in any reporting period, the licensing Departments or Agencies shall coordinate with respect to the pro rata share of royalties to be paid by each.
              (e) License to other government agencies. When it is intended that a license on the same terms and conditions be available to other departments and agencies of the Government, the clause at 252.227-7010 is an example which may be used.

              227.7010
              Assignments.
              (a) The clause at 252.227-7011 is an example which may be used in contracts of assignment of patent rights to the Government.
              (b) To facilitate proof of contracts of assignments, the acknowledgement of the contractor should be executed before a notary public or other officer authorized to administer oaths (35 U.S.C. 261).

              227.7011
              Procurement of rights in inventions, patents, and copyrights.
              Even though no infringement has occurred or been alleged, it is the policy of the Department of Defense to procure rights under patents, patent applications, and copyrights whenever it is in the Government's interest to do so and the desired rights can be obtained at a fair price. The required and suggested clauses at 252.227-7004 and 252.227-7010 shall be required and suggested clauses, respectively, for license agreements and assignments made under this paragraph. The instructions at 227.7009-3 and 227.7010 concerning the applicability and use of those clauses shall be followed insofar as they are pertinent.

              227.7012
              Contract format.
              The format at 252.227-7012 appropriately modified where necessary, may be used for contracts of release, license, or assignment.

              227.7013
              Recordation.
              Executive Order No. 9424 of 18 February 1944 requires all executive Departments and agencies of the Government to forward through appropriate channels to the Commissioner of Patents and Trademarks, for recording, all Government interests in patents or applications for patents.

            Subpart 227.71—Rights in Technical Data

              Source:
              60 FR 33471, June 28, 1995, unless otherwise noted.

              227.7100
              Scope of subpart.
              This subpart—
              (a) Prescribes policies and procedures for the acquisition of technical data and the rights to use, modify, reproduce, release, perform, display, or disclose technical data. It implements requirements in the following laws and Executive Order:
              (1) 10 U.S.C. 2302(4).
              (2) 10 U.S.C. 2305 (subsection (d)(4)).
              (3) 10 U.S.C. 2320.

              (4) 10 U.S.C. 2321.
              (5) 10 U.S.C. 2325.
              (6) 10 U.S.C. 7317.
              (7) 17 U.S.C. 1301, et seq.

              (8) Pub. L. 103-355.
              (9) Executive Order 12591 (Subsection 1(b)(6)).
              (b) Does not apply to—
              (1) Computer software or technical data that is computer software documentation (see subpart 227.72); or
              (2) Releases of technical data to litigation support contractors (see subpart 204.74).
              [60 FR 33471, June 28, 1995, as amended at 74 FR 61044, Nov. 23, 2009; 79 FR 11340, Feb. 28, 2014]

              227.7101
              Definitions.
              (a) As used in this subpart, unless otherwise specifically indicated, the terms “offeror” and “contractor” include an offeror's or contractor's subcontractors, suppliers, or potential subcontractors or suppliers at any tier.
              (b) Other terms used in this subpart are defined in the clause at 252.227-7013, Rights in Technical Data—Noncommercial Items.
              [56 FR 36389, July 31, 1991, as amended at 60 FR 61598, Nov. 30, 1995]

              227.7102
              Commercial items, components, or processes.

              227.7102-1
              Policy.
              (a) DoD shall acquire only the technical data customarily provided to the public with a commercial item or process, except technical data that—
              (1) Are form, fit, or function data;
              (2) Are required for repair or maintenance of commercial items or processes, or for the proper installation, operating, or handling of a commercial item, either as a stand alone unit or as a part of a military system, when such data are not customarily provided to commercial users or the data provided to commercial users is not sufficient for military purposes; or
              (3) Describe the modifications made at Government expense to a commercial item or process in order to meet the requirements of a Government solicitation.
              (b) To encourage offerors and contractors to offer or use commercial products to satisfy military requirements, offerors, and contractors shall not be required, except for the technical data described in paragraph (a) of this subsection, to—
              (1) Furnish technical information related to commercial items or processes that is not customarily provided to the public; or
              (2) Relinquish to, or otherwise provide, the Government rights to use, modify, reproduce, release, perform, display, or disclose technical data pertaining to commercial items or processes except for a transfer of rights mutually agreed upon.
              (c) The Government's rights in a vessel design, and in any useful article embodying a vessel design, must be consistent with the Government's rights in technical data pertaining to the design (10 U.S.C. 7317; 17 U.S.C. 1301(a)(3)).
              [60 FR 33471, June 28, 1995, as amended at 74 FR 61044, Nov. 23, 2009]

              227.7102-2
              Rights in technical data.
              (a) The clause at 252.227-7015, Technical Data—Commercial Items, provides the Government specific license rights in technical data pertaining to commercial items or processes. DoD may use, modify, reproduce, release, perform, display, or disclose data only within the Government. The data may not be used to manufacture additional quantities of the commercial items and, except for emergency repair or overhaul and for covered Government support contractors, may not be released or disclosed to, or used by, third parties without the contractor's written permission. Those restrictions do not apply to the technical data described in 227.7102-1(a).
              (b) If additional rights are needed, contracting activities must negotiate with the contractor to determine if there are acceptable terms for transferring such rights. The specific additional rights granted to the Government shall be enumerated in a license agreement made part of the contract.
              [56 FR 36389, July 31, 1991, as amended at 76 FR 11367, Mar. 2, 2011]

              227.7102-3
              Government right to review, verify, challenge and validate asserted restrictions.
              Follow the procedures at 227.7103-13 and the clause at 252.227-7037, Validation of Restrictive Markings on Technical Data, regarding the validation of asserted restrictions on technical data related to commercial items.
              [76 FR 58147, Sept. 20, 2011]

              227.7102-4
              Contract clauses.
              (a)(1) Except as provided in paragraph (b) of this subsection, use the clause at 252.227-7015, Technical Data-Commercial Items, in all solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, when the Contractor will be required to deliver technical data pertaining to commercial items, components, or processes.
              (2) Use the clause at 252.227-7015 with its Alternate I in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, for the development or delivery of a vessel design or any useful article embodying a vessel design.
              (b) In accordance with the clause prescription at 227.7103-6(a), use the clause at 252.227-7013, Rights in Technical Data-Noncommercial Items, in addition to the clause at 252.227-7015, if the Government will have paid for any portion of the development costs of a commercial item. The clause at 252.227-7013 will govern the technical data pertaining to any portion of a commercial item that was developed in any part at Government expense, and the clause at 252.227-7015 will govern the technical data pertaining to any portion of a commercial item that was developed exclusively at private expense.
              (c) Use the clause at 252.227-7037, Validation of Restrictive Markings on Technical Data, in solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items that include the clause at 252.227-7015 or the clause at 252.227-7013.
              [76 FR 58147, Sept. 20, 2011, as amended at 78 FR 37988, June 25, 2013]

              227.7103
              Noncommercial items or processes.

              227.7103-1
              Policy.
              (a) DoD policy is to acquire only the technical data, and the rights in that data, necessary to satisfy agency needs.
              (b) Solicitations and contracts shall—
              (1) Specify the technical data to be delivered under a contract and delivery schedules for the data;
              (2) Establish or reference procedures for determining the acceptability of technical data;
              (3) Establish separate contract line items, to the extent practicable, for the technical data to be delivered under a contract and require offerors and contractors to price separately each deliverable data item; and
              (4) Require offerors to identify, to the extent practicable, technical data to be furnished with restrictions on the Government's rights and require contractors to identify technical data to be delivered with such restrictions prior to delivery.
              (c) Offerors shall not be required, either as a condition of being responsive to a solicitation or as a condition for award, to sell or otherwise relinquish to the Government any rights in technical data related to items, components or processes developed at private expense except for the data identified at 227.7103-5(a)(2) and (a)(4) through (9).
              (d) Offerors and contractors shall not be prohibited or discouraged from furnishing or offering to furnish items, components, or processes developed at private expense solely because the Government's rights to use, modify, release, reproduce, perform, display, or disclose technical data pertaining to those items may be restricted.
              (e) As provided in 10 U.S.C. 2305, solicitations for major systems development contracts shall not require offerors to submit proposals that would permit the Government to acquire competitively items identical to items developed at private expense unless a determination is made at a level above the contracting officer that—

              (1) The offeror will not be able to satisfy program schedule or delivery requirements; or

              (2) The offeror's proposal to meet mobilization requirements does not satisfy mobilization needs.
              (f) For acquisitions involving major weapon systems or subsystems of major weapon systems, the acquisition plan shall address acquisition strategies that provide for technical data and the associated license rights in accordance with 207.106(S-70).
              (g) The Government's rights in a vessel design, and in any useful article embodying a vessel design, must be consistent with the Government's rights in technical data pertaining to the design (10 U.S.C. 7317; 17 U.S.C. 1301(a)(3)).
              [60 FR 33471, June 28, 1995, as amended at 72 FR 51189, Sept. 6, 2007; 74 FR 61044, Nov. 23, 2009]

              227.7103-2
              Acquisition of technical data.
              (a) Contracting officers shall work closely with data managers and requirements personnel to assure that data requirements included in solicitations are consistent with the policy expressed in 227.7103-1.
              (b)(1) Data managers or other requirements personnel are responsible for identifying the Government's minimum needs for technical data. Data needs must be established giving consideration to the contractor's economic interests in data pertaining to items, components, or processes that have been developed at private expense; the Government's costs to acquire, maintain, store, retrieve, and protect the data; reprocurement needs; repair, maintenance and overhaul philosophies; spare and repair part considerations; and whether procurement of the items, components, or processes can be accomplished on a form, fit, or function basis. When it is anticipated that the Government will obtain unlimited or government purpose rights in technical data that will be required for competitive spare or repair parts procurements, such data should be identified as deliverable data items. Reprocurement needs may not be a sufficient reason to acquire detailed manufacturing or process data when items or components can be acquired using performance specifications, form, fit and function data, or when there are a sufficient number of alternate sources which can reasonably be expected to provide such items on a performance specification or form, fit, or function basis.
              (2) When reviewing offers received in response to a solicitation or other request for data, data managers must balance the original assessment of the Government's data needs with data prices contained in the offer.
              (c) Contracting officers are responsible for ensuring that, wherever practicable, solicitations and contracts—
              (1) Identify the type and quantity of the technical data to be delivered under the contract and the format and media in which the data will be delivered;
              (2) Establish each deliverable data item as a separate contract line item (this requirement may be satisfied by listing each deliverable data item on an exhibit to the contract);
              (3) Identify the prices established for each deliverable data item under a fixed-price type contract;
              (4) Include delivery schedules and acceptance criteria for each deliverable data item; and
              (5) Specifically identify the place of delivery for each deliverable item of technical data.

              227.7103-3
              Early identification of technical data to be furnished to the Government with restrictions on use, reproduction or disclosure.
              (a) 10 U.S.C. 2320 requires, to the maximum extent practicable, an identification prior to delivery of any technical data to be delivered to the Government with restrictions on use.
              (b) Use the provision at 252.227-7017, Identification and Assertion of Use, Release, or Disclosure Restrictions, in all solicitations that include the clause at 252.227-7013, Rights in Technical Data—Noncommercial Items. The provision requires offerors to identify any technical data for which restrictions, other than copyright, on use, release, or disclosure are asserted and to attach the identification and assertions to the offer.

              (c) Subsequent to contract award, the clause at 252.227-7013 permits a contractor, under certain conditions, to make additional assertions of use, release, or disclosure restrictions. The prescription for the use of that clause and its alternate is at 227.7103-6 (a) and (b).
              [60 FR 33471, June 28, 1995, as amended at 78 FR 13544, Feb. 28, 2013]

              227.7103-4
              License rights.
              (a) Grant of license. The Government obtains rights in technical data, including a copyright license, under and irrevocable license granted or obtained for the Government by the contractor. The contractor or licensor retains all rights in the data not granted to the Government. For technical data that pertain to items, components, or processes, the scope of the license is generally determined by the source of funds used to develop the item, component, or process. When the technical data do not pertain to items, components, or processes, the scope of the license is determined by the source of funds used to create the data.
              (1) Techical data pertaining to items, components, or processes. Contractors or licensors may, with some exceptions (see 227.7103-5(a)(2) and (a)(4) through (9)), restrict the Government's rights to use, modify, release, reproduce, perform, display or disclose technical data pertaining to items, components, or processes developed exclusively at private expense (limited rights). They may not restrict the Government's rights in items, components, or processes developed exclusively at Government expense (unlimited rights) without the Government's approval. When an item, component, or process is developed with mixed funding, the Government may use, modify, release, reproduce, perform, display or disclose the data pertaining to such items, components, or processes within the Government without restriction but may release or disclose the data outside the Government only for government purposes (government purpose rights).
              (2) Technical data that do not pertain to items, components, or processes. Technical data may be created during the performance of a contract for a conceptual design or similar effort that does not require the development, manufacture, construction, or production of items, components or processes. The Government generally obtains unlimited rights in such data when the data were created exclusively with Government funds, government purpose rights when the data were created with mixed funding, and limited rights when the data were created exclusively at private expense.
              (b) Source of funds determination. The determination of the source of development funds for technical data pertaining to items, components, or processes should be made at any practical sub-item or subcomponent level or for any segregable portion of a process. Contractors may assert limited rights in a segregable sub-item, sub-component, or portion of a process which otherwise qualifies for limited rights under the clause at 252.227-7013, Rights in Technical Data—Noncommercial Items.

              227.7103-5
              Government rights.
              The standard license rights that a licensor grants to the Government are unlimited rights, government purpose rights, or limited rights. Those rights are defined in the clause at 252.227-7013, Rights in Technical Data—Noncommercial Items. In unusual situations, the standards rights may not satisfy the Government's needs or the Government may be willing to accept lesser rights in data in return for other consideration. In those cases, a special license may be negotiated. However, the licensor is not obligated to provide the Government greater rights and the contracting officer is not required to accept lesser rights than the rights provided in the standard grant of license. The situations under which a particular grant of license applies are enumerated in paragraphs (a) through (d) of this subsection.
              (a) Unlimited rights. The Government obtains unlimited rights in technical data that are—
              (1) Data pertaining to an item, component, or process which has been or will be developed exclusively with Government funds;

              (2) Studies, analyses, test data, or similar data produced in the performance of a contract when the study, analysis, test, or similar work was specified as an element of performance;

              (3) Created exclusively with Government funds in the performance of a contract that does not require the development, manufacture, construction, or production of items, components, or processes;
              (4) Form, fit, and function data;
              (5) Necessary for installation, operation, maintenance, or training purposes (other than detailed manufacturing or process data);
              (6) Corrections or changes to technical data furnished to the contractor by the Government;
              (7) Publicly available or have been released or disclosed by the contractor or subcontractor without restrictions on further use, release or disclosure other than a release or disclosure resulting from the sale, transfer, or other assignment of interest in the software to another party or the sale or transfer of some or all of a business entity or its assets to another party;
              (8) Data in which the Government has obtained unlimited rights under another Government contract or as a result of negotiations; or
              (9) Data furnished to the Government, under a Government contract or subcontract thereunder, with—
              (i) Government purpose license rights or limited rights and the restrictive condition(s) has/have expired; or
              (ii) Government purpose rights and the contractor's exclusive right to use such data for commercial purposes has expired.
              (b) Government purpose rights. (1) The Government obtains government purpose rights in technical data—
              (i) That pertain to items, components, or processes developed with mixed funding except when the Government is entitled to unlimited rights as provided in paragraphs (a)(2) and (a)(4) through (9) of this subsection; or
              (ii) Created with mixed funding in the performance of a contract that does not require the development, manufacture, construction, or production of items, components, or processes.
              (2) The period during which government purpose rights are effective is negotiable. The clause at 252.227-7013 provides a nominal five-year period. Either party may request a different period. Changes to the government purpose rights period may be made at any time prior to delivery of the technical data without consideration from either party. Longer periods should be negotiated when a five-year period does not provide sufficient time to apply the data for commercial purposes or when necessary to recognize subcontractors' interests in the data.
              (3) The government purpose rights period commences upon execution of the contract, subcontract, letter contract (or similar contractual instrument), contract modification, or option exercise that required the development. Upon expiration of the Government rights period, the Government has unlimited rights in the data including the right to authorize others to use the data for commercial purposes.
              (4) During the government purpose rights period, the government may not use, or authorize other persons to use, technical data marked with government purpose rights legends for commercial purposes. The Government shall not release or disclose data in which it has government purpose rights to any person, or authorize others to do so, unless—
              (i) Prior to release or disclosure, the intended recipient is subject to the use and non-disclosure agreement at 227.7103-7; or
              (ii) The intended recipient is a Government contractor receiving access to the data for performance of a Government contract that contains the clause at 252.227-7025, Limitations on the Use or Disclosure of Government-Furnished Information Marked with Restrictive Legends.
              (5) When technical data marked with government purpose rights legends will be released or disclosed to a Government contractor performing a contract that does not include the clause at 252-227-7025, the contract may be modified, prior to release or disclosure, to include that clause in lieu of requiring the contractor to complete a use and non-disclosure agreement.

              (6) Contracting activities shall establish procedures to assure that technical data marked with government purpose rights legends are released or disclosed, including a release or disclosure through a Government solicitation, only to persons subject to the use and non-disclosure restrictions. Public announcements in the Commerce Business Daily or other publications must provide notice of the use and non-disclosure requirements. Class use and non-disclosure agreements (e.g., agreements covering all solicitations received by the XYZ company within a reasonable period) are authorized and may be obtained at any time prior to release or disclosure of the government purpose rights data. Documents transmitting government purpose rights data to persons under class agreements shall identify the technical data subject to government purpose rights and the class agreement under which such data are provided.
              (c) Limited rights. (1) The Government obtains limited rights in technical data—
              (i) That pertain to items, components, or processes developed exclusively at private expense except when the Government is entitled to unlimited rights as provided in paragraphs (a)(2) and (a)(4) through (9) of this subsection; or
              (ii) Created exclusively at private expense in the performance of a contract that does not require the development, manufacture, construction, or production of items, components, or processes.
              (2) Data in which the Government has limited rights may not be used, released, or disclosed outside the Government without the permission of the contractor asserting the restriction except for a use, release, or disclosure that is—
              (i) Necessary for emergency repair and overhaul; or
              (ii) To a covered Government support contractor; or
              (iii) To a foreign government, other than detailed manufacturing or process data, when use, release, or disclosure is in the interest of the United States and is required for evaluational or informational purposes.
              (3) The person asserting limited rights must be notified of the Government's intent to release, disclose, or authorize others to use such data prior to release or disclosure of the data except notification of an intended release, disclosure, or use for emergency repair or overhaul which shall be made as soon as practicable.
              (4) When the person asserting limited rights permits the Government to release, disclose, or have others use the data subject to restrictions on further use, release, or disclosure, or for a release under paragraph (c)(2)(i), (ii), or (iii) of this subsection, the intended recipient must complete the use and non-disclosure agreement at 227.7103-7, or receive the data for performance of a Government contract that contains the clause at 252.227-7025, Limitations on the Use or Disclosure of Government-Furnished Information Marked with Restrictive Legends, prior to release or disclosure of the limited rights data.
              (d) Specifically negotiated license rights. (1) Negotiate specific licenses when the parties agree to modify the standard license rights granted to the government or when the government wants to obtain rights in data in which it does not have rights. When negotiating to obtain, relinquish, or increase the Government's rights in technical data, consider the acquisition strategy for the item, component, or process, including logistics support and other factors which may have relevance for a particular procurement. The Government may accept lesser rights when it has unlimited or government purpose rights in data but may not accept less than limited rights in such data. The negotiated license rights must stipulate what rights the Government has to release or disclose the data to other persons or to authorize others to use the data. Identify all negotiated rights in a license agreement made part of the contract.

              (2) When the Government needs additional rights in data acquired with government purpose or limited rights, the contracting officer must negotiate with the contractor to determine whether there are acceptable terms for transferring such rights. Generally, such negotiations should be conducted only when there is a need to disclose the data outside the Government or if the additional rights are required for competitive reprocurement and the anticipated savings expected to be obtained through competition are estimated to exceed the acquisition cost of the additional rights. Prior to negotiating for additional rights in limited rights data, consider alternatives such as—
              (i) Using performance specifications and form, fit, and function data to acquire or develop functionally equivalent items, components, or processes;
              (ii) Obtaining a contractor's contractual commitment to qualify additional sources and maintain adequate competition among the sources; or
              (iii) Reverse engineering, or providing items from Government inventories to contractors who request the items to facilitate the development of equivalent items through reverse engineering.
              [56 FR 36389, July 31, 1991, as amended at 76 FR 11367, Mar. 2, 2011; 78 FR 30238, May 22, 2013]

              227.7103-6
              Contract clauses.
              (a) Use the clause at 252.227-7013, Rights in Technical Data-Noncommercial Items, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, when the successful offeror(s) will be required to deliver to the Government technical data pertaining to noncommercial items, or pertaining to commercial items for which the Government will have paid for any portion of the development costs (in which case the clause at 252.227-7013 will govern the technical data pertaining to any portion of a commercial item that was developed in any part at Government expense, and the clause at 252.227-7015 will govern the technical data pertaining to any portion of a commercial item that was developed exclusively at private expense). Do not use the clause when the only deliverable items are computer software or computer software documentation (see 227.72), commercial items developed exclusively at private expense (see 227.7102-4), existing works (see 227.7105), special works (see 227.7106), or when contracting under the Small Business Innovation Research Program (see 227.7104). Except as provided in 227.7107-2, do not use the clause in architect-engineer and construction contracts.
              (b)(1) Use the clause at 252.227-7013 with its Alternate I in research solicitations and contracts, including research solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, when the contracting officer determines, in consultation with counsel, that public dissemination by the contractor would be—
              (i) In the interest of the government; and
              (ii) Facilitated by the Government relinquishing its right to publish the work for sale, or to have others publish the work for sale on behalf of the Government.
              (2) Use the clause at 252.227-7013 with its Alternate II in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that are for the development or delivery of a vessel design or any useful article embodying a vessel design.
              (c) Use the clause at 252.227-7025, Limitations on the Use or Disclosure of Government Furnished Information Marked with Restrictive Legends, in solicitations and contracts when it is anticipated that the Government will provide the contractor (other than a litigation support contractor covered by 252.204-7014), for performance of its contract, technical data marked with another contractor's restrictive legend(s).
              (d) Use the provision at 252.227-7028, Technical Data or Computer Software Previously Delivered to the Government, in solicitations when the resulting contract will require the contractor to deliver technical data. The provision requires offerors to identify any technical data specified in the solicitations as deliverable data items that are the same or substantially the same as data items the offeror has delivered or is obligated to deliver, either as a contractor or subcontractor, under any other federal agency contract.
              (e) Use the following clauses in solicitations and contracts that include the clause at 252.227-7013:
              (1) 252.227-7016, Rights in Bid or Proposal Information;

              (2) 252.227-7030, Technical Data—Withholding of Payment; and

              (3) 252.227-7037, Validation of Restrictive Markings on Technical Data (paragraph (e) of the clause contains information that must be included in a challenge).
              [60 FR 33471, June 28, 1995; 60 FR 41157, Aug. 11, 1995; 60 FR 61598, Nov. 30, 1995; 62 FR 2613, Jan. 17, 1997; 69 FR 31911, June 8, 2004; 74 FR 61044, Nov. 23, 2009; 76 FR 58147, Sept. 20, 2011; 78 FR 37988, June 25, 2013; 79 FR 11340, Feb. 28, 2014]

              227.7103-7
              Use and non-disclosure agreement.
              (a) Except as provided in paragraph (b) of this subsection, technical data or computer software delivered to the Government with restrictions on use, modification, reproduction, release, performance, display, or disclosure may not be provided to third parties unless the intended recipient completes and signs the use and non-disclosure agreement at paragraph (c) of this subsection prior to release, or disclosure of the data.
              (1) The specific conditions under which an intended recipient will be authorized to use, modify, reproduce, release, perform, display, or disclose technical data subject to limited rights or computer software subject to restricted rights must be stipulated in an attachment to the use and non-disclosure agreement.
              (2) For an intended release, disclosure, or authorized use of technical data or computer software subject to special license rights, modify paragraph (1)(d) of the use and non-disclosure agreement to enter the conditions, consistent with the license requirements, governing the recipient's obligations regarding use, modification, reproduction, release, performance, display or disclosure of the data or software.
              (b) The requirement for use and non-disclosure agreements does not apply to Government contractors which require access to a third party's data or software for the performance of a Government contract that contains the clause at 252.227-7025, Limitations on the Use or Disclosure of Government-Furnished Information Marked with Restrictive Legends.
              (c) The prescribed use and non-disclosure agreement is:

                Use and Non-Disclosure Agreement
                The undersigned, ________ (Insert Name) ________, an authorized representative of the ________ (Insert Company Name) ________, (which is hereinafter referred to as the “Recipient”) requests the Government to provide the Recipient with technical data or computer software (hereinafter referred to as “Data”) in which the Government's use, modification, reproduction, release, performance, display or disclosure rights are restricted. Those Data are identified in an attachment to this Agreement. In consideration for receiving such Data, the Recipient agrees to use the Data strictly in accordance with this Agreement:
                (1) The Recipient shall—
                (a) Use, modify, reproduce, release, perform, display, or disclose Data marked with government purpose rights or SBIR data rights legends only for government purposes and shall not do so for any commercial purpose. The Recipient shall not release, perform, display, or disclose these Data, without the express written permission of the contractor whose name appears in the restrictive legend (the “Contractor”), to any person other than its subcontractors or suppliers, or prospective subcontractors or suppliers, who require these Data to submit offers for, or perform, contracts with the Recipient. The Recipient shall require its subcontractors or suppliers, or prospective subcontractors or suppliers, to sign a use and non-disclosure agreement prior to disclosing or releasing these Data to such persons. Such agreement must be consistent with the terms of this agreement.
                (b) Use, modify, reproduce, release, perform, display, or disclose technical data marked with limited rights legends only as specified in the attachment to this Agreement. Release, performance, display, or disclosure to other persons is not authorized unless specified in the attachment to this Agreement or expressly permitted in writing by the Contractor. The Recipient shall promptly notify the Contractor of the execution of this Agreement and identify the Contractor's Data that has been or will be provided to the Recipient, the date and place the Data were or will be received, and the name and address of the Government office that has provided or will provide the Data.

                (c) Use computer software marked with restricted rights legends only in performance of Contract Number ________ (insert contract number(s)) ________. The recipient shall not, for example, enhance, decompile, disassemble, or reverse engineer the software; time share, or use a computer program with more than one computer at a time. The recipient may not release, perform, display, or disclose such software to others unless expressly permitted in writing by the licensor whose name appears in the restrictive legend. The Recipient shall promptly notify the software licensor of the execution of this Agreement and identify the software that has been or will be provided to the Recipient, the date and place the software were or will be received, and the name and address of the Government office that has provided or will provide the software.
                (d) Use, modify, reproduce, release, perform, display, or disclose Data marked with special license rights legends (To be completed by the contracting officer. See 227.7103-7(a)(2). Omit if none of the Data requested is marked with special license rights legends).
                (2) The Recipient agrees to adopt or establish operating procedures and physical security measures designed to protect these Data from inadvertent release or disclosure to unauthorized third parties.
                (3) The Recipient agrees to accept these Data “as is” without any Government representation as to suitability for intended use or warranty whatsoever. This disclaimer does not affect any obligation the Government may have regarding Data specified in a contract for the performance of that contract.
                (4) The Recipient may enter into any agreement directly with the Contractor with respect to the use, modification, reproduction, release, performance, display, or disclosure of these Data.
                (5) The Recipient agrees to indemnify and hold harmless the Government, its agents, and employees from every claim or liability, including attorneys fees, court costs, and expenses arising out of, or in any way related to, the misuse or unauthorized modification, reproduction, release, performance, display, or disclosure of Data received from the Government with restrictive legends by the Recipient or any person to whom the Recipient has released or disclosed the Data.
                (6) The Recipient is executing this Agreement for the benefit of the Contractor. The Contractor is a third party beneficiary of this Agreement who, in addition to any other rights it may have, is intended to have the rights of direct action against the Recipient or any other person to whom the Recipient has released or disclosed the Data, to seek damages from any breach of this Agreement or to otherwise enforce this Agreement.
                (7) The Recipient agrees to destroy these Data, and all copies of the Data in its possession, no later than 30 days after the date shown in paragraph (8) of this Agreement, to have all persons to whom it released the Data do so by that date, and to notify the Contractor that the Data have been destroyed.
                (8) This Agreement shall be effective for the period commencing with the Recipient's execution of this Agreement and ending upon ____ (Insert Date) ____. The obligations imposed by this Agreement shall survive the expiration or termination of the Agreement.
                Recipient's Business Name
                By
                Authorized Representative

                Date

                Representative's Typed Name
                and Title

              (End of use and non-disclosure agreement)

              227.7103-8
              Deferred delivery and deferred ordering of technical data.
              (a) Deferred delivery. Use the clause at 252.227-7026, Deferred Delivery of Technical Data or Computer Software, when it is in the Government's interests to defer the delivery of technical data. The clause permits the contracting officer to require the delivery of technical data identified as “deferred delivery” data at any time until two years after acceptance by the Government of all items (other than technical data or computer software) under the contract or contract termination, whichever is later. The obligation of subcontractors or suppliers to deliver such technical data expires two years after the date the prime contractor accepts the last item from the subcontractor or supplier for use in the performance of the contract. The contract must specify which technical data is subject to deferred delivery. The contracting officer shall notify the contractor sufficiently in advance of the desired delivery date for such data to permit timely delivery.
              (b) Deferred ordering. Use the clause at 252.227-7027, Deferred Ordering of Technical Data or Computer Software, when a firm requirement for a particular data item(s) has not been established prior to contract award but there is a potential need for the data. Under this clause, the contracting officer may order any data that has been generated in the performance of the contract or any subcontract thereunder at any time until three years after acceptance of all items (other than technical data or computer software) under the contract or contract termination, whichever is later. The obligation of subcontractors to deliver such data expires three years after the date the contractor accepts the last item under the subcontract. When the data are ordered, the delivery dates shall be negotiated and the contractor compensated only for converting the data into the prescribed form, reproduction costs, and delivery costs.

              227.7103-9
              Copyright.
              (a) Copyright license. (1) The clause at 252.227-7013, Rights in Technical Data—Noncommercial Items, requires a contractor to grant or obtain for the Government license rights which permit the Government to reproduce data, distribute copies of the data, publicly perform or display the data or, through the right to modify data, prepare derivative works. The extent to which the Government, and others acting on its behalf, may exercise these rights varies for each of the standard data rights licenses obtained under the clause. When non-standard license rights in technical data will be negotiated, negotiate the extent of the copyright license concurrent with negotiations for the data rights license. Do not negotiate a copyright license that provides less rights than the standard limited rights license in technical data.
              (2) The clause at 252.227-7013 does not permit a contractor to incorporate a third party's copyrighted data into a deliverable data item unless the contractor has obtained an appropriate license for the Government and, when applicable, others acting on the Government's behalf, or has obtained the contracting officer's written approval to do so. Grant approval to use third party copyrighted data in which the Government will not receive a copyright license only when the Government's requirements cannot be satisfied without the third party material or when the use of the third party material will result in cost savings to the Government which outweigh the lack of a copyright license.
              (b) Copyright considerations—acquisition of existing and special works. See 227.7105 or 227.7106 for copyright considerations when acquiring existing or special works.

              227.7103-10
              Contractor identification and marking of technical data to be furnished with restrictive markings.
              (a) Identification requirements. (1) The solicitation provision at 252.227-7017, Identification and Assertion of Use, Release, or Disclosure Restrictions, requires offerors to identify to the contracting officer, prior to contract award, any technical data that the offeror asserts should be provided to the Government with restrictions on use, modification, reproduction, release or disclosure. This requirement does not apply to restrictions based solely on copyright. The notification and identification must be submitted as an attachment to the offer. If an offeror fails to submit the attachment or fails to complete the attachment in accordance with the requirements of the solicitation provision, such failure shall constitute a minor informality. Provide offerors an opportunity to remedy a minor informality in accordance with the procedures at FAR 14.405 or 15.306. An offeror's failure to correct the informality within the time prescribed by the contracting officer shall render the offer ineligible for award.
              (2) The procedures for correcting minor informalities shall not be used to obtain information regarding asserted restrictions or an offeror's suggested asserted rights category. Questions regarding the justification for an asserted restriction or asserted rights category must be pursued in accordance with the procedures at 227.7103-13.

              (3) The restrictions asserted by a successful offeror shall be attached to its contract unless, in accordance with the procedures at 227.7103-13, the parties have agreed that an asserted restriction is not justified. The contract attachment shall provide the same information regarding identification of the technical data, the asserted rights category, the basis for the assertion, and the name of the person asserting the restrictions as required by paragraph (d) of the solicitation provision at 252.227-7017. Subsequent to contract award, the clause at 252.227-7013, Rights in Technical Data—Noncommercial Items, permits the contractor to make additional assertions under certain conditions. The additional assertions must be made in accordance with the procedures and in the format prescribed by that clause.
              (4) Neither the pre- or post-award assertions made by the contractor, nor the fact that certain assertions are identified in the attachment to the contract, determine the respective rights of the parties. As provided at 227.7103-13, the Government has the right to review, verify, challenge and validate restrictive markings.
              (5) Information provided by offerors in response to the solicitation provision may be used in the source selection process to evaluate the impact on evaluation factors that may be created by restrictions on the Government's ability to use or disclose technical data. However, offerors shall not be prohibited from offering products for which the offeror is entitled to provide the Government limited rights in the technical data pertaining to such products and offerors shall not be required, either as a condition of being responsive to a solicitation or as a condition for award, to sell or otherwise relinquish any greater rights in technical data when the offeror is entitled to provide the technical data with limited rights.
              (b) Contractor marking requirements. The clause at 252.227-7013, Rights in Technical Data—Noncommercial Items—
              (1) Requires a contractor that desires to restrict the Government's rights in technical data to place restrictive markings on the data, provides instructions for the placement of the restrictive markings, and authorizes the use of certain restrictive markings; and
              (2) Requires a contractor to deliver, furnish, or otherwise provide to the Government any technical data in which the Government has previously obtained rights with the Government's pre-existing rights in that data unless the parties have agreed otherwise or restrictions on the Government's rights to use, modify, reproduce, release, perform, display, or disclose the data have expired. When restrictions are still applicable, the contractor is permitted to mark the data with the appropriate restrictive legend for which the data qualified.
              (c) Unmarked technical data. (1) Technical data delivered or otherwise provided under a contract without restrictive markings shall be presumed to have been delivered with unlimited rights and may be released or disclosed without restriction. To the extent practicable, if a contractor has requested permission (see paragraph (c)(2) of this subsection) to correct an inadvertent omission of markings, do not release or disclose the technical data pending evaluation of the request.
              (2) A contractor may request permission to have appropriate legends placed on unmarked technical data at its expense. The request must be received by the contracting officer within six months following the furnishing or delivery of such data, or any extension of that time approved by the contracting officer. The person making the request must:
              (i) Identify the technical data that should have been marked;
              (ii) Demonstrate that the omission of the marking was inadvertent, the proposed marking is justified and conforms with the requirements for the marking of technical data contained in the clause at 252.227-7013; and
              (iii) Acknowledge, in writing, that the Government has no liability with respect to any disclosure, reproduction, or use of the technical data made prior to the addition of the marking or resulting from the omission of the marking.
              (3) Contracting officers should grant permission to mark only if the technical data were not distributed outside the Government or were distributed outside the Government with restrictions on further use or disclosure.
              [60 FR 33471, June 28, 1995, as amended at 82 FR 61481, Dec. 28, 2017]

              227.7103-11
              Contractor procedures and records.

              (a) The clause at 252.227-7013, Rights in Technical Data—Noncommercial Items, requires a contractor, and its subcontractors or suppliers that will deliver technical data with other than unlimited rights, to establish and follow written procedures to assure that restrictive markings are used only when authorized and to maintain records to justify the validity of asserted restrictions on delivered data.
              (b) The clause at 252.227-7037, Validation of Restrictive Markings on Technical Data requires contractors and their subcontractors at any tier to maintain records sufficient to justify the validity of restrictive markings on technical data delivered or to be delivered under a Government contract.

              227.7103-12
              Government right to establish conformity of markings.
              (a) Nonconforming markings. (1) Authorized markings are identified in the clause at 252.227-7013, Rights in Technical Data—Noncommercial Items. All other markings are nonconforming markings. An authorized marking that is not in the form, or differs in substance, from the marking requirements in the clause at 252.227-7013 is also a nonconforming marking.
              (2) The correction of nonconforming markings on technical data is not subject to 252.227-7037, Validation of Restrictive Markings on Technical Data. To the extent practicable, the contracting officer should return technical data bearing nonconforming markings to the person who has placed the nonconforming markings on such data to provide that person an opportunity to correct or strike the nonconforming marking at that person's expense. If that person fails to correct the nonconformity and return the corrected data within 60 days following the person's receipt of the data, the contracting officer may correct or strike the nonconformity at that person's expense. When it is impracticable to return technical data for correction, contracting officers may unilaterally correct any nonconforming markings at Government expense. Prior to correction, the data may be used in accordance with the proper restrictive marking.
              (b) Unjustified markings. (1) An unjustified marking is an authorized marking that does not depict accurately restrictions applicable to the Government's use, modification, reproduction, release, performance, display, or disclosure of the marked technical data. For example, a limited rights legend placed on technical data pertaining to items, components, or processes that were developed under a Government contract either exclusively at Government expense or with mixed funding (situations under which the Government obtains unlimited or government purpose rights) is an unjustified marking.
              (2) Contracting officers have the right to review and challenge the validity of unjustified markings. However, at any time during performance of a contract and notwithstanding existence of a challenge, the contracting officer and the person who has asserted a restrictive marking may agree that the restrictive marking is not justified. Upon such agreement, the contracting officer may, at his or her election, either—
              (i) Strike or correct the unjustified marking at that person's expense; or
              (ii) Return the technical data to the person asserting the restriction for correction at that person's expense. If the data are returned and that person fails to correct or strike the unjustified restriction and return the corrected data to the contracting officer within 60 days following receipt of the data, the unjustified marking shall be corrected or stricken at that person's expense.

              227.7103-13
              Government right to review, verify, challenge, and validate asserted restrictions.
              (a) General. An offeror's assertion(s) of restrictions on the Government's rights to use, modify, reproduce, release, or disclose technical data do not, by themselves, determine the extent of the Government's rights in the technical data. Under 10 U.S.C. 2321, the Government has the right to challenge asserted restrictions when there are reasonable grounds to question the validity of the assertion and continued adherence to the assertion would make it impractical to later procure competitively the item to which the data pertain.
              (b) Pre-award considerations. The challenge procedures required by 10 U.S.C. 2321 could significantly delay awards under competitive procurements. Therefore, avoid challenging asserted restrictions prior to a competitive contract award unless resolution of the assertion is essential for successful completion of the procurement.

              (c) Challenge considerations and presumption.

              (1) Requirements to initiate a challenge. Contracting officers shall have reasonable grounds to challenge the validity of an asserted restriction. Before issuing a challenge to an asserted restriction, carefully consider all available information pertaining to the assertion. The contracting officer shall not challenge a contractor's assertion that a commercial item was developed exclusively at private expense unless the Government can demonstrate that it contributed to development of that item.
              (2) Presumption regarding development exclusively at private expense. 10 U.S.C. 2320(b)(1) and 2321(f) establish a presumption and procedures regarding validation of asserted restrictions for technical data related to commercial items, and to major systems, on the basis of development exclusively at private expense.
              (i) Commercial items. Except as provided in paragraph (c)(2)(ii) of this section, contracting officers shall presume that a commercial item was developed exclusively at private expense whether or not a contractor or subcontractor submits a justification in response to a challenge notice. When a challenge is warranted, a contractor's or subcontractor's failure to respond to the challenge notice cannot be the sole basis for issuing a final decision denying the validity of an asserted restriction.
              (ii) Major weapon systems. When the contracting officer challenges an asserted restriction regarding technical data for a major weapon system or a subsystem or component thereof on the basis that the technology was not developed exclusively at private expense—
              (A) The presumption in paragraph (c)(2)(i) of this section applies to—
              (1) A commercial subsystem or component of a major weapon system, if the major weapon system was acquired as a commercial item in accordance with subpart 234.70 (10 U.S.C. 2379(a));
              (2) A component of a subsystem, if the subsystem was acquired as a commercial item in accordance with subpart 234.70 (10 U.S.C. 2379(b)); and
              (3) Any other component, if the component is a commercially available off-the-shelf item or a commercially available off-the-shelf item with modifications of a type customarily available in the commercial marketplace or minor modifications made to meet Federal Government requirements; and
              (B) In all other cases, the contracting officer shall sustain the challenge unless information provided by the contractor or subcontractor demonstrates that the item was developed exclusively at private expense.
              (d) Challenge and validation. All challenges shall be made in accordance with the provisions of the clause at 252.227-7037, Validation of Restrictive Markings on Technical Data.
              (1) Challenge period. Asserted restrictions should be reviewed before acceptance of technical data deliverable under the contract. Assertions must be challenged within three years after final payment under the contract or three years after delivery of the data, whichever is later. However, restrictive markings may be challenged at any time if the technical data—
              (i) Are publicly available without restrictions;
              (ii) Have been provided to the United States without restriction; or
              (iii) Have been otherwise made available without restriction other than a release or disclosure resulting from the sale, transfer, or other assignment of interest in the technical data to another party or the sale or transfer of some or all of a business entity or its assets to another party.
              (2) Pre-challenge requests for information. (i) After consideration of the situations described in paragraph (d)(3) of this subsection, contracting officers may request the person asserting a restriction to furnish a written explanation of the facts and supporting documentation for the assertion in sufficient detail to enable the contracting officer to ascertain the basis of the restrictive markings. Additional supporting documentation may be requested when the explanation provided by the person making the assertion does not, in the contracting officer's opinion, establish the validity of the assertion.

              (ii) If the person asserting the restriction fails to respond to the contracting officer's request for information or additional supporting documentation, or if the information submitted or any other available information pertaining to the validity of a restrictive marking does not justify the asserted restriction, a challenge should be considered.
              (3) Transacting matters directly with subcontracts. The clause at 252.227-7037 obtains the contractor's agreement that the Government may transact matters under the clause directly with a subcontractor, at any tier, without creating or implying privity of contract. Contracting officers should permit a subcontractor or supplier to transact challenge and validation matters directly with the Government when—
              (i) A subcontractor's or supplier's business interests in its technical data would be compromised if the data were disclosed to a higher tier contractor;
              (ii) There is reason to believe that the contractor will not respond in a timely manner to a challenge and an untimely response would jeopardize a subcontractor's or suppliers right to assert restrictions; or
              (iii) Requested to do so by a subcontractor or supplier.
              (4) Challenge notice. The contracting officer shall not issue a challenge notice unless there are reasonable grounds to question the validity of an assertion. The contracting officer may challenge an assertion whether or not supporting documentation was requested under paragraph (d)(2) of this subsection. Challenge notices shall be in writing and issued to the contractor or, after consideration of the situations described in paragraph (d)(3) of this subsection, the person asserting the restriction. The challenge notice shall include the information in paragraph (e) of the clause at 252.227-7037.
              (5) Extension of response time. The contracting officer, at his or her discretion, may extend the time for response contained in a challenge notice, as appropriate, if the contractor submits a timely written request showing the need for additional time to prepare a response.
              (6) Contracting officer's final decision. Contracting officers must issue a final decision for each challenged assertion, whether or not the assertion has been justified.
              (i) A contracting officer's final decision that an assertion is not justified must be issued a soon as practicable following the failure of the person asserting the restriction to respond to the contracting officer's challenge within 60 days, or any extension to that time granted by the contracting officer.
              (ii) A contracting officer who, following a challenge and response by the person asserting the restriction, determines that an asserted restriction is justified, shall issue a final decision sustaining the validity of the asserted restriction. If the asserted restriction was made subsequent to submission of the contractor's offer, add the asserted restriction to the contract attachment.
              (iii) A contracting officer who determine that the validity of an asserted restriction has not been justified shall issue a contracting officer's final decision within the time frames prescribed in 252.227-7037. As provided in paragraph (g) of that clause, the Government is obligated to continue to respect the asserted restrictions through final disposition of any appeal unless the agency head notifies the person asserting the restriction that urgent or compelling circumstances do not permit the Government to continue to respect the asserted restriction.
              (7) Multiple challenges to an asserted restriction. When more than one contracting officer challenges an asserted restriction, the contracting officer who made the earliest challenge is responsible for coordinating the Government challenges. That contracting officer shall consult with all other contracting officers making challenges, verify that all challenges apply to the same asserted restriction and, after consulting with the contractor, subcontractor, or supplier asserting the restriction, issue a schedule that provides that person a reasonable opportunity to respond to each challenge.
              (8) Validation. Only a contracting officer's final decision, or actions of an agency board of contract appeals or a court of competent jurisdiction, that sustain the validity of an asserted restriction constitute validation of the asserted restriction.
              [60 FR 33471, June 28, 1995, as amended at 81 FR 65566, Sept. 23, 2016]

              227.7103-14
              Conformity, acceptance, and warranty of technical data.
              (a) Statutory requirements. 10 U.S.C. 2320—
              (1) Provides for the establishment of remedies applicable to technical data found to be incomplete, inadequate, or not to satisfy the requirements of the contract concerning such data; and
              (2) Authorizes agency heads to withhold payments (or exercise such other remedies an agency head considers appropriate) during any period if the contractor does not meet the requirements of the contract pertaining to the delivery of technical data.
              (b) Conformity and acceptance. (1) Solicitations and contracts requiring the delivery of technical data shall specify the requirements the data must satisfy to be acceptable. Contracting officers, or their authorized representatives, are responsible for determining whether technical data tendered for acceptance conform to the contractual requirements.
              (2) The clause at 252.227-7030, Technical Data—Withholding of Payment, provides for withholding up to 10 percent of the contract price pending correction or replacement of the nonconforming technical data or negotiation of an equitable reduction in contract price. The amount subject to withholding may be expressed as a fixed dollar amount or as a percentage of the contract price. In either case, the amount shall be determined giving consideration to the relative value and importance of the data. For example—
              (i) When the sole purpose of a contract is to produce the data, the relative value of that data may be considerably higher than the value of data produced under a contract where the production of the data is a secondary objective; or
              (ii) When the Government will maintain or repair items, repair and maintenance data may have a considerably higher relative value than data that merely describe the item or provide performance characteristics.
              (3) Do not accept technical data that do not conform to the contractual requirements in all respects. Except for nonconforming restrictive markings (see paragraph (b)(4) of this subsection), correction or replacement of nonconforming data or an equitable reduction in contract price when correction or replacement of the nonconforming data is not practicable or is not in the Government's interests, shall be accomplished in accordance with—
              (i) The provisions of a contract clause providing for inspection and acceptance of deliverables and remedies for nonconforming deliverables; or
              (ii) The procedures at FAR 46.407(c) through (g), if the contract does not contain an inspection clause providing remedies for nonconforming deliverables.
              (4) Follow the procedures at 227.7103-12(a)(2) if nonconforming markings are the sole reason technical data fail to conform to contractual requirements. The clause at 252.227-7030 may be used to withhold an amount for payment, consistent with the terms of the clause, pending correction of the nonconforming markings.
              (c) Warranty. (1) The intended use of the technical data and the cost, if any, to obtain the warranty should be considered before deciding to obtain a data warranty (see FAR 46.703). The fact that a particular item, component, or process is or is not warranted is not a consideration in determining whether or not to obtain a warranty for the technical data that pertain to the item, component, or process. For example, a data warranty should be considered if the Government intends to repair or maintain an item and defective repair or maintenance data would impair the Government's effective use of the item or result in increased costs to the Government.
              (2) As prescribed in 246.710, use the clause at 252.246-7001, Warranty of Data, and its alternates, or a substantially similar clause when the Government needs a specific warranty of technical data.
              [60 FR 33471, June 28, 1995, as amended at 69 FR 31912, June 8, 2004]

              227.7103-15
              Subcontractor rights in technical data.
              (a) 10 U.S.C. 2320 provides subcontractors at all tiers the same protection for their rights in data as is provided to prime contractors. The clauses at 252.227-7013, Rights in Technical Data—Noncommercial Items, and 252.227-7037, Validation of Restrictive Markings on Technical Data, implement the statutory requirements.
              (b) 10 U.S.C. 2321 permits a subcontractor to transact directly with the Government matters relating to the validation of its asserted restrictions on the Government's rights to use or disclose technical data. The clause at 252.227-7037 obtains a contractor's agreement that the direct transaction of validation or challenge matters with subcontractors at any tier does not establish or imply privity of contract. When a subcontractor or supplier exercise its right to transact validation matters directly with the Government, contracting officers shall deal directly with such persons, as provided at 227.7103-13(c)(3).
              (c) Require prime contractors whose contracts include the following clauses to include those clauses, without modification except for appropriate identification of the parties, in contracts with subcontractors or suppliers, at all tiers, who will be furnishing technical data for non-commercial items in response to a Government requirement:
              (1) 252.227-7013, Rights in Technical Data—Noncommercial Items;
              (2) 252.227-7025, Limitations on the Use or Disclosure of Government-Furnished Information Marked with Restrictive Legends;
              (3) 252.227-7028, Technical Data or Computer Software Previously Delivered to the Government; and
              (4) 252.227-7037, Validation of Restrictive Markings on Technical Data.
              (d) Do not require contractors to have their subcontractors or suppliers at any tier relinquish rights in technical data to the contractor, a higher tier subcontractor, or to the Government, as a condition for award of any contract, subcontract, purchase order, or similar instrument except for the rights obtained by the Government under the Rights in Technical Data—Noncommercial Items clause contained in the contractor's contract with the Government.
              [56 FR 36389, July 31, 1991, as amended at 60 FR 61598, Nov. 30, 1995]

              227.7103-16
              Providing technical data to foreign governments, foreign contractors, or international organizations.
              Technical data may be released or disclosed to foreign governments, foreign contractors, or international organizations only if release or disclosure is otherwise permitted both by Federal export controls and other national security laws or regulations. Subject to such laws and regulations, the Department of Defense—
              (a) May release or disclose technical data in which it has obtained unlimited rights to such foreign entities or authorize the use of such data by those entities; and
              (b) Shall not release or disclose technical data for which restrictions on use, release, or disclosure have been asserted to foreign entities, or authorize the use of technical data by those entities, unless the intended recipient is subject to the same provisions as included in the use and non-disclosure agreement at 227.7103-7 and the requirements of the clause at 252.227-7103, Rights in Technical Data—Noncommercial Items, governing use, modification, reproduction, release, performance, display, or disclosure of such data have been satisfied.

              227.7103-17
              Overseas contracts with foreign sources.
              (a) The clause at 252.227-7032, Rights in Technical Data and Computer Software (Foreign), may be used in contracts with foreign contractors to be performed overseas, except Canadian purchases (see paragraph (c) of this subsection), in lieu of the clause at 252.227-7013, Rights in Technical Data—Noncommercial Items, when the Government requires the unrestricted right to use, modify, reproduce, perform, display, release or disclose all technical data to be delivered under the contract. Do not use the clause in contracts for existing or special works.

              (b) When the Government does not require unlimited rights, the clause at 252.227-7032 may be modified to accommodate the needs of a specific overseas procurement situation. The Government should obtain rights in the technical data that are not less than the rights the Government would have obtained under the data rights clause(s) prescribed in this part for a comparable procurement performed within the United States or its outlying areas.
              (c) Contracts for Canadian purchases shall include the appropriate data rights clause prescribed in this part for a comparable procurement performed within the United States or its outlying areas.
              [56 FR 36389, July 31, 1991, as amended at 70 FR 35545, June 21, 2005]

              227.7104
              Contracts under the Small Business Innovation Research (SBIR) Program.
              (a) Use the clause at 252.227-7018, Rights in Noncommercial Technical Data and Computer Software—Small Business Innovation Research (SBIR) Program, when technical data or computer software will be generated during performance of contracts under the SBIR program.
              (b) Under the clause at 252.227-7018, the Government obtains SBIR data rights in technical data and computer software generated under the contract and marked with the SBIR data rights legend. SBIR data rights provide the Government limited rights in such technical data and restricted rights in such computer software during the SBIR data protection period commencing with contract award and ending five years after completion of the project under which the data were generated. Upon expiration of the five-year restrictive license, the Government has unlimited rights in the SBIR technical data and computer software.
              (c) During the SBIR data protection period, the Government may not release or disclose SBIR technical data or computer software to any person except as authorized for limited rights technical data or restricted rights computer software, respectively.
              (d) Use the clause at 252.227-7018 with its Alternate I in research contracts when the contracting officer determines, in consultation with counsel, that public dissemination by the contractor would be—
              (1) In the interest of the Government; and
              (2) Facilitated by the Government relinquishing its right to publish the work for sale, or to have others publish the work for sale on behalf of the Government.
              (e) Use the following provision and clauses in SBIR solicitations and contracts that include the clause at 252.227-7018:
              (1) 252.227-7016, Rights in Bid or Proposal Information;
              (2) 252.227-7017, Identification and Assertion of Use, Release, or Disclosure Restrictions;
              (3) 252.227-7019, Validation of Asserted Restrictions—Computer Software;
              (4) 252.227-7030, Technical Data—Withholding of Payment; and
              (5) 252.227-7037, Validation of Restrictive Markings on Technical Data (paragraph (e) of the clause contains information that must be included in a challenge).
              (f) Use the following clauses and provision in SBIR solicitations and contracts in accordance with the guidance at 227.7103-6 (c) and (d):
              (1) 252.227-7025, Limitations on the Use or Disclosure of Government-Furnished Information Marked with Restrictive Legends; and
              (2) 252.227-7028, Technical Data or Computer Software Previously Delivered to the Government.
              [56 FR 36389, July 31, 1991, as amended at 60 FR 61598, Nov. 30, 1995; 62 FR 2614, Jan. 17, 1997; 69 FR 31912, June 8, 2004; 78 FR 30238, May 22, 2013]

              227.7105
              Contracts for the acquisition of existing works.

              227.7105-1
              General.

              (a) Existing works include motion pictures, television recordings, video recordings, and other audiovisual works in any medium; sound recordings in any medium; musical, dramatic, and literary works; pantomimes and choreographic works; pictorial, graphic, and sculptural works; and works of a similar nature. Usually, these or similar works were not first created, developed, generated, originated, prepared, or produced under a Government contract. Therefore, the Government must obtain a license in the work if it intends to reproduce the work, distribute copies of the work, prepare derivative works, or perform or display the work publicly. When the Government is not responsible for the content of an existing work, it should require the copyright owner to indemnify the Government for liabilities that may arise out of the content, performance, use, or disclosure of such data.
              (b) Follow the procedures at 227.7106 for works which will be first created, developed, generated, originated, prepared, or produced under a Government contract and the Government needs to control distribution of the work or has a specific need to obtain indemnity for liabilities that may arise out of the creation, content, performance, use, or disclosure of the work or from libelous or other unlawful material contained in the work. Follow the procedures at 227.7103 when the Government does not need to control distribution of such works or obtain such indemnities.

              227.7105-2
              Acquisition of existing works without modification.
              (a) Use the clause at 252.227-7021, Rights in Data—Existing Works, in lieu of the clause at 252.227-7013, Rights in Technical Data—Noncommercial Items, in solicitations and contracts exclusively for existing works when—
              (1) The existing works will be acquired without modification; and
              (2) The Government requires the right to reproduce, prepare derivative works, or publicly perform or display the existing works; or
              (3) The Government has a specific need to obtain indemnity for liabilities that may arise out of the content, performance, use, or disclosure of such data.
              (b) The clause at 252.227-7021 provides the Government, and others acting on its behalf, a paid-up, non-exclusive, irrevocable, world-wide license to reproduce, prepare derivative works and publicly perform or display the works called for by a contract and to authorize others to do so for government purposes.
              (c) A contract clause is not required to acquire existing works such as books, magazines and periodicals, in any storage or retrieval medium, when the Government will not reproduce the books, magazines or periodicals, or prepare derivative works.

              227.7105-3
              Acquisition of modified existing works.
              Use the clause at 252.227-7020, Rights in Special Works, in solicitations and contracts for modified existing works in lieu of the clause at 252.227-7021, Rights in Data—Existing Works.

              227.7106
              Contracts for special works.
              (a) Use the clause at 252.227-7020, Rights in Special Works, in solicitations and contracts where the Government has a specific need to control the distribution of works first produced, created, or generated in the performance of a contract and required to be delivered under that contract, including controlling distribution by obtaining an assignment of copyright, or a specific need to obtain indemnity for liabilities that may arise out of the creation, delivery, use, modification, reproduction, release, performance, display, or disclosure of such works. Use the clause—
              (1) In lieu of the clause at 252.227-7013, Rights in Technical Data—Noncommercial Items, when the Government must own or control copyright in all works first produced, created, or generated and required to be delivered under a contract; or
              (2) In addition to the clause at 252.227-7013 when the Government must own or control copyright in a portion of a work first produced, created, or generated and required to be delivered under a contract. The specific portion in which the Government must own or control copyright must be identified in a special contract requirement.

              (b) Although the Government obtains an assignment of copyright and unlimited rights in a special work under the clause at 252.227-7020, the contractor retains use and disclosure rights in that work. If the Government needs to restrict a contractor's rights to use or disclose a special work, it must also negotiate a special license which specifically restricts the contractor's use or disclosure rights.
              (c) The clause at 252.227-7020 does not permit a contractor to incorporate into a special work any works copyrighted by others unless the contractor obtains the contracting officer's permission to do so and obtains for the Government a non-exclusive, paid up, world-wide license to make and distribute copies of that work, to prepare derivative works, to perform or display publicly any portion of the work, and to permit others to do so for government purposes. Grant permission only when the Government's requirements cannot be satisfied unless the third party work is included in the deliverable work.
              (d) Examples of works which may be procured under the Rights in Special Works clause include, but are not limited, to audiovisual works, computer data bases, computer software documentation, scripts, soundtracks, musical compositions, and adaptations; histories of departments, agencies, services or units thereof; surveys of Government establishments; instructional works or guidance to Government officers and employees on the discharge of their official duties; reports, books, studies, surveys or similar documents; collections of data containing information pertaining to individuals that, if disclosed, would violate the right of privacy or publicity of the individuals to whom the information relates; or investigative reports.

              227.7107
              Contracts for architect-engineer services.
              This section sets forth policies and procedures, pertaining to data, copyrights, and restricted designs unique to the acquisition of construction and architect-engineer services.

              227.7107-1
              Architectural designs and data clauses for architect-engineer or construction contracts.
              (a) Except as provided in paragraph (b) of this subsection and in 227.7107-2, use the clause at 252.227-7022, Government Rights (Unlimited), in solicitations and contracts for architect-engineer services and for construction involving architect-engineer services.
              (b) When the purpose of a contract for architect-engineer services, or for construction involving architect-engineer services, is to obtain a unique architectural design of a building, a monument, or construction of similar nature, which for artistic, aesthetic or other special reasons the Government does not want duplicated, the Government may acquire exclusive control of the data pertaining to the design by including the clause at 252.227-7023, Drawings and Other Data to Become Property of Government, in solicitations and contracts.
              (c) The Government shall obtain unlimited rights in shop drawings for construction. In solicitations and contracts calling for delivery of shop drawings, include the clause at 252.227-7033, Rights in Shop Drawings.

              227.7107-2
              Contracts for construction supplies and research and development work.
              Use the provisions and clauses required by 227-7103-6 and 227.7203-6 when the acquisition is limited to—
              (a) Construction supplies or materials;
              (b) Experimental, developmental, or research work, or test and evaluation studies of structures, equipment, processes, or materials for use in construction; or
              (c) Both.

              227.7107-3
              Approval of restricted designs.
              The clause at 252.227-7024, Notice and Approval of Restricted Designs, may be included in architect-engineer contracts to permit the Government to make informed decisions concerning noncompetitive aspects of the design.

              227.7108
              Contractor data repositories.
              (a) Contractor data repositories may be established when permitted by agency procedures. The contractual instrument establishing the data repository must require, as a minimum, the data repository management contractor to—

              (1) Establish and maintain adequate procedures for protecting technical data delivered to or stored at the repository from unauthorized release or disclosure;

              (2) Establish and maintain adequate procedures for controlling the release or disclosure of technical data from the repository to third parties consistent with the Government's rights in such data;
              (3) When required by the contracting officer, deliver data to the Government on paper or in other specified media;
              (4) Be responsible for maintaining the currency of data delivered directly by Government contractors or subcontractors to the repository;
              (5) Obtain use and non-disclosure agreements (see 227.7103-7) from all persons to whom government purpose rights data is released or disclosed; and
              (6) Indemnify the Government from any liability to data owners or licensors resulting from, or as a consequence of, a release or disclosure of technical data made by the data repository contractor or its officers, employees, agents, or representatives.
              (b) If the contractor is or will be the data repository manager, the contractor's data management and distribution responsibilities must be identified in the contract or the contract must reference the agreement between the Government and the contractor that establishes those responsibilities.
              (c) If the contractor is not and will not be the data repository manager, do not require a contractor or subcontractor to deliver technical data marked with limited rights legends to a data repository managed by another contractor unless the contractor or subcontractor who has asserted limited rights agrees to release the data to the repository or has authorized, in writing, the Government to do so.
              (d) Repository procedures may provide for the acceptance, delivery, and subsequent distribution of technical data in storage media other than paper, including direct electronic exchange of data between two computers. The procedures must provide for the identification of any portions of the data provided with restrictive legends, when appropriate. The acceptance criteria must be consistent with the authorized delivery format.

            Subpart 227.72—Rights in Computer Software and Computer Software Documentation

              Source:
              60 FR 33482, June 28, 1995, unless otherwise noted.

              227.7200
              Scope of subpart.
              This subpart—
              (a) Prescribes policies and procedures for the acquisition of computer software and computer software documentation, and the rights to use, modify, reproduce, release, perform, display, or disclose such software or documentation. It implements requirements in the following laws and Executive Order:
              (1) 10 U.S.C. 2302(4).
              (2) 10 U.S.C. 2305 (subsection (d)(4)).
              (3) 10 U.S.C. 2320.
              (4) 10 U.S.C. 2321.
              (5) 10 U.S.C. 2325.
              (6) Executive Order 12591 (subsection 1(b)(6)).
              (b) Does not apply to—
              (1) Computer software or computer software documentation acquired under GSA schedule contracts; or
              (2) Releases of computer software or computer software documentation to litigation support contractors (see subpart 204.74).
              [60 FR 33482, June 28, 1995, as amended at 79 FR 11340, Feb. 28, 2014]

              227.7201
              Definitions.
              (a) As used in this subpart, unless otherwise specifically indicated, the terms “offeror” and “contractor” include an offeror's or contractor's subcontractors, suppliers, or potential subcontractors or suppliers at any tier.
              (b) Other terms used in this subpart are defined in the clause at 252.227-7014, Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation.

              227.7202
              Commercial computer software and commercial computer software documentation.

              227.7202-1
              Policy.

              (a) Commercial computer software or commercial computer software documentation shall be acquired under the licenses customarily provided to the public unless such licenses are inconsistent with Federal procurement law or do not otherwise satisfy user needs.
              (b) Commercial computer software and commercial computer software documentation shall be obtained competitively, to the maximum extent practicable, using firm-fixed-price contracts or firm-fixed-priced orders under available pricing schedules.
              (c) Offerors and contractors shall not be required to—
              (1) Furnish technical information related to commercial computer software or commercial computer software documentation that is not customarily provided to the public except for information documenting the specific modifications made at Government expense to such software or documentation to meet the requirements of a Government solicitation; or
              (2) Relinquish to, or otherwise provide, the Government rights to use, modify, reproduce, release, perform, display, or disclose commercial computer software or commercial computer software documentation except for a transfer of rights mutually agreed upon.

              227.7202-2
              [Reserved]

              227.7202-3
              Rights in commercial computer software or commercial computer software documentation.
              (a) The Government shall have only the rights specified in the license under which the commercial computer software or commercial computer software documentation was obtained.
              (b) If the Government has a need for rights not conveyed under the license customarily provided to the public, the Government must negotiate with the contractor to determine if there are acceptable terms for transferring such rights. The specific rights granted to the Government shall be enumerated in the contract license agreement or an addendum thereto.

              227.7202-4
              Contract clause.
              A specific contract clause governing the Government's rights in commercial computer software or commercial computer software documentation is not prescribed. As required by 227.7202-3, the Government's rights to use, modify, reproduce, release, perform, display, or disclose computer software or computer software documentation shall be identified in a license agreement.

              227.7203
              Noncommercial computer software and noncommercial computer software documentation.

              227.7203-1
              Policy.
              (a) DoD policy is to acquire only the computer software and computer software documentation, and the rights in such software or documentation, necessary to satisfy agency needs.
              (b) Solicitations and contracts shall—
              (1) Specify the computer software or computer software documentation to be delivered under a contract and the delivery schedules for the software or documentation;
              (2) Establish or reference procedures for determining the acceptability of computer software or computer software documentation;
              (3) Establish separate contract line items, to the extent practicable, for the computer software or computer software documentation to be delivered under a contract and require offerors and contractors to price separately each deliverable data item; and
              (4) Require offerors to identify, to the extent practicable, computer software or computer software documentation to be furnished with restrictions on the Government's rights and require contractors to identify computer software or computer software documentation to be delivered with such restrictions prior to delivery.
              (c) Offerors shall not be required, either as a condition of being responsive to a solicitation or as a condition for award, to sell or otherwise relinquish to the Government any rights in computer software developed exclusively at private expense except for the software identified at 227.7203-5(a) (3) through (6).

              (d) Offerors and contractors shall not be prohibited or discouraged from furnishing or offering to furnish computer software developed exclusively at private expense solely because the Government's rights to use, modify, release, reproduce, perform, display, or disclose the software may be restricted.
              (e) For acquisitions involving major weapon systems or subsystems of major weapon systems, the acquisition plan shall address acquisition strategies that provide for computer software and computer software documentation, and the associated license rights, in accordance with 207.106(S-70).
              [60 FR 33471, June 28, 1995, as amended at 72 FR 51189, Sept. 6, 2007]

              227.7203-2
              Acquisition of noncommercial computer software and computer software documentation.
              (a) Contracting officers shall work closely with data managers and requirements personnel to assure that computer software and computer software documentation requirements included in solicitations are consistent with the policy expressed in 227.7203-1.
              (b)(1) Data managers or other requirements personnel are responsible for identifying the Government's minimum needs. In addition to desired software performance, compatibility, or other technical considerations, needs determinations should consider such factors as multiple site or shared use requirements, whether the Government's software maintenance philosophy will require the right to modify or have third parties modify the software, and any special computer software documentation requirements.
              (2) When reviewing offers received in response to a solicitation or other request for computer software or computer software documentation, data managers must balance the original assessment of the Government's needs with prices offered.
              (c) Contracting officers are responsible for ensuring that, wherever practicable, solicitations and contracts—
              (1) Identify the types of computer software and the quantity of computer programs and computer software documentation to be delivered, any requirements for multiple users at one site or multiple site licenses, and the format and media in which the software or documentation will be delivered;
              (2) Establish each type of computer software or computer software documentation to be delivered as a separate contract line item (this requirement may be satisfied by an exhibit to the contract);
              (3) Identify the prices established for each separately priced deliverable item of computer software or computer software documentation under a fixed-price type contract;
              (4) Include delivery schedules and acceptance criteria for each deliverable item; and
              (5) Specifically identify the place of delivery for each deliverable item.

              227.7203-3
              Early identification of computer software or computer software documentation to be furnished to the Government with restrictions on use, reproduction or disclosure.
              (a) Use the provision at 252.227-7017, Identification and Assertion of Use, Release, or Disclosure Restrictions, in all solicitation that include the clause at 252.227-7014, Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation. The provision requires offerors to identify any computer software or computer software documentation for which restrictions, other than copyright, on use, modification, reproduction, release, performance, display, or disclosure are asserted and to attach the identification and assertion to the offer.
              (b) Subsequent to contract award, the clause at 252.227-7014 permits a contractor, under certain conditions, to make additional assertions of restrictions. The prescriptions for the use of that clause and its alternates are at 227.7203-6(a).

              227.7203-4
              License rights.
              (a) Grant of license. The Government obtains rights in computer software or computer software documentation, including a copyright license, under an irrevocable license granted or obtained by the contractor which developed the software or documentation or the licensor of the software or documentation if the development contractor is not the licensor. The contractor or licensor retains all rights in the software or documentation not granted to the Government. The scope of a computer software license is generally determined by the source of funds used to develop the software. Contractors or licensors may, with some exceptions, restrict the Government's rights to use, modify, reproduce, release, perform, display, or disclose computer software developed exclusively or partially at private expense (see 227.7203-5 (b) and (c)). They may not, without the Government's agreement (see 227.7203-5(d)), restrict the Government's rights in computer software developed exclusively with Government funds or in computer software documentation required to be delivered under a contract.
              (b) Source of funds determination. The determination of the source of funds used to develop computer software should be made at the lowest practicable segregable portion of the software or documentation (e.g., a software sub-routine that performs a specific function). Contractors may assert restricted rights in a segregable portion of computer software which otherwise qualifies for restricted rights under the clause at 252.227-7014, Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation.

              227.7203-5
              Government rights.
              The standard license rights in computer software that a licensor grants to the Government are unlimited rights, government purpose rights, or restricted rights. The standard license in computer software documentation conveys unlimited rights. Those rights are defined in the clause at 252.227-7014, Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation. In unusual situations, the standard rights may not satisfy the Government's needs or the Government may be willing to accept lesser rights in return for other consideration. In those cases, a special license may be negotiated. However, the licensor is not obligated to provide the Government greater rights and the contracting officer is not required to accept lesser rights than the rights provided in the standard grant of license. The situations under which a particular grant of license applies are enumerated in paragraphs (a) through (d) of this subsection.
              (a) Unlimited rights. The Government obtains an unlimited rights license in—
              (1) Computer software developed exclusively with Government funds;
              (2) Computer software documentation required to be delivered under a Government contract;
              (3) Corrections or changes to computer software or computer software documentation furnished to the contractor by the Government;
              (4) Computer software or computer software documentation that is otherwise publicly available or has been released or disclosed by the contractor or subcontractor without restrictions on further use, release or disclosure other than a release or disclosure resulting from the sale, transfer, or other assignment of interest in the software to another party or the sale or transfer of some or all of a business entity or it assets to another party;
              (5) Computer software or computer software documentation obtained with unlimited rights under another Government contract or as a result of negotiations; or
              (6) Computer software or computer software documentation furnished to the Government, under a Government contract or subcontract with—
              (i) Restricted rights in computer software, limited rights in technical data, or government purpose license rights and the restrictive conditions have expired; or
              (ii) Government purpose rights and the contractor's exclusive right to use such software or documentation for commercial purposes has expired.
              (b) Government purpose rights. (1) Except as provided in paragraph (a) of this subsection, the Government obtains government purpose rights in computer software developed with mixed funding.

              (2) The period during which government purpose rights are effective is negotiable. The clause at 252.227-7014 provides a nominal five-year period. Either party may request a different period. Changes to the government purpose rights period may be made at any time prior to delivery of the software without consideration from either party. Longer periods should be negotiated when a five-year period does not provide sufficient time to commercialize the software or, for software developed by subcontractors, when necessary to recognize the subcontractors' interests in the software.
              (3) The government purpose rights period commences upon execution of the contract, subcontract, letter contract (or similar contractual instrument), contract modification, or option exercise that required development of the computer software. Upon expiration of the government purpose rights period, the Government has unlimited rights in the software including the right to authorize others to use data for commercial purposes.
              (4) During the government purpose rights period, the Government may not use, or authorize other persons to use, computer software marked with government purpose rights legends for commercial purposes. The Government shall not release or disclose, or authorize others to release or disclose, computer software in which it has government purpose rights to any person unless—
              (i) Prior to release or disclosure, the intended recipient is subject to the use and non-disclosure agreement at 227.7103-7; or
              (ii) The intended recipient is a Government contractor receiving access to the software for performance of a Government contract that contains the clause at 252.227-7025, Limitations on the Use or Disclosure of Government-Furnished Information Marked with Restrictive Legends.
              (5) When computer software marked with government purpose rights legends will be released or disclosed to a Government contractor performing a contract that does not include the clause at 252.227-7025, the contract may be modified, prior to release or disclosure, to include such clause in lieu of requiring the contractor to complete a use and non-disclosure agreement.
              (6) Contracting activities shall establish procedures to assure that computer software or computer software documentation marked with government purpose rights legends are released or disclosed, including a release or disclosure through a Government solicitation, only to persons subject to the use and non-disclosure restrictions. Public announcements in the Commerce Business Daily or other publications must provide notice of the use and non-disclosure requirements. Class use and non-disclosure agreements (e.g., agreements covering all solicitations received by the XYZ company within a reasonable period) are authorized and may be obtained at any time prior to release or disclosure of the government purpose rights software or documentation. Documents transmitting government purpose rights software or documentation to persons under class agreements shall identify the specific software or documentation subject to government purpose rights and the class agreement under which such software or documentation are provided.
              (c) Restricted rights. (1) The Government obtains restricted rights in noncommercial computer software, required to be delivered or otherwise provided to the Government under a contract, that was developed exclusively at private expense.
              (2) Contractors are not required to provide the Government additional rights in computer software delivered or otherwise provided to the Government with restricted rights. When the Government has a need for additional rights, the Government must negotiate with the contractor to determine if there are acceptable terms for transferring such rights. List or describe all software in which the contractor has granted the Government additional rights in a license agreement made part of the contract (see paragraph (d) of this subsection). The license shall enumerate the specific additional rights granted to the Government.
              (d) Specifically negotiated license rights. Negotiate specific licenses when the parties agree to modify the standard license rights granted to the Government or when the Government wants to obtain rights in computer software in which it does not have rights. When negotiating to obtain, relinquish, or increase the Government's rights in computer software, consider the planned software maintenance philosophy, anticipated time or user sharing requirements, and other factors which may have relevance for a particular procurement. If negotiating to relinquish rights in computer software documentation, consider the administrative burden associated with protecting documentation subject to restrictions from unauthorized release or disclosure. The negotiated license rights must stipulate the rights granted the Government to use, modify, reproduce, release, perform, display, or disclose the software or documentation and the extent to which the Government may authorize others to do so. Identify all negotiated rights in a license agreement made part of the contract.
              (e) Rights in derivative computer software or computer software documentation. The clause at 252.227-7014 protects the Government's rights in computer software, computer software documentation, or portions thereof that the contractor subsequently uses to prepare derivative software or subsequently embeds or includes in other software or documentation. The Government retains the rights it obtained under the development contract in the unmodified portions of the derivative software or documentation.
              [56 FR 36389, July 31, 1991, as amended at 76 FR 3537, Jan. 20, 2011]

              227.7203-6
              Contract clauses.
              (a)(1) Use the clause at 252.227-7014, Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation, in solicitations and contracts when the successful offeror(s) will be required to deliver computer software or computer software documentation. Do not use the clause when the only deliverable items are technical data (other than computer software documentation), commercial computer software or commercial computer software documentation, commercial items (see 227.7102-3), special works (see 227.7205), or contracts under the Small Business Innovation Research Program (see 227.7104), Except as provided in 227.7107-2, do not use the clause in architect-engineer and construction contracts.
              (2) Use the clause at 252.227-7014 with its Alternate I in research contracts when the contracting officer determines, in consultation with counsel, that public dissemination by the contractor would be—
              (i) In the interest of the Government; and
              (ii) Facilitated by the Government relinquishing its right to publish the work for sale, or to have others publish the work for sale on behalf of the Government.
              (b) Use the clause at 252.227-7016, Rights in Bid or Proposal Information, in solicitations and contracts that include the clause at 252.227-7014.
              (c) Use the clause at 252.227-7019, Validation of Asserted Restrictions—Computer Software, in solicitations and contracts that include the clause at 252.227-7014. The clause provides procedures for the validation of asserted restrictions on the Government's rights to use, release, or disclose computer software.
              (d) Use the provision at 252.227-7025, Limitations on the Use or Disclosure of Government-Furnished Information Marked with Restrictive Legends, in solicitations and contracts when it is anticipated that the Government will provide the contractor (other than a litigation support contractor covered by 252.204-7014), for performance of its contract, computer software or computer software documentation marked with another contractor's restrictive legend(s).
              (e) Use the provision at 252.227-7028, Technical Data or Computer Software Previously Delivered to the Government, in solicitations when the resulting contract will require the contractor to deliver computer software or computer software documentation. The provision requires offerors to identify any software or documentation specified in the solicitation as deliverable items that are the same or substantially the same as software or documentation which the offeror has delivered or is obligated to deliver, either as a contractor or subcontractor, under any other federal agency contract.

              (f) Use the clause at 252.227-7037, Validation of Restrictive Markings on Technical Data, in solicitations and contracts that include the clause at 252.227-7014 when the contractor will be required to deliver noncommercial computer software documentation (technical data). The clause implements statutory requirements under 10 U.S.C. 2321. Paragraph (e) of the clause contains information that must be included in a formal challenge.
              [56 FR 36389, July 31, 1991, as amended at 76 FR 3537, Jan. 20, 2011; 79 FR 11340, Feb. 28, 2014]

              227.7203-8
              Deferred delivery and deferred ordering of computer software and computer software documentation.
              (a) Deferred delivery. Use the clause at 252.227-7026, Deferred Delivery of Technical Data or Computer Software, when it is in the Government's interests to defer the delivery of computer software or computer software documentation. The clause permits the contracting officer to require the delivery of data identified as “deferred delivery” data or computer software at any time until two years after acceptance by the Government of all items (other than technical data or computer software) under the contract or contract termination, whichever is later. The obligation of subcontractors or suppliers to deliver such data expires two years after the date the prime contractor accepts the last item from the subcontractor or supplier for use in the performance of the contract. The contract must specify the computer software or computer software documentation that is subject to deferred delivery. The contracting officer shall notify the contractor sufficiently in advance of the desired delivery date for such software or documentation to permit timely delivery.
              (b) Deferred ordering. Use the clause at 252.227-7027, Deferred Ordering of Technical Data or Computer Software, when a firm requirement for software or documentation has not been established prior to contract award but there is a potential need for computer software or computer software documentation. Under this clause the contracting officer may order any computer software or computer software documentation generated in the performance of the contract or any subcontract thereunder at any time until three years after acceptance of all items (other than technical data or computer software) under the contract or contract termination, whichever is later. The obligation of subcontractors to deliver such technical data or computer software expires three years after the date the contractor accepts the last item under the subcontract. When the software or documentation are ordered, the delivery dates shall be negotiated and the contractor compensated only for converting the software or documentation into the prescribed form, reproduction costs, and delivery costs.

              227.7203-9
              Copyright.
              (a) Copyright license. (1) The clause at 252.227-7014, Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation, requires a contractor to grant, or obtain for the Government license rights which permit the Government to reproduce the software or documentation, distribute copies, perform or display the software or documentation and, through the right to modify data, prepare derivative works. The extent to which the Government, and others acting on its behalf, may exercise these rights varies for each of the standard data rights licenses obtained under the clause. When non-standard license rights in computer software or computer software documentation will be negotiated, negotiate the extent of the copyright license concurrent with negotiations for the data rights license. Do not negotiate copyright licenses for computer software that provide less rights than the standard restricted rights in computer software license. For computer software documentation, do not negotiate a copyright license that provides less rights than the standard limited rights in technical data license.

              (2) The clause at 252.227-7013, Rights in Technical Data—Noncommercial Items, does not permit a contractor to incorporate a third party's copyrighted software into a deliverable software item unless the contractor has obtained an appropriate license for the Government and, when applicable, others acting on the Government's behalf, or has obtained the contracting officer's written approval to do so. Grant approval to use third party copyrighted software in which the Government will not receive a copyright license only when the Government's requirements cannot be satisfied without the third party material or when the use of the third party material will result in cost savings to the Government which outweigh the lack of a copyright license.
              (b) Copyright considerations—special works. See 227.7205 for copyright considerations when acquiring special works.

              227.7203-10
              Contractor identification and marking of computer software or computer software documentation to be furnished with restrictive markings.
              (a) Identification requirements. (1) The solicitation provision at 252.227-7017, Identification and Assertion of Use, Release, or Disclosure Restrictions, requires offerors to identify, prior to contract award, any computer software or computer software documentation that an offeror asserts should be provided to the Government with restrictions on use, modification, reproduction, release, or disclosure. This requirement does not apply to restrictions based solely on copyright. The notification and identification must be submitted as an attachment to the offer. If an offeror fails to submit the attachment or fails to complete the attachment in accordance with the requirements of the solicitation provision, such failure shall constitute a minor informality. Provide offerors an opportunity to remedy a minor informality in accordance with the procedures at FAR 14.405 or 15.306(a). An offeror's failure to correct an informality within the time prescribed by the contracting officer shall render the offer ineligible for award.
              (2) The procedures for correcting minor informalities shall not be used to obtain information regarding asserted restrictions or an offeror's suggested asserted rights category. Questions regarding the justification for an asserted restriction or asserted rights category must be pursued in accordance with the procedures at 227.7203-13.
              (3) The restrictions asserted by a successful offeror shall be attached to its contract unless, in accordance with the procedures at 227.7203-13, the parties have agreed that an asserted restriction is not justified. The contract attachment shall provide the same information regarding identification of the computer software or computer software documentation, the asserted rights category, the basis for the assertion, and the name of the person asserting the restrictions as required by paragraph (d) of the solicitation provision at 252.227-7017. Subsequent to contract award, the clause at 252.227-7014, Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation, permits a contractor to make additional assertions under certain conditions. The additional assertions must be made in accordance with the procedures and in the format prescribed by that clause.
              (4) Neither the pre- or post-award assertions made by the contractor nor the fact that certain assertions are identified in the attachment to the contract, determine the respective rights of the parties. As provided at 227.7203-13, the Government has the right to review, verify, challenge and validate restrictive markings.
              (5) Information provided by offerors in response to the solicitation provision at 252.227-7017 may be used in the source selection process to evaluate the impact on evaluation factors that may be created by restrictions on the Government's ability to use or disclose computer software or computer software documentation.
              (b) Contractor marking requirements. The clause at 252.227-7014, Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation—
              (1) Requires a contractor who desires to restrict the Government's rights in computer software or computer software documentation to place restrictive markings on the software or documentation, provides instructions for the placement of the restrictive markings, and authorizes the use of certain restrictive markings. When it is anticipated that the software will or may be used in combat or situations which simulate combat conditions, do not permit contractors to insert instructions into computer programs that interfere with or delay operation of the software to display a restrictive rights legend or other license notice; and

              (2) Requires a contractor to deliver, furnish, or otherwise provide to the Government any computer software or computer software documentation in which the Government has previously obtained rights with the Government's pre-existing rights in that software or documentation unless the parties have agreed otherwise or restrictions on the Government's rights to use, modify, produce, release, or disclose the software or documentation have expired. When restrictions are still applicable, the contractor is permitted to mark the software or documentation with the appropriate restrictive legend.
              (c) Unmarked computer software or computer software documentation. (1) Computer software or computer software documentation delivered or otherwise provided under a contract without restrictive markings shall be presumed to have been delivered with unlimited rights and may be released or disclosed without restriction. To the extent practicable, if a contractor has requested permission (see paragraph (c)(2) of this subsection) to correct an inadvertent omission of markings, do not release or disclose the software or documentation pending evaluation of the request.
              (2) A contractor may request permission to have appropriate legends placed on unmarked computer software or computer software documentation at its expense. The request must be received by the contracting officer within six months following the furnishing or delivery of such software or documentation, or any extension of that time approved by the contracting officer. The person making the request must—
              (i) Identify the software or documentation that should have been marked;
              (ii) Demonstrate that the omission of the marking was inadvertent, the proposed marking is justified and conforms with the requirements for the marking of computer software or computer software documentation contained in the clause at 252.227-7014; and
              (iii) Acknowledge, in writing, that the Government has no liability with respect to any disclosure, reproduction, or use of the software or documentation made prior to the addition of the marking or resulting from the omission of the marking.
              (3) Contracting officers should grant permission to mark only if the software or documentation were not distributed outside the Government or were distributed outside the Government with restrictions on further use or disclosure.
              [60 FR 33482, June 28, 1995, as amended at 63 FR 55052, Oct. 14, 1998]

              227.7203-11
              Contractor procedures and records.
              (a) The clause at 252.227-7014, Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation, requires a contractor, and its subcontractors or suppliers that will deliver computer software or computer software documentation with other than unlimited rights, to establish and follow written procedures to assure that restrictive markings are used only when authorized and to maintain records to justify the validity of restrictive markings.
              (b) The clause at 252.227-7019, Validation of Asserted Restrictions—Computer Software, requires contractors and their subcontractors or suppliers at any tier to maintain records sufficient to justify the validity of markings that assert restrictions on the use, modification, reproduction, release, performance, display, or disclosure of computer software.

              227.7203-12
              Government right to establish conformity of markings.
              (a) Nonconforming markings. (1) Authorized markings are identified in the clause at 252.227-7014, Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation. All other markings are nonconforming markings. An authorized marking that is not in the form, or differs in substance, from the marking requirements in the clause at 252.227-7014 is also a nonconforming marking.

              (2) The correction of nonconforming markings on computer software is not subject to 252.227-7019, Validation of Asserted Restrictions—Computer Software, and the correction of nonconforming markings on computer software documentation (technical data) is not subject to 252.227-7037, Validation of Restrictive Markings on Technical Data. To the extent practicable, the contracting officer should return computer software or computer software documentation bearing nonconforming markings to the person who has placed the nonconforming markings on the software or documentation to provide that person an opportunity to correct or strike the nonconforming markings at that person's expense. If that person fails to correct the nonconformity and return the corrected software or documentation within 60 days following the person's receipt of the software or documentation, the contracting officer may correct or strike the nonconformity at the person's expense. When it is impracticable to return computer software or computer software documentation for correction, contracting officers may unilaterally correct any nonconforming markings at Government expense. Prior to correction, the software or documentation may be used in accordance with the proper restrictive marking.
              (b) Unjustified markings. (1) An unjustified marking is an authorized marking that does not depict accurately restrictions applicable to the Government's use, modification, reproduction, release, or disclosure of the marked computer software or computer software documentation. For example, a restricted rights legend placed on computer software developed under a Government contract either exclusively at Government expense or with mixed funding (situations under which the Government obtains unlimited or government purpose rights) is an unjustified marking.
              (2) Contracting officers have the right to review and challenge the validity of unjustified markings. However, at any time during performance of a contract and notwithstanding existence of a challenge, the contracting officer and the person who has asserted a restrictive marking may agree that the restrictive marking is not justified. Upon such agreement, the contracting officer may, at his or her election, either—
              (i) Strike or correct the unjustified marking at that person's expense; or
              (ii) Return the computer software or computer software documentation to the person asserting the restriction for correction at that person's expense. If the software or documentation are returned and that person fails to correct or strike the unjustified restriction and return the corrected software or documentation to the contracting officer within 60 days following receipt of the software or documentation, the unjustified marking shall be corrected or stricken at that person's expense.

              227.7203-13
              Government right to review, verify, challenge, and validate asserted restrictions.
              (a) General. An offeror's or contractor's assertion(s) of restrictions on the Government's rights to use, modify, reproduce, release, or disclose computer software or computer software documentation do not, by themselves, determine the extent of the Government's rights in such software or documentation. The Government may require an offeror or contractor to submit sufficient information to permit an evaluation of a particular asserted restriction and may challenge asserted restrictions when there are reasonable grounds to believe that an assertion is not valid.
              (b) Requests for information. Contracting officers should have a reason to suspect that an asserted restriction might not be correct prior to requesting information. When requesting information, provide the offeror or contractor the reason(s) for suspecting that an asserted restriction might not be correct. A need for additional license rights is not, by itself, a sufficient basis for requesting information concerning an asserted restriction. Follow the procedures at 227.7203-5(d) when additional license rights are needed but there is no basis to suspect that an asserted restriction might not be valid.
              (c) Transacting matters directly with subcontractors. The clause at 252.227-7019, Validation of Asserted Restrictions—Computer Software, obtains the contractor's agreement that the Government may transact matters under the clause directly with a subcontractor or supplier, at any tier, without creating or implying privity of contract. Contracting officers should permit a subcontractor or supplier to transact challenge and validation matters directly with the Government when—

              (1) A subcontractor's or supplier's business interests in its technical data would be compromised if the data were disclosed to a higher tier contractor.
              (2) There is reason to believe that the contractor will not respond in a timely manner to a challenge and an untimely response would jeopardize a subcontractor's or supplier's right to assert restrictions; or
              (3) Requested to do so by a subcontractor or supplier.
              (d) Challenging asserted restrictions—(1) Pre-award considerations. The challenge procedures in the clause at 252.227-7019 could significantly delay competitive procurements. Therefore, avoid challenging asserted restrictions prior to a competitive contract award unless resolution of the assertion is essential for successful completion of the procurement.
              (2) Computer software documentation. Computer software documentation is technical data. Challenges to asserted restrictions on the Government's rights to use, modify, reproduce, release, perform, display, or disclose computer software documentation must be made in accordance with the clause at 252.227-7037, Validation of Restrictive Markings on Technical Data, and the guidance at 227.7103-13. The procedures in the clause at 252.227-7037 implement requirements contained in 10 U.S.C. 2321. Resolution of questions regarding the validity of asserted restrictions using the process described at 227.7103-12(b)(2) is strongly encouraged.
              (3) Computer software. (i) Asserted restrictions should be reviewed before acceptance of the computer software deliverable under a contract. The Government's right to challenge an assertion expires three years after final payment under the contract or three years after delivery of the software, whichever is later. Those limitations on the Government's challenge rights do not apply to software that is publicly available, has been furnished to the Government without restrictions, or has been otherwise made available without restrictions.
              (ii) Contracting officers must have reasonable grounds to challenge the current validity of an asserted restriction. Before challenging an asserted restriction, carefully consider all available information pertaining to the asserted restrictions. Resolution of questions regarding the validity of asserted restrictions using the process described at 227.7203-12(b)(2) is strongly encouraged. After consideration of the situations described in paragraph (c) of this subsection, contracting officers may request the person asserting a restriction to furnish a written explanation of the facts and supporting documentation for the assertion in sufficient detail to enable the contracting officer to determine the validity of the assertion. Additional supporting documentation may be requested when the explanation provided by that person does not, in the contracting officer's opinion, establish the validity of the assertion.
              (iii) Assertions may be challenged whether or not supporting documentation was requested. Challenges must be in writing and issued to the person asserting the restriction.
              (4) Extension of response time. The contracting officer, at his or her discretion, may extend the time for response contained in a challenge, as appropriate, if the contractor submits a timely written request showing the need for additional time to prepare a response.
              (e) Validating or denying asserted restrictions. (1) Contracting officers must promptly issue a final decision denying or sustaining the validity of each challenged assertion unless the parties have agreed on the disposition of the assertion. When a final decision denying the validity of an asserted restriction is made following a timely response to a challenge, the Government is obligated to continue to respect the asserted restrictions through final disposition of any appeal unless the agency head notifies the person asserting the restriction that urgent or compelling circumstances do not permit the Government to continue to respect the asserted restriction. See 252.227-7019(g) for restrictions applicable following a determination of urgent and compelling circumstances.

              (2) Only a contracting officer's final decision, or actions of an agency Board of Contract Appeals or a court of competent jurisdiction, that sustain the validity of an asserted restriction constitute validation of the restriction.
              (f) Multiple challenges to an asserted restriction. When more than one contracting officer challenges an asserted restriction, the contracting officer who made the earliest challenge is responsible for coordinating the Government challenges. That contracting officer shall consult with all other contracting officers making challenges, verify that all challenges apply to the same asserted restriction and, after consulting with the contractor, subcontractor, or supplier asserting the restriction, issue a schedule that provides that person a reasonable opportunity to respond to each challenge.
              [56 FR 36389, July 31, 1991, as amended at 76 FR 58148, Sept. 20, 2011; 81 FR 65566, Sept. 23, 2016]

              227.7203-14
              Conformity, acceptance, and warranty of computer software and computer software documentation.
              (a) Computer software documentation. Computer software documentation is technical data. See 227.7103-14 for appropriate guidance and statutory requirements.
              (b) Computer software—(1) Conformity and acceptance. Solicitations and contracts requiring the delivery of computer software shall specify the requirements the software must satisfy to be acceptable. Contracting officers, or their authorized representatives, are responsible for determining whether computer software tendered for acceptance conforms to the contractual requirements. Except for nonconforming restrictive markings (follow the procedures at 227.7203-12(a) if nonconforming markings are the sole reason computer software tendered for acceptance fails to conform to contractual requirements), do not accept software that does not conform in all respects to applicable contractual requirements. Correction or replacement of nonconforming software, or an equitable reduction in contract price when correction or replacement of the nonconforming data is not practicable or is not in the Government's interests, shall be accomplished in accordance with—
              (i) The provisions of a contract clause providing for inspection and acceptance of deliverables and remedies for nonconforming deliverables; or
              (ii) The procedures at FAR 46.407(c) through (g), if the contract does not contain an inspection clause providing remedies for nonconforming deliverables.
              (2) Warranties—(i) Weapon systems. Computer software that is a component of a weapon system or major subsystem should be warranted as part of the weapon system warranty. Follow the procedures at 246.7.
              (ii) Non-weapon systems. Approval of the chief of the contracting office must be obtained to use a computer software warranty other than a weapon system warranty. Consider the factors at FAR 46.703 in deciding whether to obtain a computer software warranty. When approval for a warranty has been obtained, the clause at 252.246-7001, Warranty of Data, and its alternates, may be appropriately modified for use with computer software or a procurement specific clause may be developed.
              [56 FR 36389, July 31, 1991, as amended at 76 FR 3537, Jan. 20, 2011]

              227.7203-15
              Subcontractor rights in computer software or computer software documentation.
              (a) Subcontractors and suppliers at all tiers should be provided the same protection for their rights in computer software or computer software documentation as are provided to prime contractors.

              (b) The clauses at 252.227-7019, Validation of Asserted Restrictions—Computer Software, and 252.227-7037, Validation of Restrictive Markings on Technical Data, obtain a contractor's agreement that the Government's transaction of validation or challenge matters directly with subcontractors at any tier does not establish or imply privity of contract. When a subcontractor or supplier exercises its right to transact validation matters directly with the Government, contracting officers shall deal directly with such persons, as provided at 227.7203-13(c) for computer software and 227.7103-13(c)(3) for computer software documentation (technical data).

              (c) Require prime contractors whose contracts include the following clauses to include those clauses, without modification except for appropriate identification of the parties, in contracts with subcontractors or suppliers who will be furnishing computer software in response to a Government requirement (see 227.7103-15(c) for clauses required when subcontractors or suppliers will be furnishing computer software documentation (technical data)):
              (1) 252.227-7014, Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation;
              (2) 252.227-7019, Validation of Asserted Restrictions—Computer Software;
              (3) 252.227-7025, Limitations on the Use or Disclosure of Government Furnished Information Marked with Restrictive Legends; and
              (4) 252.227-7028, Technical Data or Computer Software Previously Delivered to the Government.
              (d) Do not require contractors to have their subcontractors or suppliers at any tier relinquish rights in technical data to the contractor, a higher tier subcontractor, or to the Government, as a condition for award of any contract, subcontract, purchase order, or similar instrument except for the rights obtained by the Government under the provisions of the Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation clause contained in the contractor's contract with the Government.
              [56 FR 36389, July 31, 1991, as amended at 76 FR 76320, Dec. 7, 2011]

              227.7203-16
              Providing computer software or computer software documentation to foreign governments, foreign contractors, or international organizations.
              Computer software or computer software documentation may be released or disclosed to foreign governments, foreign contractors, or international organizations only if release or disclosure is otherwise permitted both by Federal export controls and other national security laws or regulations. Subject to such laws and regulations, the Department of Defense—
              (a) May release or disclose computer software or computer software documentation in which it has obtained unlimited rights to such foreign entities or authorize the use of such data by those entities; and
              (b) Shall not release or disclose computer software or computer software documentation for which restrictions on use, release, or disclosure have been asserted to such foreign entities or authorize the use of such data by those entities, unless the intended recipient is subject to the same provisions as included in the use and non-disclosure agreement at 227.7103-7 and the requirements of the clause at 252.227-7014, Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation, governing use, modification, reproduction, release, performance, display, or disclosure of such data have been satisfied.

              227.7203-17
              Overseas contracts with foreign sources.
              (a) The clause at 252.227-7032, Rights in Technical Data and Computer Software (Foreign), may be used in contracts with foreign contractors to be performed overseas, except Canadian purchases (see paragraph (c) of this subsection) in lieu of the clause at 252.227-7014, Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation, when the Government requires the unrestricted right to use, modify, reproduce, release, perform, display, or disclose all computer software or computer software documentation to be delivered under the contract. Do not use the clause in contracts for special works.

              (b) When the Government does not require unlimited rights, the clause at 252.227-7032 may be modified to accommodate the needs of a specific overseas procurement situation. The Government should obtain rights to the computer software or computer software documentation that are not less than the rights the Government would have obtained under the software rights clause(s) prescribed in this part for a comparable procurement performed within the United States or its outlying areas.

              (c) Contracts for Canadian purchases shall include the appropriate software rights clause prescribed in this part for a comparable procurement performed within the United States or its outlying areas.
              [56 FR 36389, July 31, 1991, as amended at 70 FR 35545, June 21, 2005]

              227.7204
              Contracts under the Small Business Innovation Research Program.
              When contracting under the Small Business Innovation Research Program, follow the procedures at 227-7104.
              [56 FR 36389, July 31, 1991, as amended at 76 FR 3537, Jan. 20, 2011]

              227.7205
              Contracts for special works.
              (a) Use the clause at 252.227-7020, Rights in Special Works, in solicitations and contracts where the Government has a specific need to control the distribution of computer software or computer software documentation first produced, created, or generated in the performance of a contract and required to be delivered under that contract, including controlling distribution by obtaining an assignment of copyright, or a specific need to obtain indemnity for liabilities that may arise out of the creation, delivery, use, modification, reproduction, release, performance, display, or disclosure of such software or documentation. Use the clause—
              (1) In lieu of the clause at 252.227-7014, Rights in Noncommercial Computer Software and Noncommercial Computer Software Documentation, when the Government must own or control copyright in all computer software or computer software documentation first produced, created, or generated and required to be delivered under a contract; or
              (2) In addition to the clause at 252.227-7014 when the Government must own or control copyright in some of the computer software or computer software documentation first produced, created, or generated and required to be delivered under a contract. The specific software or documentation in which the Government must own or control copyright must be identified in a special contract requirement.
              (b) Although the Government obtains an assignment of copyright and unlimited rights in the computer software or computer software documentation delivered as a special work under the clause at 252.227-7020, the contractor retains use and disclosure rights in that software or documentation. If the Government needs to restrict a contractor's rights to use or disclose a special work, it must also negotiate a special license which specifically restricts the contractor's use or disclosure rights.
              (c) The clause at 252.227-7020 does not permit a contractor to incorporate into a special work any work copyrighted by others unless the contractor obtains the contracting officer's permission to do so and obtains for the Government a non-exclusive, paid up, world-wide license to make and distribute copies of that work, to prepare derivative works, to perform or display any portion of that work, and to permit others to do so for government purposes. Grant permission only when the Government's requirements cannot be satisfied unless the third party work is included in the deliverable work.
              (d) Examples of other works which may be procured under the clause at 252.227-7020 include, but are not limited to, audiovisual works, scripts, soundtracks, musical compositions, and adaptations; histories of departments, agencies, services or units thereof; surveys of Government establishments; instructional works or guidance to Government officers and employees on the discharge of their official duties; reports, books, studies, surveys or similar documents; collections of data containing information pertaining to individuals that, if disclosed, would violate the right of privacy or publicity of the individuals to whom the information relates; or investigative reports.

              227.7206
              Contracts for architect-engineer services.
              Follow 227.7107 when contracting for architect-engineer services.

              227.7207
              Contractor data repositories.

              Follow 227.7108 when it is in the Government's interests to have a data repository include computer software or to have a separate computer software repository. Contractual instruments establishing the repository requirements must appropriately reflect the repository manager's software responsibilities.

          Pt. 228
          PART 228—BONDS AND INSURANCE

              Subpart 228.1—Bonds
              Sec.
              228.102
              Performance and payment bonds for construction contracts.
              228.102-1
              General.
              228.102-70
              Defense Environmental Restoration Program construction contract.
              228.105
              Other types of bonds.
              228.106
              Administration.
              228.106-7
              Withholding contract payments.

              Subpart 228.3—Insurance
              228.304
              Risk-pooling arrangements.
              228.305
              Overseas workers' compensation and war-hazard insurance.
              228.307
              Insurance under cost-reimbursement contracts.
              228.307-1
              Group insurance plans.
              228.311
              Solicitation provision and contract clause on liability insurance under cost-reimbursement contracts.
              228.311-1
              Contract clause.
              228.370
              Additional clauses.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36404, July 31, 1991, unless otherwise noted.

            Subpart 228.1—Bonds

              228.102
              Performance and payment bonds for construction contracts.

              228.102-1
              General.
              The requirement for performance and payment bonds is waived for cost-reimbursement contracts. However, for cost-type contracts with fixed-price construction subcontracts over $40,000, require the prime contractor to obtain from each of its construction subcontractors performance and payment protections in favor of the prime contractor as follows:
              (1) For fixed-price construction subcontracts over $40,000, but not exceeding $150,000, payment protection sufficient to pay labor and material costs, using any of the alternatives listed at FAR 28.102-1(b)(1).
              (2) For fixed-price construction subcontracts over $150,000—
              (i) A payment bond sufficient to pay labor and material costs; and
              (ii) A performance bond in an equal amount if available at no additional cost.
              [68 FR 36945, June 20, 2003, as amended at 71 FR 75892, Dec. 19, 2006; 75 FR 45074, Aug. 2, 2010; 80 FR 36904, June 26, 2015; 85 FR 61504, Sept. 29, 2020]

              228.102-70
              Defense Environmental Restoration Program construction contracts.
              For Defense Environmental Restoration Program construction contracts entered into pursuant to 10 U.S.C. 2701—
              (a) Any rights of action under the performance bond shall only accrue to, and be for the exclusive use of, the obligee named in the bond;
              (b) In the event of default, the surety's liability on the performance bond is limited to the cost of completion of the contract work, less the balance of unexpended funds. Under no circumstances shall the liability exceed the penal sum of the bond;
              (c) The surety shall not be liable for indemnification or compensation of the obligee for loss or liability arising from personal injury or property damage, even if the injury or damage was caused by a breach of the bonded contract; and
              (d) Once it has taken action to meet its obligations under the bond, the surety is entitled to any indemnification and identical standard of liability to which the contractor was entitled under the contract or applicable laws and regulations.
              [68 FR 36945, June 20, 2003]

              228.105
              Other types of bonds.
              Fidelity and forgery bonds generally are not required but are authorized for use when—
              (1) Necessary for the protection of the Government or the contractor; or
              (2) The investigative and claims services of a surety company are desired.
              [70 FR 8538, Feb. 22, 2005]

              228.106
              Administration.

              228.106-7
              Withholding contract payments.
              (a) Withholding may be appropriate in other than construction contracts (see FAR 32.112-1(b)).
              [57 FR 42707, Sept. 16, 1992, as amended at 70 FR 8538, Feb. 22, 2005]

            Subpart 228.3—Insurance

              228.304
              Risk-pooling arrangements.
              DoD has established the National Defense Projects Rating Plan, also known as the Special Casualty Insurance Rating Plan, as a risk-pooling arrangement to minimize the cost to the Government of purchasing the liability insurance listed in FAR 28.307-2. Use the plan in accordance with the procedures at PGI 228.304 when it provides the necessary coverage more advantageously than commercially available coverage.
              [69 FR 65091, Nov. 10, 2004]

              228.305
              Overseas workers' compensation and war-hazard insurance.
              (d) When submitting requests for waiver, follow the procedures at PGI 228.305(d).
              [69 FR 65091, Nov. 10, 2004]

              228.307
              Insurance under cost-reimbursement contracts.

              228.307-1
              Group insurance plans.
              The Defense Department Group Term Insurance Plan is available for contractor use under cost-reimbursement type contracts when approved as provided in department or agency regulations. A contractor is eligible if—
              (a) The number of covered employees is 500 or more; and
              (b) The contractor has all cost-reimbursement contracts; or
              (c) At least 90 percent of the payroll for contractor operations to be covered by the Plan is under cost-reimbursement contracts.

              228.311
              Solicitation provision and contract clause on liability insurance under cost-reimbursement contracts.

              228.311-1
              Contract clause.
              Use the clause at FAR 52.228-7, Insurance—Liability to Third Persons, in solicitations and contracts, other than those for construction and those for architect-engineer services, when a cost-reimbursement contract is contemplated, unless the head of the contracting activity waives the requirement for use of the clause.
              [56 FR 36404, July 31, 1991. Redesignated at 61 FR 50454, Sept. 26, 1996]

              228.370
              Additional clauses.
              (a) Use the clause at 252.228-7000, Reimbursement for War-Hazard Losses, when—
              (1) The clause at FAR 52.228-4, Worker's Compensation and War-Hazard Insurance Overseas, is used; and
              (2) The head of the contracting activity decides not to allow the contractor to buy insurance for war-hazard losses.
              (b)(1) Use the clause at 252.228-7001, Ground and Flight Risk, in all solicitations and contracts for the acquisition, development, production, modification, maintenance, repair, flight, or overhaul of aircraft, except those solicitations and contracts—

              (i) That are strictly for activities incidental to the normal operations of the aircraft (e.g., refueling operations, minor non-structural actions not requiring towing such as replacing aircraft tires due to wear and tear);
              (ii) That are awarded under FAR Part 12 procedures and are for the development, production, modification, maintenance, repair, flight, or overhaul of aircraft; or otherwise involving the furnishing of aircraft;
              (iii) For which a non-DoD customer (including a foreign military sales customer) has not agreed to assume the risk for loss or destruction of, or damages to, the aircraft; or

              (iv) For commercial derivative aircraft that are to be maintained to Federal Aviation Administration (FAA) airworthiness when the work will be performed at a licensed FAA repair station.

              (2) The clause at 252.228-7001 may be modified only as follows:

              (i) Include a modified definition of “aircraft” if the contract covers other than conventional types of winged aircraft, i.e., helicopters, vertical take-off or landing aircraft, lighter-than-air airships, unmanned aerial vehicles, or other nonconventional aircraft. The modified definition should describe a stage of manufacture comparable to the standard definition.
              (ii) Modify “in the open” to include “hush houses,” test hangars and comparable structures, and other designated areas.
              (iii) Expressly define the “contractor's premises” where the aircraft will be located during and for contract performance. These locations may include contract premises which are owned or leased by the contractor or subcontractor, or premises where the contractor or subcontractor is a permittee or licensee or has a right to use, including Government airfields.
              (iv) Revise paragraph (e)(3) of the clause to provide Government assumption of risk for transportation by conveyance on streets or highways when transportation is—
              (A) Limited to the vicinity of contractor premises; and
              (B) Incidental to work performed under the contract.
              (3) Follow the procedures at PGI 228.370(b) when using the clause at 252.228-7001.

              (c) The clause at 252.228-7003, Capture and Detention, may be used when contractor employees are subject to capture and detention and may not be covered by the War Hazards Compensation Act (42 U.S.C. 1701 et seq.).
              (d) Use the clause at 252.228-7005, Mishap Reporting and Investigation Involving Aircraft, Missiles, and Space Launch Vehicles, in solicitations and contracts that involve the manufacture, modification, overhaul, or repair of aircraft, missiles, and space launch vehicles.
              (e) Use the clause at 252.228-7006, Compliance with Spanish Laws and Insurance, in solicitations and contracts for services or construction to be performed in Spain, unless the contractor is a Spanish concern.
              [56 FR 36404, July 31, 1991, as amended at 57 FR 42631, Sept. 15, 1992; 62 FR 34125, June 24, 1997; 63 FR 69006, Dec. 15, 1998; 75 FR 32644, June 8, 2010; 84 FR 65312, Nov. 27, 2019]

          Pt. 229
          PART 229—TAXES

              Subpart 229.1—General
              Sec.
              229.101
              Resolving tax problems.
              229.170
              Reporting of foreign taxation on U.S. assistance programs.
              229.170-1
              Definition.
              229.170-2
              Policy.
              229.170-3
              Reports.
              229.170-4
              Contract clause.

              Subpart 229.4—Contract Clauses
              229.402
              Foreign contracts.
              229.402-70
              Additional provisions and clauses.

              Subpart 229.70—Special Procedures for Overseas Contracts

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36405, July 31, 1991, unless otherwise noted.

            Subpart 229.1—General

              229.101
              Resolving tax problems.
              (a) Within DoD, the agency-designated legal counsels are the defense agency General Counsels, the General Counsels of the Navy and Air Force, and for the Army, the Chief, Contract Law Division, Office of the Judge Advocate General. For additional information on the designated legal counsels, see PGI 229.101(a).
              (b) For information on fuel excise taxes, see PGI 229.101(b).
              (c) For guidance on directing a contractor to litigate the applicability of a particular tax, see PGI 229.101(c).
              (d) For information on tax relief agreements between the United States and European foreign governments, see PGI 229.101(d).
              [70 FR 8538, Feb. 22, 2005, as amended at 71 FR 14100, Mar. 21, 2006]

              229.170
              Reporting of foreign taxation on U.S. assistance programs.

              229.170-1
              Definition.

                Commodities, as used in this section, means any materials, articles, supplies, goods, or equipment.
              [70 FR 57192, Sept. 30, 2005]

              229.170-2
              Policy.
              (a) By law, bilateral agreements with foreign governments must include a provision that commodities acquired under contracts funded by U.S. assistance programs shall be exempt from taxation by the foreign government. If taxes or customs duties nevertheless are imposed, the foreign government must reimburse the amount of such taxes to the U.S. Government (Section 579 of Division E of the Consolidated Appropriations Act, 2003 (Pub. L. 108-7), as amended by Section 506 of Division D of the Consolidated Appropriations Act, 2004 (Pub. L. 108-199), and similar sections in subsequent acts).
              (b) This foreign tax exemption—
              (1) Applies to a contract or subcontract for commodities when—
              (i) The funds are appropriated by the annual foreign operations appropriations act; and
              (ii) The value of the contract or subcontract is $500 or more;
              (2) Does not apply to the acquisition of services;
              (3) Generally is implemented through letters of offer and acceptance, other country-to-country agreements, or Federal interagency agreements; and
              (4) Requires reporting of noncompliance for effective implementation.
              [70 FR 57192, Sept. 30, 2005]

              229.170-3
              Reports.
              The contracting officer shall submit a report to the designated Security Assistance Office when a foreign government or entity imposes tax or customs duties on commodities acquired under contracts or subcontracts meeting the criteria of 229.170-2(b)(1). Follow the procedures at PGI 229.170-3 for submission of reports.
              [70 FR 57192, Sept. 30, 2005]

              229.170-4
              Contract clause.
              Use the clause at 252.229-7011, Reporting of Foreign Taxes—U.S. Assistance Programs, in solicitations and contracts funded with U.S. assistance appropriations provided in the annual foreign operations appropriations act.
              [70 FR 57192, Sept. 30, 2005]

            Subpart 229.4—Contract Clauses

              Source:
              62 FR 34125, June 24, 1997, unless otherwise noted.

              229.402
              Foreign contracts.

              229.402-70
              Additional provisions and clauses.
              (a) Use the basic or the alternate of the clause at 252.229-7001, Tax Relief, in solicitations and contracts when a contract will be awarded to a foreign concern for performance in a foreign country.
              (1) Use the basic clause in solicitations and contracts when the contract will be performed in a foreign country other than Germany.
              (2) Use the alternate I clause in solicitations and contracts when the contract will be performed in Germany.
              (b) Use the clause at 252.229-7002, Customs Exemptions (Germany), in solicitations and contracts requiring the import of U.S. manufactured products into Germany.
              (c)(1) Use the clause at 252.229-7003, Tax Exemptions (Italy), in solicitations and contracts when contract performance will be in Italy.
              (2) Use the provision at 252.229-7012, Tax Exemptions (Italy)—Representation, in solicitations that contain the clause at 252.229-7003, Tax Exemptions (Italy). If the solicitation includes the provision at FAR 52.204-7, do not separately list 252.229-7012 in the solicitation.

              (d) Use the clause at 252.229-7004, Status of Contractor as a Direct Contractor (Spain), in solicitations and contracts requiring the import into Spain of supplies for construction, development, maintenance, or operation of Spanish-American installations and facilities.

              (e)(1) Use the clause at 252.229-7005, Tax Exemptions (Spain). If the solicitation includes the provision at FAR 52.204-7, do not separately list 252.229-7013 in the solicitation., in solicitations and contracts when contract performance will be in Spain.
              (2) Use the provision at 252.229-7013, Tax Exemptions (Spain)—Representation, in solicitations that contain the clause at 252.229-7005, Tax Exemptions (Spain).
              (f) Use the clause at 252.229-7006, Value Added Tax Exclusion (United Kingdom), in solicitations and contracts when contract performance will be in the United Kingdom.
              (g) Use the clause at 252.229-7007, Verification of United States Receipt of Goods, in solicitations and contracts when contract performance will be in the United Kingdom.
              (h) Use the clause at 252.229-7008, Relief from Import Duty (United Kingdom), in solicitations issued and contracts awarded in the United Kingdom.
              (i) Use the clause at 252.229-7009, Relief from Customs Duty and Value Added Tax on Fuel (Passenger Vehicles) (United Kingdom), in solicitations issued and contracts awarded in the United Kingdom for fuels (gasoline or diesel) and lubricants used in passenger vehicles (excluding taxis).
              (j) Use the clause at 252.229-7010, Relief from Customs Duty on Fuel (United Kingdom), in solicitations issued and contracts awarded in the United Kingdom that require the use of fuels (gasoline or diesel) and lubricants in taxis or vehicles other than passenger vehicles.
              (k) Use the clause at 252.229-7014, Taxes—Foreign Contracts in Afghanistan, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, with performance in Afghanistan, unless the clause at 252.229-7015 is used.
              (l) Use the clause at 252.229-7015, Taxes—Foreign Contracts in Afghanistan (North Atlantic Treaty Organization Status of Forces Agreement), instead of the clause at 252.229-7014, Taxes—Foreign Contracts in Afghanistan, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, with performance in Afghanistan awarded on behalf of the North Atlantic Treaty Organization (NATO), which are governed by the NATO Status of Forces Agreement (SOFA), if approval from the Director, Defense Procurement and Acquisition Policy, Office of the Under Secretary of Defense for Acquisition, Technology, and Logistics, has been obtained prior to each use.
              [62 FR 34125, June 24, 1997, 77 FR 19130, Mar. 30, 2012; 78 FR 37989, June 25, 2013; 78 FR 40043, July 3, 2013; 79 FR 58700, Sept. 30, 2014; 80 FR 81469, Dec. 30, 2015]

            Subpart 229.70—Special Procedures for Overseas Contracts

              Source:
              70 FR 6375, Feb. 7, 2005, unless otherwise noted.

              Note:
              To obtain tax relief for overseas contracts, follow the procedures at PGI 229.70.

          Pt. 230
          PART 230—COST ACCOUNTING STANDARDS ADMINISTRATION

              Subpart 230.2—CAS Program Requirements
              Sec.
              230.201-5
              Waiver.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36406, July 31, 1991, unless otherwise noted.

            Subpart 230.2—CAS Program Requirements

              230.201-5
              Waiver.
              (a)(1)(A) The military departments and the Director, Defense Procurement and Acquisition Policy, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics)—
              (1) May grant CAS waivers that meet the conditions in FAR 30.201-5(b)(1); and
              (2) May grant CAS waivers that meet the conditions in FAR 30.201-5(b)(2), provided the cognizant Federal agency official granting the waiver determines that—
              (i) The property or services cannot reasonably be obtained under the contract, subcontract, or modification, as applicable, without granting the waiver;

              (ii) The price can be determined to be fair and reasonable without the application of the Cost Accounting Standards; and
              (iii) There are demonstrated benefits to granting the waiver.
              (B) Follow the procedures at PGI 230.201-5(a)(1) for submitting waiver requests to the Director, Defense Procurement and Acquisition Policy.
              (2) The military departments shall not delegate CAS waiver authority below the individual responsible for issuing contracting policy for the department.
              (e) By November 30th of each year, the military departments shall provide a report to the Director, Defense Procurement and Acquisition Policy, ATTN: DPAP/CPIC, of all waivers granted under FAR 30.201-5(a), during the previous fiscal year, for any contract, subcontract, or modification expected to have a value of $15,000,000 or more. See PGI 230.201-5(e) for format and guidance for the report. The Director, Defense Procurement and Acquisition Policy, will submit a consolidated report to the CAS Board and the congressional defense committees.
              [71 FR 69495, Dec. 1, 2006, as amended at 77 FR 52254, Aug. 29, 2012]

          Pt. 231
          PART 231—CONTRACT COST PRINCIPLES AND PROCEDURES

              Subpart 231.1—Applicability
              Sec.
              231.100
              Scope of subpart.
              231.100-70
              Contract clause.

              Subpart 231.2—Contracts With Commercial Organizations
              231.205
              Selected costs.
              231.205-1
              Public relations and advertising costs.
              231.205-6
              Compensation for personal services.
              231.205-18
              Independent research and development and bid and proposal costs.
              231.205-19
              Insurance and indemnification.
              231.205-22
              Legislative lobbying costs.
              231.205-70
              External restructuring costs.
              231.205-71
              Costs related to counterfeit electronic parts and suspect counterfeit electronic parts.

              Subpart 231.3—Contracts With Educational Institutions
              231.303
              Requirements.

              Subpart 231.6—Contracts With State, Local, and Federally Recognized Indian Tribal Governments
              231.603
              Requirements.

              Subpart 231.7—Contracts With Nonprofit Organizations
              231.703
              Requirements.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36408, July 31, 1991, unless otherwise noted.

            Subpart 231.1—Applicability

              231.100
              Scope of subpart.

              231.100-70
              Contract clause.
              Use the clause at 252.231-7000, Supplemental Cost Principles, in all solicitations and contracts which are subject to the principles and procedures described in FAR subpart 31.1, 31.2, 31.6, or 31.7.
              [59 FR 27672, May 27, 1994]

            Subpart 231.2—Contracts With Commercial Organizations

              231.205
              Selected costs.

              231.205-1
              Public relations and advertising costs.
              (e) See 225.7303-2(e) for allowability provisions affecting foreign military sales contracts.
              (f) Unallowable public relations and advertising costs also include monies paid to the Government associated with the leasing of Government equipment, including lease payments and reimbursement for support services, except for foreign military sales contracts as provided for at 225.7303-2.
              [74 FR 68382, Dec. 24, 2009]

              231.205-6
              Compensation for personal services.

              (f)(1) In accordance with Section 8122 of Pub. L. 104-61, and similar sections in subsequent Defense appropriations acts, costs for bonuses or other payments in excess of the normal salary paid by the contractor to an employee, that are part of restructuring costs associated with a business combination, are unallowable under DoD contracts funded by fiscal year 1996 or subsequent appropriations. This limitation does not apply to severance payments or early retirement incentive payments. (See 231.205-70(b) for the definitions of “business combination” and “restructuring costs.”)
              (m)(1) Fringe benefit costs that are contrary to law, employer-employee agreement, or an established policy of the contractor are unallowable.
              [57 FR 53600, Nov. 12, 1992, as amended at 58 FR 28469, May 13, 1993; 60 FR 2331, Jan. 9, 1995; 60 FR 61598, Nov. 30, 1995; 61 FR 7077, Feb. 26, 1996; 61 FR 36306, July 10, 1996; 61 FR 50454, Sept. 26, 1996; 61 FR 58490, Nov. 15, 1996; 61 FR 65479, Dec. 13, 1996; 62 FR 63036, Nov. 26, 1997; 63 FR 14641, Mar. 26, 1998; 78 FR 73453, Dec. 6, 2013]

              231.205-18
              Independent research and development and bid and proposal costs.
              (a) Definitions. As used in this subsection—
              (i) Covered contract means a DoD prime contract for an amount exceeding the simplified acquisition threshold, except for a fixed-price contract without cost incentives. The term also includes a subcontract for an amount exceeding the simplified acquisition threshold, except for a fixed-price subcontract without cost incentives under such a prime contract.
              (ii) Covered segment means a product division of the contractor that allocated more than $1,100,000 in independent research and development and bid and proposal (IR&D/B&P) costs to covered contracts during the preceding fiscal year. In the case of a contractor that has no product divisions, the term means that contractor as a whole. A product division of the contractor that allocated less than $1,100,000 in IR&D/B&P costs to covered contracts during the preceding fiscal year is not subject to the limitations in paragraph (c) of this subsection.
              (iii) Major contractor means any contractor whose covered segments allocated a total of more than $11,000,000 in IR&D/B&P costs to covered contracts during the preceding fiscal year. For purposes of calculating the dollar threshold amounts to determine whether a contractor meets the definition of “major contractor,” do not include contractor segments allocating less than $1,100,000 of IR&D/B&P costs to covered contracts during the preceding fiscal year.
              (c) Allowability. (i) Departments/agencies shall not supplement this regulation in any way that limits IR&D/B&P cost allowability.
              (ii) See 225.7303-2(c) for allowability provisions affecting foreign military sale contracts.
              (iii) For major contractors, the following limitations apply:
              (A) The amount of IR&D/B&P costs allowable under DoD contracts shall not exceed the lesser of—
              (1) Such contracts' allocable share of total incurred IR&D/B&O costs; or
              (2) The amount of incurred IR&D/B&P costs for projects having potential interest to DoD.
              (B) Allowable IR&D/B&P costs are limited to those for projects that are of potential interest to DoD, including activities intended to accomplish any of the following:
              (1) Enable superior performance of future U.S. weapon systems and components.
              (2) Reduce acquisition costs and life-cycle costs of military systems.
              (3) Strengthen the defense industrial and technology base of the United States.
              (4) Enhance the industrial competitiveness of the United States.
              (5) Promote the development of technologies identified as critical under 10 U.S.C. 2522.
              (6) Increase the development and promotion of efficient and effective applications of dual-use technologies.
              (7) Provide efficient and effective technologies for achieving such environmental benefits as: Improved environmental data gathering, environmental cleanup and restoration, pollution reduction in manufacturing, environmental conservation, and environmentally safe management of facilities.
              (C) For annual IR&D costs to be allowable—

              (1) The IR&D projects generating the costs must be reported to the Defense Technical Information Center (DTIC) using the DTIC's online input form and instructions at http://www.defenseinnovationmarketplace.mil/;

              (2) The inputs must be updated at least annually and when the project is completed; and
              (3) Copies of the input and updates must be made available for review by the cognizant administrative contracting officer (ACO) and the cognizant Defense Contract Audit Agency auditor to support the allowability of the costs.
              (iv) Contractors not meeting the threshold of a major contractor are encouraged to use the DTIC online input form to report IR&D projects to provide DoD with visibility into the technical content of the contractors' IR&D activities.
              (v) For major contractors, the ACO or corporate ACO shall—
              (A) Determine whether IR&D/B&P projects are of potential interest to DoD; and
              (B) Provide the results of the determination to the contractor.
              (vi) The cognizant contract administration office shall furnish contractors with guidance on financial information needed to support IR&D/B&P costs and on technical information needed from major contractors to support the potential interest to DoD determination (also see 242.771-3).
              [64 FR 8729, Feb. 23, 1999, as amended at 77 FR 4636, Jan. 30, 2012; 81 FR 78011, Nov. 4, 2016; 83 FR 42788, Aug. 24, 2018]

              231.205-19
              Insurance and indemnification.
              (e) In addition to the cost limitations in FAR 31.205-19(e), self-insurance and purchased insurance costs are subject to the requirements of the clauses at 252.217-7012, Liability and Insurance, and 252.228-7001, Ground and Flight Risk.
              [75 FR 32645, June 8, 2010]

              231.205-22
              Legislative lobbying costs.
              (a) Costs associated with preparing any material, report, list, or analysis on the actual or projected economic or employment impact in a particular State or congressional district of an acquisition program for which all research, development, testing, and evaluation has not been completed also are unallowable (10 U.S.C. 2249).
              [69 FR 63332, Nov. 1, 2004]

              231.205-70
              External restructuring costs.
              (a) Scope. This subsection—
              (1) Prescribes policies and procedures for allowing contractor external restructuring costs when savings would result for DoD; and
              (2) Implements 10 U.S.C. 2325.
              (b) Definitions. As used in this subsection:
              (1) Business combination means a transaction whereby assets or operations of two or more companies not previously under common ownership or control are combined, whether by merger, acquisition, or sale/purchase of assets.
              (2) External restructuring activities means restructuring activities occurring after a business combination that affect the operations of companies not previously under common ownership or control. They do not include restructuring activities occurring after a business combination that affect the operations of only one of the companies not previously under common ownership or control, or, when there has been no business combination, restructuring activities undertaken within one company. External restructuring activities are a direct outgrowth of a business combination. They normally will be initiated within 3 years of the business combination.
              (3) Restructuring activities means nonroutine, nonrecurring, or extraordinary activities to combine facilities, operations, or workforce, in order to eliminate redundant capabilities, improve future operations, and reduce overall costs. Restructuring activities do not include routine or ongoing repositionings and redeployments of a contractor's productive facilities or workforce (e.g., normal plant rearrangement or employee relocation), nor do they include other routine or ordinary activities charged as indirect costs that would otherwise have been incurred (e.g., planning and analysis, contract administration and oversight, or recurring financial and administrative support).
              (4) Restructuring costs means the costs, including both direct and indirect, of restructuring activities. Restructuring costs that may be allowed include, but are not limited to, severance pay for employees, early retirement incentive payments for employees, employee retraining costs, relocation expense for retained employees, and relocation and rearrangement of plant and equipment. For purposes of this definition, if restructuring costs associated with external restructuring activities allocated to DoD contracts are less than $2.5 million, the costs shall not be subject to the audit, review, and determination requirements of paragraph (c)(4) of this subsection; instead, the normal rules for determining cost allowability in accordance with FAR part 31 shall apply.
              (5) Restructuring savings means cost reductions, including both direct and indirect cost reductions, that result from restructuring activities. Reassignments of cost to future periods are not restructuring savings.
              (c) Limitations on cost allowability. Restructuring costs associated with external restructuring activities shall not be allowed unless—
              (1) Such costs are allowable in accordance with FAR part 31 and DFARS part 231;
              (2) An audit of projected restructuring costs and restructuring savings is performed;
              (3) The cognizant administrative contracting officer (ACO) reviews the audit report and the projected costs and projected savings, and negotiates an advance agreement in accordance with paragraph (d) of this subsection; and
              (4)(i) The official designated in paragraph (c)(4)(ii) of this subsection determines in writing that the audited projected savings, on a present value basis, for DoD resulting from the restructuring will exceed either—
              (A) The costs allowed by a factor of at least two to one; or
              (B) The costs allowed, and the business combination will result in the preservation of a critical capability that might otherwise be lost to DoD.
              (ii)(A) If the amount of restructuring costs is expected to exceed $25 million over a 5-year period, the designated official is the Under Secretary of Defense (Acquisition, Technology, and Logistics) or the Principal Deputy. This authority may not be delegated below the level of an Assistant Secretary of Defense.
              (B) For all other cases, the designated official is the Director of the Defense Contract Management Agency. The Director may not delegate this authority.
              (d) Procedures and ACO responsibilities. As soon as it is known that the contractor will incur restructuring costs for external restructuring activities, the cognizant ACO shall follow the procedures at PGI 231.205-70(d).
              (e) Information needed to obtain a determination. (1) The novation agreement (if one is required).
              (2) The contractor's restructuring proposal.
              (3) The proposed advance agreement.
              (4) The audit report.
              (5) Any other pertinent information.
              (6) The cognizant ACO's recommendation for a determination. This recommendation must clearly indicate one of the following, consistent with paragraph (c)(4)(i) of this subsection:
              (i) The audited projected savings for DoD will exceed the costs allowed by a factor of at least two to one on a present value basis.
              (ii) The business combination will result in the preservation of a critical capability that might otherwise be lost to DoD, and the audited projected savings for DoD will exceed the costs allowed on a present value basis.
              (f) Contracting officer responsibilities. (1) The contracting officer, in consultation with the cognizant ACO, should consider including a repricing clause in noncompetitive fixed-price contracts that are negotiated during the period between—
              (i) The time a business combination is announced; and
              (ii) The time the contractor's forward pricing rates are adjusted to reflect the impact of restructuring.

              (2) The decision to use a repricing clause will depend upon the particular circumstances involved, including—

              (i) When the restructuring will take place;
              (ii) When restructuring savings will begin to be realized;
              (iii) The contract performance period;
              (iv) Whether the contracting parties are able to make a reasonable estimate of the impact of restructuring on the contract; and
              (v) The size of the potential dollar impact of restructuring on the contract.
              (3) If the contracting officer decides to use a repricing clause, the clause must provide for a downward-only price adjustment to ensure that DoD receives its appropriate share of restructuring net savings.
              [63 FR 7309, Feb. 13, 1998; 63 FR 12862, Mar. 16, 1998, as amended at 64 FR 18828, Apr. 16, 1999; 65 FR 39705, June 27, 2000; 68 FR 7440, Feb. 14, 2003; 69 FR 63332, Nov. 1, 2004; 70 FR 43075, July 26, 2005]

              231.205-71
              Costs related to counterfeit electronic parts and suspect counterfeit electronic parts.
              (a) Scope. This section implements the requirements of section 818(c)(2), National Defense Authorization Act for Fiscal Year 2012 (Pub. L. 112-81), as modified by section 833, National Defense Authorization Act for Fiscal Year 2013 (Pub. L. 112-239), and section 885 of the National Defense Authorization Act for Fiscal Year 2016 (Pub. L. 114-92).
              (b) The costs of counterfeit electronic parts and suspect counterfeit electronic parts and the costs of rework or corrective action that may be required to remedy the use or inclusion of such parts are unallowable, unless—
              (1) The contractor has an operational system to detect and avoid counterfeit electronic parts and suspect counterfeit electronic parts that has been reviewed and approved by DoD pursuant to 244.303(b);
              (2) The counterfeit electronic parts or suspect counterfeit electronic parts are Government-furnished property as defined in FAR 45.101 or were obtained by the contractor in accordance with the clause at 252.246-7008, Sources of Electronic Parts; and
              (3) The contractor—
              (i) Becomes aware of the counterfeit electronic parts or suspect counterfeit electronic parts through inspection, testing, and authentication efforts of the contractor or its subcontractors; through a Government Industry Data Exchange Program (GIDEP) alert; or by other means; and
              (ii) Provides timely (i.e., within 60 days after the contractor becomes aware) written notice to—
              (A) The cognizant contracting officer(s); and
              (B) GIDEP (unless the contractor is a foreign corporation or partnership that does not have an office, place of business, or fiscal paying agent in the United States; or the counterfeit electronic part or suspect counterfeit electronic part is the subject of an on-going criminal investigation).
              [81 FR 59515, Aug. 30, 2016]

            Subpart 231.3—Contracts With Educational Institutions

              231.303
              Requirements.
              (1) Pursuant to section 841 of the National Defense Authorization Act for Fiscal Year 1994 (Pub. L. 103-160), no limitation may be placed on the reimbursement of otherwise allowable indirect costs incurred by an institution of higher education under a DoD contract awarded on or after November 30, 1993, unless that same limitation is applied uniformly to all other organizations performing similar work under DoD contracts. The 26 percent limitation imposed on administrative indirect costs by OMB Circular No. A-21 shall not be applied to DoD contracts awarded on or after November 30, 1993, to institutions of higher education because the same limitation is not applied to other organizations performing similar work.

              (2) The cognizant administrative contracting officer may waive the prohibition in 231.303(1) if the governing body of the institution of higher education requests the waiver to simplify the institution's overall management of DoD cost reimbursements under DoD contracts.

              (3) Under 10 U.S.C. 2249, the costs cited in 231.205-22(a) are unallowable.
              [59 FR 26144, May 19, 1994, as amended at 60 FR 2331, Jan. 9, 1995; 61 FR 36306, July 10, 1996; 62 FR 47155, Sept. 8, 1997; 63 FR 14641, Mar. 26, 1998]

            Subpart 231.6—Contracts With State, Local, and Federally Recognized Indian Tribal Governments

              231.603
              Requirements.
              Under 10 U.S.C. 2249, the costs cited in 231.205-22(a) are unallowable.
              [61 FR 36306, July 10, 1996, as amended at 62 FR 47155, Sept. 8, 1997; 63 FR 14641, Mar. 26, 1998]

            Subpart 231.7—Contracts With Nonprofit Organizations

              231.703
              Requirements.
              Under 10 U.S.C. 2249, the costs cited in 231.205-22(a) are unallowable.
              [61 FR 36306, July 10, 1996, as amended at 62 FR 47155, Sept. 8, 1997; 63 FR 14641, Mar. 26, 1998]

          Pt. 232
          PART 232—CONTRACT FINANCING

            Sec.
            232.001
            Definitions.
            232.006
            Reduction or suspension of contract payments upon finding of fraud.
            232.006-5
            Reporting.
            232.007
            Contract financing payments.
            232.009
            Providing accelerated payments to small business subcontractors.
            232.009-1
            General.
            232.009-2
            Contract clause.
            232.070
            Responsibilities.
            232.071
            [Reserved]
            232.072
            Financial responsibility of contractors.
            232.072-1
            Required financial reviews.
            232.072-2
            Appropriate information.
            232.072-3
            Cash flow forecasts.

              Subpart 232.1—Non-Commercial Item Purchase Financing
              232.102
              Description of contract financing methods.
              232.102-70
              Provisional delivery payments.
              232.104
              Providing contract financing.

              Subpart 232.2—Commercial Item Purchase Financing
              232.202-4
              Security for Government financing.
              232.206
              Solicitation provisions and contract clauses.

              Subpart 232.3—Loan Guarantees for Defense Production
              232.302
              Authority.

              Subpart 232.4—Advance Payments for Non-Commercial Items
              232.404
              Exclusions.
              232.409
              Contracting officer action.
              232.409-1
              Recommendation for approval.
              232.410
              Findings, determination, and authorization.
              232.412
              Contract clause.
              232.412-70
              Additional clauses.
              232.470
              Advance payment pool.

              Subpart 232.5—Progress Payments Based on Costs
              232.501
              General.
              232.501-1
              Customary progress payment rates.
              232.501-2
              Unusual progress payments.
              232.501-3
              Contract price.
              232.502
              Preaward matters.
              232.502-4
              Contract clauses.
              232.502-4-70
              Additional clauses.
              232.503
              Postaward matters.
              232.503-6
              Suspension or reduction of payments.
              232.503-15
              Application of Government title terms.

              Subpart 232.6—Contract Debts
              232.602
              Responsibilities.
              232.603
              Debt determination.
              232.604
              Demand for payment.
              232.610
              Compromising debts.
              232.611
              Contract clause.
              232.670
              Transfer of responsibility for debt collection.
              232.671
              Bankruptcy reporting.

              Subpart 232.7—Contract Funding
              232.702
              Policy.
              232.703
              Contract funding requirements.
              232.703-1
              General.
              232.703-3
              Contracts crossing fiscal years.
              232.703-70
              Military construction appropriations act restriction.
              232.704
              Limitation of cost or funds.
              232.704-70
              Incrementally funded fixed-price contracts.
              232.705
              Contract clauses.
              232.705-70
              Clause for limitation of Government's obligation.

              Subpart 232.8—Assignment of Claims
              232.803
              Policies.
              232.805
              Procedure.
              232.806
              Contract clause.

              Subpart 232.9—Prompt Payment
              232.901
              Applicability.
              232.903
              Responsibilities.
              232.904
              Determining payment due dates.
              232.905
              Payment documentation and process.
              232.906
              Making payments.
              232.908
              Contract clauses.

              Subpart 232.10—Performance-Based Payments
              232.1001
              Policy.
              232.1003-70
              Criteria for use.
              232.1004
              Procedures.
              232.1005-70
              Solicitation provisions and contract clauses.

              Subpart 232.11—Electronic Funds Transfer
              232.1110
              Solicitation provision and contract clauses.

              Subpart 232.70—Electronic Submission and Processing of Payment Requests and Receiving Reports
              232.7000
              Scope of subpart.
              232.7001
              Definitions.
              232.7002
              Policy.
              232.7003
              Procedures.
              232.7004
              Contract clauses.

              Subpart 232.71—Levies on Contract Payments
              232.7100
              Scope of subpart.
              232.7101
              Policy and procedures.
              232.7102
              Contract clause.

              Subpart 232.72—Payment in Local Currency (Afghanistan)
              232.7200
              Scope of subpart.
              232.7201
              Policy and procedures.
              232.7202
              Solicitation provision.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36409, July 31, 1991, unless otherwise noted.

            232.001
            Definitions.

              Incremental funding means the partial funding of a contract or an exercised option, with additional funds anticipated to be provided at a later time.
            [71 FR 18673, Apr. 12, 2006]

            232.006
            Reduction or suspension of contract payments upon finding of fraud.

            232.006-5
            Reporting.
            Departments and agencies in accordance with department/agency procedures, shall prepare and submit to the Under Secretary of Defense (Acquisition, Technology, and Logistics), through the Director of Defense Procurement and Acquisition Policy, annual reports (Report Control Symbol DD-AT&L(A) 1891) containing the information required by FAR 32.006-5.
            [63 FR 11535, Mar. 9, 1998, as amended at 65 FR 39705, June 27, 2000; 68 FR 7440, Feb. 14, 2003]

            232.007
            Contract financing payments.
            (a) DoD policy is to make contract financing payments as quickly as possible. Generally, the contracting officer shall insert the standard due dates of 7 days for progress payments, and 14 days for performance-based payments and interim payments on cost-type contracts, in the appropriate paragraphs of the respective payment clauses. For interim payments on cost-reimbursement contracts for services, see 232.906(a)(i).
            (b) The contracting officer should coordinate contract financing payment terms with offices that will be involved in the payment process to ensure that specified terms can be met. Where justified, the contracting officer may insert a due date greater than, but not less than, the standard. In determining payment terms, consider—
            (i) Geographical separation;
            (ii) Workload;
            (iii) Contractor ability to submit a proper request; and
            (iv) Other factors that could affect timing of payment.
            [70 FR 75412, Dec. 20, 2005]

            232.009
            Providing accelerated payments to small business subcontractors.

            232.009-1
            General.

            Section 852 of the National Defense Authorization Act for Fiscal Year 2019 (Pub. L. 115-232) requires DoD to provide accelerated payments to small business contractors and subcontractors, to the fullest extent permitted by law, with a goal of 15 days.
            [85 FR 19697, Apr. 8, 2020]

            232.009-2
            Contract clause.
            Use the clause at 252.232-7017, Accelerating Payments to Small Business Subcontractors—Prohibition on Fees and Consideration, in solicitations and contracts, including those using FAR part 12 procedures for the acquisition of commercial items, that include the clause at FAR 52.232-40, Providing Accelerated Payments to Small Business Subcontractors.
            [85 FR 19697, Apr. 8, 2020]

            232.070
            Responsibilities.
            (a) The Director of Defense Procurement and Acquisition Policy, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics) (OUSD(AT&L)DPAP) is responsible for ensuring uniform administration of DoD contract financing, including DoD contract financing policies and important related procedures. Agency discretion under FAR part 32 is at the DoD level and is not delegated to the departments and agencies. Proposals by the departments and agencies, to exercise agency discretion, shall be submitted to OUSD(AT&L)DPAP.
            (b) Departments and agencies are responsible for their day-to-day contract financing operations. Refer specific cases involving financing policy or important procedural issues to OUSD(AT&L)DPAP for consideration through the department/agency Contract Finance Committee members (also see Subpart 201.4 for deviation request and approval procedures).
            (c) See PGI 232.070(c) for information on department/agency contract financing offices.
            [63 FR 11535, Mar. 9, 1998, as amended at 65 FR 39705, June 27, 2000; 68 FR 7440, Feb. 14, 2003; 70 FR 75412, Dec. 20, 2005; 72 FR 20765, Apr. 26, 2007]

            232.071
            [Reserved]

            232.072
            Financial responsibility of contractors.
            Use the policies and procedures in this section in determining the financial capability of current or prospective contractors.
            [63 FR 11535, Mar. 9, 1998]

            232.072-1
            Required financial reviews.
            The contracting officer shall perform a financial review when the contracting officer does not otherwise have sufficient information to make a positive determination of financial responsibility. In addition, the contracting officer shall consider performing a financial review—
            (a) Prior to award of a contract, when—
            (1) The contractor is on a list requiring preaward clearance or other special clearance before award;
            (2) The contractor is listed on the Consolidated List of Contractors Indebted to the Government (Hold-Up List), or is otherwise known to be indebted to the Government;
            (3) The contractor may receive Government assets such as contract financing payments or Government property;
            (4) The contractor is experiencing performance difficulties on other work; or
            (5) The contractor is a new company or a new supplier of the item.
            (b) At periodic intervals after award of a contract, when—
            (1) Any of the conditions in paragraphs (a)(2) through (a)(5) of this subsection are applicable; or
            (2) There is any other reason to question the contractor's ability to finance performance and completion of the contract.
            [63 FR 11535, Mar. 9, 1998]

            232.072-2
            Appropriate information.

            (a) The contracting officer shall obtain the type and depth of financial and other information that is required to establish a contractor's financial capability or disclose a contractor's financial condition. While the contracting officer should not request information that is not necessary for protection for the Government's interests, the contracting officer must insist upon obtaining the information that is necessary. The unwillingness or inability of a contractor to present reasonably requested information in a timely manner, especially information that a prudent business person would be expected to have and to use in the professional management of a business, may be a material fact in the determination of the contractor's responsibility and prospects for contract completion.
            (b) The contracting officer shall obtain the following information to the extent required to protect the Government's interest. In addition, if the contracting officer concludes that information not listed in paragraphs (b)(1) through (b)(10) of this subsection is required to comply with 232.072-1, that information should be requested. The information must be for the person(s) who are legally liable for contract performance. If the contractor is not a corporation, the contracting officer shall obtain the required information for each individual/joint venturer/partner:
            (1) Balance sheet and income statement—
            (i) For the current fiscal year (interim);
            (ii) For the most recent fiscal year and, preferably, for the 2 preceding fiscal years. These should be certified by an independent public accountant or by an appropriate officer of the firm; and
            (iii) Forecasted for each fiscal year for the remainder of the period of contract performance.
            (2) Summary history of the contractor and its principal managers, disclosing any previous insolvencies—corporate or personal, and describing its products or services.
            (3) Statement of all affiliations disclosing—
            (i) Material financial interests of the contractor;
            (ii) Material financial interests in the contractor;
            (iii) Material affiliations of owners, officers, directors, major stockholders; and
            (iv) The major stockholders if the contractor is not a widely-traded, publicly-held corporation.
            (4) Statement of all forms of compensation to each officer, manager, partner, joint venturer, or proprietor, as appropriate—
            (i) Planned for the current year;
            (ii) Paid during the past 2 years; and
            (iii) Deferred to future periods.
            (5) Business base and forecast that—
            (i) Shows, by significant markets, existing contracts and outstanding offers, including those under negotiation; and
            (ii) Is reconcilable to indirect cost rate projections.
            (6) Cash forecast for the duration of the contract (see 232.072-3).
            (7) Financing arrangement information that discloses—
            (i) Availability of cash to finance contract performance;
            (ii) Contractor's exposure to financial crisis from creditor's demands;
            (iii) Degree to which credit security provisions could conflict with Government title terms under contract financing;
            (iv) Clearly stated confirmations of credit with no unacceptable qualifications;
            (v) Unambiguous written agreement by a creditor if credit arrangements include deferred trade payments or creditor subordinations/repayment suspensions.
            (8) Statement of all state, local, and Federal tax accounts, including special mandatory contributions, e.g., environmental superfund.
            (9) Description and explanation of the financial effect of issues such as—
            (i) Leases, deferred purchase arrangements, or patent or royalty arrangements;
            (ii) Insurance, when relevant to the contract;
            (iii) Contemplated capital expenditures, changes in equity, or contractor debt load;
            (iv) Pending claims either by or against the contractor;
            (v) Contingent liabilities such as guarantees, litigation, environmental, or product liabilities;
            (vi) Validity of accounts receivable and actual value of inventory, as assets; and
            (vii) Status and aging of accounts payable.
            (10) Significant ratios such as—
            (i) Inventory to annual sales;
            (ii) Inventory to current assets;
            (iii) Liquid assets to current assets;
            (iv) Liquid assets to current liabilities;
            (v) Current assets to current liabilities; and

            (vi) Net worth to net debt.
            [63 FR 11535, Mar. 9, 1998]

            232.072-3
            Cash flow forecasts.
            (a) A contractor must be able to sustain a sufficient cash flow to perform the contract. When there is doubt regarding the sufficiency of a contractor's cash flow, the contracting officer should require the contractor to submit a cash flow forecast covering the duration of the contract.
            (b) A contractor's inability of refusal to prepare and provide cash flow forecasts or to reconcile actual cash flow with previous forecasts is a strong indicator of serious managerial deficiencies or potential contract cost or performance problems.
            (c) Single or one-time cash flow forecasts are of limited forecasting power. As such, they should be limited to preaward survey situations. Reliability of cash flow forecasts can be established only by comparing a series of previous actual cash flows with the corresponding forecasts and examining the causes of any differences.
            (d) Cash flow forecasts must—
            (1) Show the origin and use of all material amounts of cash within the entire business unit responsible for contract performance, period by period, for the length of the contract (or until the risk of a cash crisis ends); and
            (2) Provide an audit trail to the data and assumptions used to prepare it.
            (e) Cash flow forecasts can be no more reliable than the assumptions on which they are based. Most important of these assumptions are—
            (1) Estimated amounts and timing of purchases and payments for materials, parts, components, subassemblies, and services;
            (2) Estimated amounts and timing of payments of purchase or production of capital assets, test facilities, and tooling;
            (3) Amounts and timing of fixed cash charges such as debt installments, interest, rentals, taxes, and indirect costs;
            (4) Estimated amounts and timing of payments for projected labor, both direct and indirect;
            (5) Reasonableness of projected manufacturing and production schedules;
            (6) Estimated amounts and timing of billings to customers (including progress payments), and customer payments;
            (7) Estimated amounts and timing of cash receipts from lenders or other credit sources, and liquidation of loans; and
            (8) Estimated amount and timing of cash receipt from other sources.
            (f) The contracting officer should review the assumptions underlying the cash flow forecasts. In determining whether the assumptions are reasonable and realistic, the contracting officer should consult with—
            (1) The contractor;
            (2) Government personnel in the areas of finance, engineering, production, cost, and price analysis; or
            (3) Prospective supply, subcontract, and loan or credit sources.
            [63 FR 11536, Mar. 9, 1998]

            Subpart 232.1—Non-Commercial Item Purchase Financing

              Source:
              63 FR 11536, Mar. 9, 1998, unless otherwise noted.

              232.102
              Description of contract financing methods.
              (e)(2) Progress payments based on percentage or stage of completion are authorized only for contracts for construction (as defined in FAR 36.102), shipbuilding, and ship conversion, alteration, or repair. However, percentage or state of completion methods of measuring contractor performance may be used for performance-based payments in accordance with FAR Subpart 32.10.

              232.102-70
              Provisional delivery payments.
              (a) The contracting officer may establish provisional delivery payments to pay contractors for the costs of supplies and services delivered to and accepted by the Government under the following contract actions if undefinitized:
              (1) Letter contracts contemplating a fixed-price contract.
              (2) Orders under basic ordering agreements.

              (3) Spares provisioning documents annexed to contracts.
              (4) Unpriced equitable adjustments on fixed-price contracts.
              (5) Orders under indefinite-delivery contracts.
              (b) Provisional delivery payments shall be—
              (1) Used sparingly;
              (2) Priced conservatively; and
              (3) Reduced by liquidating previous progress payments in accordance with the Progress Payments clause.
              (c) Provisional delivery payments shall not—
              (1) Include profit;
              (2) Exceed funds obligated for the undefinitized contract action; or
              (3) Influence the definitized contract price.

              232.104
              Providing contract financing.
              For fixed-price contracts with a period of performance in excess of a year that meet the dollar thresholds established in FAR 32.104(d), and for solicitations expected to result in such contracts, in lieu of the requirement at FAR 32.104(d)(1)(ii) for the contractor to demonstrate actual financial need or the unavailability of private financing, DoD has determined that—
              (1) The use of customary contract financing (see FAR 32.113), other than loan guarantees and advance payments, is in DoD's best interest; and
              (2) Further justification of its use in individual acquisitions is unnecessary.
              [81 FR 93842, Dec. 22, 2016]

            Subpart 232.2—Commercial Item Purchase Financing

              Source:
              63 FR 11537, Mar. 9, 1998, unless otherwise noted.

              232.202-4
              Security for Government financing.
              (a)(2) When determining whether an offeror's financial condition is adequate security, see 232.072-2 and 232.072-3 for guidance. It should be noted that an offeror's financial condition may be sufficient to make the contractor responsible for award purposes, but may not be adequate security for commercial contract financing.

              232.206
              Solicitation provisions and contract clauses.
              (f) Prompt payment for commercial purchase payments. The contracting officer shall incorporate the following standard prompt payment terms for commercial item contract financing:
              (i) Commercial advance payments: The contractor entitlement date specified in the contract, or 30 days after receipt by the designated billing office of a proper request for payment, whichever is later.
              (ii) Commercial interim payments: The contractor entitlement date specified in the contract, or 14 days after receipt by the designated billing office of a proper request for payment, whichever is later. The prompt payment standards for commercial delivery payments shall be the same as specified in FAR Subpart 32.9 for invoice payments for the item delivered.
              (g) Installment payment financing for commercial items. Installment payment financing shall not be used for DoD contracts, unless market research has established that this form of contract financing is both appropriate and customary in the commercial marketplace. When installment payment financing is used, the contracting officer shall use the ceiling percentage of contract price that is customary in the particular marketplace (not to exceed the maximum rate established in FAR 52.232-30).
              [63 FR 11537, Mar. 9, 1998, as amended at 70 FR 75413, Dec. 20, 2005]

            Subpart 232.3—Loan Guarantees for Defense Production

              232.302
              Authority.
              (a) The use of guaranteed loans as a contract financing mechanism requires the availability of certain congressional authority. The DoD has not requested such authority in recent years, and none is now available.

            Subpart 232.4—Advance Payments for Non-Commercial Items

              232.404
              Exclusions.
              (a)(9) The requirements of FAR subpart 32.4 do not apply to advertisements in high school and college publications for military recruitment efforts under 10 U.S.C. 503 when the contract cost does not exceed the micro-purchase threshold.
              [56 FR 36409, July 31, 1991, as amended at 70 FR 75413, Dec. 20, 2005; 71 FR 75892, Dec. 19, 2006; 75 FR 45074, Aug. 2, 2010]

              232.409
              Contracting officer action.

              232.409-1
              Recommendation for approval.
              Follow the procedures at PGI 232.409-1 for preparation of the documents required by FAR 32.409-1(e) and (f).
              [70 FR 75413, Dec. 20, 2005]

              232.410
              Findings, determination, and authorization.
              If an advance payment procedure is used without a special bank account, follow the procedures at PGI 232.410.
              [70 FR 75413, Dec. 20, 2005]

              232.412
              Contract clause.

              232.412-70
              Additional clauses.
              (a) Use the clause at 252.232-7000, Advance Payment Pool, in any contract that will be subject to the terms of an advance payment pool agreement with a nonprofit organization or educational institution. Normally, use the clause in all cost reimbursement type contracts with the organization or institution.
              (b) Use the clause at 252.232-7005, Reimbursement of Subcontractor Advance Payments-DoD Pilot Mentor-Protégé Program, when advance payments will be provided by the contractor to a subcontractor pursuant to an approved mentor-protégé agreement (see subpart 219.71).
              [56 FR 36409, July 31, 1991, as amended at 56 FR 67217, Dec. 30, 1991; 85 FR 19699, Apr. 8, 2020]

              232.470
              Advance payment pool.
              (a) An advance payment pool agreement—
              (1) Is a means of financing the performance of more than one contract held by a single contractor;
              (2) Is especially convenient for the financing of cost-type contracts with nonprofit educational or research institutions for experimental or research and development work when several contracts require financing by advance payments. When appropriate, pooled advance payments may also be used to finance other types of contracts held by a single contractor; and
              (3) May be established—
              (i) Without regard to the number of appropriations involved;
              (ii) To finance contracts for one or more department(s) or contracting activity(ies); or
              (iii) In addition to any other advance payment pool agreement at a single contractor location when it is more convenient or otherwise preferable to have more than one agreement.

            Subpart 232.5—Progress Payments Based on Costs

              232.501
              General.

              232.501-1
              Customary progress payment rates.
              (a) The customary progress payment rates for DoD contracts, including contracts that contain foreign military sales (FMS) requirements, are 80 percent for large business concerns and 90 percent for small business concerns.
              [79 FR 61582, Oct. 14, 2014]

              232.501-2
              Unusual progress payments.
              Follow the procedures at PGI 232.501-2 for approval of unusual progress payments.
              [70 FR 75413, Dec. 20, 2005]

              232.501-3
              Contract price.
              (b) The contracting officer may approve progress payments when the contract price exceeds the funds obligated under the contract, provided the contract limits the Government's liability to the lesser of—

              (i) The applicable rate (i.e., the lower of the progress payment rate, the liquidation rate, or the loss-ratio adjusted rate); or

              (ii) 100 percent of the funds obligated.
              [56 FR 36409, July 31, 1991, as amended at 65 FR 39722, June 27, 2000; 70 FR 75413, Dec. 20, 2005]

              232.502
              Preaward matters.

              232.502-4-70
              Additional clauses.
              (a) Use the clause at 252.232-7002, Progress Payments for Foreign Military Sales Acquisitions, in solicitations and contracts that—
              (i) Contain FMS requirements; and
              (ii) Provide for progress payments.
              (b) Use the clause at 252.232-7004, DoD Progress Payment Rates, instead of Alternate I of the clause at FAR 52.232-16, if the contractor is a small business concern.
              [56 FR 36409, July 31, 1991, as amended at 56 FR 67217, Dec. 30, 1991; 64 FR 8731, Feb. 23, 1999; 65 FR 39722, June 27, 2000; 66 FR 49865, Oct. 1, 2001; 79 FR 61582, Oct. 14, 2014]

              232.503
              Postaward matters.

              232.503-6
              Suspension or reduction of payments.
              (b) Contractor noncompliance. See also 242.7503.
              (g) Loss contracts. Use the following loss ratio adjustment procedures for making adjustments required by FAR 32.503-6(f) and (g)—
              (i) Except as provided in paragraph (g)(ii) of this subsection, the contracting officer must prepare a supplementary analysis of the contractor's request for progress payments and calculate the loss ratio adjustment using the procedures in FAR 32.503-6(g).
              (ii) The contracting officer may request the contractor to prepare the supplementary analysis as an attachment to the progress payment request when the contracting officer determines that the contractor's methods of estimating the “Costs to Complete” are reliable, accurate, and not susceptible to improper influences.
              (iii) To maintain an audit trail and permit verification of calculations, do not make the loss ratio adjustments by altering or replacing data on the contractor's original request for progress payment (SF 1443, Contractor's Request for Progress Payment, or computer generated equivalent).
              [56 FR 36409, July 31, 1991, as amended at 60 FR 29499, June 5, 1995; 65 FR 39722, June 27, 2000]

              232.503-15
              Application of Government title terms.
              (d) An administrative contracting officer (ACO) determination that the contractor's material management and accounting system conforms to the system criteria at 252.242-7004(d)(7) constitutes the contracting officer approval requirement of FAR 32.503-15(d). Prior to granting blanket approval of cost transfers between contracts, the ACO should determine that—
              (i) The contractor retains records of the transfer activity that took place in the prior month;
              (ii) The contractor prepares, at least monthly, a summary of the transfer activity that took place in the prior month; and
              (iii) The summary report includes as a minimum, the total number and dollar value of transfers.
              [56 FR 36409, July 31, 1991, as amended at 57 FR 42632, Sept. 15, 1992; 70 FR 75413, Dec. 20, 2005; 77 FR 11365, Feb. 24, 2012]

            Subpart 232.6—Contract Debts

              232.602
              Responsibilities.
              (b) Disbursing officers are those officials designated to make payments under a contract or to receive payments of amounts due under a contract. The disbursing officer is responsible for determining the amount and collecting contract debts whenever overpayments or erroneous payments have been made. The disbursing officer also has primary responsibility when the amounts due and dates for payment are contained in the contract, and a copy of the contract has been furnished to the disbursing officer with notice to collect as amounts become due.
              [56 FR 36409, July 31, 1991, as amended at 70 FR 75413, Dec. 20, 2005. Redesignated and amended at 80 FR 58633, Sept. 30, 2015]

              232.603
              Debt determination.
              When transferring a case to the contract financing office, follow the procedures at PGI 232.603.
              [80 FR 58633, Sept. 30, 2015]

              232.604
              Demand for payment.
              When issuing a demand for payment of a contract debt, follow the procedures at PGI 232.604.
              [80 FR 58633, Sept. 30, 2015]

              232.610
              Compromising debts.
              Only the department/agency contract financing offices (see PGI 232.070(c)) are authorized to compromise debts covered by this subpart. 232.617
              [80 FR 58633, Sept. 30, 2015]

              232.611
              Contract clause.
              (a) The Director of Defense Procurement and Acquisition Policy, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics), may exempt the contracts in FAR 32.611(a)(2) through (5) and other contracts, in exceptional circumstances, from the administrative interest charges required by this subpart.
              (7) Other exceptions are—
              (A) Contracts for instructions of military or ROTC personnel at civilian schools, colleges, and universities;
              (B) Basic agreements with telephone companies for communications services and facilities, and purchases under such agreements; and
              (C) Transportation contracts with common carriers for common carrier services.
              [70 FR 75413, Dec. 20, 2005. Redesignated and amended at 80 FR 58633, Sept. 30, 2015]

              232.670
              Transfer of responsibility for debt collection.
              Follow the procedures at PGI 232.670 for transferring responsibility for debt collection.
              [70 FR 75413, Dec. 20, 2005]

              232.671
              Bankruptcy reporting.
              Follow the procedures at PGI 232.671 for bankruptcy reporting.
              [70 FR 75413, Dec. 20, 2005]

            Subpart 232.7—Contract Funding

              Source:
              58 FR 46092, Sept. 1, 1993, unless otherwise noted.

              232.702
              Policy.
              Fixed-price contracts shall be fully funded except as permitted by 232.703-1.

              232.703
              Contract funding requirements.

              232.703-1
              General.
              (1) A fixed-price contract may be incrementally funded only if—
              (i) The contract (excluding any options) or any exercised option—
              (A) Is for severable services;
              (B) Does not exceed one year in length; and
              (C) Is incrementally funded using funds available (unexpired) as of the date the funds are obligated; or
              (ii) The contract uses funds available from multiple (two or more) fiscal years and—
              (A) The contract is funded with research and development appropriations; or
              (B) Congress has otherwise authorized incremental funding.
              (2) An incrementally funded fixed-price contract shall be fully funded as soon as funds are available.
              [71 FR 18673, Apr. 12, 2006]

              232.703-3
              Contracts crossing fiscal years.
              (b) The contracting officer may enter into a contract, exercise an option, or place an order under a contract for severable services for a period that begins in one fiscal year and ends in the next fiscal year if the period of the contract awarded, option exercised, or order placed does not exceed 1 year (10 U.S.C. 2410a).
              [64 FR 28110, May 25, 1999]

              232.703-70
              Military construction appropriations act restriction.
              Annual military construction appropriations acts restrict the use of funds appropriated by the acts for payments under cost-plus-fixed-fee contracts (see 216.306(c)).
              [61 FR 7744, Feb. 29, 1996]

              232.704
              Limitation of cost or funds.

              232.704-70
              Incrementally funded fixed-price contracts.
              (a) Upon receipt of the contractor's notice under paragraph (c) of the clause at 252.232-7007, Limitation of Government's Obligation, the contracting officer shall promptly provide written notice to the contractor that the Government is—
              (1) Allotting additional funds for continued performance and increasing the Government's limitation of obligation in a specified amount;
              (2) Terminating the contract; or
              (3) Considering whether to allot additional funds; and
              (i) The contractor is entitled by the contract terms to stop work when the Government's limitation of obligation is reached; and
              (ii) Any costs expended beyond the Government's limitation of obligation are at the contractor's risk.
              (b) Upon learning that the contract will receive no further funds, the contracting officer shall promptly give the contractor written notice of the Government's decision and terminate for the convenience of the Government.
              (c) The contracting officer shall ensure that, in accordance with paragraph (b) of the clause at 252.232-7007, Limitation of Government's Obligation, sufficient funds are allotted to the contract to cover the total amount payable to the contractor in the event of termination for the convenience of the Government.

              232.705
              Contract clauses.

              232.705-70
              Clause for limitation of Government's obligation.
              Use the clause at 252.232-7007, Limitation of Government's Obligation, in solicitations and resultant incrementally funded fixed-price contracts. The contracting officer may revise the contractor's notification period, in paragraph (c) of the clause, from “ninety” to “thirty” or “sixty” days, as appropriate.

            Subpart 232.8—Assignment of Claims

              232.803
              Policies.
              (b) Only contracts for personal services may prohibit the assignment of claims.

              (d) Pursuant to 41 U.S.C. 6305, and in accordance with Presidential delegation dated October 3, 1995, Secretary of Defense delegation dated February 5, 1996, and Under Secretary of Defense (Acquisition, Technology, and Logistics) delegation dated February 23, 1996, the Director of Defense Procurement determined on May 10, 1996, that a need exists for DoD to agree not to reduce or set off any money due or to become due under the contract when the proceeds under the contract have been assigned in accordance with the Assignment of Claims provision of the contract. This determination was published in the Federal Register on June 11, 1996, as required by law. Nevertheless, if departments/agencies decide it is in the Government's interests, or if the contracting officer makes a determination in accordance with FAR 32.803(d) concerning a significantly indebted offeror, they may exclude the no-setoff commitment.
              [56 FR 36409, July 31, 1991, as amended at 61 FR 50454, Sept. 26, 1996; 65 FR 39706, June 27, 2000; 76 FR 58137, Sept. 20, 2011]

              232.805
              Procedure.
              (b) The assignee shall forward—
              (i) To the administrative contracting officer (ACO), a true copy of the instrument of assignment and an original and three copies of the notice of assignment. The ACO shall acknowledge receipt by signing and dating all copies of the notice of assignment and shall—
              (A) File the true copy of the instrument of assignment and the original of the notice in the contract file;
              (B) Forward two copies of the notice to the disbursing officer of the payment office cited in the contract;
              (C) Return a copy of the notice to the assignee; and
              (D) Advise the contracting officer of the assignment.

              (ii) To the surety or sureties, if any, a true copy of the instrument of assignment and an original and three copies of the notice of assignment. The surety shall return three acknowledged copies of the notice to the assignee, who shall forward two copies to the disbursing officer designated in the contract.
              (iii) To the disbursing officer of the payment office cited in the contract, a true copy of the instrument of assignment and an original and one copy of the notice of assignment. The disbursing officer shall acknowledge and return to the assignee the copy of the notice and shall file the true copy of the instrument and original notice.

              232.806
              Contract clause.
              (a)(1) Use the clause at 252.232-7008, Assignment of Claims (Overseas), instead of the clause at FAR 52.232-23, Assignment of Claims, in solicitations and contracts when contract performance will be in a foreign country.
              (2) Use Alternate I with the clause at FAR 52.232-23, Assignment of Claims, unless otherwise authorized under 232.803(d).
              [62 FR 34126, June 24, 1997]

            Subpart 232.9—Prompt Payment

              232.901
              Applicability.
              (1) Except for FAR 32.908, FAR subpart 32.9, Prompt Payment, does not apply when—
              (i) There is—
              (A) An emergency, as defined in the Disaster Relief Act of 1974;
              (B) A contingency operation (see FAR 2.101(b)); or
              (C) The release or threatened release of hazardous substances (as defined in 4 U.S.C. 9606, section 106); and
              (ii) The head of the contracting activity has made a determination, after consultation with the cognizant comptroller, that conditions exist that limit normal business operations; and

              (iii) Payments will be made in the operational area or made contingent upon receiving supporting documentation (i.e., contract, invoice, and receiving report) from the operational area.
              (2) Criteria limiting normal business operations during emergencies and contingency operations that restrict the use of FAR 32.9 may include such conditions as—
              (i) Support infrastructure, hardware, communications capabilities, and bandwidth are not consistently available such that normal business operations can be carried out;
              (ii) Support resources, facilities, and banking needs are not consistently available for use as necessary in carrying out normal business operations;
              (iii) Military mission priorities override the availability of appropriately skilled personnel in support of back-office operations;
              (iv) Mobility impairments and security concerns restrict free movement of personnel and documents necessary for timely processing;

              (v) Foreign vendors are not familiar with or do not understand DoD contract requirements (i.e., proper invoice, receiving documentation, and contracting terms); or
              (vi) Documents received in support of payment requests and shipments require language translations that cannot be performed and documented within normal business processing times.
              (3) Subsequent Determinations. The head of the contracting activity shall make subsequent determinations, after consultation with the cognizant comptroller, as the operational area evolves into either a more stable or less stable environment.
              (i) If the head of the contracting activity determines that the operational area has evolved into a more stable environment, the contracting officer shall notify, by issuance of a contract modification, each contractor performing in the operational area under review. The modification deactivates clause 252.232-7011 and activates the applicable FAR Prompt Payment clause in the contract.
              (ii) If after deactivation of clause 252.232-7011, the head of the contracting activity subsequently determines that the operational area has evolved into a less stable environment, the head of the contracting activity will make a determination that conditions exist that limit normal business operations. The contracting officer will then reactivate clause 252.232-7011 by issuance of a contract modification.
              [75 FR 40713, July 13, 2010, as amended at 76 FR 11373, Mar. 2, 2011]

              232.903
              Responsibilities.
              In accordance with section 852 of the National Defense Authorization Act for Fiscal Year 2019 (Pub. L. 115-232), DoD shall assist small business concerns by providing payment as quickly as possible, to the fullest extent permitted by law, with a goal of 15 days after receipt of proper invoices and all required documentation, including acceptance, and before normal payment due dates established in the contract (see 232.906(a)).
              [85 FR 19697, Apr. 8, 2020]

              232.904
              Determining payment due dates.
              (d) In most cases, Government acceptance or approval can occur within the 7-day constructive acceptance period specified in the FAR Prompt Payment clauses. Government payment of construction progress payments can, in most cases, be made within the 14-day period allowed by the Prompt Payment for Construction Contracts clause. While the contracting officer may specify a longer period because the period specified in the contract is not reasonable or practical, such change should be coordinated with the Government offices responsible for acceptance or approval and for payment. Reasons for specifying a longer period include but are not limited to: the nature of the work or supplies or services, inspection or testing requirements, shipping and acceptance terms, and resources available at the acceptance activity. A constructive acceptance period of less than the cited 7 or 14 days is not authorized.
              [70 FR 75413, Dec. 20, 2005]

              232.905
              Payment documentation and process.
              (b)(1)(iii) For task and delivery orders numbered in accordance with FAR 4.1603 and 204.1603, the 13-character order number may serve as the contract number on invoices and receiving reports. The contract or agreement number under which the order was placed may be omitted from invoices and receiving reports. The contractor may choose to identify both the contract number and the 13-character order number on invoices and receiving reports. Task and delivery orders numbered with a four-position alpha-numeric call or order serial number shall include both the 13-position basic contract Procurement Instrument Identifier and the four-position order number.
              [81 FR 9786, Feb. 26, 2016]

              232.906
              Making payments.
              (a)(i) Generally, the contracting officer shall insert the standard due date of 14 days for interim payments on cost-reimbursement contracts for services in the clause at FAR 52.232-25, Prompt Payment, when using the clause with its Alternate I.
              (ii) The restrictions of FAR 32.906 prohibiting early payment do not apply to invoice payments made to small business concerns. However, contractors shall not be entitled to interest penalties if the Government fails to make early payment.
              [70 FR 75413, Dec. 20, 2005, as amended at 76 FR 23506, Apr. 27, 2011]

              232.908
              Contract clauses.
              Use the clause at 252.232-7011, Payments in Support of Emergencies and Contingency Operations, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, in acquisitions that meet the applicability criteria at 232.901(1). Use of this clause is in addition to use of either the approved Payment clause prescribed in FAR 32.908 or the clause at FAR 52.212-4, Contract Terms and Conditions—Commercial Items.
              [78 FR 37989, June 25, 2013]

            Subpart 232.10—Performance-Based Payments

              Source:
              63 FR 11537, Mar. 9, 1998, unless otherwise noted.

              232.1001
              Policy.

              (a) As with all contract financing, the purpose of performance-based payments is to assist the contractor in the payment of costs incurred during the performance of the contract. See PGI 232.1001(a) for additional information on use of performance-based payments. However, in accordance with 10 U.S.C. 2307(b)(2), performance-based payments shall not be conditioned upon costs incurred in contract performance, but on the achievement of performance outcomes. Subject to the criteria in 232.1003-70, all companies, including nontraditional defense contractors, are eligible for performance-based payments, consistent with best commercial practices.
              (d) The contracting officer shall use the following standard payment terms for performance-based payments: The contractor entitlement date, if any, specified in the contract, or 14 days after receipt by the designated billing office of a proper request for payment, whichever is later.
              [63 FR 11537, Mar. 9, 1998, as amended at 79 FR 17936, Mar. 31, 2014; 85 FR 19688, Apr. 8, 2020]

              232.1003-70
              Criteria for use.
              In accordance with 10 U.S.C. 2307(b)(4)(A), a contractor's financial statements shall be in compliance with Generally Accepted Accounting Principles in order to receive performance-based payments. 10 U.S.C. 2307(b)(4)(B) specifies that it does not grant the Defense Contract Audit Agency the authority to audit compliance with Generally Accepted Accounting Principles.
              [85 FR 19688, Apr. 8, 2020]

              232.1004
              Procedures.
              (b) Establishing performance-based finance payment amounts. (i) The contracting officer should include in a solicitation both the progress payments and performance-based payments provisions and clauses prescribed in this part, when considering both types of payment methods. Only one type of financing will be included in the resultant contract, except as may be authorized on separate orders subject to FAR 32.1003(c)).

              (ii) The contracting officer shall analyze the performance-based payment schedule using the performance-based payments (PBP) analysis tool. The PBP analysis tool is on the DPC website in the Cost, Pricing & Finance section, Performance Based Payments—Guide Book & Analysis Tool tab, at http://www.acq.osd.mil/dpap/cpic/cp/Performance_based_payments.html.

              (A) When considering performance-based payments, obtain from the offeror/contractor a proposed performance-based payments schedule that includes all performance-based payments events, completion criteria and event values along with the projected monthly expenditure profile in order to negotiate the value of the performance events such that the performance-based payments are not expected to result in an unreasonably low or negative level of contractor investment in the contract. If performance-based payments are deemed practical, the Government will evaluate and negotiate the details of the performance-based payments schedule.
              (B) For modifications to contracts that already use performance-based payments financing, the basis for negotiation must include performance-based payments. The PBP analysis tool will be used in the same manner to help determine the price for the modification.
              (iii) The contracting officer shall document in the contract file that the performance-based payment schedule provides a mutually beneficial settlement position that reflects adequate consideration to the Government for the improved contractor cash flow.
              (c) Instructions for multiple appropriations. If the contract contains foreign military sales requirements, the contracting officer shall provide instructions for distribution of the contract financing payments to each country's account.
              [63 FR 11537, Mar. 9, 1998, as amended at 79 FR 17936, Mar. 31, 2014; 85 FR 19688, Apr. 8, 2020]

              232.1005-70
              Solicitation provisions and contract clauses.
              (a) The contracting officer shall include the following clauses with appropriate fill-ins in solicitations and contracts that include performance-based payments:

              (1) For performance-based payments made on a whole-contract basis, use the clause at 252.232-7012, Performance-Based Payments—Whole-Contract Basis.

              (2) For performance-based payments made on a deliverable-item basis, use the clause at 252.232-7013, Performance-Based Payments—Deliverable-Item Basis.
              (b) Use the provision at 252.232-7015, Performance-Based Payments—Representation, in solicitations where the resulting contract may include performance-based payments.
              (c) Use the provision at 252.232-7016, Notice of Progress Payments or Performance-Based Payments, in lieu of FAR 52.232-13, Notice of Progress Payments, when the solicitation contains clauses for progress payments and performance-based payments (only one type of financing will be included in the resultant contract, except as may be authorized on separate orders subject to FAR 32.1003(c)).
              [79 FR 17936, Mar. 31, 2014, as amended at 85 FR 19688, Apr. 8, 2020]

            Subpart 232.11—Electronic Funds Transfer

              Source:
              65 FR 46626, July 31, 2000, unless otherwise noted.

              232.1110
              Solicitation provision and contract clauses.
              Use the clause at 252.232-7009, Mandatory Payment by Governmentwide Commercial Purchase Card, in solicitations, contracts, and agreements, including solicitations, contracts, and agreements using FAR part 12 procedures for the acquisition of commercial items, when—
              (1) Placement of orders or calls valued at or below the micro-purchase threshold is anticipated; and
              (2) Payment by Governmentwide commercial purchase card is required for orders or calls valued at or below the micro-purchase threshold under the contract or agreement.
              [78 FR 37989, June 25, 2013]

            Subpart 232.70—Electronic Submission and Processing of Payment Requests and Receiving Reports

              Source:
              68 FR 8455, Feb. 21, 2003, unless otherwise noted.

              232.7000
              Scope of subpart.
              This subpart prescribes policies and procedures for submitting and processing payment requests in electronic form to comply with 10 U.S.C. 2227.

              232.7001
              Definitions.
              As used in this subpart—

                Electronic form means any automated system that transmits information electronically from the initiating system to affected systems.

                Payment request means any request for contract financing payment or invoice payment submitted by the contractor under a contract or task or delivery order.

                Receiving report means the data prepared in the manner and to the extent required by appendix F of this chapter, Material Inspection and Receiving Report.
              [83 FR 66063, Dec. 21, 2018]

              232.7002
              Policy.
              (a) Payment requests and receiving reports are required to be submitted in electronic form, except for—
              (1) Classified contracts or purchases when electronic submission and processing of payment requests and receiving reports could compromise the safeguarding of classified information or national security;

              (2) Cases in which contractor submission of electronic payment requests and receiving reports is not feasible (e.g., when contract performance is in an environment where internet connectivity is not available);
              (3) Cases in which DoD is unable to receive payment requests or provide acceptance in electronic form;

              (4) Cases in which the contractor has requested permission in writing to submit payment requests and receiving reports by nonelectronic means, and the contracting officer has provided instructions for a temporary alternative method of submission of payment requests and receiving reports in the contract administration data section of the contract or task or delivery order (e.g., section G, an addendum to FAR 52.212-4, or applicable clause); and

              (5) When the Governmentwide commercial purchase card is used as the method of payment, in which case only submission of the receiving report in electronic form is required.

              (b)(1) The only acceptable electronic form for submission of payment requests and receiving reports is Wide Area WorkFlow (WAWF) (https://wawf.eb.mil/), except as follows:

              (i) For payment of commercial transportation services provided under a Government rate tender, contract, or task or delivery order for transportation services, the use of a DoD-approved electronic third party payment system or other exempted vendor payment/invoicing system (e.g., PowerTrack, Transportation Financial Management System, and Cargo and Billing System) is permitted.
              (ii) For submitting and processing payment requests and receiving reports for contracts or task or delivery orders for rendered health care services, the use of TRICARE Encounter Data System as the electronic form is permitted.
              (2) Facsimile, email, and scanned documents are not acceptable electronic forms of payment requests or receiving reports.
              [83 FR 66063, Dec. 21, 2018]

              232.7003
              Procedures.
              (a) DoD officials receiving payment requests in electronic form shall process the payment requests in electronic form. The WAWF system provides the method to electronically process payment requests and receiving reports.
              (1) Documents necessary for payment, such as receiving reports, invoice approvals, contracts, contract modifications, and required certifications, shall also be processed in electronic form.
              (2) Scanned documents and other commonly used file formats are only acceptable for processing supporting documentation.
              (b) If one of the exceptions to submission in electronic form at 232.7002(a) applies, the contracting officer shall—

              (1) Consult the payment office and the contract administration office regarding the alternative method to be used for submission of payment requests or receiving reports (e.g., facsimile or conventional mail); and

              (2) Provide procedures for invoicing in the contract administration data section of the contract or task or delivery order (e.g., section G, an addendum to FAR 52.212-4, or applicable clause) for submission of invoices by nonelectronic means. If submission of invoices by nonelectronic means is temporary, the procedures should specify the time period for which they apply.
              [83 FR 66063, Dec. 21, 2018]

              232.7004
              Contract clauses.
              (a) Unless an exception to submission in electronic form at 232.7002(a) applies and instructions for invoices are contained in the contract administration data section of the contract or task or delivery order, use the clause at 252.232-7003, Electronic Submission of Payment Requests and Receiving Reports, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items.
              (b) Use the clause at 252.232-7006, Wide Area WorkFlow Payment Instructions, in solicitations and contracts or task or delivery orders, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, when 252.232-7003 is used and none of the exceptions at 232.7002(b)(1) apply. See PGI 232.7004 for instructions on completing the clause.
              [83 FR 66063, Dec. 21, 2018]

            Subpart 232.71—Levies on Contract Payments

              Source:
              70 FR 52032, Sept. 1, 2005, unless otherwise noted.

              232.7100
              Scope of subpart.
              This subpart prescribes policies and procedures concerning the effect of levies pursuant to 26 U.S.C. 6331(h) on contract payments. The Internal Revenue Service (IRS) is authorized to levy up to 100 percent of all payments made under a DoD contract, up to the amount of the tax debt.

              232.7101
              Policy and procedures.
              (a) The contracting officer shall require the contractor to—

              (1) Promptly notify the contracting officer when a levy may result in an inability to perform the contract; and

              (2) Advise the contracting officer whether the inability to perform may adversely affect national security.
              (b) The contracting officer shall promptly notify the Director, Defense Procurement and Acquisition Policy (DPAP), when the contractor's inability to perform will adversely affect national security or will result in significant additional costs to the Government. Follow the procedures at PGI 232.7101(b) for reviewing the contractor's rationale and submitting the required notification.
              (c) The Director, DPAP, will promptly evaluate the contractor's rationale and will notify the IRS, the contracting officer, and the payment office, as appropriate, in accordance with the procedures at PGI 232.7101(c).
              (d) The contracting officer shall then notify the contractor in accordance with paragraph (c) of the clause at 252.232-7010 and in accordance with the procedures at PGI 232.7101(d).
              [71 FR 69492, Dec. 1, 2006]

              232.7102
              Contract clause.
              Use the clause at 252.232-7010, Levies on Contract Payments, in all solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items.
              [71 FR 69492, Dec. 1, 2006, as amended at 78 FR 37989, June 25, 2013]

            SUBPART 232.72—Payment in local currency (Afghanistan)

              Source:
              79 FR 58695, Sept. 30, 2014, unless otherwise noted.

              232.7200
              Scope of subpart.
              This subpart prescribes policies and procedures concerning the payment of contracts for performance in Afghanistan.

              232.7201
              Policy and procedures.
              Payment currency used for contracts performed in Afghanistan shall be dependent on the nationality of the vendor pursuant to the authority of USCENTCOM Fragmentary Orders (FRAGOs) 09-1567 and 10-143. If the contract is awarded to a host nation vendor (Afghan), the contractor will be paid in Afghani (local currency) via electronic funds transfer to a local (Afghan) banking institution. Contracts shall not be awarded to host nation vendors who do not bank locally. If awarded to other than a host nation vendor, the contract will be awarded in U.S. dollars.

              232.7202
              Solicitation provision.
              Use the provision at 252.232-7014, Notification of Payment in Local Currency (Afghanistan), in all solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial items, for performance in Afghanistan.

          Pt. 233
          PART 233—PROTESTS, DISPUTES, AND APPEALS

              Subpart 233.1—Protests
              Sec.
              233.102
              General.
              233.170
              Briefing requirement for protested acquisitions valued at $1 billion or more.
              233.171
              Reporting requirement for protests of solicitations or awards.

              Subpart 233.2—Disputes and Appeals
              233.204-70
              Limitations on payment.
              233.210
              Contracting officer's authority.
              233.215
              Contract clause.
              233.215-70
              Additional contract clause.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36416, July 31, 1991, unless otherwise noted.

            Subpart 233.1—Protests

              233.102
              General.
              If the Government exercises the authority provided in 239.7305(d) to limit disclosure of information, no action undertaken by the Government under such authority shall be subject to review in a bid protest before the Government Accountability Office or in any Federal court (see subpart 239.73).
              [78 FR 69271, Nov. 18, 2013]

              233.170
              Briefing requirement for protested acquisitions valued at $1 billion or more.
              Follow the procedures at PGI 233.170 for briefing protested acquisitions valued at $1 billion or more.
              [76 FR 3537, Jan. 20, 2011]

              233.171
              Reporting requirement for protests of solicitations or awards.
              Follow the procedures at PGI 233.171 for reporting information on protests involving the same contract award or proposed award that have been filed at both the Government Accountability Office and the United States Court of Federal Claims.
              [84 FR 25194, May 31, 2019]

            Subpart 233.2—Disputes and Appeals

              233.204-70
              Limitations on payment.
              See 10 U.S.C. 2410(b) for limitations on Congressionally directed payment of a claim under 41 U.S.C. chapter 71 (Contract Disputes), a request for equitable adjustment to contract terms, or a request for relied under Pub. L. 85-804.
              [63 FR 11537, Mar. 9, 1998, as amended at 77 FR 35881, June 15, 2012]

              233.210
              Contracting officer's authority.
              See PGI 233.210 for guidance on reviewing a contractor's claim.
              [72 FR 6485, Feb. 12, 2007]

              233.215
              Contract clause.
              Use Alternate I of the clause at FAR 52.233-1, Disputes, when—
              (1) The acquisition is for—
              (i) Aircraft
              (ii) Spacecraft and launch vehicles
              (iii) Naval vessels
              (iv) Missile systems
              (v) Tracked combat vehicles
              (vi) Related electronic systems;
              (2) The contracting officer determines that continued performance is—
              (i) Vital to the national security, or
              (ii) Vital to the public health and welfare; or
              (3) The head of the contracting activity determines that continued performance is necessary pending resolution of any claim that might arise under or be related to the contract.
              [56 FR 36416, July 31, 1991. Redesignated at 62 FR 34126, June 24, 1997]

              233.215-70
              Additional contract clause.
              Use the clause at 252.233-7001, Choice of Law (Overseas), in solicitations and contracts when contract performance will be outside the United States and its outlying areas, unless otherwise provided for in a government-to-government agreement.
              [70 FR 35545, June 21, 2005]

        SUBCHAPTER F—SPECIAL CATEGORIES OF CONTRACTING

          Pt. 234
          PART 234—MAJOR SYSTEM ACQUISITION

            Sec.
            234.001
            Definitions.
            234.003
            Responsibilities.
            234.004
            Acquisition strategy.
            234.005
            General requirements.
            234.005-1
            Competition.
            234.005-2
            Mission-oriented solicitation.

              Subpart 234.2—Earned Value Management System
              234.201
              Policy.
              234.203
              Solicitation provisions and contract clause.

              Subpart 234.70—Acquisition of Major Weapon Systems as Commercial Items
              234.7000
              Scope of subpart.
              234.7001
              Definition.
              234.7002
              Policy.

              Subpart 234.71—Cost and Software Data Reporting
              234.7100
              Policy.
              234.7101
              Solicitation provision and contract clause.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            234.001
            Definitions.
            As used in this subpart—

              Acceptable earned value management system and earned value management system are defined in the clause at 252.234-7002, Earned Value Management System.

              Production of major defense acquisition program means the production and deployment of a major system that is intended to achieve an operational capability that satisfies mission needs, or an activity otherwise defined as Milestone C under Department of Defense Instruction 5000.02 or related authorities.

              Significant deficiency is defined in the clause at 252.234-7002, Earned Value Management System, and is synonymous with noncompliance.

            [76 FR 28867, May 18, 2011, as amended at 79 FR 4632, Jan. 29, 2014]

            234.003
            Responsibilities.
            DoDD 5000.01, The Defense Acquisition System, and DoDI 5000.02, Operation of the Defense Acquisition System, contain the DoD implementation of OMB Circular A-109 and OMB Circular A-11.
            [70 FR 14575, Mar. 23, 2005, as amended at 76 FR 76320, Dec. 7, 2011]

            234.004
            Acquisition strategy.
            (1) See 209.570 for policy applicable to acquisition strategies that consider the use of lead system integrators.
            (2) Contract type.

            (i) In accordance with section 818 of the National Defense Authorization Act for Fiscal Year 2007 (Pub. L. 109-364), for major defense acquisition programs at Milestone B—
            (A) The milestone decision authority shall select, with the advice of the contracting officer, the contract type for a development program at the time of Milestone B approval or, in the case of a space program, Key Decision Point B approval;
            (B) The basis for the contract type selection shall be documented in the acquisition strategy. The documentation—
            (1) Shall include an explanation of the level of program risk; and
            (2) If program risk is determined to be high, shall outline the steps taken to reduce program risk and the reasons for proceeding with Milestone B approval despite the high level of program risk; and
            (C) If a cost-reimbursement type contract is selected, the contract file shall include the milestone decision authority's's written determination that—
            (1) The program is so complex and technically challenging that it would not be practicable to reduce program risk to a level that would permit the use of a fixed-price type contract; and
            (2) The complexity and technical challenge of the program is not the result of a failure to meet the requirements of 10 U.S.C. 2366a.

            (ii) In accordance with section 811 of the National Defense Authorization Act for Fiscal Year 2013 (Pub. L. 112-239), the contracting officer shall—
            (A) Not use cost-reimbursement line items for the acquisition of production of major defense acquisition programs, unless the Under Secretary of Defense for Acquisition and Sustainment (USD(A&S)), or the milestone decision authority when the milestone decision authority is the service acquisition executive of the military department that is managing the program, submits to the congressional defense committees—
            (1) A written certification that the particular cost-reimbursement line items are needed to provide a required capability in a timely and cost effective manner; and
            (2) An explanation of the steps taken to ensure that cost-reimbursement line items are used only to achieve the purposes of the exception; and
            (B) Include a copy of such congressional certification in the contract file.
            (iii) See 216.301-3 for additional contract type approval requirements for cost-reimbursement contracts.
            (iv) For fixed-price incentive (firm target) contracts, contracting officers shall comply with the guidance provided at PGI 216.403-1(1)(ii)(B) and (C).
            (3) The contracting officer shall include in solicitations for contracts for the technical maturation and risk reduction phase, engineering and manufacturing development phase or production phase of a weapon system, including embedded software—
            (i) Clearly defined measurable criteria for engineering activities and design specifications for reliability and maintainability provided by the program manager, or the comparable requiring activity official performing program management responsibilities; or
            (ii) Ensure a copy of the justification, executed by the program manager or the comparable requiring activity official performing program management responsibilities for the decision that engineering activities and design specifications for reliability and maintainability should not be a requirement, is included in the contract file (10 U.S.C. 2443).
            [73 FR 4118, Jan. 24, 2008, as amended at 79 FR 4632, Jan. 29, 2014; 79 FR 23278, Apr. 28, 2014; 79 FR 58694, Sept. 30, 2014; 84 FR 58334, Oct. 31, 2019, 84 FR 65307, Nov. 27, 2019]

            234.005
            General requirements.

            234.005-1
            Competition.
            A contract that is initially awarded from the competitive selection of a proposal resulting from a broad agency announcement may contain a contract line item or contract option for the provision of advanced component development, prototype, or initial production of technology developed under the contract or the delivery of initial or additional items if the item or a prototype thereof is created as the result of work performed under the contract only when it adheres to the following limitations:
            (1) The contract line item or contract option shall be limited to the minimal amount of initial or additional prototype items that will allow for timely competitive solicitation and award of a follow-on development or production contract for those items.
            (2) The term of the contract line item or contract option shall be for not more than 2 years.
            (3) The dollar value of the work to be performed pursuant to the contract line item or contract option shall not exceed $100 million in fiscal year 2017 constant dollars. (10 U.S.C. 2302e)
            [75 FR 32639, June 8, 2010, as amended at 81 FR 17045, Mar. 25, 2016; 84 FR 4365, Feb. 15, 2019]

            234.005-2
             Mission-oriented solicitation.
            See 215.101-2-70(b)(2) for the prohibition on the use of the lowest price technically acceptable source selection process for engineering and manufacturing development of a major defense acquisition program for which budgetary authority is requested beginning in fiscal year 2019.
            [84 FR 50789, Sept. 26, 2019]

            Subpart 234.2—Earned Value Management System

              Source:
              73 FR 21848, Apr. 23, 2008, unless otherwise noted.

              234.201
              Policy.
              (1) DoD applies the earned value management system requirement as follows:
              (i) For cost or incentive contracts and subcontracts valued at $20,000,000 or more, the earned value management system shall comply with the guidelines in the American National Standards Institute/Electronic Industries Alliance Standard 748, Earned Value Management Systems (ANSI/EIA-748).
              (ii) For cost or incentive contracts and subcontracts valued at $50,000,000 or more, the contractor shall have an earned value management system that has been determined by the cognizant Federal agency to be in compliance with the guidelines in ANSI/EIA-748.
              (iii) For cost or incentive contracts and subcontracts valued at less than $20,000,000—
              (A) The application of earned value management is optional and is a risk-based decision;
              (B) A decision to apply earned value management shall be documented in the contract file; and
              (C) Follow the procedures at PGI 234.201(1)(iii) for conducting a cost-benefit analysis.
              (iv) For firm-fixed-price contracts and subcontracts of any dollar value—
              (A) The application of earned value management is discouraged; and
              (B) Follow the procedures at PGI 234.201(1)(iv) for obtaining a waiver before applying earned value management.
              (2) When an offeror proposes a plan for compliance with the earned value management system guidelines in ANSI/EIA-748, follow the review procedures at PGI 234.201(2).
              (3) The Defense Contract Management Agency is responsible for determining earned value management system compliance when DoD is the cognizant Federal agency.
              (4) See PGI 234.201(3) for additional guidance on earned value management.
              (5) The cognizant contracting officer, in consultation with the functional specialist and auditor, shall—
              (i) Determine the acceptability of the contractor's earned value management system and approve or disapprove the system; and
              (ii) Pursue correction of any deficiencies.
              (6) In evaluating the acceptability of a contractor's earned value management system, the contracting officer, in consultation with the functional specialist and auditor, shall determine whether the contractor's earned value management system complies with the system criteria for an acceptable earned value management system as prescribed in the clause at 252.234-7002, Earned Value Management System.
              (7) Disposition of findings—(i) Reporting of findings. The functional specialist or auditor shall document findings and recommendations in a report to the contracting officer. If the functional specialist or auditor identifies any significant deficiencies in the contractor's earned value management system, the report shall describe the deficiencies in sufficient detail to allow the contracting officer to understand the deficiencies.
              (ii) Initial determination. (A) The contracting officer shall review all findings and recommendations and, if there are no significant deficiencies, shall promptly notify the contractor, in writing, that the contractor's earned value management system is acceptable and approved; or
              (B) If the contracting officer finds that there are one or more significant deficiencies (as defined in the clause at 252.234-7002, Earned Value Management System) due to the contractor's failure to meet one or more of the earned value management system criteria in the clause at 252.234-7002, the contracting officer shall—
              (1) Promptly make an initial written determination on any significant deficiencies and notify the contractor, in writing, providing a description of each significant deficiency in sufficient detail to allow the contractor to understand the deficiencies;
              (2) Request the contractor to respond, in writing, to the initial determination within 30 days; and

              (3) Evaluate the contractor's response to the initial determination, in consultation with the auditor or functional specialist, and make a final determination.
              (iii) Final determination. (A) The contracting officer shall make a final determination and notify the contractor, in writing, that—
              (1) The contractor's earned value management system is acceptable and approved, and no significant deficiencies remain, or
              (2) Significant deficiencies remain. The notice shall identify any remaining significant deficiencies, and indicate the adequacy of any proposed or completed corrective action. The contracting officer shall—
              (i) Request that the contractor, within 45 days of receipt of the final determination, either correct the deficiencies or submit an acceptable corrective action plan showing milestones and actions to eliminate the deficiencies;
              (ii) Disapprove the system in accordance with the clause at 252.234-7002, Earned Value Management System, when initial validation is not successfully completed within the timeframe approved by the contracting officer, or the contracting officer determines that the existing earned value management system contains one or more significant deficiencies in high-risk guidelines in ANSI/EIA-748 standards (guidelines 1, 3, 6, 7, 8, 9, 10, 12, 16, 21, 23, 26, 27, 28, 30, or 32). When the contracting officer determines that the existing earned value management system contains one or more significant deficiencies in one or more of the remaining 16 guidelines in ANSI/EIA-748 standards, the contracting officer shall use discretion to disapprove the system based on input received from functional specialists and the auditor; and
              (iii) Withhold payments in accordance with the clause at 252.242-7005, Contractor Business Systems, if the clause is included in the contract.
              (B) Follow the procedures relating to monitoring a contractor's corrective action and the correction of significant deficiencies at PGI 234.201(7).
              (8) System approval. The contracting officer shall promptly approve a previously disapproved earned value management system and notify the contractor when the contracting officer determines that there are no remaining significant deficiencies.
              (9) Contracting officer notifications. The cognizant contracting officer shall promptly distribute copies of a determination to approve a system, disapprove a system and withhold payments, or approve a previously disapproved system and release withheld payments to the auditor; payment office; affected contracting officers at the buying activities; and cognizant contracting officers in contract administration activities.
              [73 FR 21848, Apr. 23, 2008, as amended at 76 FR 28867, May 18, 2011; 76 FR 76320, Dec. 7, 2011]

              234.203
              Solicitation provisions and contract clause.
              For cost or incentive contracts valued at $20,000,000 or more, and for other contracts for which EVMS will be applied in accordance with 234.201(1)(iii) and (iv)—
              (1) Use the provision at 252.234-7001, Notice of Earned Value Management System, instead of the provisions at FAR 52.234-2, Notice of Earned Value Management System—Pre-Award IBR, and FAR 52.234-3, Notice of Earned Value Management System—Post-Award IBR, in the solicitation; and
              (2) Use the clause at 252.234-7002, Earned Value Management System, instead of the clause at FAR 52.234-4, Earned Value Management System, in the solicitation and contract.

            Subpart 234.70—Acquisition of Major Weapon Systems as Commercial Items

              Source:
              71 FR 58538, Oct. 4, 2006, unless otherwise noted.

              234.7000
              Scope of subpart.
              This subpart—
              (a) Implements 10 U.S.C. 2379; and
              (b) Requires a determination by the Secretary of Defense and a notification to Congress before acquiring a major weapon system as a commercial item.

              234.7001
              Definition.
              As used in this subpart—

                Major weapon system means a weapon system acquired pursuant to a major defense acquisition program.
              [85 FR 34532, June 5, 2020]

              234.7002
              Policy.
              (a) Major weapon systems. (1) A DoD major weapon system may be treated as a commercial item, or acquired under procedures established for the acquisition of commercial items, only if—
              (i) The Secretary of Defense determines that—
              (A) The major weapon system is a commercial item as defined in FAR 2.101; and
              (B) Such treatment is necessary to meet national security objectives; and
              (ii) The congressional defense committees are notified at least 30 days before such treatment or acquisition occurs. Follow the procedures at PGI 234.7002.
              (2) The authority of the Secretary of Defense to make a determination under paragraph (a)(1) of this section may not be delegated below the level of the Deputy Secretary of Defense.
              (b) Subsystems. A subsystem of a major weapon system (other than a commercially available off-the-shelf item) shall be treated as a commercial item and acquired under procedures established for the acquisition of commercial items if—
              (1) The subsystem is intended for a major weapon system that is being acquired, or has been acquired, under procedures established for the acquisition of commercial items in accordance with paragraph (a) of this section; or
              (2) The contracting officer determines in writing that the subsystem is a commercial item.
              (c) Components and spare parts. (1) A component or spare part for a major weapon system (other than a commercially available off-the-shelf item) may be treated as a commercial item if—
              (i) The component or spare part is intended for—
              (A) A major weapon system that is being acquired, or has been acquired, under procedures established for the acquisition of commercial items in accordance with paragraph (a) of this section; or
              (B) A subsystem of a major weapon system that is being acquired, or has been acquired, under procedures established for the acquisition of commercial items in accordance with paragraph (b) of this section; or
              (ii) The contracting officer determines in writing that the component or spare part is a commercial item.
              (2) This paragraph (c) shall apply only to components and spare parts that are acquired by DoD through a prime contract or a modification to a prime contract, or through a subcontract under a prime contract or modification to a prime contract on which the prime contractor adds no, or negligible, value.
              (d) Relevant information. See 212.209(a) for requirements of 10 U.S.C. 2377 with regard to market research.
              (1) To the extent necessary to make a determination of price reasonableness, the contracting officer shall require the offeror to submit prices paid for the same or similar commercial items under comparable terms and conditions by both Government and commercial customers.
              (2) If the contracting officer determines that the offeror cannot provide sufficient information described in paragraph (d)(1) of this section to determine the reasonableness of price, the contracting officer shall request the offeror to submit information on—
              (i) Prices paid for the same or similar items under different terms and conditions;
              (ii) Prices paid for similar levels of work or effort on related products or services;
              (iii) Prices paid for alternative solutions or approaches; and
              (iv) Other relevant information that can serve as the basis for a price reasonableness determination.

              (3) If the contracting officer determines that the information submitted pursuant to paragraphs (d)(1) and (2) of this section is not sufficient to determine the reasonableness of price, the contracting officer shall request the offeror to submit other relevant information, including uncertified cost data. However, no uncertified cost data may be required in any case in which there are sufficient non-Government sales of the same item to establish reasonableness of price.
              (4) An offeror shall not be required to submit information described in paragraph (d)(3) of this section with regard to a commercially available off-the-shelf item. An offeror may be required to submit such information with regard to any other item that was developed exclusively at private expense only after the head of the contracting activity determines in writing that the information submitted pursuant to paragraphs (d)(1) and (2) of this section is not sufficient to determine the reasonableness of price.
              (5) An offeror may submit information or analysis relating to the value of a commercial item to aid in the determination of the reasonableness of the price of such item. A contracting officer may consider such information or analysis in addition to the information submitted pursuant to paragraphs (d)(1) and (2) of this section. For additional guidance see PGI 234.7002(d)(5).
              [74 FR 34264, July 15, 2009, as amended at 83 FR 4445, Jan. 31, 2018; 85 FR 34532, June 5, 2020]

            Subpart 234.71—Cost and Software Data Reporting

              Source:
              75 FR 71561, Nov. 24, 2010, unless otherwise noted.

              234.7100
              Policy.
              (a) The cost and software data reporting (CSDR) requirement is mandatory for major defense acquisition programs (as defined in 10 U.S.C. 2430), and major automated information system programs (as defined in 10 U.S.C. 2445a) as specified in DoDI 5000.02, Operation of the Defense Acquisition System and the DoD 5000.04-M-1, CSDR Manual. The CSDR system is applied in accordance with the reporting requirements established in DoDI 5000.02. The two principal components of the CSDR system are contractor cost data reporting and software resources data reporting.
              (b) Prior to contract award, contracting officers shall consult with the Defense Cost and Resource Center to determine that the offeror selected for award has proposed a standard CSDR system, as described in the offeror's proposal in response to the provision at 252.234-7003, that is in compliance with DoDI 5000.02, Operation of the Defense Acquisition System, and the DoD 5000.04-M-1, CSDR Manual.
              (c) Contact information for the Defense Cost and Resource Center and the Deputy Director, Cost Assessment, is located at PGI 234.7100.

              234.7101
              Solicitation provision and contract clause.
              (a) Use the basic or the alternate of the provision at 252.234-7003, Notice of Cost and Software Data Reporting System, in any solicitation that includes the basic or the alternate of the clause at 252.234-7004, Cost and Software Data Reporting.
              (1) Use the basic provision when the solicitation includes the clause at 252.234-7004, Cost and Software Data Reporting—Basic.
              (2) Use the alternate I provision when the solicitation includes the clause at 252.234-7004, Cost and Software Data Reporting—Alternate I.
              (b) Use the basic or the alternate of the clause at 252.234-7004, Cost and Software Data Reporting System, in solicitations that include major defense acquisition programs or major automated information system programs as follows:
              (1) Use the basic clause in solicitations and contracts for major defense acquisition programs or major automated information system programs that exceed $50 million.
              (2) Use the alternate I clause in solicitations and contracts for major defense acquisition programs or major automated information system programs with a value equal to or greater than $20 million, but less than or equal to $50 million, when so directed by the program manager with the approval of the OSD Deputy Director, Cost Assessment.
              [79 FR 65593, Nov. 5, 2014]

          Pt. 235
          PART 235—RESEARCH AND DEVELOPMENT CONTRACTING

            Sec.
            235.001
            Definitions.
            235.006
            Contracting methods and contract type.

            235.006-70
            Manufacturing Technology Program.
            235.006-71
            Competition.
            235.008
            Evaluation for award.
            235.010
            Scientific and technical reports.
            235.015-70
            Special use allowances for research facilities acquired by educational institutions.
            235.016
            Broad agency announcement.
            235.017
            Federally Funded Research and Development Centers.
            235.017-1
            Sponsoring agreements.
            235.070
            Indemnification against unusually hazardous risks.
            235.070-1
            Indemnification under research and development contracts.
            235.070-2
            Indemnification under contracts involving both research and development and other work.
            235.070-3
            Contract clauses.
            235.071
            Export-controlled items.
            235.072
            Additional contract clauses.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36416, July 31, 1991, unless otherwise noted.

            235.001
            Definitions.
            “Research and development” means those efforts described by the Research, Development, Test, and Evaluation (RDT&E) budget activity definitions found in the DoD Financial Management Regulation (DoD 7000.14-R), Volume 2B, Chapter 5.
            [65 FR 32040, May 22, 2000]

            235.006
            Contracting methods and contract type.
            (b)(i) Consistent with section 829 of the National Defense Authorization Act for Fiscal Year 2017 (Pub. L. 114-328), the Under Secretary of Defense for Acquisition and Sustainment (USD(A&S)) has determined that the use of cost-reimbursement contracts for research and development in excess of $25 million is approved, if the contracting officer executes a written determination and findings that—
            (A) The level of program risk does not permit realistic pricing; and
            (B) It is not possible to provide an equitable and sensible allocation of program risk between the Government and the contractor.
            (b)(ii) For major defense acquisition programs as defined in 10 U.S.C. 2430—
            (A) Follow the procedures at 234.004; and
            (B) Notify the milestone decision authority of an intent not to exercise a fixed-price production option on a development contract for a major weapon system reasonably in advance of the expiration of the option exercise period.
            (iii) For other than major defense acquisition programs—
            (A) Do not award a fixed-price type contract for a development program effort unless—
            (1) The level of program risk permits realistic pricing;
            (2) The use of a fixed-price type contract permits an equitable and sensible allocation of program risk between the Government and the contractor; and
            (3) A written determination that the criteria of paragraphs (b)(iii)(A)(1) and (2) of this section have been met is executed—
            (i) By the USD(A&S) if the contract is over $25 million and is for: research and development for a non-major system; the development of a major system (as defined in FAR 2.101); or the development of a subsystem of a major system; or
            (ii) By the contracting officer for any development not covered by paragraph (b)(iii)(A)(3)(i) of this section.
            (B) Obtain USD(A&S) approval of the Government's prenegotiation position before negotiations begin, and obtain USD(A&S) approval of the negotiated agreement with the contractor before the agreement is executed, for any action that is—
            (1) An increase of more than $250 million in the price or ceiling price of a fixed-price type development contract, or a fixed-price type contract for the lead ship of a class;
            (2) A reduction in the amount of work under a fixed-price type development contract or a fixed-price type contract for the lead ship of a class, when the value of the work deleted is $100 million or more; or
            (3)) A repricing of fixed-price type production options to a development contract, or a contract for the lead ship of a class, that increases the price or ceiling price by more than $250 million for equivalent quantities.
            [73 FR 4118, Jan. 24, 2008, as amended at 84 FR 65308, Nov. 27, 2019]

            235.006-70
            Manufacturing Technology Program.
            In accordance with 10 U.S.C. 2521(d), for acquisitions under the Manufacturing Technology Program—
            (a) Award all contracts using competitive procedures; and
            (b) Include in all solicitations an evaluation factor that addresses the extent to which offerors propose to share in the cost of the project (see FAR 15.304).
            [65 FR 2058, Jan. 13, 2000, as amended at 69 FR 65092, Nov. 10, 2004]

            235.006-71
            Competition.
            (a) Use of a broad agency announcement with peer or scientific review for the award of science and technology proposals in accordance with 235.016(a) fulfills the requirement for full and open competition (see 206.102(d)(2)).
            (b) See 234.005-1 for limitations on the use of contract line items or contract options for the provision of advanced component development or prototypes of technology developed under a competitively awarded proposal.
            [75 FR 71563, Nov. 24, 2010, as amended at 84 FR 4366, Feb. 15, 2019]

            235.008
            Evaluation for award.
            See 209.570 for limitations on the award of contracts to contractors acting as lead system integrators.
            [73 FR 1825, Jan. 10, 2008]

            235.010
            Scientific and technical reports.
            (b) For DoD, the Defense Technical Information Center is responsible for collecting all scientific and technical reports. For access to these reports, follow the procedures at PGI 235.010(b).
            [69 FR 65092, Nov. 10, 2004]

            235.015-70
            Special use allowances for research facilities acquired by educational institutions.
            (a) Definitions. As used in this subsection—
            (1) Research facility means—
            (i) Real property, other than land; and
            (ii) Includes structures, alterations, and improvements, acquired for the purpose of conducting scientific research under contracts with departments and agencies of the DoD.
            (2) Special use allowance means a negotiated direct or indirect allowance—
            (i) For construction or acquisition of buildings, structures, and real property, other than land; and
            (ii) Where the allowance is computed at an annual rate exceeding the rate which normally would be allowed under FAR subpart 31.3.
            (b) Policy. (1) Educational institutions are to furnish the facilities necessary to perform Defense contracts. FAR 31.3 governs how much the Government will reimburse the institution for the research programs. However, in extraordinary situations, the Government may give special use allowances to an educational institution when the institution is unable to provide the capital for new laboratories or expanded facilities needed for Defense contracts.
            (2) Decisions to provide a special use allowance must be made on a case-by-case basis, using the criteria in paragraph (c) of this subsection.
            (c) Authorization for special use allowance. The head of a contracting activity may approve special use allowances only when all of the following conditions are met—
            (1) The research facility is essential to the performance of DoD contracts;
            (2) Existing facilities, either Government or nongovernment, cannot meet program requirements practically or effectively;
            (3) The proposed agreement for special use allowances is a sound business arrangement;
            (4) The Government's furnishing of Government-owned facilities is undesirable or impractical; and
            (5) The proposed use of the research facility is to conduct essential Government research which requires the new or expanded facilities.
            (d) Application of the special use allowance. (1) In negotiating a special use allowance—

            (i) Compare the needs of DoD and of the institution for the research facility to determine the amount of the special use allowance;

            (ii) Consider rental costs for similar space in the area where the research facility is or will be located to establish the annual special use allowance;
            (iii) Do not include or allow—
            (A) The costs of land; or
            (B) Interest charges on capital;
            (iv) Do not include maintenance, utilities, or other operational costs;
            (v) The period of allowance generally will be—
            (A) At least ten years; or
            (B) A shorter period if the total amount to be allowed is less than the construction or acquisition cost for the research facility;
            (vi) Generally, provide for allocation of the special use allowance equitably among the Government contracts using the research facility;
            (vii) Special use allowances apply only in the years in which the Government has contracts in effect with the institution. However, if in any given year there is a reduced level of Government research effort which results in the special use allowance being excessive compared to the Government research funding, a separate special use allowance may be negotiated for that year;
            (viii) Special use allowances may be adjusted for the period before construction is complete if the facility is partially occupied and used for Government research during that period.
            (2) A special use allowance may be based on either total or partial cost of construction or acquisition of the research facility.
            (i) When based on total cost neither the normal use allowance nor depreciation will apply—
            (A) During the special use allowance period; and
            (B) After the educational institution has recovered the total construction or acquisition cost from the Government or other users.
            (ii) When based on partial cost, normal use allowance and depreciation—
            (A) Apply to the balance of costs during the special use allowance period to the extent negotiated in the special use allowance agreement; and
            (B) Do not apply after the special use allowance period, except for normal use allowance applied to the balance.
            (3) During the special use allowance period, the research facility—
            (i) Shall be available for Government research use on a priority basis over nongovernment use; and
            (ii) Cannot be put to any significant use other than that which justified the special use allowance, unless the head of the contracting activity, who approved the special use allowance, consents.
            (4) The Government will pay only an allocable share of the special use allowance when the institution makes any substantial use of the research facility for parties other than the Government during the period when the special use allowance is in effect.
            (5) In no event shall the institution be paid more than the acquisition costs.
            [56 FR 36416, July 31, 1991, as amended at 60 FR 29500, June 5, 1995]

            235.016
            Broad agency announcement.
            (a) General. A broad agency announcement with peer or scientific review may be used for the award of science and technology proposals. Science and technology proposals include proposals for the following:
            (i) Basic research (budget activity 6.1).
            (ii) Applied research (budget activity 6.2).
            (iii) Advanced technology development (budget activity 6.3).
            (iv) Advanced component development and prototypes (budget activity 6.4).
            [84 FR 4366, Feb. 15, 2019]

            235.017
            Federally Funded Research and Development Centers.
            (a) Policy. (2) No DoD fiscal year 1992 or later funds may be obligated or expended to finance activities of a DoD Federally Funded Research and Development Center (FFRDC) if a member of its board of directors or trustees simultaneously serves on the board of directors or trustees of a profit-making company under contract to DoD, unless the FFRDC has a DoD-approved conflict of interest policy for its members (section 8107 of Pub. L. 102-172 and similar sections in subsequent Defense appropriations acts).
            [58 FR 28471, May 13, 1993]

            235.017-1
            Sponsoring agreements.
            (c)(4) DoD-sponsoring FFRDCs that function primarily as research laboratories (C3I Laboratory operated by the Institute for Defense Analysis, Lincoln Laboratory operated by Massachusetts Institute of Technology, and Software Engineering Institute operated by Carnegie Mellon) may respond to solicitations and announcements for programs which promote research, development, demonstration, or transfer of technology (Section 217, Public Law 103-337).
            [60 FR 61598, Nov. 30, 1995, as amended at 69 FR 65092, Nov. 10, 2004]

            235.070
            Indemnification against unusually hazardous risks.

            235.070-1
            Indemnification under research and development contracts.
            (a) Under 10 U.S.C. 2354, and if authorized by the Secretary concerned, contracts for research and/or development may provide for indemnification of the contractor or subcontractors for—
            (1) Claims by third persons (including employees) for death, bodily injury, or loss of or damage to property; and
            (2) Loss of or damage to the contractor's property to the extent that the liability, loss, or damage—
            (i) Results from a risk that the contract defines as “unusually hazardous;”
            (ii) Arises from the direct performance of the contract; and
            (iii) Is not compensated by insurance or other means.
            (b) Clearly define the specific unusually hazardous risks to be indemnified. Submit this definition for approval with the request for authorization to grant indemnification. Include the approved definition in the contract.
            [56 FR 36416, July 31, 1991, as amended at 64 FR 51076, Sept. 21, 1999]

            235.070-2
            Indemnification under contracts involving both research and development and other work.
            These contracts may provide for indemnification under the authority of both 10 U.S.C. 2354 and Public Law 85-804. Public Law 85-804 will apply only to work to which 10 U.S.C. 2354 does not apply. Actions under Public Law 85-804 must also comply with FAR 50.104-3.
            [56 FR 36416, July 31, 1991, as amended at 78 FR 21850, Apr. 12, 2013]

            235.070-3
            Contract clauses.
            When the contractor is to be indemnified in accordance with 235.070-1, use either—
            (a) The clause at 252.235-7000, Indemnification Under 10 U.S.C. 2354—Fixed Price; or
            (b) The clause at 252.235-7001, Indemnification Under 10 U.S.C. 2354—Cost-Reimbursement, as appropriate.

            235.071
            Export-controlled items.
            For requirements regarding access to export-controlled items, see 225.7901.
            [73 FR 42278, July 21, 2008, as amended at 78 FR 36111, June 17, 2013]

            235.072
            Additional contract clauses.
            (a) Use a clause substantially the same as the clause at 252.235-7002, Animal Welfare, in solicitations and contracts involving research, development, test, and evaluation or training that use live vertebrate animals.
            (b) Use the basic or the alternate of the clause at 252.235-7003, Frequency Authorization, in solicitations and contracts for developing, producing, constructing, testing, or operating a device requiring a frequency authorization.
            (1) Use the basic clause if agency procedures do not authorize the use of DD Form 1494, Application for Equipment Frequency Allocation, to obtain radio frequency authorization.
            (2) Use the alternate I clause if agency procedures authorize the use of DD Form 1494, Application for Equipment Frequency Allocation, to obtain frequency authorization.
            (c) Use the clause at 252.235-7010, Acknowledgement of Support and Disclaimer, in solicitations and contracts for research and development.

            (d) Use the clause at 252.235-7011, Final Scientific or Technical Report, in solicitations and contracts for research and development.

            (e) Use the clause at 252.235-7004, Protection of Human Subjects, in solicitations and contracts that include or may include research involving human subjects in accordance with 32 CFR Part 219, DoD Directive 3216.02, and 10 U.S.C. 980, including research that meets exemption criteria under 32 CFR 219.101(b). The clause—
            (1) Applies to solicitations and contracts awarded by any DoD component, regardless of mission or funding Program Element Code; and
            (2) Does not apply to use of cadaver materials alone, which are not directly regulated by 32 CFR Part 219 or DoD Directive 3216.02, and which are governed by other DoD policies and applicable State and local laws.
            [56 FR 36416, July 31, 1991, as amended at 60 FR 29500, June 5, 1995; 70 FR 35545, June 21, 2005. Redesignated at 73 FR 42278, July 21, 2008; 74 FR 37645, 37648, July 29, 2009; 79 FR 17447, Mar. 28, 2014; 79 FR 23501, Dec. 11, 2014]

          Pt. 236
          PART 236—CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS

              Subpart 236.1—General
              Sec.
              236.102
              Definitions.

              Subpart 236.2—Special Aspects of Contracting for Construction
              236.203
              Government estimate of construction costs.
              236.204
              Disclosure of the magnitude of construction projects.
              236.206
              Liquidated damages.
              236.213
              Special procedures for sealed bidding in construction contracting.
              236.215
              Special procedures for cost-reimbursement contracts for construction.
              236.270
              Expediting construction contracts.
              236.271
              Cost-plus-fixed-fee contracts.
              236.272
              Prequalification of sources.
              236.273
              Construction in foreign countries.
              236.274
              Restriction on acquisition of steel for use in military construction projects.
              236.275
              Construction of industrial resources.

              SUBPART 236.3—Two-phase design-build selection procedures
              236.303-1
              Phase One.

              Subpart 236.5—Contract Clauses
              236.570
              Additional provisions and clauses.

              Subpart 236.6—Architect-Engineer Services
              236.601
              Policy.
              236.602
              Selection of firms for architect-engineer contracts.
              236.602-1
              Selection criteria.
              236.602-70
              Restriction on award of overseas architect-engineer contracts to foreign firms.
              236.604
              Performance evaluation.
              236.606
              Negotiations.
              236.606-70
              Statutory fee limitation.
              236.609
              Contract clauses.
              236.609-70
              Additional provision.

              Subpart 236.7—Standard and Optional Forms for Contracting for Construction, Architect-Engineer Services, and Dismantling, Demolition, or Removal of Improvements
              236.701
              Standard and optional forms for use in contracting for construction or dismantling, demolition, or removal of improvements.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36421, July 31, 1991, unless otherwise noted.

            Subpart 236.1—General

              236.102
              Definitions.

                Construction activity means an activity at any organizational level of the DoD that—
              (1) Is responsible for the architectural, engineering, and other related technical aspects of the planning, design, and construction of facilities; and
              (2) Receives its technical guidance from the Army Office of the Chief of Engineers, Naval Facilities Engineering Command, or Air Force Directorate of Civil Engineering.

                Marshallese firm is defined in the provision at 252.236-7012, Military Construction on Kwajalein Atoll—Evaluation Preference.

                United States firm is defined in the provisions at 252.236-7010, Overseas Military Construction-Preference for United States Firms, and 252.236-7011, Overseas Architect-Engineer Services-Restriction to United States firms.
              [56 FR 36421, July 31, 1991, as amended at 62 FR 2857, Jan. 17, 1997; 63 FR 11538, Mar. 9, 1998; 71 FR 9272, Feb. 23, 2006; 76 FR 58155, Sept. 20, 2011]

            Subpart 236.2—Special Aspects of Contracting for Construction

              236.203
              Government estimate of construction costs.
              Follow the procedures at PGI 236.203 for handling the Government estimate of construction costs.
              [71 FR 9273, Feb. 23, 2006]

              236.204
              Disclosure of the magnitude of construction projects.
              Additional price ranges are—
              (i) Between $10,000,000 and $25,000,000;
              (ii) Between $25,000,000 and $100,000,000;
              (iii) Between $100,000,000 and $250,000,000;
              (iv) Between $250,000,000 and $500,000,000; and
              (v) Over $500,000,000.
              [61 FR 7749, Feb. 29, 1996]

              236.206
              Liquidated damages.
              See 211.503 for instructions on use of liquidated damages.
              [56 FR 36421, July 31, 1991, as amended at 66 FR 49861, Oct. 1, 2001]

              236.213
              Special procedures for sealed bidding in construction contracting.
              If it appears that sufficient funds may not be available for all the desired construction features, consider using a bid schedule with additive or deductive items in accordance with PGI 236.213.
              [71 FR 9273, Feb. 23, 2006]

              236.215
              Special procedures for cost-reimbursement contracts for construction.
              For contracts in connection with a military construction project or military family housing project, see the prohibition at 216.301-3.
              [81 FR 65564, Sept. 23, 2016]

              236.270
              Expediting construction contracts.
              (a) 10 U.S.C. 2858 requires agency head approval to expedite the completion date of a contract funded by a Military Construction Appropriations Act, if additional costs are involved. This approval authority may not be redelegated. The approval authority must—
              (1) Certify that the additional expenditures are necessary to protect the National interest; and
              (2) Establish a reasonable completion date for the project.
              (b) The contracting officer may approve an expedited completion date if no additional costs are involved.

              236.271
              Cost-plus-fixed-fee contracts.
              Annual military construction appropriations acts restrict the use of cost-plus-fixed-fee contracts (see 216.306(c)). See also 216.301-3 regarding the prohibition on the use of certain cost-reimbursement contracts in connection with a military construction project or military family housing project.
              [81 FR 65565, Sept. 23, 2016]

              236.272
              Prequalification of sources.
              (a) Prequalification procedures may be used when necessary to ensure timely and efficient performance of critical construction projects. Prequalification—
              (1) Results in a list of sources determined to be qualified to perform a specific construction contract; and
              (2) Limits offerors to those with proven competence to perform in the required manner.
              (b) The head of the contracting activity must—
              (1) Authorize the use of prequalification by determining, in writing, that a construction project is of an urgency or complexity that requires prequalification; and
              (2) Approve the prequalification procedures.
              (c) For small businesses, the prequalification procedures must require the qualifying authority to—
              (1) Request a preliminary recommendation from the appropriate Small Business Administration regional office, if the qualifying authority believes a small business is not responsible;
              (2) Permit the small business to submit a bid or proposal if the preliminary recommendation is that the small business is responsible; and
              (3) Follow the procedures in FAR 19.6, if the small business is in line for award and is found nonresponsible.

              236.273
              Construction in foreign countries.

              (a) In accordance with section 112 of the Military Construction and Veterans Affairs and Related Agencies Appropriations Act, 2015 (Division I of Pub. L. 113-235) and the same provision in subsequent military construction appropriations acts, military construction contracts funded with military construction appropriations, that are estimated to exceed $1,000,000 and are to be performed in the United States outlying areas in the Pacific and on Kwajalein Atoll, or in countries bordering the Arabian Gulf (i.e., Iran, Oman, United Arab Emirates, Saudi Arabia, Qatar, Bahrain, Kuwait, and Iraq), shall be awarded only to United States firms, unless—
              (1) The lowest responsive and responsible offer of a United States firm exceeds the lowest responsive and responsible offer of a foreign firm by more than 20 percent; or
              (2) The contract is for military construction on Kwajalein Atoll and the lowest responsive and responsible offer is submitted by a Marshallese firm.
              (b) See PGI 236.273(b) for guidance on technical working agreements with foreign governments.
              [56 FR 36421, July 31, 1991, as amended at 62 FR 2856, Jan. 17, 1997; 62 FR 34127, June 24, 1997; 63 FR 11538, Mar. 9, 1998; 66 FR 49861, Oct. 1, 2001; 70 FR 35545, June 21, 2005. Redesignated and amended at 71 FR 9273, Feb. 23, 2006; 79 FR 44316, July 31, 2014; 80 FR 15911, Mar. 26, 2015]

              236.274
              Restriction on acquisition of steel for use in military construction projects.
              In accordance with section 108 of the Military Construction and Veterans Affairs Appropriations Act, 2009 ( Pub. L. 110-329, Division E) and the same provision in subsequent military construction appropriations acts), do not acquire, or allow a contractor to acquire, steel for any construction project or activity for which American steel producers, fabricators, or manufacturers have been denied the opportunity to compete for such acquisition of steel.
              [74 FR 2418, Jan. 15, 2009, as amended at 80 FR 15911, Mar. 26, 2015]

              236.275
              Construction of industrial resources.
              See Subpart 237.75 for policy relating to facilities projects.
              [74 FR 37646, July 29, 2009]

            Subpart 236.3—Two-phase design-Build selection procedures

              Source:
              84 FR 4373, Feb. 15, 2019, unless otherwise noted.

              236.303-1
              Phase One.
              (a)(4) In lieu of the limitations on the maximum number of offerors that may be selected to submit phase-two proposals at FAR 36.303-1(a)(4), for DoD—
              (i) If the contract value exceeds $4.5 million, the maximum number of offerors specified in the solicitation that are to be selected to submit phase-two proposals shall not exceed five, unless—
              (A) The solicitation is issued for an indefinite-delivery indefinite-quantity contract for design-build construction; or
              (B) The head of the contracting activity, delegable to a level no lower than the senior contracting official within the contracting activity, approves the contracting officer's decision with respect to an individual solicitation, that a maximum number greater than five is in the best interest of the Government and is consistent with the purposes and objectives of the two-phase selection procedures. The decision shall be documented in the contract file (10 U.S.C 2305a(d)).
              (ii) If the contract value is at or below $4.5 million, the maximum number of offerors specified in the solicitation that are to be selected to submit phase-two proposals is at the discretion of the contracting officer.
              [84 FR 4373, Feb. 15, 2019, as amended at 85 FR 61504, Sept. 29, 2020]

            Subpart 236.5—Contract Clauses

              236.570
              Additional provisions and clauses.

              (a) Use the following clauses in all fixed-price construction solicitations and contracts—

              (1) 252.236-7000, Modification Proposals-Price Breakdown; and
              (2) 252.236-7001, Contract Drawings and Specifications.
              (b) Use the following provisions and clauses in fixed-price construction contracts and solicitations as applicable—
              (1) 252.236-7002, Obstruction of Navigable Waterways, when the contract will involve work near or on navigable waterways.
              (2) When the head of the contracting activity has approved use of a separate bid item for mobilization and preparatory work, use either—
              (i) 252.236-7003, Payment for Mobilization and Preparatory Work. Use this clause for major construction contracts that require—
              (A) Major or special items of plant and equipment; or
              (B) Large stockpiles of material which are in excess of the type, kind, and quantity which would be normal for a contractor qualified to undertake the work; or
              (ii) 252.236-7004, Payment for Mobilization and Demobilization. Use this clause for contracts involving major mobilization expense, or plant equipment and material (other than the situations covered in paragraph (b)(2)(i) of this section) made necessary by the location or nature of the work.
              (A) Generally, allocate 60 percent of the lump sum price in paragraph (a) of the clause to the cost of mobilization.
              (B) Vary this percentage to reflect the circumstances of the particular contract, but in no event should mobilization exceed 80 percent of the payment item.
              (3) 252.236-7005, Airfield Safety Precautions, when construction will be performed on or near airfields.
              (4) 252.236-7006, Cost Limitation, if the solicitation's bid schedule contains one or more items subject to statutory cost limitations, and if a waiver has not been granted (FAR 36.205).
              (5) 252.236-7007, Additive or Deductive Items, if the procedures in 236.213 are being used.
              (6) 252.236-7008, Contract Prices—Bidding Schedule, if the contract will contain only unit prices for some items.
              (c) Use the following provisions in solicitations for military construction contracts that are funded with military construction appropriations and are estimated to exceed $1,000,000:
              (1) 252.236-7010, Overseas Military Construction—Preference for United States Firms, when contract performance will be in a United States outlying area in the Pacific or in a country bordering the Arabian Gulf.
              (2) 252.236-7012, Military Construction on Kwajalein Atoll—Evaluation Preference, when contract performance will be on Kwajalein Atoll.
              (d) Use the clause at 252.236-7013, Requirement for Competition Opportunity for American Steel Producers, Fabricators, and Manufacturers, in solicitations and contracts that—
              (1) Use funds appropriated for military construction); and
              (2) May require the acquisition of steel as a construction material.
              (e) Also see 246.710(4) for an additional clause applicable to construction contracts to be performed in Germany.
              [56 FR 36421, July 31, 1991, as amended at 57 FR 42632, Sept. 15, 1992; 62 FR 2856, Jan. 17, 1997; 62 FR 34127, June 24, 1997; 63 FR 11538, Mar. 9, 1998; 65 FR 63804, Oct. 25, 2000; 68 FR 7440, Feb. 14, 2003; 70 FR 35545, June 21, 2005; 73 FR 46817, Aug. 12, 2008; 74 FR 2418, Jan. 15, 2009; 79 FR 44316, July 31, 2014; 80 FR 15911, Mar. 26, 2015]

            Subpart 236.6—Architect-Engineer Services

              236.601
              Policy.
              (1) Written notification to the congressional defense committees is required if the total estimated contract price for architect-engineer services or construction design, in connection with military construction, military family housing, or restoration or replacement of damaged or destroyed facilities, exceeds $1.5 million. In accordance with 10 U.S.C. 480, unclassified notifications must be provided by electronic medium.
              (i) For military construction or military family housing (10 U.S.C. 2807(b)), the notification—
              (A) Must include the scope of the project and the estimated contract price; and
              (B)(1) If provided by electronic medium, must be provided at least 14 days before the initial obligation of funds; or
              (2) If provided by other than electronic medium, must be received by the congressional defense committees at least 21 days before the initial obligation of funds.
              (ii) For restoration or replacement of damaged or destroyed facilities (10 U.S.C. 2854(b)), the notification—
              (A) Must include the justification for the project, the estimated contract price, and the source of the funds for the project; and
              (B)(1) If provided by electronic medium, must be provided at least 7 days before the initial obligation of funds; or
              (2) If provided by other than electronic medium, must be received by the congressional defense committees at least 21 days before the initial obligation of funds.
              (2) During the applicable notice period, synopsis of the proposed contract action and administrative actions leading to the award may be started.
              [71 FR 58541, Oct. 4, 2006, as amended at 80 FR 36905, June 26, 2015]

              236.602
              Selection of firms for architect-engineer contracts.

              236.602-1
              Selection criteria.
              (a) Establish the evaluation criteria before making the public announcement required by FAR 5.205(d) and include the criteria and their relative order of importance in the announcement. Follow the procedures at PGI 236.602-1(a).
              [69 FR 75000, Dec. 15, 2004, as amended at 71 FR 53044, Sept. 8, 2006]

              236.602-70
              Restriction on award of overseas architect-engineer contracts to foreign firms.

              In accordance with section 111 of the Military Construction and Veterans Affairs and Related Agencies Appropriations Act, 2015 (Division I of Pub. L. 113-235) and the same provision in subsequent military construction appropriations acts, architect-engineer contracts funded by military construction appropriations that are estimated to exceed $500,000 and are to be performed in Japan, in any North Atlantic Treaty Organization member country, or in countries bordering the Arabian Gulf (i.e., Iran, Oman, United Arab Emirates, Saudi Arabia, Qatar, Bahrain, Kuwait, and Iraq), shall be awarded only to United States firms or to joint ventures of United States and host nation firms.
              [80 FR 15911, Mar. 26, 2015]

              236.604
              Performance evaluation.
              Prepare a separate performance evaluation after actual construction of the project. Ordinarily, the evaluating official should be the person most familiar with the architect-engineer contractor's performance.
              [76 FR 58155, Sept. 20, 2011]

              236.606
              Negotiations.

              236.606-70
              Statutory fee limitation.
              (a) 10 U.S.C. 4540, 7212, and 9540 limit the contract price (or fee) for architect-engineer services for the preparation of designs, plans, drawings, and specifications to six percent of the project's estimated construction cost.
              (b) The six percent limit also applies to contract modifications, including modifications involving—
              (1) Work not initially included in the contract. Apply the six percent limit to the revised total estimated construction cost.
              (2) Redesign. Apply the six percent limit as follows—
              (i) Add the estimated construction cost of the redesign features to the original estimated construction cost;
              (ii) Add the contract cost for the original design to the contract cost for redesign; and
              (iii) Divide the total contract design cost by the total estimated construction cost. The resulting percentage may not exceed the six percent statutory limitation.
              (c) The six percent limit applies only to that portion of the contract (or modification) price attributable to the preparation of designs, plans, drawings, and specifications. If a contract or modification also includes other services, the part of the price attributable to the other services is not subject to the six percent limit.
              [56 FR 36421, July 31, 1991, as amended at 76 FR 58156, Sept. 20, 2011]

              236.609
              Contract clauses.

              236.609-70
              Additional provision.
              Use the provision at 252.236-7011, Overseas Architect-Engineer Services—Restriction to United States Firms, in solicitations for architect-engineer contracts that are—
              (1) Funded with military construction appropriations;
              (2) Estimated to exceed $500,000; and
              (3) To be performed in Japan, in any North Atlantic Treaty Organization member country, or in countries bordering the Arabian Gulf.
              [56 FR 36421, July 31, 1991, as amended at 62 FR 2858, Jan. 17, 1997; 63 FR 11539, Mar. 9, 1998; 76 FR 58156, Sept. 20, 2011; 79 FR 44316, July 31, 2014; 80 FR 15911, Mar. 26, 2015; 83 FR 54681, Oct. 31, 2018]

            Subpart 236.7—Standard and Optional Forms for Contracting for Construction, Architect-Engineer Services, and Dismantling, Demolition, or Removal of Improvements

              236.701
              Standard and optional forms for use in contracting for construction or dismantling, demolition, or removal of improvements.
              (c) Do not use Optional Form 347, Order for Supplies or Services (see 213.307).
              [56 FR 36421, July 31, 1991, as amended at 65 FR 63804, Oct. 25, 2000]

          Pt. 237
          PART 237—SERVICE CONTRACTING

              Subpart 237.1—Service Contracts—General
              Sec.
              237.101
              Definitions.
              237.102
              Policy.
              237.102-70
              Prohibition on contracting for firefighting or security-guard functions.
              237.102-71
              Limitation on service contracts for military flight simulators.
              237.102-72
              Contracts for management services.
              237.102-73
              Prohibition on contracts for services of senior mentors.
              237.102-74
              Taxonomy for the acquisition of services, and supplies and equipment.
              237.102-75
              Defense Acquisition Guidebook.
              237.102-76
              Review criteria for the acquisition of services.
              237.102-77
              Acquisition requirements roadmap tool.
              237.102-78
              Market research report guide for improving the tradecraft in services acquisition.
              237.102-79
              Private sector notification requirements in support of in-sourcing actions.
              237.104
              Personal services contracts.
              237.106
              Funding and term of service contracts.
              237.109
              Services of quasi-military armed forces.
              237.170
              Approval of contracts and task orders for services.
              237.170-1
              Scope.
              237.170-2
              Approval requirements.
              237.171
              Training for contractor personnel interacting with detainees.
              237.171-1
              Scope.
              237.171-2
              Definition.
              237.171-3
              Policy.
              237.171-4
              Contract clause.
              237.172
              Service contracts surveillance.
              237.173
              Prohibition on interrogation of detainees by contractor personnel.
              237.173-1
              Scope.
              237.173-2
              Definitions.
              237.173-3
              Policy.
              237.173-4
              Waiver.
              237.173-5
              Contract clause.
              237.174
              Disclosure of information to litigation support contractors.
              237.175
              Training that uses live vertebrate animals.

              Subpart 237.2—Advisory and Assistance Services
              237.270
              Acquisition of audit services.

              Subpart 237.5—Management Oversight of Service Contracts
              237.503
              Agency-head responsibilities.

              Subpart 237.70—Mortuary Services
              237.7000
              Scope.
              237.7001
              Method of acquisition.
              237.7002
              Area of performance and distribution of contracts.
              237.7003
              Solicitation provisions and contract clauses.

              Subpart 237.71—Laundry and Dry Cleaning Services
              237.7100
              Scope.
              237.7101
              Solicitation provisions and contract clauses.

              Subpart 237.72—Educational Service Agreements
              237.7200
              Scope.
              237.7201
              Educational service agreement.
              237.7202
              Limitations.

              237.7203
              Duration.
              237.7204
              Format and clauses for educational service agreements.

              Subpart 237.73—Services of Students at Research and Development Laboratories
              237.7300
              Scope.
              237.7301
              Definitions.
              237.7302
              General.
              237.7303
              Contract clauses.

              Subpart 237.74—Services at Installations Being Closed
              237.7400
              Scope.
              237.7401
              Policy.
              237.7402
              Contract clause.

              Subpart 237.75—Acquisition and Management of Industrial Resources
              237.7501
              Definition.
              237.7502
              Policy.

              Subpart 237.76—Continuation of Essential Contractor Services
              237.7600
              Scope.
              237.7601
              Definitions.
              237.7602
              Policy.
              237.7603
              Solicitation provision and contract clause.

              Subpart 237.77—Competition for Religious-Related Services
              237.7700
              Scope of subpart.
              237.7701
              Definition.
              237.7702
              Policy.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36424, July 31, 1991, unless otherwise noted.

            Subpart 237.1—Service Contracts—General

              237.101
              Definitions.

                Increased performance of security-guard functions, as used in this subpart, means—
              (1) In the case of an installation or facility where no security-guard functions were performed as of September 10, 2001, the entire scope or extent of the performance of security-guard functions at the installation or facility after such date; and
              (2) In the case of an installation or facility where security-guard functions were performed within a lesser scope of requirements or to a lesser extent as of September 10, 2001, than after such date, the increment of the performance of security-guard functions at the installation or facility that exceeds such lesser scope of requirements or extent of performance.

                Senior mentor means a retired flag, general, or other military officer or retired senior civilian official who provides expert experience-based mentoring, teaching, training, advice, and recommendations to senior military officers, staff, and students as they participate in war games, warfighting courses, operational planning, operational exercises, and decision-making exercises.
              [68 FR 7443, Feb. 14, 2003, as amended at 75 FR 71564, Nov. 24, 2010]

              237.102
              Policy.
              (b)(1) Preference for certain commercial services. See 212.272 for procedures for implementation of the preference for commercial facilities-related services, knowledge-based services (except engineering services), medical services, or transportation services, as required by section 876 of the National Defense Authorization Act for Fiscal Year 2017 (Pub. L. 114-328).
              (2) Public-private competitions. See PGI 207.302 for information on the Governmentwide moratorium and restrictions on public-private competitions conducted pursuant to Office of Management and Budget (OMB) Circular A-76.
              (c) In addition to the prohibition on award of contracts for the performance of inherently governmental functions, contracting officers shall not award contracts for functions that are exempt from private sector performance. See 207.503(e) for the associated documentation requirement.
              (e) Program officials shall obtain assistance from contracting officials through the Peer Review process at 201.170.
              [73 FR 1826, Jan. 10, 2008, as amended at 74 FR 37626, July 29, 2009; 81 FR 36473, June 7, 2016; 84 FR 39204, Aug. 9, 2019]

              237.102-70
              Prohibition on contracting for firefighting or security-guard functions.

              (a) Under 10 U.S.C. 2465, the DoD is prohibited for entering into contracts for the performance of firefighting or security-guard functions at any military installation or facility unless—
              (1) The contract is to be carried out at a location outside the United States and its outlying areas at which members of the armed forces would have to be used for the performance of firefighting or security-guard functions at the expense of unit readiness;
              (2) The contract will be carried out on a Government-owned but privately operated installation;
              (3) The contract (or renewal of a contract) is for the performance of a function under contract on September 24, 1983; or
              (4) The contract—
              (i) Is for the performance of firefighting functions;
              (ii) Is for a period of 1 year or less; and
              (iii) Covers only the performance of firefighting functions that, in the absence of the contract, would have to be performed by members of the armed forces who are not readily available to perform such functions by reason of a deployment.
              (b) Under Section 2907 of Public Law 103-160, this prohibition does not apply to services at installations being closed (see subpart 237.74).
              (c)(1) Under section 332 of Public Law 107-314, as amended by section 333 of Public Law 109-364 and section 343 of Public Law 110-181, this prohibition does not apply to any contract that is entered into for any increased performance of security-guard functions at a military installation or facility undertaken in response to the terrorist attacks on the United States on September 11, 2001, if—
              (i) Without the contract, members of the Armed Forces are or would be used to perform the increased security-guard functions;
              (ii) The agency has determined that—
              (A) Recruiting and training standards for the personnel who are to perform the security-guard functions are comparable to the recruiting and training standards for DoD personnel who perform the same security-guard functions;
              (B) Contractor personnel performing such functions will be effectively supervised, reviewed, and evaluated; and
              (C) Performance of such functions will not result in a reduction in the security of the installation or facility;
              (iii) Contract performance will not extend beyond September 30, 2012; and
              (iv) The total number of personnel employed to perform security-guard functions under all contracts entered into pursuant to this authority does not exceed the following limitations:
              (A) For fiscal year 2007, the total number of such personnel employed under such contracts on October 1, 2006.
              (B) For fiscal year 2008, the number equal to 90 percent of the total number of such personnel employed under such contracts on October 1, 2006.
              (C) For fiscal year 2009, the number equal to 80 percent of the total number of such personnel employed under such contracts on October 1, 2006.
              (D) For fiscal year 2010, the number equal to 70 percent of the total number of such personnel employed under such contracts on October 1, 2006.
              (E) For fiscal year 2011, the number equal to 60 percent of the total number of such personnel employed under such contracts on October 1, 2006.
              (F) For fiscal year 2012, the number equal to 50 percent of the total number of such personnel employed under such contracts on October 1, 2006.
              (2) Follow the procedures at PGI 237.102-70(c) to ensure that the personnel limitations specified in paragraph (c)(1)(iv) of this section are not exceeded.
              [60 FR 61599, Nov. 30, 1995, as amended at 67 FR 11439, Mar. 14, 2002; 68 FR 7443, Feb. 14, 2003; 69 FR 35533, June 25, 2004; 70 FR 14577, Mar. 23, 2005; 70 FR 35545, June 21, 2005; 71 FR 34834, June 16, 2006; 72 FR 51192, Sept. 6, 2007; 73 FR 53157, Sept. 15, 2008; 84 FR 65311, Nov. 27, 2019]

              237.102-71
              Limitation on service contracts for military flight simulators.
              (a) Definitions. As used in this subsection—
              (1) Military flight simulator means any system to simulate the form, fit, and function of a military aircraft that has no commonly available commercial variant.
              (2) Service contract means any contract entered into by DoD, the principal purpose of which is to furnish services in the United States through the use of service employees as defined in 41 U.S.C. 6701.
              (b) Under Section 832 of Public Law 109-364, as amended by Section 883(b) of Public Law 110-181, DoD is prohibited from entering into a service contract to acquire a military flight simulator. However, the Secretary of Defense may waive this prohibition with respect to a contract, if the Secretary—
              (1) Determines that a waiver is in the national interest; and
              (2) Provides an economic analysis to the congressional defense committees at least 30 days before the waiver takes effect. This economic analysis shall include, at a minimum—
              (i) A clear explanation of the need for the contract; and
              (ii) An examination of at least two alternatives for fulfilling the requirements that the contract is meant to fulfill, including the following with respect to each alternative:
              (A) A rationale for including the alternative.
              (B) A cost estimate of the alternative and an analysis of the quality of each cost estimate.
              (C) A discussion of the benefits to be realized from the alternative.
              (D) A best value determination of each alternative and a detailed explanation of the life-cycle cost calculations used in the determination.
              (c) When reviewing requirements or participating in acquisition planning that would result in a military department or defense agency acquiring a military flight simulator, the contracting officer shall notify the program officials of the prohibition in paragraph (b) of this subsection. If the program officials decide to request a waiver from the Secretary of Defense under paragraph (b) of this subsection, the contracting officer shall follow the procedures at PGI 237.102-71.
              [72 FR 51193, Sept. 6, 2007, as amended at 73 FR 53156, Sept. 15, 2008; 76 FR 58137, Sept. 20, 2011]

              237.102-72
              Contracts for management services.
              In accordance with Section 802 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181), DoD may award a contract for the acquisition of services the primary purpose of which is to perform acquisition support functions with respect to the development or production of a major system, only if—
              (a) The contract prohibits the contractor from performing inherently governmental functions;
              (b) The DoD organization responsible for the development or production of the major system ensures that Federal employees are responsible for determining—
              (1) Courses of action to be taken in the best interest of the Government; and
              (2) Best technical performance for the warfighter; and
              (c) The contract requires that the prime contractor for the contract may not advise or recommend the award of a contract or subcontract for the development or production of the major system to an entity owned in whole or in part by the prime contractor.
              [74 FR 34269, July 15, 2009]

              237.102-73
              Prohibition on contracts for services of senior mentors.

              DoD is prohibited from entering into contracts for the services of senior mentors. See PGI 237.102-73 for references to DoD policy and implementation guidance.
              [75 FR 71564, Nov. 24, 2010]

              237.102-74
              Taxonomy for the acquisition of services, and supplies and equipment.
              See PGI 237.102-74 for further guidance on the taxonomy for the acquisition of services and the acquisition of supplies and equipment.
              [79 FR 51264, Aug. 28, 2014]

              237.102-75
              Defense Acquisition Guidebook.
              See PGI 237.102-75 for information on the Defense Acquisition Guidebook, Chapter 10, Acquisition of Services.
              [81 FR 36473, June 7, 2016, as amended at 82 FR 61481, Dec. 28, 2017]

              237.102-76
              Review criteria for the acquisition of services.
              See PGI 237.102-76 for tenets and review criteria to be used when conducting preaward and postaward reviews for the acquisition of services.
              [76 FR 76320, Dec. 7, 2011]

              237.102-77
              Acquisition requirements roadmap tool.
              See PGI 237.102-77 for guidance on using the Acquisition Requirements Roadmap Tool to develop and organize performance requirements into draft versions of the performance work statement, the quality assurance surveillance plan, and the performance requirements summary.
              [77 FR 52254, Aug. 29, 2012, as amended at 81 FR 36473, June 7, 2016]

              237.102-78
              Market research report guide for improving the tradecraft in services acquisition.
              See PGI 210.070 for guidance on use of the market research report guide to conduct and document market research for service acquisitions.
              [77 FR 52254, Aug. 29, 2012]

              237.102-79
              Private sector notification requirements in support of in-sourcing actions.
              In accordance with 10 U.S.C. 2463, contracting officers shall provide written notification to affected incumbent contractors of Government in-sourcing determinations. Notification shall be provided within 20 business days of the contracting officer's receipt of a decision from the cognizant component in-sourcing program official. The notification will summarize the requiring official's final determination as to why the service is being in-sourced and shall be coordinated with the component's in-sourcing program official. No formal hiring or contract-related actions may be initiated prior to such notification, except for preliminary internal actions associated with hiring or contract modification. See the OASD (RFM) memorandum entitled “Private Sector Notification Requirements in Support of In-sourcing Actions,” dated January 29, 2013, for further information, which is available at PGI 237.102-79.
              [78 FR 65219, Oct. 31, 2013, as amended at 79 FR 35701, June 24, 2014]

              237.104
              Personal services contracts.
              (b)(i) Authorization to acquire the personal services of experts and consultants is included in 10 U.S.C. 129b. Personal service contracts for expert and consultant services must also be authorized by a determination and findings (D&F) in accordance with department/agency regulations.
              (A) Generally, the D&F should authorize one contract at a time; however, an authorizing official may issue a blanket D&F for classes of contracts.
              (B) Prepare each D&F in accordance with FAR 1.7 and include a determination that—
              (1) The duties are of a temporary or intermittent nature;
              (2) Acquisition of the services is advantageous to the national defense;
              (3) DoD personnel with necessary skills are not available;
              (4) Excepted appointment cannot be obtained;
              (5) A nonpersonal services contract is not practicable;
              (6) Statutory authority, 5 U.S.C. 3109 and other legislation, apply; and
              (7) Any other determination required by statutes has been made.
              (ii) Personal services contracts for health care are authorized by 10 U.S.C. 1091.
              (A) This authority may be used to acquire—
              (1) Direct health care services provided in medical treatment facilities;
              (2) Health care services at locations outside of medical treatment facilities (such as the provision of medical screening examinations at military entrance processing stations); and
              (3) Services of clinical counselors, family advocacy program staff, and victim's services representatives to members of the Armed Forces and covered beneficiaries who require such services, provided in medical treatment facilities or elsewhere. Persons with whom a personal services contract may be entered into under this authority include clinical social workers, psychologists, psychiatrists, and other comparable professionals who have advanced degrees in counseling or related academic disciplines and who meet all requirements for State licensure and board certification requirements, if any, within their fields of specialization.
              (B) Sources for personal services contracts with individuals under the authority of 10 U.S.C. 1091 shall be selected through the procedures in this section. These procedures do not apply to contracts awarded to business entities other than individuals. Selections made using the procedures in this section are exempt by statute from FAR part 6 competition requirements (see 206.001(b)).
              (C) Approval requirements for—
              (1) Direct health care personal services contracts (see paragraphs (b)(ii)(A)(1) and (2) of this section) and a pay cap are in DoDI 6025.5, Personal Services Contracts for Health Care Providers.
              (i) A request to enter into a personal services contract for direct health care services must be approved by the commander of the medical/dental treatment facility where the services will be performed.
              (ii) A request to enter into a personal services contract for a location outside of a medical treatment facility must be approved by the chief of the medical facility who is responsible for the area in which the services will be performed.
              (2) Services of clinical counselors, family advocacy program staff, and victim's services representatives (see paragraph (b)(ii)(A)(3) of this section), shall be in accordance with agency procedures.
              (D) The contracting officer must ensure that the requiring activity provides a copy of the approval with the purchase request.
              (E) The contracting officer must provide adequate advance notice of contracting opportunities to individuals residing in the area of the facility. The notice must include the qualification criteria against which individuals responding will be evaluated. The contracting officer shall solicit applicants through at least one local publication which serves the area of the facility. Acquisitions under this section for personal service contracts are exempt from the posting and synopsis requirements of FAR part 5.
              (F) The contracting officer shall provide the qualifications of individuals responding to the notice to the commander of the facility for evaluation and ranking in accordance with agency procedures. Individuals must be considered solely on the basis of the professional qualifications established for the particular personal services being acquired and the Government's estimate of reasonable rates, fees, or other costs. The commander of the facility shall provide the contracting officer with rationale for the ranking of individuals, consistent with the required qualifications.
              (G) Upon receipt from the facility of the ranked listing of applicants, the contracting officer shall either—
              (1) Enter into negotiations with the highest ranked applicant. If a mutually satisfactory contract cannot be negotiated, the contracting officer shall terminate negotiations with the highest ranked applicant and enter into negotiations with the next highest.
              (2) Enter into negotiations with all qualified applicants and select on the basis of qualifications and rates, fees, or other costs.
              (H) In the event only one individual responds to an advertised requirement, the contracting officer is authorized to negotiate the contract award. In this case, the individual must still meet the minimum qualifications of the requirement and the contracting officer must be able to make a determination that the price is fair and reasonable.
              (I) If a fair and reasonable price cannot be obtained from a qualified individual, the requirement should be canceled and acquired using procedures other than those set forth in this section.
              (iii) (A) In accordance with 10 U.S.C. 129b(d), an agency may enter into a personal services contract if—
              (1) The personal services—
              (i) Are to be provided by individuals outside the United States, regardless of their nationality;
              (ii) Directly support the mission of a defense intelligence component or counter-intelligence organization of DoD; or

              (iii) Directly support the mission of the special operations command of DoD; and
              (2) The head of the contracting activity provides written approval for the proposed contract. The approval shall include a determination that addresses the following:
              (i) The services to be procured are urgent or unique;
              (ii) It would not be practical to obtain such services by other means; and
              (iii) For acquisition of services in accordance with paragraph (b)(iii)(A)(1)(i) of this section, the services to be acquired are necessary and appropriate for supporting DoD activities and programs outside the United States.

              (B) The contracting officer shall ensure that the applicable requirements of paragraph (b)(iii)(A)(2) of this section have been satisfied and shall include the approval documentation in the contract file.
              (iv) The requirements of 5 U.S.C. 3109, Employment of Experts and Consultants; Temporary or Intermittent, do not apply to contracts entered into in accordance with paragraph (b)(iii) of this section.
              (d) See 237.503(c) for requirements for certification and approval of requirements for services to prevent contracts from being awarded or administered in a manner that constitutes an unauthorized personal services contract.
              (f)(i) Payment to each expert or consultant for personal services under 5 U.S.C. 3109 shall not exceed the highest rate fixed by the Classification Act Schedules for grade GS-15 (see 5 CFR 304.105(a)).
              (ii) The contract may provide for the same per diem and travel expenses authorized for a Government employee, including actual transportation and per diem in lieu of subsistence for travel between home or place of business and official duty station.
              (iii) Coordinate with the civilian personnel office on benefits, taxes, personnel ceilings, and maintenance of records.
              [56 FR 36424, July 31, 1991, as amended at 60 FR 2888, Jan. 12, 1995; 60 FR 61599, Nov. 30, 1995; 63 FR 11539, Mar. 9, 1998; 67 FR 61516, Oct. 1, 2002; 69 FR 55992, Sept. 17, 2004; 76 FR 25566, May 5, 2011]

              237.106
              Funding and term of service contracts.
              (1) Personal service contracts for expert or consultant services shall not exceed 1 year. The nature of the duties must be—
              (i) Temporary (not more than 1 year); or
              (ii) Intermittent (not cumulatively more than 130 days in 1 year).
              (2) The contracting officer may enter into a contract, exercise an option, or place an order under a contract for severable services for a period that begins in one fiscal year and ends in the next fiscal year if the period of the contract awarded, option exercised, or order placed does not exceed 1 year (10 U.S.C. 2410a).
              [64 FR 28110, May 25, 1999]

              237.109
              Services of quasi-military armed forces.
              See 237.102-70b for prohibition on contracting for firefighting or security-guard functions.
              [60 FR 61599, Nov. 30, 1995]

              237.170
              Approval of contracts and task orders for services.

              237.170-1
              Scope.
              This section—
              (a) Implements 10 U.S.C. 2330; and
              (b) Applies to services acquired for DoD, regardless of whether the services are acquired through—
              (1) A DoD contract or task order; or
              (2) A contract or task order awarded by an agency other than DoD.
              [68 FR 56564, Oct. 1, 2003]

              237.170-2
              Approval requirements.
              (a) Acquisition of services through a contract or task order that is not performance based. (1) For acquisitions at or below $100 million, obtain the approval of the official designated by the department or agency.
              (2) For acquisitions exceeding $100 million, obtain the approval of the senior procurement executive.
              (b) Acquisition of services through use of a contract or task order issued by a non-DoD agency. Comply with the review, approval, and reporting requirements established in accordance with subpart 217.7 when acquiring services through use of a contract or task order issued by a non-DoD agency.
              [70 FR 29643, May 24, 2005, as amended at 71 FR 14104, Mar. 21, 2006; 71 FR 75893, Dec. 19, 2006; 75 FR 45074, Aug. 2, 2010; 80 FR 36905, June 26, 2015; 80 FR 67255, Oct. 30, 2015; 85 FR 61504, Sept. 29, 2020]

              237.171
              Training for contractor personnel interacting with detainees.

              237.171-1
              Scope.
              This section prescribes policies to prevent the abuse of detainees, as required by Section 1092 of the National Defense Authorization Act for Fiscal Year 2005 (Pub. L. 108-375).
              [70 FR 52033, Sept. 1, 2005]

              237.171-2
              Definition.

                Combatant commander, detainee, and personnel interacting with detainees, as used in this section, are defined in the clause at 252.237-7019, Training for Contractor Personnel Interacting with Detainees.
              [71 FR 53048, Sept. 8, 2006]

              237.171-3
              Policy.
              (a) Each DoD contract in which contractor personnel, in the course of their duties, interact with detainees shall include a requirement that such contractor personnel—
              (1) Receive Government-provided training regarding the international obligations and laws of the United States applicable to the detention of personnel, including the Geneva Conventions; and
              (2) Provide a copy of the training receipt document to the contractor.
              (b) The combatant commander responsible for the area where the detention or interrogation facility is located will arrange for the training and a training receipt document to be provided to contractor personnel. For information on combatant commander geographic areas of responsibility and point of contact information for each command, see PGI 237.171-3(b).
              [71 FR 53048, Sept. 8, 2006]

              237.171-4
              Contract clause.
              Use the clause at 252.237-7019, Training for Contractor Personnel Interacting with Detainees, in in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that are for the acquisition of services if—
              (a) The clause at 252.225-7040, Contractor Personnel Supporting U.S. Armed Forces Deployed Outside the United States, is included in the solicitation or contract; or
              (b) The services will be performed at a facility holding detainees, and contractor personnel in the course of their duties may be expected to interact with the detainees.
              [70 FR 52033, Sept. 1, 2005, as amended at 78 FR 37989, June 25, 2013; 79 FR 30471, May 28, 2014]

              237.172
              Service contracts surveillance.

              (a) Ensure that quality assurance surveillance plans are prepared in conjunction with the preparation of the statement of work or statement of objectives for solicitations and contracts for services. These plans should be tailored to address the performance risks inherent in the specific contract type and the work effort addressed by the contract. (See FAR subpart 46.4.) Retain quality assurance surveillance plans in the contract file. See http://sam.dau.mil, Step Four—Requirements Definition, for examples of quality assurance surveillance plans.
              (b) See PGI 216.505-70 for guidance regarding minimum labor category qualifications for orders issued under multiple award services contracts.
              [80 FR 58632, Sept. 30, 2015, as amended at 84 FR 48510, Sept. 13, 2019]

              237.173
              Prohibition on interrogation of detainees by contractor personnel.

              237.173-1
              Scope.
              This section prescribes policies that prohibit interrogation of detainees by contractor personnel, as required by section 1038 of the Fiscal Year 2010 National Defense Authorization Act (Pub. L. 111-84).
              [75 FR 67633, Nov. 3, 2010]

              237.173-2
              Definitions.
              As used in this subpart—

                Detainee means any person captured, detained, held, or otherwise under the effective control of DoD personnel (military or civilian) in connection with hostilities. This includes, but is not limited to, enemy prisoners of war, civilian internees, and retained personnel. This does not include DoD personnel or DoD contractor personnel being held for law enforcement purposes.

                Interrogation of detainees means a systematic process of formally and officially questioning a detainee for the purpose of obtaining reliable information to satisfy foreign intelligence collection requirements.
              [75 FR 67633, Nov. 3, 2010]

              237.173-3
              Policy.
              (a) No detainee may be interrogated by contractor personnel.
              (b) Contractor personnel with proper training and security clearances may be used as linguists, interpreters, report writers, information technology technicians, and other employees filling ancillary positions, including as trainers of and advisors to interrogators, in interrogations of detainees if—

              (1) Such personnel are subject to the same laws, rules, procedures, and policies (including DoD Instruction 1100.22, Policy and Procedures for Determining Workforce Mix (http://www.dtic.mil/whs/directives/corres/pdf/110022p.pdf); DoD Directive 2310.01E, The Department of Defense Detainee Program (http://www.dtic.mil/whs/directives/corres/pdf/231001p.pdf); and DoD Directive 3115.09, DoD Intelligence Interrogations, Detainee Debriefings, and Tactical Questioning (http://www.dtic.mil/whs/directives/corres/pdf/311509p.pdf)); pertaining to detainee operations and interrogations as those that apply to Government personnel in such positions in such interrogations; and
              (2) Appropriately qualified and trained DoD personnel (military or civilian) are available to oversee the contractor's performance and to ensure that contractor personnel do not perform activities that are prohibited under this section.
              [75 FR 67633, Nov. 3, 2010]

              237.173-4
              Waiver.
              The Secretary of Defense may waive the prohibition in 237.173-3(a) for a period of 60 days, if the Secretary determines such a waiver is vital to the national security interests of the United States. The Secretary may renew a waiver issued pursuant to this paragraph for an additional 30-day period, if the Secretary determines that such a renewal is vital to the national security interests of the United States. Not later than five days after issuance of the waiver, the Secretary shall submit written notification to Congress. See specific waiver procedures at DoDI 1100.22.
              [75 FR 67633, Nov. 3, 2010]

              237.173-5
              Contract clause.
              Insert the clause at 252.237-7010, Prohibition on Interrogation of Detainees by Contractor Personnel, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that are for the provision of services.
              [75 FR 67633, Nov. 3, 2010, as amended at 78 FR 37989, June 25, 2013]

              237.174
              Disclosure of information to litigation support contractors.
              See 204.74 for disclosure of information to litigation support contractors.
              [79 FR 11340, Feb. 28, 2014]

              237.175
              Training that uses live vertebrate animals.
              Use the clause at 252.235-7002, Animal Welfare, as prescribed in 235.072(a), when contracting for training that will use live vertebrate animals.
              [79 FR 73501, Dec. 11, 2014]

            Subpart 237.2—Advisory and Assistance Services

              237.270
              Acquisition of audit services.
              (a) General policy. (1) Do not contract for audit services unless—

              (i) The cognizant DoD audit organization determines that expertise required to perform the audit is not available within the DoD audit organization; or

              (ii) Temporary audit assistance is required to meet audit reporting requirements mandated by law or DoD regulation.
              (2) See 215.101-2-70(b)(3) for the prohibition on the use of the lowest price technically acceptable source selection process when acquiring audit services.
              (3) See PGI 237.270 for a list of DoD publications that govern the conduct of audits.
              (b) Contract period. Except in unusual circumstances, award contracts for recurring audit services for a 1-year period with at least 2 option years.
              (c) Approvals. Do not issue a solicitation for audit services unless the requiring activity provides evidence that the cognizant DoD audit organization has approved the statement of work. The requiring agency shall obtain the same evidence of approval for subsequent material changes to the statement of work.
              (d) Solicitation provisions and contract clauses. (1) Use the provision at 252.237-7000, Notice of Special Standards of Responsibility, in solicitations for audit services.
              (2) Use the clause at 252.237-7001, Compliance with Audit Standards, in solicitations and contracts for audit services.
              [70 FR 57193, Sept. 30, 2005, as amended at 84 FR 50789, Sept. 26, 2019]

            Subpart 237.5—Management Oversight of Service Contracts

              Source:
              75 FR 54525, Sept. 8, 2010, unless otherwise noted.

              237.503
              Agency-head responsibilities.
              (c) The agency head or designee shall employ procedures to ensure that requirements for service contracts are vetted and approved as a safeguard to prevent contracts from being awarded or administered in a manner that constitutes an unauthorized personal services contract. Contracting officers shall follow the procedures at PGI 237.503, include substantially similar certifications in conjunction with service contract requirements, and place the certification in the contract file. The program manager or other official responsible for the requirement, at a level specified by the agency, should execute the certification. In addition, contracting officers and program managers should remain aware of the descriptive elements at FAR 37.104(d) to ensure that a service contract does not inadvertently become administered as a personal-services contract.
              [76 FR 25566, May 5, 2011]

            Subpart 237.70—Mortuary Services

              Source:
              71 FR 3416, Jan. 23, 2006, unless otherwise noted.

              237.7000
              Scope.
              This subpart—
              (a) Applies to contracts for mortuary services (the care of remains) for military personnel within the United States; and
              (b) May be used as guidance in areas outside the United States for mortuary services for deceased military and civilian personnel.

              237.7001
              Method of acquisition.
              (a) Requirements type contract. By agreement among the military activities, one activity in each geographical area will contract for the estimated requirements for the care of remains for all military activities in the area. Use a requirements type contract (see FAR 16.503) when the estimated annual requirements for the activities in the area are ten or more.
              (b) Purchase order. Where no contract exists, use DD Form 1155, Order for Supplies or Services, to obtain mortuary services.

              237.7002
              Area of performance and distribution of contracts.
              Follow the procedures at PGI 237.7002 for—
              (a) Defining the geographical area to be covered by the contract; and
              (b) Distributing copies of the contract.

              237.7003
              Solicitation provisions and contract clauses.

              (a) Use the following clauses in all mortuary service solicitations and contracts, except do not use the clauses at 252.237-7004, Area of Performance, in solicitations or contracts that include port of entry requirements:
              (1) 252.237-7003, Requirements, (insert activities authorized to place orders in paragraph (e) of the clause).
              (2) 252.237-7004, Area of Performance.
              (3) 252.237-7005, Performance and Delivery.
              (4) 252.237-7006, Subcontracting.
              (5) 252.237-7007, Termination for Default.
              (6) 252.237-7008, Group Interment.
              (7) 252.237-7009, Permits.
              (8) 252.237-7011, Preparation History.
              (b) Use the clause at FAR 52.245-1, Government Property, with its Alternate I, in solicitations and contracts that include port of entry requirements.
              [71 FR 3416, Jan. 23, 2006, as amended at 74 FR 37646, July 29, 2009; 79 FR 65593, Nov. 5, 2014; 84 FR 48505, Sept. 13, 2019]

            Subpart 237.71—Laundry and Dry Cleaning Services

              237.7100
              Scope.
              This subpart—
              (a) Applies to contracts for laundry and dry cleaning services within the United States; and
              (b) May be used as guidance in areas outside the United States.
              [71 FR 3416, Jan. 23, 2006]

              237.7101
              Solicitation provisions and contract clauses.
              (a) Use the provision at 252.237-7012, Instruction to Offerors (Count-of-Articles), in solicitations for laundry and dry cleaning services to be provided on a count-of-articles basis.
              (b) Use the provision at 252.237-7013, Instruction to Offerors (Bulk Weight), in solicitations for laundry services to be provided on a bulk weight basis.
              (c) Use the clause at 252.237-7014, Loss or Damage (Count-of-Articles), in solicitations and contracts for laundry and dry cleaning services to be provided on a count-of-articles basis.
              (d) Use the clause at 252.237-7015, Loss or Damage (Weight of Articles), in solicitations and contracts for laundry and dry cleaning services to be provided on a bulk weight basis.
              (1) Insert a reasonable per pound price in paragraph (b) of the clause, based on the average per pound value. When the contract requires laundry services on a bag type basis, insert reasonable per pound prices by bag type.
              (2) Insert an appropriate percentage in paragraph (e) of the clause, not to exceed eight percent.
              (e) Use the basic or an alternate of the clause at 252.237-7016, Delivery Tickets, in all solicitations and contracts for laundry and dry cleaning services.
              (1) Use the basic clause when services are not to be provided on a bulk weight basis.
              (2) Use the alternate I clause when services are for bag type laundry to be provided on a bulk weight basis.
              (3) Use the alternate II clause when services are unsorted laundry to be provided on a bulk weight basis.
              (f) Use the clause at 252.237-7017, Individual Laundry, in solicitations and contracts for laundry and dry cleaning services to be provided to individual personnel.
              (1) Insert the number of pieces of outer garments in paragraphs (d) (1) and (2) of the clause.
              (2) The number of pieces and composition of a bundle in paragraphs (d) (1) and (2) of the clause may be modified to meet local conditions.
              (g) Use the clause at 252.237-7018, Special Definitions of Government Property, in all solicitations and contracts for laundry and dry cleaning services.
              [56 FR 36424, July 31, 1991, as amended at 62 FR 34127, June 24, 1997. Redesignated at 71 FR 3416, Jan. 23, 2006; 79 FR 65593, Nov. 5, 2014]

            Subpart 237.72—Educational Service Agreements

              237.7200
              Scope.
              (a) This subpart prescribes acquisition procedures for educational services from schools, colleges, universities, or other educational institutions. This subpart does not include tuition assistance agreements, i.e., payment by the Government of partial tuition under the off-duty educational program.
              (b) As used in the subpart—
              (1) “Facilities” do not include the institution's dining rooms or dormitories; and

              (2) “Fees” does not include charges for meals or lodging.

              237.7201
              Educational service agreement.
              (a) An educational service agreement is not a contract, but is an ordering agreement under which the Government may order educational services.
              (b) Educational service agreements provide for ordering educational services when—
              (1) The Government pays normal tuition and fees for educational services provided to a student by the institution under its normal schedule of tuition and fees applicable to all students generally; and
              (2) Enrollment is at the institution under the institution's normal rules and in courses and curricula which the institution offers to all students meeting admission requirements.

              237.7202
              Limitations.
              Educational service agreements are not used to provide special courses or special fees for Government students.
              [56 FR 36424, July 31, 1991, as amended at 83 FR 16005, Apr. 13, 2018]

              237.7203
              Duration.
              (a) Educational service agreements are for an indefinite duration and remain in effect until terminated.
              (b) The issuing activity must establish procedures to review each educational service agreement at least once each year. Review dates should consider the institution's academic calendar and occur at least 30 days before the beginning of a term. The purpose of the review is to incorporate changes to reflect requirements of any statute, Executive Order, FAR, or DFARS.
              (c) If the contracting officer and the institution do not agree on required changes, terminate the agreement.

              237.7204
              Format and clauses for educational service agreements.
              Educational service agreements under this subpart shall be in the following format. Add to the schedule any other provisions necessary to describe the requirements, if they are consistent with the following provisions and the policy of acquiring educational services in the form of standard course offerings at the prevailing rates of the institution.

                Educational Service Agreement
                Agreement No. ______
                1. This agreement entered into on the ____ day of _____ ____, is between the Government, represented by the Contracting Officer, and the Contractor, (name of institution), an educational institution located in ____ (city), ____ (state).
                2. This agreement is for educational services to be provided by the Contractor to Government personnel at the Contractor's institution. The Contractor shall provide instruction with standard offerings of courses available to the public.
                3. The Government shall pay for services under the Contractor's normal schedule of tuition and fees applicable to the public and in effect at the time the services are performed.
                4. The Government will review this agreement annually before the anniversary of its effective date for the purpose of incorporating changes required by statutes, executive orders, the Federal Acquisition Regulation, or the Defense Federal Acquisition Regulation Supplement. Changes required to be made by modification to this agreement or by issuance of a superseding agreement. If mutual agreement on the changes cannot be reached, the Government will terminate this agreement.
                5. The parties may amend this agreement only by mutual consent.
                6. This agreement shall start on the date in paragraph 1 and shall continue until terminated.
                7. The estimated annual cost of this agreement is $_____. This estimate is for administrative purposes only and does not impose any obligation on the Government to request any services or make any payment.
                8. Advance payments are authorized by 10 U.S.C. 2396(a)(3).
                9. Submit invoices to: ______ (name and address of activity).
                Schedule Provisions
                1. Ordering procedures and services to be provided. (a) The Contractor shall promptly deliver to the Contracting Officer one copy of each catalog applicable to this agreement, and one copy of any subsequent revision.

                (b) The Government will request educational services under this agreement by a (insert type of request, such as, delivery order, official Government order, or other written communication). The (insert type of request, such as, delivery order, official Government order, or other written communication) will contain the number of this agreement and will designate as students at the Contractor's institution one or more Government-selected persons who have already been accepted for admission under the Contractor's usual admission standards.
                (c) All students under this agreement shall register in the same manner, be subject to the same academic regulations, and have the same privileges, including the use of all facilities and equipment as any other students enrolled in the institution.
                (d) Upon enrolling each student under this agreement, the Contractor shall, where the resident or nonresident status involves a difference in tuition or fees—
                (i) Determine the resident or nonresident status of the student;
                (ii) Notify the student and the Contracting Officer of the determination. If there is an appeal of the determination;
                (iii) If there is an appeal of the determination, process the appeal under the Contractor's standard procedures;
                (iv) Notify the student and Contracting Officer of the result; and
                (v) Make the determination a part of the student's permanent record.
                (e) The Contractor shall not furnish any instruction or other services to any student under this agreement before the effective date of a request for services in the form specified in paragraph (b) of this schedule.
                2. Change in curriculum. The Contracting Officer may vary the curriculum for any student enrolled under this agreement but shall not require or make any change in any course without the Contractor's consent.
                3. Payment. (a) The Government shall pay the Contractor the normal tuition and fees which the Contractor charges any students pursuing the same or similar curricula, except for any tuition and fees which this agreement excludes. The Contractor may change any tuition and fees, provided—
                (1) The Contractor publishes the revisions in a catalog or otherwise publicly announces the revisions;
                (2) Applies the revisions uniformly to all students studying the same or similar curricula;
                (3) Provides the Contracting Officer notice of changes before their effective date.
                (b) The Contractor shall not establish any tuition or fees which apply solely to students under this agreement.
                (c) If the Contractor regularly charges higher tuition and fees for nonresident students, the Contractor may charge the Government the normal nonresident tuition and fees for students under this agreement who are nonresidents. The Government shall not claim resident tuition and fees for any student solely on the basis of the student residing in the State as a consequence of enrollment under this agreement.
                (d) The Contractor shall charge the Government only the tuition and fees which relate directly to enrollment as a student. Tuition and fees may include—
                (i) Penalty fees for late registration or change of course caused by the Government;
                (ii) Mandatory health fees and health insurance charges; and
                (iii) Any flat rate charge applicable to all students registered for research that appears in the Contractor's publicly announced fee schedule.
                (e) The Contractor shall not charge the Government for—
                (i) Permit charges, such as vehicle registration or parking fees, unless specifically authorized in the request for service; and
                (ii) Any equipment, refundable deposits, or any items or services (such as computer time) related to student research.
                (f) Normally, the Contractor shall not directly charge individual students for application fees or any other fee chargeable to this agreement. However, if the Contractor's standard procedures require payment of any fee before the student is enrolled under this agreement, the Contractor may charge the student. When the Contractor receives payment from the Government, the Contractor shall fully reimburse the student.
                (g) For each term the Contractor enrolls students under this agreement, the Contractor shall submit ____ copies of an invoice listing charges for each student separately. The Contractor shall submit invoices within ____ days after the start of the term and shall include—
                (i) Agreement number and inclusive dates of the term;
                (ii) Name of each student;
                (iii) A list showing each course for each student if the school charges by credit hour;
                (iv) The resident or nonresident status of each student (if applicable to the Contractor's school); and
                (v) A breakdown of charges for each student, including credit hours, tuition, application fee, and other fees. Provide a total for each student and a grand total for all students listed on the invoice.
                (h) If unforeseen events require additional charges that are otherwise payable under the Contractor's normal tuition and fee schedule, the Contractor may submit a supplemental invoice or make the adjustment on the next regular invoice under this agreement. The Contractor shall clearly identify and explain the supplemental invoice or the adjustment.

                (i) The Contractor shall apply any credits resulting from withdrawal of students, or from any other cause under its standard procedures, to subsequent invoices submitted under this agreement. Credits should appear on the first invoice submitted after the action resulting in the credits. If no subsequent invoice is submitted, the Contractor shall deliver to the Contracting Officer a check drawn to the order of the office designated for contract administration. The Contractor shall identify the reason for the credit and the applicable term dates in all cases.
                4. Withdrawal of students. (a) The Government may, at its option and at any time, withdraw financial support for any student by issuing official orders. The Government will furnish ____ copies of the orders to the Contractor within a reasonable time after publication.
                (b) The Contractor may request withdrawal by the Government of any student for academic or disciplinary reasons.
                (c) If withdrawal occurs before the end of a term, the Government will pay any tuition and fees due for the current term. The Contractor shall credit the Government with any charges eligible for refund under the Contractor's standard procedures for any students in effect on the date of withdrawal.
                (d) Withdrawal of students by the Government will not be the basis for any special charge or claim by the Contractor other than charges under the Contractor's standard procedures.
                5. Transcripts. Within a reasonable time after withdrawal of a student for any reason, or after graduation, the Contractor shall send to the Contracting Officer (or to an address supplied by the Contracting Officer) one copy of an official transcript showing all work by the student at the institution until such withdrawal or graduation.
                6. Student teaching. The Government does not anticipate the Contractor awarding fellowships and assistantships to students attending school under this agreement. However, for graduate students, should both the student and the Contractor decide it to be in the student's best interests to assist in the institution's teaching program, the Contractor may provide nominal compensation for part-time service. Base the compensation on the Contractor's practices and procedures for other students of similar accomplishment in that department or field. The Contractor shall apply the compensation as a credit against any invoices presented for payment for any period in which the student performed the part-time teaching service.
                7. Termination of agreement. (a) Either party may terminate this agreement by giving 30 days advance written notice of the effective date of termination. In the event of termination, the Government shall have the right, at its option, to continue to receive educational services for those students already enrolled in the contractor's institution under this agreement until such time that the students complete their courses or curricula or the Government withdraws them from the Contractor's institution. The terms and conditions of this agreement in effect on the effective date of the termination shall continue to apply to such students remaining in the Contractor's institution.
                (b) Withdrawal of students under Schedule provision 4 shall not be considered a termination within the meaning of this provision 7.
                (c) Termination by either party shall not be the basis for any special charge or claim by the Contractor, other than as provided by the Contractor's standard procedures.
                General Provisions
                Use the following clauses in educational service agreements:
                1. FAR 52.202-1, Definitions, and add the following paragraphs (h) through (m).
                (h) “Term” means the period of time into which the Contractor divides the academic year for purposes of instruction. This includes “semester,” “trimester,” “quarter,” or any similar word the Contractor may use.
                (i) “Course” means a series of lectures or instructions, and laboratory periods, relating to one specific representation of subject matter, such as Elementary College Algebra, German 401, or Surveying. Normally, a student completes a course in one term and receives a certain number of semester hours credit (or equivalent) upon successful completion.
                (j) “Curriculum” means a series of courses having a unified purpose and belonging primarily to one major academic field. It will usually include certain required courses and elective courses within established criteria. Examples include Business Administration, Civil Engineering, Fine and Applied Arts, and Physics. A curriculum normally covers more than one term and leads to a degree or diploma upon successful completion.
                (k) “Catalog” means any medium by which the Contractor publicly announces terms and conditions for enrollment in the Contractor's institution, including tuition and fees to be charged. This includes “bulletin,” “announcement,” or any other similar word the Contractor may use.
                (l) “Tuition” means the amount of money charged by an educational institution for instruction, not including fees.
                (m) “Fees” means those applicable charges directly related to enrollment in the Contractor's institution. Unless specifically allowed in the request for services, fees shall not include—
                (1) Any permit charge, such as parking and vehicle registration; or
                (2) Charges for services of a personal nature, such as food, housing, and laundry.
                2. FAR 52.203-3, Gratuities.
                3. FAR 52.203-5, Covenant Against Contingent Fees.
                4. FAR 52.204-1, Approval of Contract, if required by department/agency procedures.

                5. FAR 52.215-2, Audit and Records—Negotiation.

                6. FAR 52.215-8, Order of Precedence—Uniform Contract Format.
                7. Conflicts Between Agreement and Catalog. Insert the following clause:
                Conflicts Between Agreement and Catalog
                If there is any inconsistency between this agreement and any catalog or other document incorporated in this agreement by reference or any of the Contractor's rules and regulations, the provisions of this agreement shall govern.
                8. FAR 52.222-3, Convict Labor.
                9. Under FAR 22.802, FAR 22.807, and FAR 22.810, use the appropriate clause from FAR 52.222-26, Equal Opportunity.
                10. FAR 52.233-1, Disputes.
                11. Assignment of Claims. Insert the following clause:
                Assignment of Claims
                No claim under this agreement shall be assigned.
                12. FAR 52.252-4, Alterations in Contract, if required by department/agency procedures.
                Signature Page
                Agreement No.
                Date

                The United States of America
                By:
                  (Contracting Officer)
                Activity
                Location
                    (Name of Contractor)
                By:
                (Title)

              [56 FR 36424, July 31, 1991, as amended at 60 FR 61599, Nov. 30, 1995; 63 FR 55052, Oct. 14, 1998; 64 FR 49684, Sept. 14, 1999; 64 FR 53447, Oct. 1, 1999; 74 FR 42780, Aug. 25, 2009]

            Subpart 237.73—Services of Students at Research and Development Laboratories

              237.7300
              Scope.
              This subpart prescribes procedures for acquisition of temporary or intermittent services of students at institutions of higher learning for the purpose of providing technical support at Defense research and development laboratories (10 U.S.C. 2360).

              237.7301
              Definitions.
              As used in this subpart—
              (a) Institution of higher learning means any public or private post-secondary school, junior college, college, university, or other degree granting educational institution that—
              (1) Is located in the United States or its outlying areas;
              (2) Has an accredited education program approved by an appropriate accrediting body; and
              (3) Offers a program of study at any level beyond high school.
              (b) Nonprofit organization means any organization described by section 501(c)(3) of title 26 of the U.S.C. which is exempt from taxation under section 501(a) of title 26.
              (c) Student means an individual enrolled (or accepted for enrollment) at an institution of higher learning before the term of the student technical support contract. The individual shall remain in good standing in a curriculum designed to lead to the granting of a recognized degree, during the term of the contract.
              (d) Technical support means any scientific or engineering work in support of the mission of the DoD laboratory involved. It does not include administrative or clerical services.
              [56 FR 36424, July 31, 1991, as amended at 70 FR 35545, June 21, 2005]

              237.7302
              General.
              Generally, agencies will acquire services of students at institutions of higher learning by contract between a nonprofit organization employing the student and the Government. When it is in the best interest of the Government, contracts may be made directly with students. These services are not subject to the requirements of FAR part 19, FAR 13.003(b)(1), or DFARS part 219. Award authority for these contracts is 10 U.S.C. 2304(a)(1) and 10 U.S.C. 2360.
              [56 FR 36424, July 31, 1991, as amended at 60 FR 29500, June 5, 1995; 64 FR 2598, Jan. 15, 1999]

              237.7303
              Contract clauses.
              Contracts made directly with students are nonpersonal service contracts but shall include the clauses at FAR 52.232-3, Payments Under Personal Services Contracts, and FAR 52.249-12, Termination (Personal Services).

            Subpart 237.74—Services at Installations Being Closed

              Source:
              59 FR 36089, July 15, 1994, unless otherwise noted.

              237.7400
              Scope.
              This subpart prescribes procedures for contracting, through use of other than full and open competition, with local governments for police, fire protection, airfield operation, or other community services at military installations to be closed under the Defense Authorization Amendments and Base Closure and Realignment Act (Pub. L. 100-526), as amended, and the Defense Base Closure and Realignment Act of 1990 (Pub. L. 101-510), as amended.
              [59 FR 36089, July 15, 1994, as amended at 60 FR 29500, June 5, 1995]

              237.7401
              Policy.
              The authority in 206.302-5(b)(ii) to contract with local governments—
              (a) May be exercised without regard to the provisions of 10 U.S.C. Chapter 146, Contracting for Performance of Civilian Commercial or Industrial Type Functions;
              (b) May not be exercised earlier than 180 days before the date the installation is scheduled to be closed;
              (c) Requires a determination by the head of the contracting activity that the services being acquired under contract with the local government are in the best interests of the Department of Defense.
              [59 FR 36089, July 15, 1994, as amended at 60 FR 29500, June 5, 1995; 83 FR 24894, May 30, 2018]

              237.7402
              Contract clause.
              Use the clause at 252.237-7022, Services at Installations Being Closed, in solicitations and contracts based upon the authority of this subpart.
              [59 FR 36089, July 15, 1994, as amended at 60 FR 29500, June 5, 1995]

            Subpart 237.75—Acquisition and Management of Industrial Resources

              Source:
              74 FR 37646, July 29, 2009, unless otherwise noted.

              237.7501
              Definition.

                Facilities project, as used in this subpart, means a Government project to provide, modernize, or replace real property for use by a contractor in performing a Government contract or subcontract.

              237.7502
              Policy.
              (a) Comply with DoD Directive 4275.5, Acquisition and Management of Industrial Resources, in processing requests for facilities projects.
              (b) Departments and agencies shall submit reports of facilities projects to the House and Senate Armed Services Committees—
              (1) At least 30 days before starting facilities projects involving real property (10 U.S.C. 2662); and
              (2) In advance of starting construction for a facilities project regardless of cost. Use DD Form 1391, FY__ Military Construction Project Data, to notify congressional committees of projects that are not included in the annual budget.

            Subpart 237.76—Continuation of Essential Contractor Services

              Source:
              75 FR 66682, Oct. 29, 2010, unless otherwise noted.

              237.7600
              Scope.
              This subpart prescribes procedures for the acquisition of essential contractor services which support mission-essential functions.

              237.7601
              Definitions.
              As used in this subpart, essential contractor service and mission-essential functions are defined in the clause at 252.237-7023, Continuation of Essential Contractor Services.

              237.7602
              Policy.

              (a) Contractors providing services designated as essential contractor services shall be prepared to continue providing such services, in accordance with the terms and conditions of their contracts, during periods of crisis. As a general rule, the designation of services as essential contractor services will not apply to an entire contract but will apply only to those service functions that have been specifically identified as essential contractor services by the functional commander or civilian equivalent.
              (b) Contractors who provide Government-determined essential contractor services shall provide a written plan to be incorporated in the contract, to ensure the continuation of these services in crisis situations. Contracting officers shall consult with a functional manager to assess the sufficiency of the contractor-provided written plan. Contractors will activate such plans only during periods of crisis, as authorized by the contracting officer, who does so at the direction of the appropriate functional commander or civilian equivalent.
              (c) The contracting officer shall follow the procedures at PGI 207.105U(b)(20)(C) in preparing an acquisition plan.

              237.7603
              Solicitation provision and contract clause.
              (a) Use the clause at 252.237-7023, Continuation of Essential Contractor Services in all solicitations and contracts for services that are in support of mission-essential functions.
              (b) Use the provision at 252.237-7024, Notice of Continuation of Essential Contractor Services in all solicitations for services that include the clause 252.237-7023.

            Subpart 237.77—Competition for Religious-Related Services

              Source:
              83 FR 16002, Apr. 13, 2018, unless otherwise noted.

              237.7700
              Scope of subpart.
              This subpart provides policy and guidance for the acquisition of religious-related services to be performed on a U.S. military installation in accordance with section 898 of the National Defense Authorization Act for Fiscal Year 2016 (Pub. L. 114-92).

              237.7701
              Definition.
              As used in this subpart—

                Nonprofit organization means any organization that is—
              (1) Described in section 501(c) of the Internal Revenue Code of 1986; and
              (2) Exempt from tax under section 501(a) of that Code.

              237.7702
              Policy.
              (a) A nonprofit organization shall not be precluded from competing for a contract for religious-related services to be performed on a U.S. military installation.
              (b) See 219.270 when an acquisition for religious-related services to be performed on a U.S. military installation is set aside for any of the small business concerns identified in FAR 19.000(a)(3).

          Pt. 239
          PART 239—ACQUISITION OF INFORMATION TECHNOLOGY

              Subpart 239.1—General
              Sec.
              239.001
              Applicability.
              239.101
              Policy.

              Subpart 239.70—Exchange or Sale of Information Technology
              239.7001
              Policy.

              Subpart 239.71—Security and Privacy for Computer Systems
              239.7100
              Scope of subpart.
              239.7101
              Definition.
              239.7102
              Policy and responsibilities.
              239.7102-1
              General.
              239.7102-2
              Compromising emanations—TEMPEST or other standard.
              239.7102-3
              Information assurance contractor training and certification.
              239.7103
              Contract clauses.

              Subpart 239.72—Standards
              239.7201
              Solicitation requirements.

              Subpart 239.73—Requirements for Information Relating to Supply Chain Risk
              239.7300
              Scope of subpart.
              239.7301
              Definitions.
              239.7302
              Applicability.
              239.7303
              Authorized individuals.
              239.7304
              Determination and notification.
              239.7305
              Exclusion and limitation on disclosure.
              239.7306
              Solicitation provision and contract clause.

              Subpart 239.74—Telecommunications Services
              239.7400
              Scope.
              239.7401
              Definitions.

              239.7402
              Policy.
              239.7403-239.7404
              [Reserved]
              239.7405
              Delegated authority for telecommunications resources.
              239.7406
              Certified cost or pricing data and data other than certified cost or pricing data.
              239.7407
              Type of contract.
              239.7408
              Special construction.
              239.7408-1
              General.
              239.7408-2
              Applicability of construction labor standards for special construction.
              239.7409
              Special assembly.
              239.7410
              Cancellation and termination.
              239.7411
              Contract clauses.

              Subpart 239.76—Cloud Computing
              239.7600
              Scope of subpart.
              239.7601
              Definitions.
              239.7602
              Policy and responsibilities.
              239.7602-1
              General.
              239.7602-2
              Required storage of data within the United States or outlying areas.
              239.7603
              Procedures.
              239.7604
              Solicitation provision and contract clause.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36429, July 31, 1991, unless otherwise noted.

            Subpart 239.1—General

              239.001
              Applicability.
              Notwithstanding FAR 39.001, this part applies to acquisitions of information technology, including national security systems.
              [80 FR 67251, Oct. 30, 2015]

              239.101
              Policy.
              (1) A contracting officer may not enter into a contract in excess of the simplified acquisition threshold for information technology products or services that are not commercial items unless the head of the contracting activity determines in writing that no commercial items are suitable to meet the agency's needs, as determined through the use of market research appropriate to the circumstances (see FAR 10.001(a)(3)) (section 855 of the National Defense Authorization Act for Fiscal Year 2016 (Pub. L. 114-92)).
              (2) See subpart 208.74 when acquiring commercial software or software maintenance.
              (3) See 227.7202 for policy on the acquisition of commercial computer software and commercial computer software documentation.
              [83 FR 4445, Jan. 31, 2018]

            Subpart 239.70—Exchange or Sale of Information Technology

              239.7001
              Policy.
              Agencies shall follow the procedures in DoD Manual 4140.01, Volume 9, DoD Supply Chain Materiel Management Procedures: Materiel Programs, when considering the exchange or sale of Government-owned information technology.
              [71 FR 39010, July 11, 2006, as amended at 82 FR 61481, Dec. 28, 2017]

            Subpart 239.71—Security and Privacy for Computer Systems

              Source:
              69 FR 35534, June 25, 2004, unless otherwise noted.

              239.7100
              Scope of subpart.
              This subpart includes information assurance and Privacy Act considerations. Information assurance requirements are in addition to provisions concerning protection of privacy of individuals (see FAR Subpart 24.1).

              239.7101
              Definition.

                Information assurance, as used in this subpart, means measures that protect and defend information, that is entered, processed, transmitted, stored, retrieved, displayed, or destroyed, and information systems, by ensuring their availability, integrity, authentication, confidentiality, and non-repudiation. This includes providing for the restoration of information systems by incorporating protection, detection, and reaction capabilities.

              239.7102
              Policy and responsibilities.

              239.7102-1
              General.
              (a) Agencies shall ensure that information assurance is provided for information technology in accordance with current policies, procedures, and statutes, to include—
              (1) The National Security Act;
              (2) The Clinger-Cohen Act;

              (3) National Security Telecommunications and Information Systems Security Policy No. 11;
              (4) Federal Information Processing Standards;
              (5) DoD Directive 8500.1, Information Assurance;
              (6) DoD Instruction 8500.2, Information Assurance Implementation;
              (7) DoD Directive 8140.01, Cyberspace Workforce Management; and
              (8) DoD Manual 8570.01-M, Information Assurance Workforce Improvement Program.
              (b) For all acquisitions, the requiring activity is responsible for providing to the contracting officer—
              (1) Statements of work, specifications, or statements of objectives that meet information assurance requirements as specified in paragraph (a) of this subsection;
              (2) Inspection and acceptance contract requirements; and
              (3) A determination as to whether the information technology requires protection against compromising emanations.
              [69 FR 35534, June 25, 2004, as amended at 73 FR 1829, Jan. 10, 2008; 75 FR 34946, June 21, 2010; 80 FR 56930, Sept. 21, 2015]

              239.7102-2
              Compromising emanations—TEMPEST or other standard.
              For acquisitions requiring information assurance against compromising emanations, the requiring activity is responsible for providing to the contracting officer—
              (a) The required protections, i.e., an established National TEMPEST standard (e.g., NSTISSAM TEMPEST 1-92) or a standard used by other authority;
              (b) The required identification markings to include markings for TEMPEST or other standard, certified equipment (especially if to be reused);
              (c) Inspection and acceptance requirements addressing the validation of compliance with TEMPEST or other standards; and
              (d) A date through which the accreditation is considered current for purposes of the proposed contract.
              [69 FR 35534, June 25, 2004, as amended at 84 FR 58337, Oct. 31, 2019]

              239.7102-3
              Information assurance contractor training and certification.
              (a) For acquisitions that include information assurance functional services for DoD information systems, or that require any appropriately cleared contractor personnel to access a DoD information system to perform contract duties, the requiring activity is responsible for providing to the contracting officer—(1) A list of information assurance functional responsibilities for DoD information systems by category (e.g., technical or management) and level (e.g., computing environment, network environment, or enclave); and
              (2) The information assurance training, certification, certification maintenance, and continuing education or sustainment training required for the information assurance functional responsibilities.
              (b) After contract award, the requiring activity is responsible for ensuring that the certifications and certification status of all contractor personnel performing information assurance functions as described in DoD 8570.01-M, Information Assurance Workforce Improvement Program, are in compliance with the manual and are identified, documented, and tracked.
              (c) The responsibilities specified in paragraphs (a) and (b) of this section apply to all DoD information assurance duties supported by a contractor, whether performed full-time or part-time as additional or embedded duties, and when using a DoD contract, or a contract or agreement administered by another agency (e.g., under an interagency agreement).
              (d) See PGI 239.7102-3 for guidance on documenting and tracking certification status of contractor personnel, and for additional information regarding the requirements of DoD 8570.01-M.
              [73 FR 1829, Jan. 10, 2008]

              239.7103
              Contract clauses.

              (a) Use the clause at 252.239-7000, Protection Against Compromising Emanations, in solicitations and contracts involving information technology that requires protection against compromising emanations.

              (b) Use the clause at 252.239-7001, Information Assurance Contractor Training and Certification, in solicitations and contracts involving contractor performance of information assurance functions as described in DoD 8570.01-M.
              [73 FR 1829, Jan. 10, 2008]

            Subpart 239.72—Standards

              239.7201
              Solicitation requirements.
              Contracting officers shall ensure that all applicable Federal Information Processing Standards are incorporated into solicitations.
              [71 FR 39011, July 11, 2006]

            Subpart 239.73—Requirements for Information Relating to Supply Chain Risk

              Source:
              78 FR 69271, Nov. 18, 2013, unless otherwise noted.

              239.7300
              Scope of subpart.

              This subpart implements 10 U.S.C. 2339a and elements of DoD Instruction 5200.44, Protection of Mission Critical Functions to Achieve Trusted Systems and Networks (TSN), at https://www.esd.whs.mil/Portals/54/Documents/DD/issuances/dodi/520044p.pdf?ver=2018-11-08-075800-903.

              [84 FR 4369, Feb. 15, 2019]

              239.7301
              Definitions.
              As used in this subpart—

                Covered item of supply means an item of information technology that is purchased for inclusion in a covered system, and the loss of integrity of which could result in a supply chain risk for a covered system (see 10 U.S.C. 2339a).

                Covered system means a national security system, as that term is defined at 44 U.S.C. 3552(b) (see 10 U.S.C. 2339a). It is any information system, including any telecommunications system, used or operated by an agency or by a contractor of an agency, or other organization on behalf of an agency—
              (1) The function, operation, or use of which—
              (i) Involves intelligence activities;
              (ii) Involves cryptologic activities related to national security;
              (iii) Involves command and control of military forces;
              (iv) Involves equipment that is an integral part of a weapon or weapons system; or
              (v) Is critical to the direct fulfillment of military or intelligence missions but this does not include a system that is to be used for routine administrative and business applications, including payroll, finance, logistics, and personnel management applications; or
              (2) Is protected at all times by procedures established for information that have been specifically authorized under criteria established by an Executive order or an Act of Congress to be kept classified in the interest of national defense or foreign policy.

                Information technology (see 40 U.S.C 11101(6)) means, in lieu of the definition at FAR 2.1, any equipment, or interconnected system(s) or subsystem(s) of equipment, that is used in the automatic acquisition, storage, analysis, evaluation, manipulation, management, movement, control, display, switching, interchange, transmission, or reception of data or information by the agency.
              (1) For purposes of this definition, equipment is used by an agency if the equipment is used by the agency directly or is used by a contractor under a contract with the agency that requires—
              (i) Its use; or
              (ii) To a significant extent, its use in the performance of a service or the furnishing of a product.
              (2) The term “information technology” includes computers, ancillary equipment (including imaging peripherals, input, output, and storage devices necessary for security and surveillance), peripheral equipment designed to be controlled by the central processing unit of a computer, software, firmware and similar procedures, services (including support services), and related resources.
              (3) The term “information technology” does not include any equipment acquired by a contractor incidental to a contract.

                Supply chain risk means the risk that an adversary may sabotage, maliciously introduce unwanted function, or otherwise subvert the design, integrity, manufacturing, production, distribution, installation, operation, or maintenance of a covered system so as to surveil, deny, disrupt, or otherwise degrade the function, use, or operation of such system (see 10 U.S.C. 2339a).
              [78 FR 69271, Nov. 18, 2013. Redesignated and amended at 80 FR 67251, Oct. 30, 2015; 83 FR 15995, Apr. 13, 2018; 84 FR 4369, Feb. 15, 2019]

              239.7302
              Applicability.
              Notwithstanding FAR 39.001, this subpart shall be applied to acquisition of information technology for covered systems (see 10 U.S.C. 2339a), for procurements involving—
              (a) A source selection for a covered system or a covered item of supply involving either a performance specification (see 10 U.S.C. 2305(a)(1)(C)(ii)), or an evaluation factor (see 10 U.S.C. 2305(a)(2)(A)), relating to supply chain risk;
              (b) The consideration of proposals for and issuance of a task or delivery order for a covered system or a covered item of supply where the task or delivery order contract concerned includes a requirement relating to supply chain risk (see 10 U.S.C. 2304c(d)(3) and FAR 16.505(b)(1)(iv)(D)); or
              (c) Any contract action involving a contract for a covered system or a covered item of supply where such contract includes a requirement relating to supply chain risk.
              [78 FR 69271, Nov. 18, 2013. Redesignated and amended at 80 FR 67251, Oct. 30, 2015; 84 FR 4370, Feb. 15, 2019]

              239.7303
              Authorized individuals.
              (a) Subject to 239.7304, the following individuals are authorized to take the actions authorized by 239.7305:
              (1) The Secretary of Defense.
              (2) The Secretary of the Army.
              (3) The Secretary of the Navy.
              (4) The Secretary of the Air Force.
              (b) The individuals authorized at paragraph (a) may not delegate the authority to take the actions at 239.7305 or the responsibility for making the determination required by 239.7304 to an official below the level of—
              (1) For the Department of Defense, the Under Secretary of Defense for Acquisition and Sustainment; and,
              (2) For the military departments, the service acquisition executive for the department concerned.
              [78 FR 69271, Nov. 18, 2013, as amended at 84 FR 4370, Feb. 15, 2019]

              239.7304
              Determination and notification.
              The individuals authorized in 239.7303 may exercise the authority provided in 239.7305 only after—
              (a) Obtaining a joint recommendation by the Under Secretary of Defense for Acquisition and Sustainment and the Chief Information Officer of the Department of Defense, on the basis of a risk assessment by the Under Secretary of Defense for Intelligence, that there is a significant supply chain risk to a covered system;
              (b) Making a determination in writing, in unclassified or classified form, with the concurrence of the Under Secretary of Defense for Acquisition and Sustainment, that—
              (1) Use of the authority in 239.7305(a), (b), or (c) is necessary to protect national security by reducing supply chain risk;
              (2) Less intrusive measures are not reasonably available to reduce such supply chain risk; and
              (3) In a case where the individual authorized in 239.7303 plans to limit disclosure of information under 239.7305(d), the risk to national security due to the disclosure of such information outweighs the risk due to not disclosing such information; and
              (c)(1) Providing a classified or unclassified notice of the determination made under paragraph (b) of this section—
              (i) In the case of a covered system included in the National Intelligence Program or the Military Intelligence Program, to the Select Committee on Intelligence of the Senate, the Permanent Select Committee on Intelligence of the House of Representatives, and the congressional defense committees; and
              (ii) In the case of a covered system not otherwise included in paragraph (a) of this section, to the congressional defense committees; and
              (2) The notice shall include—

              (i) The following information (see 10 U.S.C. 2304(f)(3)):

              (A) A description of the agency's needs.
              (B) An identification of the statutory exception from the requirement to use competitive procedures and a demonstration, based on the proposed contractor's qualifications or the nature of the procurement, of the reasons for using that exception.
              (C) A determination that the anticipated cost will be fair and reasonable.
              (D) A description of the market survey conducted or a statement of the reasons a market survey was not conducted.
              (E) A listing of the sources, if any, that expressed in writing an interest in the procurement.
              (F) A statement of the actions, if any, the agency may take to remove or overcome any barrier to competition before a subsequent procurement for such needs;
              (ii) The joint recommendation by the Under Secretary of Defense for Acquisition and Sustainment and the Chief Information Officer of the Department of Defense as specified in paragraph (a) of this section;
              (iii) A summary of the risk assessment by the Under Secretary of Defense for Intelligence that serves as the basis for the joint recommendation specified in paragraph (a) of this section; and
              (iv) A summary of the basis for the determination, including a discussion of less intrusive measures that were considered and why they were not reasonably available to reduce supply chain risk.
              [78 FR 69271, Nov. 18, 2013, as amended at 80 FR 67251, Oct. 30, 2015; 84 FR 4370, Feb. 15, 2019]

              239.7305
              Exclusion and limitation on disclosure.
              Subject to 239.7304, the individuals authorized in 239.7303 may, in the course of procuring information technology, whether as a service or as a supply, that is a covered system, is a part of a covered system, or is in support of a covered system—
              (a) Exclude a source that fails to meet qualification standards established in accordance with the requirements of 10 U.S.C. 2319, for the purpose of reducing supply chain risk in the acquisition of covered systems;
              (b) Exclude a source that fails to achieve an acceptable rating with regard to an evaluation factor providing for the consideration of supply chain risk in the evaluation of proposals for the award of a contract or the issuance of a task or delivery order;
              (c) Withhold consent for a contractor to subcontract with a particular source or direct a contractor for a covered system to exclude a particular source from consideration for a subcontract under the contract; and
              (d) Limit, notwithstanding any other provision of law, in whole or in part, the disclosure of information relating to the basis for carrying out any of the actions authorized by paragraphs (a) through (c) of this section, and if such disclosures are so limited—
              (1) No action undertaken by the individual authorized under such authority shall be subject to review in a bid protest before the Government Accountability Office or in any Federal court; and
              (2) The authorized individual shall—
              (i) Notify appropriate parties of action taken under paragraphs (a) through (d) of this section and the basis for such action only to the extent necessary to effectuate the action;
              (ii) Notify other Department of Defense components or other Federal agencies responsible for procurements that may be subject to the same or similar supply chain risk, in a manner and to the extent consistent with the requirements of national security; and
              (iii) Ensure the confidentiality of any such notifications.
              [78 FR 69271, Nov. 18, 2013, as amended at 80 FR 67251, Oct. 30, 2015]

              239.7306
              Solicitation provision and contract clause.

              (a) Insert the provision at 252.239-7017, Notice of Supply Chain Risk, in solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial items, for information technology, whether acquired as a service or as a supply, that is a covered system, is a part of a covered system, or is in support of a covered system, as defined at 239.7301.

              (b) Insert the clause at 252.239-7018, Supply Chain Risk, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, for information technology, whether acquired as a service or as a supply, that is a covered system, is a part of a covered system, or is in support of a covered system, as defined at 239.7301.
              [80 FR 67252, Oct. 30, 2015]

            Subpart 239.74—Telecommunications Services

              239.7400
              Scope.
              This subpart prescribes policy and procedures for acquisition of telecommunications services and maintenance of telecommunications security. Telecommunications services meet the definition of information technology.
              [62 FR 1060, Jan. 8, 1997, as amended at 71 FR 39011, July 11, 2006]

              239.7401
              Definitions.
              As used in this subpart—
              ) Common carrier means any entity engaged in the business of providing telecommunications services which are regulated by the Federal Communications Commission or other governmental body.

                Foreign carrier means any person, partnership, association, joint-stock company, trust, governmental body, or corporation not subject to regulation by a U.S. governmental regulatory body and not doing business as a citizen of the United States, providing telecommunications services outside the territorial limits of the United States.

                Governmental regulatory body means the Federal Communications Commission, any statewide regulatory body, or any body with less than statewide jurisdiction when operating under the State authority. The following are not “governmental regulatory bodies”—
              (1) Regulatory bodies whose decisions are not subject to judicial appeal; and
              (2) Regulatory bodies which regulate a company owned by the same entity which creates the regulatory body.

                Long-haul telecommunications means all general and special purpose long-distance telecommunications facilities and services (including commercial satellite services, terminal equipment and local circuitry supporting the long-haul service) to or from the post, camp, base, or station switch and/or main distribution frame (except for trunk lines to the first-serving commercial central office for local communications services).

                Noncommon carrier means any entity other than a common carrier offering telecommunications facilities, services, or equipment for lease.

                Securing, sensitive information, and telecommunications systems have the meaning given in the clause at 252.239-7016, Telecommunications Security Equipment, Devices, Techniques, and Services.

                Telecommunications means the transmission, emission, or reception of signals, signs, writing, images, sounds, or intelligence of any nature, by wire, cable, satellite, fiber optics, laser, radio, or any other electronic, electric, electromagnetic, or acoustically coupled means.

                Telecommunications services means the services acquired, whether by lease or contract, to meet the Government's telecommunications needs. The term includes the telecommunications facilities and equipment necessary to provide such services.
              [56 FR 36429, July 31, 1991, as amended at 70 FR 67918, Nov. 9, 2005; 81 FR 28733, May 10, 2016]

              239.7402
              Policy.
              (a) Acquisition. DoD policy is to acquire telecommunications services from common and noncommon telecommunications carriers—
              (1) On a competitive basis, except when acquisition using other than full and open competition is justified;
              (2) Recognizing the regulations, practices, and decisions of the Federal Communications Commission (FCC) and other governmental regulatory bodies on rates, cost principles, and accounting practices; and
              (3) Making provision in telecommunications services contracts for adoption of—
              (i) FCC approved practices; or

              (ii) The generally accepted practices of the industry on those issues concerning common carrier services where—
              (A) The governmental regulatory body has not expressed itself;
              (B) The governmental regulatory body has declined jurisdiction; or
              (C) There is no governmental regulatory body to decide.
              (b) Security. (1) The contracting officer shall ensure, in accordance with agency procedures, that purchase requests identify—
              (i) The nature and extent of information requiring security during telecommunications;
              (ii) The requirement for the contractor to secure telecommunications systems;
              (iii) The telecommunications security equipment, devices, techniques, or services with which the contractor's telecommunications security equipment, devices, techniques, or services must be interoperable; and
              (iv) The approved telecommunications security equipment, devices, techniques, or services, such as found in the National Security Agency's Information Systems Security Products and Services Catalogue.
              (2) Contractors and subcontractors shall provide all telecommunications security techniques or services required for performance of Government contracts.
              (3) Except as provided in paragraph (b)(4) of this section, contractors and subcontractors shall normally provide all required property, to include telecommunications security equipment or related devices, in accordance with FAR 45.102. In some cases, such as for communications security (COMSEC) equipment designated as controlled cryptographic item (CCI), contractors or subcontractors must also meet ownership eligibility conditions.
              (4) The head of the agency may authorize provision of the necessary property as Government-furnished property or acquisition as contractor-acquired property, as long as conditions of FAR 45.102(b) are met.
              (c) Foreign carriers. For information on contracting with foreign carriers, see PGI 239.7402(c).
              [56 FR 36429, July 31, 1991, as amended at 56 FR 67220, Dec. 30, 1991; 62 FR 1060, Jan. 8, 1997; 71 FR 39011, July 11, 2006; 74 FR 37647, July 29, 2009]

              239.7403-239.7404
              [Reserved]

              239.7405
              Delegated authority for telecommunications resources.
              The contracting officer may enter into a telecommunications service contract on a month-to-month basis or for any longer period or series of periods, not to exceed a total of 10 years. See PGI 239.7405 for documents relating to this contracting authority, which the General Services Administration has delegated to DoD.
              [70 FR 67918, Nov. 9, 2005]

              239.7406
              Certified cost or pricing data and data other than certified cost or pricing data.
              (a) Common carriers are not required to submit certified cost or pricing data before award of contracts for tariffed services. Rates or preliminary estimates quoted by a common carrier for tariffed telecommunications services are considered to be prices set by regulation within the provisions of 10 U.S.C. 2306a. This is true even if the tariff is set after execution of the contract.
              (b) Rates or preliminary estimates quoted by a common carrier for nontariffed telecommunications services or by a noncommon carrier for any telecommunications service are not considered prices set by law or regulation.

              (c) Contracting officers shall obtain sufficient data to determine that the prices are reasonable in accordance with FAR 15.403-3 or 15.403-4. See PGI 239.7406 for examples of instances where additional data may be necessary to determine price reasonableness.
              [77 FR 76940, Dec. 31, 2012]

              239.7407
              Type of contract.

              When acquiring telecommunications services, the contracting officer may use a basic agreement (see FAR 16.702) in conjunction with communication service authorizations. When using this method, follow the procedures at PGI 239.7407.
              [71 FR 27646, May 12, 2006]

              239.7408
              Special construction.

              239.7408-1
              General.
              (a) Special construction normally involves a common carrier giving a special service or facility related to the performance of the basic telecommunications service requirements.
              This may include—
              (1) Moving or relocating equipment;
              (2) Providing temporary facilities;
              (3) Expediting provision of facilities; or
              (4) Providing specially constructed channel facilities to meet Government requirements.
              (b) Use this subpart instead of FAR part 36 for acquisition of “special construction.”
              (c) Special construction costs may be—
              (1) A contingent liability for using telecommunications services for a shorter time than the minimum to reimburse the contractor for unamortized nonrecoverable costs. These costs are usually expressed in terms of a termination liability, as provided in the contract or by tariff;
              (2) A onetime special construction charge;
              (3) Recurring charges for constructed facilities;
              (4) A minimum service charge;
              (5) An expediting charge; or
              (6) A move or relocation charge.
              (d) When a common carrier submits a proposal or quotation which has special construction requirements, the contracting officer shall require a detailed special construction proposal. Analyze all special construction proposals to—
              (1) Determine the adequacy of the proposed construction;
              (2) Disclose excessive or duplicative construction; and
              (3) When different forms of charge are possible, provide for the form of charge most advantageous to the Government.
              (e) When possible, analyze and approve special construction charges before receiving the service. Impose a ceiling on the special construction costs before authorizing the contractor to proceed, if prior approval is not possible. The contracting officer must approve special construction charges before final payment.
              [56 FR 36429, July 31, 1991, as amended at 71 FR 39011, July 11, 2006]

              239.7408-2
              Applicability of construction labor standards for special construction.
              (a) The construction labor standards in FAR Subpart 22.4 ordinarily do not apply to special construction. However, if the special construction includes construction, alteration, or repair (as defined in FAR 22.401) of a public building or public work, the construction labor standards may apply. Determine applicability under FAR 22.402.
              (b) Each CSA or other type contract which is subject to construction labor standards under FAR 22.402 shall cite that fact.
              [56 FR 36429, July 31, 1991, as amended at 71 FR 39011, July 11, 2006]

              239.7409
              Special assembly.
              (a) Special assembly is the designing, manufacturing, arranging, assembling, or wiring of equipment to provide telecommunications services that cannot be provided with general use equipment.
              (b) Special assembly rates and charges shall be based on estimated costs. The contracting officer should negotiate special assembly rates and charges before starting service. When it is not possible to negotiate in advance, use provisional rates and charges subject to adjustment, until final rates and charges are negotiated. The CSAs authorizing the special assembly shall be modified to reflect negotiated final rates and charges.
              [56 FR 36429, July 31, 1991, as amended at 71 FR 39011, July 11, 2006]

              239.7410
              Cancellation and termination.
              (a)(1) Cancellation is stopping a requirement after placing of an order but before service starts.
              (2) Termination is stopping a requirement after placing an order and after service starts.

              (b) Determine cancellation or termination charges under the provisions of the applicable tariff or agreement/contract.

              239.7411
              Contract clauses.
              (a) In addition to other appropriate FAR and DFARS clauses, use the following clauses in solicitations, contracts, and basic agreements for telecommunications services. Modify the clauses only if necessary to meet the requirements of a governmental regulatory agency.
              (1) 252.239-7002, Access.
              (2) 252.239-7004, Orders for Facilities and Services.
              (3) 252.239-7006, Tariff Information.
              (4) 252.239-7007, Cancellation or Termination of Orders.
              (b) Use the following clauses in solicitations, contracts, and basic agreements for telecommunications services when the acquisition includes or may include special construction. Modify the clauses only if necessary to meet the requirements of a governmental regulatory agency—
              (1) 252.239-7011, Special Construction and Equipment Charges; and
              (2) 252.239-7012, Title to Telecommunication Facilities and Equipment.
              (c) Use the basic or alternate of the clause at 252.239-7013, Term of Agreement and Continuation of Services, in basic agreements for telecommunications services.
              (1) Use the basic clause in basic agreements that do not supersede an existing basic agreement with the contractor.
              (2) Use the alternate I clause in basic agreements that supersede an existing basic agreement with the contractor. Complete paragraph (c)(1) of the clause with the basic agreement number, date, and contacting office that issued the basic agreement being superseded.
              (d) Use the clause at 252.239-7016, Telecommunications Security Equipment, Devices, Techniques, and Services, in solicitations and contracts when performance of a contract requires secure telecommunications.
              [56 FR 36429, July 31, 1991, as amended at 57 FR 42632, Sept. 15, 1992; 62 FR 40473, July 29, 1997; 70 FR 67919, Nov. 9, 2005; 71 FR 39011, July 11, 2006; 84 FR 48497, 48498, Sept. 13, 2019; 84 FR 58338, Oct. 31, 2019]

            Subpart 239.76—Cloud Computing

              Source:
              80 FR 51743, Aug. 26, 2015, unless otherwise noted.

              239.7600
              Scope of subpart.
              This subpart prescribes policies and procedures for the acquisition of cloud computing services.

              239.7601
              Definitions.
              As used in this subpart—

                Authorizing official, as described in DoD Instruction 8510.01, Risk Management Framework (RMF) for DoD Information Technology (IT), means the senior Federal official or executive with the authority to formally assume responsibility for operating an information system at an acceptable level of risk to organizational operations (including mission, functions, image, or reputation), organizational assets, individuals, other organizations, and the Nation.

                Cloud computing means a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with minimal management effort or service provider interaction. This includes other commercial terms, such as on-demand self-service, broad network access, resource pooling, rapid elasticity, and measured service. It also includes commercial offerings for software-as-a-service, infrastructure-as-a-service, and platform-as-a-service.

                Government data means any information, document, media, or machine readable material regardless of physical form or characteristics, that is created or obtained by the Government in the course of official Government business.

                Government-related data means any information, document, media, or machine readable material regardless of physical form or characteristics that is created or obtained by a contractor through the storage, processing, or communication of Government data. This does not include a contractor's business records (e.g., financial records, legal records, etc.) or data such as operating procedures, software coding, or algorithms that are not uniquely applied to the Government data.

                Information system means a discrete set of information resources organized for the collection, processing, maintenance, use, sharing, dissemination, or disposition of information.

                Media means physical devices or writing surfaces including, but not limited to, magnetic tapes, optical disks, magnetic disks, large-scale integration memory chips, and printouts onto which information is recorded, stored, or printed within an information system.
              [80 FR 51743, Aug. 26, 2015, as amended at 81 FR 72999, Oct. 21, 2016]

              239.7602
              Policy and responsibilities.

              239.7602-1
              General.
              (a) Generally, DoD shall acquire cloud computing services using commercial terms and conditions that are consistent with Federal law, and an agency's needs, including those requirements specified in this subpart. Some examples of commercial terms and conditions are license agreements, End User License Agreements (EULAs), Terms of Service (TOS), or other similar legal instruments or agreements. Contracting officers shall incorporate any applicable service provider terms and conditions into the contract by attachment or other appropriate mechanism. Contracting officers shall carefully review commercial terms and conditions and consult counsel to ensure these are consistent with Federal law, regulation, and the agency's needs.

              (b)(1) Except as provided in paragraph (b)(2) of this section, the contracting officer shall only award a contract to acquire cloud computing services from a cloud service provider (e.g., contractor or subcontractor, regardless of tier) that has been granted provisional authorization by Defense Information Systems Agency, at the level appropriate to the requirement, to provide the relevant cloud computing services in accordance with the Cloud Computing Security Requirements Guide (SRG) (version in effect at the time the solicitation is issued or as authorized by the contracting officer) found at http://iase.disa.mil/cloud_security/Pages/index.aspx.

              (2) The contracting officer may award a contract to acquire cloud computing services from a cloud service provider that has not been granted provisional authorization when—
              (i) The requirement for a provisional authorization is waived by the DoD Chief Information Officer; or
              (ii) The cloud computing service requirement is for a private, on-premises version that will be provided from U.S. Government facilities. Under this circumstance, the cloud service provider must obtain a provisional authorization prior to operational use.
              (c) When contracting for cloud computing services, the contracting officer shall ensure the following information is provided by the requiring activity:
              (1) Government data and Government-related data descriptions.

              (2) Data ownership, licensing, delivery and disposition instructions specific to the relevant types of Government data and Government-related data (e.g., DD Form 1423, Contract Data Requirements List; work statement task; line item). Disposition instructions shall provide for the transition of data in commercially available, or open and non-proprietary format (and for permanent records, in accordance with disposition guidance issued by National Archives and Record Administration).
              (3) Appropriate requirements to support applicable inspection, audit, investigation, or other similar authorized activities specific to the relevant types of Government data and Government-related data, or specific to the type of cloud computing services being acquired.
              (4) Appropriate requirements to support and cooperate with applicable system-wide search and access capabilities for inspections, audits, investigations, , and similar authorized activities.
              [80 FR 51743, Aug. 26, 2015, as amended at 81 FR 72999, Oct. 21, 2016]

              239.7602-2
              Required storage of data within the United States or outlying areas.

              (a) Cloud computing service providers are required to maintain within the 50 states, the District of Columbia, or outlying areas of the United States, all Government data that is not physically located on DoD premises, unless otherwise authorized by the authorizing official, as described in DoD Instruction 8510.01, in accordance with the SRG.
              (b) The contracting officer shall provide written notification to the contractor when the contractor is permitted to maintain Government data at a location outside the 50 States, the District of Columbia, and outlying areas of the United States.
              [80 FR 51743, Aug. 26, 2015, as amended at 81 FR 72999, Oct. 21, 2016]

              239.7603
              Procedures.
              Follow the procedures relating to cloud computing at PGI 239.7603.
              [80 FR 74695, Nov. 30, 2015]

              239.7604
              Solicitation provision and contract clause.
              (a) Use the provision at 252.239-7009, Representation of Use of Cloud Computing, in solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial item, for information technology services.
              (b) Use the clause at 252.239-7010, Cloud Computing Services, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial item, for information technology services.
              [80 FR 51743, Aug. 26, 2015. Redesignated at 80 FR 74695, Nov. 30, 2015]

          Pt. 241
          PART 241—ACQUISITION OF UTILITY SERVICES

              Subpart 241.1—General
              Sec.
              241.101
              Definitions.
              241.102
              Applicability.
              241.103
              Statutory and delegated authority.

              Subpart 241.2—Acquiring Utility Services
              241.201
              Policy.
              241.202
              Procedures.
              241.205
              Separate contracts.

              Subpart 241.5—Solicitation Provision and Contract Clauses
              241.501
              Solicitation provision and contract clauses.
              241.501-70
              Additional clauses.

            Authority:
            48 U.S.C. 421 and 48 CFR Chapter 1.

            Source:
            63 FR 11539, Mar. 9, 1998, unless otherwise noted.

            Subpart 241.1—General

              241.101
              Definitions.
              As used in this part—

                Independent regulatory body means the Federal Energy Regulatory Commission, a state-wide agency, or an agency with less than state-wide jurisdiction when operating pursuant to state authority. The body has the power to fix, establish, or control the rates and services of utility suppliers.

                Nonindependent regulatory body means a body that regulates a utility supplier which is owned or operated by the same entity that created the regulatory body, e.g., a municipal utility.

                Regulated utility supplier means a utility supplier regulated by an independent regulatory body.

                Service power procurement officer means for the—
              (1) Army, the Chief of Engineers;
              (2) Navy, the Commander, Naval Facilities Engineering Command;
              (3) Air Force, the head of a contracting activity; and
              (4) Defense Logistics Agency, the head of a contracting activity.
              [63 FR 11539, Mar. 9, 1998, as amended at 71 FR 3417, Jan. 23, 2006]

              241.102
              Applicability.
              (a) This part applies to purchase of utility services from nonregulated and regulated utility suppliers. It includes the acquisition of liquefied petroleum gas as a utility service when purchased from regulated utility suppliers.
              (b)(7) This part does not apply to third party financed projects. However, it may be used for any purchased utility services directly resulting from such projects, including those authorized by—

              (A) 10 U.S.C. 2394 for energy, fuels, and energy production facilities for periods not to exceed 30 years;

              (B) 10 U.S.C. 2394a for renewable energy for periods not to exceed 25 years;
              (C) 10 U.S.C. 2689 for geothermal resources that result in energy production facilities;
              (D) 10 U.S.C. 2809 for potable and waste water treatment plants for periods not to exceed 32 years; and
              (E) 10 U.S.C. 2812 for lease/purchase of energy production facilities for periods not to exceed 32 years.

              241.103
              Statutory and delegated authority.
              (1) The contracting officer may enter into a utility service contract related to the conveyance of a utility system for a period not to exceed 50 years (10 U.S.C. 2688(d)(2)).
              (2) The contracting officer may enter into an energy savings contract under 10 U.S.C. 2913 for a period not to exceed 25 years.
              (3) See 217.174 for authority to enter into multiyear contracts for electricity from renewable energy sources.
              (4) See PGI 241.103 for statutory authorities and maximum contract periods for utility and energy contracts.
              [71 FR 3417, Jan. 23, 2006, as amended at 74 FR 52896, Oct. 15, 2009; 75 FR 34943, June 21, 2010; 76 FR 58155, Sept. 20, 2011; 81 FR 28734, May 10, 2016]

            Subpart 241.2—Acquiring Utility Services

              241.201
              Policy.
              (1) DoD, as a matter of comity, generally complies with the current regulations, practices, and decisions of independent regulatory bodies. This policy does not extend to nonindependent regulatory bodies.
              (2) Purchases of utility services outside the United States may use—
              (i) Formats and technical provisions consistent with local practice; and
              (ii) Dual language forms and contracts.
              (3) Rates established by an independent regulatory body—
              (i) Are considered “prices set by law or regulation”;
              (ii) Are sufficient to set prices without obtaining certified cost or pricing data (see FAR subpart 15.4); and
              (iii) Are a valid basis on which prices can be determined fair and reasonable.
              (4) Compliance with the regulations, practices, and decisions of independent regulatory bodies as a matter of comity is not a substitute for the procedures at FAR 41.202(a).
              [71 FR 3418, Jan. 23, 2006, as amended at 77 FR 76940, Dec. 31, 2012]

              241.202
              Procedures.
              (1) Connection and service charges. The Government may pay a connection charge when required to cover the cost of the necessary connecting facilities. A connection charge based on the estimated labor cost of installing and removing the facility shall not include salvage cost. A lump-sum connection charge shall be no more than the agreed cost of the connecting facilities less net salvage. The order of precedence for contractual treatment of connection and service charges is—
              (i) No connection charge.
              (ii) Termination liability. Use when an obligation is necessary to secure the required services. The obligation must be not more than the agreed connection charge, less any net salvage material costs. Use of a termination liability instead of a connection charge requires the approval of the service power procurement officer or designee.
              (iii) Connection charge, refundable. Use a refundable connection charge when the supplier refuses to provide the facilities based on lack of capital or published rules which prohibit providing up-front funding. The contract should provide for refund of the connection charge within five years unless a longer period or omission of the refund requirement is authorized by the service power procurement officer or designee.
              (iv) Connection and service charges, nonrefundable. The Government may pay certain nonrefundable, nonrecurring charges including service initiation charges, a contribution in aid of construction, membership fees, and charges required by the supplier's rules and regulations to be paid by the customer. If possible, consider sharing with other than Government users the use of (and costs for) facilities when large nonrefundable charges are required.
              (2) Construction and labor requirements. Follow the procedures at PGI 241.202(2) for construction and labor requirements associated with connection and service charges.
              [71 FR 3417, Jan. 23, 2006]

              241.205
              Separate contracts.
              Follow the procedures at PGI 241.205 when acquiring utility services by separate contract.
              [71 FR 3417, Jan. 23, 2006]

            Subpart 241.5—Solicitation Provision and Contract Clauses

              241.501
              Solicitation provision and contract clauses.
              (d)(1) Use a clause substantially the same as the clause at FAR 52.241-7, Change in Rates or Terms and Conditions of Service for Regulated Services, when the utility services to be provided are subject to an independent regulatory body.
              (2) Use a clause substantially the same as the clause at FAR 52.241-8, Change in Rates or Terms and Conditions of Service for Unregulated Services, when the utility services to be provided are not subject to a regulatory body or are subject to a nonindependent regulatory body.
              [71 FR 3418, Jan. 23, 2006]

              241.501-70
              Additional clauses.
              (a) If the Government must execute a superseding contract and capital credits, connection charge credits, or termination liability exist, use the clause at 252.241-7000, Superseding Contract.
              (b) Use the clause at 252.241-70001, Government Access, when the clause at FAR 52.241-5, Contractor's Facilities, is used.

        SUBCHAPTER G—CONTRACT MANAGEMENT

          Pt. 242
          PART 242—CONTRACT ADMINISTRATION AND AUDIT SERVICES

            Sec.
            242.002
            Interagency agreements.

              Subpart 242.2—Contract Administration Services
              242.200-70
              Scope of subpart.
              242.202
              Assignment of contract administration.

              Subpart 242.3—Contract Administration Office Functions
              242.301
              General.
              242.302
              Contract administration functions.

              Subpart 242.5—Postaward Orientation
              242.503
              Postaward conferences.
              242.503-2
              Post-award conference procedure.

              Subpart 242.6—Corporate Administrative Contracting Officer
              242.602
              Assignment and location.

              Subpart 242.7—Indirect Cost Rates
              242.705
              Final indirect cost rates.
              242.705-1
              Contracting officer determination procedure.
              242.705-2
              Auditor determination procedure.
              242.771
              Independent research and development and bid and proposal costs.
              242.771-1
              Scope.
              242.771-2
              Policy.
              242.771-3
              Responsibilities.

              Subpart 242.8—Disallowance of Costs
              242.803
              Disallowing costs after incurrence.

              Subpart 242.11—Production Surveillance and Reporting
              242.1104
              Surveillance requirements.
              242.1105
              Assignment of criticality designator.
              242.1106
              Reporting requirements.
              242.1107
              Contract clause.

              Subpart 242.12—Novation and Change-of-Name Agreements
              242.1203
              Processing agreements.
              242.1204
              Agreement to recognize a successor in interest (novation agreement).

              Subpart 242.15—Contractor Performance Information
              242.1502
              Policy.

              Subpart 242.70—Contractor Business Systems
              242.7000
              Contractor business system deficiencies.
              242.7001
              Contract clause.

              Subpart 242.71—Voluntary Refunds
              242.7100
              General.

              Subpart 242.72—Contractor Material Management and Accounting System
              242.7200
              Scope of subpart.
              242.7201
              Definitions.
              242.7202
              Policy.
              242.7203
              Review procedures.
              242.7204
              Contract clause.

              Subpart 242.73—Contractor Insurance/Pension Review
              242.7301
              General.
              242.7302
              Requirements.
              242.7303
              Responsibilities.

              Subpart 242.74—Technical Representation at Contractor Facilities
              242.7400
              General.
              242.7401
              Procedures.

              Subpart 242.75—Contractor Accounting Systems and Related Controls
              242.7501
              Definitions.
              242.7502
              Policy.
              242.7503
              Contract clause.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36437, July 31, 1991, unless otherwise noted.

            242.002
            Interagency agreements.
            (b)(i) DoD requires reimbursement, at a rate set by the Under Secretary of Defense (Comptroller/Chief Financial Officer), from non-DoD organizations, except for—

            (A) Quality assurance, contract administration, and audit services provided under a no-charge reciprocal agreement;

            (B) Services performed under subcontracts awarded by the Small Business Administration under FAR subpart 19.8; and
            (C) Quality assurance requests performed for the Canadian Department of National Defence and pricing services performed for Public Works and Government Services Canada (PWGSC), operating as Public Services and Procurment Canada (PSPC).
            (ii) Departments and agencies may request an exception from the reimbursement policy in paragraph (b)(i) of this section from the Under Secretary of Defense (Comptroller/Chief Financial Officer). A request must show that an exception is in the best interest of the Government.
            (iii) Departments and agencies must pay for services performed by non-DoD activities, foreign governments, or international organizations, unless otherwise provided by reciprocal agreements.
            (S-70)(i) Foreign governments and international organizations may request contract administration services on their direct purchases from U.S. producers. Direct purchase is the purchase of defense supplies in the United States through commercial channels for use by the foreign government or international organization.
            (ii) PWGSC, operating as PSPC, is permitted to submit its requests for contract administration services directly to the cognizant contract administration office.
            (iii) Other foreign governments (including Canadian government organizations other than PSPC) and international organizations send their requests for contract administration services to the DoD Central Control Point (CCP) at the Headquarters, Defense Contract Management Agency, International and Federal Business Team. Contract administration offices provide services only upon request from the CCP. The CCP shall follow the procedures at PGI 242.002(S-70)(iii).
            [64 FR 61029, Nov. 9, 1999, as amended at 65 FR 52952, Aug. 31, 2000; 65 FR 63804, Oct. 25, 2000; 70 FR 67920, Nov. 9, 2005; 83 FR 12681, Mar. 23, 2018]

            Subpart 242.2—Contract Administration Services

              Source:
              64 FR 61029, Nov. 9, 1999, unless otherwise noted.

              242.200-70
              Scope of subpart.
              This subpart does not address the contract administration role of a contracting officer's representative (see 201.602).

              242.202
              Assignment of contract administration.
              (a)(i) DoD activities shall not retain any contract for administration that requires performance of any contract administration function at or near contractor facilities, except contracts for—
              (A) The National Security Agency;
              (B) Research and development with universities;
              (C) Flight training;
              (D) Management and professional support services;
              (E) Mapping, charting, and geodesy services;
              (F) Base, post, camp, and station purchases;
              (G) Operation or maintenance of, or installation of equipment at, radar or communication network sites;
              (H) Communications services;
              (I) Installation, operation, and maintenance of space-track sensors and relays;
              (J) Dependents Medicare program contracts;
              (K) Stevedoring contracts;
              (L) Construction and maintenance of military and civil public works, including harbors, docks, port facilities, military housing, development of recreational facilities, water resources, flood control, and public utilities;
              (M) Architect-engineer services;
              (N) Airlift and sealift services (Air Mobility Command and Military Sealift Command may perform contract administration services at contractor locations involved solely in performance of airlift or sealift contracts);
              (O) Subsistence supplies;

              (P) Ballistic missile sites (contract administration offices may perform supporting administration of these contracts at missile activation sites during the installation, test, and checkout of the missiles and associated equipment);
              (Q) Operation and maintenance of, or installation of equipment at, military test ranges, facilities, and installations; and
              (R) The Defense Energy Support Center, Defense Logistics Agency.
              (ii) Contract administration functions for base, post, camp, and station contracts on a military installation are normally the responsibility of the installation or tenant commander. However, the Defense Contract Management Agency (DCMA) shall, upon request of the military department, and subject to prior agreement, perform contract administration services on a military installation.
              (iii) DCMA shall provide preaward survey assistance for post, camp, and station work performed on a military installation. The contracting office and the DCMA preaward survey monitor should jointly determine the scope of the survey and individual responsibilities.
              (iv) To avoid duplication, contracting offices shall not locate their personnel at contractor facilities, except—
              (A) In support of contracts retained for administration in accordance with paragraph (a)(i) of this section; or
              (B) As permitted under subpart 242.74.

              (e)(1)(A) In special circumstances, a contract administration office may request support from a component not listed in the Federal Directory of Contract Administration Services Components (available via the Internet at https://pubapp.dcma.mil/CASD/main.jsp). An example is a situation where the contractor's work site is on a military base and a base organization is asked to provide support. Before formally sending the request, coordinate with the office concerned to ensure that resources are available for, and capable of, providing the support.
              (B) When requesting support on a subcontract that includes foreign contract military sale (FMS) requirements, the contract administration office shall—
              (1) Mark “FMS Requirement” on the face of the documents; and
              (2) For each FMS case involved, provide the FMS case identifier, associated item quantities, DoD prime contract number, and prime contract line/subline item number.
              [64 FR 61029, Nov. 9, 1999, as amended at 65 FR 52953, Aug. 31, 2000; 66 FR 49861, Oct. 1, 2001; 66 FR 63335, Dec. 6, 2001; 70 FR 52034, Sept. 1, 2005; 70 FR 67920, Nov. 9, 2005; 77 FR 23632, Apr. 20, 2012]

            Subpart 242.3—Contract Administration Office Functions

              242.301
              General.
              Contract administration services performed outside the U.S. should be performed in accordance with FAR 42.301 unless there are no policies and procedures covering a given situation. In this case, coordinate proposed actions with the appropriate U.S. country teams or commanders of unified and specified commands.

              242.302
              Contract administration functions.
              (a) (7) See 242.7502 for ACO responsibilities with regard to receipt of an audit report identifying significant accounting system or related internal control deficiencies.
              (9) For additional contract administration functions related to IR&D/B&P projects performed by major contractors, see 242.771-3(a).
              (12) Also perform all payment administration in accordance with any applicable payment clauses.
              (13)(A) Do not delegate the responsibility to make payments to the Defense Contract Management Agency (DCMA).
              (B) Follow the procedures at PGI 242.302(a)(13)(B) for designation of payment offices.
              (39) See 223.370 for contract administration responsibilities on contracts for ammunition and explosives.
              (67) Also support program offices and buying activities in precontractual efforts leading to a solicitation or award.
              (S-70) Serve as the single point of contact for all Single Process Initiative (SPI) Management Council activities. The ACO shall negotiate and execute facilitywide class modifications and agreements for SPI processes, when authorized by the affected components.

              (S-71) DCMA has responsibility for reviewing earned value management system (EVMS) plans and for verifying initial and continuing contractor compliance with DoD EVMS criteria. The contracting officer shall not retain this function.

              (S-72) Ensure implementation of the Synchronized Predeployment and Operational Tracker (SPOT) by the contractor and maintain surveillance over contractor compliance with SPOT business rules available at the Web site provided at PGI 207.105(b)(20)(C)(9) for contracts incorporating the clause at 252.225-7040, Contractor Personnel Supporting U.S. Armed Forces Deployed Outside the United States. See PGI 242.302(a)(S-72) for guidance on assessing contractor's implementation of SPOT.
              (S-73) Maintain surveillance over contractor compliance with trafficking in persons requirements for all DoD contracts for services incorporating the clause at FAR 52.222-50, Combating Trafficking in Persons, and, when necessary, its Alternate I, as identified in the clause prescription at FAR 22.1705. (See PGI 222.1703.)
              (S-74) Approve or disapprove contractor business systems, as identified in the clause at 252.242-7005, Contractor Business Systems.
              (S-75) See PGI 242.302(a)(S-75) for guidelines for monitoring contractor costs.
              (S-76) Review and audit contractor identification of contractor-approved suppliers for the acquisition of electronic parts, as identified in the clause at 252.246-7008, Sources of Electronic Parts.
              (b)(S-70) Issue, negotiate, and execute orders under basic ordering agreements for overhaul, maintenance, and repair.
              [71 FR 44928, Aug. 8, 2006, as amended at 76 FR 36884, June 23, 2011; 76 FR 71830, Nov. 18, 2011; 77 FR 11365, Feb. 24, 2012; 77 FR 23632, Apr. 20, 2012; 78 FR 13544, Feb. 28, 2013; 79 FR 30471, May 28, 2014; 80 FR 36903, June 26, 2015; 81 FR 50648, Aug. 2, 2016]

            Subpart 242.5—Postaward Orientation

              242.503
              Postaward conferences.

              242.503-2
              Post-award conference procedure.
              (a) DD Form 1484, Post-Award Conference Record, may be used in conducting the conference and in preparing the conference report.
              (b) For contracts that include the clause at 252.234-7004, Cost and Software Data Reporting, postaward conferences shall include a discussion of the contractor's standard cost and software data reporting (CSDR) process that satisfies the guidelines contained in the DoD 5000.04-M-1, CSDR Manual, and the requirements in the Government-approved CSDR plan for the contract, DD Form 2794, and related Resource Distribution Table.
              [70 FR 67920, Nov. 9, 2005, as amended at 75 FR 71562, Nov. 24, 2010]

            Subpart 242.6—Corporate Administrative Contracting Officer

              242.602
              Assignment and location.
              (c)(2) If the agencies cannot agree, refer the matter to the Director of Defense Procurement and Acquisition Policy.
              [56 FR 36437, July 31, 1991, as amended at 68 FR 7440, Feb. 14, 2003]

            Subpart 242.7—Indirect Cost Rates

              242.705
              Final indirect cost rates.

              242.705-1
              Contracting officer determination procedure.
              (a) Applicability and responsibility. (1) The corporate administrative contracting officer and individual administrative contracting officers shall jointly decide how to conduct negotiations. Follow the procedures at PGI 242.705-1(a)(1) when negotiations are conducted on a coordinated basis.
              [70 FR 67920, Nov. 9, 2005]

              242.705-2
              Auditor determination procedure.
              (b) Procedures. (2)(iii) When agreement cannot be reached with the contractor, the auditor will issue a DCAA Form 1, Notice of Contract Costs Suspended and/or Disapproved, in addition to the advisory report to the administrative contracting officer.
              [56 FR 36437, July 31, 1991, as amended at 60 FR 61599, Nov. 30, 1995; 64 FR 61030, Nov. 9, 1999; 70 FR 67920, Nov. 9, 2005]

              242.771
              Independent research and development and bid and proposal costs.

              242.771-1
              Scope.
              This section implements 10 U.S.C. 2372, Independent research and development and bid and proposal costs: Payments to contractors.
              [64 FR 8730, Feb. 23, 1999]

              242.771-2
              Policy.
              Defense contractors are encouraged to engage in independent research and development and bid and proposal (IR&D/B&P) activities of potential interest to DoD, including activities cited in 231.205-18(c)(iii)(B).
              [64 FR 8730, Feb. 23, 1999]

              242.771-3
              Responsibilities.
              (a) The cognizant administrative contracting officer (ACO) or corporate ACO shall—
              (1) Determine cost allowability of IR&D/B&P costs as set forth in 231.205-18 and FAR 31.205-18.
              (2) Determine whether IR&D/B&P projects performed by major contractors (see 231.205-18(a)) are of potential interest to DoD; and
              (3) Notify the contractor promptly of any IR&D/B&P activities that are not of potential interest to DoD.
              (b) The Defense Contract Management Agency or the military department responsible for performing contract administration functions is responsible for providing the Defense Contract Audit Agency (DCAA) with IR&D/B&P statistical information, as necessary, to assist DCAA in the annual report required by paragraph (c) of this subsection.
              (c) DCAA is responsible for submitting an annual report to the Director of Defense Procurement and Acquisition Policy, Office of the Under Secretary of Defense (Acquisition, Technology, and Logistics (OUSD (AT&L))) setting forth required statistical information relating to the DoD-wide IR&D/B&P program.
              (d) The Office of the Assistant Secretary of Defense for Research and Engineering (OASD R&E), is responsible for establishing a regular method for communication—
              (1) From DoD to contractors, of timely and comprehensive information regarding planned or expected DoD future needs; and
              (2) From contractors to DoD, of brief technical descriptions of contractor IR&D projects.
              [64 FR 8730, Feb. 23, 1999, as amended at 65 FR 39706, June 27, 2000; 65 FR 52953, Aug. 31, 2000; 68 FR 7440, Feb. 14, 2003; 81 FR 78011, Nov. 4, 2016]

            Subpart 242.8—Disallowance of Costs

              242.803
              Disallowing costs after incurrence.
              (a) Contracting officer receipt of vouchers. Contracting officer receipt of vouchers is applicable only for cost-reimbursement contracts with the Canadian Commercial Corporation. See 225.870-5(b) for invoice procedures.
              (b) Auditor receipt of voucher. (i) The contract auditor is the authorized representative of the contracting officer for—
              (A) Receiving vouchers from contractors electronically or by other delivery methods as directed by the terms of the contract;
              (B) Approving interim vouchers that were selected using sampling methodologies for provisional payment and sending them to the disbursing office after a pre-payment review. Interim vouchers not selected for a pre-payment review will be considered to be provisionally approved and will be sent directly to the disbursing office. All provisionally approved interim vouchers are subject to a later audit of actual costs incurred;
              (C) Reviewing completion/final vouchers and sending them to the administrative contracting officer; and

              (D) Issuing DCAA Forms 1, Notice of Contract Costs Suspended and/or Disapproved, to deduct costs where allowability is questionable.

              (ii) The administrative contracting officer—
              (A) Approves all completion/final vouchers and sends them to the disbursing officer; and
              (B) May issue or direct the issuance of DCAA Form 1 on any cost when there is reason to believe it should be suspended or disallowed.
              [61 FR 25409, May 21, 1996, as amended at 61 FR 25409, May 21, 1996; 61 FR 50454, Sept. 26, 1996; 77 FR 52259, Aug. 29, 2012]

            Subpart 242.11—Production Surveillance and Reporting

              242.1104
              Surveillance requirements.
              (a) The cognizant contract administration office (CAO)—
              (i) Shall perform production surveillance on all contractors that have Criticality Designator A or B contracts;
              (ii) Shall not perform production surveillance on contractors that have only Criticality Designator C contracts, unless specifically requested by the contracting officer; and
              (iii) When production surveillance is required, shall—
              (A) Conduct a periodic risk assessment of the contractor to determine the degree of production surveillance needed for all contracts awarded to that contractor. The risk assessment shall consider information provided by the contractor and the contracting officer;
              (B) Develop a production surveillance plan based on the risk level determined during a risk assessment;
              (C) Modify the production surveillance plan to incorporate any special surveillance requirements for individual contracts, including any requirements identified by the contracting officer; and
              (D) Monitor contract progress and identify potential contract delinquencies in accordance with the production surveillance plan. Contracts with Criticality Designator C are exempt from this requirement unless specifically requested by the contracting officer.
              [69 FR 31912, June 8, 2004]

              242.1105
              Assignment of criticality designator.
              (1) Contracting officers shall—
              (i) Assign criticality designator A to items with a priority 01, 02, 03, or 06 (if emergency supply of clothing) under DoD Manual 4140.01, Volume 5, DoD Supply Chain Materiel Management Procedures: Delivery of Materiel; and
              (ii) Ordinarily assign criticality designator C to unilateral purchase orders.
              (2) Only the contracting officer shall change the assigned designator.
              [56 FR 36437, July 31, 1991, as amended at 67 FR 61516, Oct. 1, 2002, 82 FR 61481, Dec. 28, 2017]

              242.1106
              Reporting requirements.
              (a) See DoDI 5000.2, Operation of the Defense Acquisition System, for reporting requirements for defense technology projects and acquisition programs.
              (b)(i) Within four working days after receipt of the contractor's report, the CAO must provide the report and any required comments to the contracting officer and, unless otherwise specified in the contract, the inventory control manager.
              (ii) If the contractor's report indicates that the contract is on schedule and the CAO agrees, the CAO does not need to add further comments. In all other cases, the CAO must add comments and recommend a course of action.
              [65 FR 39723, June 27, 2000, as amended at 70 FR 14575, Mar. 23, 2005; 73 FR 21848, Apr. 23, 2008]

              242.1107
              Contract clause.
              (b) When using the clause at FAR 52.242-2, include the following instructions in the contract schedule—
              (i) Frequency and timing of reporting (normally 5 working days after each reporting period);
              (ii) Contract line items, exhibits, or exhibit line items requiring reports;
              (iii) Offices (with addressees/codes) where reports should be sent (always include the contracting office and contract administration office); and

              (iv) The following requirements for report content—

              (A) The problem, actual or potential, and its cause;
              (B) Items and quantities affected;
              (C) When the delinquency started or will start;
              (D) Actions taken to overcome the delinquency;
              (E) Estimated recovery date; and/or
              (F) Proposed schedule revision.

            Subpart 242.12—Novation and Change-of-Name Agreements

              242.1203
              Processing agreements.
              The responsible contracting officer shall process and execute novation and change-of-name agreements in accordance with the procedures at PGI 242.1203.
              [70 FR 67920, Nov. 9, 2005]

              242.1204
              Agreement to recognize a successor in interest (novation agreement).

              (i) When a novation agreement is required and the transferee intends to incur restructuring costs as defined at 213.205-70, the cognizant contracting officer shall include the following provision as paragraph (b)(7) of the novation agreement instead of the paragraph (b)(7) provided in the sample format at FAR 42.1204(i):

                “(7)(i) Except as set forth in subparagraph (7)(ii) below, the Transferor and the Transferee agree that the Government is not obligated to pay or reimburse either of them for, or otherwise give effect to, any costs, taxes, or other expenses, or any related increases, directly or indirectly arising out of or resulting from the transfer or this Agreement, other than those that the Government in the absence of this transfer or Agreement would have been obligated to pay or reimburse under the terms of the contracts.
                (ii) The Government recognizes that restructuring by the Transferee incidental to the acquisition/merger may be in the best interests of the Government. Restructuring costs that are allowable under Part 31 of the Federal Acquisition Regulation (FAR) or Part 231 of the Defense Federal Acquisition Regulation Supplement (DFARS) may be reimbursed under flexibily-priced novated contracts, provided the Transferee demonstrates that the restructuring will reduce overall costs to the Department of Defense (DoD) (and to the National Aeronautics and Space Administration (NASA), where there is a mix of DoD and NASA contracts), and the requirements included in DFARS 231.205-70 are met. Restructuring costs shall not be allowed on novated contracts unless there is an audit of the restructuring proposal; a determination by the contracting officer of overall reduced costs to DoD/NASA; and an Advance Agreement setting forth a cumulative cost ceiling for restructuring projects and the period to which such costs shall be assigned.”

              [60 FR 1749, Jan. 5, 1995, as amended at 61 FR 16882, Apr. 18, 1996; 65 FR 63805, Oct. 25, 2000]

            Subpart 242.15—Contractor Performance Information

              Source:
              83 FR 15999, Apr. 13, 2018, unless otherwise noted.

              242.1502
              Policy.
              (g) Past performance evaluations in the Contractor Performance Assessment Reporting System shall include an assessment of the contractor's performance against, and efforts to achieve, the goals identified in its comprehensive small business subcontracting plan when the contract contains the clause at 252.219-7004, Small Business Subcontracting Plan (Test Program).

            Subpart 242.70—Contractor Business Systems

              Source:
              76 FR 28868, May 18, 2011, unless otherwise noted.

              242.7000
              Contractor business system deficiencies.
              (a) Definitions. As used in this subpart—

                Acceptable contractor business systems and contractor business systems are defined in the clause at 252.242-7005, Contractor Business Systems.

                Covered contract means a contract that is subject to the Cost Accounting Standards under 41 U.S.C. chapter 15, as implemented in regulations found at 48 CFR 9903.201-1 (see the FAR Appendix) (10 U.S.C. 2302 note, as amended by section 816 of Pub. L. 112-81).

                Significant deficiency is defined in the clause at 252.242-7005, Contractor Business Systems.
              (b) Determination to withhold payments. If the contracting officer makes a final determination to disapprove a contractor's business system in accordance with the clause at 252.242-7005, Contractor Business Systems, the contracting officer shall—
              (1) In accordance with agency procedures, identify one or more covered contracts containing the clause at 252.242-7005, Contractor Business Systems, from which payments will be withheld. When identifying the covered contracts from which to withhold payments, the contracting officer shall ensure that the total amount of payment withholding under 252.242-7005, does not exceed 10 percent of progress payments, performance-based payments, and interim payments under cost-reimbursement, labor-hour, and time-and-materials contracts billed under each of the identified covered contracts. Similarly, the contracting officer shall ensure that the total amount of payment withholding under the clause at 252.242-7005, Contractor Business Systems, for each business system does not exceed five percent of progress payments, performance-based payments, and interim payments under cost-reimbursement, labor-hour, and time-and-materials contracts billed under each of the identified covered contracts. The contracting officer has the sole discretion to identify the covered contracts from which to withhold payments.
              (2) Promptly notify the contractor, in writing, of the contracting officer's determination to implement payment withholding in accordance with the clause at 252.242-7005, Contractor Business Systems. The notice of payment withholding shall be included in the contracting officer's written final determination for the contractor business system and shall inform the contractor that—
              (i) Payments shall be withheld from the contract or contracts identified in the written determination in accordance with the clause at 252.242-7005, Contractor Business Systems, until the contracting officer determines that there are no remaining significant deficiencies; and
              (ii) The contracting officer reserves the right to take other actions within the terms and conditions of the contract.
              (3) Provide all contracting officers administering the selected contracts from which payments will be withheld, a copy of the determination. The contracting officer shall also provide a copy of the determination to the auditor; payment office; affected contracting officers at the buying activities; and cognizant contracting officers in contract administration activities.
              (c) Monitoring contractor's corrective action. The contracting officer, in consultation with the auditor or functional specialist, shall monitor the contractor's progress in correcting the deficiencies. The contracting officer shall notify the contractor of any decision to decrease or increase the amount of payment withholding in accordance with the clause at 252.242-7005, Contractor Business Systems.
              (d) Correction of significant deficiencies. (1) If the contractor notifies the contracting officer that the contractor has corrected the significant deficiencies, the contracting officer shall request the auditor or functional specialist to review the correction to verify that the deficiencies have been corrected. If, after receipt of verification, the contracting officer determines that the contractor has corrected all significant deficiencies as directed by the contracting officer's final determination, the contracting officer shall discontinue the withholding of payments, release any payments previously withheld, and approve the system, unless other significant deficiencies remain.
              (2) Prior to the receipt of verification, the contracting officer may discontinue withholding payments pending receipt of verification, and release any payments previously withheld, if the contractor submits evidence that the significant deficiencies have been corrected, and the contracting officer, in consultation with the auditor or functional specialist, determines that there is a reasonable expectation that the corrective actions have been implemented and are expected to correct the significant deficiencies.
              (3) Within 90 days of receipt of the contractor notification that the contractor has corrected the significant deficiencies, the contracting officer shall—
              (i) Make a determination that—

              (A) The contractor has corrected all significant deficiencies as directed by the contracting officer's final determination in accordance with paragraph (d)(1) of this section;
              (B) There is a reasonable expectation that the corrective actions have been implemented in accordance with paragraph (d)(2) of this section; or
              (C) The contractor has not corrected all significant deficiencies as directed by the contracting officer's final determination in accordance with paragraph (d)(1) of this section, or there is not a reasonable expectation that the corrective actions have been implemented in accordance with paragraph (d)(2) of this section; or
              (ii) Reduce withholding directly related to the significant deficiencies covered under the corrective action plan by at least 50 percent of the amount being withheld from progress payments and performance-based payments, and direct the contractor, in writing, to reduce the percentage withheld on interim cost vouchers by at least 50 percent, until the contracting officer makes a determination in accordance with paragraph (d)(3)(i) of this section.
              (4) If, at any time, the contracting officer determines that the contractor has failed to correct the significant deficiencies identified in the contractor's notification, the contracting officer will continue, reinstate, or increase withholding from progress payments and performance-based payments, and direct the contractor, in writing, to continue, reinstate, or increase the percentage withheld on interim cost vouchers to the percentage initially withheld, until the contracting officer determines that the contractor has corrected all significant deficiencies as directed by the contracting officer's final determination.
              (e) For sample formats for written notifications of contracting officer determinations to initiate payment withholding, reduce payment withholding, and discontinue payment withholding in accordance with the clause at DFARS 252.242-7005, Contractor Business Systems, see PGI 242.7000.
              [76 FR 28868, May 18, 2011, as amended at 77 FR 11365, Feb. 24, 2012]

              242.7001
              Contract clause.
              Use the clause at 252.242-7005, Contractor Business Systems, in solicitations and contracts (other than in contracts with educational institutions, Federally Funded Research and Development Centers (FFRDCs), or University Associated Research Centers (UARCs) operated by educational institutions) when—
              (a) The resulting contract will be a covered contract as defined in 242.7000(a); and
              (b) The solicitation or contract includes any of the following clauses:
              (1) 252.215-7002, Cost Estimating System Requirements.
              (2) 252.234-7002, Earned Value Management System.
              (3) 252.242-7004, Material Management and Accounting System.
              (4) 252.242-7006, Accounting System Administration.
              (5) 252.244-7001, Contractor Purchasing System Administration.
              (6) 252.245-7003, Contractor Property Management System Administration.
              [76 FR 28868, May 18, 2011, as amended at 77 FR 11366, Feb. 24, 2012]

            Subpart 242.71—Voluntary Refunds

              242.7100
              General.
              A voluntary refund is a payment or credit (adjustment under one or more contracts or subcontracts) to the Government from a contractor or subcontractor that is not required by any contractual or other legal obligation. Follow the procedures at PGI 242.7100 for voluntary refunds.
              [70 FR 67920, Nov. 9, 2005]

            Subpart 242.72—Contractor Material Management and Accounting System

              Source:
              65 FR 77833, Dec. 13, 2000, unless otherwise noted.

              242.7200
              Scope of subpart.

              (a) This subpart provides policies, procedures, and standards for use in the evaluation of a contractor's material management and accounting system (MMAS).

              (b) The policies, procedures, and standards in this subpart—
              (1) Apply only when the contractor has contracts exceeding the simplified acquisition threshold that are not for the acquisition of commercial items and are either—
              (i) Cost-reimbursement contracts; or
              (ii) Fixed-price contracts with progress payments made on the basis of costs incurred by the contractor as work progresses under the contract; and
              (2) Do not apply to small businesses, educational institutions, or nonprofit organizations.

              242.7201
              Definitions.

                Acceptable material management and accounting system, material management and accounting system, and valid time-phased requirements are defined in the clause at 252.242-7004, Material Management and Accounting System.

                Significant deficiency is defined in the clause at 252.242.7004, Material Management and Accounting System.
              [76 FR 28869, May 18, 2011]

              242.7202
              Policy.
              (a) DoD policy is for its contractors to have an MMAS that conforms to the standards in paragraph (d) of the clause at 252.242-7004, Material Management and Accounting System, so that the system—
              (1) Reasonably forecasts material requirements;
              (2) Ensures the costs of purchased and fabricated material charged or allocated to a contract are based on valid time-phased requirements; and
              (3) Maintains a consistent, equitable, and unbiased logic for costing of material transactions.
              (b) The cognizant contracting officer, in consultation with the auditor and functional specialist, if appropriate, shall—
              (1) Determine the acceptability of the contractor's MMAS and approve or disapprove the system; and
              (2) Pursue correction of any deficiencies.
              (c) In evaluating the acceptability of the contractor's MMAS, the contracting officer, in consultation with the auditor and functional specialist, if appropriate, shall determine whether the contractor's MMAS complies with the system criteria for an acceptable MMAS as prescribed in the clause at 252.242-7004, Material Management and Accounting System.
              [76 FR 28869, May 18, 2011, as amended at 81 FR 36473, June 7, 2016]

              242.7203
              Review procedures.
              (a) Criteria for conducting reviews. Conduct an MMAS review when—
              (1) A contractor has $40 million of qualifying sales to the Government during the contractor's preceding fiscal year; and
              (2) The administrative contracting officer (ACO), with advice from the auditor, determines an MMAS review is needed based on a risk assessment of the contractor's past experience and current vulnerability.
              (b) Qualifying sales. Qualifying sales are sales for which certified cost or pricing data were required under 10 U.S.C. 2306a, as implemented in FAR 15.403, or that are contracts priced on other than a firm-fixed-price or fixed-price with economic price adjustment basis. Sales include prime contracts, subcontracts, and modifications to such contracts and subcontracts.
              (c) Disposition of findings—(1) Reporting of findings. The auditor or functional specialist shall document findings and recommendations in a report to the contracting officer. If the auditor or functional specialist identifies any significant MMAS deficiencies, the report shall describe the deficiencies in sufficient detail to allow the contracting officer to understand the deficiencies.
              (2) Initial determination. (i) The contracting officer shall review findings and recommendations and, if there are no significant deficiencies, shall promptly notify the contractor, in writing, that the contractor's MMAS is acceptable and approved; or

              (ii) If the contracting officer finds that there are one or more significant deficiencies (as defined in the clause at 252.242-7004, Material Management and Accounting System) due to the contractor's failure to meet one or more of the MMAS system criteria in the clause at 252.242-7004, Material Management and Accounting System, the contracting officer shall—

              (A) Promptly make an initial written determination on any significant deficiencies and notify the contractor, in writing, providing a description of each significant deficiency in sufficient detail to allow the contractor to understand the deficiency;
              (B) Request the contractor to respond, in writing, to the initial determination within 30 days; and
              (C) Promptly evaluate the contractor's response to the initial determination in consultation with the auditor or functional specialist, and make a final determination.
              (3) Final determination. (i) The ACO shall make a final determination and notify the contractor that—
              (A) The contractor's MMAS is acceptable and approved, and no deficiencies remain, or
              (B) Significant deficiencies remain. The notice shall identify any remaining significant deficiencies, and indicate the adequacy of any proposed or completed corrective action. The contracting officer shall—
              (1) Request that the contractor, within 45 days of receipt of the final determination, either correct the deficiencies or submit an acceptable corrective action plan showing milestones and actions to eliminate the deficiencies;
              (2) Disapprove the system in accordance with the clause at 252.242-7004, Material Management and Accounting System; and
              (3) Withhold payments in accordance with the clause at 252.242-7005, Contractor Business Systems, if the clause is included in the contract.
              (ii) Follow the procedures relating to monitoring a contractor's corrective action and the correction of significant deficiencies in PGI 242.7203.
              (d) System approval. The contracting officer shall promptly approve a previously disapproved MMAS and notify the contractor when the contracting officer determines that there are no remaining significant deficiencies.
              (e) Contracting officer notifications. The cognizant contracting officer shall promptly distribute copies of a determination to approve a system, disapprove a system and withhold payments, or approve a previously disapproved system and release withheld payments to the auditor; payment office; affected contracting officers at the buying activities; and cognizant contracting officers in contract administration activities.
              [65 FR 77833, Dec. 13, 2000, as amended at 76 FR 28869, May 18, 2011; 77 FR 76940, Dec. 31, 2012]

              242.7204
              Contract clause.
              Use the clause at 252.242-7004, Material Management and Accounting System, in all solicitations and contracts exceeding the simplified acquisition threshold that are not for the acquisition of commercial items and—
              (a) Are not awarded to small businesses, educational institutions, or nonprofit organizations; and
              (b) Are either—
              (1) Cost-reimbursement contracts; or
              (2) Fixed-price contracts with progress payments made on the basis of costs incurred by the contractor as work progresses under the contract.

            Subpart 242.73—Contractor Insurance/Pension Review

              242.7301
              General.
              (a) The administrative contracting officer (ACO) is responsible for determining the allowability of insurance/pension costs in Government contracts and for determining the need for a Contractor/Insurance Pension Review (CIPR). Defense Contract Management Agency (DCMA) insurance/pension specialists and Defense Contract Audit Agency (DCAA) auditors assist ACOs in making these determinations, conduct CIPRs when needed, and perform other routine audits as authorized under FAR 42.705 and 52.215-2. A CIPR is a DCMA/DCAA joint review that—
              (1) Provides an in-depth evaluation of a contractor's—
              (i) Insurance programs;
              (ii) Pension plans;
              (iii) Other deferred compensation plans; and
              (iv) Related policies, procedures, practices, and costs; or

              (2) Concentrates on specific areas of the contractor's insurance programs, pension plans, or other deferred compensation plans.

              (b) DCMA is the DoD Executive Agent for the performance of all CIPRs.
              (c) DCAA is the DoD agency designated for the performance of contract audit responsibilities related to Cost Accounting Standards administration as described in FAR subparts 30.2 and 30.6 as they relate to a contractor's insurance programs, pension plans, and other deferred compensation plans.
              [71 FR 9273, Feb. 23, 2006, as amended at 77 FR 76940, Dec. 31, 2012; 82 FR 61481, Dec. 28, 2017]

              242.7302
              Requirements.
              (a)(1) An in-depth CIPR as described at DFARS 242.7301(a)(1) shall be conducted only when—
              (i) A contractor has $50 million of qualifying sales to the Government during the contractor's preceding fiscal year; and
              (ii) The ACO, with advice from DCMA insurance/pension specialists and DCAA auditors, determines a CIPR is needed based on a risk assessment of the contractor's past experience and current vulnerability.
              (2) Qualifying sales are sales for which certified cost or pricing data were required under 10 U.S.C. 2306a, as implemented in FAR 15.403, or that are contracts priced on other than a firm-fixed-price or fixed-price with economic price adjustment basis. Sales include prime contracts, subcontracts, and modifications to such contracts and subcontracts.
              (b) A special CIPR that concentrates on specific areas of a contractor's insurance programs, pension plans, or other deferred compensation plans shall be performed for a contractor (including, but not limited to, a contractor meeting the requirements in paragraph (a) of this section) when any of the following circumstances exists, but only if the circumstance(s) may result in a material impact on Government contract costs:
              (1) Information or data reveals a deficiency in the contractor's insurance/pension program.
              (2) The contractor proposes or implements changes in its insurance, pension, or deferred compensation plans.
              (3) The contractor is involved in a merger, acquisition, or divestiture.
              (4) The Government needs to follow up on contractor implementation of prior CIPR recommendations.
              (c) The DCAA auditor shall use relevant findings and recommendations of previously performed CIPRs in determining the scope of any audits of insurance and pension costs.
              (d) When a Government organization believes that a review of the contractor's insurance/pension program should be performed, that organization should provide a recommendation for a review to the ACO. If the ACO concurs, the review should be performed as part of an ACO-initiated special CIPR or as part of a CIPR already scheduled for the near future.
              [78 FR 13544, Feb. 28, 2013]

              242.7303
              Responsibilities.
              Follow the procedures at PGI 242.7303 when conducting a CIPR.
              [71 FR 9273, Feb. 23, 2006]

            Subpart 242.74—Technical Representation at Contractor Facilities

              242.7400
              General.
              (a) Program managers may conclude that they need technical representation in contractor facilities to perform non-contract administration service (CAS) technical duties and to provide liaison, guidance, and assistance on systems and programs. In these cases, the program manager may assign technical representatives under the procedures in 242.7401.
              (b) A technical representative is a representative of a DoD program, project, or system office performing non-CAS technical duties at or near a contractor facility. A technical representative is not—
              (1) A representative of a contract administration or contract audit component; or
              (2) A contracting officer's representative (see 201.602).
              [70 FR 67921, Nov. 9, 2005]

              242.7401
              Procedures.
              When the program, project, or system manager determines that a technical representative is required, follow the procedures at PGI 242.7401.
              [70 FR 67921, Nov. 9, 2005]

            Subpart 242.75—Contractor Accounting Systems and Related Controls

              Source:
              76 FR 28870, May 18, 2011, unless otherwise noted.

              242.7501
              Definitions.
              As used in this subpart—

                Acceptable accounting system, and accounting system are defined in the clause at 252.242-7006, Accounting System Administration.

                Significant deficiency is defined in the clause at 252.242-7006, Accounting System Administration.

              242.7502
              Policy.
              (a) Contractors receiving cost-reimbursement, incentive type, time-and-materials, or labor-hour contracts, or contracts which provide for progress payments based on costs or on a percentage or stage of completion, shall maintain an accounting system.
              (b) The cognizant contracting officer, in consultation with the auditor or functional specialist, shall—
              (1) Determine the acceptability of a contractor's accounting system and approve or disapprove the system; and
              (2) Pursue correction of any deficiencies.
              (c) In evaluating the acceptability of a contractor's accounting system, the contracting officer, in consultation with the auditor or functional specialist, shall determine whether the contractor's accounting system complies with the system criteria for an acceptable accounting system as prescribed in the clause at 252.242-7006, Accounting System Administration.
              (d) Disposition of findings— (1) Reporting of findings. The auditor shall document findings and recommendations in a report to the contracting officer. If the auditor identifies any significant accounting system deficiencies, the report shall describe the deficiencies in sufficient detail to allow the contracting officer to understand the deficiencies. Follow the procedures at PGI 242.7502 for reporting of deficiencies.
              (2) Initial determination. (i) The contracting officer shall review findings and recommendations and, if there are no significant deficiencies, shall promptly notify the contractor, in writing, that the contractor's accounting system is acceptable and approved; or
              (ii) If the contracting officer finds that there are one or more significant deficiencies (as defined in the clause at 252.242-7006, Accounting System Administration) due to the contractor's failure to meet one or more of the accounting system criteria in the clause at 252.242-7006, the contracting officer shall—
              (A) Promptly make an initial written determination on any significant deficiencies and notify the contractor, in writing, providing a description of each significant deficiency in sufficient detail to allow the contractor to understand the deficiency;
              (B) Request the contractor to respond, in writing, to the initial determination within 30 days; and
              (C) Promptly evaluate the contractor's response to the initial determination, in consultation with the auditor or functional specialist, and make a final determination.
              (3) Final determination. (i) The contracting officer shall make a final determination and notify the contractor, in writing, that—
              (A) The contractor's accounting system is acceptable and approved, and no significant deficiencies remain, or
              (B) Significant deficiencies remain. The notice shall identify any remaining significant deficiencies, and indicate the adequacy of any proposed or completed corrective action. The contracting officer shall—
              (1) Request that the contractor, within 45 days of receipt of the final determination, either correct the deficiencies or submit an acceptable corrective action plan showing milestones and actions to eliminate the deficiencies;
              (2) Make a determination to disapprove the system in accordance with the clause at 252.242-7006, Accounting System Administration; and

              (3) Withhold payments in accordance with the clause at 252.242-7005, Contractor Business Systems, if the clause is included in the contract.
              (ii) Follow the procedures relating to monitoring a contractor's corrective action and the correction of significant deficiencies in PGI 242.7502.
              (e) System approval. The contracting officer shall promptly approve a previously disapproved accounting system and notify the contractor when the contracting officer determines that there are no remaining significant deficiencies.
              (f) Contracting officer notifications. The cognizant contracting officer shall promptly distribute copies of a determination to approve a system, disapprove a system and withhold payments, or approve a previously disapproved system and release withheld payments to the auditor; payment office; affected contracting officers at the buying activities; and cognizant contracting officers in contract administration activities.
              (g) Mitigating the risk of accounting system deficiencies on specific proposals.

              (1) Field pricing teams shall discuss identified accounting system deficiencies and their impact in all reports on contractor proposals until the deficiencies are resolved.

              (2) The contracting officer responsible for negotiation of a proposal generated by an accounting system with an identified deficiency shall evaluate whether the deficiency impacts the negotiations. See also PGI 242.7502(g)(2). If it does not, the contracting officer should proceed with negotiations. If it does, the contracting officer should consider other alternatives, e.g.—
              (i) Allowing the contractor additional time to correct the accounting system deficiency and submit a corrected proposal;
              (ii) Considering another type of contract;
              (iii) Using additional cost analysis techniques to determine the reasonableness of the cost elements affected by the accounting system's deficiency;
              (iv) Reducing the negotiation objective for profit or fee; or
              (v) Including a contract (reopener) clause that provides for adjustment of the contract amount after award.
              (3) The contracting officer who incorporates a reopener clause into the contract is responsible for negotiating price adjustments required by the clause. Any reopener clause necessitated by an accounting system deficiency should—
              (i) Clearly identify the amounts and items that are in question at the time of negotiation;
              (ii) Indicate a specific time or subsequent event by which the contractor will submit a supplemental proposal, including certified cost or pricing data, identifying the cost impact adjustment necessitated by the deficient accounting system;
              (iii) Provide for the contracting officer to adjust the contract price unilaterally if the contractor fails to submit the supplemental proposal; and
              (iv) Provide that failure of the Government and the contractor to agree to the price adjustment shall be a dispute under the Disputes clause.
              [76 FR 28870, May 18, 2011, as amended at 77 FR 11366, Feb. 24, 2012; 77 FR 76940, Dec. 31, 2012; 80 FR 10390, Feb. 26, 2015]

              242.7503
              Contract clause.
              Use the clause at 252.242-7006, Accounting System Administration, in solicitations and contracts when contemplating—
              (a) A cost-reimbursement, incentive type, time-and-materials, or labor-hour contract; or
              (b) A contract with progress payments made on the basis of costs incurred by the contractor or on a percentage or stage of completion.
              [76 FR 28870, May 18, 2011, as amended at 77 FR 11366, Feb. 24, 2012; 82 FR 61481, Dec. 28, 2017]

          Pt. 243
          PART 243—CONTRACT MODIFICATIONS

              Subpart 243.1—General
              Sec.
              243.107-70
              Notification of substantial impact on employment.
              243.170
              Identification of foreign military sale (FMS) requirements.
              243.171
              Obligation or deobligation of funds.
              243.172
              Application of modifications.

              Subpart 243.2—Change Orders
              243.204
              Administration.
              243.204-70
              Definitization of change orders
              243.204-70-2
              Price ceiling.
              243.204-70-4
              Limitations on obligations.
              243.204-70-5
              Exceptions.
              243.204-70-6
              Allowable profit.
              243.204-70-7
              Plans and reports.
              243.204-71
              Certification of requests for equitable adjustment.
              243.205
              Contract clauses.
              243.205-70
              Pricing of contract modifications.
              243.205-71
              Requests for equitable adjustment.
              243.205-72
              Unpriced change orders.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36446, July 31, 1991, unless otherwise noted.

            Subpart 243.1—General

              243.107-70
              Notification of substantial impact on employment.
              The Secretary of Defense is required to notify the Secretary of Labor if a modification of a major defense contract or subcontract will have a substantial impact on employment. The clause prescribed at 249.7003(c) requires that the contractor notify its employees, its subcontractors, and State and local officials when a contract modification will have a substantial impact on employment.
              [56 FR 67220, Dec. 30, 1991, as amended at 70 FR 67922, Nov. 9, 2005]

              243.170
              Identification of foreign military sale (FMS) requirements.
              Follow the procedures at PGI 243.170 for identifying contract modifications that add FMS requirements.
              [70 FR 67922, Nov. 9, 2005]

              243.171
              Obligation or deobligation of funds.
              Follow the procedures at PGI 243.171 when obligating or deobligating funds.
              [70 FR 67922, Nov. 9, 2005]

              243.172
              Application of modifications.
              Follow the procedures in 204.1671 for determining the sequence for application of modifications to a contract or order.
              [77 FR 30368, May 22, 2012, as amended at 81 FR 9786, Feb. 26, 2016]

            Subpart 243.2—Change Orders

              243.204
              Administration.
              Follow the procedures at PGI 243.204 for administration of change orders.
              [75 FR 48277, Aug. 10, 2010]

              243.204-70
              Definitization of change orders.

              243.204-70-1
              Scope.
              (a) This subsection applies to unpriced change orders with an estimated value exceeding $5 million.
              (b) Unpriced change orders for foreign military sales and special access programs are not subject to this subsection, but the contracting officer shall apply the policy and procedures to them to the maximum extent practicable. If the contracting officer determines that it is impracticable to adhere to the policy and procedures of this subsection for an unpriced change order for a foreign military sale or a special access program, the contracting officer shall provide prior notice, through agency channels, to the Deputy Director, Defense Procurement and Acquisition Policy (Contract Policy and International Contracting), 3060 Defense Pentagon, Washington, DC 20301-3060.
              [75 FR 48277, Aug. 10, 2010]

              243.204-70-2
              Price ceiling.
              Unpriced change orders shall include a not-to-exceed price.
              [75 FR 48277, Aug. 10, 2010]

              243.204-70-3
              Definitization schedule.
              (a) Unpriced change orders shall contain definitization schedules that provide for definitization by the earlier of—
              (1) The date that is 180 days after issuance of the change order (this date may be extended but may not exceed the date that is 180 days after the contractor submits a qualifying proposal); or
              (2) The date on which the amount of funds obligated under the change order is equal to more than 50 percent of the not-to-exceed price.

              (b) Submission of a qualifying proposal in accordance with the definitization schedule is a material element of the contract. If the contractor does not submit a timely qualifying proposal, the contracting officer may suspend or reduce progress payments under FAR 32.503-6, or take other appropriate action.
              [75 FR 48277, Aug. 10, 2010, as amended at 82 FR 61481, Dec. 28, 2017]

              243.204-70-4
              Limitations on obligations.

              (a) The Government shall not obligate more than 50 percent of the not-to-exceed price before definitization. However, if a contractor submits a qualifying proposal before 50 percent of the not-to-exceed price has been obligated by the Government, the limitation on obligations before definitization may be increased to no more than 75 percent (see 232.102-70 for coverage on provisional delivery payments).
              (b) Obligations should be consistent with the contractor's requirements for the undefinitized period.
              [75 FR 48277, Aug. 10, 2010]

              243.204-70-5
              Exceptions.
              (a) The limitations in 243.204-70-2, 243.204-70-3, and 243.204-70-4 do not apply to unpriced change orders for the purchase of initial spares.
              (b) The limitations in 243.204-70-4(a) do not apply to unpriced change orders for ship construction and ship repair.
              (c) The head of the agency may waive the limitations in 243.204-70-2, 243.204-70-3, and 243.204-70-4 for unpriced change orders if the head of the agency determines that the waiver is necessary to support—
              (1) A contingency operation; or
              (2) A humanitarian or peacekeeping operation.
              [75 FR 48277, Aug. 10, 2010]

              243.204-70-6
              Allowable profit.
              When the final price of an unpriced change order is negotiated after a substantial portion of the required performance has been completed, the head of the contracting activity shall ensure the profit allowed reflects—
              (a) Any reduced cost risk to the contractor for costs incurred during contract performance before negotiation of the final price;
              (b) Any reduced cost risk to the contractor for costs expected to be incurred during performance of the remainder of the contract; and
              (c) The extent to which costs have been incurred prior to definitization of the unpriced change order (see 215.404-71-3(d)(2)). The risk assessment shall be documented in the price negotiation memorandum .
              [75 FR 48277, Aug. 10, 2010, as amended at 83 FR 30587, June 29, 2018]

              243.204-70-7
              Plans and reports.
              To provide for enhanced management and oversight of unpriced change orders, departments and agencies shall—
              (a) Include in the Consolidated Undefinitized Contract Action (UCA) Management Plan required by 217.7405, the actions planned and taken to ensure that unpriced change orders are definitized in accordance with this subsection; and
              (b) Include in the Consolidated UCA Management Report required by 217.7405, each unpriced change order with an estimated value exceeding $5 million.
              [75 FR 48277, Aug. 10, 2010]

              243.204-71
              Certification of requests for equitable adjustment.
              (a) A request for equitable adjustment to contract terms that exceeds the simplified acquisition threshold may not be paid unless the contract certifies the request in accordance with the clause at 252.243-7002.
              (b) To determine if the dollar threshold for requiring certification is met, add together the absolute value of each cost increase and each cost decrease. See PGI 243.204-71(b) for an example.

              (c) The certification required by 10 U.S.C. 2410(a), as implemented in the clause at 252.243-7002, is different from the certification required by 41 U.S.C. 7103, Disputes. If the contractor has certified a request for equitable adjustment in accordance with 10 U.S.C. 2410(a), and desires to convert the request to a claim under the Contract Disputes statute, the contractor shall certify the claim in accordance with FAR Subpart 33.2.
              [62 FR 37147, July 11, 1997, as amended at 63 FR 11541, Mar. 9, 1998; 70 FR 67922, Nov. 9, 2005; 76 FR 58137, Sept. 20, 2011; 76 FR 76320, Dec. 7, 2011; 77 FR 35881, June 15, 2012]

              243.205
              Contract clauses.

              243.205-70
              Pricing of contract modifications.
              Use the clause at 252.243-7001, Pricing of Contract Modifications, in solicitations and contracts when anticipating and using a fixed price type contract.
              [56 FR 36446, July 31, 1991. Redesignated at 66 FR 49865, Oct. 1, 2001]

              243.205-71
              Requests for equitable adjustment.
              Use the clause at 252.243-7002, Requests for Equitable Adjustment, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that are estimated to exceed the simplified acquisition threshold.
              [63 FR 17124, Apr. 8, 1998. Redesignated at 66 FR 49865, Oct. 1, 2001; 78 FR 37989, June 25, 2013]

              243.205-72
              Unpriced change orders.

                See the clause prescriptions at 217.7406 for all unpriced change orders with an estimated value exceeding $5 million.
              [75 FR 48278, Aug. 10, 2010]

          Pt. 244
          PART 244—SUBCONTRACTING POLICIES AND PROCEDURES

              Subpart 244.1—General
              Sec.
              244.101
              Definitions

              Subpart 244.2—Consent to Subcontracts
              244.201
              Consent and advance notification requirements.
              244.201-1
              Consent requirements.
              244.202
              Contracting officer's evaluation.
              244.202-2
              Considerations.

              Subpart 244.3—Contractors' Purchasing Systems Reviews
              244.301
              Objective.
              244.302
              Requirements.
              244.303
              Extent of review.
              244.305
              Granting, withholding, or withdrawing approval.
              244.305-70
              Policy.
              244.305-71
              Contract clause.

              Subpart 244.4—Subcontracts for Commercial Items and Commercial Components
              244.402
              Policy requirements.
              244.403
              Contract clause.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36447, July 31, 1991, unless otherwise noted.

            Subpart 244.1—General

              244.101
              Definitions.
              As used in this subpart—

                Acceptable purchasing system and purchasing system are defined in the clause at 252.244-7001, Contractor Purchasing System Administration.

                Significant deficiency is defined in the clause at 252.244-7001, Contractor Purchasing System Administration.
              [76 FR 28871, May 18, 2011]

            Subpart 244.2—Consent to Subcontracts

              244.201
              Consent and advance notification requirements.
              [78 FR 69272, Nov. 18, 2013]

              244.201-1
              Consent requirements.
              (a) In accordance with section 824 of the National Defense Authorization Act for Fiscal Year 2019 (Pub. L. 115-232), notwithstanding the requirements in FAR 44.201-1(a), the contracting officer shall not withhold consent to subcontract without the written approval of the program manager, or comparable requiring activity official exercising program management responsibilities, if the contractor has an approved purchasing system, as defined in FAR 44.101.

              (S-70) In solicitations and contracts for information technology, whether acquired as a service or as a supply, that is a covered system or covered item of supply as those terms are defined at 239.7301, consider the need for a consent to subcontract requirement regarding supply chain risk (see subpart 239.73). For additional guidance see PGI 244.201-1.
              [80 FR 67252, Oct. 30, 2015, as amended at 84 FR 12141, Apr. 1, 2019]

              244.202
              Contracting officer's evaluation.

              244.202-2
              Considerations.
              (a) Where other than lowest price is the basis for subcontractor selection, has the contractor adequately substantiated the selection as offering the greatest value to the Government?
              [60 FR 29501, June 5, 1995]

            Subpart 244.3—Contractors' Purchasing Systems Reviews

              244.301
              Objective.
              The administrative contracting officer (ACO) is solely responsible for initiating reviews of the contractor's purchasing systems, but other organizations may request that the ACO initiate such reviews.
              [70 FR 67922, Nov. 9, 2005]

              244.302
              Requirements.
              (a) In lieu of the threshold at FAR 44.302(a), the ACO shall determine the need for a CPSR if a contractor's sales to the Government are expected to exceed $50 million during the next 12 months.
              [84 FR 72249, Dec. 31, 2019]

              244.303
              Extent of review.
              (a) Also review the adequacy of rationale documenting commercial item determinations to ensure compliance with the definition of “commercial item” in FAR 2.101.
              (b) Also review the adequacy of the contractor's counterfeit electronic part detection and avoidance system under clause 252.246-7007, Contractor Counterfeit Electronic Part Detection and Avoidance System.
              [67 FR 38023, May 31, 2002, as amended at 79 FR 26106, May 6, 2014]

              244.305
              Granting, withholding, or withdrawing approval.

              244.305-70
              Policy.
              Use this subsection instead of FAR 44.305-2(c) and 44.305-3(b).
              (a) The cognizant contracting officer, in consultation with the purchasing system analyst or auditor, shall—
              (1) Determine the acceptability of the contractor's purchasing system and approve or disapprove the system; and
              (2) Pursue correction of any deficiencies.
              (b) In evaluating the acceptability of the contractor's purchasing system, the contracting officer, in consultation with the purchasing system analyst or auditor, shall determine whether the contractor's purchasing system complies with the system criteria for an acceptable purchasing system as prescribed in the clause at 252.244-7001, Contractor Purchasing System Administration.
              (c) Disposition of findings—(1) Reporting of findings. The purchasing system analyst or auditor shall document findings and recommendations in a report to the contracting officer. If the auditor or purchasing system analyst identifies any significant purchasing system deficiencies, the report shall describe the deficiencies in sufficient detail to allow the contracting officer to understand the deficiencies.
              (2) Initial determination. (i) The contracting officer shall review all findings and recommendations and, if there are no significant deficiencies, shall promptly notify the contractor that the contractor's purchasing system is acceptable and approved; or
              (ii) If the contracting officer finds that there are one or more significant deficiencies (as defined in the clause at 252.244-7001, Contractor Purchasing System Administration) due to the contractor's failure to meet one or more of the purchasing system criteria in the clause at 252.244-7001, the contracting officer shall—

              (A) Promptly make an initial written determination on any significant deficiencies and notify the contractor, in writing, providing a description of each significant deficiency in sufficient detail to allow the contractor to understand the deficiency;

              (B) Request the contractor to respond, in writing, to the initial determination within 30 days; and
              (C) Evaluate the contractor's response to the initial determination in consultation with the auditor or purchasing system analyst, and make a final determination.
              (3) Final determination. (i) The contracting officer shall make a final determination and notify the contractor, in writing, that—
              (A) The contractor's purchasing system is acceptable and approved, and no significant deficiencies remain, or
              (B) Significant deficiencies remain. The notice shall identify any remaining significant deficiencies, and indicate the adequacy of any proposed or completed corrective action. The contracting officer shall—
              (1) Request that the contractor, within 45 days of receipt of the final determination, either correct the deficiencies or submit an acceptable corrective action plan showing milestones and actions to eliminate the deficiencies;
              (2) Disapprove the system in accordance with the clause at 252.244-7001, Contractor Purchasing System Administration; and
              (3) Withhold payments in accordance with the clause at 252.242-7005, Contractor Business Systems, if the clause is included in the contract.
              (ii) Follow the procedures relating to monitoring a contractor's corrective action and the correction of significant deficiencies in PGI 244.305-70.
              (d) System approval. The contracting officer shall promptly approve a previously disapproved purchasing system and notify the contractor when the contracting officer determines that there are no remaining significant deficiencies.
              (e) Contracting officer notifications. The cognizant contracting officer shall promptly distribute copies of a determination to approve a system, disapprove a system and withhold payments, or approve a previously disapproved system and release withheld payments to the auditor; payment office; affected contracting officers at the buying activities; and cognizant contracting officers in contract administration activities.
              (f) Mitigating the risk of purchasing system deficiencies on specific proposals.

              (1) Source selection evaluation teams shall discuss identified purchasing system deficiencies and their impact in all reports on contractor proposals until the deficiencies are resolved.

              (2) The contracting officer responsible for negotiation of a proposal generated by a purchasing system with an identified deficiency shall evaluate whether the deficiency impacts the negotiations. If it does not, the contracting officer should proceed with negotiations. If it does, the contracting officer should consider other alternatives, e.g.—
              (i) Allowing the contractor additional time to correct the purchasing system deficiency and submit a corrected proposal;
              (ii) Considering another type of contract, e.g., a fixed-price incentive (firm target) contract instead of firm-fixed-price;
              (iii) Using additional cost analysis techniques to determine the reasonableness of the cost elements affected by the purchasing system's deficiency;
              (iv) Segregating the questionable areas as a cost-reimbursable line item;
              (v) Reducing the negotiation objective for profit or fee; or
              (vi) Including a contract (reopener) clause that provides for adjustment of the contract amount after award.
              (3) The contracting officer who incorporates a reopener clause into the contract is responsible for negotiating price adjustments required by the clause. Any reopener clause necessitated by a purchasing system deficiency should—
              (i) Clearly identify the amounts and items that are in question at the time of negotiation;
              (ii) Indicate a specific time or subsequent event by which the contractor will submit a supplemental proposal, including certified cost or pricing data, identifying the cost impact adjustment necessitated by the deficient purchasing system;
              (iii) Provide for the contracting officer to adjust the contract price unilaterally if the contractor fails to submit the supplemental proposal; and

              (iv) Provide that failure of the Government and the contractor to agree to the price adjustment shall be a dispute under the Disputes clause.
              [76 FR 28871, May 18, 2011, as amended at 77 FR 11366, Feb. 24, 2012]

              244.305-71
              Contract clause.
              Use the Contractor Purchasing System Administration basic clause or its alternate as follows:
              (a) Use the clause at 252.244-7001, Contractor Purchasing System Administration—Basic, in solicitations and contracts containing the clause at FAR 52.244-2, Subcontracts.
              (b) Use the clause at 252.244-7001, Contractor Purchasing System Administration—Alternate I, in solicitations and contracts that contain the clause at 252.246-7007, Contractor Counterfeit Electronic Part Detection and Avoidance System, but do not contain FAR 52.244-2, Subcontracts.
              [79 FR 26106, May 6, 2014]

            Subpart 244.4—Subcontracts for Commercial Items and Commercial Components

              244.402
              Policy requirements.
              (a) Contractors are required to determine whether a particular subcontract item meets the definition of a commercial item. This requirement does not affect the contracting officer's responsibilities or determinations made under FAR 15.403-1(c)(3). Contractors are expected to exercise reasonable business judgment in making such determinations, consistent with the guidelines for conducting market research in FAR part 10.
              (S-70) In accordance with 10 U.S.C. 2380b, items that are valued at less than $10,000 per item that are purchased by a contractor for use in the performance of multiple contracts with the Department of Defense and other parties and are not identifiable to any particular contract when purchased shall be treated as commercial items, even though the items may not meet the definition of “commercial item” at FAR 2.101 and do not require a commercial item determination.
              [67 FR 38023, May 31, 2002, as amended at 85 FR 60921, Sept. 29, 2020]

              244.403
              Contract clause.
              Use the clause at 252.244-7000, Subcontracts for Commercial Items, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items.
              [78 FR 37989, June 25, 2013]

          Pt. 245
          PART 245—GOVERNMENT PROPERTY

              Subpart 245.1—General
              Sec.
              245.101
              Definitions.
              245.102
              Policy.
              245.103-70
              Furnishing Government property to contractors.
              245.103-71
              Transferring Government property accountability.
              245.103-72
              Government-furnished property attachments to solicitations and awards.
              245.103-73
              Government property under sustainment contracts.
              245.103-74
              Contracting office responsibilities.
              245.104
              Responsibility and liability for Government property.
              245.105
              Contractor's property management system compliance.
              245.107
              Contract clause.

              Subpart 245.2—Solicitation and Evaluation Procedures
              245.201
              Solicitation.
              245.201-70
              Definitions.
              245.201-71
              Security classification.

              Subpart 245.3—Authorizing the Use and Rental of Government Property
              245.302
              Contracts with foreign governments or international organizations.

              Subpart 245.4—Title to Government Property
              245.402
              Title to contractor-acquired property.
              245.402-70
              Policy.
              245.402-71
              Delivery of contractor-acquired property.

              Subpart 245.5—Support Government Property Administration
              245.570
              Storage at the Government's expense.

              Subpart 245.6— Reporting, Reutilization, and Disposal
              245.602
              Reutilization of Government property.
              245.602-1
              Inventory disposal schedules.
              245.602-3
              Screening.
              245.602-70
              Plant clearance procedures.
              245.604
              Disposal of surplus property.
              245.604-3
              Sale of surplus property.

              Subpart 245.70—Plant Clearance Forms
              245.7101
              Forms.
              245.7001
              Forms.
              245.7001-1
              Standard Form 97, Certificate of Release of a Motor Vehicle (Agency Record Copy).
              245.7001-2
              DD Form 1149, Requisition and Invoice Shipping Document.
              245.7001-3
              DD Form 1348-1, DoD Single Line Item Release/Receipt Document.
              245.7001-4
              DD Form 1640, Request for Plant Clearance.
              245.7001-5
              DD Form 1641, Disposal Determination/Approval.
              245.7001-6
              Defense Logistics Agency DLA Form 1822, End Use Certificate.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36448, July 31, 1991, unless otherwise noted.

            Subpart 245.1—General

              Source:
              74 FR 37647, July 29, 2009, unless otherwise noted.

              245.101
              Definitions.

                Mapping, charting, and geodesy property, as used in this subpart, is defined in the clause at 252.245-7000, Government-Furnished Mapping, Charting, and Geodesy Property.

              245.102
              Policy.
              (See the policy guidance at PGI 245.102-70.)
              (1) Mapping, charting, and geodesy property. All Government-furnished mapping, charting, and geodesy (MC&G) property is under the control of the Director, National Geospatial Intelligence Agency.
              (i) MC&G property shall not be duplicated, copied, or otherwise reproduced for purposes other than those necessary for contract performance.
              (ii) Upon completion of contract performance, the contracting officer shall—
              (A) Contact the Director, National Geospatial-Intelligence Agency, 7500 Geoint Drive, Springfield, VA 22150, for disposition instructions;
              (B) Direct the contractor to destroy or return all Government-furnished MC&G property not consumed during contract performance; and
              (C) Specify the destination and means of shipment for property to be returned to the Government.
              (2) Government supply sources. When a contractor will be responsible for preparing requisitioning documentation to acquire Government-furnished property from Government supply sources, include in the contract the requirement to prepare the documentation in accordance with DoD 4000.25-1-M, Military Standard Requisitioning and Issue Procedures (MILSTRIP). Copies are available from the address cited at PGI 251.102.
              (3) Acquisition and management of industrial resources. See Subpart 237.75 for policy relating to facilities projects.
              (4) Government-furnished property identification.

              (i) It is DoD policy that Government-furnished property be tagged, labeled, or marked based on DoD marking standards (MIL Standard 130) or other standards, when the requiring activity determines that such items are subject to serialized item management (serially-managed items). The list of Government-furnished property subject to serialized item management will be identified in the contract in accordance with PGI 245.103-72, GFP attachments to solicitations and awards.
              (ii) Exceptions. The Contractor will not be required to tag, label, or mark—
              (A) Government-furnished property that was previously tagged, labeled, or marked;
              (B) Items, as determined by the head of the agency, that are to be used to support a contingency operation; or to facilitate defense against or recovery from nuclear, biological, chemical, or radiological attack;

              (C) Items for which a determination and findings has been executed concluding that it is more cost effective for the Government requiring activity to assign, mark, and register the unique item identification after delivery of an item acquired from a small business concern or a commercial item acquired under FAR part 12 or part 8.
              (1) The determination and findings shall be executed by—
              (i) The Component Acquisition Executive for an Acquisition Category (ACAT) I program; or
              (ii) The head of the contracting activity for all other programs.
              (2) A copy of the executed determination and findings shall be provided to the DoD Unique Item Identification Policy Office at this address: OUSD (AT&L) DPAP/Program Development and Implementation, Room 3B855, 3060 Defense Pentagon, Washington, DC 20301-3060; or by facsimile to 703-602-6047.
              (D) Items that are contractor-acquired property;
              (E) Property under any statutory leasing authority;
              (F) Property to which the Government has acquired a lien or title solely because of partial, advance, progress, or performance-based payments;
              (G) Intellectual property or software; or
              (H) Real property.
              (5) Reporting loss of Government property. The Defense Contract Management Agency (DCMA) eTools software application is the DoD data repository for reporting loss of Government property in the possession of contractors. The requirements and procedures for reporting loss of Government property to eTools are set forth in the clause at 252.245-7002, Reporting Loss of Government Property, prescribed at 245.107.
              [74 FR 37647, July 29, 2009, as amended at 76 FR 3537, Jan. 20, 2011; 76 FR 6006, 6008, Feb. 2, 2011; 80 FR 2021, Jan. 15, 2015; 81 FR 36473, June 7, 2016]

              245.103-70
              Furnishing Government property to contractors.
              Follow the procedures at PGI 245.103-70 for furnishing Government property to contractors.
              [76 FR 3537, Jan. 20, 2011. Redesignated and amended at 77 FR 76937, Dec. 31, 2012]

              245.103-71
              Transferring Government property accountability.
              Follow the procedures at PGI 245.103-71 for transferring Government property accountability.
              [76 FR 3537, Jan. 20, 2011. Redesignated and amended at 77 FR 76937, Dec. 31, 2012]

              245.103-72
              Government-furnished property attachments to solicitations and awards.

              When performance will require the use of Government-furnished property, contracting officers shall use the fillable electronic “Requisitioned Government Furnished Property” and/or “Scheduled Government Furnished Property” formats as attachments to solicitations and awards. See PGI 245.103-72 for links to the formats and procedures for preparing Government-furnished property attachments to solicitations and awards.
              [77 FR 76937, Dec. 31, 2012, as amended at 78 FR 13544, Feb. 28, 2013]

              245.103-73
              Government property under sustainment contracts.
              See PGI 245.103-73 for information on the reporting requirements for Government inventory held by contractors under sustainment contracts in accordance with DoD Manual 4140.01, Volume 6, DoD Supply Chain Materiel Management Procedures: Materiel Returns, Retention, and Disposition.
              [82 FR 61481, Dec. 28, 2017]

              245.103-74
              Contracting office responsibilities.
              See PGI 245.103-74 for contracting office responsibilities.
              [77 FR 76937, Dec. 31, 2012. Redesignated at 82 FR 61481, Dec. 28, 2017; 83 FR 12681, Mar. 23, 2018]

              245.104
              Responsibility and liability for Government property.
              In addition to the contract types listed at FAR 45.104, contractors are not held liable for loss of Government property under negotiated fixed-price contracts awarded on a basis other than submission of certified cost or pricing data.
              [76 FR 71826, Nov. 18, 2011]

              245.105
              Contractors' property management system compliance.
              (a) Definitions—
              (1) Acceptable property management system and property management system are defined in the clause at 252.245-7003, Contractor Property Management System Administration.
              (2) Significant deficiency is defined in the clause at 252.245-7003, Contractor Property Management System Administration.
              (b) Policy. The cognizant contracting officer, in consultation with the property administrator, shall—
              (1) Determine the acceptability of the system and approve or disapprove the system; and
              (2) Pursue correction of any deficiencies.
              (c) In evaluating the acceptability of a contractor's property management system, the contracting officer, in consultation with the property administrator, shall determine whether the contractor's property management system complies with the system criteria for an acceptable property management system as prescribed in the clause at 252.245-7003, Contractor Property Management System Administration.
              (d) Disposition of findings—(1) Reporting of findings. The property administrator shall document findings and recommendations in a report to the contracting officer. If the property administrator identifies any significant property system deficiencies, the report shall describe the deficiencies in sufficient detail to allow the contracting officer to understand the deficiencies.
              (2) Initial determination. (i) The contracting officer shall review findings and recommendations and, if there are no significant deficiencies, shall promptly notify the contractor, in writing, that the contractor's property management system is acceptable and approved; or
              (ii) If the contracting officer finds that there are one or more significant deficiencies (as defined in the clause at 252.245-7003, Contractor Property Management System Administration) due to the contractor's failure to meet one or more of the property management system criteria in the clause at 252.245-7003, the contracting officer shall—
              (A) Promptly make an initial written determination on any significant deficiencies and notify the contractor, in writing, providing a description of each significant deficiency in sufficient detail to allow the contractor to understand the deficiency;
              (B) Request the contractor to respond, in writing, to the initial determination within 30 days and;
              (C) Evaluate the contractor's response to the initial determination, in consultation with the property administrator, and make a final determination.
              (3) Final determination. (i) The contracting officer shall make a final determination and notify the contractor, in writing, that—
              (A) The contractor's property management system is acceptable and approved, and no significant deficiencies remain, or
              (B) Significant deficiencies remain. The notice shall identify any remaining significant deficiencies, and indicate the adequacy of any proposed or completed corrective action. The contracting officer shall—
              (1) Request that the contractor, within 45 days of receipt of the final determination, either correct the deficiencies or submit an acceptable corrective action plan showing milestones and actions to eliminate the deficiencies;
              (2) Disapprove the system in accordance with the clause at 252.245-7003, Contractor Property Management System Administration; and
              (3) Withhold payments in accordance with the clause at 252.242-7005, Contractor Business Systems, if the clause is included in the contract.
              (ii) Follow the procedures relating to monitoring a contractor's corrective action and the correction of significant deficiencies in PGI 245.105.
              (e) System approval. The contracting officer shall promptly approve a previously disapproved property management system and notify the contractor when the contracting officer determines, in consultation with the property administrator, that there are no remaining significant deficiencies.
              (f) Contracting officer notifications. The cognizant contracting officer shall promptly distribute copies of a determination to approve a system, disapprove a system and withhold payments, or approve a previously disapproved system and release withheld payments to the auditor; payment office; affected contracting officers at the buying activities; and cognizant contracting officers in contract administration activities.
              [76 FR 28872, May 18, 2011]

              245.107
              Contract clauses.
              (1)(i) In lieu of the prescription at FAR 45.107(d), use the clause at FAR 52.245-1, Government Property, in all purchase orders for repair, maintenance, overhaul, or modification of Government property regardless of the unit acquisition cost of the items to be repaired.
              (ii) For negotiated fixed-price contracts awarded on a basis other than submission of certified cost or pricing data for which Government property is provided, use the clause at FAR 52.245-1, Government Property, without its Alternate I.
              (2) Use the clause at 252.245-7000, Government-Furnished Mapping, Charting, and Geodesy Property, in solicitations and contracts when mapping, charting, and geodesy property is to be furnished.
              (3) Use the clause at 252.245-7001, Tagging, Labeling, and Marking of Government-Furnished Property, in solicitations and contracts that contain the clause at FAR 52.245-1, Government Property.
              (4) Use the clause at 252.245-7002, Reporting Loss of Government Property, in solicitations and contracts that contain the clause at FAR 52.245-1, Government Property.
              (5) Use the clause at 252.245-7003, Contractor Property Management System Administration, in solicitations and contracts containing the clause at FAR 52.245-1, Government Property.
              (6) Use the clause at 252.245-7004, Reporting, Reutilization, and Disposal, in solicitations and contracts that contain the clause at FAR 52.245-1, Government Property.
              [76 FR 6006, 6008, Feb. 2, 2011, as amended at 76 FR 28872, May 18, 2011; 76 FR 52142, Aug. 19, 2011; 76 FR 71826, Nov. 18, 2011; 84 FR 18162, Apr. 30, 2019]

            Subpart 245.2—Solicitation and Evaluation Procedures

              Source:
              76 FR 3537, Jan. 20, 2011, unless otherwise noted.

              245.201
              Solicitation.

              245.201-70
              Definitions.

                See the definitions at PGI 245.201-70.

              245.201-71
              Security classification.
              Follow the procedures at PGI 245.201-71 for security classification.
              [76 FR 3537, Jan. 20, 2011. Redesignated and amended at 77 FR 76937, Dec. 31, 2012]

            Subpart 245.3—Authorizing the Use and Rental of Government Property

              Source:
              74 FR 37647, July 29, 2009, unless otherwise noted.

              245.302
              Contracts with foreign governments or international organizations.
              (1) General.

              (i) Approval. A contractor may use Government property on work for foreign governments and international organizations only when approved in writing by the contracting officer having cognizance of the property. The contracting officer may grant approval, provided—
              (A) The use will not interfere with foreseeable requirements of the United States;
              (B) The work is undertaken as a DoD foreign military sale; or
              (C) For a direct commercial sale, the foreign country or international organization would be authorized to contract with the department concerned under the Arms Export Control Act.
              (ii) Use charges.

              (A) The Use and Charges clause is applicable on direct commercial sales to foreign governments or international organizations.

              (B) When a particular foreign government or international organization has funded the acquisition of property, do not assess the foreign government or international organization rental charges or nonrecurring recoupments for the use of such property.

              (2) Special tooling and special test equipment.

              (i) DoD normally recovers a fair share of nonrecurring costs of special tooling and special test equipment by including these costs in its calculation of the nonrecurring cost recoupment charge when major defense equipment is sold by foreign military sales or direct commercial sales to foreign governments or international organizations. “Major defense equipment” is defined in DoD Directive 2140.2, Recoupment of Nonrecurring Costs on Sales of U.S. Items, as any item of significant military equipment on the United States Munitions List having a nonrecurring research, development, test, and evaluation cost of more than $50 million or a total production cost of more than $200 million.
              (ii) When the cost thresholds in paragraph (2)(i) of this section are not met, the contracting officer shall assess rental charges for use of special tooling and special test equipment pursuant to the Use and Charges clause if administratively practicable.
              (3) Waivers.

              (i) Rental charges for use of U.S. production and research property on commercial sales transactions to the Government of Canada are waived for all commercial contracts. This waiver is based on an understanding wherein the Government of Canada has agreed to waive its rental charges.
              (ii) Requests for waiver or reduction of charges for the use of Government property on work for foreign governments or international organizations shall be submitted to the contracting officer, who is authorized to approve the requests in consultation with the appropriate functional specialist.
              [74 FR 37647, July 29, 2009, as amended at 78 FR 65220, Oct. 31, 2013]

            Subpart 245.4—Title to Government Property

              Source:
              76 FR 3537, Jan. 20, 2011, unless otherwise noted.

              245.402
              Title to contractor-acquired property.

              245.402-70
              Policy.
              Review the guidance at PGI 245.402-70 with regard to oversight and surveillance of contractor-acquired property.
              [81 FR 50652, Aug. 2, 2016]

              245.402-71
              Delivery of contractor-acquired property.
              Follow the procedures at PGI 245.402-71 for the delivery of contractor-acquired property.

            Subpart 245.5—Support Government Property Administration

              Source:
              76 FR 52142, Aug. 19, 2011, unless otherwise noted.

              245.570
              Storage at the Government's expense.
              All storage contracts or agreements shall be separately priced and shall include all costs associated with the storage.

            Subpart 245.6—Reporting, Reutilization, and Disposal

              Source:
              76 FR 52142, Aug. 19, 2011, unless otherwise noted.

              245.602
              Reutilization of Government property.

              245.602-1
              Inventory disposal schedules.
              For termination inventory, plant clearance officers shall verify inventory schedules, either directly or through appropriate technical personnel, to determine the following:
              (a) Allocability.

              (1) Review contract requirements, delivery schedules, bills of material, and other pertinent documents to determine whether schedules include property that—
              (i) Is appropriate for use on the contract; or
              (ii) Exceeds the quantity required for completion of the contract, but could be diverted to other commercial work or Government use.
              (2) Review the contractor's—

              (i) Recent purchases of similar material;
              (ii) Plans for current and scheduled production;
              (iii) Stock record entries; and
              (iv) Bills of material for similar items.
              (b) Quantity. Take measures to provide assurance that available inventory is in accordance with quantities listed on the inventory schedules. Quantities may be verified by actual item count, acceptance of labeled quantities in unopened/sealed packages, scale counts, or other appropriate methods.
              (c) Condition. Ensure that the physical condition of the property is reasonably consistent with the Federal Condition Code supplied by the contractor.

              245.602-3
              Screening.
              Property will be screened DoD-wide, including the contracting agency, requiring agency, and, as appropriate, the General Services Administration. The requiring agency shall have priority for retention of listed items. All required screening must be completed before any sale of contractor inventory, including contractor inventory in overseas locations (foreign excess personal property) can take place. Upon request of the prospective reutilization, transfer, donation, or sales customer, the plant clearance officer shall arrange for inspection of property at the contractor's plant in such a manner as to avoid interruption of the contractor's operations, and consistent with any security requirements.

              245.602-70
              Plant clearance procedures.
              Follow the procedures at PGI 245.602-70 for establishing and processing a plant clearance case.

              245.604
              Disposal of surplus property.

              245.604-3
              Sale of surplus property.
              (a) Plant clearance officers shall determine a best value sales approach (formal or informal sales), to include due consideration for costs, risks, and benefits, e.g., potential sales proceeds.
              (b) Informal bid procedures. The plant clearance officer may direct the contractor to issue informal invitations for bid (orally, telephonically, or by other informal media), provided—
              (1) Maximum practical competition is obtained;
              (2) Sources solicited are recorded; and
              (3) Informal bids are confirmed in writing.
              (c) Sale approval and award. Plant clearance officers shall—
              (1) Evaluate bids to establish that the sale price is fair and reasonable, taking into consideration—
              (i) Knowledge or tests of the market;
              (ii) Current published prices for the property;
              (iii) The nature, condition, quantity, and location of the property; and
              (iv) Past sale history for like or similar items;
              (2) Approve award to the responsible bidder whose bid is most advantageous to the Government. The plant clearance officer shall not approve award to any bidder who is an ineligible transferee, as defined in 252.245-7004, Reporting, Reutilization, and Disposal; and
              (3) Notify the contractor of the bidder to whom an award will be made within five working days from receipt of bids.
              (d) Noncompetitive sales.

              (1) Noncompetitive sales include purchases or retention at less than cost by the contractor. Noncompetitive sales may be made when—
              (i) The plant clearance officer determines that this method is essential to expeditious plant clearance; and
              (ii) The Government's interests are adequately protected.
              (2) Noncompetitive sales shall be at fair and reasonable prices, not less than those reasonably expected under competitive sales.
              (3) Conditions justifying noncompetitive sales are—
              (i) No acceptable bids are received under competitive sale;
              (ii) Anticipated sales proceeds do not warrant competitive sale;
              (iii) Specialized nature of the property would not create bidder interest;
              (iv) Removal of the property would reduce its value or result in disproportionate handling expenses; or

              (v) Such action is essential to the Government's interests.

              (e) Plant clearance officers shall consider any special disposal requirements such as demilitarization or trade security control requirements in accordance with DoDM 4160.28-M, Defense Demilitarization Manual, and DoDI 2030.08, Implementation of Trade Security Controls, respectively (See PGI 245.6).]

            Subpart 245.70—Plant Clearance Forms

              245.7001
              Forms.
              Use the forms listed below in performance of plant clearance actions.

              245.7001-1
              Standard Form 97, Certificate of Release of a Motor Vehicle (Agency Record Copy).
              Use for transfers, donations, and sales of motor vehicles. The contracting officer shall execute the SF 97 and furnish it to the purchaser.

              245.7001-2
              DD Form 1149, Requisition and Invoice Shipping Document.
              Use for transfer and donation of contractor inventory.

              245.7001-3
              DD Form 1348-1, DoD Single Line Item Release/Receipt Document.
              Use when authorized by the plant clearance officer.

              245.7001-4
              DD Form 1640, Request for Plant Clearance.
              Use to request plant clearance assistance or transfer plant clearance.

              245.7001-5
              DD Form 1641, Disposal Determination/Approval.
              Use to record rationale for the following disposal determinations:
              (a) Downgrade useable property to scrap.
              (b) Abandonment or destruction.
              (c) Noncompetitive sale of surplus property.
              (d) Other disposal actions.

              245.7001-6
              DLA Form 1822, End Use Certificate.
              Use when directed by the plant clearance officer.
              [56 FR 36448, July 31, 1991, as amended at 77 FR 52254, Aug. 29, 2012]

          Pt. 246
          PART 246—QUALITY ASSURANCE

              Subpart 246.1—General
              Sec.
              246.101
              Definitions.
              246.102
              Policy.
              246.103
              Contracting office responsibilities.

              Subpart 246.2—Contract Quality Requirements
              246.202
              Types of contract quality requirements.
              246.202-4
              Higher-level contract quality requirements.
              246.270
              Safety of facilities, infrastructure, and equipment for military operations.
              246.270-1
              Scope.
              246.270-2
              Policy.
              246.270-3
              Exceptions.
              246.270-4
              Contract clause.

              Subpart 246.3—Contract Clauses
              246.370
              Notification of potential safety issues.

              Subpart 246.4—Government Contract Quality Assurance
              246.401
              General.
              246.402
              Government contract quality assurance at source.
              246.404
              Government contract quality assurance for acquisitions at or below the simplified acquisition threshold.
              246.406
              Foreign governments.
              246.407
              Nonconforming supplies or services.
              246.408
              Single-agency assignments of Government contract quality assurance.
              246.408-70
              Subsistence.
              246.408-71
              Aircraft.
              246.470
              Government contract quality assurance actions.
              246.470-1
              Assessment of additional costs.
              246.470-2
              Quality evaluation data.
              246.471
              Authorizing shipment of supplies.
              246.472
              Inspection stamping.

              Subpart 246.5—Acceptance
              246.504
              Certificate of conformance.

              Subpart 246.6—Material Inspection and Receiving Reports
              246.601
              General.

              Subpart 246.7—Warranties
              246.701
              Definitions.
              246.704
              Authority for use of warranties.
              246.705
              Limitations.
              246.706
              Warranty terms and conditions.
              246.708
              Warranties of data.
              246.710

              Solicitation provision and contract clauses.

              246.710-70
              Warranty attachments.

              Subpart 246.8—Contractor Liability for Loss of or Damage to Property of the Government
              246.870
              Contractor counterfeit electronic part detection and avoidance.
              246.870-0
              Scope.
              246.870-1
              Definition.
              246.870-2
              Policy.
              246.870-3
              Contract clauses.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36460, July 31, 1991, unless otherwise noted.

            Subpart 246.1—General

              246.101
              Definitions.

                Discipline Working Group, as used in this subpart, is defined in the clause at 252.246-7004, Safety of Facilities, Infrastructure, and Equipment for Military Operations.
              [75 FR 66685, Oct. 29, 2010]

              246.102
              Policy.
              Departments and agencies shall also—
              (1) Develop and manage a systematic, cost-effective Government contract quality assurance program to ensure that contract performance conforms to specified requirements. Apply Government quality assurance to all contracts for services and products designed, developed, purchased, produced, stored, distributed, operated, maintained, or disposed of by contractors.
              (2) Conduct quality audits to ensure the quality of products and services meet contractual requirements.
              (3) Base the type and extent of Government contract quality assurance actions on the particular acquisition.
              (4) Provide contractors the maximum flexibility in establishing efficient and effective quality programs to meet contractual requirements. Contractor quality programs may be modeled on military, commercial, national, or international quality standards.
              [56 FR 36460, July 31, 1991, as amended at 60 FR 33145, June 27, 1995; 71 FR 27646, May 12, 2006]

              246.103
              Contracting office responsibilities.
              (1) The contracting office must coordinate with the quality assurance activity before changing any quality requirement.
              (2) The activity responsible for technical requirements may prepare instructions covering the type and extent of Government inspections for acquisitions that are complex, have critical applications, or have unusual requirements. Follow the procedures at PGI 246.103(2) for preparation of instructions.
              [71 FR 27647, May 12, 2006]

            Subpart 246.2—Contract Quality Requirements

              246.202
              Types of contract quality requirements.

              246.202-4
              Higher-level contract quality requirements.
              (1) Higher-level contract quality requirements are used in addition to a standard inspection requirement.
              (2) Higher-level contract quality requirements, including nongovernment quality system standards adopted to meet DoD needs, are listed in the DoD Index of Specifications and Standards.
              [60 FR 33145, June 27, 1995. Redesignated and amended at 60 FR 61599, Nov. 30, 1995]

              246.270
              Safety of facilities, infrastructure, and equipment for military operations.

              246.270-1
              Scope.
              This section implements section 807 of the National Defense Authorization Act for Fiscal Year 2010 (Pub. L. 111-84). It establishes policies and procedures intended to ensure the safety and habitability of facilities, infrastructure, and equipment acquired for use by DoD military or civilian personnel during military operations performed outside the United States, Guam, Puerto Rico, and the Virgin Islands.
              [75 FR 66685, Oct. 29, 2010]

              246.270-2
              Policy.
              (a) Contracts (including task and delivery orders) for the construction, installation, repair, maintenance, or operation of facilities, infrastructure, and equipment configured for occupancy, including but not limited to, existing host nation facilities, new construction, and relocatable buildings acquired for use by DoD military or civilian personnel, shall require a pre-occupancy safety and habitability inspection.
              (b) To minimize safety and health risks, each contract covered by this policy shall require the contractor's compliance with the Unified Facilities Criteria (UFC) 1-200-01 and its referenced standards for—
              (1) Fire protection;
              (2) Structural integrity;
              (3) Electrical systems;
              (4) Plumbing;
              (5) Water treatment;
              (6) Waste disposal; and
              (7) Telecommunications networks.
              (c) Existing host nation facilities constructed to standards equivalent to or more stringent than UFC 1-200-01 are acceptable upon a written determination of the acceptability of the standards by the Discipline Working Group.
              (d) Inspections to ensure compliance with UFC 1-200-01 standards shall be conducted in accordance with the inspection clause of the contract.
              [75 FR 66685, Oct. 29, 2010]

              246.270-3
              Exceptions.
              The combatant commander may waive compliance with the foregoing standards when it is impracticable to comply with such standards under prevailing operational conditions.
              [75 FR 66685, Oct. 29, 2010]

              246.270-4
              Contract clause.
              Use the clause at 252.246-7004, Safety of Facilities, Infrastructure, and Equipment for Military Operations, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, for the construction, installation, repair, maintenance, or operation of facilities, infrastructure, or for equipment configured for occupancy, planned for use by DoD military or civilian personnel during military operations.
              [75 FR 66685, Oct. 29, 2010, as amended at 78 FR 37989, June 25, 2013]

            Subpart 246.3—Contract Clauses

              246.370
              Notification of potential safety issues.
              (a) Use the clause at 252.246-7003, Notification of Potential Safety Issues, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, for the acquisition of—
              (1) Repairable or consumable parts identified as critical safety items;
              (2) Systems and subsystems, assemblies, and subassemblies integral to a system; or
              (3) Repair, maintenance, logistics support, or overhaul services for systems and subsystems, assemblies, subassemblies, and parts integral to a system.
              (b) Follow the procedures at PGI 246.370 for the handling of notifications received under the clause at 252.246-7003.
              [72 FR 2636, Jan. 22, 2007, as amended at 78 FR 37989, June 25, 2013. Redesignated and amended at 83 FR 66064, Dec. 21, 2018]

            Subpart 246.4—Government Contract Quality Assurance

              246.401
              General.
              The requirement for a quality assurance surveillance plan shall be addressed and documented in the contract file for each contract except for those awarded using simplified acquisition procedures. For contracts for services, the contracting officer should prepare a quality assurance surveillance plan to facilitate assessment of contractor performance, see 237.172. For contracts for supplies, the contracting officer should address the need for a quality assurance surveillance plan.
              [75 FR 22706, Apr. 30, 2010]

              246.402
              Government contract quality assurance at source.
              Do not require Government contract quality assurance at source for contracts or delivery orders valued below $350,000, unless—
              (1) Mandated by DoD regulation;
              (2) Required by a memorandum of agreement between the acquiring department or agency and the contract administration agency; or
              (3) The contracting officer determines that—
              (i) Contract technical requirements are significant (e.g., the technical requirements include drawings, test procedures, or performance requirements);
              (ii) The product being acquired—
              (A) Has critical characteristics;
              (B) Has specific features identified that make Government contract quality assurance at source necessary; or
              (C) Has specific acquisition concerns identified that make Government contract quality assurance at source necessary; and
              (iii) The contract is being awarded to—
              (A) A manufacturer or producer; or
              (B) A non-manufacturer or non-producer and specific Government verifications have been identified as necessary and feasible to perform.
              [70 FR 8543, Feb. 22, 2005, as amended at 75 FR 45074, Aug. 2, 2010; 85 FR 61504, Sept. 29, 2020]

              246.404
              Government contract quality assurance for acquisitions at or below the simplified acquisition threshold.
              Do not require Government contract quality assurance at source for contracts or delivery orders valued at or below the simplified acquisition threshold unless the criteria at 246.402 have been met.
              [70 FR 8543, Feb. 22, 2005]

              246.406
              Foreign governments.
              (1) Quality assurance among North Atlantic Treaty Organization (NATO) countries. (i) NATO Standardization Agreement (STANAG) 4107, Mutual Acceptance of Government Quality Assurance and Usage of the Allied Quality Assurance Publications—
              (A) Contains the processes, procedures, terms, and conditions under which one NATO member nation will perform quality assurance for another NATO member nation or NATO organization;
              (B) Standardizes the development, updating, and application of the Allied Quality Assurance Publications; and
              (C) Has been ratified by the United States and other nations in NATO with certain reservations identified in STANAG 4107.
              (ii) Departments and agencies shall follow STANAG 4107 when—
              (A) Asking a NATO member nation to perform quality assurance; or
              (B) Performing quality assurance when requested by a NATO member nation or NATO organization.
              (2) International military sales (non-NATO). Departments and agencies shall—
              (i) Perform quality assurance services on international military sales contracts or in accordance with existing agreements;
              (ii) Inform host or U.S. Government personnel and contractors on the use of quality assurance publications; and
              (iii) Delegate quality assurance to the host government when satisfactory services are available.
              (3) Reciprocal quality assurance agreements. A Memorandum of Understanding (MOU) with a foreign country may contain an annex that provides for the reciprocal performance of quality assurance services. MOUs should be checked to determine whether such an annex exists for the country where a defense contract will be performed. (See subpart 225.8 for more information about MOUs.)
              [56 FR 36460, July 31, 1991, as amended at 63 FR 43890, Aug. 17, 1998; 63 FR 47439, Sept. 8, 1998; 71 FR 27647, May 12, 2006]

              246.407
              Nonconforming supplies or services.
              (f) If nonconforming material or services are discovered after acceptance, the defect appears to be the fault of the contractor, any warranty has expired, and there are no other contractual remedies, the contracting officer—

              (i) Shall notify the contractor in writing of the nonconforming material or service;

              (ii) Shall request that the contractor repair or replace the material, or perform the service, at no cost to the Government; and
              (iii) May accept consideration if offered. For guidance on solicitation of a refund, see subpart 242.71.
              (S-70) The head of the design control activity is the approval authority for acceptance of any nonconforming aviation or ship critical safety items or nonconforming modification, repair, or overhaul of such items (see 209.270). Authority for acceptance of minor nonconformances in aviation or ship critical safety items may be delegated as determined appropriate by the design control activity. See additional information at PGI 246.407.
              [56 FR 36460, July 31, 1991, as amended at 67 FR 4208, Jan. 29, 2002; 69 FR 55989, Sept. 17, 2004; 70 FR 57190, Sept. 30, 2005; 73 FR 1828, Jan. 10, 2008]

              246.408
              Single-agency assignments of Government contract quality assurance.

              246.408-70
              Subsistence.
              (a) The Surgeons General of the military departments are responsible for—
              (1) Acceptance criteria;
              (2) Technical requirements; and
              (3) Inspection procedures needed to assure wholesomeness of foods.
              (b) The contracting office may designate any Federal activity, capable of assuring wholesomeness and quality in food, to perform quality assurance for subsistence contract items. The designation may—
              (1) Include medical service personnel of the military departments; and
              (2) Be on a reimbursable basis.

              246.408-71
              Aircraft.
              (a) The Federal Aviation Administration (FAA) has certain responsibilities and prerogatives in connection with some commercial aircraft and of aircraft equipment and accessories (Pub. L. 85-726 (72 Stat 776, 49 U.S.C. 1423)). This includes the issuance of various certificates applicable to design, manufacture, and airworthiness.
              (b) FAA evaluations are not a substitute for normal DoD evaluations of the contractor's quality assurance measures. Actual records of FAA evaluations may be of use to the contract administration office (CAO) and should be used to their maximum advantage.
              (c) The CAO shall ensure that the contractor possesses any required FAA certificates prior to acceptance.
              [56 FR 36460, July 31, 1991, as amended at 71 FR 27647, May 12, 2006]

              246.470
              Government contract quality assurance actions.

              246.470-1
              Assessment of additional costs.
              (a) Under the clause at FAR 52.246-2, Inspection of Supplies—Fixed-Price, after considering the factors in paragraph (c) of this subsection, the quality assurance representative (QAR) may believe that the assessment of additional costs is warranted. If so, the representative shall recommend that the contracting officer take the necessary action and provide a recommendation as to the amount of additional costs. Costs are based on the applicable Federal agency, foreign military sale, or public rate in effect at the time of the delay, reinspection, or retest.
              (b) If the contracting officer agrees with the QAR, the contracting officer shall—
              (1) Notify the contractor, in writing, of the determination to exercise the Government's right under the clause at FAR 52.246-2, Inspection of Supplies—Fixed-Price; and
              (2) Demand payment of the costs in accordance with the collection procedures contained in FAR Subpart 32.6.
              (c) In making a determination to assess additional costs, the contracting officer shall consider—
              (1) The frequency of delays, reinspection, or retest under both current and prior contracts;
              (2) The cause of such delay, reinspection, or retest; and
              (3) The expense of recovering the additional costs.
              [71 FR 27647, May 12, 2006]

              246.470-2
              Quality evaluation data.

              The contract administration office shall establish a system for the collection, evaluation, and use of the types of quality evaluation data specified in PGI 246.470-2.
              [71 FR 27647, May 12, 2006]

              246.471
              Authorizing shipment of supplies.
              (a) General. (1) Ordinarily, a representative of the contract administration office signs or stamps the shipping papers that accompany Government source-inspected supplies to release them for shipment. This is done for both prime and subcontracts.
              (2) An alternative procedure (see paragraph (b) of this section) permits the contractor to assume the responsibility for releasing the supplies for shipment.
              (3) The alternative procedure may include prime contractor release of supplies inspected at a subcontractor's facility.
              (4) The use of the alternative procedure releases DoD manpower to perform technical functions by eliminating routine signing or stamping of the papers accompanying each shipment.
              (b) Alternative Procedures—Contract Release for Shipment.

              (1) For foreign military sales contracts, do not use alternative procedures.(2) The contract administration office may authorize, in writing, the contractor to release supplies for shipment when—
              (i) The stamping or signing of the shipping papers by a representative of the contract administration office interferes with the operation of the Government contract quality assurance program or takes too much of the Government representative's time;
              (ii) There is sufficient continuity of production to permit the Government to establish a systematic and continuing evaluation of the contractor's control of quality; and
              (iii) The contractor has a record of satisfactory quality, including that pertaining to preparation for shipment.
              (3) The contract administration office shall withdraw, in writing, the authorization when there is an indication that the conditions in paragraph (b)(2) of this subsection no longer exist.
              (4) When the alternative procedure is used, require the contractor to—

              (i) Type or stamp, and sign, the following statement on the required copy or copies of the shipping paper(s), or on an attachment—

                The supplies in this shipment—
                1. Have been subjected to and have passed all examinations and tests required by the contract;
                2. Were shipped in accordance with authorized shipping instructions;
                3. Conform to the quality, identity, and condition called for by the contract; and
                4. Are of the quantity shown on this document.
                This shipment was—
                1. Released in accordance with section 246.471 of the Defense FAR Supplement; and
                2. Authorized by (name and title of the authorized representative of the contract administration office) in a letter dated (date of authorizing letter). (Signature and title of contractor's designated official.)

              (ii) Release and process, in accordance with established instructions, the DD Form 250, Material Inspection and Receiving Report, or other authorized receiving report.
              [56 FR 36460, July 31, 1991, as amended at 83 FR 66064, Dec. 21, 2018]

              246.472
              Inspection stamping.
              (a) DoD quality inspection approval marking designs (stamps) may be used for both prime contracts and subcontracts. Follow the procedures at PGI 246.472(a) for use of DoD inspection stamps.
              (b) Policies and procedures regarding the use of National Aeronautics and Space Administration (NASA) quality status stamps are contained in NASA publications. When requested by NASA centers, the DoD inspector shall use NASA quality status stamps in accordance with current NASA requirements.
              [71 FR 27647, May 12, 2006]

            Subpart 246.5—Acceptance

              246.504
              Certificate of conformance.
              Before authorizing a certificate of conformance for aviation or ship critical safety items, obtain the concurrence of the head of the design control activity (see 209.270).
              [73 FR 1828, Jan. 10, 2008]

            Subpart 246.6—Material Inspection and Receiving Reports

              246.601
              General.

                See Appendix F, Material Inspection and Receiving Report, for procedures and instructions for the use, preparation, and distribution of—
              (1) The Material Inspection and Receiving Report (DD Form 250 series); and
              (2) Supplier's commercial shipping/packing lists used to evidence Government contract quality assurance.
              [71 FR 27647, May 12, 2006]

            Subpart 246.7—Warranties

              246.701

              Definitions.
              As used in this subpart—

                Acceptance as used in this subpart and in the warranty clauses at FAR 52.246-17, Warranty of Supplies of a Noncomplex Nature; FAR 52.246-18, Warranty of Supplies of a Complex Nature; FAR 52.246-19, Warranty of Systems and Equipment Under Performance Specifications or Design Criteria; and FAR 52.246-20, Warranty of Services, includes the execution of an official document (e.g., DD Form 250, Material Inspection and Receiving Report) by an authorized representative of the Government.

                Defect means any condition or characteristic in any supply or service furnished by the contractor under the contract that is not in compliance with the requirements of the contract.

                Enterprise means the entity (e.g., a manufacturer or vendor) responsible for granting the warranty and/or assigning unique item identifiers to serialized warranty items.

                Enterprise identifier means a code that is uniquely assigned to an enterprise by an issuing agency.

                Issuing agency means an organization responsible for assigning a globally unique identifier to an enterprise, as indicated in the Register of Issuing Agency Codes for International Standards Organization/International Electrotechnical Commission 15459, located at http://www.aimglobal.org/?Reg_Authority15459.

                Serialized item means each item produced is assigned a serial number that is unique among all the collective tangible items produced by the enterprise, or each item of a particular part, lot, or batch number is assigned a unique serial number within that part, lot, or batch number assignment within the enterprise identifier. The enterprise is responsible for ensuring unique serialization within the enterprise identifier or within the part, lot, or batch numbers, and that serial numbers, once assigned, are never used again.

                Unique item identifier means a set of data elements marked on an item that is globally unique and unambiguous.

                Warranty tracking means the ability to trace a warranted item from delivery through completion of the effectivity of the warranty.
              [76 FR 33168, June 8, 2011, as amended at 81 FR 17043, Mar. 25, 2016]

              246.704
              Authority for use of warranties.
              (1) The chief of the contracting office must approve use of a warranty, except in acquisitions for—
              (i) Commercial items (see FAR 46.709);

              (ii) Technical data, unless the warranty provides for extended liability (see 246.708);

              (iii) Supplies and services in fixed-price type contracts containing quality assurance provisions that reference higher-level contract quality requirements (see 246.202-4); or
              (iv) Supplies and services in construction contracts when using the warranties that are contained in Federal, military, or construction guide specifications.
              (2) The chief of the contracting office shall approve the use of a warranty only when the benefits are expected to outweigh the cost.
              [71 FR 27647, May 12, 2006]

              246.705
              Limitations.
              (a) In addition to the exceptions provided in FAR 46.705(a), warranties in the clause at 252.246-7001, Warranty of Data, may be used in cost-reimbursement contracts.
              [71 FR 27647, May 12, 2006]

              246.706
              Warranty terms and conditions.
              (b)(5) Markings. For non-commercial items, use MIL-STD-129, Marking for Shipments and Storage, and MIL-STD-130, Identification Marking of U.S. Military Property, when marking warranty items.
              [71 FR 27647, May 12, 2006]

              246.708
              Warranties of data.
              Obtain warranties on technical data when practicable and cost effective. Consider the factors in FAR 46.703 in deciding whether to obtain warranties of technical data. Consider the following in deciding whether to use extended liability provisions—
              (1) The likelihood that correction or replacement of the nonconforming data, or a price adjustment, will not give adequate protection to the Government; and
              (2) The effectiveness of the additional remedy as a deterrent against furnishing nonconforming data.

              246.710
              Solicitation provision and contract clauses.
              (1) Use a clause substantially the same as the basic or one of the alternates of the clause at 252.246-7001, Warranty of Data, in solicitations and contracts that include the clause at 252.227-7013, Rights in Technical Data and Computer Software, when there is a need for greater protection or period of liability than provided by the inspection and warranty clauses prescribed in FAR part 46.
              (i) Use the basic clause in solicitations and contracts that are not firm-fixed price or fixed-price incentive.
              (ii) Use alternate I in fixed-price-incentive solicitations and contracts.
              (iii) Use alternate II in firm-fixed-price solicitations and contracts.
              (2) Use the clause at 252.246-7002, Warranty of Construction (Germany), instead of the clause at FAR 52.246-21, Warranty of Construction, in solicitations and contracts for construction when a fixed-price contract will be awarded and contract performance will be in Germany.
              (3) When the solicitation includes the clause at 252.211-7003, Item Unique Identification and Valuation, which is prescribed in 211.274-6(a), and it is anticipated that the resulting contract will include a warranty for serialized items—
              (i) Use the provision at 252.246-7005, Notice of Warranty Tracking of Serialized Items, in the solicitation if the Government does not specify a warranty and offerors will be required to enter data with the offer;
              (ii) Use the clause at 252.246-7006, Warranty Tracking of Serialized Items, in the solicitation and contract; and

              (iii) Include the following warranty attachments, available at https://www.pdrep.csd.disa.mil/pdrep_files/other/wsr.htm, in the solicitation and contract and see 246.710-70:
              (A) Warranty Tracking Information.
              (B) Source of Repair Instructions.
              [56 FR 36460, July 31, 1991, as amended at 62 FR 34128, June 24, 1997; 64 FR 51077, Sept. 21, 1999; 71 FR 27647, May 12, 2006; 76 FR 33168, June 8, 2011; 78 FR 76072, Dec. 16, 2013; 79 FR 17449, Mar. 28, 2014; 79 FR 18654, Apr. 3, 2014; 81 FR 17043, Mar. 25, 2016]

              246.710-70
              Warranty attachments.
              Follow the procedures at PGI 246.710-70 regarding warranty attachments.
              [81 FR 17043, Mar. 25, 2016]

            Subpart 246.8—Contractor Liability for Loss of or Damage to Property of the Government

              Source:
              79 FR 26106, May 6, 2014, unless otherwise noted.

              246.870
              Contractor counterfeit electronic part detection and avoidance.

              246.870-0
              Scope.
              This section—
              (a) Partially implements section 818(c) and (e) of the National Defense Authorization Act for Fiscal Year 2012 (Pub. L. 112-81), as amended by section 817 of the National Defense Authorization Act for Fiscal Year 2015 (Pub. L. 113-291 and section 885 of the National Defense Authorization Act for Fiscal Year 2016 (Pub. L. 114-92); and

              (b) Prescribes policy and procedures for preventing counterfeit electronic parts and suspect counterfeit electronic parts from entering the supply chain when procuring electronic parts or end items, components, parts, or assemblies that contain electronic parts.
              [79 FR 26106, May 6, 2014. Redesignated and amended at 81 FR 50648, Aug. 2, 2016; 83 FR 19645, May 4, 2018]

              246.870-1
              Definition.

                Authorized supplier, as used in this subpart, means a supplier, distributor, or an aftermarket manufacturer with a contractual arrangement with, or the express written authority of, the original manufacturer or current design activity to buy, stock, repackage, sell, or distribute the part.
              [81 FR 50648, Aug. 2, 2016]

              246.870-2
              Policy.
              (a) Sources of electronic parts. (1) Except as provided in paragraph (a)(2) of this section, the Government requires contractors and subcontractors at all tiers, to—
              (i) Obtain electronic parts that are in production by the original manufacturer or an authorized aftermarket manufacturer or currently available in stock from—
              (A) The original manufacturers of the parts;
              (B) Their authorized suppliers; or
              (C) Suppliers that obtain such parts exclusively from the original manufacturers of the parts or their authorized suppliers; and
              (ii) Obtain electronic parts that are not in production by the original manufacturer or an authorized aftermarket manufacturer, and that are not currently available in stock from a source listed in paragraph (a)(1)(i) of this section, from suppliers identified by the Contractor as contractor-approved suppliers, provided that—

              (A) For identifying and approving such contractor-approved suppliers, the contractor uses established counterfeit prevention industry standards and processes (including inspection, testing, and authentication), such as the DoD-adopted standards at https://assist.dla.mil;

              (B) The contractor assumes responsibility for the authenticity of parts provided by such contractor-approved suppliers (see 231.205-71); and
              (C) The selection of such contractor-approved suppliers is subject to review, audit, and approval by the Government, generally in conjunction with a contractor purchasing system review or other surveillance of purchasing practices by the contract administration office, or if the Government obtains credible evidence that a contractor-approved supplier has provided counterfeit parts. The contractor may proceed with the acquisition of electronic parts from a contractor-approved supplier unless otherwise notified by DoD.
              (2) The Government requires contractors and subcontractors to comply with the notification, inspection, testing, and authentication requirements of paragraph (b)(3)(ii) through (b)(3)(iv) of the clause at 252.246-7008, Sources of Electronic Parts, if the contractor—
              (i) Obtains an electronic part from—
              (A) A source other than any of the sources identified in paragraph (a)(1) of this section, due to nonavailability from such sources; or
              (B) A subcontractor (other than the original manufacturer) that refuses to accept flowdown of this clause; or
              (ii) Cannot confirm that an electronic part is new or not previously used and that it has not been comingled in supplier new production or stock with used, refurbished, reclaimed, or returned parts.
              (3) Contractors and subcontractors are still required to comply with the requirements of paragraphs (a)(1) or (2) of this section, as applicable, if—
              (i) Authorized to purchase electronic parts from the Federal Supply Schedule;
              (ii) Purchasing electronic parts from suppliers accredited by the Defense Microelectronics Activity; or
              (iii) Requisitioning electronic parts from Government inventory/stock under the authority of the clause at 252.251-7000, Ordering from Government Supply Sources.
              (A) The cost of any required inspection, testing, and authentication of such parts may be charged as a direct cost.

              (B) The Government is responsible for the authenticity of the requisitioned electronic parts. If any such part is subsequently found to be counterfeit or suspect counterfeit, the Government will—

              (1) Promptly replace such part at no charge; and
              (2) Consider an adjustment in the contract schedule to the extent that replacement of the counterfeit or suspect counterfeit electronic parts caused a delay in performance.
              (b) Contractor counterfeit electronic part detection and avoidance system. (1) Contractors that are subject to the cost accounting standards and that supply electronic parts or products that include electronic parts, and their subcontractors that supply electronic parts or products that include electronic parts, are required to establish and maintain an acceptable counterfeit electronic part detection and avoidance system. Failure to do so may result in disapproval of the purchasing system by the contracting officer and/or withholding of payments (see 252.244-7001, Contractor Purchasing System Administration).
              (2) System criteria. A counterfeit electronic part detection and avoidance system shall include risk-based policies and procedures that address, at a minimum,the following areas (see the clause at 252.246-7007, Contractor Counterfeit Electronic Part Detection and Avoidance System):
              (i) The training of personnel.
              (ii) The inspection and testing of electronic parts, including criteria for acceptance and rejection.
              (iii) Processes to abolish counterfeit parts proliferation.
              (iv) Processes for maintaining electronic part traceability.
              (v) Use of suppliers in accordance with paragraph (a) of this section.
              (vi) The reporting and quarantining of counterfeit electronic parts and suspect counterfeit electronic parts.
              (vii) Methodologies to identify suspect counterfeit electronic parts and to rapidly determine if a suspect counterfeit electronic part is, in fact, counterfeit.
              (viii) Design, operation, and maintenance of systems to detect and avoid counterfeit electronic parts and suspect counterfeit electronic parts.
              (ix) Flow down of counterfeit detection and avoidance requirements.
              (x) Process for keeping continually informed of current counterfeiting information and trends.
              (xi) Process for screening the Government-Industry Data Exchange Program (GIDEP) reports and other credible sources of counterfeiting information.
              (xii) Control of obsolete electronic parts.
              [81 FR 50648, Aug. 2, 2016, as amended at 83 FR 19645, May 4, 2018]

                Editorial Note:
                At 81 FR 72738, Oct. 21, 2016, § 246.870-2(a)(2) introductory text was to be amended by removing “(b)(3)(ii) through (b)(3)(iv)” and adding “(b)(3)(ii)” in its place; however, the amendment could not be incorporated due to inaccurate amendatory instruction.

              246.870-3
              Contract clauses.
              (a)(1) Except as provided in paragraph (a)(2) of this section, use the clause at 252.246-7007, Contractor Counterfeit Electronic Part Detection and Avoidance System, in solicitations and contracts when procuring—
              (i) Electronic parts;
              (ii) End items, components, parts, or assemblies containing electronic parts; or
              (iii) Services, if the contractor will supply electronic parts or components, parts, or assemblies containing electronic parts as part of the service.
              (2) Do not use the clause in solicitations and contracts that are set aside for small business.
              (b) Use the clause at 252.246-7008, Sources of Electronic Parts, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, when procuring—
              (1) Electronic parts;
              (2) End items, components, parts, or assemblies containing electronic parts; or
              (3) Services, if the contractor will supply electronic parts or components, parts, or assemblies containing electronic parts as part of the service.
              [79 FR 26106, May 6, 2014, as amended at 81 FR 50649, Aug. 2, 2016]

          Pt. 247
          PART 247—TRANSPORTATION

            Sec.
            247.001
            Definitions.

              Subpart 247.1—General
              247.101
              Policies.

              Subpart 247.2—Contracts for Transportation or for Transportation-Related Services
              247.200
              Scope of subpart.
              247.206
              Preparation of solicitations and contracts.
              247.207
              Solicitation provisions, contract clauses, and special requirements.
              247.270
              Stevedoring contracts.
              247.270-1
              Definitions.
              247.270-2
              Technical provisions.
              247.270-3
              Evaluation of bids and proposals.
              247.270-4
              Contract clauses.
              247.271
              Contracts for the preparation of personal property for shipment or storage or for performance of intra-city or intra-area movement.
              247.271-1
              Policy.
              247.271-2
              Procedures.
              247.271-3
              Solicitation provisions, schedule formats, and contract clauses.

              Subpart 247.3—Transportation in Supply Contracts
              247.301
              General.
              247.301-70
              Definition.
              247.301-71
              Evaluation factor or subfactor.
              247.305
              Solicitation provisions, contract clauses, and transportation factors.
              247.305-10
              Packing, marking, and consignment instructions.
              247.371
              DD Form 1384, Transportation Control and Movement Document.
              247.372
              DD Form 1653, Transportation Data for Solicitations.
              247.372
              DD Form 1654, Evaluation of Transportation Cost Factors.

              Subpart 247.5—Ocean Transportation by U.S.-Flag Vessels
              247.570
              Scope.
              247.571
              Definitions.
              247.572
              Policy.
              247.573
              General.
              247.574
              Solicitation provisions and contract clauses.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36466, July 31, 1991, unless otherwise noted.

            247.001
            Definitions.
            For definitions of “Civil Reserve Air Fleet” and “Voluntary Intermodal Sealift Agreement,” see Joint Pub 1-02, DoD Dictionary of Military and Associated Terms. See additional information at PGI 247.001 for the Voluntary Intermodal Sealift Agreement program.
            [75 FR 51417, >Aug. 20, 2010]

            Subpart 247.1—General

              247.101
              Policies.
              (h) Shipping documents covering f.o.b. origin shipments.

              (i) Procedures for the contractor to obtain bills of lading are in the clause at 252.247-7028, Application for U.S. Government Shipping Documentation/Instructions.
              (ii) The term “commercial bills of lading” includes the use of any commercial form or procedure.
              [77 FR 39140, June 29, 2012]

            Subpart 247.2—Contracts for Transportation or for Transportation-Related Services

              247.200
              Scope of subpart.
              This subpart does not apply to the operation of vessels owned by, or bareboat chartered by, the Government. See additional guidance at PGI 247.200 for procurement of transportation or related services.
              [75 FR 51417, Aug. 20, 2010]

              247.206
              Preparation of solicitations and contracts.
              Consistent with FAR 15.304 and 215.304, consider using the following as evaluation factors or subfactors:
              (1) Record of claims involving loss or damage; and

              (2) Commitment of transportation assets to readiness support (e.g., Civil Reserve Air Fleet and Voluntary Intermodal Sealift Agreement).
              [75 FR 51417, Aug. 20, 2010]

              247.207
              Solicitation provisions, contract clauses, and special requirements.

              (1) Use the clause at 252.247-7003, Pass-Through of Motor Carrier Fuel Surcharge Adjustment to the Cost Bearer, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that are for carriage in which a motor carrier, broker, or freight forwarder will provide or arrange truck transportation services that provide for a fuel-related adjustment.

              (2) Use the clause at 252.247-7028, Application for U.S. Government Shipping Documentation/Instructions in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, when shipping under Bills of Lading and Domestic Route Order under FOB origin contracts, Export Traffic Release regardless of FOB terms, or foreign military sales shipments.
              [77 FR 39140, June 29, 2012, as amended at 78 FR 37989, June 25, 2013]

              247.270
              Stevedoring contracts.

              247.270-1
              Definitions.

                Commodity rate is—
              (1) The price quoted for handling a ton (weight or measurement) of a specified commodity; and
              (2) Computed by dividing the hourly stevedoring gang cost by the estimated number of tons of the specified commodity that can be handled in 1 hour.

                Gang cost is—
              (1) The total hourly wages paid to the workers in the gang, in accordance with the collective bargaining agreement between the maritime industry and the unions at a specific port; and
              (2) Payments for workmen's compensation, social security taxes, unemployment insurance, taxes, liability and property damage insurance, general and administrative expenses, and profit.

                Stevedoring is the—
              (1) Loading of cargo from an agreed point of rest on a pier or lighter and its storage aboard a vessel; or
              (2) Breaking out and discharging of cargo from any space in the vessel to an agreed point of rest dockside or in a lighter.
              [56 FR 36466, July 31, 1991, as amended at 65 FR 50144, Aug. 17, 2000. Redesignated at 75 FR 51417, Aug. 20, 2010]

              247.270-2
              Technical provisions.
              (a) Because conditions vary at different ports, and sometimes within the same port, it is not practical to develop standard technical provisions covering all phases of stevedoring operations.
              (b) When including rail car, truck, or intermodal equipment loading and unloading, or other dock and terminal work under a stevedoring contract, include these requirements as separate items of work.
              [65 FR 50144, Aug. 17, 2000. Redesignated at 75 FR 51417, Aug. 20, 2010]

              247.270-3
              Evaluation of bids and proposals.
              As a minimum, require that offers include—
              (a) Tonnage or commodity rates that apply to the bulk of the cargo worked under normal conditions;
              (b) Labor-hour rates that apply to services not covered by commodity rates, or to work performed under hardship conditions; and
              (c) Rates for equipment rental.
              [65 FR 50144, Aug. 17, 2000. Redesignated at 75 FR 51417, Aug. 20, 2010]

              247.270-4
              Contract clauses.
              Use the following clauses in solicitations and contracts for stevedoring services as indicated:
              (a) 252.247-7000, Hardship Conditions.
              (b) 252.247-7002, Revision of Prices, when using negotiation.
              (c) 252.247-7007, Liability and Insurance.
              [84 FR 30953, June 28, 2019]

              247.271
              Contracts for the preparation of personal property for shipment or storage or for performance of intra-city or intra-area movement.

              247.271-1
              Policy.
              (a) Annual contracts. Normally—
              (1) Use requirements contracts to acquire services for the—
              (i) Preparation of personal property for shipment or storage; and
              (ii) Performance of intra-area movement.
              (2) Award contracts on a calendar year basis.
              (3) Provide for option years.
              (4) Award contracts, or exercise option years, before November 1 of each year, if possible.
              (b) Areas of performance. Define clearly in the solicitation each area of performance.

              (1) Establish one or more areas; however, hold the number to a minimum consistent with local conditions.

              (2) Each schedule may provide for the same or different areas of performance. Determine the areas as follows—
              (i) Use political boundaries, streets, or any other features as lines of demarcation. Consider such matters as—
              (A) Total volume;
              (B) Size of overall area; and
              (C) The need to service isolated areas of high population density.
              (ii) Specifically identify frequently used terminals, and consider them as being included in each area of performance described in the solicitation.
              (c) Maximum requirements-minimum capability. The contracting officer must—
              (1) Establish realistic quantities on the Estimated Quantities Report in DoD 4500.9-R, Defense Transportation Regulation, Part IV;
              (2) Ensure that the Government's minimum acceptable daily capability—
              (i) Will at least equal the maximum authorized individual weight allowance as prescribed by the Joint Federal Travel Regulations; and
              (ii) Will encourage maximum participation of small business concerns as offerors.
              [56 FR 36466, July 31, 1991, as amended at 65 FR 50145, Aug. 17, 2000. Redesignated at 75 FR 51417, Aug. 20, 2010]

              247.271-2
              Procedures.
              Follow the procedures at PGI 247.271-2 for contracting for the preparation of personal property for shipment or storage.
              [75 FR 51417, Aug. 20, 2010]

              247.271-3
              Solicitation provisions, schedule formats, and contract clauses.
              When acquiring services for the preparation of personal property for movement or storage, or for performance of intra-city or intra-area movement, use the following provisions, clauses, and schedules. Revise solicitation provisions and schedules, as appropriate, if using negotiation rather than sealed bidding. Overseas commands, except those in Alaska and Hawaii, may modify these clauses to conform to local practices, laws, and regulations.
              (a) In solicitations and resulting contracts, the schedules provided by the installation personal property shipping office. Follow the procedures at PGI 247.271-3(c) for use of schedules.
              (b) In addition to designating each ordering activity, as required by the clause at FAR 52.216-18, Ordering, identify by name or position title the individuals authorized to place orders for each activity. When provisions are made for placing oral orders in accordance with FAR 16.504(a)(4)(vii), document the oral orders in accordance with department or agency instructions.
              (c) The clause at 252.247-7014, Demurrage. See additional information at PGI 247.271-3(c)(1) for demurrage and detention charges.
              (d) The clause at 252.247-7016, Contractor Liability for Loss and Damage.
              (e) The clauses at FAR 52.247-8, Estimated Weight or Quantities Not Guaranteed, and FAR 52.247-13, Accessorial Services—Moving Contracts.
              [56 FR 36466, July 31, 1991, as amended at 65 FR 50145, Aug. 17, 2000. Redesignated and amended at 75 FR 51417, Aug. 20, 2010; 78 FR 38235, June 26, 2013; 79 FR 22037, Apr. 21, 2014; 83 FR 30588, June 29, 2018; 83 FR 49179, Sept. 28, 2018; 84 FR 25195, May 31, 2019; 84 FR 30951, June 28, 2019]

            Subpart 247.3—Transportation in Supply Contracts

              247.301
              General.

                See PGI 247.301 for transportation guidance relating to Government Purchase Card purchases.
              [75 FR 51417, Aug. 20, 2010, as amended at 81 FR 78012, Nov. 4, 2016]

              247.301-70
              Definition.
              “Integrated logistics managers” or “third-party logistics providers” means providers of multiple logistics services. Some examples of logistics services are the management of transportation, demand forecasting, information management, inventory maintenance, warehousing, and distribution.
              [65 FR 50145, Aug. 17, 2000]

              247.301-71
              Evaluation factor or subfactor.

              For contracts that will include a significant requirement for transportation of items outside the contiguous United States, include an evaluation factor or subfactor that favors suppliers, third-party logistics providers, and integrated logistics managers that commit to using carriers that participate in one of the readiness programs (e.g., Civil Reserve Air Force Fleet and Voluntary Intermodal Sealift Agreement).
              [65 FR 50145, Aug. 17, 2000, as amended at 81 FR 78012, Nov. 4, 2016]

              247.305
              Solicitation provisions, contract clauses, and transportation factors.

              247.305-10
              Packing, marking, and consignment instructions.
              Follow the procedures at PGI 247.305-10 for preparation of consignment instructions.
              [75 FR 51417, Aug. 20, 2010]

              247.370
              DD Form 1384, Transportation Control and Movement Document.
              The transportation office of the shipping activity prepares the DD Form 1384 to accompany all shipments made through a military air or water port, in accordance with DoD 4500.9-R, Defense Transportation Regulation, Part II, Chapter 203. A link to this document is available in PGI 247.370.
              [75 FR 51418, Aug. 20, 2010]

              247.371
              DD Form 1653, Transportation Data for Solicitations.
              The transportation specialist prepares the DD Form 1653 to accompany requirements for the acquisition of supplies. The completed form should contain recommendations for suitable f.o.b. terms and other suggested transportation provisions for inclusion in the solicitation.
              [75 FR 51418, Aug. 20, 2010]

              247.372
              DD Form 1654, Evaluation of Transportation Cost Factors.
              Contracting personnel may use the DD Form 1654 to furnish information to the transportation office for development of cost factors for use by the contracting officer in the evaluation of f.o.b. origin offers.
              [56 FR 36466, July 31, 1991. Redesignated at 75 FR 51418, Aug. 20, 2010]

            Subpart 247.5—Ocean Transportation by U.S.-Flag Vessels

              247.570
              Scope.
              This subpart—
              (a) Implements—
              (1) The Cargo Preference Act of 1904 (“the 1904 Act”), 10 U.S.C. 2631, which applies to the ocean transportation of cargo owned by, or destined for use by, DoD;
              (2) Section 1017 of the National Defense Authorization Act for Fiscal Year 2007 (Pub. L. 109-364), which requires consideration, in solicitations requiring a covered vessel, of the extent to which offerors have had overhaul, repair, and maintenance work performed in shipyards located in the United States or Guam; and
              (3) Section 3504 of the National Defense Authorization Act for Fiscal Year 2009 (Pub. L. 110-417), which addresses requirements that apply to riding gang members and DoD-exempted individuals (see 252.247-7027(c)) who perform work on U.S.-flag vessels under DoD contracts for transportation services documented under chapter 121, title 46 U.S.C.
              (b) Does not specifically implement the Cargo Preference Act of 1954 (“the 1954 Act”), 46 U.S.C. 1241(b). The 1954 Act is applicable to DoD, but DFARS coverage is not required because compliance with the 1904 Act historically has resulted in DoD exceeding the 1954 Act's requirements; and
              (c) Does not apply to ocean transportation of the following products, in which case FAR subpart 47.5 applies:
              (1) Products obtained for contributions to foreign assistance programs.
              (2) Products owned by agencies other than DoD, unless the products are clearly identifiable for eventual use by DoD.
              [65 FR 50146, Aug. 17, 2000, as amended at 72 FR 49205, Aug. 28, 2007; 73 FR 70911, Nov. 24, 2008; 75 FR 65438, Oct. 25, 2010]

              247.571
              Definitions.
              As used in this subpart—
              (a) Components, foreign flag vessel,
                ocean transportation, supplies, and U.S.-flag vessel have the meaning given in the clause at 252.247-7023, Transportation of Supplies by Sea.

              (b) Reflagging or repair work has the meaning given in the clause at 252.247-7025, Reflagging or Repair Work.
              (c) Covered vessel, foreign shipyard, overhaul, repair, and maintenance work, shipyard, and U.S. shipyard have the meaning given in the provision at 252.247-7026, Evaluation Preference for Use of Domestic Shipyards—Applicable to Acquisition of Carriage by Vessel for DoD Cargo in the Coastwise or Noncontiguous Trade.
              [78 FR 37989, June 25, 2013]

              247.572
              Policy.
              (a) In accordance with 10 U.S.C. 2631(a), DoD contractors shall transport supplies, as defined in the clause at 252.247-7023, Transportation of Supplies by Sea, exclusively on U.S.-flag vessels unless—
              (1) Those vessels are not available;
              (2) The proposed charges to the Government are higher than charges to private persons for the transportation of like goods; or
              (3) The proposed freight charges are excessive or unreasonable.
              (b) Contracts must provide for the use of Government-owned vessels when security classifications prohibit the use of other than Government-owned vessels.
              (c) In accordance with 10 U.S.C. 2631(b)—
              (1) Any vessel used under a time charter contract for the transportation of supplies under this section shall have any reflagging or repair work, as defined in the clause at 252.247-7025, Reflagging or Repair Work, performed in the United States or its outlying areas, if the reflagging or repair work is performed—
              (i) On a vessel for which the contractor submitted an offer in response to the solicitation for the contract; and
              (ii) Prior to the acceptance of the vessel by the Government.
              (2) The Secretary of Defense may waive this requirement if the Secretary determines that such waiver is critical to the national security of the United States.
              (d) In accordance with Section 1017 of the National Defense Authorization Act for Fiscal Year 2007 (Public Law 109-364)—
              (1) When obtaining carriage requiring a covered vessel, the contracting officer must consider the extent to which offerors have had overhaul, repair, and maintenance work for covered vessels performed in shipyards located in the United States or Guam; and
              (2) DoD must submit an annual report to the congressional defense committees, addressing the information provided by offerors with regard to overhaul, repair, and maintenance for covered vessels performed in the United States or Guam.
              (e) In accordance with section 3504 of the National Defense Authorization Act for Fiscal Year 2009 (Pub. L. 110-417), DoD may not award, renew or extend, or exercise an option under a charter of, or contract for carriage of cargo by, a U.S.-flag vessel documented under chapter 121 of title 46 U.S.C., unless the contract contains the clause at 252.247-7027.
              [65 FR 50146, Aug. 17, 2000, as amended at 70 FR 35545, June 21, 2005. Redesignated and amended at 72 FR 49206, Aug. 28, 2007; 73 FR 70911, Nov. 24, 2008; 75 FR 65438, Oct. 25, 2010; 78 FR 37990, June 25, 2013; 79 FR 61583, Oct. 14, 2014]

              247.573
              General.
              (a) Delegated authority. Pursuant to 10 U.S.C. 2631(a) and Secretary of Defense Memorandum dated February 7, 2012, (see PGI 245.573) the authority to make determinations of excessive ocean liner rates and excessive charter rates is delegated to—
              (1) The Commander, United States Transportation Command, for excessive ocean liner rate determinations; and
              (2) The Secretary of the Navy for excessive charter rate determinations.
              (b) Procedures. (1) Contracting officers shall follow the procedures at PGI 247.573(b)(1) when purchase of ocean transportation services is incidental to a contract for supplies, services, or construction.
              (2) Contracting officers shall follow the procedures at PGI 247.573(b)(2) when direct purchase of ocean transportation services is the principal purpose of the contract.

              (3) Agency and department procedures relating to annual reporting requirements of information received from offerors in response to solicitation provision 252.247-7026, Evaluation Preference for Use of Domestic Shipyards—Applicable to Acquisition of Carriage by Vessel for DoD Cargo in the Coastwise of Noncontiguous Trade, are found at PGI 247.573(b)(3).
              (4) Procedures are provided at PGI 247.573(b)(4) to accomplish security background checks pursuant to clause 252.247-7027, Riding Gang Member Requirements.
              [79 FR 61583, Oct. 14, 2014]

              247.574
              Solicitation provisions and contract clauses.
              (a)(1) Use the provision at 252.247-7022, Representation of Extent of Transportation by Sea, in all solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial items, except—
              (i) Those for direct purchase of ocean transportation services; or
              (ii) Those with an anticipated value at or below the simplified acquisition threshold.
              (2) If the solicitation includes the provision at FAR 52.204-7, do not separately list 252.247-7022 in the solicitation.
              (b) Use the basic or one of the alternates of the clause at 252.247-7023, Transportation of Supplies by Sea, in all solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, except those for direct purchase of ocean transportation services.
              (1) Use the basic clause unless any of the supplies to be transported are commercial items that are—
              (i) Shipped in direct support of U.S. military contingency operations, exercises, or forces deployed in humanitarian or peacekeeping operations when the contract is not a construction contract; or
              (ii) Commissary or exchange cargoes transported outside of the Defense Transportation System when the contract is not a construction contract.
              (2) Use the alternate I clause if any of the supplies to be transported are commercial items that are shipped in direct support of U.S. military contingency operations, exercises, or forces deployed in humanitarian or peacekeeping operations when the contract is not a construction contract.
              (3) Use the alternate II clause if any of the supplies to be transported are commercial items that are commissary or exchange cargoes transported outside of the Defense Transportation System (10 U.S.C. 2643), when the contract is not a construction contract.
              (c) Use the clause at 252.247-7025, Reflagging or Repair Work, in all time charter solicitations and contracts, including time charter solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that are for the use of a vessel for the transportation of supplies, unless a waiver has been granted in accordance with 247.572(c)(2).
              (d) Use the provision at 252.247-7026, Evaluation Preference for Use of Domestic Shipyards—Applicable to Acquisition of Carriage by Vessel for DoD Cargo in the Coastwise or Noncontiguous Trade, in solicitations, including solicitations using FAR part 12 procedures for the acquisition of commercial items, that require a covered vessel for carriage of cargo for DoD.
              (e) Use the clause at 252.247-7027, Riding Gang Member Requirements, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial items, that are for the charter of, or contract for carriage of cargo by, a U.S.-flag vessel documented under chapter 121 of title 46 U.S.C.
              [56 FR 36466, July 31, 1991, as amended at 59 FR 10580, Mar. 7, 1994; 60 FR 29501, June 5, 1995; 64 FR 2598, Jan. 15, 1999; 65 FR 14401. Mar. 16, 2000; 67 FR 38021, May 31, 2002. Redesignated and amended at 72 FR 49206, Aug. 28, 2007; 73 FR 70911, Nov. 24, 2008; 75 FR 65438, Oct. 25, 2010; 76 FR 61281, Oct. 4, 2011; 78 FR 37990, June 25, 2013; 78 FR 40043, July 3, 2013; 79 FR 22038, Apr. 21, 2014; 79 FR 61584, Oct. 14, 2014; 84 FR 4371, Feb. 15, 2019]

          Pt. 249
          PART 249—TERMINATION OF CONTRACTS

              Subpart 249.1—General Principles
              Sec.
              249.105
              Duties of termination contracting officer after issuance of notice of termination.
              249.105-1
              Termination status reports.
              249.105-2
              Release of excess funds.
              249.109
              Settlement agreements.

              249.109-7
              Settlement by determination.
              249.109-70
              Limitation on pricing of the terminated effort.
              249.110
              Settlement negotiation memorandum.

              Subpart 249.5—Contract Termination Clauses
              249.501
              General.
              249.501-70
              Special termination costs.

              Subpart 249.70—Special Termination Requirements
              249.7000
              Terminated contracts with Canadian Commercial Corporation.
              249.7001
              Congressional notification on significant contract terminations.
              249.7002
              [Reserved]
              249.7003
              Notification of anticipated contract terminations or reductions.
              249.7004
              Contract clause.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36471, July 31, 1991, unless otherwise noted.

            Subpart 249.1—General Principles

              249.105
              Duties of termination contracting officer after issuance of notice of termination.

              249.105-1
              Termination status reports.
              Follow the procedures at PGI 249.105-1 for reporting status of termination actions.
              [71 FR 27645, May 12, 2006]

              249.105-2
              Release of excess funds.
              See PGI 249.105-2 for guidance on recommending the release of excess funds.
              [71 FR 27645, May 12, 2006]

              249.109
              Settlement agreements.

              249.109-7
              Settlement by determination.
              Follow the procedures at PGI 249.109-7 for settlement of a convenience termination by determination.
              [71 FR 27645, May 12, 2006]

              249.109-70
              Limitation on pricing of the terminated effort.
              When there is a termination for convenience (partial or whole) or a change that reduces scope, follow the procedures at PGI 249.109-70 for limitation on pricing of the terminated or reduced effort.
              [84 FR 30953, June 28, 2019]

              249.110
              Settlement negotiation memorandum.
              Follow the procedures at PGI 249.110 for preparation of a settlement negotiation memorandum.
              [71 FR 27645, May 12, 2006]

            Subpart 249.5—Contract Termination Clauses

              249.501
              General.

              249.501-70
              Special termination costs.
              (a) The clause at 252.249-7000, Special Termination Costs, may be used in an incrementally funded contract when its use is approved by the agency head.
              (b) The clause is authorized when—
              (1) The contract term is 2 years or more;
              (2) The contract is estimated to require—
              (i) Total RDT&E financing in excess of $25 million; or
              (ii) Total production investment in excess of $100 million; and
              (3) Adequate funds are available to cover the contingent reserve liability for special termination costs.
              (c) The contractor and the contracting officer must agree upon an amount that represents their best estimate of the total special termination costs to which the contractor would be entitled in the event of termination of the contract. Insert this amount in paragraph (c) of the clause.
              (d)(1) Consider substituting an alternate paragraph (c) for paragraph (c) of the basic clause when—
              (i) The contract covers an unusually long performance period; or
              (ii) The contractor's cost risk associated with contingent special termination costs is expected to fluctuate extensively over the period of the contract.

              (2) The alternate paragraph (c) should provide for periodic negotiation and adjustment of the amount reserved for special termination costs. Occasions for periodic adjustment may include—

              (i) The Government's incremental assignment of funds to the contract;
              (ii) The time when certain performance milestones are accomplished by the contractor; or
              (iii) Other specific time periods agreed upon by the contracting officer and the contractor.

            Subpart 249.70—Special Termination Requirements

              249.7000
              Terminated contracts with Canadian Commercial Corporation.
              (a) Terminate contracts with the Canadian Commercial Corporation in accordance with—
              (1) The Letter of Agreement (LOA) between the Department of Defence Production (Canada) and the U.S. DoD, “Canadian Agreement” (for a copy of the LOA or for questions on its currency, contact the Office of the Director of Defense Procurement and Acquisition Policy (Contract Policy and International Contracting), osd.pentagon.ousd-atl.mbx.cpic@mail.mil);
              (2) Policies in the Canadian Agreement and part 249; and

              (3) The Canadian Supply Manual, Chapter 8, Annex 8.3, available at http://www.tpsgc-pwgsc.gc.ca/app-acq/ga-sm/index-eng.html, “Termination for Convenience Process, Public Works and Government Services Canada.”
              (b) Contracting officers shall ensure that the Canadian Commercial Corporation submits termination settlement proposals in the format prescribed in FAR 49.602 and that they contain the amount of settlements with subcontractors. The termination contracting officer (TCO) shall prepare an appropriate settlement agreement. (See FAR 49.603.) The letter transmitting a settlement proposal must certify—
              (1) That disposition of inventory has been completed; and
              (2) That the Contract Claims Resolution Board of the Public Works and Government Services Canada has approved settlements with Canadian subcontractors when the Procedures Manual on Termination of Contracts requires such approval.
              (c)(1) The Canadian Commercial Corporation will—
              (i) Settle all Canadian subcontractor termination claims under the Canadian Agreement; and
              (ii) Submit schedules listing serviceable and usable contractor inventory for screening to the TCO (see FAR 45.6).
              (2) After screening, the TCO must provide guidance to the Canadian Commercial Corporation for disposition of the contractor inventory.
              (3) Settlement of Canadian subcontractor claims are not subject to the approval and ratification of the TCO. However, when the proposed negotiated settlement exceeds the total contract price of the prime contract, the TCO shall obtain from the U.S. contracting officer prior to final settlement—
              (i) Ratification of the proposed settlement; and
              (ii) A contract modification increasing the contract price and obligating the additional funds.
              (d) The Canadian Commercial Corporation should send all termination settlement proposals submitted by U.S. subcontractors and suppliers to the TCO of the cognizant contract administration office of the Defense Contract Management Agency for settlement. The TCO will inform the Canadian Commercial Corporation of the amount of the net settlement of U.S. subcontractors and suppliers so that this amount can be included in the Canadian Commercial Corporation termination proposal. The Canadian Commercial Corporation is responsible for execution of the settlement agreement with these subcontractors.
              (e) The Canadian Commercial Corporation will continue administering contracts that the U.S. contracting officer terminates.
              (f) The Canadian Commercial Corporation will settle all Canadian subcontracts in accordance with the policies, practices, and procedures of the Canadian Government.

              (g) The U.S. agency administering the contract with the Canadian Commercial Corporation shall provide any services required by the Canadian Commercial Corporation, including disposal of inventory, for settlement of any subcontracts placed in the United States. Settlement of such U.S. subcontracts will be in accordance with this regulation.
              [56 FR 36471, July 31, 1991, as amended at 65 FR 39706, June 27, 2000; 68 FR 7440, Feb. 14, 2003; 71 FR 27645, May 12, 2006; 72 FR 30278, May 31, 2007; 76 FR 3537, Jan. 20, 2011; 79 FR 56279, Sept. 19, 2014]

              249.7001
              Congressional notification on significant contract terminations.
              Congressional notification is required for any termination involving a reduction in employment of 100 or more contractor employees. Proposed terminations must be cleared through department/agency liaison offices before release of the termination notice, or any information on the proposed termination, to the contractor. Follow the procedures at PGI 249.7001 for congressional notification and release of information.
              [71 FR 27645, May 12, 2006]

              249.7002
              [Reserved]

              249.7003
              Notification of anticipated contract terminations or reductions.
              (a) Section 1372 of the National Defense Authorization Act for Fiscal Year 1994 (Pub. L. 103-160) and section 824 of the National Defense Authorization Act for Fiscal Year 1997 (Pub. L. 104-201) are intended to help establish benefit eligibility under the Workforce Innovation and Opportunity Act (29 U.S.C. Chapter 32) for employees of DoD contractors and subcontractors adversely affected by termination or substantial reductions in major defense programs.
              (b) Departments and agencies are responsible for establishing procedures to—
              (1) Identify which contracts (if any) under major defense programs will be terminated or substantially reduced as a result of the funding levels provided in an appropriations act; and
              (2) Within 60 days of the enactment of such an act, provide notice of the anticipated termination of or substantial reduction in the funding of affected contracts—
              (i) Directly to the Secretary of Labor; and
              (ii) Through the contracting officer to each prime contractor.
              (c) When subcontracts have been issued, the prime contractor is responsible for—
              (1) Providing notice of the termination or substantial reduction in funding to all first-tier subcontractors with a subcontract valued equal to or greater than $700,000; and
              (2) Requiring that each subcontractor—
              (i) Provide such notice to each of its subcontractors for subcontracts valued greater than $150,000; and
              (ii) Impose a similar notice and flowdown requirement in subcontracts valued greater than $150,000 at all tiers.
              [61 FR 64637, Dec. 6, 1996; 61 FR 66077, Dec. 16, 1996; 62 FR 49304, Sept. 19, 1997; 85 FR 34535, June 5, 2020]

              249.7004
              Contract clause.
              Use the clause at 252.249-7002, Notification of Anticipated Contract Termination or Reduction, in all contracts under a major defense program.
              [85 FR 34536, June 5, 2020]

          Pt. 250
          PART 250—EXTRAORDINARY CONTRACTUAL ACTIONS AND THE SAFETY ACT

              Subpart 250.1—Extraordinary Contractual Actions
              Sec.
              250.100
              Definitions.
              250.101
              General.
              250.101-2
              Policy.
              250.101-2-70
              Limitations on payment.
              250.101-3
              Records.
              250.102
              Delegation of and limitations on exercise of authority.
              250.102-1
              Delegation of authority.
              250.102-1-70
              Delegations.
              250.102-2
              Contract adjustment boards.
              250.103
              Contract adjustments.
              250.103-3
              Contract adjustment.
              250.103-5
              Processing cases.
              250.103-6
              Disposition.
              250.104
              Residual powers.
              250.104-3
              Special procedures for unusually hazardous or nuclear risks.
              250.104-3-70
              Indemnification under contracts involving both research and development and other work.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            73 FR 46815, Aug. 12, 2008, unless otherwise noted.

            Subpart 250.1—Extraordinary Contractual Actions

              250.100
              Definitions.

                Secretarial level, as used in this subpart, means—
              (1) An official at or above the level of an Assistant Secretary (or Deputy) of Defense or of the Army, Navy, or Air Force; and
              (2) A contract adjustment board established by the Secretary concerned.

              250.101
              General.

              250.101-2
              Policy.

              250.101-2-70
              Limitations on payment.
              See 10 U.S.C. 2410(b) for limitations on Congressionally directed payment of a request for equitable adjustment to contract terms or a request for relief under Public Law 85-804.

              250.101-3
              Records.
              Follow the procedures at PGI 250.101-3 for preparation of records.

              250.102
              Delegation of and limitations on exercise of authority.

              250.102-1
              Delegation of authority.
              (b) Authority under FAR 50.104 to approve actions obligating $75,000 or less may not be delegated below the level of the head of the contracting activity.
              (d) In accordance with the acquisition authority of the Under Secretary of Defense (Acquisition, Technology, and Logistics (USD (AT&L)) under 10 U.S.C. 133, in addition to the Secretary of Defense and the Secretaries of the military departments, the USD (AT&L) may exercise authority to indemnify against unusually hazardous or nuclear risks.
              [73 FR 46815, Aug. 12, 2008, as amended at 75 FR 45074, Aug. 2, 2010; 80 FR 36905, June 26, 2015; 85 FR 61504, Sept. 29, 2020]

              250.102-1-70
              Delegations.
              (a) Military departments. The Departments of the Army, Navy, and Air Force will specify delegations and levels of authority for actions under the Act and the Executive Order in departmental supplements or agency acquisition guidance.
              (b) Defense agencies. Subject to the restrictions on delegations of authority in 250.102-1(b) and FAR 50.102-1, the directors of the defense agencies may exercise and redelegate the authority contained in the Act and the Executive Order. The agency supplements or agency acquisition guidance shall specify the delegations and levels of authority.
              (1) Requests to obligate the Government in excess of $75,000 must be submitted to the USD (AT&L) for approval.
              (2) Requests for indemnification against unusually hazardous or nuclear risks must be submitted to the USD(AT&L) for approval before using the indemnification clause at FAR 52.250-1, Indemnification Under Public Law 85-804.
              (c) Approvals. The Secretary of the military department or the agency director must approve any delegations in writing.
              [73 FR 46815, Aug. 12, 2008, as amended at 75 FR 45074, Aug. 2, 2010; 80 FR 36905, June 26, 2015; 85 FR 61504, Sept. 29, 2020]

              250.102-2
              Contract adjustment boards.
              The Departments of the Army, Navy, and Air Force each have a contract adjustment board. The board consists of a Chair and not less than two nor more than six other members, one of whom may be designated the Vice-Chair. A majority constitutes a quorum for any purpose and the concurring vote of a majority of the total board membership constitutes an action of the board. Alternates may be appointed to act in the absence of any member.

              250.103
              Contract adjustments.

              250.103-3
              Contract adjustment.
              (a) Contractor requests should be filed with the procuring contracting officer (PCO). However, if filing with the PCO is impractical, requests may be filed with an authorized representative, an administrative contracting officer, or the Office of General Counsel of the applicable department or agency, for forwarding to the cognizant PCO.

              250.103-5
              Processing cases.

              (1) At the time the request is filed, the activity shall prepare the record described at PGI 250.101-3(1)(i) and forward it to the appropriate official within 30 days after the close of the month in which the record is prepared.
              (2) The officer or official responsible for the case shall forward to the contract adjustment board, through departmental channels, the documentation described at PGI 250.103-5.
              (3) Contract adjustment boards will render decisions as expeditiously as practicable. The Chair shall sign a memorandum of decision disposing of the case. The decision shall be dated and shall contain the information required by FAR 50.103-6. The memorandum of decision shall not contain any information classified “Confidential” or higher. The board's decision will be sent to the appropriate official for implementation.

              250.103-6
              Disposition.
              For requests denied or approved below the Secretarial level, follow the disposition procedures at PGI 250.103-6.

              250.104
              Residual powers.

              250.104-3
              Special procedures for unusually hazardous or nuclear risks.

              250.104-3-70
              Indemnification under contracts involving both research and development and other work.
              When indemnification is to be provided on contracts requiring both research and development work and other work, the contracting officer shall insert an appropriate clause using the authority of both 10 U.S.C. 2354 and Public Law 85-804.
              (a) The use of Public Law 85-804 is limited to work which cannot be indemnified under 10 U.S.C. 2354 and is subject to compliance with FAR 50.104.
              (b) Indemnification under 10 U.S.C. 2354 is covered by 235.070.

          Pt. 251
          PART 251—USE OF GOVERNMENT SOURCES BY CONTRACTORS

              Subpart 251.1—Contractor Use of Government Supply Sources
              Sec.
              251.101
              Policy.
              251.102
              Authorization to use Government supply sources.
              251.107
              Contract clause.

              Subpart 251.2—Contractor Use of Interagency Fleet Management System (IFMS) Vehicles
              251.202
              Authorization.
              251.205
              Contract clause.

            Authority:
            41 U.S.C. 1303 and 48 CFR chapter 1.

            Source:
            56 FR 36479, July 31, 1991, unless otherwise noted.

            Subpart 251.1—Contractor Use of Government Supply Sources

              251.101
              Policy.
              (a)(1) Notwithstanding the restriction at FAR 51.101(a)(1), contracting officers may authorize contractors to use Defense Logistics Agency Energy as a source of fuel in performance of other than cost-reimbursement contracts, when the fuel is funded by the Defense Working Capital Fund. When providing this authorization to contractors, follow the procedures at PGI 251.101.
              [85 FR 53684, Aug. 31, 2020]

              251.102
              Authorization to use Government supply sources.
              (e) When authorizing contractor use of Government supply sources, follow the procedures at PGI 251.102.
              (3)(ii) The contracting officer may also authorize the contractor to use the DD Form 1155 when requisitioning from the Department of Veterans Affairs.
              (f) The authorizing agency is also responsible for promptly considering requests of the DoD supply source for authority to refuse to honor requisitions from a contractor that is indebted to DoD and has failed to pay proper invoices in a timely manner.
              [69 FR 67858, Nov. 22, 2004]

              251.107
              Contract clause.
              Use the clause at 252.251-7000, Ordering From Government Supply Sources, in solicitations and contracts which include the clause at FAR 52.251-1, Government Supply Sources.

            Subpart 251.2—Contractor Use of Interagency Fleet Management System (IFMS) Vehicles

              251.202
              Authorization.
              (a)(2)(A) See FAR 28.307-2(c) for policy on contractor insurance.
              (B) See FAR 28.308 for policy on self-insurance.
              (C) See FAR 31.205-19 for allowability of insurance costs.
              (5) Paragraph (d) of the clause at 252.251-7001 satisfies the requirement of FAR 51.202(a)(5) for a written statement.

              251.205
              Contract clause.
              Use the clause at 252.251-7001, Use of Interagency Fleet Management System (IFMS)Vehicles and Related Services, in solicitations and contracts which include the clause at FAR 52.251-2, Interagency Fleet Management System (IFMS) Vehicles and Related Services.

        SUBCHAPTER H—CLAUSES AND FORMS

          Pt. 252
          PART 252—SOLICITATION PROVISIONS AND CONTRACT CLAUSES

              Subpart 252.1—Instructions for Using Provisions and Clauses
              Sec.
              252.101
              Using part 252.
              252.102
              Identification of provisions and clauses.

              Subpart 252.2—Text of provisions and clauses
              252.201-7000
              Contracting officer's representative.
              252.203-7000
              Requirements relating to compensation of former DoD officials.
              252.203-7001
              Prohibition on persons convicted of fraud or other defense-contract-related felonies.
              252.203-7002
              Requirement to inform employees of whistleblower rights.
              252.203-7003
              Agency Office of the Inspector General.
              252.203-7004
              Display of Hotline Posters.
              252.203-7004
              Display of fraud hotline poster(s).
              252.203-7005
              Representation Relating to Compensation of Former DoD Officials.
              252.204-7000
              Disclosure of information.
              252.204-7001
              [Reserved]
              252.204-7002
              Payment for Contract Line or Subline Items Not Separately Priced.
              252.204-7003
              Control of government personnel work product.
              252.204-7005
              [Reserved]
              252.204-7006
              Billing instructions.
              252.204-7007
              Alternate A, Annual Representations and Certifications.
              252.204-7008
              Compliance with safeguarding covered defense information controls.
              252.204-7009
              Limitations on the use or disclosure of third-party contractor reported cyber incident information.
              252.204-7010
              Requirement for contractor to notify DoD if the contractor's activities are subject to reporting under the U.S.-International Atomic Energy Agency Additional Protocol.
              252.204-7011
              [Reserved]
              252.204-7012
              Safeguarding covered defense information and cyber incident reporting.
              252.204-7013
              [Reserved]
              252.204-7014
              Limitations on the Use or Disclosure of Information by Litigation Support Contractors.
              252.204-7015
              Notice of Authorized Disclosure of Information for Litigation Support.
              252.204-7016
              Covered Defense Telecommunications Equipment or Services—Representation.
              252.204-7017
              Prohibition on the Acquisition of Covered Defense Telecommunications Equipment or Services—Representation.
              252.204-7018
              Prohibition on the Acquisition of Covered Defense Telecommunications Equipment or Services.
              252.204-7019
              Notice of NIST SP 800-171 DoD Assessment Requirements.
              252.204-7020
              NIST SP 800-171 DoD Assessment Requirements.
              252.204-7021
              Contractor Compliance with the Cybersecurity Maturity Model Certification Level Requirement.
              252.205-7000
              Provision of information to cooperative agreement holders.
              252.206-7000
              Domestic source restriction.
              252.208-7000
              Intent to furnish precious metals as Government-furnished material.
              252.209-7001
              [Reserved]
              252.209-7002
              Disclosure of ownership or control by a foreign government.
              252.209-7003
              Reserve Officer Training Corps and Military Recruiting on Campus-Representation.
              252.209-7004
              Subcontracting with Firms that are Owned or Controlled by the Government of a Country that is a State Sponsor of Terrorism.
              252.209-7005
              Reserve Officer Training Corps and military recruiting on campus.
              252.209-7006
              Limitations on Contractors Acting as Lead System Integrators.
              252.209-7007
              Prohibited Financial Interests for Lead System Integrators.
              252.209-7008
              Notice of Prohibition Relating to Organizational Conflict of Interest—Major Defense Acquisition Program.
              252.209-7009
              Organizational Conflict of Interest—Major Defense Acquisition Program.
              252.209-7010
              Critical safety items.
              252.211-7000—252.211-7001
              [Reserved]
              252.211-7002
              Availability for examination of specifications, standards, plans, drawings, data item descriptions, and other pertinent documents.
              252.211-7003
              Item unique identification and valuation.
              252.211-7004
              [Reserved]
              252.211-7005
              [Reserved]
              252.211-7006
              Passive Radio Frequency Identification.
              252.211-7007
              Reporting of Government-Furnished Property.
              252.211-7008
              Use of Government-assigned serial numbers.
              252.212-7000—252.212-7001
              [Reserved]
              252.212-7002

              Pilot Program for Acquisition of Military-Purpose Nondevelopmental Items.

              252.213-7000
              Notice to Prospective Suppliers on Use of Supplier Performance Risk System in Past Performance Evaluations.
              252.215-7000—252.215-7001
              [Reserved]
              252.215-7002
              Cost estimating system requirements.
              252.215-7003
              Requirement for submission of data other than certified cost or pricing data—Canadian Commercial Corporation.
              252.215-7004
              Requirement for submission of data other than certified cost or pricing data—Modifications-Canadian Commercial Corporation.
              252.215-7005
              Evaluation Factor for Employing or Subcontracting With Members of the Selected Reserve.
              252.215-7006
              Use of Employees or Individual Subcontractors Who Are Members of the Selected Reserve.
              252.215-7007
              Notice of Intent to Resolicit.
              252.215-7008
              Only One Offer.
              252.215-7009
              Proposal adequacy checklist.
              252.215-7010
              Requirements for Certified Cost or Pricing Data and Data Other Than Certified Cost or Pricing Data.
              252.215-7011
              Requirements for Submission of Proposals to the Administrative Contracting Officer and Contract Auditor.
              252.215-7012
              Requirements for Submission of Proposals via Electronic Media.
              252.215-7013
              Supplies and Services Provided by Nontraditional Defense Contractors.
              252.215-7014
              Exception from Certified Cost or Pricing Data Requirements for Foreign Military Sales Indirect Offsets.
              252.215-7015
              Program Should-Cost Review.
              252.216-7000
              Economic price adjustment—basic steel, aluminum, brass, bronze, or copper mill products.
              252.216-7001
              Economic price adjustment—nonstandard steel items.
              252.216-7002
              Alternate A, Time-and-Materials/Labor-Hour Proposal Requirements—Non-Commercial Item Acquisition with Adequate Price Competition.
              252.216-7003
              Economic price adjustment—wage rates or material prices controlled by a foreign government.
              252.216-7004
              Award Fee Reduction or Denial for Jeopardizing the Health or Safety of Government Personnel.
              252.216-7005
              [Reserved]
              252.216-7006
              [Reserved]
              252.216-7007
              Economic price adjustment—basic steel, aluminum, brass, bronze, or copper mill products-representation.
              252.216-7008
              Economic price adjustment—wage rates or material prices controlled by a foreign government—representation.
              252.216-7009
              Allowability of legal costs incurred in connection with a whistleblower proceeding.
              252.217-7000
              Exercise of option to fulfill foreign military sales commitments.
              252.217-7001
              Surge option.
              252.217-7002
              Offering property for exchange.
              252.217-7003
              Changes.
              252.217-7004
              Job orders and compensation.
              252.217-7005
              Inspection and manner of doing work.
              252.217-7006
              Title.
              252.217-7007
              Payments.
              252.217-7008
              Bonds.
              252.217-7009
              Default.
              252.217-7010
              Performance.
              252.217-7011
              Access to vessel.
              252.217-7012
              Liability and insurance.
              252.217-7013
              Guarantees.
              252.217-7014
              Discharge of liens.
              252.217-7015
              Safety and health.
              252.217-7016
              Plant protection.
              252.217-7017—252.217-7025
              [Reserved]
              252.217-7026
              Identification of sources of supply.
              252.217-7027
              Contract definitization.
              252.217-7028
              Over and above work.
              252.219-7000
              Advancing Small Business Growth.
              252.219-7001—252.219-7002
              [Reserved]
              252.219-7003
              Small Business Subcontracting Plan (DoD Contracts).
              252.219-7004
              Small Business Subcontracting Plan (Test Program).
              252.219-7005—252.219-7008
              [Reserved]
              252.219-7009
              Section 8(a) direct award.
              252.219-7010
              Notification of Competition Limited to Eligible 8(a) Participants—Partnership Agreement
              252.219-7011
              Notification to delay performance.
              252.219-7012
              Competition for Religious-Related Services.
              252.222-7000
              Restrictions on employment of personnel.
              252.222-7001
              [Reserved]
              252.222-7002
              Compliance with local labor laws (overseas).
              252.222-7003
              Permit from Italian Inspectorate of Labor.
              252.222-7004
              Compliance with Spanish social security laws and regulations.
              252.222-7005
              Prohibition on use of nonimmigrant aliens—Guam.
              252.222-7006
              Restrictions on the Use of Mandatory Arbitration Agreements.
              252.223-7000
              [Reserved]
              252.223-7001
              Hazard warning labels.
              252.223-7002
              Safety precautions for ammunition and explosives.
              252.223-7003
              Change in place of performance—ammunition and explosives.
              252.223-7004
              Drug-free work force.
              252.223-7005
              [Reserved]
              252.223-7006
              Prohibition on storage, treatment, and disposal of toxic or hazardous materials.
              252.223-7007
              Safeguarding sensitive conventional arms, ammunition, and explosives.
              252.223-7008
              Prohibition of Hexavalent Chromium.

              252.225-7000
              Buy American—Balance of Payments Program Certificate.
              252.225-7001
              Buy American and Balance of Payments Program.
              252.225-7002
              Qualifying country sources as subcontractors.
              252.225-7003
              Report of intended performance outside the United States and Canada—Submission with offer.
              252.225-7004
              Reporting of intended performance outside the United States and Canada—Submission after award.
              252.225-7005
              Identification of Expenditures in the United States.
              252.225-7006
              Acquisition of the American flag.
              252.225-7007
              Prohibition on Acquisition of Certain Items from Communist Chinese Military Companies.
              252.225-7008
              Restriction on Acquisition of Specialty Metals.
              252.225-7009
              Restriction on Acquisition of Certain Articles Containing Specialty Metals.
              252.225-7010
              Commercial Derivative Military Article—Specialty Metals Compliance Certificate.
              252.225-7011
              Restriction on acquisition of supercomputers.
              252.225-7012
              Preference for certain domestic commodities.
              252.225-7013
              Duty-free entry.
              252.225-7014
              [Reserved]
              252.225-7015
              Restriction on acquisition of hand or measuring tools.
              252.225-7016
              Restriction on acquisition of ball and roller bearings.
              252.225-7017
              Photovoltaic devices.
              252.225-7018
              Photovoltaic devices—certificate.
              252.225-7019
              Restriction on acquisition of anchor and mooring chain.
              252.225-7020
              Trade agreements certificate.
              252.225-7021
              Trade agreements.
              252.225-7022
              [Reserved]
              252.225-7023
              Preference for products or services from Afghanistan.
              252.225-7024
              Requirement for products or services from Afghanistan.
              252.225-7025
              Restriction on acquisition of forgings.
              252.225-7026
              Acquisition restricted to products or services from Afghanistan.
              252.225-7027
              Restriction on contingent fees for foreign military sales.
              252.225-7028
              Exclusionary policies and practices of foreign governments.
              252.225-7029
              Acquisition of uniform components for Afghan military or Afghan National Police.
              252.225-7030
              [Reserved]
              252.225-7031
              Secondary Arab boycott of Israel.
              252.225-7032
              Waiver of United Kingdom levies—Evaluation of offers.
              252.225-7033
              Waiver of United Kingdom Levies.
              252.225-7034
              [Reserved]
              252.225-7035
              Buy American—Free Trade Agreements—Balance of Payments Program Certificate.
              252.225-7036
              Buy American—Free Trade Agreements—Balance of Payments Program.
              252.225-7037
              Evaluation of offers for air circuit breakers.
              252.225-7038
              Restriction on acquisition of air circuit breakers.
              252.225-7039
              Defense Contractors Performing Private Security Functions Outside the United States.
              252.225-7040
              Contractor Personnel Supporting U.S. Armed Forces Deployed Outside the United States.
              252.225-7041
              Correspondence in English.
              252.225-7042
              Authorization to perform.
              252.225-7043
              Antiterrorism/force protection policy for defense contractors outside the United States.
              252.225-7044
              Balance of Payments Program—Construction Material.
              252.225-7045
              Balance of Payments Program—Construction Material Under Trade Agreements.
              252.225-7046
              Exports by approved community members in response to the solicitation.
              252.225-7047
              Exports by approved community members in performance of the contract.
              252.225-7048
              Export-controlled items.
              252.225-7049
              Prohibition on Acquisition of Certain Foreign Commercial Satellite Services—Representations.
              252.225-7050
              Disclosure of Ownership or Control by the Government of a Country that is a State Sponsor of Terrorism.
              252.225-7051
              Prohibition on Acquisition of Certain Foreign Commercial Satellite Services.

                252.225-7052
                Restriction on the Acquisition of Certain Magnets, Tantalum, and Tungsten.
                252.226-7001
                Utilization of Indian organizations, Indian-owned economic enterprises, and native Hawaiian small business concerns.
                252.226-7002
                Representation for Demonstration Project for Contractors Employing Persons with Disabilities.
                252.227-7000
                Non-estoppel.
                252.227-7001
                Release of past infringement.
                252.227-7002
                Readjustment of payments.
                252.227-7003
                Termination.
                252.227-7004
                License grant.
                252.227-7005
                License term.
                252.227-7006
                License grant—running royalty.
                252.227-7007
                License term—running royalty.
                252.227-7008
                Computation of royalties.
                252.227-7009
                Reporting and payment of royalties.
                252.227-7010
                License to other Government agencies.

                252.227-7011
                Assignments.
                252.227-7012
                Patent license and release contract.
                252.227-7013
                Rights in technical data—Noncommercial items.
                252.227-7014
                Rights in noncommercial computer software and noncommercial computer software documentation.
                252.227-7015
                Technical data—Commercial items.
                252.227-7016
                Rights in bid or proposal information.
                252.227-7017
                Identification and assertion of use, release, or disclosure restrictions.
                252.227-7018
                Rights in noncommercial technical data and computer software—Small Business Innovation Research (SBIR) Program.
                252.227-7019
                Validation of asserted restrictions—Computer software.
                252.227-7020
                Rights in special works.
                252.227-7021
                Rights in data—existing works.
                252.227-7022
                Government rights (unlimited).
                252.227-7023
                Drawings and other data to become property of Government.
                252.227-7024
                Notice and approval of restricted designs.
                252.227-7025
                Limitations on the use or disclosure of government-furnished information marked with restrictive legends.
                252.227-7026
                Deferred delivery of technical data or computer software.
                252.227-7027
                Deferred ordering of technical data or computer software.
                252.227-7028
                Technical data or computer software previously delivered to the government.
                252.227-7029
                [Reserved]
                252.227-7030
                Technical data—withholding of payment.
                252.227-7031
                [Reserved]
                252.227-7032
                Rights in technical data and computer software (foreign).
                252.227-7033
                Rights in shop drawings.
                252.227-7034—252.227-7036
                [Reserved]
                252.227-7037
                Validation of restrictive markings on technical data.
                252.227-7038
                Patent Rights—Ownership by the Contractor (Large Business).
                252.227-7039
                Patents—reporting of subject inventions.
                252.228-7000
                Reimbursement for war-hazard losses.
                252.228-7001
                Ground and flight risk.
                252.228-7002
                Aircraft flight risk.
                252.228-7003
                Capture and detention.
                252.228-7004
                [Reserved]
                252.228-7005
                Mishap reporting and investigation involving aircraft, missiles, and space launch vehicles.
                252.228-7006
                Compliance with Spanish laws and insurance.
                252.229-7000
                [Reserved]
                252.229-7001
                Tax relief.
                252.229-7002
                Customs exemptions (Germany).
                252.229-7003
                Tax exemptions (Italy).
                252.229-7004
                Status of contractors as a direct contractor (Spain).
                252.229-7005
                Tax exemptions (Spain).
                252.229-7006
                Value added tax exclusion (United Kingdom).
                252.229-7007
                Verification of United States receipt of goods.
                252.229-7008
                Relief from import duty (United Kingdom).
                252.229-7009
                Relief from customs duty and value added tax on fuel (passenger vehicles) (United Kingdom).
                252.229-7010
                Relief from customs duty on fuel (United Kingdom).
                252.229-7011
                Reporting of Foreign Taxes—U.S. Assistance Programs.
                252.229-7012
                Tax exemptions (Italy)—representation.
                252.229-7013
                Tax exemptions (Spain)—representation.
                252.229-7014
                Taxes—Foreign Contracts in Afghanistan.
                252.229-7015
                Taxes—Foreign Contracts in Afghanistan (North Atlantic Treaty Organization Status of Forces Agreement).
                252.231-7000
                Supplemental cost principles.
                252.232-7000
                Advance payment pool.
                252.232-7001
                [Reserved]
                252.232-7002
                Progress payments for foreign military sales acquisitions.
                252.232-7003
                Electronic submission of payment requests and receiving reports.
                252.232-7004
                DoD progress payment rates.
                252.232-7005
                Reimbursement of subcontractor advance payments—DoD pilot mentor-protégé program.
                252.232-7006
                Wide Area WorkFlow payment instructions.
                252.232-7007
                Limitation of Government's obligation.
                252.232-7008
                Assignment of claims (overseas).
                252.232-7009
                Mandatory payment by Governmentwide commercial purchase card.
                252.232-7010
                Levies on contract payments.
                252.232-7011
                Payments in support of emergencies and contingency operations.
                252.232-7012
                Performance-Based Payments—Whole-Contract Basis.
                252.232-7013
                Performance-Based Payments—Deliverable-Item Basis.
                252.232-7014
                Notification of Payment in Local Currency (Afghanistan).
                252.232-7015
                Performance-Based Payments—Representation..
                252.232-7016
                Notice of Progress Payments or Performance-Based Payments.
                252.232-7017
                Accelerating Payments to Small Business Subcontractors—Prohibition on Fees and Consideration.
                252.233-7000
                [Reserved]
                252.233-7001
                Choice of law (overseas).
                252.234-7001
                Notice of Earned Value Management System.
                252.234-7002
                Earned Value Management System.

                252.234-7003
                Notice of Cost and Software Data Reporting System.
                252.234-7004
                Cost and Software Data Reporting System.
                252.235-7000
                Indemnification under 10 U.S.C. 2354—fixed price.
                252.235-7001
                Indemnification under 10 U.S.C. 2354—cost reimbursement.
                252.235-7002
                Animal Welfare.
                252.235-7003
                Frequency authorization.
                252.235-7004
                Protection of Human Subjects.
                252.235-7005—252.235-7009
                [Reserved]
                252.235-7010
                Acknowledgement of support and disclaimer.
                252.235-7011
                Final scientific or technical report.
                252.236-7000
                Modification proposals—price breakdown.
                252.236-7001
                Contract drawings and specifications.
                252.236-7002
                Obstruction of navigable waterways.
                252.236-7003
                Payment for mobilization and preparatory work.
                252.236-7004
                Payment for mobilization and demobilization.
                252.236-7005
                Airfield safety precautions.
                252.236-7006
                Cost limitation.
                252.236-7007
                Additive or deductive items.
                252.236-7008
                Contract prices—bidding schedules.
                252.236-7009
                [Reserved]
                252.236-7010
                Overseas military construction—Preference for United States firms.
                252.236-7011
                Overseas architect-engineer services—Restriction to United States firms.
                252.236-7012
                Military construction on Kwajalein Atoll—evaluation preference.
                252.236-7013
                Requirement for competition opportunity for American steel producers, fabricators, and manufacturers.
                252.237-7000
                Notice of special standards of responsibility.
                252.237-7001
                Compliance with audit standards.
                252.237-7002
                [Reserved]
                252.237-7003
                Requirements.
                252.237-7004
                Area of performance.
                252.237-7005
                Performance and delivery.
                252.237-7006
                Subcontracting.
                252.237-7007
                Termination for default.
                252.237-7008
                Group interment.
                252.237-7009
                Permits.
                252.237-7010
                Prohibition on interrogation of detainees by contractor personnel.
                252.237-7011
                Preparation history.
                252.237-7012
                Instruction to offerors (count-of-articles).
                252.237-7013
                Instruction to offerors (bulk weight).
                252.237-7014
                Loss or damage (count-of-articles).
                252.237-7015
                Loss or damage (weight of articles).
                252.237-7016
                Delivery tickets.
                252.237-7017
                Individual laundry.
                252.237-7018
                Special definitions of Government property.
                252.237-7019
                Training for contractor personnel interacting with detainees.
                252.237-7020—252.237-7021
                [Reserved]
                252.237-7022
                Services at installations being closed.
                252.237-7023
                Continuation of essential contractor services.
                252.237-7024
                Notice of continuation of essential contractor services.
                252.239-7000
                Protection against compromising emanations.
                252.239-7001
                Information Assurance Contractor Training and Certification.
                252.239-7002
                Access.
                252.239-7003
                [Reserved]
                252.239-7004
                Orders for facilities and services.
                252.239-7005
                [Reserved]
                252.239-7006
                Tariff information.
                252.239-7007
                Cancellation or termination of orders.
                252.239-7008
                [Reserved]
                252.239-7009
                Representation of use of cloud computing.
                252.239-7010
                Cloud computing services.
                252.239-7011
                Special construction and equipment charges.
                252.239-7012
                Title to telecommunication facilities and equipment.
                252.239-7013
                Term of agreement and continuation of services.
                252.239-7014
                [Reserved]
                252.239-7015
                [Reserved]
                252.239-7016
                Telecommunications security equipment, devices, techniques, and services.
                252.239-7017
                Notice of supply chain risk.
                252.239-7018
                Supply chain risk.
                252.241-7000
                Superseding contract.
                252.241-7001
                Government access.
                252.242-7000—252.242-7002
                [Reserved]
                252.242-7004
                Material management and accounting system.
                252.242-7005
                Contractor business systems.
                252.242-7006
                Accounting system administration.
                252.243-7000
                [Reserved]
                252.243-7001
                Pricing of contract modifications.
                252.243-7002
                Requests for equitable adjustment.
                252.244-7000
                Subcontracts for commercial items.
                252.244-7001
                Contractor purchasing system administration.
                252.245-7000
                Government-furnished mapping, charting, and geodesy property.
                252.245-7001
                Tagging, labeling, and marking of government-furnished property
                252.245-7002
                Reporting Loss of Government Property.
                252.245-7003
                Contractor Property Management System Administration.
                252.245-7004
                Reporting, Reutilization, and Disposal.

                252.246-7000
                [Reserved]
                252.246-7001
                Warranty of data.
                252.246-7002
                Warranty of construction (Germany).
                252.246-7003
                Notification of Potential Safety Issues.
                252.246-7004
                Safety of Facilities, Infrastructure, and Equipment for Military Operations.
                252.246-7005
                Notice of Warranty Tracking of Serialized Items.
                252.246-7006
                Warranty Tracking of Serialized Items.
                252.246-7007
                Contractor Counterfeit Electronic Part Detection and Avoidance System.
                252.246-7008
                Sources of electronic parts.
                252.247-7000
                Hardship conditions.
                252.247-7001
                [Reserved]
                252.247-7002
                Revision of prices.
                252.247-7003
                Pass-through of motor carrier fuel surcharge adjustment to the cost bearer.
                252.247-7004—252.247-7006
                [Reserved]
                252.247-7007
                Liability and insurance.
                252.247-7008—252.247-7013
                [Reserved]
                252.247-7014
                Demurrage.
                252.247-7015
                [Reserved]
                252.247-7016
                Contractor liability for loss or damage.
                252.247-7017—252.247-7021
                [Reserved]
                252.247-7022
                Representation of extent of transportation by sea.
                252.247-7023
                Transportation of supplies by sea.
                252.247-7024
                [Reserved]
                252.247-7025
                Reflagging or repair work.
                252.247-7026
                Evaluation preference for use of domestic shipyards—applicable to acquisition of carriage by vessel for DoD cargo in the coastwise or noncontiguous trade.
                252.247-7027
                Riding gang member requirements.
                252.247-7028
                Application for U.S. Government Shipping Documentation/Instructions.
                252.249-7000
                Special termination costs.
                252.249-7001
                [Reserved]
                252.249-7002
                Notification of Anticipated Contract Termination or Reduction.
                252.251-7000
                Ordering from Government supply sources.
                252.251-7001
                Use of Interagency Fleet Management System (IFMS) vehicles and related services.

                  Authority:
                  41 U.S.C. 1303 and 48 CFR chapter 1.

                Source:
                56 FR 36479, July 31, 1991, unless otherwise noted.

              Subpart 252.1—Instructions for Using Provisions and Clauses

                252.101
                Using part 252.
                (b) Numbering. (2) Provisions or clauses that supplement the FAR.

                (ii)(B) DFARS provisions or clauses use a four digit sequential number in the 7000 series, e.g., -7000, -7001, -7002. Department or agency supplemental provisions or clauses use four digit sequential numbers in the 9000 series.

                252.102
                Identification of provisions and clauses.
                For guidance on numbering department or agency provisions and clauses, see PGI 252.103.
                [80 FR 36718, June 26, 2015]

              Subpart 252.2—Text of Provisions and Clauses

                252.201-7000
                Contracting officer's representative.
                As prescribed in 201.602-70, use the following clause:

                  Contracting Officer's Representative (DEC 1991)
                  (a) Definition. Contracting officer's representative means an individual designated in accordance with subsection 201.602-2 of the Defense Federal Acquisition Regulation Supplement and authorized in writing by the contracting officer to perform specific technical or administrative functions.
                  (b) If the Contracting Officer designates a contracting officer's representative (COR), the Contractor will receive a copy of the written designation. It will specify the extent of the COR's authority to act on behalf of the contracting officer. The COR is not authorized to make any commitments or changes that will affect price, quality, quantity, delivery, or any other term or condition of the contract.

                (End of clause)
                [56 FR 36479, July 31, 1991, as amended at 57 FR 42633, Sept. 15, 1992]

                252.203-7000
                Requirements Relating to Compensation of Former DoD Officials.
                As prescribed in 203.171-4(a), use the following clause:

                  Requirements Relating to Compensation of Former DoD Officials (SEP 2011)
                  (a) Definition. Covered DoD official, as used in this clause, means an individual that—
                  (1) Leaves or left DoD service on or after January 28, 2008; and
                  (2)(i) Participated personally and substantially in an acquisition as defined in 41 U.S.C. 131 with a value in excess of $10 million, and serves or served—
                  (A) In an Executive Schedule position under subchapter II of chapter 53 of Title 5, United States Code;
                  (B) In a position in the Senior Executive Service under subchapter VIII of chapter 53 of Title 5, United States Code; or
                  (C) In a general or flag officer position compensated at a rate of pay for grade O-7 or above under section 201 of Title 37, United States Code; or
                  (ii) Serves or served in DoD in one of the following positions: Program manager, deputy program manager, procuring contracting officer, administrative contracting officer, source selection authority, member of the source selection evaluation board, or chief of a financial or technical evaluation team for a contract in an amount in excess of $10 million.
                  (b) The Contractor shall not knowingly provide compensation to a covered DoD official within 2 years after the official leaves DoD service, without first determining that the official has sought and received, or has not received after 30 days of seeking, a written opinion from the appropriate DoD ethics counselor regarding the applicability of post-employment restrictions to the activities that the official is expected to undertake on behalf of the Contractor.
                  (c) Failure by the Contractor to comply with paragraph (b) of this clause may subject the Contractor to rescission of this contract, suspension, or debarment in accordance with 41 U.S.C. 2105(c).

                (End of clause)
                [74 FR 2409, Jan. 15, 2009, as amended at 76 FR 58137, Sept. 20, 2011; 78 FR 37990, June 25, 2013]

                252.203-7001
                Prohibition on persons convicted of fraud or other defense-contract-related felonies.
                As prescribed in 203.570-3, use the following clause:

                  Prohibition on Persons Convicted of Fraud or Other Defense-Contract-Related Felonies (DEC 2008)
                  (a) Definitions. As used in this clause—
                  (1) Arising out of a contract with the DoD means any act in connection with—
                  (i) Attempting to obtain;
                  (ii) Obtaining; or
                  (iii) Performing a contract or first-tier subcontract of any agency, department, or component of the Department of Defense (DoD).
                  (2) Conviction of fraud or any other felony means any conviction for fraud or a felony in violation of state or Federal criminal statutes, whether entered on a verdict or plea, including a plea of nolo contendere, for which sentence has been imposed.
                  (3) Date of conviction means the date judgment was entered against the individual.
                  (b) Any individual who is convicted after September 29, 1988, of fraud or any other felony arising out of a contract with the DoD is prohibited from serving—
                  (1) In a management or supervisory capacity on this contract;
                  (2) On the board of directors of the Contractor;
                  (3) As a consultant, agent, or representative for the Contractor; or
                  (4) In any other capacity with the authority to influence, advise, or control the decisions of the Contractor with regard to this contract.
                  (c) Unless waived, the prohibition in paragraph (b) of this clause applies for not less than 5 years from the date of conviction.
                  (d) 10 U.S.C. 2408 provides that the Contractor shall be subject to a criminal penalty of not more than $500,000 if convicted of knowingly—
                  (1) Employing a person under a prohibition specified in paragraph (b) of this clause; or
                  (2) Allowing such a person to serve on the board of directors of the contractor or first-tier subcontractor.
                  (e) In addition to the criminal penalties contained in 10 U.S.C. 2408, the Government may consider other available remedies, such as—
                  (1) Suspension or debarment;
                  (2) Cancellation of the contract at no cost to the Government; or
                  (3) Termination of the contract for default.
                  (f) The Contractor may submit written requests for waiver of the prohibition in paragraph (b) of this clause to the Contracting Officer. Requests shall clearly identify—
                  (1) The person involved;
                  (2) The nature of the conviction and resultant sentence or punishment imposed;
                  (3) The reasons for the requested waiver; and
                  (4) An explanation of why a waiver is in the interest of national security.

                  (g) The Contractor agrees to include the substance of this clause, appropriately modified to reflect the identity and relationship of the parties, in all first-tier subcontracts exceeding the simplified acquisition threshold in part 2 of the Federal Acquisition Regulation, except those for commercial items or components.

                  (h) Pursuant to 10 U.S.C. 2408(c), defense contractors and subcontractors may obtain information as to whether a particular person has been convicted of fraud or any other felony arising out of a contract with the DoD by contacting The Office of Justice Programs, The Denial of Federal Benefits Office, U.S. Department of Justice, telephone (301) 937-1542; www.ojp.usdoj.gov/BJA/grant/DPFC.html.

                (End of clause)
                [56 FR 36479, July 31, 1991, as amended at 58 FR 28471, May 13, 1993; 59 FR 27675, May 27, 1994; 60 FR 61600, Nov. 30, 1995; 62 FR 34128, June 24, 1997; 64 FR 14398, Mar. 25, 1999; 69 FR 74990, Dec. 15, 2004; 73 FR 76972, Dec. 18, 2008]

                252.203-7002
                Requirement to Inform Employees of Whistleblower Rights.
                As prescribed in 203.970, use the following clause:

                  Requirement To Inform Employees of Whistleblower Rights (SEP 2013)
                  (a) The Contractor shall inform its employees in writing, in the predominant native language of the workforce, of contractor employee whistleblower rights and protections under 10 U.S.C. 2409, as described in subpart 203.9 of the Defense Federal Acquisition Regulation Supplement.
                  (b) The Contractor shall include the substance of this clause, including this paragraph (b), in all subcontracts.

                (End of clause)
                [74 FR 2411, Jan. 15, 2009, as amended at 78 FR 59854, Sept. 30, 2013]

                252.203-7003
                Agency Office of the Inspector General.
                As prescribed in 203.1004(a), use the following clause:

                  Agency Office of the Inspector General (AUG 2019)

                  The agency office of the Inspector General referenced in paragraphs (c) and (d) of FAR clause 52.203-13, Contractor Code of Business Ethics and Conduct, is the DoD Office of Inspector General at the following address:

                  Department of Defense Office of Inspector General, Administrative Investigations, Contractor Disclosure Program, 4800 Mark Center Drive, Suite 14L25, Alexandria, VA 22350-1500.
                  Toll Free Telephone: 866-429-8011. Website: https://www.dodig.mil/Programs/Contractor-Disclosure-Program/.

                (End of clause)
                [77 FR 76937, Dec. 31, 2012, as amended at 84 FR 39203, Aug. 9, 2019]

                252.203-7004
                Display of Hotline Posters.
                As prescribed in 203.1004(b)(2)(ii), use the following clause:

                  Display of Hotline Posters (AUG 2019)
                  (a) Definition. As used in this clause—

                    United States means the 50 States, the District of Columbia, and outlying areas.
                  (b) Display of hotline poster(s). (1)(i) The Contractor shall display prominently the DoD fraud, waste, and abuse hotline poster prepared by the DoD Office of the Inspector General, in effect at time of contract award, in common work areas within business segments performing work under Department of Defense (DoD) contracts.
                  (ii) For contracts performed outside the United States, when security concerns can be appropriately demonstrated, the contracting officer may provide the contractor the option to publicize the program to contractor personnel in a manner other than public display of the poster, such as private employee written instructions and briefings.
                  (2) If the contract is funded, in whole or in part, by Department of Homeland Security (DHS) disaster relief funds and the work is to be performed in the United States, the DHS fraud hotline poster shall be displayed in addition to the DoD hotline poster. If a display of a DHS fraud hotline poster is required, the Contractor may obtain such poster from—
                  (i) DHS Office of Inspector General/MAIL STOP 0305, Attn: Office of Investigations—Hotline, 245 Murray Lane SW., Washington, DC 20528-0305; or
                  (ii) Via the Internet at https://www.oig.dhs.gov/assets/Hotline/DHS_ OIG_Hotline-optimized.jpg.

                  (c)(1) These DoD hotline poster may be obtained from: Defense Hotline, The Pentagon, Washington, DC 20301-1900, or is also available via the internet at https://www.dodig.mil/Resources/Posters-and-Brochures/.

                  (2) If a significant portion of the employee workforce does not speak English, then the poster is to be displayed in the foreign languages that a significant portion of the employees speak.
                  (3) Additionally, if the Contractor maintains a company Web site as a method of providing information to employees, the Contractor shall display an electronic version of the required poster at the Web site.
                  (d) Subcontracts. The Contractor shall include the substance of this clause, including this paragraph (d), in all subcontracts that exceed the threshold specified in Defense Federal Acquisition Regulation Supplement 203.1004(b)(2)(ii) on the date of subcontract award, except when the subcontract is for the acquisition of a commercial item.

                (End of clause)
                [80 FR 5001, Jan. 29, 2015, as amended at 80 FR 36905, June 26, 2015; 81 FR 73006, Oct. 21, 2016; 84 FR 25187, May 31, 2019; 84 FR 39203, Aug. 9, 2019]

                252.203-7005
                Representation Relating to Compensation of Former DoD Officials.
                As prescribed in 203.171-4(b), insert the following provision:

                  Representation Relating to Compensation of Former DoD Officials (NOV 2011)
                  (a) Definition. Covered DoD official is defined in the clause at 252.203-7000, Requirements Relating to Compensation of Former DoD Officials.
                  (b) By submission of this offer, the offeror represents, to the best of its knowledge and belief, that all covered DoD officials employed by or otherwise receiving compensation from the offeror, and who are expected to undertake activities on behalf of the offeror for any resulting contract, are presently in compliance with all post-employment restrictions covered by 18 U.S.C. 207, 41 U.S.C. 2101-2107, and 5 CFR parts 2637 and 2641, including Federal Acquisition Regulation 3.104-2.

                [76 FR 71830, Nov. 18, 2011]

                252.204-7000
                Disclosure of information.
                As prescribed in 204.404-70(a), use the following clause:

                  Disclosure of Information (OCT 2016)
                  (a) The Contractor shall not release to anyone outside the Contractor's organization any unclassified information, regardless of medium (e.g., film, tape, document), pertaining to any part of this contract or any program related to this contract, unless—
                  (1) The Contracting Officer has given prior written approval;
                  (2) The information is otherwise in the public domain before the date of release; or
                  (3) The information results from or arises during the performance of a project that involves no covered defense information (as defined in the clause at DFARS 252.204-7012, Safeguarding Covered Defense Information and Cyber Incident Reporting) and has been scoped and negotiated by the contracting activity with the contractor and research performer and determined in writing by the contracting officer to be fundamental research (which by definition cannot involve any covered defense information), in accordance with National Security Decision Directive 189, National Policy on the Transfer of Scientific, Technical and Engineering Information, in effect on the date of contract award and the Under Secretary of Defense (Acquisition, Technology, and Logistics) memoranda on Fundamental Research, dated May 24, 2010, and on Contracted Fundamental Research, dated June 26, 2008 (available at DFARS PGI 204.4).
                  (b) Requests for approval under paragraph (a)(1) shall identify the specific information to be released, the medium to be used, and the purpose for the release. The Contractor shall submit its request to the Contracting Officer at least 10 business days before the proposed date for release.
                  (c) The Contractor agrees to include a similar requirement, including this paragraph (c), in each subcontract under this contract. Subcontractors shall submit requests for authorization to release through the prime contractor to the Contracting Officer.

                (End of clause)
                [78 FR 48333, Aug. 8, 2013, as amended at 81 FR 72999, Oct. 21, 2016]

                252.204-7001
                [Reserved]

                252.204-7002
                Payment for Contract Line or Subline Items Not Separately Priced.
                As prescribed in 204.7109(a), use the following clause:

                  Payment for Contract Line or Subline Items Not Separately Priced (APR 2020)
                  (a) If the schedule in this contract contains any contract line or subline items identified as not separately priced (NSP), it means that the unit price for the NSP line or subline item is included in the unit price of another, related line or subline item.
                  (b) The Contractor shall not invoice the Government for an item that includes in its price an NSP item until—
                  (1) The Contractor has also delivered the NSP item included in the price of the item being invoiced; and
                  (2) The Government has accepted the NSP item.
                  (c) This clause does not apply to technical data.

                (End of clause)
                [85 FR 19692, Apr. 8, 2020]

                252.204-7003
                Control of government personnel work product.
                As prescribed in 204.404-70(b), use the following clause:

                  Control of Government Personnel Work Product (APR 1992)
                  The Contractor's procedures for protecting against unauthorized disclosure of information shall not require Department of Defense employees or members of the Armed Forces to relinquish control of their work products, whether classified or not, to the contractor.

                (End of clause)
                [57 FR 14996, Apr. 23, 1992]

                252.204-7004
                Antiterrorism Awareness Training for Contractors.
                As prescribed in 204.7203, use the following clause:

                  Level I Antiterrorism Awareness Training for Contractors (FEB 2019)
                  (a) Definition. As used in this clause—

                    Military installation means a base, camp, post, station, yard, center, or other activity under the jurisdiction of the Secretary of a military department or, in the case of an activity in a foreign country, under the operational control of the Secretary of a military department or the Secretary of Defense (see 10 U.S.C. 2801(c)(4)).
                  (b) Training. Contractor personnel who require routine physical access to a Federally-controlled facility or military installation shall complete Level I antiterrorism awareness training within 30 days of requiring access and annually thereafter. In accordance with Department of Defense Instruction O-2000.16 Volume 1, DoD Antiterrorism (AT) Program Implementation: DoD AT Standards, Level I antiterrorism awareness training shall be completed—
                  (1) Through a DoD-sponsored and certified computer or web-based distance learning instruction for Level I antiterrorism awareness; or
                  (2) Under the instruction of a Level I antiterrorism awareness instructor.
                  (c) Additional information. Information and guidance pertaining to DoD antiterrorism awareness training is available at https://jko.jten.mil/ or as otherwise identified in the performance work statement.
                  (d) Subcontracts. The Contractor shall include the substance of this clause, including this paragraph (d), in subcontracts, including subcontracts for commercial items, when subcontractor performance requires routine physical access to a Federally-controlled facility or military installation.

                (End of clause)
                [84 FR 4364, Feb. 15, 2019]

                252.204-7005
                [Reserved]

                252.204-7006
                Billing instructions.
                As prescribed in 204.7109(b), use the following clause:

                  Billing Instructions (OCT 2005)
                  When submitting a request for payment, the Contractor shall—
                  (a) Identify the contract line item(s) on the payment request that reasonably reflect contract work performance; and
                  (b) Separately identify a payment amount for each contract line item included in the payment request.

                (End of clause)
                [70 FR 58983, Oct. 11, 2005, as amended at 85 FR 19692, Apr. 8, 2020]

                252.204-7007
                Alternate A, Annual Representations and Certifications.
                As prescribed in 204.1202, use the following provision:

                  Alternate A, Annual Representations and Certifications (APR 2020)
                  Substitute the following paragraphs (b), (d), and (e) for paragraphs (b) and (d) of the provision at FAR 52.204-8:
                  (b)(1) If the provision at FAR 52.204-7, System for Award Management, is included in this solicitation, paragraph (e) of this provision applies.
                  (2) If the provision at FAR 52.204-7, System for Award Management, is not included in this solicitation, and the Offeror has an active registration in the System for Award Management (SAM), the Offeror may choose to use paragraph (e) of this provision instead of completing the corresponding individual representations and certifications in the solicitation. The Offeror shall indicate which option applies by checking one of the following boxes:
                  __ (i) Paragraph (e) applies.
                  __ (ii) Paragraph (e) does not apply and the Offeror has completed the individual representations and certifications in the solicitation.
                  (d)(1) The following representations or certifications in the SAM database are applicable to this solicitation as indicated:
                  (i) 252.204-7016, Covered Defense Telecommunications Equipment or Services—Representation. Applies to all solicitations.
                  (ii) 252.209-7003, Reserve Officer Training Corps and Military Recruiting on Campus—Representation. Applies to all solicitations with institutions of higher education.

                  (iii) 252.216-7008, Economic Price Adjustment—Wage Rates or Material Prices Controlled by a Foreign Government. Applies to solicitations for fixed-price supply and service contracts when the contract is to be performed wholly or in part in a foreign country, and a foreign government controls wage rates or material prices and may during contract performance impose a mandatory change in wages or prices of materials.
                  (iv) 252.225-7042, Authorization to Perform. Applies to all solicitations when performance will be wholly or in part in a foreign country.
                  (v) 252.225-7049, Prohibition on Acquisition of Certain Foreign Commercial Satellite Services—Representations. Applies to solicitations for the acquisition of commercial satellite services.
                  (vi) 252.225-7050, Disclosure of Ownership or Control by the Government of a Country that is a State Sponsor of Terrorism. Applies to all solicitations expected to result in contracts of $150,000 or more.
                  (vii) 252.229-7012, Tax Exemptions (Italy)—Representation. Applies to solicitations when contract performance will be in Italy.
                  (viii) 252.229-7013, Tax Exemptions (Spain)—Representation. Applies to solicitations when contract performance will be in Spain.
                  (ix) 252.247-7022, Representation of Extent of Transportation by Sea. Applies to all solicitations except those for direct purchase of ocean transportation services or those with an anticipated value at or below the simplified acquisition threshold.

                  (2) The following representations or certifications in SAM are applicable to this solicitation as indicated by the Contracting Officer: [Contracting Officer check as appropriate.]

                  __(i) 252.209-7002, Disclosure of Ownership or Control by a Foreign Government.
                  __(ii) 252.225-7000, Buy American—Balance of Payments Program Certificate.
                  __(iii) 252.225-7020, Trade Agreements Certificate.
                  __Use with Alternate I.
                  __(iv) 252.225-7031, Secondary Arab Boycott of Israel.
                  __(v) 252.225-7035, Buy American—Free Trade Agreements—Balance of Payments Program Certificate.
                  __Use with Alternate I.
                  __Use with Alternate II.
                  __Use with Alternate III.
                  __Use with Alternate IV.
                  __Use with Alternate V.
                  __ (vi) 252.226-7002, Representation for Demonstration Project for Contractors Employing Persons with Disabilities.
                  __ (vii) 252.232-7015, Performance-Based Payments—Representation.

                  (e) The offeror has completed the annual representations and certifications electronically via the SAM Web site at https://www.acquisition.gov/. After reviewing the ORCA database information, the offeror verifies by submission of the offer that the representations and certifications currently posted electronically that apply to this solicitation as indicated in FAR 52.204-8(c) and paragraph (d) of this provision have been entered or updated within the last 12 months, are current, accurate, complete, and applicable to this solicitation (including the business size standard applicable to the NAICS code referenced for this solicitation), as of the date of this offer, and are incorporated in this offer by reference (see FAR 4.1201); except for the changes identified below [offeror to insert changes, identifying change by provision number, title, date]. Any changes provided by the offeror are applicable to this solicitation only, and do not result in an update to the representations and certifications located in the SAM database.

                      FAR/DFARS provision No.
                      Title
                      Date
                      Change

                  Any changes provided by the offeror are applicable to this solicitation only, and do not result in an update to the representations and certifications posted on ORCA.

                (End of provision)
                [76 FR 58141, Sept. 20, 2011, as amended at 76 FR 71464, Nov. 18, 2011; 77 FR 19130, Mar. 30, 2012; 77 FR 30357, May 22, 2012; 77 FR 35881, June 15, 2012; 77 FR 43470, July 24, 2012; 78 FR 28758, May 16, 2013; 78 FR 30232, May 22, 2013; 79 FR 17446, Mar. 28, 2014; 79 FR 45664, Aug. 5, 2014; 79 FR 73490, Dec. 11, 2014; 80 FR 5001, Jan. 29, 2015; 83 FR 66073, Dec. 21, 2018; 84 FR 12140, Apr. 1, 2019; 84 FR 30947, June 28, 2019; 84 FR 72237, 72560, Dec. 31, 2019; 85 FR 19688, Apr. 8, 2020]

                252.204-7008
                Compliance with safeguarding covered defense information controls.
                As prescribed in 204.7304(a), use the following provision:

                  Compliance With Safeguarding Covered Defense Information Controls (OCT 2016)
                  (a) Definitions. As used in this provision—

                    Controlled technical information, covered contractor information system,
                    covered defense information, cyber incident,
                    information system, and technical information are defined in clause 252.204-7012, Safeguarding Covered Defense Information and Cyber Incident Reporting.

                  (b) The security requirements required by contract clause 252.204-7012, shall be implemented for all covered defense information on all covered contractor information systems that support the performance of this contract.
                  (c) For covered contractor information systems that are not part of an information technology service or system operated on behalf of the Government (see 252.204-7012(b)(2))—

                  (1) By submission of this offer, the Offeror represents that it will implement the security requirements specified by National Institute of Standards and Technology (NIST) Special Publication (SP) 800-171, “Protecting Controlled Unclassified Information in Nonfederal Information Systems and Organizations” (see http://dx.doi.org/10.6028/NIST.SP.800-171)that are in effect at the time the solicitation is issued or as authorized by the contracting officer, not later than December 31, 2017.
                  (2)(i) If the Offeror proposes to vary from any of the security requirements specified by NIST SP 800-171 that are in effect at the time the solicitation is issued or as authorized by the Contracting Officer, the Offeror shall submit to the Contracting Officer, for consideration by the DoD Chief Information Officer (CIO), a written explanation of—
                  (A) Why a particular security requirement is not applicable; or
                  (B) How an alternative but equally effective, security measure is used to compensate for the inability to satisfy a particular requirement and achieve equivalent protection.
                  (ii) An authorized representative of the DoD CIO will adjudicate offeror requests to vary from NIST SP 800-171 requirements in writing prior to contract award. Any accepted variance from NIST SP 800-171 shall be incorporated into the resulting contract.

                (End of provision)
                [80 FR 51744, Aug. 26, 2015, as amended at 80 FR 81473, Dec. 30, 2015; 81 FR 72999, Oct. 21, 2016]

                252.204-7009
                Limitations on the use or disclosure of third-party contractor reported cyber incident information.
                As prescribed in 204.7304(b), use the following clause:

                  Limitations on the Use or Disclosure of Third-Party Contractor Reported Cyber Incident Information (OCT 2016)
                  (a) Definitions. As used in this clause—

                    Compromise means disclosure of information to unauthorized persons, or a violation of the security policy of a system, in which unauthorized intentional or unintentional disclosure, modification, destruction, or loss of an object, or the copying of information to unauthorized media may have occurred.

                    Controlled technical information means technical information with military or space application that is subject to controls on the access, use, reproduction, modification, performance, display, release, disclosure, or dissemination. Controlled technical information would meet the criteria, if disseminated, for distribution statements B through F using the criteria set forth in DoD Instruction 5230.24, Distribution Statements on Technical Documents. The term does not include information that is lawfully publicly available without restrictions.

                    Covered defense information means unclassified controlled technical information or other information (as described in the Controlled Unclassified Information (CUI) Registry at http://www.archives.gov/cui/registry/category-list.html) that requires safeguarding or dissemination controls pursuant to and consistent with law, regulations, and Governmentwide policies, and is—
                  (1) Marked or otherwise identified in the contract, task order, or delivery order and provided to the contractor by or on behalf of DoD in support of the performance of the contract; or
                  (2) Collected, developed, received, transmitted, used, or stored by or on behalf of the contractor in support of the performance of the contract.

                    Cyber incident means actions taken through the use of computer networks that result in a compromise or an actual or potentially adverse effect on an information system and/or the information residing therein.

                    Information system means a discrete set of information resources organized for the collection, processing, maintenance, use, sharing, dissemination, or disposition of information.

                    Media means physical devices or writing surfaces including, but is not limited to, magnetic tapes, optical disks, magnetic disks, large-scale integration memory chips, and printouts onto which covered defense information is recorded, stored, or printed within a covered contractor information system.

                    Technical information means technical data or computer software, as those terms are defined in the clause at DFARS 252.227-7013, Rights in Technical Data—Noncommercial Items, regardless of whether or not the clause is incorporated in this solicitation or contract. Examples of technical information include research and engineering data, engineering drawings, and associated lists, specifications, standards, process sheets, manuals, technical reports, technical orders, catalog-item identifications, data sets, studies and analyses and related information, and computer software executable code and source code.
                  (b) Restrictions. The Contractor agrees that the following conditions apply to any information it receives or creates in the performance of this contract that is information obtained from a third-party's reporting of a cyber incident pursuant to DFARS clause 252.204-7012, Safeguarding Covered Defense Information and Cyber Incident Reporting (or derived from such information obtained under that clause):
                  (1) The Contractor shall access and use the information only for the purpose of furnishing advice or technical assistance directly to the Government in support of the Government's activities related to clause 252.204-7012, and shall not be used for any other purpose.
                  (2) The Contractor shall protect the information against unauthorized release or disclosure.
                  (3) The Contractor shall ensure that its employees are subject to use and non-disclosure obligations consistent with this clause prior to the employees being provided access to or use of the information.
                  (4) The third-party contractor that reported the cyber incident is a third-party beneficiary of the non-disclosure agreement between the Government and Contractor, as required by paragraph (b)(3) of this clause.
                  (5) A breach of these obligations or restrictions may subject the Contractor to—
                  (i) Criminal, civil, administrative, and contractual actions in law and equity for penalties, damages, and other appropriate remedies by the United States; and
                  (ii) Civil actions for damages and other appropriate remedies by the third party that reported the cyber incident, as a third party beneficiary of this clause.
                  (c) Subcontracts. The Contractor shall include this clause, including this paragraph (c), in subcontracts, or similar contractual instruments, for services that include support for the Government's activities related to safeguarding covered defense information and cyber incident reporting, including subcontracts for commercial items, without alteration, except to identify the parties.

                (End of clause)
                [80 FR 51745, Aug. 26, 2015, as amended at 80 FR 81474, Dec. 30, 2015; 81 FR 73000, Oct. 21, 2016]

                252.204-7010
                Requirement for Contractor To Notify DoD if the Contractor's Activities are Subject to Reporting Under the U.S.-International Atomic Energy Agency Additional Protocol.
                As prescribed in 204.470-3, use the following clause:

                  Requirement for Contractor To Notify DoD if the Contractor's Activities Are Subject to Reporting Under the U.S.-International Atomic Energy Agency Additional Protocol (JAN 2009)

                  (a) If the Contractor is required to report any of its activities in accordance with Department of Commerce regulations (15 CFR part 781 et seq.) or Nuclear Regulatory Commission regulations (10 CFR part 75) in order to implement the declarations required by the U.S.-International Atomic Energy Agency Additional Protocol (U.S.-IAEA AP), the Contractor shall—
                  (1) Immediately provide written notification to the following DoD Program Manager:

                    [Contracting Officer to insert Program Manager's name, mailing address, e-mail address, telephone number, and facsimile number];

                  (2) Include in the notification—
                  (i) Where DoD contract activities or information are located relative to the activities or information to be declared to the Department of Commerce or the Nuclear Regulatory Commission; and
                  (ii) If or when any current or former DoD contract activities and the activities to be declared to the Department of Commerce or the Nuclear Regulatory Commission have been or will be co-located or located near enough to one another to result in disclosure of the DoD activities during an IAEA inspection or visit; and
                  (3) Provide a copy of the notification to the Contracting Officer.
                  (b) After receipt of a notification submitted in accordance with paragraph (a) of this clause, the DoD Program Manager will—
                  (1) Conduct a security assessment to determine if and by what means access may be granted to the IAEA; or
                  (2) Provide written justification to the component or agency treaty office for a national security exclusion, in accordance with DoD Instruction 2060.03, Application of the National Security Exclusion to the Agreements Between the United States of America and the International Atomic Energy Agency for the Application of Safeguards in the United States of America. DoD will notify the Contractor if a national security exclusion is applied at the Contractor's location to prohibit access by the IAEA.
                  (c) If the DoD Program Manager determines that a security assessment is required—
                  (1) DoD will, at a minimum—
                  (i) Notify the Contractor that DoD officials intend to conduct an assessment of vulnerabilities to IAEA inspections or visits;
                  (ii) Notify the Contractor of the time at which the assessment will be conducted, at least 30 days prior to the assessment;

                  (iii) Provide the Contractor with advance notice of the credentials of the DoD officials who will conduct the assessment; and

                  (iv) To the maximum extent practicable, conduct the assessment in a manner that does not impede or delay operations at the Contractor's facility; and
                  (2) The Contractor shall provide access to the site and shall cooperate with DoD officials in the assessment of vulnerabilities to IAEA inspections or visits.
                  (d) Following a security assessment of the Contractor's facility, DoD officials will notify the Contractor as to—
                  (1) Whether the Contractor's facility has any vulnerabilities where potentially declarable activities under the U.S.-IAEA AP are taking place;
                  (2) Whether additional security measures are needed; and
                  (3) Whether DoD will apply a national security exclusion.
                  (e) If DoD applies a national security exclusion, the Contractor shall not grant access to IAEA inspectors.
                  (f) If DoD does not apply a national security exclusion, the Contractor shall apply managed access to prevent disclosure of program activities, locations, or information in the U.S. declaration.
                  (g) The Contractor shall not delay submission of any reports required by the Department of Commerce or the Nuclear Regulatory Commission while awaiting a DoD response to a notification provided in accordance with this clause.
                  (h) The Contractor shall incorporate the substance of this clause, including this paragraph (h), in all subcontracts that are subject to the provisions of the U.S.-IAEA AP.

                (End of clause)
                [74 FR 2412, Jan. 15, 2009]

                252.204-7011
                [Reserved]

                252.204-7012
                Safeguarding covered defense information and cyber incident reporting.
                As prescribed in 204.7304c, use the following clause:

                  Safeguarding Covered Defense Information and Cyber Incident Reporting (DEC 2019)
                  (a) Definitions. As used in this clause—

                    Adequate security means protective measures that are commensurate with the consequences and probability of loss, misuse, or unauthorized access to, or modification of information.

                    Compromise means disclosure of information to unauthorized persons, or a violation of the security policy of a system, in which unauthorized intentional or unintentional disclosure, modification, destruction, or loss of an object, or the copying of information to unauthorized media may have occurred.

                    Contractor attributional/proprietary information means information that identifies the contractor(s), whether directly or indirectly, by the grouping of information that can be traced back to the contractor(s) (e.g., program description, facility locations), personally identifiable information, as well as trade secrets, commercial or financial information, or other commercially sensitive information that is not customarily shared outside of the company.

                    Controlled technical information means technical information with military or space application that is subject to controls on the access, use, reproduction, modification, performance, display, release, disclosure, or dissemination. Controlled technical information would meet the criteria, if disseminated, for distribution statements B through F using the criteria set forth in DoD Instruction 5230.24, Distribution Statements on Technical Documents. The term does not include information that is lawfully publicly available without restrictions.

                    Covered contractor information system means an unclassified information system that is owned, or operated by or for, a contractor and that processes, stores, or transmits covered defense information.

                    Covered defense information means unclassified controlled technical information or other information, as described in the Controlled Unclassified Information (CUI) Registry at http://www.archives.gov/cui/registry/category-list.html, that requires safeguarding or dissemination controls pursuant to and consistent with law, regulations, and Governmentwide policies, and is—
                  (1) Marked or otherwise identified in the contract, task order, or delivery order and provided to the contractor by or on behalf of DoD in support of the performance of the contract; or
                  (2) Collected, developed, received, transmitted, used, or stored by or on behalf of the contractor in support of the performance of the contract.

                    Cyber incident means actions taken through the use of computer networks that result in a compromise or an actual or potentially adverse effect on an information system and/or the information residing therein.

                    Forensic analysis means the practice of gathering, retaining, and analyzing computer-related data for investigative purposes in a manner that maintains the integrity of the data.

                    Information system means a discrete set of information resources organized for the collection, processing, maintenance, use, sharing, dissemination, or disposition of information.

                    Malicious software means computer software or firmware intended to perform an unauthorized process that will have adverse impact on the confidentiality, integrity, or availability of an information system. This definition includes a virus, worm, Trojan horse, or other code-based entity that infects a host, as well as spyware and some forms of adware.

                    Media means physical devices or writing surfaces including, but is not limited to, magnetic tapes, optical disks, magnetic disks, large-scale integration memory chips, and printouts onto which covered defense information is recorded, stored, or printed within a covered contractor information system.

                    Operationally critical support means supplies or services designated by the Government as critical for airlift, sealift, intermodal transportation services, or logistical support that is essential to the mobilization, deployment, or sustainment of the Armed Forces in a contingency operation.

                    Rapidly report means within 72 hours of discovery of any cyber incident.

                    Technical information means technical data or computer software, as those terms are defined in the clause at DFARS 252.227-7013, Rights in Technical Data—Noncommercial Items, regardless of whether or not the clause is incorporated in this solicitation or contract. Examples of technical information include research and engineering data, engineering drawings, and associated lists, specifications, standards, process sheets, manuals, technical reports, technical orders, catalog-item identifications, data sets, studies and analyses and related information, and computer software executable code and source code.
                  (b) Adequate security. The Contractor shall provide adequate security on all covered contractor information systems. To provide adequate security, the Contractor shall implement, at a minimum, the following information security protections:
                  (1) For covered contractor information systems that are part of an information technology (IT) service or system operated on behalf of the Government, the following security requirements apply:
                  (i) Cloud computing services shall be subject to the security requirements specified in the clause 252.239-7010, Cloud Computing Services, of this contract.
                  (ii) Any other such IT service or system (i.e., other than cloud computing) shall be subject to the security requirements specified elsewhere in this contract.
                  (2) For covered contractor information systems that are not part of an IT service or system operated on behalf of the Government and therefore are not subject to the security requirement specified at paragraph (b)(1) of this clause, the following security requirements apply:

                  (i) Except as provided in paragraph (b)(2)(ii) of this clause, the covered contractor information system shall be subject to the security requirements in National Institute of Standards and Technology (NIST) Special Publication (SP) 800-171, “Protecting Controlled Unclassified Information in Nonfederal Information Systems and Organizations” (available via the internet at http://dx.doi.org/10.6028/NIST.SP.800-171) in effect at the time the solicitation is issued or as authorized by the Contracting Officer.

                  (ii)(A) The Contractor shall implement NIST SP 800-171, as soon as practical, but not later than December 31, 2017. For all contracts awarded prior to October 1, 2017, the Contractor shall notify the DoD Chief Information Officer (CIO), via email at osd.dibcsia@mail.mil, within 30 days of contract award, of any security requirements specified by NIST SP 800-171 not implemented at the time of contract award.
                  (B) The Contractor shall submit requests to vary from NIST SP 800-171 in writing to the Contracting Officer, for consideration by the DoD CIO. The Contractor need not implement any security requirement adjudicated by an authorized representative of the DoD CIO to be nonapplicable or to have an alternative, but equally effective, security measure that may be implemented in its place.
                  (C) If the DoD CIO has previously adjudicated the contractor's requests indicating that a requirement is not applicable or that an alternative security measure is equally effective, a copy of that approval shall be provided to the Contracting Officer when requesting its recognition under this contract.

                  (D) If the Contractor intends to use an external cloud service provider to store, process, or transmit any covered defense information in performance of this contract, the Contractor shall require and ensure that the cloud service provider meets security requirements equivalent to those established by the Government for the Federal Risk and Authorization Management Program (FedRAMP) Moderate baseline (https://www.fedramp.gov/resources/documents/) and that the cloud service provider complies with requirements in paragraphs (c) through (g) of this clause for cyber incident reporting, malicious software, media preservation and protection, access to additional information and equipment necessary for forensic analysis, and cyber incident damage assessment.

                  (3) Apply other information systems security measures when the Contractor reasonably determines that information systems security measures, in addition to those identified in paragraphs (b)(1) and (2) of this clause, may be required to provide adequate security in a dynamic environment or to accommodate special circumstances (e.g., medical devices) and any individual, isolated, or temporary deficiencies based on an assessed risk or vulnerability. These measures may be addressed in a system security plan.
                  (c) Cyber incident reporting requirement.

                  (1) When the Contractor discovers a cyber incident that affects a covered contractor information system or the covered defense information residing therein, or that affects the contractor's ability to perform the requirements of the contract that are designated as operationally critical support and identified in the contract, the Contractor shall—
                  (i) Conduct a review for evidence of compromise of covered defense information, including, but not limited to, identifying compromised computers, servers, specific data, and user accounts. This review shall also include analyzing covered contractor information system(s) that were part of the cyber incident, as well as other information systems on the Contractor's network(s), that may have been accessed as a result of the incident in order to identify compromised covered defense information, or that affect the Contractor's ability to provide operationally critical support; and
                  (ii) Rapidly report cyber incidents to DoD at  https://dibnet.dod.mil.

                  (2) Cyber incident report. The cyber incident report shall be treated as information created by or for DoD and shall include, at a minimum, the required elements at https://dibnet.dod.mil.

                  (3) Medium assurance certificate requirement. In order to report cyber incidents in accordance with this clause, the Contractor or subcontractor shall have or acquire a DoD-approved medium assurance certificate to report cyber incidents. For information on obtaining a DoD-approved medium assurance certificate, see https://public.cyber.mil/eca/.
                  (d) Malicious software. When the Contractor or subcontractors discover and isolate malicious software in connection with a reported cyber incident, submit the malicious software to DoD Cyber Crime Center (DC3) in accordance with instructions provided by DC3 or the Contracting Officer. Do not send the malicious software to the Contracting Officer.
                  (e) Media preservation and protection. When a Contractor discovers a cyber incident has occurred, the Contractor shall preserve and protect images of all known affected information systems identified in paragraph (c)(1)(i) of this clause and all relevant monitoring/packet capture data for at least 90 days from the submission of the cyber incident report to allow DoD to request the media or decline interest.
                  (f) Access to additional information or equipment necessary for forensic analysis. Upon request by DoD, the Contractor shall provide DoD with access to additional information or equipment that is necessary to conduct a forensic analysis.
                  (g) Cyber incident damage assessment activities. If DoD elects to conduct a damage assessment, the Contracting Officer will request that the Contractor provide all of the damage assessment information gathered in accordance with paragraph (e) of this clause.
                  (h) DoD safeguarding and use of contractor attributional/proprietary information. The Government shall protect against the unauthorized use or release of information obtained from the contractor (or derived from information obtained from the contractor) under this clause that includes contractor attributional/proprietary information, including such information submitted in accordance with paragraph (c). To the maximum extent practicable, the Contractor shall identify and mark attributional/proprietary information. In making an authorized release of such information, the Government will implement appropriate procedures to minimize the contractor attributional/proprietary information that is included in such authorized release, seeking to include only that information that is necessary for the authorized purpose(s) for which the information is being released.
                  (i) Use and release of contractor attributional/proprietary information not created by or for DoD. Information that is obtained from the contractor (or derived from information obtained from the contractor) under this clause that is not created by or for DoD is authorized to be released outside of DoD—
                  (1) To entities with missions that may be affected by such information;
                  (2) To entities that may be called upon to assist in the diagnosis, detection, or mitigation of cyber incidents;
                  (3) To Government entities that conduct counterintelligence or law enforcement investigations;
                  (4) For national security purposes, including cyber situational awareness and defense purposes (including with Defense Industrial Base (DIB) participants in the program at 32 CFR part 236); or
                  (5) To a support services contractor (“recipient”) that is directly supporting Government activities under a contract that includes the clause at 252.204-7009, Limitations on the Use or Disclosure of Third-Party Contractor Reported Cyber Incident Information.
                  (j) Use and release of contractor attributional/proprietary information created by or for DoD. Information that is obtained from the contractor (or derived from information obtained from the contractor) under this clause that is created by or for DoD (including the information submitted pursuant to paragraph (c) of this clause) is authorized to be used and released outside of DoD for purposes and activities authorized by paragraph (i) of this clause, and for any other lawful Government purpose or activity, subject to all applicable statutory, regulatory, and policy based restrictions on the Government's use and release of such information.

                  (k) The Contractor shall conduct activities under this clause in accordance with applicable laws and regulations on the interception, monitoring, access, use, and disclosure of electronic communications and data.
                  (l) Other safeguarding or reporting requirements. The safeguarding and cyber incident reporting required by this clause in no way abrogates the Contractor's responsibility for other safeguarding or cyber incident reporting pertaining to its unclassified information systems as required by other applicable clauses of this contract, or as a result of other applicable U.S. Government statutory or regulatory requirements.
                  (m) Subcontracts. The Contractor shall—
                  (1) Include this clause, including this paragraph (m), in subcontracts, or similar contractual instruments, for operationally critical support, or for which subcontract performance will involve covered defense information, including subcontracts for commercial items, without alteration, except to identify the parties. The Contractor shall determine if the information required for subcontractor performance retains its identity as covered defense information and will require protection under this clause, and, if necessary, consult with the Contracting Officer; and
                  (2) Require subcontractors to—
                  (i) Notify the prime Contractor (or next higher-tier subcontractor) when submitting a request to vary from a NIST SP 800-171 security requirement to the Contracting Officer, in accordance with paragraph (b)(2)(ii)(B) of this clause; and
                  (ii) Provide the incident report number, automatically assigned by DoD, to the prime Contractor (or next higher-tier subcontractor) as soon as practicable, when reporting a cyber incident to DoD as required in paragraph (c) of this clause.

                (End of clause)
                [80 FR 51745, Aug. 26, 2015, as amended at 80 FR 56930, Sept. 21, 2015; 80 FR 81474, Dec. 30, 2015; 81 FR 73000, Oct. 21, 2016; 84 FR 72563, Dec. 31, 2019]

                252.204-7013
                [Reserved]

                252.204-7014
                Limitations on the Use or Disclosure of Information by Litigation Support Contractors.
                As prescribed in 204.7403(a), use the following clause:

                  Limitations on the Use or Disclosure of Information by Litigation Support Contractors (MAY 2016)
                  (a) Definitions. As used in this clause—

                    Computer software means computer programs, source code, source code listings, object code listings, design details, algorithms, processes, flow charts, formulae, and related material that would enable the software to be reproduced, recreated, or recompiled. Computer software does not include computer data bases or computer software documentation.

                    Litigation information means any information, including sensitive information, that is furnished to the contractor by or on behalf of the Government, or that is generated or obtained by the contractor in the performance of litigation support under a contract. The term does not include information that is lawfully, publicly available without restriction, including information contained in a publicly available solicitation.

                    Litigation support means administrative, technical, or professional services provided in support of the Government during or in anticipation of litigation.

                    Litigation support contractor means a contractor (including its experts, technical consultants, subcontractors, and suppliers) providing litigation support under a contract that contains this clause.

                    Sensitive information means controlled unclassified information of a commercial, financial, proprietary, or privileged nature. The term includes technical data and computer software, but does not include information that is lawfully, publicly available without restriction.

                    Technical data means recorded information, regardless of the form or method of the recording, of a scientific or technical nature (including computer software documentation). The term does not include computer software or data incidental to contract administration, such as financial and/or management information.
                  (b) Limitations on use or disclosure of litigation information. Notwithstanding any other provision of this contract, the Contractor shall—
                  (1) Access and use litigation information only for the purpose of providing litigation support under this contract;
                  (2) Not disclose litigation information to any entity outside the Contractor's organization unless, prior to such disclosure the Contracting Officer has provided written consent to such disclosure;
                  (3) Take all precautions necessary to prevent unauthorized disclosure of litigation information;
                  (4) Not use litigation information to compete against a third party for Government or nongovernment contracts; and
                  (5) Upon completion of the authorized litigation support activities, destroy or return to the Government at the request of the Contracting Officer all litigation information in its possession.

                  (c) Violation of paragraph (b)(1),(b)(2), (b)(3), (b)(4), or (b)(5) of this clause is a basis for the Government to terminate this contract.

                  (d) Indemnification and creation of third party beneficiary rights. The Contractor agrees—
                  (1) To indemnify and hold harmless the Government, its agents, and employees from any claim or liability, including attorneys' fees, court costs, and expenses, arising out of, or in any way related to, the misuse or unauthorized modification, reproduction, release, performance, display, or disclosure of any litigation information; and
                  (2) That any third party holding proprietary rights or any other legally protectable interest in any litigation information, in addition to any other rights it may have, is a third party beneficiary under this contract who shall have a right of direct action against the Contractor, and against any person to whom the Contractor has released or disclosed such litigation information, for any such unauthorized use or disclosure of such information.
                  (e) Contractor
                    employees. The Contractor shall ensure that its employees are subject to use and nondisclosure obligations consistent with this clause prior to the employees being provided access to or use of any litigation information covered by this clause.
                  (f) Flowdown. Include the substance of this clause, including this paragraph (f), in all subcontracts, including subcontracts for commercial items.

                (End of clause)
                [79 FR 11340, Feb. 28, 2014, as amended at 81 FR 28729, May 10, 2016; 84 FR 58332, Oct. 31, 2019]

                252.204-7015
                Notice of Authorized Disclosure of Information for Litigation Support.
                As prescribed in 204.7403(b), use the following clause:

                  Notice of Authorized Disclosure of Information for Litigation Support (MAY 2016)
                  (a) Definitions. As used in this clause—

                    Computer software means computer programs, source code, source code listings, object code listings, design details, algorithms, processes, flow charts, formulae, and related material that would enable the software to be reproduced, recreated, or recompiled. Computer software does not include computer data bases or computer software documentation.

                    Litigation support means administrative, technical, or professional services provided in support of the Government during or in anticipation of litigation.

                    Litigation support contractor means a contractor (including its experts, technical consultants, subcontractors, and suppliers) providing litigation support under a contract that contains the clause at 252.204-7014, Limitations on the Use or Disclosure of Information by Litigation Support Contractors.

                    Sensitive information means controlled unclassified information of a commercial, financial, proprietary, or privileged nature. The term includes technical data and computer software, but does not include information that is lawfully, publicly available without restriction.

                    Technical data means recorded information, regardless of the form or method of the recording, of a scientific or technical nature (including computer software documentation). The term does not include computer software or data incidental to contract administration, such as financial and/or management information.
                  (b) Notice of authorized disclosures Notwithstanding any other provision of this solicitation or contract, the Government may disclose to a litigation support contractor, for the sole purpose of litigation support activities, any information, including sensitive information, received—
                  (1) Within or in connection with a quotation or offer; or
                  (2) In the performance of or in connection with a contract.
                  (c) Flowdown. Include the substance of this clause, including this paragraph (c), in all subcontracts, including subcontracts for commercial items.

                (End of clause)
                [79 FR 11341, Feb. 28, 2014, as amended at 81 FR 28729, May 10, 2016; 84 FR 58332, Oct. 31, 2019]

                252.204-7016
                Covered Defense Telecommunications Equipment or Services—Representation.
                As prescribed in 204.2105(a), use the following provision:

                  Covered Defense Telecommunications Equipment or Services—Representation (DEC 2019)
                  (a) Definitions. As used in this provision, covered defense telecommunications equipment or services has the meaning provided in the clause 252.204-7018, Prohibition on the Acquisition of Covered Defense Telecommunications Equipment or Services.
                  (b) Procedures. The Offeror shall review the list of excluded parties in the System for Award Management (SAM) (https://www.sam.gov) for entities excluded from receiving federal awards for “covered defense telecommunications equipment or services”.
                  (c) Representation. The Offeror represents that it [ ] does, [ ] does not provide covered defense telecommunications equipment or services as a part of its offered products or services to the Government in the performance of any contract, subcontract, or other contractual instrument.

                (End of provision)
                [84 FR 72237, Dec. 31, 2019]

                252.204-7017
                Prohibition on the Acquisition of Covered Defense Telecommunications Equipment or Services—Representation.
                As prescribed in 204.2105(b), use the following provision:

                  Prohibition on the Acquisiton of Covered Defense Telecommunications Equipment or Services—Representation (DEC 2019)
                  The Offeror is not required to complete the representation in this provision if the Offeror has represented in the provision at 252.204-7016, Covered Defense Telecommunications Equipment or Services—Representation, that it “does not provide covered defense telecommunications equipment or services as a part of its offered products or services to the Government in the performance of any contract, subcontract, or other contractual instrument.”
                  (a) Definitions. Covered defense telecommunications equipment or services, covered mission, critical technology, and substantial or essential component, as used in this provision, have the meanings given in the 252.204-7018 clause, Prohibition on the Acquisition of Covered Defense Telecommunications Equipment or Services, of this solicitation.
                  (b) Prohibition. Section 1656 of the National Defense Authorization Act for Fiscal Year 2018 (Pub. L. 115-91) prohibits agencies from procuring or obtaining, or extending or renewing a contract to procure or obtain, any equipment, system, or service to carry out covered missions that uses covered defense telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system.
                  (c) Procedures. The Offeror shall review the list of excluded parties in the System for Award Management (SAM) at https://www.sam.gov for entities that are excluded when providing any equipment, system, or service to carry out covered missions that uses covered defense telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system, unless a waiver is granted.
                  (d) Representation. If in its annual representations and certifications in SAM the Offeror has represented in paragraph (c) of the provision at 252.204-7016, Covered Defense Telecommunications Equipment or Services—Representation, that it “does” provide covered defense telecommunications equipment or services as a part of its offered products or services to the Government in the performance of any contract, subcontract, or other contractual instrument, then the Offeror shall complete the following additional representation:
                  The Offeror represents that it [ ] will [ ] will not provide covered defense telecommunications equipment or services as a part of its offered products or services to DoD in the performance of any award resulting from this solicitation.
                  (e) Disclosures. If the Offeror has represented in paragraph (d) of this provision that it “will provide covered defense telecommunications equipment or services,” the Offeror shall provide the following information as part of the offer:
                  (1) A description of all covered defense telecommunications equipment and services offered (include brand or manufacturer; product, such as model number, original equipment manufacturer (OEM) number, manufacturer part number, or wholesaler number; and item description, as applicable).
                  (2) An explanation of the proposed use of covered defense telecommunications equipment and services and any factors relevant to determining if such use would be permissible under the prohibition referenced in paragraph (b) of this provision.
                  (3) For services, the entity providing the covered defense telecommunications services (include entity name, unique entity identifier, and Commercial and Government Entity (CAGE) code, if known).
                  (4) For equipment, the entity that produced or provided the covered defense telecommunications equipment (include entity name, unique entity identifier, CAGE code, and whether the entity was the OEM or a distributor, if known).

                (End of provision)
                [84 FR 72237, Dec. 31, 2019]

                252.204-7018
                Prohibition on the Acquisition of Covered Defense Telecommunications Equipment or Services.
                As prescribed in 204.2105(c), use the following clause:

                  Prohibition on the Acquisition of Covered Defense Telecommunications Equipment or Services (DEC 2019)
                  (a) Definitions. As used in this clause—

                    Covered defense telecommunications equipment or services means—
                  (1) Telecommunications equipment produced by Huawei Technologies Company or ZTE Corporation, or any subsidiary or affiliate of such entities;

                  (2) Telecommunications services provided by such entities or using such equipment; or

                  (3) Telecommunications equipment or services produced or provided by an entity that the Secretary of Defense reasonably believes to be an entity owned or controlled by, or otherwise connected to, the government of a covered foreign country.

                    Covered foreign country means—
                  (1) The People's Republic of China; or
                  (2) The Russian Federation.

                    Covered missions means—
                  (1) The nuclear deterrence mission of DoD, including with respect to nuclear command, control, and communications, integrated tactical warning and attack assessment, and continuity of Government; or
                  (2) The homeland defense mission of DoD, including with respect to ballistic missile defense.
                  “Critical technology” means—
                  (1) Defense articles or defense services included on the United States Munitions List set forth in the International Traffic in Arms Regulations under subchapter M of chapter I of title 22, Code of Federal Regulations;
                  (2) Items included on the Commerce Control List set forth in Supplement No. 1 to part 774 of the Export Administration Regulations under subchapter C of chapter VII of title 15, Code of Federal Regulations, and controlled—
                  (i) Pursuant to multilateral regimes, including for reasons relating to national security, chemical and biological weapons proliferation, nuclear nonproliferation, or missile technology; or
                  (ii) For reasons relating to regional stability or surreptitious listening;
                  (3) Specially designed and prepared nuclear equipment, parts and components, materials, software, and technology covered by part 810 of title 10, Code of Federal Regulations (relating to assistance to foreign atomic energy activities);
                  (4) Nuclear facilities, equipment, and material covered by part 110 of title 10, Code of Federal Regulations (relating to export and import of nuclear equipment and material);
                  (5) Select agents and toxins covered by part 331 of title 7, Code of Federal Regulations, part 121 of title 9 of such Code, or part 73 of title 42 of such Code; or
                  (6) Emerging and foundational technologies controlled pursuant to section 1758 of the Export Control Reform Act of 2018 (50 U.S.C. 4817).

                    Substantial or essential component means any component necessary for the proper function or performance of a piece of equipment, system, or service.
                  (b) Prohibition. In accordance with section 1656 of the National Defense Authorization Act for Fiscal Year 2018 (Pub. L. 115-91), the contractor shall not provide to the Government any equipment, system, or service to carry out covered missions that uses covered defense telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system, unless the covered defense telecommunication equipment or services are covered by a waiver described in Defense Federal Acquisition Regulation Supplement 204.2104.
                  (c) Procedures. The Contractor shall review the list of excluded parties in the System for Award Management (SAM) at https://www.sam.gov for entities that are excluded when providing any equipment, system, or service, to carry out covered missions, that uses covered defense telecommunications equipment or services as a substantial or essential component of any system, or as critical technology as part of any system, unless a waiver is granted.
                  (d) Reporting.

                  (1) In the event the Contractor identifies covered defense telecommunications equipment or services used as a substantial or essential component of any system, or as critical technology as part of any system, during contract performance, the Contractor shall report at https://dibnet.dod.mil the information in paragraph (d)(2) of this clause.
                  (2) The Contractor shall report the following information pursuant to paragraph (d)(1) of this clause:
                  (i) Within one business day from the date of such identification or notification: The contract number; the order number(s), if applicable; supplier name; brand; model number (original equipment manufacturer number, manufacturer part number, or wholesaler number); item description; and any readily available information about mitigation actions undertaken or recommended.
                  (ii) Within 10 business days of submitting the information in paragraph (d)(2)(i) of this clause: Any further available information about mitigation actions undertaken or recommended. In addition, the Contractor shall describe the efforts it undertook to prevent use or submission of a covered defense telecommunications equipment or services, and any additional efforts that will be incorporated to prevent future use or submission of covered telecommunications equipment or services.
                  (e) Subcontracts. The Contractor shall insert the substance of this clause, including this paragraph (e), in all subcontracts and other contractual instruments, including subcontracts for the acquisition of commercial items.

                (End of clause)
                [84 FR 72237, Dec. 31, 2019]

                252.204-7019
                Notice of NIST SP 800-171 DoD Assessment Requirements.
                As prescribed in 204.7304(d), use the following provision:

                  NOTICE OF NIST SP 800-171 DOD ASSESSMENT REQUIREMENTS (NOV 2020)
                  (a) Definitions.

                    Basic Assessment, Medium Assessment, and High Assessment have the meaning given in the clause 252.204-7020, NIST SP 800-171 DoD Assessments.

                    Covered contractor information system has the meaning given in the clause 252.204-7012, Safeguarding Covered Defense Information and Cyber Incident Reporting, of this solicitation.
                  (b) Requirement. In order to be considered for award, if the Offeror is required to implement NIST SP 800-171, the Offeror shall have a current assessment (i.e., not more than 3 years old unless a lesser time is specified in the solicitation) (see 252.204-7020) for each covered contractor information system that is relevant to the offer, contract, task order, or delivery order. The Basic, Medium, and High NIST SP 800-171 DoD Assessments are described in the NIST SP 800-171 DoD Assessment Methodology located at https://www.acq.osd.mil/dpap/pdi/cyber/strategically_assessing_contractor_ implementation_of_ NIST_SP_800-171.html.

                  (c) Procedures. (1) The Offeror shall verify that summary level scores of a current NIST SP 800-171 DoD Assessment (i.e., not more than 3 years old unless a lesser time is specified in the solicitation) are posted in the Supplier Performance Risk System (SPRS) (https://www.sprs.csd.disa.mil/) for all covered contractor information systems relevant to the offer.

                  (2) If the Offeror does not have summary level scores of a current NIST SP 800-171 DoD Assessment (i.e., not more than 3 years old unless a lesser time is specified in the solicitation) posted in SPRS, the Offeror may conduct and submit a Basic Assessment to webptsmh@navy.mil for posting to SPRS in the format identified in paragraph (d) of this provision.
                  (d) Summary level scores. Summary level scores for all assessments will be posted 30 days post-assessment in SPRS to provide DoD Components visibility into the summary level scores of strategic assessments.
                  (1) Basic Assessments. An Offeror may follow the procedures in paragraph (c)(2) of this provision for posting Basic Assessments to SPRS.
                  (i) The email shall include the following information:
                  (A) Cybersecurity standard assessed (e.g., NIST SP 800-171 Rev 1).
                  (B) Organization conducting the assessment (e.g., Contractor self-assessment).
                  (C) For each system security plan (security requirement 3.12.4) supporting the performance of a DoD contract—
                  (1) All industry Commercial and Government Entity (CAGE) code(s) associated with the information system(s) addressed by the system security plan; and
                  (2) A brief description of the system security plan architecture, if more than one plan exists.
                  (D) Date the assessment was completed.
                  (E) Summary level score (e.g., 95 out of 110, NOT the individual value for each requirement).

                  (F) Date that all requirements are expected to be implemented (i.e., a score of 110 is expected to be achieved) based on information gathered from associated plan(s) of action developed in accordance with NIST SP 800-171.
                  (ii) If multiple system security plans are addressed in the email described at paragraph (d)(1)(i) of this section, the Offeror shall use the following format for the report:

                      System security plan
                      CAGE codes supported by this plan
                      Brief description of the plan architecture
                      Date ofassessment

                      Total score
                      Date score of 110 will achieved

                  (2) Medium and High Assessments. DoD will post the following Medium and/or High Assessment summary level scores to SPRS for each system assessed:
                  (i) The standard assessed (e.g., NIST SP 800-171 Rev 1).
                  (ii) Organization conducting the assessment, e.g., DCMA, or a specific organization (identified by Department of Defense Activity Address Code (DoDAAC)).
                  (iii) All industry CAGE code(s) associated with the information system(s) addressed by the system security plan.
                  (iv) A brief description of the system security plan architecture, if more than one system security plan exists.
                  (v) Date and level of the assessment, i.e., medium or high.
                  (vi) Summary level score (e.g., 105 out of 110, not the individual value assigned for each requirement).

                  (vii) Date that all requirements are expected to be implemented (i.e., a score of 110 is expected to be achieved) based on information gathered from associated plan(s) of action developed in accordance with NIST SP 800-171.

                  (3) Accessibility. (i) Assessment summary level scores posted in SPRS are available to DoD personnel, and are protected, in accordance with the standards set forth in DoD Instruction 5000.79, Defense-wide Sharing and Use of Supplier and Product Performance Information (PI).

                  (ii) Authorized representatives of the Offeror for which the assessment was conducted may access SPRS to view their own summary level scores, in accordance with the SPRS Software User's Guide for Awardees/Contractors available at https://www.sprs.csd.disa.mil/pdf/SPRS_Awardee.pdf.

                  (iii) A High NIST SP 800-171 DoD Assessment may result in documentation in addition to that listed in this section. DoD will retain and protect any such documentation as “Controlled Unclassified Information (CUI)” and intended for internal DoD use only. The information will be protected against unauthorized use and release, including through the exercise of applicable exemptions under the Freedom of Information Act (e.g., Exemption 4 covers trade secrets and commercial or financial information obtained from a contractor that is privileged or confidential).

                (End of provision)
                [85 FR 61520, Sept. 29, 2020]

                  Effective Date Note:
                  At 85 FR 61520, Sept. 29, 2020, § 252.204-7019 was added, effective Nov. 30, 2020.

                252.204-7020
                NIST SP 800-171 DoD Assessment Requirements.
                As prescribed in 204.7304(e), use the following clause:

                  NIST SP 800-171 DOD ASSESSMENT REQUIREMENTS (NOV 2020)
                  (a) Definitions.

                    Basic Assessment means a contractor's self-assessment of the contractor's implementation of NIST SP 800-171 that—
                  (1) Is based on the Contractor's review of their system security plan(s) associated with covered contractor information system(s);
                  (2) Is conducted in accordance with the NIST SP 800-171 DoD Assessment Methodology; and
                  (3) Results in a confidence level of “Low” in the resulting score, because it is a self-generated score.

                    Covered contractor information system has the meaning given in the clause 252.204-7012, Safeguarding Covered Defense Information and Cyber Incident Reporting, of this contract.

                    High Assessment means an assessment that is conducted by Government personnel using NIST SP 800-171A, Assessing Security Requirements for Controlled Unclassified Information that—
                  (1) Consists of—
                  (i) A review of a contractor's Basic Assessment;
                  (ii) A thorough document review;
                  (iii) Verification, examination, and demonstration of a Contractor's system security plan to validate that NIST SP 800-171 security requirements have been implemented as described in the contractor's system security plan; and
                  (iv) Discussions with the contractor to obtain additional information or clarification, as needed; and
                  (2) Results in a confidence level of “High” in the resulting score.

                    Medium Assessment means an assessment conducted by the Government that—
                  (1) Consists of—
                  (i) A review of a contractor's Basic Assessment;
                  (ii) A thorough document review; and
                  (iii) Discussions with the contractor to obtain additional information or clarification, as needed; and
                  (2) Results in a confidence level of “Medium” in the resulting score.
                  (b) Applicability. This clause applies to covered contractor information systems that are required to comply with the National Institute of Standards and Technology (NIST) Special Publication (SP) 800-171, in accordance with Defense Federal Acquisition Regulation System (DFARS) clause at 252.204-7012, Safeguarding Covered Defense Information and Cyber Incident Reporting, of this contract.
                  (c) Requirements. The Contractor shall provide access to its facilities, systems, and personnel necessary for the Government to conduct a Medium or High NIST SP 800-171 DoD Assessment, as described in NIST SP 800-171 DoD Assessment Methodology at https://www.acq.osd.mil/dpap/pdi/cyber/strategically_assessing_ contractor_implementation_of_ NIST_SP_800-171.html, if necessary.
                  (d) Procedures. Summary level scores for all assessments will be posted in the Supplier Performance Risk System (SPRS) (https://www.sprs.csd.disa.mil/) to provide DoD Components visibility into the summary level scores of strategic assessments.
                  (1) Basic Assessments. A contractor may submit, via encrypted email, summary level scores of Basic Assessments conducted in accordance with the NIST SP 800-171 DoD Assessment Methodology to webptsmh@navy.mil for posting to SPRS.
                  (i) The email shall include the following information:
                  (A) Version of NIST SP 800-171 against which the assessment was conducted.
                  (B) Organization conducting the assessment (e.g., Contractor self-assessment).

                  (C) For each system security plan (security requirement 3.12.4) supporting the performance of a DoD contract—

                  (1) All industry Commercial and Government Entity (CAGE) code(s) associated with the information system(s) addressed by the system security plan; and
                  (2) A brief description of the system security plan architecture, if more than one plan exists.
                  (D) Date the assessment was completed.
                  (E) Summary level score (e.g., 95 out of 110, NOT the individual value for each requirement).

                  (F) Date that all requirements are expected to be implemented (i.e., a score of 110 is expected to be achieved) based on information gathered from associated plan(s) of action developed in accordance with NIST SP 800-171.
                  (ii) If multiple system security plans are addressed in the email described at paragraph (b)(1)(i) of this section, the Contractor shall use the following format for the report:

                      System security plan
                      CAGE codes supported by this plan
                      Brief description of the plan architecture
                      Date ofassessment

                      Total score
                      Date score of 110 will achieved

                  (2) Medium and High Assessments. DoD will post the following Medium and/or High Assessment summary level scores to SPRS for each system security plan assessed:
                  (i) The standard assessed (e.g., NIST SP 800-171 Rev 1).
                  (ii) Organization conducting the assessment, e.g., DCMA, or a specific organization (identified by Department of Defense Activity Address Code (DoDAAC)).
                  (iii) All industry CAGE code(s) associated with the information system(s) addressed by the system security plan.
                  (iv) A brief description of the system security plan architecture, if more than one system security plan exists.
                  (v) Date and level of the assessment, i.e., medium or high.
                  (vi) Summary level score (e.g., 105 out of 110, not the individual value assigned for each requirement).

                  (vii) Date that all requirements are expected to be implemented (i.e., a score of 110 is expected to be achieved) based on information gathered from associated plan(s) of action developed in accordance with NIST SP 800-171.
                  (e) Rebuttals. (1) DoD will provide Medium and High Assessment summary level scores to the Contractor and offer the opportunity for rebuttal and adjudication of assessment summary level scores prior to posting the summary level scores to SPRS (see SPRS User's Guide https://www.sprs.csd.disa.mil/pdf/SPRS_Awardee.pdf).
                  (2) Upon completion of each assessment, the contractor has 14 business days to provide additional information to demonstrate that they meet any security requirements not observed by the assessment team or to rebut the findings that may be of question.
                  (f) Accessibility. (1) Assessment summary level scores posted in SPRS are available to DoD personnel, and are protected, in accordance with the standards set forth in DoD Instruction 5000.79, Defense-wide Sharing and Use of Supplier and Product Performance Information (PI).

                  (2) Authorized representatives of the Contractor for which the assessment was conducted may access SPRS to view their own summary level scores, in accordance with the SPRS Software User's Guide for Awardees/Contractors available at https://www.sprs.csd.disa.mil/pdf/SPRS_Awardee.pdf.

                  (3) A High NIST SP 800-171 DoD Assessment may result in documentation in addition to that listed in this clause. DoD will retain and protect any such documentation as “Controlled Unclassified Information (CUI)” and intended for internal DoD use only. The information will be protected against unauthorized use and release, including through the exercise of applicable exemptions under the Freedom of Information Act (e.g., Exemption 4 covers trade secrets and commercial or financial information obtained from a contractor that is privileged or confidential).
                  (g) Subcontracts. (1) The Contractor shall insert the substance of this clause, including this paragraph (g), in all subcontracts and other contractual instruments, including subcontracts for the acquisition of commercial items (excluding COTS items).

                  (2) The Contractor shall not award a subcontract or other contractual instrument, that is subject to the implementation of NIST SP 800-171 security requirements, in accordance with DFARS clause 252.204-7012 of this contract, unless the subcontractor has completed, within the last 3 years, at least a Basic NIST SP 800-171 DoD Assessment, as described in https://www.acq.osd.mil/dpap/pdi/cyber/strategically_assessing_ contractor_implementation_of_ NIST_SP_800-171.html, for all covered contractor information systems relevant to its offer that are not part of an information technology service or system operated on behalf of the Government.

                  (3) If a subcontractor does not have summary level scores of a current NIST SP 800-171 DoD Assessment (i.e., not more than 3 years old unless a lesser time is specified in the solicitation) posted in SPRS, the subcontractor may conduct and submit a Basic Assessment, in accordance with the NIST SP 800-171 DoD Assessment Methodology, to webptsmh@navy.mil for posting to SPRS along with the information required by paragraph (d) of this clause.

                (End of clause)
                [85 FR 61520, Sept. 29, 2020]

                  Effective Date Note:
                  At 85 FR 61520, Sept. 29, 2020, § 252.204-7020 was added, effective Nov. 30, 2020.

                252.204-7021
                Contractor Compliance with the Cybersecurity Maturity Model Certification Level Requirement.
                As prescribed in 204.7503(a) and (b), insert the following clause:

                  CONTRACTOR COMPLIANCE WITH THE CYBERSECURITY MATURITY MODEL CERTIFICATION LEVEL REQUIREMENT (NOV 2020)
                  (a) Scope. The Cybersecurity Maturity Model Certification (CMMC) CMMC is a framework that measures a contractor's cybersecurity maturity to include the implementation of cybersecurity practices and institutionalization of processes (see https://www.acq.osd.mil/cmmc/index.html).
                  (b) Requirements. The Contractor shall have a current (i.e. not older than 3 years) CMMC certificate at the CMMC level required by this contract and maintain the CMMC certificate at the required level for the duration of the contract.
                  (c) Subcontracts. The Contractor shall—
                  (1) Insert the substance of this clause, including this paragraph (c), in all subcontracts and other contractual instruments, including subcontracts for the acquisition of commercial items, excluding commercially available off-the-shelf items; and

                  (2) Prior to awarding to a subcontractor, ensure that the subcontractor has a current (i.e., not older than 3 years) CMMC certificate at the CMMC level that is appropriate for the information that is being flowed down to the subcontractor.

                (End of clause)
                [85 FR 61520, Sept. 29, 2020]

                  Effective Date Note:
                  At 85 FR 61520, Sept. 29, 2020, § 252.204-7021 was added, effective Nov. 30, 2020.

                252.205-7000
                Provision of information to cooperative agreement holders.
                As prescribed in 205.470, use the following clause:

                  Provision of Information to Cooperative Agreement Holders (DEC 1991)
                  (a) Definition. Cooperative agreement holder means a State or local government; a private, nonprofit organization; a tribal organization (as defined in section 4(c) of the Indian Self-Determination and Education Assistance Act (Pub. L. 93-268; 25 U.S.C. 450(c))); or an economic enterprise (as defined in section 3(e) of the Indian Financing Act of 1974 (Pub. L. 93-362; 25 U.S.C. 1452(e))) whether such economic enterprise is organized for profit or nonprofit purposes; which has an agreement with the Defense Logistics Agency to furnish procurement technical assistance to business entities.
                  (b) The Contractor shall provide cooperative agreement holders, upon their request, with a list of those appropriate employees or offices responsible for entering into subcontracts under defense contracts. The list shall include the business address, telephone number, and area of responsibility of each employee or office.
                  (c) The Contractor need not provide the listing to a particular cooperative agreement holder more frequently than once a year.

                (End of clause)
                [56 FR 36479, July 31, 1991, as amended at 69 FR 63328, Nov. 1, 2004]

                252.206-7000
                Domestic source restriction.
                As prescribed at 206.302-3-70, use the following provision:

                  Domestic Source Restriction (DEC 1991)
                  This solicitation is restricted to domestic sources under the authority of 10 U.S.C. 2304(c)(3). Foreign sources, except Canadian sources, are not eligible for award.

                (End of provision)

                252.208-7000
                Intent to furnish precious metals as Government-furnished material.
                As prescribed in 208.7305(a), use the following clause:

                  Intent To Furnish Precious Metals as Government-Furnished Material (DEC 1991)

                  (a) The Government intends to furnish precious metals required in the manufacture of items to be delivered under the contract if the Contracting Officer determines it to be in the Government's best interest. The use of Government-furnished silver is mandatory when the quantity required is one hundred troy ounces or more. The precious metal(s) will be furnished pursuant to the Government Furnished Property clause of the contract.
                  (b) The Offeror shall cite the type (silver, gold, platinum, palladium, iridium, rhodium, and ruthenium) and quantity in whole troy ounces of precious metals required in the performance of this contract (including precious metals required for any first article or production sample), and shall specify the national stock number (NSN) and nomenclature, if known, of the deliverable item requiring precious metals.

                      Precious metal*
                      Quantity
                      Deliverable item (NSN and nomenclature)!!rs

                    *If platinum or palladium, specify whether sponge or granules are required.

                  (c) Offerors shall submit two prices for each deliverable item which contains precious metals—one based on the Government furnishing precious metals, and one based on the Contractor furnishing precious metals. Award will be made on the basis which is in the best interest of the Government.
                  (d) The Contractor agrees to insert this clause, including this paragraph (d), in solicitations for subcontracts and purchase orders issued in performance of this contract, unless the Contractor knows that the item being purchased contains no precious metals.

                (End of clause)

                252.209-7000—252.209-7001
                [Reserved]

                252.209-7002
                Disclosure of ownership or control by a foreign government.
                As prescribed in 209.104-70, use the following provision:

                  Disclosure of Ownership or Control by a Foreign Government (JUN 2010)
                  (a) Definitions. As used in this provision—
                  (1) Effectively owned or controlled means that a foreign government or any entity controlled by a foreign government has the power, either directly or indirectly, whether exercised or exercisable, to control the election, appointment, or tenure of the Offeror's officers or a majority of the Offeror's board of directors by any means, e.g., ownership, contract, or operation of law (or equivalent power for unincorporated organizations).
                  (2) Entity controlled by a foreign government—
                  (i) Means—
                  (A) Any domestic or foreign organization or corporation that is effectively owned or controlled by a foreign government; or
                  (B) Any individual acting on behalf of a foreign government.
                  (ii) Does not include an organization or corporation that is owned, but is not controlled, either directly or indirectly, by a foreign government if the ownership of that organization or corporation by that foreign government was effective before October 23, 1992.
                  (3) Foreign government includes the state and the government of any country (other than the United States and its outlying areas) as well as any political subdivision, agency, or instrumentality thereof.
                  (4) Proscribed information means—
                  (i) Top Secret information;
                  (ii) Communications security (COMSEC) material, excluding controlled cryptographic items when unkeyed or utilized with unclassified keys;
                  (iii) Restricted Data as defined in the U.S. Atomic Energy Act of 1954, as amended;
                  (iv) Special Access Program (SAP) information; or
                  (v) Sensitive Compartmented Information (SCI).
                  (b) Prohibition on award. No contract under a national security program may be awarded to an entity controlled by a foreign government if that entity requires access to proscribed information to perform the contract, unless the Secretary of Defense or a designee has waived application of 10 U.S.C. 2536(a).
                  (c) Disclosure. The Offeror shall disclose any interest a foreign government has in the Offeror when that interest constitutes control by a foreign government as defined in this provision. If the Offeror is a subsidiary, it shall also disclose any reportable interest a foreign government has in any entity that owns or controls the subsidiary, including reportable interest concerning the Offeror's immediate parent, intermediate parents, and the ultimate parent. Use separate paper as needed, and provide the information in the following format: Offeror's Point of Contact for Questions about Disclosure (Name and Phone Number with Country Code, City Code and Area Code, as applicable)

                      Name and Address of Offeror

                      Name and Address of Entity Controlled by a Foreign Government
                      Description of Interest, Ownership Percentage, and Identification of Foreign Government

                (End of provision)
                [58 FR 28471, May 13, 1993, as amended at 59 FR 51133, Oct. 7, 1994; 70 FR 35546, June 21, 2005; 75 FR 35685, June 23, 2010; 79 FR 73490, Dec. 11, 2014]

                252.209-7003
                Reserve Officer Training Corps and Military Recruiting on Campus-Representation.
                As prescribed in 209.470-4(a), use the following provision:

                  Reserve Officer Training Corps and Military Recruiting on Campus—Representation (MAR 2012)
                  (a) Definition. “Institution of higher education,” as used in this provision, is defined in the clause at 252.209-7005, Reserve officer Training Corps and Military Recruiting on Campus.
                  (b) Limitation on contract award. Except as provided in paragraph (c) of this provision, an institution of higher education is ineligible for contract award if the Secretary of Defense determines that the institution has a current policy or practice (regardless of when implemented) that prohibits or in effect prevents—
                  (1) The Secretary of a military department from maintaining, establishing, or operating a unit of the Senior Reserve Officer Training Corps (ROTC) (in accordance with 10 U.S.C. 654 and other applicable Federal laws) at that institution;
                  (2) A student at that institution from enrolling in a unit of the Senior ROTC at another institution of higher education;
                  (3) The Secretary of a military department or the Secretary of Transportation from gaining entry to campuses, or access to students (who are 17 years of age or older) on campuses, for purposes of military recruiting; or
                  (4) Military recruiters from accessing, for purposes of military recruiting, the following information pertaining to students (who are 17 years of age or older) enrolled at that institution:
                  (i) Name.
                  (ii) Address.
                  (iii) Telephone number.
                  (iv) Date and place of birth.
                  (v) Educational level.
                  (vi) Academic major.
                  (vii) Degrees received.
                  (viii) Most recent educational institution enrollment.
                  (c) Exception. The limitation in paragraph (b) of this provision does not apply to an institution of higher education if the Secretary of Defense determines that the institution has a long-standing policy of pacifism based on historical religious affiliation.
                  (d) Representation. By submission of its offer, the offeror represents that the institution does not have any policy or practice described in paragraph (b) of this clause, unless the Secretary of Defense has determined that the institution has a long-standing policy of pacifism based on historical religious affiliation.

                (End of provision)
                [77 FR 19130, Mar. 30, 2012]

                252.209-7004
                Subcontracting with Firms that are Owned or Controlled by the Government of a Country that is a State Sponsor of Terrorism.
                As prescribed in 209.409, use the following clause:

                  Subcontracting With Firms That Are Owned or Controlled by the Government of a Country That Is a State Sponsor of Terrorism (MAY 2019)
                  (a) Unless the Government determines that there is a compelling reason to do so, the Contractor shall not enter into any subcontract in excess of the threshold specified in Federal Acquisition Regulation 9.405-2(b) on the date of subcontract award with a firm, or a subsidiary of a firm, that is identified in the Exclusions section of the System for Award Management System (SAM Exclusions) as being ineligible for the award of Defense contracts or subcontracts because it is owned or controlled by the government of a country that is a state sponsor of terrorism.
                  (b) A corporate officer or a designee of the Contractor shall notify the Contracting Officer, in writing, before entering into a subcontract with a party that is identified, in SAM Exclusions, as being ineligible for the award of Defense contracts or subcontracts because it is owned or controlled by the government of a country that is a state sponsor of terrorism. The notice must include the name of the proposed subcontractor and the compelling reason(s) for doing business with the subcontractor notwithstanding its inclusion in SAM Exclusions.

                (End of clause)
                [79 FR 73490, Dec. 11, 2014, as amended at 80 FR 36905, June 26, 2015; 84 FR 25187, May 31, 2019]

                252.209-7005
                Reserve Officer Training Corps and military recruiting on campus.
                As prescribed in 209.470-4, use the following clause:

                  Reserve Officer Training Corps and Military Recruiting on Campus (MAR 2012)
                  (a) Definition. “Institution of higher education,” as used in this clause, means an institution that meets the requirements of 20 U.S.C. 1001 and includes all subelements of such an institution.
                  (b) Limitation. Except as provided in paragraph (c) of this clause, the Contractor shall not, during performance of this contract, have any policy or practice that prohibits or in effect prevents—
                  (1) The Secretary of a military department from maintaining, establishing, or operating a unit of the Senior Reserve Officer Training Corps (ROTC) (in accordance with 10 U.S.C. 654 and other applicable Federal laws) at that institution;
                  (2) A student at that institution from enrolling in a unit of the Senior ROTC at another institution of higher education;
                  (3) The Secretary of a military department or the Secretary of Transportation from gaining entry to campuses, or access to students (who are 17 years of age or older) on campuses, for purposes of military recruiting; or
                  Military recruiters from accessing, for purposes of military recruiting, the following information pertaining to students (who are 17 years of age or older) enrolled at that institution:
                  (i) Name.
                  (ii) Address.
                  (iii) Telephone number.
                  (iv) Date and place of birth.
                  (v) Educational level.
                  (vi) Academic major.
                  (vii) Degrees received.
                  (viii) Most recent educational institution enrollment.
                  (c) Exception. The limitation in paragraph (b) of this clause does not apply to an institution of higher education if the Secretary of Defense determines that—
                  (1) The institution has ceased the policy or practice described in paragraph (b) of this clause; or
                  (2) The institution has a long-standing policy of pacifism based on historical religious affiliation.
                  (d) Notwithstanding any other clause of this contract, if the Secretary of Defense determines that the Contractor misrepresented its policies and practices at the time of contract award or has violated the prohibition in paragraph (b) of this clause—
                  (1) The Contractor will be ineligible for further payments under this and other contracts with the Department of Defense; and
                  (2) The Government will terminate this contract for default for the Contractor's material failure to comply with the terms and conditions of award.

                (End of clause)
                [65 FR 2057, Jan. 13, 2000, as amended at 77 FR 19130, Mar. 30, 2012]

                252.209-7006
                Limitations on Contractors Acting as Lead System Integrators.
                As prescribed in 209.570-4(a), use the following provision:

                  Limitations on Contractors Acting As Lead System Integrators (JAN 2008)
                  (a) Definitions. Lead system integrator, lead system integrator with system responsibility, and lead system integrator without system responsibility, as used in this provision, have the meanings given in the clause of this solicitation entitled “Prohibited Financial Interests for Lead System Integrators” (DFARS 252.209-7007).
                  (b) General. Unless an exception is granted, no contractor performing lead system integrator functions in the acquisition of a major system by the Department of Defense may have any direct financial interest in the development or construction of any individual system or element of any system of systems.
                  (c) Representations. (1) The offeror represents that it does
                  [ ] does not [ ] propose to perform this contract as a lead system integrator with system responsibility.
                  (2) The offeror represents that it does [ ] does not [ ] propose to perform this contract as a lead system integrator without system responsibility.
                  (3) If the offeror answered in the affirmative in paragraph (c)(1) or (2) of this provision, the offeror represents that it does [ ] does not [ ] have any direct financial interest as described in paragraph (b) of this provision with respect to the system(s), subsystem(s), system of systems, or services described in this solicitation.
                  (d) If the offeror answered in the affirmative in paragraph (c)(3) of this provision, the offeror should contact the Contracting Officer for guidance on the possibility of submitting a mitigation plan and/or requesting an exception.
                  (e) If the offeror does have a direct financial interest, the offeror may be prohibited from receiving an award under this solicitation, unless the offeror submits to the Contracting Officer appropriate evidence that the offeror was selected by a subcontractor to serve as a lower-tier subcontractor through a process over which the offeror exercised no control.
                  (f) This provision implements the requirements of 10 U.S.C. 2410p, as added by section 807 of the National Defense Authorization Act for Fiscal Year 2007 (Pub. L. 109-364).

                (End of provision)
                [73 FR 1825, Jan. 10, 2007]

                252.209-7007
                Prohibited Financial Interests for Lead System Integrators.
                As prescribed in 209.570-4(b), use the following clause:

                  Prohibited Financial Interests for Lead System Integrators (JUL 2009)
                  (a) Definitions. As used in this clause—
                  (1) Lead system integrator includes lead system integrator with system responsibility and lead system integrator without system responsibility.

                  (2) Lead system integrator with system responsibility means a prime contractor for the development or production of a major system, if the prime contractor is not expected at the time of award to perform a substantial portion of the work on the system and the major subsystems.
                  (3) Lead system integrator without system responsibility means a prime contractor under a contract for the procurement of services, the primary purpose of which is to perform acquisition functions closely associated with inherently governmental functions (see section 7.503(d) of the Federal Acquisition Regulation) with respect to the development or production of a major system.
                  (b) Limitations. The Contracting Officer has determined that the Contractor meets the definition of lead system integrator with [ ] without [ ] system responsibility. Unless an exception is granted, the Contractor shall not have any direct financial interest in the development or construction of any individual system or element of any system of systems while performing lead system integrator functions in the acquisition of a major system by the Department of Defense under this contract.
                  (c) Agreement. The Contractor agrees that during performance of this contract it will not acquire any direct financial interest as described in paragraph (b) of this clause, or, if it does acquire or plan to acquire such interest, it will immediately notify the Contracting Officer. The Contractor further agrees to provide to the Contracting Officer all relevant information regarding the change in financial interests so that the Contracting Officer can determine whether an exception applies or whether the Contractor will be allowed to continue performance on this contract. If a direct financial interest cannot be avoided, eliminated, or mitigated to the Contracting Officer's satisfaction, the Contracting Officer may terminate this contract for default for the Contractor's material failure to comply with the terms and conditions of award or may take other remedial measures as appropriate in the Contracting Officer's sole discretion.
                  (d) Notwithstanding any other clause of this contract, if the Contracting Officer determines that the Contractor misrepresented its financial interests at the time of award or has violated the agreement in paragraph (c) of this clause, the Government may terminate this contract for default for the Contractor's material failure to comply with the terms and conditions of award or may take other remedial measures as appropriate in the Contracting Officer's sole discretion.
                  (e) This clause implements the requirements of 10 U.S.C. 2410p, as added by Section 807 of the National Defense Authorization Act for Fiscal Year 2007 (Pub. L. 109-364), and Section 802 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181).

                (End of clause)
                [73 FR 1825, Jan. 10, 2007, as amended at 74 FR 34269, July 15, 2009]

                252.209-7008
                Notice of Prohibition Relating to Organizational Conflict of Interest—Major Defense Acquisition Program.
                As prescribed in 209.571-8(a), use the following provision:

                  Notice of Prohibition Relating to Organizational Conflict of Interest—Major Defense Acquisition Program (DEC 2010)
                  (a) Definitions. “Major subcontractor” is defined in the clause at 252.209-7009, Organizational Conflict of Interest—Major Defense Acquisition Program.
                  (b) This solicitation is for the performance of systems engineering and technical assistance for a major defense acquisition program or a pre-major defense acquisition program.
                  (c) Prohibition. As required by paragraph (b)(3) of section 207 of the Weapons System Acquisition Reform Act of 2009 (Pub. L. 111-23), if awarded the contract, the contractor or any affiliate of the contractor is prohibited from participating as a prime contractor or a major subcontractor in the development or production of a weapon system under the major defense acquisition program or pre-major defense acquisition program, unless the offeror submits, and the Government approves, an Organizational Conflict of Interest Mitigation Plan.
                  (d) Request for an exception. If the offeror requests an exception to the prohibition of paragraph (c) of this provision, then the offeror shall submit an Organizational Conflict of Interest Mitigation Plan with its offer for evaluation.
                  (e) Incorporation of Organizational Conflict of Interest Mitigation Plan in contract. If the apparently successful offeror submitted an acceptable Organizational Conflict of Interest Mitigation Plan, and the head of the contracting activity determines that DoD needs the domain experience and expertise of the highly qualified, apparently successful offeror in accordance with FAR 209.571-7(c), then the Contracting Officer will incorporate the Organizational Conflict of Interest Mitigation Plan into the resultant contract, and paragraph (d) of the clause at 252.209-7009 will become applicable.

                (End of provision)
                [75 FR 81914, Dec. 29, 2010]

                252.209-7009
                Organizational Conflict of Interest—Major Defense Acquisition Program.
                As prescribed in 209.571-8(b), use the following clause:

                  Organizational Conflict of Interest—Major Defense Acquisition Program (MAY 2019)
                  (a) Definition. As used in this clause—

                    Major subcontractor means a subcontractor that is awarded a subcontract that equals or exceeds—
                  (1) Both the certified cost or pricing data threshold and 10 percent of the value of the contract under which the subcontract is awarded; or
                  (2) The threshold specified in the definition of “major subcontractor” at Defense Federal Acquisition Regulation Supplement 209.571-1 on the date of subcontract award.
                  (b) This contract is for the performance of systems engineering and technical assistance for a major defense acquisition program or a pre-major defense acquisition program.
                  (c) Prohibition. Except as provided in paragraph (d) of this clause, as required by paragraph (b)(3) of section 207 of the Weapons System Acquisition Reform Act of 2009 (Pub. L. 111-23), the Contractor or any affiliate of the Contractor is prohibited from participating as a prime contractor or major subcontractor in the development or production of a weapon system under the major defense acquisition program or pre-major defense acquisition program.
                  (d) Organizational Conflict of Interest Mitigation Plan. If the Contractor submitted an acceptable Organizational Conflict of Interest Mitigation Plan that has been incorporated into this contract, then the prohibition in paragraph (c) of this clause does not apply. The Contractor shall comply with the Organizational Conflict of Interest Mitigation Plan. Compliance with the Organizational Conflict of Interest Mitigation Plan is a material requirement of the contract. Failure to comply may result in the Contractor or any affiliate of the Contractor being prohibited from participating as a contractor or major subcontractor in the development or production of a weapon system under the program, in addition to any other remedies available to the Government for noncompliance with a material requirement of a contract.

                (End of clause)
                [75 FR 81914, Dec. 29, 2010, as amended at 77 FR 76940, Dec. 31, 2012; 80 FR 36905, June 26, 2015; 84 FR 25187, May 31, 2019]

                252.209-7010
                Critical Safety Items.
                As prescribed in 209.270-5, use the following clause:

                  Critical Safety Items (AUG 2011)
                  (a) Definitions.

                    Aviation critical safety item means a part, an assembly, installation equipment, launch equipment, recovery equipment, or support equipment for an aircraft or aviation weapon system if the part, assembly, or equipment contains a characteristic any failure, malfunction, or absence of which could cause—
                  (i) A catastrophic or critical failure resulting in the loss of, or serious damage to, the aircraft or weapon system;
                  (ii) An unacceptable risk of personal injury or loss of life; or
                  (iii) An uncommanded engine shutdown that jeopardizes safety.

                    Design control activity. (i) With respect to an aviation critical safety item, means the systems command of a military department that is specifically responsible for ensuring the airworthiness of an aviation system or equipment, in which an aviation critical safety item is to be used; and
                  (ii) With respect to a ship critical safety item, means the systems command of a military department that is specifically responsible for ensuring the seaworthiness of a ship or ship equipment, in which a ship critical safety item is to be used.

                    Ship critical safety item means any ship part, assembly, or support equipment containing a characteristic, the failure, malfunction, or absence of which could cause—
                  (i) A catastrophic or critical failure resulting in loss of, or serious damage to, the ship; or
                  (ii) An unacceptable risk of personal injury or loss of life.
                  (b) Identification of critical safety items. One or more of the items being procured under this contract is an aviation or ship critical safety item. The following items have been designated aviation critical safety items or ship critical safety items by the designated design control activity:

                  (Insert additional lines as necessary)

                  (c) Heightened quality assurance surveillance. Items designated in paragraph (b) of this clause are subject to heightened, risk-based surveillance by the designated quality assurance representative.

                (End of clause)
                [76 FR 52139, Aug. 19, 2011]

                252.211-7000—252.211-7001
                [Reserved]

                252.211-7002
                Availability for examination of specifications, standards, plans, drawings, data item descriptions, and other pertinent documents.
                As prescribed in 211.204(c), use the following provision:

                  Availability for Examination of Specifications, Standards, Plans, Drawings, Data Item Descriptions, and Other Pertinent Documents (DEC 1991)

                  The specifications, standards, plans, drawings, data item descriptions, and other pertinent documents cited in this solicitation are not available for distribution but may be examined at the following location:

                  (Insert complete address)

                (End of provision)
                [56 FR 36479, July 31, 1991. Redesignated and amended at 60 FR 61600, Nov. 30, 1995]

                252.211-7003
                Item unique identification and valuation.
                As prescribed in 211.274-6(a)(1), use the following clause:

                  Item Unique Identification and Valuation (MAR 2016)
                  (a) Definitions. As used in this clause—

                    Automatic identification device means a device, such as a reader or interrogator, used to retrieve data encoded on machine-readable media.

                    Concatenated unique item identifier means—
                  (1) For items that are serialized within the enterprise identifier, the linking together of the unique identifier data elements in order of the issuing agency code, enterprise identifier, and unique serial number within the enterprise identifier; or
                  (2) For items that are serialized within the original part, lot, or batch number, the linking together of the unique identifier data elements in order of the issuing agency code; enterprise identifier; original part, lot, or batch number; and serial number within the original part, lot, or batch number.

                    Data matrix means a two-dimensional matrix symbology, which is made up of square or, in some cases, round modules arranged within a perimeter finder pattern and uses the Error Checking and Correction 200 (ECC200) specification found within International Standards Organization (ISO)/International Electrotechnical Commission (IEC) 16022.

                    Data qualifier means a specified character (or string of characters) that immediately precedes a data field that defines the general category or intended use of the data that follows.

                    DoD recognized unique identification equivalent means a unique identification method that is in commercial use and has been recognized by DoD. All DoD recognized unique identification equivalents are listed at http://www.acq.osd.mil/dpap/pdi/uid/iuid_equivalents.html.

                    DoD item unique identification means a system of marking items delivered to DoD with unique item identifiers that have machine-readable data elements to distinguish an item from all other like and unlike items. For items that are serialized within the enterprise identifier, the unique item identifier shall include the data elements of the enterprise identifier and a unique serial number. For items that are serialized within the part, lot, or batch number within the enterprise identifier, the unique item identifier shall include the data elements of the enterprise identifier; the original part, lot, or batch number; and the serial number.

                    Enterprise means the entity (e.g., a manufacturer or vendor) responsible for assigning unique item identifiers to items.

                    Enterprise identifier means a code that is uniquely assigned to an enterprise by an issuing agency.

                    Government's unit acquisition cost means—
                  (1) For fixed-price type line, subline, or exhibit line items, the unit price identified in the contract at the time of delivery;
                  (2) For cost-type or undefinitized line, subline, or exhibit line items, the Contractor's estimated fully burdened unit cost to the Government at the time of delivery; and
                  (3) For items produced under a time-and-materials contract, the Contractor's estimated fully burdened unit cost to the Government at the time of delivery.

                    Issuing agency means an organization responsible for assigning a globally unique identifier to an enterprise, as indicated in the Register of Issuing Agency Codes for ISO/IEC 15459, located at http://www.aimglobal.org/?Reg_Authority15459.

                    Issuing agency code means a code that designates the registration (or controlling) authority for the enterprise identifier.

                    Item means a single hardware article or a single unit formed by a grouping of subassemblies, components, or constituent parts.

                    Lot or batch number means an identifying number assigned by the enterprise to a designated group of items, usually referred to as either a lot or a batch, all of which were manufactured under identical conditions.

                    Machine-readable means an automatic identification technology media, such as bar codes, contact memory buttons, radio frequency identification, or optical memory cards.

                    Original part number means a combination of numbers or letters assigned by the enterprise at item creation to a class of items with the same form, fit, function, and interface.

                    Parent item means the item assembly, intermediate component, or subassembly that has an embedded item with a unique item identifier or DoD recognized unique identification equivalent.

                    Serial number within the enterprise identifier means a combination of numbers, letters, or symbols assigned by the enterprise to an item that provides for the differentiation of that item from any other like and unlike item and is never used again within the enterprise.

                    Serial number within the part, lot, or batch number means a combination of numbers or letters assigned by the enterprise to an item that provides for the differentiation of that item from any other like item within a part, lot, or batch number assignment.

                    Serialization within the enterprise identifier means each item produced is assigned a serial number that is unique among all the tangible items produced by the enterprise and is never used again. The enterprise is responsible for ensuring unique serialization within the enterprise identifier.

                    Serialization within the part, lot, or batch number means each item of a particular part, lot, or batch number is assigned a unique serial number within that part, lot, or batch number assignment. The enterprise is responsible for ensuring unique serialization within the part, lot, or batch number within the enterprise identifier.

                    Type designation means a combination of letters and numerals assigned by the Government to a major end item, assembly or subassembly, as appropriate, to provide a convenient means of differentiating between items having the same basic name and to indicate modifications and changes thereto.

                    Unique item identifier means a set of data elements marked on items that is globally unique and unambiguous. The term includes a concatenated unique item identifier or a DoD recognized unique identification equivalent.

                    Unique item identifier type means a designator to indicate which method of uniquely identifying a part has been used. The current list of accepted unique item identifier types is maintained at http://www.acq.osd.mil/dpap/pdi/uid/uii_types.html.

                  (b) The Contractor shall deliver all items under a contract line, subline, or exhibit line item.
                  (c) Unique item identifier. (1) The Contractor shall provide a unique item identifier for the following:
                  (i) Delivered items for which the Government's unit acquisition cost is $5,000 or more, except for the following line items:

                      Contract line, subline, or exhibit line item No.
                      Item description

                  (ii) Items for which the Government's unit acquisition cost is less than $5,000 that are identified in the Schedule or the following table:

                      Contract line, subline, or exhibit line item No.
                      Item description

                  (If items are identified in the Schedule, insert “See Schedule” in this table.)

                  (iii) Subassemblies, components, and parts embedded within delivered items, items with warranty requirements, DoD serially managed reparables and DoD serially managed nonreparables as specified in Attachment Number __.
                  (iv) Any item of special tooling or special test equipment as defined in FAR 2.101 that have been designated for preservation and storage for a Major Defense Acquisition Program as specified in Attachment Number __.
                  (v) Any item not included in paragraphs (c)(1)(i), (ii), (iii), or (iv) of this clause for which the contractor creates and marks a unique item identifier for traceability.
                  (2) The unique item identifier assignment and its component data element combination shall not be duplicated on any other item marked or registered in the DoD Item Unique Identification Registry by the contractor.
                  (3) The unique item identifier component data elements shall be marked on an item using two dimensional data matrix symbology that complies with ISO/IEC International Standard 16022, Information technology—International symbology specification—Data matrix; ECC200 data matrix specification.
                  (4) Data syntax and semantics of unique item identifiers. The Contractor shall ensure that—
                  (i) The data elements (except issuing agency code) of the unique item identifier are encoded within the data matrix symbol that is marked on the item using one of the following three types of data qualifiers, as determined by the Contractor:

                  (A) Application Identifiers (AIs) (Format Indicator 05 of ISO/IEC International Standard 15434), in accordance with ISO/IEC International Standard 15418, Information Technology—EAN/UCC Application Identifiers and Fact Data Identifiers and Maintenance and ANSI MH 10.8.2 Data Identifier and Application Identifier Standard.

                  (B) Data Identifiers (DIs) (Format Indicator 06 of ISO/IEC International Standard 15434), in accordance with ISO/IEC International Standard 15418, Information Technology—EAN/UCC Application Identifiers and Fact Data Identifiers and Maintenance and ANSI MH 10.8.2 Data Identifier and Application Identifier Standard.
                  (C) Text Element Identifiers (TEIs) (Format Indicator 12 of ISO/IEC International Standard 15434), in accordance with the Air Transport Association Common Support Data Dictionary; and
                  (ii) The encoded data elements of the unique item identifier conform to the transfer structure, syntax, and coding of messages and data formats specified for Format Indicators 05, 06, and 12 in ISO/IEC International Standard 15434, Information Technology-Transfer Syntax for High Capacity Automatic Data Capture Media.
                  (5) Unique item identifier.

                  (i) The Contractor shall—
                  (A) Determine whether to—
                  (1) Serialize within the enterprise identifier;
                  (2) Serialize within the part, lot, or batch number; or
                  (3) Use a DoD recognized unique identification equivalent (e.g. Vehicle Identification Number); and
                  (B) Place the data elements of the unique item identifier (enterprise identifier; serial number; DoD recognized unique identification equivalent; and for serialization within the part, lot, or batch number only: Original part, lot, or batch number) on items requiring marking by paragraph (c)(1) of this clause, based on the criteria provided in MIL-STD-130, Identification Marking of U.S. Military Property, latest version;
                  (C) Label shipments, storage containers and packages that contain uniquely identified items in accordance with the requirements of MIL-STD-129, Military Marking for Shipment and Storage, latest version; and
                  (D) Verify that the marks on items and labels on shipments, storage containers, and packages are machine readable and conform to the applicable standards. The contractor shall use an automatic identification technology device for this verification that has been programmed to the requirements of Appendix A, MIL-STD-130, latest version.
                  (ii) The issuing agency code—
                  (A) Shall not be placed on the item; and
                  (B) Shall be derived from the data qualifier for the enterprise identifier.
                  (d) For each item that requires item unique identification under paragraph (c)(1)(i), (ii), or (iv) of this clause or when item unique identification is provided under paragraph (c)(1)(v), in addition to the information provided as part of the Material Inspection and Receiving Report specified elsewhere in this contract, the Contractor shall report at the time of delivery, as part of the Material Inspection and Receiving Report, the following information:
                  (1) Unique item identifier.
                  (2) Unique item identifier type.
                  (3) Issuing agency code (if concatenated unique item identifier is used).
                  (4) Enterprise identifier (if concatenated unique item identifier is used).
                  (5) Original part number (if there is serialization within the original part number).
                  (6) Lot or batch number (if there is serialization within the lot or batch number).
                  (7) Current part number (optional and only if not the same as the original part number).
                  (8) Current part number effective date (optional and only if current part number is used).
                  (9) Serial number (if concatenated unique item identifier is used).
                  (10) Government's unit acquisition cost.
                  (11) Unit of measure.
                  (12) Type designation of the item as specified in the contract schedule, if any.
                  (13) Whether the item is an item of Special Tooling or Special Test Equipment.
                  (14) Whether the item is covered by a warranty.
                  (e) For embedded subassemblies, components, and parts that require DoD item unique identification under paragraph (c)(1)(iii) of this clause or when item unique identification is provided under paragraph (c)(1)(v), the Contractor shall report as part of the Material Inspection and Receiving Report specified elsewhere in this contract, the following information:
                  (1) Unique item identifier of the parent item under paragraph (c)(1) of this clause that contains the embedded subassembly, component, or part.
                  (2) Unique item identifier of the embedded subassembly, component, or part.
                  (3) Unique item identifier type.**
                  (4) Issuing agency code (if concatenated unique item identifier is used).**
                  (5) Enterprise identifier (if concatenated unique item identifier is used).**
                  (6) Original part number (if there is serialization within the original part number).**
                  (7) Lot or batch number (if there is serialization within the lot or batch number).**
                  (8) Current part number (optional and only if not the same as the original part number).**
                  (9) Current part number effective date (optional and only if current part number is used).**
                  (10) Serial number (if concatenated unique item identifier is used).**
                  (11) Description.

                  ** Once per item.

                  (f) The Contractor shall submit the information required by paragraphs (d) and (e) of this clause as follows:

                  (1) End items shall be reported using the receiving report capability in Wide Area WorkFlow (WAWF) in accordance with the clause at 252.232-7003. If WAWF is not required by this contract, and the contractor is not using WAWF, follow the procedures at http://dodprocurementtoolbox.com/site/uidregistry/.

                  (2) Embedded items shall be reported by one of the following methods—
                  (i) Use of the embedded items capability in WAWF;

                  (ii) Direct data submission to the IUID Registry following the procedures and formats at http://dodprocurementtoolbox.com/site/uidregistry/; or

                  (iii) Via WAWF as a deliverable attachment for exhibit line item number (fill in) __, Unique Item Identifier Report for Embedded Items, Contract Data Requirements List, DD Form 1423.
                  (g) Subcontracts. If the Contractor acquires by contract any items for which item unique identification is required in accordance with paragraph (c)(1) of this clause, the Contractor shall include this clause, including this paragraph (g), in the applicable subcontract(s), including subcontracts for commercial items.

                (End of clause)
                [70 FR 20836, Apr. 22, 2005, as amended at 70 FR 35549, June 21, 2005; 72 FR 52298, Sept. 13, 2007; 73 FR 27464, May 13, 2008; 73 FR 46820, Aug. 12, 2008; 75 FR 59103, Sept. 27, 2010; 76 FR 33169, June 8, 2011; 76 FR 76320, Dec. 7, 2011; 78 FR 37990, June 25, 2013; 78 FR 76072, Dec. 16, 2013; 79 FR 30474, May 28, 2014; 81 FR 17043, Mar. 25, 2016]

                252.211-7004
                [Reserved]

                252.211-7005
                [Reserved]

                252.211-7006
                Passive Radio Frequency Identification.
                As prescribed in 211.275-3, use the following clause:

                  Passive Radio Frequency Identification (DEC 2019)
                  (a) Definitions. As used in this clause—

                    Advance shipment notice means an electronic notification used to list the contents of a shipment of goods as well as additional information relating to the shipment, such as passive radio frequency identification (RFID) or item unique identification (IUID) information, order information, product description, physical characteristics, type of packaging, marking, carrier information, and configuration of goods within the transportation equipment.

                    Bulk commodities means the following commodities, when shipped in rail tank cars, tanker trucks, trailers, other bulk wheeled conveyances, or pipelines:
                  (1) Sand.
                  (2) Gravel.
                  (3) Bulk liquids (water, chemicals, or petroleum products).
                  (4) Ready-mix concrete or similar construction materials.
                  (5) Coal or combustibles such as firewood.
                  (6) Agricultural products such as seeds, grains, or animal feed.

                    Case means either a MIL-STD-129 defined exterior container within a palletized unit load or a MIL-STD-129 defined individual shipping container.

                    Electronic Product Code TM (EPC ®) means an identification scheme for universally identifying physical objects via RFID tags and other means. The standardized EPC TM data consists of an EPC TM (or EPC TM identifier) that uniquely identifies an individual object, as well as an optional filter value when judged to be necessary to enable effective and efficient reading of the EPC TM tags. In addition to this standardized data, certain classes of EPC TM tags will allow user-defined data. The EPC TM Tag Data Standards will define the length and position of this data, without defining its content.

                    EPCglobal ® means a subscriber-driven organization comprised of industry leaders and organizations focused on creating global standards for the adoption of passive RFID technology.

                    Exterior container means a MIL-STD-129 defined container, bundle, or assembly that is sufficient by reason of material, design, and construction to protect unit packs and intermediate containers and their contents during shipment and storage. It can be a unit pack or a container with a combination of unit packs or intermediate containers. An exterior container may or may not be used as a shipping container.

                    Palletized unit load means a MIL-STD-129 defined quantity of items, packed or unpacked, arranged on a pallet in a specified manner and secured, strapped, or fastened on the pallet so that the whole palletized load is handled as a single unit. A palletized or skidded load is not considered to be a shipping container. A loaded 463L System pallet is not considered to be a palletized unit load. Refer to the Defense Transportation Regulation, DoD 4500.9-R, Part II, Chapter 203, for marking of 463L System pallets.

                    Passive RFID tag means a tag that reflects energy from the reader/interrogator or that receives and temporarily stores a small amount of energy from the reader/interrogator signal in order to generate the tag response. The only acceptable tags are EPC Class 1 passive RFID tags that meet the EPCglobal TM Class 1 Generation 2 standard.

                    Radio frequency identification (RFID) means an automatic identification and data capture technology comprising one or more reader/interrogators and one or more radio frequency transponders in which data transfer is achieved by means of suitably modulated inductive or radiating electromagnetic carriers.

                    Shipping container means a MIL-STD-129 defined exterior container that meets carrier regulations and is of sufficient strength, by reason of material, design, and construction, to be shipped safely without further packing (e.g., wooden boxes or crates, fiber and metal drums, and corrugated and solid fiberboard boxes).
                  (b)(1) Except as provided in paragraph (b)(2) of this clause, the Contractor shall affix passive RFID tags, at the case- and palletized- unit-load packaging levels, for shipments of items that—
                  (i) Are in any of the following classes of supply, as defined in DoD Manual 4140.01, Volume 6, DoD Supply Chain Materiel Management Procedures: Materiel Returns, Retention, and Disposition:
                  (A) Subclass of Class I—Packaged operational rations.
                  (B) Class II—Clothing, individual equipment, tentage, organizational tool kits, hand tools, and administrative and housekeeping supplies and equipment.
                  (C) Class IIIP—Packaged petroleum, lubricants, oils, preservatives, chemicals, and additives.
                  (D) Class IV—Construction and barrier materials.
                  (E) Class VI—Personal demand items (non-military sales items).
                  (F) Subclass of Class VIII—Medical materials (excluding pharmaceuticals, biologicals, and reagents—suppliers should limit the mixing of excluded and non-excluded materials).
                  (G) Class IX—Repair parts and components including kits, assemblies and subassemblies, reparable and consumable items required for maintenance support of all equipment, excluding medical-peculiar repair parts; and

                  (ii) Are being shipped to one of the locations listed at https://www.acq.osd.mil/log/sci/RFID_ship-to-locations.html or to—
                  (A) A location outside the contiguous United States when the shipment has been assigned Transportation Priority 1, or to—
                  (B) The following location(s) deemed necessary by the requiring activity:

                      Contract line, subline, or exhibit line item number
                      Location name
                      City
                      State
                      DoDAAC

                  (2) The following are excluded from the requirements of paragraph (b)(1) of this clause:
                  (i) Shipments of bulk commodities.
                  (ii) Shipments to locations other than Defense Distribution Depots when the contract includes the clause at FAR 52.213-1, Fast Payment Procedures.
                  (c) The Contractor shall—

                  (1) Ensure that the data encoded on each passive RFID tag are globally unique (i.e., the tag ID is never repeated across two or more RFID tags) and conforms to the requirements in paragraph (d) of this clause;
                  (2) Use passive tags that are readable; and
                  (3) Ensure that the passive tag is affixed at the appropriate location on the specific level of packaging, in accordance with MIL-STD-129 (Section 4.9.2) tag placement specifications.
                  (d) Data syntax and standards. The Contractor shall encode an approved RFID tag using the instructions provided in the EPC TM Tag Data Standards in effect at the time of contract award. The EPC TM Tag Data Standards are available at http://www.gs1.org/epc-rfid”.
                  (1) If the Contractor is an EPCglobal TM subscriber and possesses a unique EPC TM company prefix, the Contractor may use any of the identifiers and encoding instructions described in the most recent EPC TM Tag Data Standards document to encode tags.

                  (2) If the Contractor chooses to employ the DoD identifier, the Contractor shall use its previously assigned Commercial and Government Entity (CAGE) code and shall encode the tags in accordance with the tag identifier details located in the DoD Suppliers' Passive RFID Information Guide at http://www.acq.osd.mil/log/sci/ait.html.If the Contractor uses a third-party packaging house to encode its tags, the CAGE code of the third-party packaging house is acceptable.
                  (3) Regardless of the selected encoding scheme, the Contractor with which the Department holds the contract is responsible for ensuring that the tag ID encoded on each passive RFID tag is globally unique, per the requirements in paragraph (c)(1) of this clause.
                  (e) Advance shipment notice. The Contractor shall use Wide Area WorkFlow (WAWF), as required by DFARS 252.232-7003, Electronic Submission of Payment Requests, to electronically submit advance shipment notice(s) with the RFID tag ID(s) (specified in paragraph (d) of this clause) in advance of the shipment in accordance with the procedures at https://wawf.eb.mil/.

                (End of clause)
                [70 FR 53968, Sept. 13, 2005, as amended at 71 FR 29086, May 19, 2006; 72 FR 6483, Feb. 12, 2007; 81 FR 36474, June 7, 2016; 82 FR 61481, Dec. 28, 2017; 83 FR 12681, Mar. 23, 2018; 84 FR 72563, Dec. 31, 2019]

                252.211-7007
                Reporting of Government-Furnished Property.
                As prescribed in 211.274-6(b), use the following clause:

                  Reporting of Government-Furnished Property (AUG 2012)
                  (a) Definitions. As used in this clause—
                  “Commercial and Government entity (CAGE) code” means—
                  (i) A code assigned by the Defense Logistics Agency Logistics Information Service to identify a commercial or Government entity; or
                  (ii) A code assigned by a member of the North Atlantic Treaty Organization that the Defense Logistics Agency Logistics Information Service records and maintains in the CAGE master file. The type of code is known as an “NCAGE code.”
                  “Contractor-acquired property” has the meaning given in FAR clause 52.245-1. Upon acceptance by the Government, contractor-acquired property becomes Government-furnished property.
                  “Government-furnished property” has the meaning given in FAR clause 52.245-1.
                  “Item unique identification (IUID)” means a system of assigning, reporting, and marking DoD property with unique item identifiers that have machine-readable data elements to distinguish an item from all other like and unlike items.
                  “IUID Registry” means the DoD data repository that receives input from both industry and Government sources and provides storage of, and access to, data that identifies and describes tangible Government personal property. The IUID Registry is—
                  (i) The authoritative source of Government unit acquisition cost for items with unique item identification (see DFARS 252.211-7003) that were acquired after January 1, 2004;
                  (ii) The master data source for Government-furnished property; and
                  (iii) An authoritative source for establishing the acquisition cost of end-item equipment.
                  “National stock number (NSN)” means a 13-digit stock number used to identify items of supply. It consists of a four-digit Federal Supply Code and a nine-digit National Item Identification Number.
                  “Nomenclature” means—
                  (i) The combination of a Government-assigned type designation and an approved item name;
                  (ii) Names assigned to kinds and groups of products; or
                  (iii) Formal designations assigned to products by customer or supplier (such as model number or model type, design differentiation, or specific design series or configuration).
                  “Part or identifying number (PIN)” means the identifier assigned by the original design activity, or by the controlling nationally recognized standard, that uniquely identifies (relative to that design activity) a specific item.
                  “Reparable” means an item, typically in unserviceable condition, furnished to the Contractor for maintenance, repair, modification, or overhaul.
                  “Serially managed item” means an item designated by DoD to be uniquely tracked, controlled, or managed in maintenance, repair, and/or supply systems by means of its serial number.

                  “Supply condition code” means a classification of materiel in terms of readiness for issue and use or to identify action underway to change the status of materiel (see http://www2.dla.mil/j-6/dlmso/elibrary/manuals/dlm/dlm_pubs.asp).
                  “Unique item identifier (UII)” means a set of data elements permanently marked on an item that is globally unique and unambiguous and never changes, in order to provide traceability of the item throughout its total life cycle. The term includes a concatenated UII or a DoD recognized unique identification equivalent.
                  “Unit acquisition cost” has the meaning given in FAR clause 52.245-1.
                  (b) Reporting Government-furnished property to the IUID Registry. Except as provided in paragraph (c) of this clause, the Contractor shall report, in accordance with paragraph (f), Government-furnished property to the IUID Registry as follows:—
                  (1) Up to and including December 31, 2013, report serially managed Government-furnished property with a unit-acquisition cost of $5,000 or greater.
                  (2) Beginning January 1, 2014, report—
                  (i) All serially managed Government-furnished property, regardless of unit-acquisition cost; and
                  (ii) Contractor receipt of non-serially managed items. Unless tracked as an individual item, the Contractor shall report non-serially managed items to the Registry in the same unit of packaging, e.g., original manufacturer's package, box, or container, as it was received.
                  (c) Exceptions. Paragraph (b) of this clause does not apply to—
                  (1) Contractor-acquired property;

                  (2) Property under any statutory leasing authority;

                  (3) Property to which the Government has acquired a lien or title solely because of partial, advance, progress, or performance-based payments;
                  (4) Intellectual property or software;
                  (5) Real property; or
                  (6) Property released for work in process.
                  (d) Data for reporting to the IUID Registry. To permit reporting of Government-furnished property to the IUID Registry, the Contractor's property management system shall enable the following data elements in addition to those required by paragraph (f)(1)(iii)(A)(1) through (3), (5), (7), (8), and (10) of the Government Property clause of this contract (FAR 52.245-1):
                  (1) Received/Sent (shipped) date.
                  (2) Status code.
                  (3) Accountable Government contract number.
                  (4) Commercial and Government Entity (CAGE) code on the accountable Government contract.
                  (5) Mark record.
                  (i) Bagged or tagged code (for items too small to individually tag or mark).
                  (ii) Contents (the type of information recorded on the item, e.g., item internal control number).
                  (iii) Effective date (date the mark is applied).
                  (iv) Added or removed code/flag.
                  (v) Marker code (designates which code is used in the marker identifier, e.g., D = CAGE, UN = DUNS, LD = DODAAC).
                  (vi) Marker identifier, e.g., Contractor's CAGE code or DUNS number.
                  (vii) Medium code; how the data is recorded, e.g., barcode, contact memory button.
                  (viii) Value, e.g., actual text or data string that is recorded in its human-readable form.
                  (ix) Set (used to group marks when multiple sets exist.

                  (6) Appropriate supply condition code, required only for reporting of reparables, per Appendix 2 of DoD 4000.25-2-M, Military Standard Transaction Reporting and Accounting Procedures manual (http://www2.dla.mil/j-6/dlmso/elibrary/manuals/dlm/dlm_pubs.asp).
                  (e) When Government-furnished property is in the possession of subcontractors, Contractors shall ensure that reporting is accomplished using the data elements required in paragraph (d) of this clause.
                  (f) Procedures for reporting of Government-furnished property. Except as provided in paragraph (c) of this clause, the Contractor shall establish and report to the IUID Registry the information required by FAR clause 52.245-1, paragraphs (e) and (f)(1)(iii), in accordance with the data submission procedures at http://www.acq.osd.mil/dpap/pdi/uid/data_submission_information.html.

                  (g) Procedures for updating the IUID Registry.

                  (1) Except as provided in paragraph (g)(2), the Contractor shall update the IUID Registry at https://iuid.logisticsinformationservice.dla.mil/ for changes in status, mark, custody, condition code (for reparables only), or disposition of items that are—
                  (i) Received by the Contractor;
                  (ii) Delivered or shipped from the Contractor's plant, under Government instructions, except when shipment is to a subcontractor or other location of the Contractor;
                  (iii) Consumed or expended, reasonably and properly, or otherwise accounted for, in the performance of the contract as determined by the Government property administrator, including reasonable inventory adjustments;
                  (iv) Disposed of; or
                  (v) Transferred to a follow-on or other contract.
                  (2) The Contractor need not report to the IUID Registry those transactions reported or to be reported to the following DCMA etools:
                  (i) Plant Clearance Automated Reutilization and Screening System (PCARSS); or
                  (ii) Lost, Theft, Damaged or Destroyed (LTDD) system.
                  (3) The contractor shall update the IUID Registry as transactions occur or as otherwise stated in the Contractor's property management procedure.

                (End of clause)
                [77 FR 52257, Aug. 29, 2012, as amended at 78 FR 13544, Feb. 28, 2013]

                252.211-7008
                Use of Government-assigned Serial Numbers
                As prescribed in 211.274-6(c), use the following clause:

                  Use of Government-assigned Serial Numbers (SEP 2010)
                  (a) Definitions. As used in this clause—

                    Government-assigned serial number means a combination of letters or numerals in a fixed human-readable information format (text) conveying information about a major end item, which is provided to a contractor by the requiring activity with accompanying technical data instructions for marking the Government-assigned serial number on major end items to be delivered to the Government.

                    Major end item means a final combination of component parts and/or materials which is ready for its intended use and of such importance to operational readiness that review and control of inventory management functions (procurement, distribution, maintenance, disposal, and asset reporting) is required at all levels of life cycle management. Major end items include aircraft; ships; boats; motorized wheeled, tracked, and towed vehicles for use on highway or rough terrain; weapon and missile end items; ammunition; and sets, assemblies, or end items having a major end item as a component.

                    Unique item identifier (UII) means a set of data elements permanently marked on an item that is globally unique and unambiguous and never changes in order to provide traceability of the item throughout its total life cycle. The term includes a concatenated UII or a DoD-recognized unique identification equivalent.
                  (b) The Contractor shall mark the Government-assigned serial numbers on those major end items as specified by line item in the Schedule, in accordance with the technical instructions for the placement and method of application identified in the terms and conditions of the contract.
                  (c) The Contractor shall register the Government-assigned serial number along with the major end item's UII at the time of delivery in accordance with the provisions of the clause at DFARS 252.211-7003(d).
                  (d) The Contractor shall establish the UII for major end items for use throughout the life of the major end item. The Contractor may elect, but is not required, to use the Government-assigned serial number to construct the UII.

                (End of clause)
                [75 FR 59103, Sept. 27, 2010]

                252.212-7000—252.212-7001
                [Reserved]

                252.212-7002
                Pilot Program for Acquisition of Military-purpose Nondevelopmental Items.
                As prescribed in 212.7103, use the following provision:

                  Pilot Program for Acquisition of Military-purpose Nondevelopmental Items (JUN 2016)
                  (a) Definitions. As used in this provision—

                    Military-purpose nondevelopmental item means a nondevelopmental item that meets a validated military requirement, as determined in writing by the responsible program manager, and has been developed exclusively at private expense. An item shall not be considered to be developed at private expense if development of the item was paid for in whole or in part through—
                  (1) Independent research and development costs or bid and proposal costs, per the definition in FAR 31.205-18, that have been reimbursed directly or indirectly by a Federal agency or have been submitted to a Federal agency for reimbursement; or
                  (2) Foreign government funding.
                  “Nondevelopmental item” is defined in FAR 2.101 and also includes previously developed items of supply that require modifications other than those customarily available in the commercial marketplace if such modifications are consistent with the requirement at DFARS 212.7102-1(c)(1).
                  (b) Notice. This is a procurement action under section 866 of the National Defense Authorization Act for Fiscal Year 2011, Pilot Program for Acquisition of Military-Purpose Nondevelopmental Items, as modified by section 892 of the National Defense Authorization Act for Fiscal Year 2016 (Pub. L. 114-92), and is subject to the limitations outlined in DFARS 212.7102.

                (End of provision)
                [76 FR 38050, June 29, 2011, as amended at 77 FR 35881, June 15, 2012; 81 FR 42559, June 30, 2016]

                252.213-7000
                Notice to Prospective Suppliers on Use of Supplier Performance Risk System in Past Performance Evaluations.
                As prescribed in 213.106-2-70, use the following provision:

                  Notice to Prospective Suppliers on Use of Supplier Performance Risk System in Past Performance Evaluations (SEP 2019)

                  (a) The Supplier Performance Risk System (SPSR) application (https://www.sprs.csd.disa.mil) will be used in the evaluation of suppliers' past performance in accordance with DFARS 213.106-2(b)(i).
                  (b) SPRS collects quality and delivery data on previously awarded contracts and orders from existing Department of Defense reporting systems to classify each supplier's performance history by Federal supply class (FSC) and product or service code (PSC). The SPRS application provides the contracting officer quantifiable past performance information regarding a supplier's quality and delivery performance for the FSC and PSC of the supplies being purchased.
                  (c) The quality and delivery classifications identified for a supplier in SPRS will be used by the contracting officer to evaluate a supplier's past performance in conjunction with the supplier's references (if requested) and other provisions of this solicitation under the past performance evaluation factor. The Government reserves the right to award to the supplier whose quotation or offer represents the best value to the Government.

                  (d) SPRS classifications are generated monthly for each contractor and can be reviewed by following the access instructions in the SPRS User's Manual found at https://www.sprs.csd.disa.mil/reference.htm. Contractors are granted access to SPRS for their own classifications only. Suppliers are encouraged to review their own classifications, the SPRS reporting procedures and classification methodology detailed in the SPRS User's Manual, and SPRSEvaluation Criteria available from the references at https://www.sprs.csd.disa.mil/pdf/SPRS_DataEvaluationCriteria.pdf. The method to challenge a rating generated by SPRS is provided in the User's Manual.

                (End of provision)
                [80 FR 30118, May 26, 2015, as amended at 80 FR 36718, June 26, 2015; 83 FR 12681, Mar. 23, 2018; 84 FR 48508, Sept. 13, 2019]

                252.215-7000—252.215-7001
                [Reserved]

                252.215-7002
                Cost estimating system requirements.
                As prescribed in 215.408(1), use the following clause:

                  Cost Estimating System Requirements (DEC 2012)
                  (a) Definitions.

                    Acceptable estimating system means an estimating system that complies with the system criteria in paragraph (d) of this clause, and provides for a system that—
                  (1) Is maintained, reliable, and consistently applied;
                  (2) Produces verifiable, supportable, documented, and timely cost estimates that are an acceptable basis for negotiation of fair and reasonable prices;
                  (3) Is consistent with and integrated with the Contractor's related management systems; and
                  (4) Is subject to applicable financial control systems.

                    Estimating system means the Contractor's policies, procedures, and practices for budgeting and planning controls, and generating estimates of costs and other data included in proposals submitted to customers in the expectation of receiving contract awards. Estimating system includes the Contractor's—
                  (1) Organizational structure;
                  (2) Established lines of authority, duties, and responsibilities;
                  (3) Internal controls and managerial reviews;
                  (4) Flow of work, coordination, and communication; and
                  (5) Budgeting, planning, estimating methods, techniques, accumulation of historical costs, and other analyses used to generate cost estimates.

                    Significant deficiency means a shortcoming in the system that materially affects the ability of officials of the Department of Defense to rely upon data and information produced by the system that is needed for management purposes.
                  (b) General. The Contractor shall establish, maintain, and comply with an acceptable estimating system.
                  (c) Applicability. Paragraphs (d) and (e) of this clause apply if the Contractor is a large business and either—
                  (1) In its fiscal year preceding award of this contract, received Department of Defense (DoD) prime contracts or subcontracts, totaling $50 million or more for which certified cost or pricing data were required; or
                  (2) In its fiscal year preceding award of this contract—
                  (i) Received DoD prime contracts or subcontracts totaling $10 million or more (but less than $50 million) for which certified cost or pricing data were required; and
                  (ii) Was notified, in writing, by the Contracting Officer that paragraphs (d) and (e) of this clause apply.
                  (d) System requirements. (1) The Contractor shall disclose its estimating system to the Administrative Contracting Officer (ACO), in writing. If the Contractor wishes the Government to protect the data and information as privileged or confidential, the Contractor must mark the documents with the appropriate legends before submission.
                  (2) An estimating system disclosure is acceptable when the Contractor has provided the ACO with documentation that—
                  (i) Accurately describes those policies, procedures, and practices that the Contractor currently uses in preparing cost proposals; and
                  (ii) Provides sufficient detail for the Government to reasonably make an informed judgment regarding the acceptability of the Contractor's estimating practices.
                  (3) The Contractor shall—
                  (i) Comply with its disclosed estimating system; and
                  (ii) Disclose significant changes to the cost estimating system to the ACO on a timely basis.
                  (4) The Contractor's estimating system shall provide for the use of appropriate source data, utilize sound estimating techniques and good judgment, maintain a consistent approach, and adhere to established policies and procedures. An acceptable estimating system shall accomplish the following functions:
                  (i) Establish clear responsibility for preparation, review, and approval of cost estimates and budgets.
                  (ii) Provide a written description of the organization and duties of the personnel responsible for preparing, reviewing, and approving cost estimates and budgets.
                  (iii) Ensure that relevant personnel have sufficient training, experience, and guidance to perform estimating and budgeting tasks in accordance with the Contractor's established procedures.

                  (iv) Identify and document the sources of data and the estimating methods and rationale used in developing cost estimates and budgets.

                  (v) Provide for adequate supervision throughout the estimating and budgeting process.
                  (vi) Provide for consistent application of estimating and budgeting techniques.
                  (vii) Provide for detection and timely correction of errors.
                  (viii) Protect against cost duplication and omissions.
                  (ix) Provide for the use of historical experience, including historical vendor pricing data, where appropriate.
                  (x) Require use of appropriate analytical methods.
                  (xi) Integrate data and information available from other management systems.
                  (xii) Require management review, including verification of compliance with the company's estimating and budgeting policies, procedures, and practices.
                  (xiii) Provide for internal review of, and accountability for, the acceptability of the estimating system, including the budgetary data supporting indirect cost estimates and comparisons of projected results to actual results, and an analysis of any differences.
                  (xiv) Provide procedures to update cost estimates and notify the Contracting Officer in a timely manner throughout the negotiation process.
                  (xv) Provide procedures that ensure subcontract prices are reasonable based on a documented review and analysis provided with the prime proposal, when practicable.
                  (xvi) Provide estimating and budgeting practices that consistently generate sound proposals that are compliant with the provisions of the solicitation and are adequate to serve as a basis to reach a fair and reasonable price.
                  (xvii) Have an adequate system description, including policies, procedures, and estimating and budgeting practices, that comply with the Federal Acquisition Regulation and Defense Federal Acquisition Regulation Supplement.
                  (e) Significant deficiencies. (1) The Contracting Officer will provide an initial determination to the Contractor, in writing, of any significant deficiencies. The initial determination will describe the deficiency in sufficient detail to allow the Contractor to understand the deficiency.
                  (2) The Contractor shall respond within 30 days to a written initial determination from the Contracting Officer that identifies significant deficiencies in the Contractor's estimating system. If the Contractor disagrees with the initial determination, the Contractor shall state, in writing, its rationale for disagreeing.
                  (3) The Contracting Officer will evaluate the Contractor's response and notify the Contractor, in writing, of the Contracting Officer's final determination concerning—
                  (i) Remaining significant deficiencies;
                  (ii) The adequacy of any proposed or completed corrective action; and
                  (iii) System disapproval, if the Contracting Officer determines that one or more significant deficiencies remain.
                  (f) If the Contractor receives the Contracting Officer's final determination of significant deficiencies, the Contractor shall, within 45 days of receipt of the final determination, either correct the significant deficiencies or submit an acceptable corrective action plan showing milestones and actions to eliminate the significant deficiencies.
                  (g) Withholding payments. If the Contracting Officer makes a final determination to disapprove the Contractor's estimating system, and the contract includes the clause at 252.242-7005, Contractor Business Systems, the Contracting Officer will withhold payments in accordance with that clause.

                (End of clause)
                [76 FR 28873, May 18, 2011, as amended at 77 FR 11366, Feb. 24, 2012; 77 FR 11775, Feb. 28, 2012; 77 FR 76941, Dec. 31, 2012; 83 FR 30825, June 29, 2018]

                252.215-7003
                Requirement for Submission of Data Other Than Certified Cost or Pricing Data—Canadian Commercial Corporation.
                As prescribed at 215.408(2)(i), use the following provision:

                  Requirement for Submission of Data Other Than Certified Cost or Pricing Data—Canadian Commercial Corporation (JUL 2012)
                  (a) Submission of certified cost or pricing data is not required.
                  (b) Canadian Commercial Corporation shall obtain and provide the following:
                  (i) Profit rate or fee (as applicable).
                  (ii) Analysis provided by Public Works and Government Services Canada to the Canadian Commercial Corporation to determine a fair and reasonable price (comparable to the analysis required at FAR 15.404-1).

                  (iii) Data other than certified cost or pricing data necessary to permit a determination by the U.S. Contracting Officer that the proposed price is fair and reasonable [U.S. Contracting Officer to insert description of the data required in accordance with FAR 15.403-3(a)(1)].
                  (c) As specified in FAR 15.403-3(a)(4), an offeror who does not comply with a requirement to submit data that the U.S. Contracting Officer has deemed necessary to determine price reasonableness or cost realism is ineligible for award unless the head of the contracting activity determines that it is in the best interest of the Government to make the award to that offeror.

                (End of provision)
                [77 FR 43473, July 24, 2012, as amended at 78 FR 65217, Oct. 31, 2013; 83 FR 30825, June 29, 2018]

                252.215-7004
                Requirement for Submission of Data Other Than Certified Cost or Pricing Data—Modifications-Canadian Commercial Corporation.
                As prescribed at 215.408(2)(ii), use the following clause:

                  Requirement for Submission of Data Other Than Certified Cost or Pricing Data—Modifications—Canadian Commercial Corporation (OCT 2013)
                  This clause, in lieu of FAR 52.215-21, applies only if award is to the Canadian Commercial Corporation.
                  (a) Submission of certified cost or pricing data is not required.

                  (b) Canadian Commercial Corporation shall obtain and provide the following for modifications that exceed $150,000 [or higher dollar value specified by the U.S. Contracting Officer in the solicitation].
                  (i) Profit rate or fee (as applicable).
                  (ii) Analysis provided by Public Works and Government Services Canada to the Canadian Commercial Corporation to determine a fair and reasonable price (comparable to the analysis required at FAR 15.404-1).

                  (iii) Data other than certified cost or pricing data necessary to permit a determination by the U.S. Contracting Officer that the proposed price is fair and reasonable [U.S. Contracting Officer to insert description of the data required in accordance with FAR 15.403-3(a)(1)].

                (End of clause)
                [77 FR 43473, July 24, 2012, as amended at 78 FR 65217, Oct. 31, 2013; 83 FR 30825, June 29, 2018]

                252.215-7005
                Evaluation Factor for Employing or Subcontracting With Members of the Selected Reserve.
                As prescribed in 215.370-3(a), use the following provision:

                  Evaluation Factor for Employing or Subcontracting With Members of the Selected Reserve (OCT 2008)
                  (a) Definition. Selected Reserve, as used in this provision, has the meaning given that term in 10 U.S.C. 10143. Selected Reserve members normally attend regular drills throughout the year and are the group of Reserves most readily available to the President.
                  (b) This solicitation includes an evaluation factor that considers the offeror's intended use of employees, or individual subcontractors, who are members of the Selected Reserve.
                  (c) If the offeror, in the performance of any contract resulting from this solicitation, intends to use employees or individual subcontractors who are members of the Selected Reserve, the offeror's proposal shall include documentation to support this intent. Such documentation may include, but is not limited to—
                  (1) Existing company documentation, such as payroll or personnel records, indicating the names of the Selected Reserve members who are currently employed by the company; or
                  (2) A statement that one or more positions will be set aside to be filled by new hires of Selected Reserve members, along with verifying documentation.

                (End of provision)
                [73 FR 62212, Oct. 20, 2008]

                252.215-7006
                Use of Employees or Individual Subcontractors Who Are Members of the Selected Reserve.
                As prescribed in 215.370-3(b), use the following clause:

                  Use of Employees or Individual Subcontractors Who Are Members of the Selected Reserve (OCT 2008)
                  (a) Definition. Selected Reserve, as used in this clause, has the meaning given that term in 10 U.S.C. 10143. Selected Reserve members normally attend regular drills throughout the year and are the group of Reserves most readily available to the President.
                  (b) If the Contractor stated in its offer that it intends to use members of the Selected Reserve in the performance of this contract—
                  (1) The Contractor shall use employees, or individual subcontractors, who are members of the Selected Reserve in the performance of the contract to the fullest extent consistent with efficient contract performance; and
                  (2) The Government has the right to terminate the contract for default if the Contractor willfully or intentionally fails to use members of the Selected Reserve, as employees or individual subcontractors, in the performance of the contract.

                (End of clause)
                [73 FR 62212, Oct. 20, 2008]

                252.215-7007
                Notice of Intent to Resolicit.
                As prescribed at 215.371-6, use the following provision:

                  Notice of Intent To Resolicit (JUN 2012)
                  This solicitation provides offerors fewer than 30 days to submit proposals. In the event that only one offer is received in response to this solicitation, the Contracting Officer may cancel the solicitation and resolicit for an additional period of at least 30 days in accordance with 215.371-2.

                (End of provision)
                [77 FR 39139, June 29, 2012, as amended at 78 FR 65217, Oct. 31, 2013]

                252.215-7008
                Only One Offer.
                As prescribed at 215.408(3), use the following provision:

                  Only One Offer (JUL 2019)
                  (a) Cost or pricing data requirements. After initial submission of offers, if the Contracting Officer notifies the Offeror that only one offer was received, the Offeror agrees to—
                  (1) Submit any additional cost or pricing data that is required in order to determine whether the price is fair and reasonable or to comply with the statutory requirement for certified cost or pricing data (10 U.S.C. 2306a and FAR 15.403-3); and
                  (2) Except as provided in paragraph (b) of this provision, if the acquisition exceeds the certified cost or pricing data threshold and an exception to the requirement for certified cost or pricing data at FAR 15.403-1(b)(2) through (5) does not apply, certify all cost or pricing data in accordance with paragraph (c) of DFARS provision 252.215-7010, Requirements for Certified Cost or Pricing Data and Data Other Than Certified Cost or Pricing Data, of this solicitation.
                  (b) Canadian Commercial Corporation. If the Offeror is the Canadian Commercial Corporation, certified cost or pricing data are not required. If the Contracting Officer notifies the Canadian Commercial Corporation that additional data other than certified cost or pricing data are required in accordance with DFARS 225.870-4(c), the Canadian Commercial Corporation shall obtain and provide the following:
                  (1) Profit rate or fee (as applicable).
                  (2) Analysis provided by Public Works and Government Services Canada to the Canadian Commercial Corporation to determine a fair and reasonable price (comparable to the analysis required at FAR 15.404-1).

                  (3) Data other than certified cost or pricing data necessary to permit a determination by the U.S. Contracting Officer that the proposed price is fair and reasonable [U.S. Contracting Officer to provide description of the data required in accordance with FAR 15.403-3(a)(1) with the notification].

                  (4) As specified in FAR 15.403-3(a)(4), an offeror who does not comply with a requirement to submit data that the U.S. Contracting Officer has deemed necessary to determine price reasonableness or cost realism is ineligible for award unless the head of the contracting activity determines that it is in the best interest of the Government to make the award to that offeror.
                  (c) Subcontracts. Unless the Offeror is the Canadian Commercial Corporation, the Offeror shall insert the substance of this provision, including this paragraph (c), in all subcontracts exceeding the simplified acquisition threshold defined in FAR part 2.

                (End of provision)
                [78 FR 65217, Oct. 31, 2013, as amended at 83 FR 30825, June 29, 2018; 84 FR 30950, June 28, 2019; 84 FR 33858, July 16, 2019]

                252.215-7009
                Proposal adequacy checklist.
                As prescribed in 215.408(4), use the following provision:

                  Proposal Adequacy Checklist (JAN 2014)
                  The offeror shall complete the following checklist, providing location of requested information, or an explanation of why the requested information is not provided. In preparation of the offeror's checklist, offerors may elect to have their prospective subcontractors use the same or similar checklist as appropriate.

                  Proposal Adequacy Checklist

                    References
                    Submission item
                    Proposal page No.
                    If not providedEXPLAIN
                      (may use
                      continuation
                      pages)

                      GENERAL INSTRUCTIONS

                    1. FAR 15.408, Table 15-2, Section I Paragraph A
                    Is there a properly completed first page of the proposal per FAR 15.408 Table 15-2 I.A or as specified in the solicitation?

                    2. FAR 15.408, Table 15-2, Section I Paragraph A(7)
                    Does the proposal identify the need for Government-furnished material/tooling/test equipment? Include the accountable contract number and contracting officer contact information if known.

                    3. FAR 15.408, Table 15-2, Section I Paragraph A(8)
                    Does the proposal identify and explain notifications of noncompliance with Cost Accounting Standards Board or Cost Accounting Standards (CAS); any proposal inconsistencies with your disclosed practices or applicable CAS; and inconsistencies with your established estimating and accounting principles and procedures?

                    4. FAR 15.408, Table 15-2, Section I, Paragraph C(1)
                    Does the proposal disclose any other known activity that could materially impact the costs?

                    FAR 2.101, “Cost or pricing data”
                    This may include, but is not limited to, such factors as—(1) Vendor quotations;
                      (2) Nonrecurring costs;
                      (3) Information on changes in production methods and in production or purchasing volume;
                      (4) Data supporting projections of business prospects and objectives and related operations costs;

                    (5) Unit-cost trends such as those associated with labor efficiency;(6) Make-or-buy decisions;

                    (7) Estimated resources to attain business goals; and

                    (8) Information on management decisions that could have a significant bearing on costs.

                    5. FAR 15.408, Table 15-2, Section I Paragraph B
                    Is an Index of all certified cost or pricing data and information accompanying or identified in the proposal provided and appropriately referenced?

                    6. FAR 15.403-1(b)
                    Are there any exceptions to submission of certified cost or pricing data pursuant to FAR 15.403-1(b)? If so, is supporting documentation included in the proposal? (Note questions 18-20.)

                    7. FAR 15.408, Table 15-2, Section I Paragraph C(2)(i)
                    Does the proposal disclose the judgmental factors applied and the mathematical or other methods used in the estimate, including those used in projecting from known data?

                    8. FAR 15.408, Table 15-2, Section I Paragraph C(2)(ii)
                    Does the proposal disclose the nature and amount of any contingencies included in the proposed price?

                    9. FAR 15.408 Table 15-2, Section II, Paragraph A or B
                    Does the proposal explain the basis of all cost estimating relationships (labor hours or material) proposed on other than a discrete basis?

                    10. FAR 15.408, Table 15-2, Section I Paragraphs D and E
                    Is there a summary of total cost by element of cost and are the elements of cost cross-referenced to the supporting cost or pricing data? (Breakdowns for each cost element must be consistent with your cost accounting system, including breakdown by year.)

                    11. FAR 15.408, Table 15-2, Section I Paragraphs D and E
                    If more than one Contract Line Item Number (CLIN) or sub Contract Line Item Number (sub-CLIN) is proposed as required by the RFP, are there summary total amounts covering all line items for each element of cost and is it cross-referenced to the supporting cost or pricing data?

                    12. FAR 15.408, Table 15-2, Section I Paragraph F
                    Does the proposal identify any incurred costs for work performed before the submission of the proposal?

                    13. FAR 15.408, Table 15-2, Section I Paragraph G
                    Is there a Government forward pricing rate agreement (FPRA)? If so, the offeror shall identify the official submittal of such rate and factor data. If not, does the proposal include all rates and factors by year that are utilized in the development of the proposal and the basis for those rates and factors?

                      COST ELEMENTS

                    MATERIALS AND SERVICES

                    14. FAR 15.408, Table 15-2, Section II Paragraph A
                    Does the proposal include a consolidated summary of individual material and services, frequently referred to as a Consolidated Bill of Material (CBOM), to include the basis for pricing? The offeror's consolidated summary shall include raw materials, parts, components, assemblies, subcontracts and services to be produced or performed by others, identifying as a minimum the item, source, quantity, and price.

                    SUBCONTRACTS (Purchased materials or services)

                    15. DFARS 215.404-3
                    Has the offeror identified in the proposal those subcontractor proposals, for which the contracting officer has initiated or may need to request field pricing analysis?

                    16. FAR 15.404-3(c)FAR 52.244-2

                    Per the thresholds of FAR 15.404-3(c), Subcontract Pricing Considerations, does the proposal include a copy of the applicable subcontractor's certified cost or pricing data?

                    17. FAR 15.408, Table 15-2, Note 1; Section II Paragraph A
                    Is there a price/cost analysis establishing the reasonableness of each of the proposed subcontracts included with the proposal? If the offeror's price/cost analyses are not provided with the proposal, does the proposal include a matrix identifying dates for receipt of subcontractor proposal, completion of fact finding for purposes of price/cost analysis, and submission of the price/cost analysis?

                      EXCEPTIONS TO CERTIFIED COST OR PRICING DATA

                    18. FAR 52.215-20FAR 2.101, “commercial item”

                    Has the offeror submitted an exception to the submission of certified cost or pricing data for commercial items proposed either at the prime or subcontractor level, in accordance with provision 52.215-20?

                    a. Has the offeror specifically identified the type of commercial item claim (FAR 2.101 commercial item definition, paragraphs (1) through (8)), and the basis on which the item meets the definition?

                    b. For modified commercial items (FAR 2.101 commercial item definition paragraph (3)); did the offeror classify the modification(s) as either—

                    i. A modification of a type customarily available in the commercial marketplace (paragraph (3)(i)); or

                    ii. A minor modification (paragraph (3)(ii)) of a type not customarily available in the commercial marketplace made to meet Federal Government requirements not exceeding the thresholds in FAR 15.403-1(c)(3)(iii)(B)?

                    c. For proposed commercial items “of a type”, or “evolved” or modified (FAR 2.101 commercial item definition paragraphs (1) through (3)), did the contractor provide a technical description of the differences between the proposed item and the comparison item(s)?

                    19.
                    [Reserved]

                    20. FAR 15.408, Table 15-2, Section II Paragraph A(1)
                    Does the proposal support the degree of competition and the basis for establishing the source and reasonableness of price for each subcontract or purchase order priced on a competitive basis exceeding the threshold for certified cost or pricing data?

                    INTERORGANIZATIONAL TRANSFERS

                    21. FAR 15.408, Table 15-2, Section II Paragraph A.(2)
                    For inter-organizational transfers proposed at cost, does the proposal include a complete cost proposal in compliance with Table 15-2?

                    22. FAR 15.408, Table 15-2, Section II Paragraph A(1)
                    For inter-organizational transfers proposed at price in accordance with FAR 31.205-26(e), does the proposal provide an analysis by the prime that supports the exception from certified cost or pricing data in accordance with FAR 15.403-1?

                    DIRECT LABOR

                    23. FAR 15.408, Table 15-2, Section II Paragraph B
                    Does the proposal include a time phased (i.e.; monthly, quarterly) breakdown of labor hours, rates and costs by category or skill level? If labor is the allocation base for indirect costs, the labor cost must be summarized in order that the applicable overhead rate can be applied.

                    24. FAR 15.408, Table 15-2, Section II Paragraph B
                    For labor Basis of Estimates (BOEs), does the proposal include labor categories, labor hours, and task descriptions—(e.g.; Statement of Work reference, applicable CLIN, Work Breakdown Structure, rationale for estimate, applicable history, and time-phasing)?

                    25. FAR subpart 22.10
                    If covered by the Service Contract Labor Standards statute (41 U.S.C. chapter 67), are the rates in the proposal in compliance with the minimum rates specified in the statute?

                      INDIRECT COSTS

                    26. FAR 15.408, Table 15-2, Section II Paragraph C
                    Does the proposal indicate the basis of estimate for proposed indirect costs and how they are applied? (Support for the indirect rates could consist of cost breakdowns, trends, and budgetary data.)

                      OTHER COSTS

                    27. FAR 15.408, Table 15-2, Section II Paragraph D
                    Does the proposal include other direct costs and the basis for pricing? If travel is included does the proposal include number of trips, number of people, number of days per trip, locations, and rates (e.g. airfare, per diem, hotel, car rental, etc)?

                    28. FAR 15.408, Table 15-2, Section II Paragraph E
                    If royalties exceed $1,500 does the proposal provide the information/data identified by Table 15-2?

                    29. FAR 15.408, Table 15-2, Section II Paragraph F
                    When facilities capital cost of money is proposed, does the proposal include submission of Form CASB-CMF or reference to an FPRA/FPRP and show the calculation of the proposed amount?

                      FORMATS FOR SUBMISSION OF LINE ITEM SUMMARIES

                    30. FAR 15.408, Table 15-2, Section III
                    Are all cost element breakdowns provided using the applicable format prescribed in FAR 15.408, Table 15-2 III? (or alternative format if specified in the request for proposal)

                    31. FAR 15.408, Table 15-2, Section III Paragraph B
                    If the proposal is for a modification or change order, have cost of work deleted (credits) and cost of work added (debits) been provided in the format described in FAR 15.408, Table 15-2.III.B?

                    32. FAR 15.408, Table 15-2, Section III Paragraph C
                    For price revisions/redeterminations, does the proposal follow the format in FAR 15.408, Table 15-2.III.C?

                      OTHER

                    33. FAR 16.4
                    If an incentive contract type, does the proposal include offeror proposed target cost, target profit or fee, share ratio, and, when applicable, minimum/maximum fee, ceiling price?

                    34. FAR 16.203-4 and FAR 15.408 Table 15-2, Section II, Paragraphs A, B, C, and D
                    If Economic Price Adjustments are being proposed, does the proposal show the rationale and application for the economic price adjustment?

                    35. FAR 52.232-28
                    If the offeror is proposing Performance-Based Payments—did the offeror comply with FAR 52.232-28?

                    36. FAR 15.408(n)FAR 52.215-22
                      FAR 52.215-23

                    Excessive Pass-through Charges—Identification of Subcontract Effort: If the offeror intends to subcontract more than 70% of the total cost of work to be performed, does the proposal identify:(i) the amount of the offeror's indirect costs and profit applicable to the work to be performed by the proposed subcontractor(s); and (ii) a description of the added value provided by the offeror as related to the work to be performed by the proposed subcontractor(s)?

                (End of provision)
                [78 FR 18872, Mar. 28, 2013, as amended at 78 FR 65218, Oct. 31, 2013; 79 FR 4633, Jan. 29, 2014; 83 FR 30825, June 29, 2018]

                252.215-7010
                Requirements for Certified Cost or Pricing Data and Data Other Than Certified Cost or Pricing Data.

                  Basic. As prescribed in 215.408(5)(i) and (5)(i)(A), use the following provision:

                  Requirements for Certified Cost or Pricing Data and Data Other Than Certified Cost or Pricing Data—Basic (JUL 2019)
                  (a) Definitions. As used in this provision—

                    Market prices means current prices that are established in the course of ordinary trade between buyers and sellers free to bargain and that can be substantiated through competition or from sources independent of the offerors.

                    Non-Government sales means sales of the supplies or services to non-Governmental entities for purposes other than governmental purposes.

                    Relevant sales data means information provided by an offeror on sales of the same or similar items that can be used to establish price reasonableness taking into consideration the age, volume, and nature of the transactions (including any related discounts, refunds, rebates, offsets, or other adjustments).

                    Sufficient non-Government sales means relevant sales data that reflects market pricing and contains enough information to make adjustments covered by FAR 15.404-1(b)(2)(ii)(B).

                    Uncertified cost data means the subset of “data other than certified cost or pricing data” (see FAR 2.101) that relates to cost.
                  (b) Exceptions from certified cost or pricing data. (1) In lieu of submitting certified cost or pricing data, the Offeror may submit a written request for exception by submitting the information described in paragraphs (b)(1)(i) and (ii) of this provision. The Contracting Officer may require additional supporting information, but only to the extent necessary to determine whether an exception should be granted and whether the price is fair and reasonable.
                  (i) Exception for prices set by law or regulation—Identification of the law or regulation establishing the prices offered. If the prices are controlled under law by periodic rulings, reviews, or similar actions of a governmental body, attach a copy of the controlling document, unless it was previously submitted to the contracting office.
                  (ii) Commercial item exception. For a commercial item exception, the Offeror shall submit, at a minimum, information that is adequate for evaluating the reasonableness of the price for this acquisition, including prices at which the same item or similar items have been sold in the commercial market. Such information shall include—
                  (A) For items previously determined to be commercial, the contract number and military department, defense agency, or other DoD component that rendered such determination, and if available, a Government point of contact;
                  (B) For items priced based on a catalog—
                  (1) A copy of or identification of the Offeror's current catalog showing the price for that item; and
                  (2) If the catalog pricing provided with this proposal is not consistent with all relevant sales data, a detailed description of differences or inconsistencies between or among the relevant sales data, the proposed price, and the catalog price (including any related discounts, refunds, rebates, offsets, or other adjustments);

                  (C) For items priced based on market pricing, a description of the nature of the commercial market, the methodology used to establish a market price, and all relevant sales data. The description shall be adequate to permit the DoD to verify the accuracy of the description;
                  (D) For items included on an active Federal Supply Service Multiple Award Schedule contract, proof that an exception has been granted for the schedule item; or
                  (E) For items provided by nontraditional defense contractors, a statement that the entity is not currently performing and has not performed, for at least the 1-year period preceding the solicitation of sources by DoD for the procurement or transaction, any contract or subcontract for DoD that is subject to full coverage under the cost accounting standards prescribed pursuant to 41 U.S.C. 1502 and the regulations implementing such section.
                  (2) The Offeror grants the Contracting Officer or an authorized representative the right to examine, at any time before award, books, records, documents, or other directly pertinent records to verify any request for an exception under this provision, and to determine the reasonableness of price.
                  (c) Requirements for certified cost or pricing data. If the Offeror is not granted an exception from the requirement to submit certified cost or pricing data, the following applies:
                  (1) The Offeror shall prepare and submit certified cost or pricing data and supporting attachments in accordance with the instructions contained in Table 15-2 of FAR 15.408, which is incorporated by reference with the same force and effect as though it were inserted here in full text. The instructions in Table 15-2 are incorporated as a mandatory format to be used in any resultant contract, unless the Contracting Officer and the Offeror agree to a different format and change this provision to use Alternate I.
                  (2) As soon as practicable after agreement on price, but before contract award (except for unpriced actions such as letter contracts), the Offeror shall submit a Certificate of Current Cost or Pricing Data, as prescribed by FAR 15.406-2.

                  (3) The Offeror is responsible for determining whether a subcontractor qualifies for an exception from the requirement for submission of certified cost or pricing data on the basis of adequate price competition, i.e., two or more responsible offerors, competing independently, submit priced offers that satisfy the Government's expressed requirement in accordance with FAR 15.403-1(c)(1)(i).
                  (d) Requirements for data other than certified cost or pricing data. (1) Data other than certified cost or pricing data submitted in accordance with this provision shall include the minimum information necessary to permit a determination that the proposed price is fair and reasonable, to include the requirements in DFARS 215.402(a)(i) and 215.404-1(b).
                  (2) In cases in which uncertified cost data is required, the information shall be provided in the form in which it is regularly maintained by the Offeror or prospective subcontractor in its business operations.
                  (3) Within 10 days of a written request from the Contracting Officer for additional information to permit an adequate evaluation of the proposed price in accordance with FAR 15.403-3, the Offeror shall provide either the requested information, or a written explanation for the inability to fully comply.
                  (4) Subcontract price evaluation. (i) Offerors shall obtain from subcontractors the minimum information necessary to support a determination of price reasonableness, as described in FAR part 15 and DFARS part 215.
                  (ii) No cost data may be required from a prospective subcontractor in any case in which there are sufficient non-Government sales of the same item to establish reasonableness of price.
                  (iii) If the Offeror relies on relevant sales data for similar items to determine the price is reasonable, the Offeror shall obtain only that technical information necessary—
                  (A) To support the conclusion that items are technically similar; and
                  (B) To explain any technical differences that account for variances between the proposed prices and the sales data presented.
                  (e) Subcontracts. The Offeror shall insert the substance of this provision, including this paragraph (e), in subcontracts exceeding the simplified acquisition threshold defined in FAR part 2. The Offeror shall require prospective subcontractors to adhere to the requirements of—
                  (1) Paragraphs (c) and (d) of this provision for subcontracts above the threshold for submission of certified cost or pricing data in FAR 15.403-4; and
                  (2) Paragraph (d) of this provision for subcontracts exceeding the simplified acquisition threshold defined in FAR part 2.

                (End of provision)

                  Alternate I. As prescribed in 215.408(5)(i) and (5)(i)(B), use the following provision, which includes a different paragraph (c)(1).

                  Requirements for Certified Cost or Pricing Data and Data Other Than Certified Cost or Pricing Data—Alternate I (JUN 2019)
                  (a) Definitions. As used in this provision—

                    Market prices means current prices that are established in the course of ordinary trade between buyers and sellers free to bargain and that can be substantiated through competition or from sources independent of the offerors.

                    Non-Government sales means sales of the supplies or services to non-Governmental entities for purposes other than governmental purposes.

                    Relevant sales data means information provided by an offeror on sales of the same or similar items that can be used to establish price reasonableness taking into consideration the age, volume, and nature of the transactions (including any related discounts, refunds, rebates, offsets, or other adjustments).

                    Sufficient non-Government sales means relevant sales data that reflects market pricing and contains enough information to make adjustments covered by FAR 15.404-1(b)(2)(ii)(B).

                    Uncertified cost data means the subset of “data other than certified cost or pricing data” (see FAR 2.101) that relates to cost.
                  (b) Exceptions from certified cost or pricing data. (1) In lieu of submitting certified cost or pricing data, the Offeror may submit a written request for exception by submitting the information described in paragraphs (b)(1)(i) and (ii) of this provision. The Contracting Officer may require additional supporting information, but only to the extent necessary to determine whether an exception should be granted and whether the price is fair and reasonable.
                  (i) Exception for price set by law or regulation—Identification of the law or regulation establishing the price offered. If the price is controlled under law by periodic rulings, reviews, or similar actions of a governmental body, attach a copy of the controlling document, unless it was previously submitted to the contracting office.
                  (ii) Commercial item exception. For a commercial item exception, the Offeror shall submit, at a minimum, information that is adequate for evaluating the reasonableness of the price for this acquisition, including prices at which the same item or similar items have been sold in the commercial market. Such information shall include—
                  (A) For items previously determined to be commercial, the contract number and military department, defense agency, or other DoD component that rendered such determination, and if available, a Government point of contact;
                  (B) For items priced based on a catalog—
                  (1) A copy of or identification of the Offeror's current catalog showing the price for that item; and
                  (2) If the catalog pricing provided with this proposal is not consistent with all relevant sales data, a detailed description of differences or inconsistencies between or among the relevant sales data, the proposed price, and the catalog price (including any related discounts, refunds, rebates, offsets, or other adjustments);
                  (C) For items priced based on market pricing, a description of the nature of the commercial market, the methodology used to establish a market price, and all relevant sales data. The description shall be adequate to permit the DoD to verify the accuracy of the description;
                  (D) For items included on an active Federal Supply Service Multiple Award Schedule contract, proof that an exception has been granted for the schedule item; or
                  (E) For items provided by nontraditional defense contractors, a statement that the entity is not currently performing and has not performed, for at least the 1-year period preceding the solicitation of sources by the DoD for the procurement or transaction, any contract or subcontract for the DoD that is subject to full coverage under the cost accounting standards prescribed pursuant to 41 U.S.C. 1502 and the regulations implementing such section.
                  (2) The Offeror grants the Contracting Officer or an authorized representative the right to examine, at any time before award, books, records, documents, or other directly pertinent records to verify any request for an exception under this provision, and to determine the reasonableness of price.
                  (c) Requirements for certified cost or pricing data. If the Offeror is not granted an exception from the requirement to submit certified cost or pricing data, the following applies:

                  (1) The Offeror shall submit certified cost or pricing data and supporting attachments in the following format: [Insert description of the data and format that are required, and include access to records necessary to permit an adequate evaluation of the proposed price in accordance with FAR 15.408, Table 15-2, Note 2. The Contracting Officer shall insert the description at the time of issuing the solicitation or specify that the format regularly maintained by the offeror or prospective subcontractor in its business operations will be acceptable. The Contracting Officer may amend the description as the result of negotiations.]

                  (2) As soon as practicable after agreement on price, but before contract award (except for unpriced actions such as letter contracts), the Offeror shall submit a Certificate of Current Cost or Pricing Data, as prescribed by FAR 15.406-2.

                  (3) The Offeror is responsible for determining whether a subcontractor qualifies for an exception from the requirement for submission of certified cost or pricing data on the basis of adequate price competition, i.e., two or more responsible offerors, competing independently, submit priced offers that satisfy the Government's expressed requirement in accordance with FAR 15.403-1(c)(1)(i).
                  (d) Requirements for data other than certified cost or pricing data. (1) Data other than certified cost or pricing data submitted in accordance with this provision shall include all data necessary to permit a determination that the proposed price is fair and reasonable, to include the requirements in DFARS 215.402(a)(i) and 215.404-1(b).
                  (2) In cases in which uncertified cost data is required, the information shall be provided in the form in which it is regularly maintained by the Offeror or prospective subcontractor in its bu
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