(a) It has been determined to be in the public interest to establish a Government Use Program requiring, to the maximum practicable extent, purchase of excess aluminum in the Government stockpile by Government contractors, directly or through subcontractors or suppliers, equal in weight to the weight of aluminum products as defined in § 1-5.1001-2 purchased by the Government or used in the production of items delivered under Government contracts. In implementation of this Program, all contracts in the categories listed below shall contain the clause in § 1-5.1001-2, or in the case of construction contracts, the clause as modified in § 1-5.1001-3:

(1) Purchases in the amount of $500 or more of aluminum products as defined in § 1-5.1001-2.

(2) Purchases of supplies or construction in the amount of $25,000 or more where the aluminum products used in the production of items delivered under the contract or in the production of items incorporated in construction performed under the contract are estimated by the contracting officer to approximate 10,000 pounds or more.

(b) These provisions do not apply to procurements of supplies or construction effected by procuring activities located outside, for use outside, the United States, its possessions, and Puerto Rico. These provisions are applicable to new procurements that are effected by amendments to an existing contract. In such cases, only the new procurement portion of the total contract is considered in determining whether the clause is required and, if required, the extent of its applicability. All contracts entered into including this clause shall be reported to:

Director, Industry Materials Division, Defense Materials Service, General Services Administration, Washington, D.C. 20405. Such reports shall include the name of the contractor, the contract number, the delivery period, and the estimated amount of aluminum which will be required to fulfill the contract.

§ 1-5.1001-2 Contract clause.

REQUIRED SOURCE FOR ALUMINUM INGOT (a) As used in this clause (i) the term "aluminum products" means aluminum or

aluminum alloy in its last commercial form delivered by the producer, mill, or foundry as an end item under this contract, or used to produce an end item under this contract, such as by way of example (but not limited to) wrought aluminum products; forgings and castings; rolled bar, rod, structural shapes, and bare wire; aluminum conductor steel reinforced and bare aluminum cable; insulated or covered wire or cable; extruded bar, rod, shapes and tube (extruded, drawn and welded tube); sheet, strip and plate; pig or ingot; granular or shot; slab; foil; and powder, flake or paste; and (ii) the term "supplier" includes vendors materialmen, warehousemen, distributors or manufacturers of aluminum products or other items containing aluminum in any form.

(b) Except as provided in (c), below, the Contractor (or subcontractor or supplier, where applicable) shall purchase from the General Services Administration (GSA) a quantity of aluminum pig or ingot equal in weight to the gross weight of aluminum products constituting, or used in the production of, the items to be delivered under this contract. Such purchase shall be in accordance with the terms and conditions of sale prescribed therefor by GSA. Each order placed with GSA pursuant to this clause shall state that it is placed in accordance therewith and shall be sent to:

Director, Industry Materials Division, Defense Materials Service, General Services Administration, Washington, D.C. 20405.

Aluminum purchased pursuant to this clause may be used in any manner the Contractor desires and need not be earmarked in any way after delivery to the Contractor, nor physically incorporated in the items to be delivered hereunder.

(c) To the extent the Contractor (or subcontractor or supplier, where applicable) places subcontracts or purchase orders for aluminum products or for items other than aluminum products and containing aluminum in any form, he is not required with respect to such subcontracts or purchase orders to purchase aluminum from the GSA. However, he agrees to incorporate this clause, except paragraph (d):

(i) In any such subcontract or purchase order for aluminum products in the total amount of $500 or more; or

(ii) In any such subcontract or purchase order in the total amount of $25,000 or more for any items containing aluminum in any form where the quantity of aluminum products used in the production of such items is estimated to be 10,000 pounds or more.

(d) The Contractor shall furnish to the GSA calendar quarter summaries (within 30 days following the close of the applicable quarter) of all subcontracts and purchase orders placed by him pursuant to (c) (i) above that will identify (i) each aluminum product supplier involved, (ii) the quantity (by weight) of aluminum products, and (iii) the contract number applicable to specific

quantities. The requirements of this paragraph (d) are applicable only to the prime Contractor and not to any subcontractor or other supplier hereunder. This reporting requirement has been approved by the Bureau of the Budget in accordance with the Federal Reports Act of 1942.

(e) The requirements of this clause are not intended to preclude basic agreements or other arrangements between the parties to any contracts (subcontracts or purchase orders) subject to this clause that will permit reference in such contracts to the applicability of the requirements of this clause, without the need for physically incorporating this clause in its entirety in each affected subcontract or purchase order.

(f) In placing subcontracts and purchase orders subject to the clause, the Contractor and all subcontractors and suppliers are authorized and encouraged to consolidate aluminum product purchases hereunder with other defense rated order purchases (ACM, DO, or DX) and other identifiable Government orders so as to apply the requirements of this clause to the total purchase. Otherwise, it is required either that aluminum product purchases subject to this clause be separately made, or, if consolidated with other aluminum product purchases, that the quantities (by weights) of aluminum products subject to this clause be separately set forth in the purchase document and identified as subject to this clause.

(g) Required purchases of aluminum from GSA by Contractors, subcontractors, or suppliers, shall be made within 90 days from the date (i) of final delivery pursuant to a contract, subcontract, or purchase order containing the requirements of this clause, or (ii) when the Contractor, subcontractor, or supplier, has completed deliveries of aluminum products aggregating 100,000 pounds, whichever is earlier: Provided, however, That any Contractor, subcontractor, or supplier, may defer required purchases of aluminum for the purpose of consolidating purchases to meet the requirement of two or more contracts, subcontracts, or purchase orders containing this clause until 90 days after the aggregate purchase requirements of such contracts, subcontracts, or purchase orders equal the minimum order quantities established by GSA (approximately 10,000 pounds or more). Successive consolidated purchases thereafter may be made at any time within 90-day intervals. The 90-day limitations may be extended upon approval in writing by the GSA.

(h) Certain producers of aluminum have entered into contracts with GSA effective as of November 1, 1965, under which they have made long term commitments to purchase certain minimum and maximum quantities of aluminum from that Agency. The obligations of such producers under this clause shall be governed by the provisions of those contracts to the extent of any inconsistency.

(i) All purchases made pursuant to this clause, other than from GSA, which are rated

(ACM, DO, or DX) in accordance with DMS Regulation 1, NPA Order M-5A and BDSA Regulation 2, are subject to the provisions of those regulations concerning the maintenance of records, rights of inspection and audit, and the penalty provisions contained therein for willful noncompliance.

§ 1-5.1001-3 Contract clause for con

struction contracts.

The clause contained in § 1-5.1001-2 shall be modified by deletion of paragraph (c) thereof and substitution of the following paragraph in all contracts for construction:

(c) To the extent the Contractor or subcontractor or supplier, where applicable, places subcontracts or purchase orders for aluminum products, or for items other than aluminum products and containing aluminum in any form, or for construction where the subcontractor is to furnish materials containing aluminum in any form, he is not required with respect to such subcontracts or purchase orders to purchase aluminum from the GSA. However, he agrees to incorporate this clause, except paragraph (d):

(i) In any such subcontract or purchase order for aluminum products in the total amount of $500 or more; or

(ii) In any such subcontract or purchase order in the total amount of $25,000 or more for any items containing aluminum in any form where the quantity of aluminum products used in the production of such items is estimated to be 10,000 pounds or more; or

(iii) Construction, where the materials are to be supplied by the subcontractor and the total value of such materials containing aluminum (in any form) is estimated to be $25,000 or more, and where the quantity of aluminum products used in the production of such items is estimated to be 10,000 pounds or more.

As used in this subpart, the following terms have the meanings set forth below: (a) "End products" means articles, materials, and supplies which are to be acquired for public use. As to a given contract, the end products are the items to be delivered to the Government, as specified in the contract, including articles, materials, and supplies to be acquired by the Government for public use in connection with service contracts.

(b) "Components" means those articles, materials, and supplies which are directly incorporated in end products.

(c) "United States" means the States, the District of Columbia, Puerto Rico, American Samoa, the Canal Zone, the Virgin Islands, and any other place subject to its jurisdiction.

(d) "Domestic source end product"

means an unmanufactured end product which has been mined or produced in the United States, or an end product manufactured in the United States if the cost of its components which are mined, produced, or manufactured in the United States exceeds 50 percent of the cost of all its components. The cost of components shall include transportation costs to the place of incorporation into the end product and, in the case of components of foreign origin, duty (whether or not a duty-free entry certificate may be issued. A component shall be considered to have been mined, produced, or manufactured in the United States (regardless of its source in fact) if the end product in which it is incorporated is manufactured in the United States and the component is of a class or kind (1) determined by the Government to be not mined, produced, or manufactured in the United States in sufficient and reasonably available commercial quantities and of a satisfactory quality, or (2) as to which the head of the agency concerned has determined that it would be inconsistent with the public interest to apply the restrictions of the Buy American Act.

(e) "Foreign end product" means an end product other than a domestic source end product.

(f) "Domestic bid" means a bid or offered price for a domestic source end product, including transportation to destination.

(g) "Foreign bid" means a bid or offered price for a foreign end product, including transportation to destination and duty (whether or not a duty-free entry certificate may be issued.)

§ 1-6.102 Statutory requirements.

Except as provided in § 1-6.103, the Buy American Act requires that in the procurement of supplies and services only domestic source end products shall be acquired for public use. In determining whether an end product is a domestic source end product, only the end product and its components shall be considered.

The Buy American Act does not apply to articles, materials, or supplies of a class or kind which the Government has determined are not mined, produced, or manufactured in the United States in sufficient and reasonably available commercial quantities and of a satisfactory quality. (See § 1-6.105.)

§ 1-6.103-3 Unreasonable cost or inconsistency with the public interest. The restrictions of the Buy American Act do not apply when it is determined by the head of an agency that the cost of a domestic source end product would be unreasonable or that its acquisition would be inconsistent with the public interest. Such determination shall be made in accordance with § 1-6.104-4.

§ 1-6.103-4 Scrap.

Scrap generated in, collected in, and prepared for processing in the United States shall be considered as of domestic origin.

§ 1-6.103-5 Panamanian supplies for use in Canal Zone.

Articles, materials, and supplies that are mined, produced, or manufactured in the Republic of Panama, when purchased for use in the Canal Zone, are exempted from the provisions of the Buy American Act (under item 3 of the Memorandum of Understandings Reached ancillary to the Treaty of Mutual Understanding and Cooperation between the United States of America and the Republic of Panama, signed January 25, 1955).

listed below, is a domestic source end product (as defined in the clause entitled "Buy American Act"); and that components of unknown origin have been considered to have been mined, produced, or manufactured outside the United States:

Excluded end products (show country of origin for each excluded end product):

§ 1-6.104-4 Evaluation of bids and proposals.

(a) Unless otherwise determined by the head of the agency in accordance with the Buy American Act, where the procedures in this § 1-6.104-4 result in the acquisition of foreign end products, the acquisition of domestic source end products would be (1) unreasonable in cost or (2) inconsistent with the public interest (see § 1-6.103-3).

(b) Except as provided in paragraph (d) of this section, bids and proposals shall be evaluated as provided in this section so as to give preference to domestic bids. Each foreign bid shall be adjusted for purposes of evaluation by adding to the foreign bid (inclusive of duty) a factor of 6 percent of that bid, except that a 12 percent factor shall be used instead of the 6 percent factor if the firm submitting the low acceptable domestic bid is a small business concern or a labor concern surplus area (as defined in §§ 1-1.701 and 1-1.801, respectively), or both. However, if an award for more than $100,000 would be made to a domestic concern if the 12 percent factor is applied, but would not be made if the 6 percent factor is applied, the case shall be submitted to the head of the agency for decision as to whether the award to the small business concern or labor surplus area concern would involve unreasonable cost or inconsistency with the public interest (see § 1-6.103-3). If the foregoing procedure results in a tie between a foreign bid as evaluated and a domestic bid, award shall be made on the domestic bid. When more than one line item is offered in response to an invitation for bids or request for proposals, the appropriate factor shall be applied on an item-by-item basis, except that the factor may be applied to any group of items as to which the invitation for bids or request for proposals specifically provides that award is to be made on a particular group of items.

(c) Proposed awards shall be submitted, in accordance with agency proce

dures, to the agency head for decision where:

(1) Rejection of an acceptable low foreign bid is considered necessary to protect essential national security interests, such as maintenance of a mobilization base. Prior to rejection of bids or offered prices on the grounds that such rejection is necessary to protect essential national security interests, advice shall be obtained from the President or Director, Office of Emergency Planning.

(2) Rejection of any bid or proposal for other reasons of the national interest is considered necessary. However, information concerning rejection of bids or offered prices for reasons of the national interest not described or referred to in Executive Order No. 10582 shall be furnished to the Executive Office of the President, Bureau of the Budget.

(d) Deviations from the requirements of this § 1-6.104-4 may be authorized by the head of the agency in accordance with the Buy American Act and Executive Order No. 10582, as amended. § 1-6.104-5 Contract clause.

(a) The following clause shall be inserted in all contracts for supplies and in contracts for services involving furnishing supplies; except that it need not be inserted in contracts exclusively for articles, materials, and supplies for use outside the United States or which are of Panamanian origin for use in the Canal Zone:

BUY AMERICAN ACT SUPPLY AND SERVICE CONTRACTS

(a) In acquiring end products, the Buy American Act (41 U.S. Code 10a-10d) provides that the Government give preference to domestic source end products. For the purpose of this clause:

(i) "Components" means those articles, materials, and supplies which are directly incorporated in the end products;

(ii) "End products" means those articles, materials, and supplies which are to be acquired under this contract for public use; and

(iii) A "domestic source end product" means (A) an unmanufactured end product which has been mined or produced in the United States and (B) an end product manufactured in the United States if the cost of the components thereof which are mined, produced, or manufactured in the United States exceeds 50 percent of the cost of all its components. For the purposes of this (a) (iii) (B), components of foreign origin of the same type or kind as the products referred to in (b) (ii) or (iii) of this clausė shall be treated as components mined, pro

duced, or manufactured in the United States. (b) The Contractor agrees that there will be delivered under this contract only domestic source end products, except end products:

(1) Which are for use outside the United States;

(ii) Which the Government determines are not mined, produced, or manufactured in the United States in sufficient and reasonably available commercial quantities and of a satisfactory quality;

(iii) As to which the Secretary determines the domestic preference to be inconsistent with the public interest; or

(iv) As to which the Secretary determines the cost to the Government to be unreasonable.

(The foregoing requirements are administered in accordance with Executive Order No. 10582, dated December 17, 1954.)

(b) Where the term "secretary" is inapplicable to the agency, the term "head of the agency" may be substituted in the absence in the contract of the definition contained in § 1-7.101-1.

1-6.105 Excepted articles, materials, and supplies.

Determinations under § 1-6.103-2 that certain articles, materials, and supplies are not mined, produced, or manufactured in the United States in sufficient and reasonably available commercial quantities and of a satisfactory quality shall be made by each agency in accordance with agency procedures. Subpart 1-6.2-Buy American ActConstruction Contracts