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8 1-10.204–1 United States bonds or the fact that there may be an additional notes.
bond supported by a new surety); proIn accordance with the provisions of vided, that no such consent need be obthe Act of February 24, 1919, as amended
tained if there is an increased or addi(6 U.S.C. 15) and Treasury Department
tional bond supported by the same surety Circular No. 154 dated February 6, 1935 or sureties. (31 CFR Part 225), any person required § 1-10.206 Furnishing information to to furnish a bond to the Government has
sureties. the option, in lieu of furnishing a surety
The surety on any bond executed in or sureties thereon, of depositing certain
connection with a Government contract, United States bonds or notes in an
upon its written request, shall be furamount equal at their par value to the
nished with information as to the progpenal sum of the bond, together with a
ress of the work, payments, and the estiduly executed power of attorney and
mated percentage of completion. agreement authorizing the collection or sale of such United States bonds or notes Subpart 1-10.3—Insurancein the event of default of the principal
General on the bond. The contracting officer may turn these securities over to the fi § 1-10.300 Scope of subpart. nance or other officer as provided in This subpart sets forth principles and agency procedures, or deposit them with policies applicable to insurance under the Treasurer of the United States, a contracts for supplies and services (inFederal Reserve Bank, branch Federal cluding construction). Reserve Bank having the requisite facilities, or other depository duly desig
8 1-10.301 General. nated for the purpose by the Secretary Ordinarily, it is the policy of the Govof the Treasury, under procedures pre ernment not to insure its own risks. In scribed by the agency concerned and the absence of specific statutory authorTreasury Department Circular No. 154. ity for the payment of insurance preHowever, the contracting officer shall miums, appropriated moneys of the deposit with the Treasurer of the United United States generally are not regarded States all such bonds and notes received as available for that purpose. There by him in the District of Columbia. are, however, exceptions to these two § 1-10.204–2 Certified or cashier's
statements. Insurance will be required checks, bank drafts, money orders,
where it is mandatory by law, and may currency, or irrevocable letters of
be required in the absence of any statucredit.
tory prohibition when in the best interAny person required to furnish a bond
est of the Government. Examples of has the option, in lieu of furnishing
situations which may warrant obtaining surety or sureties thereon, of depositing
insurance are (a) where it is considered a certified or cashier's check, a bank desirable to utilize the facilities and serydraft, a Post Office money order, cur ices of the insurance industry (e.g., rency, or an irrevocable letter of credit, safety protection and claim services), in an amount equal to the penal sum of (b) where, in special instances, it is the bond. Certified or cashier's checks, deemed necessary or desirable in conbank drafts, or Post Office money orders
nection with the performance of a conshall be drawn to the order of the ap
tract (e.g., transportation of particularly propriate Federal agency.
valuable items), or (c) where commin§ 1-10.205 Consent of surety.
gling of property or the conditions of the In connection with any amendment, contract make the carrying of insurance modification, or supplemental agreement reasonably necessary for the protection with respect to which the waiver of of the several interests concerned. notice to the surety contained in the 81-10.302 Notice of cancellation or bond form is inapplicable and which
change. would otherwise effect the release of a surety, or in any other situation as pic
Where insurance is required by conscribed by each agency, the contracting tract provision or in writing by the apofficer shall obtain the written consent proving authority, the policies evidencthereto of the surety or sureties on the ing such insurance shall contain an enexisting bond or bonds (notwithstanding dorsement to the effect that cancellation or material change in the policies, ad- (c) Government-furnished property versely affecting the interest of the Gov- is involved. ernment in such insurance, shall not be (d) The work required by the contract effective unless the written notice as re is performed within a Government estabquired by the approving authority is lishment. given.
(e) The Government may desire to as
sume risks for which the contractor or§ 1-10.303 Responsibility for loss of or
dinarily obtains commercial insurance. damage to Government property. Where Government property may be
$ 1-10.402 Workmen's
compensation in the possession of or under the control
insurance overseas. of the contractor, or in the custody of a (a) The Defense Base Act, as amendtransportation company, the contract ed (42 U.S.C. 1651 et seq.), extends the shall set forth the responsibility of the application of the Longshoremen's and contractor for loss of or damage to such Harbor Workers' Compensation Act (33 Government property.
U.S.C. 901 et seq.) to various classes of § 1-10.304 Insurance against loss of or
employees engaged in work outside the
United States, including any employee damage to Government property.
engaged (1) in the performance of a pubIn instances where insurance is re
lic work contract or (2) in the performquired or approved to cover loss of or ance of any contract approved or fidamage to Government property, such nanced pursuant to the Foreign Assistinsurance may be provided either by spe ance Act of 1961 (P.L. 87–195) other than cific insurance policies, or by inclusion (i) contracts approved or financed by the of such risks in the contractor's existing Development Loan Fund except where insurance policies. When appropriate the Secretary of Labor, acting upon the the insurance policies shall make formal recommendation of any department or disclosure of the Government's interest agency of the United States, determines in the property.
that such contracts should be covered, § 1-10.305 Procedures to be followed in
or (ii) contracts exclusively for the furthe event of loss or damage to Gov.
nishing of materials or supplies. As ernment property.
used in this paragraph, a “public work”
contract includes any contract for a fixed Upon the happening of loss of or dam
improvement or any project, whether or age to any Government property, con
not fixed, involving construction, alteracerning which the contractor is relieved
tion, removal, or repair for the public of responsibility by contract provision,
use of the United States or its allies, inthe procedure to be followed shall be as
cluding projects or operations under prescribed by the agency.
service contracts and projects in connecSubpart 1-10.4- Insurance Under tion with the national defense or with Fixed-Price Contracts
war activities, dredging, harbor improve
ments, dams, roadways, and housing, as § 1-10.400 Scope of subpart.
well as preparatory and ancillary work This subpart sets forth general policies
in connection therewith at the site or on with respect to insurance under fixed
the project. The following clause shall price contracts for supplies and services
be included in all contracts subject to
the Defense Base Act unless applicability (including construction).
of that Act has been waived by the Sec$ 1–10.401 Policy.
retary of Labor as provided in paragraph Ordinarily Government agencies are
(b) of this § 1-10.402: not concerned with the insurance pro WORKMEN'S COMPENSATION INSURANCE grams of fixed-price contractors. How
(DEFENSE BASE ACT) ever, agencies may be concerned with The Contractor before commencing persuch insurance programs when special formance under this contract shall provide circumstances exist. Examples of special and thereafter maintain such Workmen's. circumstances include the following:
Compensation Insurance or security as is
required by the Defense Base Act, as (a) The contractor is engaged prin
amended (42 U.S.C. 1651 et seq.). The Concipally in Government work.
tractor further agrees to insert in all sub(b) The contractor has a segregated
contracts hereunder to which the Defense operation which is engaged principally in
Base Act is applicable, a clause similar to this Government work.
clause, including this sentence, imposing on
297 99–187–69— 20
all such subcontractors a like requirement (b) Property damage liability insurto comply with the Defense Base Act.
ance will be required only in special cir(b) Upon the recommendation of the cumstances as determined by the agency head of the agency concerned, the Secre- concerned. Property damage liability tary of Labor may waive the applica insurance may be approved when the nability of the Defense Base Act with ture of the contract operations warrant respect to any contract, subcontract, or its purchase or where such operations subordinate contract, work location, or are not separable from the contractor's classification of employees.
commercial operations. Subpart 1-10.5 Insurance Under § 1-10.502–3 Automobile liability insurCost-Reimbursement Type Contracts
Automobile liability insurance will be § 1-10.500 Scope of subpart.
required on the comprehensive form of This subpart sets forth general policies policy and will provide for bodily injury with respect to insurance under cost
and property damage liability covering reimbursement type contracts for sup the operation of all automobiles used in plies and services (including construc
connection with the performance of the tion).
contract. § 1-10.501 Policy.
§ 1-10.502-4 Aircraft public and pasThe kinds of insurance referred to in
senger liability insurance. this § 1-10.501, with limits of liability as
Where aircraft are used in connection prescribed by the agency, ordinarily shall
with the performance of the contract, be required under cost-reimbursement
aircraft public and passenger liability intype prime contracts and cost-reim
surance ordinarily will be considered rebursement type subcontracts under cost
quired coverage. reimbursement type prime contracts. However, a program of self-insurance § 1-10.502–5 Vessel collision liability approved by the agency concerned, as and protection and indemnity liabil. provided in § 1-10.503, may be substi
ity insurance. tuted for any of the kinds of required Where vessels are used in connection insurance.
with the performance of the contract, § 1-10.502 Types of insurance.
vessel collision liability and protection § 1-10.502-1 Workmen's compensation
and indemnity liability insurance will be
required whenever deemed necessary by and employers' liability insurance.
the agency concerned. Compliance with applicable workmen's compensation and occupational disease
§ 1-10.503 Self-insurance. statutes will be required, and employers' Qualified programs of self-insurance liability coverage will be obtained where
covering any kind of risk may be apavailable. In jurisdictions where all oc- proved where an examination of the procupational diseases are not compensable gram indicates that its application to under applicable law, insurance for oc the cost-reimbursement type contract is cupational diseases will be required un in the best interest of the Government. der the employers' liability section of the However, in any jurisdiction where workinsurance policy; however, such addi men's compensation does not completely tional insurance will not be required cover employers' liability to employees, a where contract operations are com- program of self-insurance for workmen's mingled with the contractor's commer
compensation may be approved only ifcial operations so that it would be im
(a) The contractor also maintains an practicable to require such coverage. approved program of self-insurance for The clause set forth in § 1-10.402 shall
any employers' liability which is not so be included in all contracts subject to the covered: or Defense Base Act unless applicability (b) The contractor shows that the of that Act has been waived by the Secre
combined cost to the Government of selftary of Labor as provided in § 1–10.402 insurance for workmen's compensation (b).
and commercial insurance for employ§ 1-10.502–2 General liability insur ers' liability will not exceed the costs of ance.
covering both kinds of risks by commer(a) Bodily injury liability insurance
cial insurance. will be required on the comprehensive $ 1-10.504 Government property [Reform of policy.
PART 1-11-FEDERAL, STATE, AND upon certain supplies and services proLOCAL TAXES
cured by executive agencies; exemptions Sec.
from such Federal taxes; policy for ob1-11.000 Scope of part.
taining exemption from State and local
taxes; and contract clauses required or Subpart 1-11.1-Federal Excise Taxes
authorized for insertion in contracts. 1-11.100 Scope of subpart.
(b) The problems presented in con1-11.101 Retailers excise taxes.
nection with the administration of the 1-11.101–1 Special fuels.
tax aspect of a contract or transaction 1-11.102 Manufacturers excise taxes. 1-11.102–1 Motor vehicles.
are widely varied. The right to immu1-11.102–2 Tires and tubes.
nity, exemption, refund, credit, or draw1-11.102–3 Gasoline.
back depends upon the nature of the tax, 1–11.102-4 Lubricating oils.
the particular tax law, the party sought 1-11.102–5 Fishing equipment.
to be taxed, the items being procured, 1–11.102–6 Firearms, shells, and cartridges.
and the provisions of the contract. These 1-11.103 Excise taxes on facilities and
problems are essentially legal; therefore, services.
when questions arise, contracting officers Subpart 1-11.2-Exemptions from Federal should request the assistance of legal Excise Taxes
counsel. 1-11.200 Scope of subpart.
Subpart 1-11.1-Federal Excise Taxes 1-11.201 Retailers excise taxes. 1-11.202 Manufacturers excise taxes.
SOURCE: The provisions of this Subpart 1-11.203 Supplies and services for the 1-11.1 appear at 31 F.R. 6370, Apr. 27, 1966,
exclusive use of the United unless otherwise noted.
8 1-11.100 Scope of subpart. Subpart 1-11.3—State and Local Taxes
This subpart deals with Federal ex1–11.301 General.
cise taxes involved in the procurement of 1-11.302 Applicability.
certain supplies and services. It is for Subpart 1-11.4-Contract Clauses the general information of Government 1-11.401 Fixed-price type contracts.
personnel and does not purport to pre1-11.401–1 Advertised and certain negoti
sent the full scope of the applicable proated contracts.
visions of law and implementing regula1-11.401–2 Certain negotiated contracts. tions as they may be amended from time 1-11.401–3 Supplementary clauses.
to time. 1-11.401-4 Matters requiring special consideration.
§ 1-11.101 Retailers excise taxes. 1-11.402 Cost-reimbursement type con
f 1-11.101-1 tracts.
(a) Diesel fuel. A tax at the indicated Subpart 1-11.5—Tax Exemption Forms
rates is imposed upon any liquid, other 1–11.500 Scope of subpart.
than that taxable as gasoline under sec1-11.501 Federal excise tax exemption forms.
tion 4081 of the Internal Revenue Code 1-11.501–1 Certificate of export to a posses
(see § 1-11.102–3), which is (i) sold by sion or Puerto Rico
any person to an owner, lessee, or other 1–11.501-2 Exemption certificate for sup
operator of a diesel-powered highway plies for vessels of war. 1-11.501–3 Cutting oil certificate.
vehicle, for use as a fuel in such vehicle, 1-11.502 State and local tax exemption or (ii) used by any person as a fuel in forms.
a diesel-powered highway vehicle unless 1-11.502–1 Types of evidence of exemption.
there was a taxable sale of such liquid 1-11.502–2 When evidence of exemption is
pursuant to (i) above, as follows: to be furnished.
(1) At 4 cents per gallon, if sold for AUTHORITY: The provisions of this Part 1
use or if used as fuel in a diesel-powered 11 issued under sec. 205(c), 63 Stat. 390; 40
highway vehicle U.S.C. 486(c).
(i) Which, at the time of such sale or SOURCE: The provisions of this Part 1-11
use, is registered, or is required to be appear at 29 F.R. 10254, July 24, 1964, unless otherwise noted.
registered, for highway use under the
laws of any State or foreign country; or § 1-11.000 Scope of part.
(ii) Which, if owned by the United (a) This part deals with Federal taxes States, is used on the highway; or imposed by the Internal Revenue Code (2) At 2 cents per gallon, if sold for
use or if used as fuel in a diesel-powered highway vehicle
(i) Which, at the time of such sale or use, is not registered, and is not required to be registered, for highway use under the laws of any State or foreign country; or
(ii) Which, if owned by the United States, is not used on the highway; and
(3) At an additional 2 cents per gallon, if fuel on which a tax of 2 cents was paid pursuant to subparagraph (2) of this paragraph is used as fuel in a dieselpowered highway vehicle
(i) Which, at the time of such use, is registered, or is required to be registered, for highway use under the laws of any State or foreign country; or .
(ii) Which, if owned by the United States, is used on the highway. No tax is imposed on diesel fuel sold for use or used as fuel in a nonhighway vehicle, such as certain military vehicles, construction equipment, and equipment designed for use at mines, factories, railroad stations, and farms.
(b) Special motor fuels. A tax at the rates indicated in subparagraphs (1) through (3) of this paragraph is imposed upon benzol, benzene, naphtha, liquefied petroleum gas, casing-head and natural gasolines, or any other liquid (other than kerosene, gas oil, fuel oil, or a product taxable as diesel fuel under paragraph (a) of this section or as gasoline under section 4081 of the Internal Revenue Code (see § 1-11.102–3), which is (i) sold by any person to an owner, lessee, or other operator of a motor vehicle, motorboat, or airplane for use as a fuel for the propulsion thereof, or (ii) used by any person as a fuel for the propulsion of a motor vehicle, motorboat, or airplane, unless there was a taxable sale of such liquid pursuant to (i) above, as follows:
(1) At 4 cents per gallon, if such liquid is sold for use or is used as a fuel for a highway vehicle .
(i) Which, at the time of such sale or use, is registered, or is required to be registered, for highway use under the laws of any State or foreign country; or
(ii) Which, if owned by the United States, is used on the highway; or
(2) At 2 cents per gallon, if such liquid is sold for use or is used as a fuel for the propulsion of a motorboat or airplane, or a motor vehicle
(i) Which, at the time of such sale or use, is not registered, and is not required
to be registered, for highway use under the laws of any State or foreign country; or
(ii) Which, if owned by the United States, is not used on the highway; and
(3) At an additional 2 cents per gallon, if a liquid on which a tax of 2 cents was paid pursuant to subparagraph (2) of this paragraph is used as fuel in a highway vehicle
(i) Which, at the time of such use, is registered, or required to be registered, for highway use under the laws of any State or foreign country; or
(ii) Which, if owned by the United States is used on the highway.
(c) Procedures. (1) The sale of diesel fuel to an owner, lessee, or other operator of a diesel-powered highway vehicle, or of special motor fuel to an owner, lessee, or other operator of a motor vehicle, motorboat, or airplane is considered as a taxable sale by the Internal Revenue Service only (i) if the liquid is delivered by the seller into the fuel supply tank of the vehicle, motorboat, or airplane, or (ii) where not so delivered, the purchaser indicates in writing to the seller prior to or at the time of the sale that the entire quantity of the liquid covered by the sale is for use by him for a taxable purpose as a fuel in such a vehicle, motorboat. or airplane. If such a written statement is not furnished by the purchaser, he is liable for the tax at the applicable rate on that quantity of the liquid which is used by him as fuel in such a vehicle, motorboat, or airplane, or which is sold by him in a taxable transaction. :
(2) If it is known in advance of procurement that the entire quantity of any bulk purchase of diesel or special motor fuel is to be used for taxable purposes (as indicated elsewhere in this section), bids may be solicited on a tax inclusive basis and the written statement referred to in subparagraph (1) of this paragraph should be furnished to the contractor.
(3) All other bulk purchases of diesel and special motor fuels will be on a tax exclusive basis and the agencies will be responsible for making payment of the tax at the applicable rate, directly to Internal Revenue Service. Such payment shall be made quarterly on TD Form 720, “Quarterly Federal Excise Tax Return." A certificate of Export is not required to support a tax-free sale of diesel fuel exported to a foreign country or shipped to a possession of the United States or to Puerto Rico.