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contract using Langer-made jewel bearings would interfere with economical or normal production scheduling of the product under contract or with the production of another item (governmental or commercial); or

(ii) The delivery schedule under the contract or subcontract is such that the use of on-hand jewel bearings or jeweled subassemblies or parts is necessary. Under either of the foregoing circumstances, the written request shall include a statement that the Langer-made jewel bearings which he is required to purchase under the contract will be used by him to replace his inventory of jewel bearings, subassemblies, or end items. Waivers of the use requirement shall be granted only to the extent and for the period of time necessary to permit the contractor to acquire and use Langer-made jewel bearings. In any instance when the use requirement is waived, an equitable adjustment for cost savings resulting therefrom shall be made.

(5) A contractor shall not be authorized to purchase from the Plant jewel bearings in amounts which exceed the quantity required to satisfy the contract.

(6) All purchase orders placed with the Plant shall cite the prime contract number and the date of the price list cited in the prime contract.

(e) Contract clause. In all procurements subject to these procedures, the following clause is required for use:

REQUIRED SOURCE FOR JEWEL BEARING (a) For the purpose of this clause: (1) "Jewel bearing” means a piece of synthetic sapphire or ruby of any shape, except a phonograph needle, which has one or more polished surfaces and which is suitable for use in an instrument, mechanism, subassembly, or part without any additional processing. A jewel bearing may be either unmounted or mounted into a ring or bushing. Examples of jewel bearings are: Watch holes-olive, watch holes-straight, pallet stones, roller jewels (jewel pins), end stones (caps), vee (cone) jewels, instrument rings, cups, double cups, and orifice jewels. As used herein, the term "jewel bearings" includes "related items."

(2) "Related items" means other synthetic sapphire or ruby components. Examples of related items are pivots, knife edges, insulators, spacers, windows, and striking surfaces other than pallet stones.

(3) "Price list" means the official U.S. Government Jewel Bearing Price List for jewel bearings produced by the William Langer Jewel Bearing Plant. This list is issued periodically by the General Services


(4) "Plant" means the Government-owned William Langer Jewel Bearing Plant, Rolla, N. Dak.

(5) "Military Standard Jewel Bearing" means a jewel bearing conforming to Military Specification No. MIL-B-27497 (latest revision) entitled "Bearings, Jewel, Sapphire or Ruby, Synthetic."

(b) Jewel bearings required in the performance of this contract shall be procured from the Plant at prices established in the price list dated (date to be filled in by Contracting Officer). Each purchase order issued to the Plant under this contract shall include the prime contract number and date of the price list cited above. The Contractor agrees that the quantities, types, and sizes (including tolerances) of jewel bearings so ordered will be those required for the performance of this contract. Within 90 calendar days after the effective date of this contract the Contractor shall furnish to the Contracting Officer a certification that the required jewel bearings were ordered pursuant to this clause. The Contractor agrees to notify the Contracting Officer promptly of the rejection of his (or any subcontractor's) purchase order in whole or in part by the Plant. The requirement for purchase and use of jewel bearings from the Plant will be waived to the extent of orders rejected because of the Plant's inability to deliver. If such a waiver is granted, an equitable adjustment shall be made in the contract price or delivery schedule, or both, in accordance with the "Changes" clause of this contract. Further, the requirement for use (but not the requirement for purchase from the Plant) of jewel bearings may be waived by the Contracting Officer when such waiver is determined by him to be consistent with established policy.

(c) The Contractor agrees to use the Langer-made jewel bearings in the production of subassemblies or end items either under this contract or in his commercial production.

(d) Whenever it is necessary for the Contractor or any subcontractor to redesign or reengineer jeweled items in order to satisfy specific performance requirements, the Contractor or subcontractor shall provide in such redesign for the use of military standard jewel bearings. This requirement does not apply when the dimensional tolerances or configurations of military standard jewel bearings are such that their use in the product would prevent attainment of the required level of performance specified for the item. However, when one or more nonstandard bearings must be used to satisfy per

formance requirements of the jeweled item but military standard jewel bearings will function satisfactorily for other applications within the same item, the item will be required to be redesigned to provide for the use of military standard jewel bearings in such "other" applications. The Contractor or subcontractor is not required to redesign a jeweled item solely for the purpose of converting from the use of nonstandard to military standard jewel bearings. Nothing in this contract shall prevent any Contractor or subcontractor from voluntarily redesigning a jeweled item solely to accommodate the use of military standard jewel bearings.

(e) If at the end of the contract period, the total quantity of end items actually ordered under this contract is less than the total estimated quantity, and the Contractor, pursuant to paragraph (b) of this clause, has purchased a larger quantity of Langer-made jewel bearings than used in deliveries made under this contract, an equitable adjustment shall be made (if requested by the Contractor within 90 days after the end of the contract period) to reimburse the Contractor for any additional costs resulting from such excess purchase but in no event shall such additional costs cover more jewel bearings than necessary to deliver the total estimated quantity of end items. Such excess jewel bearings shall be disposed of as directed by the Contracting Officer. However, such excess jewel bearings may be used in partial satisfaction of the requirements to purchase Langer-made jewel bearings pursuant to paragraph (b) of this clause where a subsequent contract to furnish similar end items to the Government is entered into with the same Contractor. In this situation the requirement to purchase and use jewel bearings from the Plant will be waived up to the amount of such excess jewel bearings in Contractor's possession upon submission of a written request by the Contractor. Such request shall contain documented evidence in support of the waiver of purchase and nonuse of such excess jewel bearings. If such waiver is granted, an equitable adjustment to the extent of differences in price lists shall be made in the contract price in accordance with the "Changes" clause of this contract.

(f) The Contractor agrees to retain for 3 years from the date of final payment under this contract and upon request of the Contracting Officer to make available during that period records showing compliance with this clause.

(g) The Contractor agrees to insert this clause, including this paragraph (g), in every subcontract and purchase order issued in performance of this contract unless he knows that the subassembly, component, or part being purchased does not contain jewel bearings.

[37 FR 19815, Sept. 22, 1972, as amended at 40 FR 18785, Apr. 30, 1975]

§ 1-1.320 Subcontractor gifts and kickbacks.

Public Law 86-695, September 2, 1960 (41 U.S.C. 51-54), prohibits the payment, directly or indirectly, by or on behalf of a subcontractor in any tier under any Government negotiated contract of any fee, commission, compensation, gift, or gratuity to the prime contractor or any higher tier subcontractor or to any officer, partner, employee, or agent of the prime contractor, of any higher tier subcontractor, as an inducement or acknowledgment for the award of a subcontract or order. The Act further provides that the amount of any such fee, commission, or compensation, or the cost or expense of any such gratuity or gift, whether heretofore or hereafter paid by the subcontractor, shall not be charged, either directly or indirectly, as a part of the contract price charged by the subcontractor to the prime contractor or higher tier subcontractor. It also creates a conclusive presumption that the cost of any such prohibited payment has been included in the price of the subcontract or order and ultimately borne by the Government. The Act provides for the recovery on behalf of the United States of any such payment from either the subcontractor or recipient, by court action, or by setoff of moneys otherwise owing to the subcontractor either by the United States directly or by the prime contractor. The Act imposes criminal penalties on any person who knowingly makes or receives, directly or indirectly, any such prohibited payment. [30 FR 9539, July 31, 1965]

§ 1-1.321 [Reserved]

§ 1-1.322 Payment of interest on contractors' claims.

(a) It is the Government's policy to pay interest on a contractor's claim when such claim is ultimately decided in favor of the contractor pursuant to the disputes clause of his contract.

(b) In order to implement the policy set forth in paragraph (a) of this section, all contracts, except for small purchases covered by Subpart 1-3.6,

which contain a disputes clause shall also include the payment of interest on contractors' claims clause set forth below:



(a) If an appeal is filed by the contractor from a final decision of the contracting officer under the disputes clause of this contract, denying a claim arising under the contract, simple interest on the amount of the claim finally determined owed by the Government shall be payable to the contractor. Such interest shall be at the rate determined by the Secretary of the Treasury pursuant to Public Law 92-41, 85 Stat. 97, from the date the contractor furnishes to the contracting officer his written appeal under the disputes clause of this contract, to the date of (1) a final judgment by a court of competent jurisdiction, or (2) mailing to the contractor of a supplemental agreement for execution either confirming completed negotiations between the parties or carrying out a decision of a board of contract appeals.

(b) Notwithstanding (a), above, (1) interest shall be applied only from the date payment was due, if such date is later than the filing of appeal, and (2) interest shall not be paid for any period of time that the contracting officer determines the contractor has unduly delayed in pursuing his remedies before a board of contract appeals or a court of competent jurisdiction.

[37 FR 15152, July 28, 1972]

§ 1-1.323 Preference for U.S. Flag Air Carriers.

[40 FR 60019, Dec. 31, 1975]

§ 1-1.323-1 Policy.

The policy of the United States regarding the use of air carriers is stated in the International Air Transportation Fair Competitive Practices Act of 1974 (Pub. L. 93-623, January 3, 1975). The Act amended Title XI of the Federal Aviation Act of 1958 (49 U.S.C. 1501 et seq.) and requires all Federal agencies, Government contractors and subcontractors to use U.S. flag air carriers for international air transportation of personnel (and their personal effects) or property to the extent service by such carriers is available. As used in this section the term "U.S. Flag Air Carrier" means a carrier holding a certificate under section 401 of the Act. (49 U.S.C. 1371).

[40 FR 60019, Dec. 31, 1975]

§ 1-1.323-2 Clause.

The contract clause prescribed by this section shall be included in (a) invitations for bids, (b) requests for proposals, and (c) contracts (including contracts resulting from unsolicited proposals) whenever it is possible that international air transportation of personnel (and their personal effects) or property will be required in the performance of the contract. The requirements of this section do not apply to small purchases made in accordance with Subpart 1-3.6.


(a) Pub. L. 93-623 requires that all Federal agencies and Government contractors and subcontractors will use U.S. flag air carriers for international air transportation of personnel (and their personal effects) or property to the extent service by such carriers is available. It further provides that the Comptroller General of the United States shall disallow any expenditure from appropriated funds for international air transportation on other than a U.S. flag air carrier in the absence of satisfactory proof of the necessity therefor.

(b) The contractor agrees to utilize U.S. flag air carriers for international air transportation of personnel (and their personal effects) or property to the extent service by such carriers is available.

(c) In the event that the contractor selects a carrier other than a U.S. flag air carrier for international air transportation, he will include a certification on vouchers involving such transportation which is essentially as follows:


I hereby certify that transportation service for personnel (and their personal effects) or property by certificated air carrier was unavailable for the following reasons: ' (state reasons).

(d) The terms used in this clause have the following meanings: (1) "International air transportation" means transportation of persons (and their personal effects) or property by air between a place in the United States and a place outside thereof or between two places both of which are outside the United States.

(2) "U.S. flag air carrier" means one of a class of air carriers holding a certificate of public convenience and necessity issued by

'See Federal Procurement Regulations (41 CFR 1-1.323-3) or section 1-336.2 of the Armed Services Procurement Regulation, as applicable.

the Civil Aeronautics Board, approved by the President, authorizing operations between the United States and/or its territories and one or more foreign countries.

(3) The term "United States" includes the fifty states. Commonwealth of Puerto Rico, possessions of the United States, and the District of Columbia.

(e) The contractor shall include the substance of this clause, including this paragraph (e), in each subcontract or purchase hereunder which may involve international air transportation.

[40 FR 60019, Dec. 31, 1975]

§ 1-1.323-3 Availability or unavailability of certificated air carrier. Expenditures for service furnished by a noncertificated air carrier generally will be allowed only when service by a certificated air carrier or carriers is "unavailable" as indicated by the June 17, 1975, Comptroller General's memorandum

(B-138942) entitled "Guidelines for Implementation of Section 5 of the International Air Transportation Fair Competitive Practices Act of 1974." The criteria contained in the memorandum are reproduced in this section.

(a) Passenger or freight service by a certificated air carrier is considered "available" even though:

(1) Comparable or a different kind of service by a noncertificated air carrier costs less, or

(2) Service by a noncertificated air carrier can be paid for in excess foreign currency, or

(3) Service by a noncertificated air carrier is preferred by the agency or traveler needing air transportation, or

(4) Service by a noncertificated air carrier is more convenient for the agency or traveler needing air transportation.

(b) Passenger service by a certificated air carrier will be considered to be "unavailable":

(1) When the traveler, while en route, has to wait 6 hours or more to transfer to a certificated air carrier to proceed to the intended destination, or (2) when any flight by a certificated air carrier is interrupted by a stop anticipated to be 6 hours or more for refueling, reloading, repairs, etc., and no other flight by a certificated air carrier is available during the 6 hour period, or

(3) when by itself or in combination with other certificated or noncertificated air carriers (if certificated air carriers are “unavailable") it takes 12 or more hours longer from the original airport to the destination airport to accomplish the agency's mission than would service by a noncertificated air carrier or carriers.

(4) When the elapsed traveltime on a scheduled flight from origin to destination airports by noncertificated air carrier(s) is 3 hours or less, and service by certificated air carrier(s) would involve twice such scheduled traveltime. [40 FR 60019, Dec. 31, 1975, as amended at 41 FR 53662, Dec. 8, 1976]

§ 1-1.323-4 Disallowance of expenditures.

The Act and the Comptroller General's memorandum provide that he will disallow any expenditures for commercial foreign air transportation on noncertificated air carriers unless there is included in the appropriate voucher a justification explaining why service by certificated air carriers was "unavailable." The justification requirement is satisfied by the contractor's use of the certification contained in the contract clause which is prescribed by § 1-1.3232.

[40 FR 60019, Dec. 31, 1975]

§ 1-1.323-5 Air freight forwarders.

(a) International air freight forwarders, as defined in 14 CFR 297.1(c) and 297.2 (1974) that are engaged in foreign air transportation (49 U.S.C. 1301(21)(c) (1970)), may be used for Government-financed movements of property. The rule stated in § 1-1.3233 also applies to the use of underlying air carriers by international air freight forwarders engaged in such foreign air transportation.

(b) In order that bills submitted by international air freight forwarders engaged in international air transportation may be paid upon presentation, such carriers shall submit with their bills a copy of the airway bill or manifest showing the underlying air carriers utilized with such justification certifications as they may have for the use of underlying noncertificated air carriers. Use of the prescribed certifi

cation satisfies the justification requirement.

[40 FR 60020, Dec. 31, 1975]

§§ 1-1.324-1-1.326 [Reserved]

§ 1-1.327 Protection of the privacy of individuals.

[40 FR 44502, Sept. 26, 1975]

§ 1-1.327-1 General.

This section implements the Privacy Act of 1974 (Pub. L. 93-579, December 31, 1974; 5 U.S.C. 552a), and OMB Circular No. A-108, July 9, 1975. In enacting this legislation, Congress stated that "the right to privacy is a personal and fundamental right protected by the Constitution of the United States." The Privacy Act concerns rights of a citizen or a resident alien under the Act and does not extend to the rights of proprietorships in their business capacity, partnerships, businesses, or corporations.

[40 FR 44502, Sept. 26, 1975]

§ 1-1.327-2 Definitions.

As used herein, the following terms have the meanings set forth below:

(a) The term "agency" means any executive department, military department, Government corporation, Government controlled corporation, or other establishment in the executive branch of the Government (including the Executive Office of the President), or any independent regulatory agency.

(b) The term "individual" means a citizen of the United States or an alien lawfully admitted for permanent residence.

(c) The term "maintain" includes maintain, collect, use, or disseminate.

(d) The term "record" means any item, collection, or grouping of information about an individual that is maintained by an agency, including, but not limited to, his education, financial transactions, medical history, and criminal or employment history and that contains his name, or the identifying number, symbol, or other identifying particular assigned to the individual, such as a finger or voice print or a photograph.

(e) The term "system of records on individuals" means a group of any rec

ords under the control of any agency from which information is retrieved by the name of the individual or by some identifying number, symbol, or other identifying particular assigned to the individual.

(f) The term "operation of a system of records" means performance of any of the activities associated with maintaining the system of records, including the collection, use, and dissemination of records.

(g) The term "the Act" means the Privacy Act of 1974 (Pub. L. 93-579, December 31, 1974).

[40 FR 44502, Sept. 26, 1975]

§ 1-1.327-3 Statutory requirements.

(a) The purpose of the Act as it pertains to Government contracts is to guard the individual's right of privacy whenever an agency system of records on individuals is operated under contract and not by the agency. The individual's privacy is ensured by requiring the contractor to observe all the rules on privacy that apply to the agency which awards the contract. Except as otherwise provided by law, Federal agencies must maintain (see § 1-1.327-2(c)) any record of identifiable information on individuals in a manner that meets the following criteria. The action must be for a necessary and lawful purpose, the information must be current and accurate for its intended use, and adequate safeguards must be provided to prevent misuse of such information. Each agency that maintains a system of records on individuals is required, among other things, to establish rules of conduct for persons involved in the design, development, operation, or maintenance of any system of records on individuals, or in maintaining any record. Further, each agency is required to instruct each person involved regarding the rules and requirements of Section 3 of the Act (5 U.S.C. 552a), including any rules and procedures adopted by the agency pursuant to Section 3 and the civil and criminal penalties for noncompliance.

(b) The paragraph in Section 3 of the Act which pertains to Government contracts states as follows:

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