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America and the Republic of Panama, signed January 25, 1955). § 1-6.104 Procedures.

§ 1-6.104-1 Applicability.

The following procedures apply to all contracts involving the procurement of end products, except contracts exclusively for end products for use outside the United States.

§ 1-6.104-2 [Reserved]

§1-6.104-3 Certificate.

Invitations for bids and requests for proposals shall require that each bid or proposal include a certificate substantially as follows:

BUY AMERICAN CERTIFICATE

The bidder or offeror hereby certifies that each end product, except the end products 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 § 1-6.1033).

(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 surplus area concern (as defined in §§ 1-1.701 and 11.801, 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 procedures, 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 clause shall be treated as components mined, produced, 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:

(i) 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 clause prescribed in § 1

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unless the delivered cost of domestic materials is estimated to be 50 percent greater than the cost of like materials of foreign origin. AID is expected to follow this policy on its administrative procurement only, continuing its more restrictive buying policies on other procurement. For purposes of carrying out this decision on procurement for use abroad, it is suggested that agencies generally follow the definition of "domestic product" which is provided in Executive Order No. 10582, although it is recognized that some flexibility in the use of this definition may be warranted in exceptional circumstances.

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As used in this subpart, the following terms have the meanings set forth in this § 1-6.802.

(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 supplies to be acquired by the Government for public use in connection with service contracts, but excluding installation and other services to be performed after delivery.

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

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

(d) "U.S. 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 a component 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 into which it is incorporated is manufactured in the United States and the component is of a class or kind determined by the procuring agency not to be mined, produced, or manufactured in the United States in sufficient and reasonably available commercial quantities and of a satisfactory quality.

(e) "Foreign end products" means those other than U.S. end products.

(f) "Domestic cost" means the total estimated or actual cost of U.S. end products and services, including all transportation and handling charges.

(g) "Foreign cost" means the total estimated or actual cost of foreign end products and services, including all transportation and handling charges.

(h) "U.S. services" means those that are performed within the United States. In some instances, services provided under a single contract are performed partially in the United States and partially abroad. Such services shall be considered U.S. services if 25 percent or less of the total cost of the services is attributable to services (including incidental supplies used in connection therewith) performed outside the United States.

(i) "Foreign services" means those other than U.S. services.

(j) "Excess and near-excess foreign currencies" means those currencies of other countries held by the United States in amounts determined by the Secretary of the Treasury to be "excess" to the foreseeable, or above the immediate (near-excess), requirements of the U.S. Government, as publicized to U.S. agencies by Bureau of the Budget bulletins.

§ 1-6.803 Deviations from evaluation and preference procedures.

(a) The evaluation and preference procedures for U.S. end products and services, as described in this subpart, reduce overseas dollar expenditures resulting from agency procurement at an acceptable increase in budgetary costs. However, this result is an average and overall result rather than one which precisely obtains in each case, because, for reasons of administrative practicability, items are considered ab

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solutely as "foreign" or "domestic" and varying degrees within each class are not recognized.

(b) In some cases, consideration of items on such an absolute basis does not produce a satisfactory result. Accordingly, deviation from the evaluation procedures or from the definitions of "U.S. end product" (see §§ 16.802 and 1-6.806-4) should be considered for major procurements (e.g., over $250,000) where it is anticipated that the low domestic bid will involve relatively substantial expenditures for foreign components in the end product offered or that the low foreign bid will involve relatively substantial expenditures for domestic components in the end product offered. In such cases, agencies should determine whether an award based on the domestic end product offered would produce a sufficient balance of payments advantage to warrant the resulting increased cost of procurement.

(c) A request for a deviation should be made sufficiently in advance of the solicitation to describe the evaluation procedure that will be used. The deviation should be approved by the head of the agency or his designee.

§ 1-6.804 Policy.

(a) Wherever feasible, excess foreign currencies (see Bureau of the Budget Circular No. A-20) shall be used for the procurement of articles, materials, supplies, and services for use outside the United States. Contracts for such procurements may also provide for payment in both local currency and dollars if the dollar portion is limited to the contractor's validated direct dollar costs of the U.S. export content of these procurements.

(b) When use of excess currencies is found not feasible, and except as provided in § 1-6.805, proposed procurement of articles, materials, supplies, and services for use outside the United States shall be restricted to U.S. end products and services.

(c) Procurements shall not be broken into several separate smaller procurements for the purpose of bringing the individual amounts of such procurements within the dollar limitations of the exceptions in § 1

6.805 which permit the procurement of foreign items.

§ 1-6.805 Exceptions.

(a) Foreign end products and services may be procured, without regard to the provisions of §§ 1-6.804 and 16.806, as follows:

(1) Where required to be made in accordance with a treaty or international agreement.

(2) Where the estimated cost of the product does not exceed $10,000.

(3) [Reserved]

(4) Where, in connection with the procurement of perishable subsistence items, it is determined that delivery from the United States would destroy or significantly impair their quality at the point of consumption. Such determinations shall be made by each agency in accordance with agency procedures.

(5) Where it is determined, in accordance with agency procedures, that a requirement can only be filled by a foreign end product or service, and that it is not feasible to forego filling the requirement or to provide a U.S. substitute for the requirement.

(6) Where, with respect to procurements other than those covered in paragraphs (a) (1) through (8) of this section, U.S. end products or services are available, the domestic cost is estimated not to exceed $10,000, and the difference between the domestic cost and the foreign cost is determined to be so large as to make procurements of foreign end products and services clearly desirable. Such determinations shall be made in accordance with agency procedures. Where the domestic cost is estimated to exceed $10,000, and the difference between the domestic cost and the foreign cost exceeds 50 percent of the foreign cost, the matter shall be forwarded to the head of the agency or his designee for determination. In either case, if the agency determines that the foreign end product or service shall be purchased, contracts for such procurements shall provide that the payment in dollars will be limited to the contractor's validated direct dollar costs of the U.S. export content of the procurement where excess or near-excess foreign currency is available and such a limita

tion on payments in dollars is considered to be practicable.

(7) Where procurements are financed from the Treasury Department supply of "near-excess" foreign currencies.

(8) Where individual products or services have been excepted by agency regulations.

(b) Complete documentation justifying procurements under paragraph (a) of this section shall be prepared by requiring activities and included in the contract file.

[32 FR 5622, Apr. 6, 1967, as amended at 40 FR 44140, Sept. 25, 1975]

§ 1-6.806 Procedures.

§ 1-6.806-1 Restricted solicitation.

(a) In the case of procurements other than those referred to in §§ 16.804(a) and 1-6.805, where the domestic cost is estimated to exceed $10,000, cost estimates of United States and foreign end products and services shall be made prior to solicitation (where one agency procures for another agency the requiring agency shall make the cost estimate). If the domestic cost is estimated to exceed the foreign cost by not more than 50 percent of the foreign cost, the solicitation shall be restricted to U.S. end products and services.

(b) If after bid opening, or receipt of proposals or quotations, the contracting officer has knowledge that domestic cost exceeds foreign cost by more than 50 percent of the foreign cost, he shall proceed as follows:

(1) Where the domestic cost is in excess of $10,000, forward the matter to the head of the agency or his designee for determination; or

(2) Where the domestic cost is not in excess of $10,000, award the contract for U.S. end products or services unless the domestic and foreign cost differential is so large as to make the procurement of foreign end products or services clearly desirable. Should the latter be the case, the solicitation shall be canceled and a nonrestricted solicitation issued.

(c) If the agency determines that the foreign end product or service shall be purchased, contracts for such procurements shall provide that the payment

in dollars will be limited to the contractor's validated direct dollar costs of the U.S. export content of the procurement where excess or near-excess foreign currency is available and such a limitation on payments in dollars is considered to be practicable.

§ 1-6.806-2 Method of purchase.

Contracts in furtherance of this Subpart 1-6.8 are considered to be negotiated procurements and may be entered into by conventional negotiation or by special method of negotiated procurement knows as "Balance of Payments Restricted Advertising." Within the United States, the latter method shall be used wherever possible. Balance of Payments Restricted Advertising, including awards thereunder, shall be conducted in the same manner as prescribed for formal advertising in Part 1-2 of this chapter, except that bids and awards shall be restricted to U.S. end products and services. Contracts entered into pursuant to conventional negotiation shall cite exceptions (2) through (15) of 41 U.S.C. 252(c), as appropriate. Where such negotiation authority is not applicable or where contracts are entered into pursuant to the Balance of Payments Restricted Advertising method of procurement, 41 U.S.C. 252(c) (1) shall be cited as negotiation authority. Invitations for bids and requests for proposals shall clearly designate items being procured pursuant to the Balance of Payments Program.

§ 1-6.806-3 Certificate.

Invitations for bids and requests for proposals shall require that each bid or proposal include a certificate substantially as follows:

U.S. PRODUCTS CERTIFICATE (BALANCE OF
PAYMENTS PROGRAM)

To the extent that the Government specifies that the items being purchased are in implementation of the Balance of Payments Program, the bidder or offeror hereby certifies that each such item is a U.S. end product or comprises U.S. services (as defined in the contract clause entitled "U.S. Products and Services (Balance of Payments Program)"), and that components of unknown origin have been considered to have been mined, produced, or manufactured outside the United States.

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