ALTERATION TO SF-32, General Provisiems CLEAN AIR AND WATER CLAUSE (Applicable only if the contract exceeds $100,000, or the contracting officer has determined that the orders under an indefinite quantity contract in any one year will exceed $100,000, or a facility to be used has been the subject of a conviction under the Clean Air Act (42 U.S.C. 1857C-8(C)(1)) or the Federal Water Pollution Control Act (33 U.S.C. 1319 (C)) and is listed by EPA, or the contract is not otherwise exempt.) (A) The contractor agrees as follows: (1) To comply with all the requirements of Section 114 of the Clean Air Act, as amended (42 U.S.C. 1857, et seq., as amended by Public Law 91-604 and Section 308 of the Federal Water Pollution Control Act (33 U.S.C. 1251, as amended by Public Law 92-500), respectively, relating to inspection, monitoring, entry, reports, and information, as well as other requirements specified in Section 114 and Section 308 of the Air Act and the Water Act, respectively, and all regulation and guidelines issued thereunder before the award of this contract. (11) That no portion of the work required by this prime contract will be performed in a facility listed on the Environmental Protection Agency list of violating facilities on the date when this contract was awarded unless and until the EPA eliminates the name of such facility or facilities from listing. (III) To use his best efforts to comply with Clean Air Standards and Clean Water Standards at the facilities in which the contract is being performed. (IV) · To insert the substance of the provisions of this clause in any nonexempt subcontract, including this paragraph (IV). (B) The terms used in this clause have the following meanings: (1) (II) The term "Water Act" means Federal Water Pollution Control Act, as amended (33 U.S.C. 1251 et seq., as amended by Public Law 92-500). (III) The term "Clean Air Standards" means any enforceable rules, regulations, guidelines, standards, limitations, orders, controls, prohibitions, or other requirements which are contained in, issued under, or otherwise adopted pursuant to the Air Act or Executive Order 11738, an applicable implementation plan as described in Section 110(D) of the Clean Air Act (42 U.S.C. 1857C-5 (D)), an approved implementation procedure or plan under Section 111(C) or Section 111(D), respectively, of the Air Act (42 U.S.C. 1857C-6(C) or (D)), or an approved implementation procedure under Section 112(D) of the Air Act (42 U.S.C. 1857C-7(D)). ALTERATION TO SF-32, General Provisions Clean Air and Water Clause (Continued) (IV) The term "Clean Water Standards" means any enforceable limitation, control, condition, prohibition, standard, or other requirement which is promulgated pursuant to the Water Act or contained in a permit issued to a discharger by the Environmental Protection Agency or by a State under an approved program, as authorized by Section 402 of the Water Act (33 U.S.C. 1342), or by a local government to ensure compliance with pretreatment regulations as required by Section 307 of the Water Act (33 U.S.C. 1317). (V) The term "compliance" means compliance with Clean Air or Water Standards. Compliance shall also mean compliance with a schedule or plan ordered or approved by a court of competent jurisdiction, The Environmental Protection Agency or an Air or Water Pollution Control Agency in accordance with the requirement of the Air Act or Water Act and regulations issued pursuant thereto. (VI) The term "Facility" means any building, plant, installation, structure, mine, vessel or other floating craft, location, or site of operations, owned, leased, or supervised by a contractor, subcontractor, to be utilised In the performance of a contract or subcontract. Where a location or site of operations contains or includes more than one building, plant, installation, or structure, the entire location shall be deemed to be a facility except where the Director, Office of Federal Activities, Environmental Protection Agency, determines that independent facilities are colocated in one geographical area. EQUAL OPPORTUNITY (July 1976) (The following clause is applicable unless this contract is exempt under the rules, regulations, and relevant orders of the Secretary of Labor (41 CFR ch. 60).) During the performance of this contract, the Contractor agrees as follows: (a) The Contractor will not discriminate against any employee or applicant for employment because of race, color, religion, sex, or national origin. The Contractor will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex, or national origin. Such action shall include, but not be limited to, the following: Employment, upgrading, demotion, or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. The Contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided by the Contracting Officer setting forth the provisions of this Equal Opportunity clause. (b) The Contractor will, in all solicitations or advertisements for employees placed by or on behalf of the Contractor, state that all qualified applicants will receive consideration for employment without regard to race, color, religion, sex, or national origin. (c) The Contractor will send to each labor union or representative of workers with which he has a collective bargaining agreement or other contract or understanding, a notice, to be provided by the agency Contracting Officer, advising the labor union or workers' representative of the Contractor's commitments under this Equal Opportunity clause, and shall post copies of the notice in conspicuous places available to employees and applicants for employment. (d) The Contractor will comply with all provisions of Executive Order No. 11246 of September 24, 1965, and of the rules, regulations, and relevant orders of the Secretary of Labor. (e) The Contractor will furnish all information and reports required by Executive Order No. 11246 of September 24, 1965, and by the rules, regulations, and orders of the Secretary of Labor, or pursuant thereto, and will permit access to his books, records, and accounts by the contracting agency and the Secretary of Labor for purposes of investigation to ascertain compliance with such rules, regulations, and orders. (f) In the event of the Contractor's noncompliance with the Equal Opportunity clause of this contract or with any of the said rules, regulations, or orders, this contract may be canceled, terminated, or suspended, in whole or in part, and the Contractor may be declared ineligible for further Government contracts in accordance with procedures authorized in Executive Order No. 11246 of September 24, 1965, and such other sanctions may be imposed and remedies invoked as provided in Executive Order No. 11246 of September 24, 1965, or by rule, regulation, or order of the Secretary of Labor, or as otherwise provided by law. (g) The Contractor will include the provisions of paragraphs (a) through (g) in every subcontract or purchase order unless exempted by rules, regulations, or orders of the Secretary of Labor issued pursuant to section 204 of Executive Order No. 11246 of September 24, 1965, so that such provisions will be binding upon each subcontractor or vendor. The Contractor will take such action with respect to any subcontract 'or purchase order as the contracting agency may direct as a means of enforcing such provisions, including sanctions for noncompliance: Provided, however, That in the event the Contractor becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction by the contracting agency, the Contractor may request the United States to enter into such litigation to protect the interests of the United States. Mr. WAXMAN. Was it the intention of HEW and the vaccine manufacturers to, at some point, enter into written contracts, which they did do in August of this year, with at least three of the four companies. Is that correct? Dr. MILLAR. That is true. Mr. WAXMAN. Why was it such a long delay between the letter contracts and reducing it into a written contract? Dr. MILLAR. As the GAO people mentioned earlier, one of the major issues involved was whether or not the Federal Government would waive the usual requirement for cost accounting standards. This strikes me as a very serious matter, which was pondered for a rather considerable period of time, largely because of its implications. I would venture that this consideration of whether or not to waive the cost accounting standards is, in fact, the reason for most of the delay. Mr. WAXMAN. Tell us what the serious implications are. Dr. MILLAR. I think that we referred to them earlier, and I am not competent to comment on the special ramifications of waiving those procedures. I would presume that any time a company asks the Government to waive a standing set of standards that this should require some significant pondering. But I do not feel that I personally have the competence to respond as to what the implications of those waivers really are. Mr. WAXMAN. GAO said that it was inappropriate to contract with the vaccine manufacturers, and to have that kind of language in it. This generally applies to Defense people. You seem to indicate that there would be some serious consequencies in having waived that provision, which caused HEW to ponder on it for over 1 year. Dr. MILLAR. It took a rather considerable period to deal with that. I wonder if I might ask Mr. Bradford to offer some help on this point. Mr. BRADFORD. I think it took an awful long time, clearly, to decide the issue of whether this should be waived or not. Obviously, the Department has come down on the position that this will not jeopardize the Government's interest in signing the contract. But, yes, it took a long time. Mr. WAXMAN. Tell me more about it. What did the Government decide to give up? Mr. BRADFORD. Again, I apologize, Mr. Waxman, because I am not a contractual expert. As I understand the issue, the manufacturers' normal accounting systems were not set up to directly relate each item of cost to a specific, or to one specific product. What was done, in fact, initially when the letter contracts were signed in September 1976, was to establish cost criteria which both the Government and the contractors could agree upon. This was the basis for the contracts which were signed in September. The issue of whether the normal standards would apply in allocating costs in the audit could not be agreed upon by the parties, and so this was a major reason why the final contracts went unsigned. Mr. WAXMAN. You are talking about_allocating costs. In other words, the party contracted with by the Government would have to allocate the costs to show where each dollar went. Is that what the accounting system requires? Mr. BRADFORD. That is the general idea, but I cannot speak to the specifics. Mr. WAXMAN. Would it be fair for one to conclude that it would have been a way for the U.S. Government to know what the costs were for the manufacturers of the vaccine by way of a clear-cut audit, as opposed to just taking their word for what the costs would be? Mr. BRADFORD. This does not take the place of an audit. Again, the Department determined, after reviewing the issue, that these accounting standards could be waived, and the final determination of what it cost the manufacturers to produce the vaccine could still be obtained through audit. So the audit process still takes place. Mr. WAXMAN. Tell me about the audit. Would the audit go into every part of the cost incurred by the vaccine manufacturers, to know what their costs were; or would it be taking certain assump tions to furnish the Government by the vaccine manufacturers? Mr. BRADFORD. Agreements have been reached with the manufacturers that the records of cost, and other records, will be open to the HEW auditors for this purpose. Mr. WAXMAN. I want to know what we gave away that took such a long time, and that HEW pondered over so greatly before deciding to give the signed contracts. After all, we gave up the normal liability that is placed on the vaccine manufacturers because we were threatened with adverse effects. So HEW came to Congress, and said: "You have to pass a new law." HEW made an administrative decision that they were going to waive some provision that is in the law, and I imagine that it is in the law for some purpose. Could HEW give us some information on that. Mr. BRADFORD. I think that we could provide the detailed infor mation about each of the standards included, what was the difficulty with them, and why the decision was made. There are procedures, as you indicated, for the granting of waivers of these types of clauses in contracts, when there is deemed to be good reason. Mr. WAXMAN. I am not questioning whether you have the right to make a waiver. I am not sure that you have the right to make the waiver, but it is a decision that HEW made to give the waiver to the vaccine manufacturers after a year of negotiations as to the cost. Evidently, this was something important enough for the vaccine manufacturers to want that out, and which finally the Government felt they could not press any longer. What did we give up? Mr. BRADFORD. I cannot answer that question. The audits will turn that up, and, of course, GAO will continue to look at this process. Mr. WAXMAN. GAO only talks to you. It does not talk to anybody else. I would like, Mr. Chairman, that the record be held open for a detailed account. I wonder why we do not have a person from HEW who negotiated this. This is a very important part of the negotiations with the manufacturers. I find it inexcusable that we do not |