(2) The procurement is made in accordance with policies and procedures particularly designed to permit fair and open competition which have been approved by the contracting officer; and

(3) The procurement is made in a manner which results in legally enforceable terms and conditions.

When any of the conditions above cannot be met, procurements involving contractor-controlled sources should be made directly by, or with the prior approval of, AEC.

(b) Guidance with respect to reimbursement for procurements or transfers from contractor-controlled sources by cost-type contractors other than those identified in paragraph (a) of this section is set forth in § 9-15.5010-19. In these cases adequate provisions should be made to give the Government the benefit of customary warranties and protec

tion against patent infringement applicable under the circumstances.

(c) Subcontracts for performance of contract work itself (as distinguished from procurement of supplies and services needed in connection with the performance of work) require AEC authorization which may involve an adjustment of the contractor's fixed fee (see, for example, § 9-7.5006-56, Note (a)). If the cost-type contractor seeks authorization to have some part of the contract work performed by a contractor-controlled source, and the contractor's performance of that work was a factor in the negotiated fixed fee, AEC approval would normally require (1) that the contractor-controlled source perform such work on a cost basis without profit or (2) an equitable downward adjustment to the contractor's (i.e., the contracting component's) fixed fee.