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(ii) advice that termination of approval will occur upon a change in the procurement system unless approved by the contracting (8) statement that approval may be withdrawn at any time at the Government's discretion.

(c) In exceptional circumstances, notification or prior written approval may be required for one or more classes of subcontracts which, because of critical nature or particular circumstances, call for extraordinary Government surveillance. Such requirements shall not be based upon the dollar amount of proposed subcontracts and, if imposed, shall be removed at the earliest possible date.

(d) When approval of the contractor's procurement system is withheld or withdrawn the contractor shall be informed in writing of specific actions necessary to qualify the system for approval and shall be requested to furnish a plan for accomplishing the necessary actions.

(e) When recommendations are made for improvement of an approved system, the contractor shall be requested to reply as soon as possible as to concurrence or position with respect to the recommendations.

(f) Copies of notifications granting, continuing, withholding, or withdrawing approval of a contractor's procurement system, copies of recommendations for improvement of an approved system, and information received from the contractor pursuant to (d) and (e) above shall be transmitted to the senior procurement official, Headquarters. $9-23.109 Disclosure of approval status of a contractor's procurement system.

(a) Upon request, a prime contractor may be informed that the procurement system of a proposed subcontractor has been approved under Government prime contracts, if such is the case. The prime contractor shall be cautioned that approval status is furnished only as of the date of notification and that the Government will not keep the prime contractor advised of any change in the approval status of the proposed subcontractor's procurement system.

(b) The contents of summary and complete reports of contractor procurement system reviews, and other information disclosed by the contractor during the review shall be divulged only to those Government personnel having a need-to-know.



Surveillance of the contractor's
approved procurement system.

The contracting officer must maintain a sufficient level of

surveillance to assure that the contractor continues to effectively manage the procurement program. The contracting officer shall develop a surveillance plan and submit it to the senior procurement official, Headquarters, for approval. The surveillance plan shall encompass all phases of the system (pre-award, post-award performance, contract completion and close out) and all operations which impact procurement and subcontracting. Surveillance shall consider all of the elements of the contractor's procurement system including, but not limited to, those items evaluated in the initial review.

(b) Certain subcontractors may require because of the flowdown of policies on cost, performance.


additional surveillance schedule, and technical

Within 30 days after receipt of the contractor's response to the recommendations made in the CPSR report, the surveillance tests of the contractor's implementation and three copies of the updated surveillance plan shall be forwarded to the senior procurement official, Headquarters.

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$9-30.000 Scope of part.

This part implements and supplements FPR Part 1-30 for use in the placement and administration of contracts for the procurement of materials and services by or for the account of ERDA.

Subpart 9-30.1 Forms of Financing

$9-30.102 Guaranteed loans


The following implements the FPR stating ERDA procedure, criteria, and policies:

(a) Procedure. The procedure for obtaining a guaranteed loan is essentially the same as the procedure for obtaining a conventional loan. The contractor or prospective contractor requiring additional funds to perform the contract, applies to its bank for a loan or credit of the required amount. The amount may be such that the bank can grant the loan for its own account. However, if for any reason the bank deems it necesssary to require a guarantee, the bank may

apply to ERDA through the appropriate Federal Reserve Bank for the required guarantee. ERDA certification of guaranteed loan applications shall be made only by the head of the agency or designee for that purpose.

(b) Criteria. The following criteria apply to the approval of guaranteed loans by ERDA:

(1) The materials or services to be furnished by the contractor are necessary to the national defense.

(2) Such materials or services cannot practicably be obtained from alternate sources without delaying or impeding the national defense except that no small business concern shall be held ineligible for the issuance of such guarantee by reason of alternative sources of supply.

(3) The contractor has demonstrated its inability to obtain the necessary financing in conventional credit channels without the guarantee.


(4) There is reasonable assurance that the loan can be re

(5) The contractor is competent to perform the contract. Eligibility under subparagraphs (1), (2), and (5) of this paragraph

is determined on the basis of findings by the appropriate procuring activity. Eligibility under subdivisions (3) and (4) of this paragraph is determined by the Controller, based on information contained in the application, the Federal Reserve Bank's report, and information furnished by the procuring activity concerned.

(c) Policies. The following policies governing the exercise of its loan guarantee authority have been established by ERDA:

(1) The use of the loan guarantee authority is not restricted to contracts or subcontracts of any particular types or classes. Each case is to be evaluated on its own merits and under the particular circumstances applicable thereto.

(2) The fact that a contract has been awarded as a result of competitive bidding should not of itself render the loan ineligible for guarantee by ERDA if the contractor is financially responsible and its need for working capital is the result of the impact of the defense program.

(3) The guarantee authority should, in general, not be used in connection with loans to contractors required to furnish performance bonds, except in those cases in which the time likely to be required for the surety or ERDA to take over in the event of default will result in delays which cannot be tolerated by the particular program concerned. When performance bonds have been furnished, the surety shall be required to subordinate its rights in favor of the guaranteed loan.

(4) The criterion that the materials or services to be provided cannot readily be procured from alternative sources does not require the finding that the materials or services are absolutely unobtainable elsewhere. The criterion should be so applied as to permit guarantees of loans when, although the materials or services can be obtained elsewhere, such factors as the urgency of supply schedules, technical capacity of the contractor, comparative prices, and time and expense involved in reletting the contract, including termination payments, establish that it is to the Government's advantage not to resort to alternative sources merely because the contractor or subcontractor may require a guaranteed loan.

(5) If it is known at the time the contract is to be awarded that the low offeror who is technically qualified and competent to furnish the required materials and services will require a guaranteed loan, the contracting officer should obtain appropriate staff advice and in reaching a decision should consider at least the following: (i) the savings to be realized by awarding the contract to the low offeror;

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