and $9-3.809. Profits and fees objectives shall be consistent with guidance in §9-3.808.

(d) Supplies and services normally should be procured through the use of specifications, standards, or purchase descriptions which clearly and accurately describe the supplies or services to be procured. If such specifications, standards, or purchase decriptions are not available and it is impractical and uneconomical to prepare them, "brand name or equal" descriptions may be used, provided the particular physical functions, or other characteristics of the brand name item which are deemed essential are clearly identified and described.

(e) A fair proportion of supplies and services shall be procured from small business and minority concerns.

(f) The need for access authorizations to classified information shall not be a limiting factor in obtaining competition except where time will not permit securing additional access authorizations.

(g) Awards shall be made only to responsible prospective contractors. Awards shall not be made to firms or individuals on the ERDA List of Disqualified Bidders and Ineligible Contractors, unless it is determined that is in the best interests of the Government to do so. Such determination shall be forwarded to the senior procurement official, Headquarters for concurrence prior to issuance of the con

tract.

(h) Selection of the type of contract to be used should be based on consideration of the nature of the supplies and services required and other circumstances surrounding the procurement. The cost-pluspercentage-of-cost system of contracting shall not be used in any

event.

(i) Small purchases (purchases not in excess of $10,000) should be made by methods designed to (1) obtain fair and reasonable prices, (2) reduce administrative costs of making such purchases to the minimum required to establish the propriety of placing the order at the price paid with the supplier concerned, and (3) improve opportunities for small and minority business concerns within the local trade area to obtain a fair proportion of purchases.

(j)(1) First-tier subcontracts and purchase orders for supplies and services for ERDA work normally should include provisions for resolving disputes to the same extent and in the same manner as in similar ERDA direct contracts.

(2) The disputes provision may be applied to lower-tier subcontracts and purchase orders provided all subcontracts and purchase orders of a higher tier are cost-type.

(3) A Disputes clause which can be used to carry out this policy is set forth in ERDA-PR 9-50.703-2.

$9-50.302-4

Procurement from contractor-controlled sources.

(a) When an operating or other onsite service contractor maintains a separate procurement function for performance of work in ERDA facilities on ERDA sites, procurement from contractor-controlled sources (any division, subsidiary, or affiliate of the contractor under a common control) may be treated in the same manner as procurement from other sources provided the procurement is made:

(1) under the same terms and conditions as would apply if the purchase were from a third party;

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

(3) 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, ERDA.

If

(b) Subcontracts for performance of contract work itself (as distinguished from procurement of supplies and services needed in connection with the performance of work) require ERDA authorization which may involve an adjustment of the contractor's fixed- fee. the 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, ERDA approval would normally require (1) that the contractorcontrolled source perform such work on a basis without profit or (2) an equitable downward adjustment to the contractor's (i.e., the contracting component's) fixed-fee.

(a) Heads of procuring activities shall require contractors to obtain the approval of the contracting officer before entering into any subcontracts or purchase orders within the following categories:

(1) Specified contract types. Approval shall be required before entering into cost-type, and time and materials, and labor-hour type subcontracts in excess of $500.

(2) Specified dollar amounts. Approval shall be required prior to entering into subcontracts or purchase orders above specified dollar amounts. Dollar limits will be established at the discretion of heads of procuring activities, taking into consideration such factors as the nature of work under each contract, the estimated cost of work under the contract, the contractor's procurement organization, other controls exercised over the contractor's procurement operations, and policies with respect to approvals established by Headquarters or field offices. Except as provided in paragraph 5(a) and 5(b) of this section, subcontracts or purchase orders in excess of the following amounts shall require prior ERDA approval:

shall be required for the subcontracting of any work a contractor is obligated to perform under a contract entered into under section 41 of the Atomic Energy Act of 1954, as amended.

(4) Specified materials, equipment, or services. Heads of procuring activities shall take such action as may be required to insure compliance with the procedure for purchases from contractorcontrolled sources or the procurement of specific items, or classes of items which by the terms of the contract may require ERDA approval.

(5) Exceptions. (a) In the event (1) application of any of the dollar amount limitations established in subparagraph (2) would impair the ERDA program of the field office or would be impracticable under the circumstances, or (2) such higher levels would be in the Government's best interest, the head of a procuring activity may, upon making such determination, approve a dollar amount up to $100,000. Requests to establish dollar levels in excess of $100,000 shall be submitted to the senior procurement official, Headquarters, for approval.

(b) When a review has been made of the contractor's procurement system in accordance with Subpart 9-23 and the contractor's procurement system has been approved, the Head of the Procuring Activity (HPA) may raise the dollar limitations in paragraph (1) and (2) above as follows:

(i) if the review was performed by ERDA the limitations may be raised to the amount of the HPA's delegated authority, provided concurrence has been obtained as required in section 9-23.107(a)

and

(ii) if the review has been performed by another agency, the limitations may be raised to those established by the performing agency, but not to exceed $1,000,000.

(6) Emergency approvals. Heads of procuring activities may, up to the limits of their delegated authority, give oral approval (or approval by telephone or teletype) to any subcontract or purchase order requiring ERDA approval in instances of compelling or unusual urgency, such as circumstances under which an ERDA program would be seriously hampered or delayed if supplies or services are not obtained by a certain date and time does not permit the obtaining of formal approval. Such emergency approvals shall be confirmed in writing.

(b) Operating and other onsite contractors shall be required to justify procurements in writing, setting forth the information and data used in determining that the procurements are in the best interests of the Government. The scope and detail of this documentation shall be consistent with the nature, dollar value, and complexity of the procurement.

(1) Contracting officers shall assure that operating and other onsite contractors establish and maintain procurement files which contain those documents essential to present an accurate and adequate record of the transaction.

(2) Field offices will establish files for the review and approval of contractor procurement actions, including among other necessary documentation an appraisal of the proposed action and a copy of suggestions, deficiencies or improvements forwarded to

contractor.

$9-50.303 Operating and onsite service contracts.

the

(a) Competition for existing operating and onsite service contracts will be sought whenever it appears likely that the Government's position may be meaningfully improved in terms of cost or performance, unless it is determined that to change a contractor would be contrary to the best interest of the Government. Except in those cases where the contract specifically permits the Government to bring in a replacement contractor, normally it would not be practical to compete an operating contract which includes major Government-owned facilities on contractor-owned or leased sites. In such cases, the alternatives would be to extend the contract or to allow the contract to expire and, if the work is to be continued, place all or some part of the work with another contractor at a different site.

(b) The following factors, as a minimum, should be considered in determining whether an existing operating or onsite service contract should be competed.

(1)

Overall performance of an incumbent contractor including specific consideration of the contractor's technical, administrative, and cost performance.

(2) Potential impact of change of contractors on programmatic

activities.

(3) The likelihood that qualified industrial firms or other organizations will compete for the contract.

$9-50.304 Field recommendations to extend or compete

operating contract and onsite service contracts.

(a) Heads of procuring activities will submit requests for the extension or competition of operating contracts or onsite service contracts in excess of their delegated authority, and for deviation from any prescribed contract policy, for advance Headquarters approval. Extensions of contracts within the HPA's authority must comply with the policy stated in 9-50.303 and be supported in writing as thoroughly as if it were to be submitted to Headquarters.

(b) If an action requires Headquarters review and approval, the field office manager will submit a memorandum that recommends either extending or not extending an operating or onsite service contract. This summary of recommended action, together with attachments supporting it, will be submitted at least 18 months prior to expiration of the contract. The attachments will include the following information:

(1) A full and complete justification of the recommendation that is made, i.e., either to obtain competition or to extend the contract without obtaining competition. This justification must address the policy stated in §9-50.303. It shall also discuss the availability of other qualified firms or organizations, if any, to compete for the contract.

(2) A statement of the present contractor's overall performance since award of the contract, or if previously extended, since Headquarters last authorized extension of the contract. This should be supported by a copy or detailed summary of the most recent overall ERDA management appraisal of the contractor's performance. This overall appraisal shall include specific appraisals of technical and cost performance.

(i) The technical appraisal shall include data which indicates the contractor's success or failure in meeting established program goals and objectives during the appraisal period. It is recognized that in some cases, the contracting office will not have the technical staffing necessary to perform an appraisal of the scientific and technical work under the contracts they are ainistering,

90-136 - 77-34