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fund, the contracting officer shall ask legal counsel to review the contract or contracts and all data relevant thereto to determine whether the Government's rights would be jeopardized or impaired by the contracting officer's proposed action.

(b) Solicited refunds. Voluntary refunds may be requested during or after contract performance. They shall be requested only when it is considered that the Government was overcharged under a contract or was inadequately compensated for the use of Government-owned property, or in the disposition of contractor inventory, and retention by the I contractor or subcontractor of the amount in question would be contrary to good conscience and equity. Generally, retention by the contractor or subcontractor shall not be considered contrary to good conscience and equity, and thus a voluntary refund shall not be requested, unless the overcharge or inadequate compensation was due, at least , in part, to the fault of the contractor or - subcontractor. The decision to solicit a voluntary refund shall be made by the Secretary concerned.

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(c) Disposition of voluntary refunds. (1) If a refund is offered prior to final payment, it is preferable that the contract price be appropriately modified to reflect the refund. In such a case, the amount of the refund shall be credited to the applicable appropriation cited in the contract.

(2) In cases where the refund is to be made by check rather than by an adjustment in the contract price, the check | shall be made payable to the Treasurer of the United States and shall be forwarded immediately to the comptroller of the appropriate Department, or other Departmental officer responsible for the control of funds. When forwarded, the check shall be accompanied by a letter identifying it as a voluntary refund, giving the number of the contract or contracts involved and, where possible, giving the account number of the appropriation to which the refund should be credited.

[30 F.R. 14887, Dec. 2, 1965]

§ 1.313

Procurement of parts.

(a) Parts for replenishment of stock, repair, or replacement, must be procured so as to assure the requisite safe, dependable, and effective operation of the equipment. Where it is feasible to do so without impairing this assurance, parts

should be procured on a competitive basis, as in the kind of cases described in paragraph (b) of this section. However, where this assurance can be had only if the parts are procured from the original manufacturer of the equipment or his supplier, the procurement should be restricted accordingly, as in the kind of cases described in paragraph (c) of this section.

(b) Parts that are fully identified and can be obtained from a number of known sources, and parts for which fully adequate manufacturing drawings and any other needed data are available (or can be made available in keeping with the policies in Subpart B, Part 9 of this title), are to be procured on a competitive basis. In general, such parts are of a standard design configuration or have commercial equivalents. They include individual items that are susceptible of separate procurement, such as resistors, transformers, generators, spark plugs, or electron tubes.

(c) Parts not within the scope of paragraph (b) of this section generally should be procured (either directly or indirectly) only from sources that have satisfactorily manufactured or furnished such parts in the past, unless fully adequate data (including any necessary proprietary data), test results, and quality assurance procedures, are available (or can reasonably be made available in keeping with the policies in Subpart B, Part 9 of this title) to assure the requisite reliability and interchangeability of the parts, and procurement on a competitive basis would be consistent with the assurance described in paragraph (a) of this section. In assessing this assurance, the nature and function of the equipment for which the part is needed should be considered. To illustrate, acceptable tolerances for a commercial television part may be far less stringent than those for a comparable military radar part, permitting competitive procurement of the former but not of the latter. The exacting performance requirements of specially designed military equipment generally demand that parts be closely controlled and have proven capabilities of precise integration with the system in which they operate, to a degree that precludes the use of even apparently identical parts from new sources, since the functioning of the

whole may depend on latent characteristics of each part which are not definitely known.

[25 F.R. 1085, Dec. 31, 1960]

§ 1.314 Disputes and appeals.

(a) When a dispute cannot be settled by agreement and a decision under the Disputes clause is necessary, the contracting officer shall review the available facts pertinent to the dispute before making his final decision. When there is any doubt as to whether the issue in dispute is subject to the disputes procedure, a decision will be made pursuant to the Disputes clause. The disputes procedure shall not be invoked in cases when a dispute is clearly not subject to the procedure. The contracting officer shall obtain, from assigned legal and other advisors, such advice and assistance as is required to render a decision, Prior to issuing the decision, the contracting officer shall consider the necessity for coordination with the contract administration office or the purchasing office, as appropriate. However, the decision must be that of the contracting officer.

(b) The final decision should include a statement of facts sufficient to enable the contractor to understand both the decision and the basis therefor. Normally, the decision should be in the form of a statement of the claim or other description of the nature of the dispute, with necessary references to pertinent contract provisions; a statement as to which of the facts relevant to the dispute the parties are in agreement and, as clearly as possible, the area of disagreement; and the contracting officer's statement of his decision and the basis therefor.

(c) The contracting officer (PCO, ACO, or TCO) shall decide all questions subject to the disputes procedures as to which he has the authority to act.

(d) When a final decision of the contracting officer involves a dispute that is subject to the procedure of a Disputes clause, or when there is doubt as to whether the decision is subject to such procedure, a paragraph substantially as follows, appropriately modified where other appeal Boards are authorized, shall be included in such decision.

This is the final decision of the Contracting Officer. Decisions on disputed questions of fact and on other questions that are sub

ject to the procedure of the Disputes clause may be appealed in accordance with the provisions of the Disputes clause. If you decide to make such an appeal from this decision, written notice thereof (in triplicate) must be mailed or otherwise furnished to the Contracting Officer within 30 days from the date you receive this decision. Such notice should indicate that an appeal is intended and should reference this decision identify the contract by number. The Armed Services Board of Contract Appeals is the authorized representative of the Secretary for hearing and determining such disputes. The rules of the Armed Services Board of Contract Appeals are set forth in the Armed Services Procurement Regulation, Appendix A, Part 2.


(e) After an appeal has been filed, contracting agencies are not precluded from further seeking agreement as to disposition of the controversy. However, such efforts to dispose of a controversy shall not be conducted pursuant to formal board actions or hearings, and shall not result in suspension of processing of an appeal, except as ordered or authorized by the Armed Services Board of Contract Appeals.

(f) In the event of an appeal, the amount determined to be payable in the decision of the contracting officer, less any portion previously paid, normally should be paid in advance of any decision by the Board without prejudice to the rights of either party or the appeal. [30 F.R. 14071, Nov. 9, 1965]

§ 1.315 Procurement of jewel bearings.

(a) It has been determined that defense interests require the continued maintenance of an active and versatile mobilization base for the production of jewel bearings. This base has been established at the Government-owned Turtle Mountain Bearing Plant, Rolla, North Dakota. In support of this policy, Government purchases of jewel bearings shall be made from that plant in all cases where it can meet purchase requirements. Additionally, all procurements of items containing jewel bearings shall provide, in the solicitations and resulting contracts, a requirement that jewel bearings in the quantities, and of the types and sizes necessary for the end items to be supplied under the contract, be purchased from the Turtle Mountain Plant and be incorporated in the delivered items, subject to the criteria provided in paragraphs (b), (c), and (d) of this section, except:

(1) When quantity requirements, quality standards, or delivery requirements cannot be satisfied by bearings manufactured at the Turtle Mountain Plant;

(2) For purchases of commercial end items or of military end items having jeweled components used in commercial 2 end items, when the quantities of such end items or components are such that the contracting officer either knows or reasonably expects that all such commercial end items or commercial components of military end items are already manufactured and available from the stock of any dealer, wholesaler, distributor, or manufacturer; or

(3) For bearings used in items that are to be procured and used outside the United States, its possessions, and Puerto Rico.

(b) In order to assure that all bidders or offerors are competing on the same basis, it is necessary that the solicitation for items containing jewel bearings clearly state:

(1) The successful contractor will be required to purchase (directly or through subcontractors, as appropriate) Turtle Mountain source bearings at prices established in the U.S. Government Jewel Bearing Price List then in effect, and to incorporate such bearings in the items to be delivered; and

(2) Bids or proposals are to be predicated on this requirement.

If it should occur, after award, that the Turtle Mountain Plant rejects the contractor's (or subcontractor's) purchase order entirely or in part, the contractor (or subcontractor) shall be required to so notify the contracting officer who will effect an equitable adjustment in the contract price to reflect any costs or savings accruing to contractor by reason of any price differential for such bearings, pursuant to the clause of this contract entitled "Changes."

(c) To the extent Turtle Mountain bearings are fungible with other bearings and it is not practical or would be costly to segregate jewel bearing inventories or work in process for items to be furnished the Government from that to be furnished commercial customers, or for other similar reasons, it may be in the "Government's interest to waive the use requirements at the discretion of the contracting officer. No waiver will be granted to prospective contractors prior to award and no assurance will be given

prior to award to any prospective contractors that such waiver will be granted after award. Minor inconvenience to contractors alone will not satisfy the need for demonstrating that the Government's interests are served by such waiver. When the use requirement is waived, an equitable adjustment for cost savings resulting therefrom shall be made.

(d) In circumstances where a procurement is not exempt from this procedure but it would be impractical or contrary to the Government's best interest to require actual use of all of the Turtle Mountain bearings required to be purchased, the contracting officer may provide in the solicitation and resulting contract that a minimum fixed percentage of the total bearings requirements be of Turtle Mountain origin, or that Turtle Mountain bearings be purchased for and used in a certain number of the total items to be supplied.

(e) In all procurements subject to these procedures, the following clause is required for use:


Jewel bearings required in the performance of this contract shall be procured from the Turtle Mountain Jewel Bearing Plant, Rolla, North Dakota, at prices established in the Official U.S. Government Jewel Bearing Price List dated (insert latest effective date). The Contractor agrees that the delivery dates specified for the quantities and types of jewel bearings so ordered will be reasonably related to manufacturing schedules and delivery requirements of this contract. The Contractor agrees to notify the Contracting Officer promptly of the rejection of his (or any subcontractor) purchase order in whole or in part by the Turtle Mountain Plant and further agrees to an equitable adjustment in the contract price pursuant to the "Changes" clause of this contract to reflect any costs or savings to the Contractor (or subcontractor) resulting from such rejection. The Contractor further agrees to incorporate or to have his subcontractors incorporate the purchased Turtle Mountain jewel bearings in the items to be delivered under this contract.* The requirement for use (but not the requirement for purchase) of such bearings may be waived in the discretion of the Contracting Officer when such waiver is determined by him to be in the Government's interest, and where agreement is reached for an equitable adjustment in the contract price by reason of such waiver.

[29 F.R. 9747, July 21, 1964, as amended at 30 F.R. 1729, Feb. 9, 1965]

§ 1.316 Disclosure of contractor performance data to other Government agencies and foreign governments. Subject to any applicable security requirements, the military departments shall honor the requests of other Government agencies for readily available information relating to the performance of their prime contractors. The agency requesting the information shall be advised that it will be responsible for any further release of such information. A request from a foreign government for such information should similarly be honored. However, if there is any question as to propriety of divulging the information for any reason, including the security aspect, the reply should be forwarded through appropriate Departmental channels.

[27 F.R. 1685, Feb. 22, 1962]

§ 1.317 Rental in lieu of purchase.

There are many situations in which the Government's equipment requirements may be more economically filled by rental than by purchase. This is particularly true in the case of certain expensive commercial equipments. The decision to rent rather than purchase must be made on a case-by-case basis, and rental should be used where it is in the Government's interest. The criteria to be considered in each case include the following:

(a) the Government requirement is of short duration, and purchase would be costlier than rental (generally, longterm rentals should be avoided in the absence of compelling circumstances);

(b) the probability that the equipment will become obsolete and that replacement within a short period will be necessary;

(c) the equipment is special or technical, and the lessor will provide the equipment, as well as maintenance and repair services, at a lower cost than would otherwise be available to the Government.

[27 F.R. 8870, Sept. 6, 1962]

§ 1.318 Contracts conditioned upon the availability of funds.

(a) In order to effectuate procurements promptly upon the beginning of a new fiscal year, it may at times be necessary to initiate a procurement properly chargeable to funds of the new fiscal year prior to the availability of such funds. In such instances, the following clause shall be included in the in

vitation for bids or other solicitation and 1 the resultant contract:



Funds are not presently available for this procurement. The Government's obligation hereunder is contingent upon the avail- 1 ability of appropriated funds from which payment for the contract purposes can be made. No legal liability on the part of the Government for payment of any money shall arise unless and until funds are made available to the Contracting Officer for this procurement and notice of such availability, to be confirmed in writing by the Contracting Officer, is given to the Contractor.

(b) The authority set forth in paragraph (a) of this section shall be used only for operation and maintenance and continuing services (such as rentals, utilities, and items of supply which are not financed by stock funds) which are necessary for normal operation and for which the Congress consistently appropriates funds. When this authority is used, the supplies or services shall not be accepted by the Government until funds are available to the contracting officer for the procurement and until the contracting officer has given notice to the contractor (to be confirmed in writing) of such availability. Appropriate records will be maintained to insure adequate administrative control of funds. [27 F.R. 11644, Nov. 27, 1962]

§ 1.319 Renegotiation performance reports.

(a) Renegotiation Board. Pursuant to the Renegotiation Act of 1951, as amended (50 U.S.C. App. 1211-1233), the Renegotiation Board reviews profits of defense contractors performing renegotiable contracts and subcontracts aggregating more than $1 million in a fiscal year in order to eliminate any excessive profits therefrom. Such review involves consideration of financial statements and other information furnished by both contractors and the Military Departments.

(b) Maintenance of renegotiation information in contract files. The contracting officer shall include in the file of each contract information pertaining to the extent and effectiveness of competition obtained in the negotiation and award of the contract, the reasonableness of the prices and profits negotiated, any target and incentive formulas incorporated in the contract, the extent of risk assumed by the contractor, the contractor's efficiency in performance of the contract, and any other infor

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mation which would facilitate compilation of the performance reports described in paragraph (d) of this section. This is particularly important in the case of incentive type contracts where the question may be raised as to whether additional profits paid to the contractor by operation of the incentive provisions have been earned. To insure the collection of accurate and detailed information, the aforementioned data shall be included in the contract file as soon as it becomes available. The foregoing is not applicable to:

(1) Purchases made pursuant to the provisions of Subpart F, Part 3 of this chapter;

(2) Delivery orders placed under Federal Supply Schedule contracts; and

(3) Those contracts known to be exempt from renegotiation. (For additional information, see Chapter XIV of this title.)

(c) Processing renegotiation requests. The Renegotiation Board will, with respect to a particular contract, submit its request for procurement data and contractor performance information to the Contract Administration Office administering that contract. The Renegotiation Board will also furnish a copy of the request to the purchasing office awarding the contract. Within 30 days of the date of this request, the Contract Administration Office should forward the performance report to the Renegotiation Board, with copies to each purchasing office concerned. Within 20 days of receipt of a copy of the Contract Administration Office's report, the purchasing office should forward its report to the Renegotiation Board. If either of these time limits cannot be met, the appropriate office shall notify the Board as to the date by which the report will be submitted.

(d) Performance reports. The report shall be an objective and accurate evaluation of the contractor's performance, prepared by Government personnel from information and data in contract files. Under no circumstances shall the contractor be requested to furnish specifically for use in preparation of this report, information relative to the evaluation of his contract performance. However, when necessary, information may be solicited from a contractor regarding performance of his subcontractor. To provide full, accurate, and objective data to the Renegotiation Board, offices concerned shall furnish information sub

stantially in accordance with the following checklist, including, favorable recommendations giving due credit for better than average contract performance and unfavorable recommendations for unsatisfactory performance:

(1) Date of report;

(2) Installation making report; (3) Source and date of request for report;

(4) Name and address of contractor;
(5) Period covered by report;

(6) List of contracts being performed during the period concerned, showing as to each:

(i) Contract number;

(ii) Date;

(iii) Total amount of contract;
(iv) Principal product or service;

(v) Method of procurement (advertised or negotiated, and extent of competition);

(vi) Type of contract;

(vii) Total billings during period; and (viii) Principal place of manufacture; (7) Brief description of manufacturing techniques and type of work normally performed by contractor (e.g., production, fabrication, assembly) and relative complexity of the work (state the percentage of work subcontracted);

(8) Information concerning contractor performance, including extent to which:

(i) The product exceeded, met or fell below the contract requirements;

(ii) Delivery schedules were met (indicate reasons for failures to meet schedules, and compliance with requests for early deliveries, if any);

(iii) Rejections and spoilage rates were high or low and reasons therefor;

(iv) Contractor met targets under incentive contracts and reasons therefor;

(v) Contractor was economical in use of materials, facilities, and manpower, and was otherwise effective in controlling production costs;

(vi) Contractor made effective use of his facilities (state whether he expanded facilities to undertake renegotiable business and if so, was such expansion excessive);

(vii) Strikes, stoppages, or other significant developments in labor management affected contract performance;

(9) Information concerning reasonableness of cost and profits, including: (i) Basis for use of particular type of contract in significant contracts (if an incentive contract, describe also the

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