U.S. Government departments and agencies, or their instrumentalities (such as Federal Prison Industries, Inc.); or (c) National Industries for the Blind. [34 FR. 13835, Aug. 29, 1969]

§ 1.902 General policy.

Purchases shall be made from, and contracts shall be awarded to, responsible prospective contractors only. A responsible prospective contractor is one which meets the standards set forth in §§ 1.9031 and 1.903-2, and such special standards as may be prescribed in accordance with § 1.903-3 and by overseas commanders. The award of a contract to a supplier based on lowest evaluated price alone can be false economy if there is subsequent default, late deliveries, or other unsatisfactory performance resulting in additional procurement or administrative costs. While it is important that Government purchases be made at the lowest price, this does not require an award to a marginal supplier solely because he submits the lowest bid or offer. A prospective contractor must demonstrate affirmatively his responsibility, including, when necessary, that of his proposed subcontractors. The contracting officer shall make a determination of nonresponsibility if, after compliance with §§ 1.905 and 1.906, the information thus obtained does not indicate clearly that the prospective contractor is responsible. Recent unsatisfactory performance, in either quality or timeliness of delivery, whether or not default proceedings were instituted, is an example of a problem which the contracting officer must consider and resolve as to its impact on the current procurement prior to making an affirmative determination of responsibility. Doubt as to productive capacity or financial strength which cannot be resolved affirmatively shall require a determination of nonresponsibility.

§ 1.903 Minimum standards for respon. sible prospective contractors. General standards.

§ 1.903-1

(b) Be able to comply with the required or proposed delivery or performance schedule, taking into consideration all existing business commitments, commercial as well as governmental (for SBA certificates of competency, see § 1.705-4);

(c) Have a satisfactory record of per、 formance (contractors who are seriously deficient in current contract performance, when the number of contracts and the extent of deficiency of each are considered, shall, in the absence of evidence to the contrary or circumstances properly beyond the control of the contractor, be presumed to be unable to meet this requirement). Past unsatisfactory performance, due to failure to apply necessary tenacity or perseverance to do an acceptable job, shall be sufficient to justify a finding of nonresponsibility and in the case of small business concerns, shall not require submission of the case to the Small Business Administration; see §§ 1.705-4(c) (5) and 1.905-2;

(d) Have a satisfactory record of integrity; and

(e) Be otherwise qualified and eligible to receive an award under applicable laws and regulations; e.g., Subpart F, Part 12 of this chapter.

[30 F.R. 11998, Sept. 21, 1965, as amended at 31 F.R. 13329, Oct. 14, 1966] § 1.903-2

Additional standards.

(a) Standards for production, m ntenance, construction, and research and development contracts. In addition to the standards in § 1.903-1, in procurement involving production, maintenance, construction (see § 18.106 of this chapter), or research and development work (and in other procurement as appropriate), a prospective contractor must:

(1) Have the necessary organization, experience, operational controls and technical skills, or the ability to obtain them (this standard includes, where appropriate, such elements as adequacy of production control procedures; quality assurance measures, including those applicable to materials produced or services performed by subcontractors) (see § 1.903-4); and

(2) Have the necessary production, construction, and technical equipment and facilities, or the ability to obtain them. Where a prospective contractor proposes to use the facilities or equipment of another concern, not a subcontractor, or of his affiliate (see §2.201

(a) (23)), all existing business arrangements, firm or contingent, for the use of such facilities or equipment shall be considered in determining the ability of the prospective contractor to perform the contract; see also § 1.904-3.

(b) Standards for Food. Procurement of food shall be made only from those sources which, in addition to meeting the standards in § 1.903-1, are approved with respect to sanitation in accordance with standards and procedures prescribed in AR 40-657, NAVSUP PUB 395, AFR 1632, and NAVMC 2573.

[30 F.R. 11998, Sept. 21, 1965, as amended at 34 F.R. 13835, Aug. 29, 1969]

§ 1.903-3 Special standards.

When the situation warrants, contracting officers shall develop with the assistance of technical personnel or other specialists, special standards of responsibility to be applicable to a particular procurement or class of procurements. Such special standards may be particularly desirable where a history of unsatisfactory performance has demonstrated the need for insuring the existence of unusual expertise or specialized facilities necessary for adequate contract performance. The resulting standards shall form a part of the solicitation and shall be applicable to all bidders or offerors. § 1.903-4

Ability to meet certain min

imum standards.

Except to the extent that a prospective contractor proposes to perform the contract by subcontracting (see § 1.906), acceptable evidence of his "ability to obtain" such things as resources, equipment, facilities, and personnel (see §§ 1.903-1(a) and 1.903-2), shall normally be a commitment or explicit arrangement, which will be in existence at the time the contract is to be awarded, for the rental, purchase or other acquisition of such resources, equipment, facilities, or personnel.

§ 1.904 Determinations of responsibility and nonresponsibility.

ing of § 1.902. The determination of responsibility shall contain a statement justifying the determination. When a certificate of competency has been issued, the affirmative determination need not be made as to the factors covered by the certificate of competency. When a bid or offer on which an award would otherwise be made is rejected because the prospective contractor is found to be nonresponsible, a determination of nonresponsibility shall be made, signed, and placed in the file. The determination of nonresponsibility shall set forth the basis of the determination. In determination of responsibility or nonresponsibility for purchase or contract awards of $100,000 and over, contractor performance evaluation information (see § 1.908, the information to be used is determined by the dollar value and type of effort required) and other performance data should be acquired and considered whenever the contracting officer deems it necessary. Supporting documents or reports, including any preaward survey reports (see § 1.905-4) and SBA certificate of competency (see § 1.705-4), shall be attached to the determination. [34 F.R. 13835, Aug. 29, 1969] § 1.904-2 Exceptions.

(a) Affiliated concerns (see §2.201(a) (23)) shall be considered as separate entities in determining whether the one of them which is to perform the contract meets the applicable standards for a responsible prospective contractor (but see § 1.701-1 with respect to status as a small business concern).

(b) Notwithstanding the above, the record of performance and integrity of affiliated concerns which may adversely

affect the responsibility of the prospective contractor shall be considered by the contracting officer when making a determination of responsibility.

§ 1.904-4 Procurements from Canadian sources of supply.

Awards to Canadian sources of supply are subject to this subpart. A Canadian firm proposed by the Canadian Commercial Corporation (CCC) as its subcontractor generally shall be accepted by the contracting officer under the provisions of § 1.906 as the basis for his determination under § 1.904-1. In cases where the firm proposed by CCC is so accepted, preaward survey forms need not be completed. When the CCC proposal is not consistent with other information which may be available to the contracting officer, he shall request from CCC and any other sources whatever additional information or plant surveys he may deem necessary to make the determination of responsibility of sources proposed by CCC. Such additional data may be requested on the preaward survey forms or on any other forms. Upon request, CCC shall be furnished an explanation of the reasons for rejection of its proposed firm.

[34 FR. 13835, Aug. 29, 1969]

§ 1.905 Procedures for determining responsibility of prospective contrac

tors.

§ 1.905-1 General.

(a) Before making a determination of responsibility (see § 1.904), the contracting officer shall have in his possession or obtain information sufficient to satisfy himself that a prospective contractor currently meets the minimum standards set forth in § 1.903, to the extent that such standards are applicable to a specific procurement.

(b) Maximum practicable use shall be made of currently valid information on file or within the knowledge of personnel in the Department of Defense. Each Department shall, at such level and manner as it deems appropriate, maintain useful records and experience data for the guidance of contracting officers in the placement of new procurement, and shall inform its contracting officers and the other Departments of the means of access thereto. Notwithstanding this direction contract administration offices shall maintain files of information reflecting upon the ability of contrac

tors to perform Government contracts successfully.

(c) Any purchasing office becoming aware of circumstances which, for any reason, casts doubt upon the ability of a contractor to perform contracts successfully, shall immediately advise the cognizant contract administration office. A contract administration office, upon being notified by a purchasing office of unfavorable information affecting a contractor under its cognizance, or upon developing unfavorable information during the course of contract administration activities, shall advise the cognizant contract administration offices of the other Departments. When a contract administration office is requested to perform a pre-award survey and it has been notified of the existence of unfavorable information relative to the contractor, it shall obtain the details including full supporting information. Careful and full consideration shall be given such information. If a contract administration office becomes aware of a prospective contract award to a contractor about whom unfavorable information exists and no pre-award survey has been requested, it shall (1) immediately notify the purchasing office concerned, and (2) secure the details of such unfavorable information as if it were performing a pre-award survey and advise the purchasing office concerned. The purchasing office shall give full consideration to such advice in determining whether an award should be made.

(d) Generally, information necessary to make determinations of responsibility shall be obtained only concerning prospective contractors within range for an award.

§ 1.905-2

When information will be ob

tained. Generally, information regarding the responsibility of a prospective contractor (including pre-award surveys (see §1.905-4) when deemed necessary) shall be obtained promptly after bid opening or receipt of proposals. However, in negotiated procurements, especially those involving research and development, such information may be obtained before the issuance of requests for proposals. Notwithstanding the foregoing, information regarding financial resources (see § 1.903-1(a)) and performance capability (see § 1.903-1(b)) shall be obtained on as current a basis as feasible with relation to the date of contract award.

§ 1.905-3 Sources of information.

Information regarding the responsibility of prospective contractors shall be sought among the following sources:

(a) The Joint Consolidated List of Debarred, Ineligible, and Suspended Contractors (see § 1.601).

(b) From the prospective contractor— including representations and other information contained in or attached to bids and proposals; replies to questionnaires; financial data, such as balance sheets, profit and loss statements, cash forecasts, financial history of the contractor and affiliated concerns; current and past production records; personnel records; and lists of tools, equipment, and facilities; written statements or commitments concerning financial assistance and subcontracting arrangements; and analyses of operational control procedures. Where it is considered necessary by the contracting officer to prevent practices prejudicial to fair and open competition or for other reasons, prospective contractors may be required to submit affidavits concerning their ability to meet any of the minimum standards set forth in § 1.903, and company ownership and control (see § 2.201 (a) (23)).

(c) Existing information within the Department of Defense-including records (e.g., § 1.908-1) on file and knowledge of personnel within the purchasing office making the procurement, other purchasing offices, related activities, contract administration offices, audit activities, and offices concerned with contract financing.

(d) Publications-including credit ratings, trade and financial journals; business directories and registers.

(e) Other sources-including suppliers, subcontractors, and customers of the prospective contractor; banks and financial companies; commercial credit agencies; Government departments and agencies; purchasing and trade associations; better business bureaus and chambers of commerce.

[30 F.R. 11998, Sept. 21, 1965, as amended at 33 F.R. 15382, Oct. 17, 1968]

§ 1.905-4 Pre-award surveys.

(a) General. A pre-award survey is an evaluation by a contract administration office of a prospective contractor's capability to perform under the terms of a proposed contract. Such evaluation shall be used by the contracting officer

in determining the prospective contractor's responsibility. The evaluation may be accomplished by use of (1) data on hand, (2) data from another Government agency or commercial source, (3) an on-site inspection of plant and facilities to be used for performance on the proposed contract, or (4) any combination of the above. Pre-award surveys shall be conducted in accordance with Appendix K, Pre-Award Survey Procedures (§ 30.7 of this chapter).

(b) Circumstances under which performed. A preaward survey shall be required when the information available to the purchasing office (including contractor performance information (see § 1.908) when deemed necessary) is not sufficient to enable the contracting officer to make a determination regarding the responsibility of a prospective contractor (but see paragraph (c) of this section). The contracting officer shall request a preaward survey on Preaward Survey of Prospective Contractor (DD Form 1524) (see F200.1524) in the detail commensurate with the dollar value and complexity of the procurement. In requesting a preaward survey, the contracting officer shall call to the attention of the contract administration office any factors which should receive special emphasis. The factors selected by the contracting officer shall be applicable to all firms responding to the solicitation and shall be considered in all preaward surveys performed for the same solicitation. In the absence of specific instructions from the purchasing office, the scope of the preaward survey shall be determined by the contract administration office and a normal time frame of 7 working days after receipt of request shall be allowed for conducting the survey and submitting the report, recognizing that in unusual circumstances exception from the normal time frame may be requested.

(c) Workload and financial capacity. Regardless of the apparent sufficiency of information available to the purchasing office indicating responsibility with respect to the standards set forth in § 1.903-1 (a) and (b), in procurements which are significant either in dollar value or in the critical nature of the requirement, consideration shall be given to requesting the contract administration office to verify information regarding current workload and financial capacity. [30 F.R. 11998, Sept. 21, 1965, as amended at 34 F.R. 13835, Aug. 29, 1969]

§ 1.906 Subcontractor responsibility.

(a) To the extent that a prospective contractor proposes to perform the contract by subcontracting, determinations of prospective subcontractors' responsibility may be necessary in order to determine the responsibility of the prospective prime contractor. Determinations concerning prospective subcontractors' responsibility shall generally be a function performed by the prospective prime contractor. (But see § 1.603 (c) relating to subcontractors listed on the Joint Consolidated List of Debarred, Ineligible, and Suspended Contractors.) prospective prime contractor may be required to (1) indicate, in writing, the responsibility of proposed subcontractors, or (2) show evidence of an acceptable and effective purchasing and subcontracting system which encompasses a method for determining subcontractor capability.

A

(b) Notwithstanding the general responsibility of a prospective contractor to demonstrate the responsibility of his prospective subcontractors, it may be in the Government's best interest to make a direct determination of the responsibility of one or more prospective subcontractors prior to award of the prime contract. Examples of when this may be particularly suitable are the procurements of (1) medical items, (2) supplies or services which are so urgently needed that it is necessary for the Government to go beyond the normal process in determining contractor responsibility, and (3) supplies or services, a substantial portion of which will be subcontracted. The determination of responsibility of a proposed subcontractor by the Government shall be based on the same factors as are applicable in a determination of responsibility of a prospective prime contractor. § 1.907 Disclosure of preaward data.

Data, including information obtained from a preaward survey, accumulated for purposes of determining the responsibility of a prospective contractor shall not be released outside the Government and shall not be made available for inspection by individuals, firms, or trade organizations (see § 1.329–3(c) (5)). Such data may be disclosed to, or summarized for, other elements within the Government on their request, and shall be made available to Department of Defense procurement personnel upon request in accordance with § 1.905-1.

Prior to making a determination of responsibility, such data may be discussed with the prospective contractor as determined necessary by the purchasing office. After an award, the findings of the preaward survey may be discussed by the contracting officer with the company surveyed as provided in §3 2.408 and 3.508 of this chapter, or if appropriate, by the head of the contract administration office or his designee.

[32 F.R. 16400, Nov. 30, 1967]

§ 1.908 Contractor performance evaluation.

[33 F.R. 15382, Oct. 17, 1968]

§ 1.908-1 General.

The purpose of the contractor performance evaluation program is to provide an orderly and uniform method of determining and recording the effectiveness of contractors in meeting their contractual commitments. This procedure will increase the importance to the contractor of satisfying his agreements in regard to cost, schedule and technical performance. The program provides a long-term incentive to contractors by creating within the Government a "memory" of their performance and means for considering this record in future actions. The dollar value and type of effort required by a contract determine the reporting requirements, form(s) and procedures to be used. The evaluation of major development and follow-on production contracts is specified by § 1.908-2(a); other development contracts by § 1.908-2(b); supply contracts by § 1.908-3; architect-engineer contracts by § 1.908-4; and construction contracts by § 1.908-5.

[34 F.R. 13836, Aug. 29, 1969]

§ 1.908-2 Development and certain specified production contracts.

(a) Major development and follow-on production contracts (DD Form 1446 Series and DD Form 1447). All advanced-development (with measurable contractual commitments), engineeringdevelopment, and operational-systemsdevelopment and production contracts specified below shall be evaluated on DD Form 1446 series and DD Form 1447. The program requires project managers within the Military Departments to prepare Contractor Performance Evaluation Reports (see DD Form 1446 series) for all such development contracts whose projected cost for a