that each department and agency head develop a "Code of Conduct" for organizations in the research and development field. This subpart has been developed in accordance with that instruction.

89-1.5402 Scope and applicability.

(a)(1) This subpart identifies various organizational conflicts of interest which might come into being and methods for avoidance of such conflicts. It provides that action must be taken to avoid placing a contractor in a position where his judgment might be biased or where he would have an unfair competitive advantage within the scope and intent of this subpart.

(2) If a contracting officer determines that a proposed procurement does involve a situation covered in 89-1.5407, all prospective contractors shall be advised of the extent of restrictions on follow-on or other work by notice in solicitations and by a clause in resulting contracts. Such notice and contract clause shall spell out the specific extent of any future restrictions on the contractor which are imposed by the contract. This, of course, does not require contract awards in circumstances that demonstrate a clear conflict of interest of a kind not specifically enumerated herein. Section 9-1.5408 shall be implemented by including in cost-type contracts, where appropriate, a provision requiring the approval of the contracting officer for the private use of information or data developed or obtained by employees of such contractor in the performance of cost-type contracts. A standard form of notice for use in solicitations or contract clause is not prescribed in this subpart since such notices and clauses must be especially adapted to apply the principle of these rules to the specific facts of each contractual situation.

(b) Except in unusual or specific situations identified by contracting officers, those parts of the rules which pertain to unfair competitive advantage are not applicable to contracts with educational institutions, or with not-for-profit organizations which conduct education and training activities, or whose facilities are used in joint programs with educational institutions for such purpose.

89-1.5403 Applicability to cost-type contractor procurement.

This subpart shall be applied to procurement by cost-type contractors that construct or operate ERDA plants and laboratories or perform research and development services for ERDA.

A Manager of a Field Office, or Headquarters Division Director, may waive the applicability of this subpart in specific cases if he determines that such waiver will not be prejudicial to the best interests of the Government.

The term "organizational conflict of interest" means a situation where a contractor, normally a corporation, has interests, either due to its other activities or its relationships with other organizations, which place it in a position that may be unsatisfactory or unfavorable (a) from the Government's standpoint in being able to secure impartial, technically sound, objective assistance and advice from the contractor, or in securing the advantages of adequate competition in its procurement; or (b) from industry's standpoint in that unfair competitive advantage may accrue to the contractor in question.

89-1.5406 General policy.

(a) In order to assist in deciding what, if any, steps should be applied to avoid organizational conflicts of interest, there are two paramount principles to be considered. These are: (1) Preventing conflicting roles which might bias a contractor's judgment in relation to its work for ERDA, and (2) preventing unfair competitive advantage. The ultimate test should always be: Is the contractor placed in a position where his judgment may be biased, or where he has an unfair competitive advantage?

(b) Final program decisions, such as the determination of projects or programs and their scope, which are required to meet ERDA missions and objectives, are of course the responsibility of Government personnel and cannot therefore be delegated to contractor personnel. Program decisions must be based on impartial, disinterested, and the best available technical and other judgments. The effective and formal power to make such decisions must remain in the hands of full-time ERDA officials. Outside technical and other advice may be weighed and used selectively to assist in developing the bases on which program decisions will be made.

(c) It is difficult to identify, and to prescribe in advance, a specific method for avoiding all of the various situations which might involve potential organizational conflicts of interest. Basically, potential conflicts of interest become acute when ERDA's quest for objectivity is paramount, such as for advice, evaluations, technical and analytical services and similar assistance that lay direct groundwork for program decisions on large future procurements, research and development programs, and production. The general policy in paragraph (a) of this section cannot be automatically or routinely implemented; the application of considered judgment is necessary if that policy is to be applied in an effective, workable manner. The following sections provide guides for the application of the general policy in specific situations. However, contracting and program officials should be alert to other situations which may warrant application of the general policy.

89-1.5407 Guides applicable prior to selection of contractor and execution of contract.

(a) A contractor who in connection with the performance of a study contract will be given information by ERDA regarding ERDA's plans or programs which is not available to interested industrial firms, should not be permitted to compete with such firms for work relating to such plans or programs.

(b) Development contractors generally should not be prohibited from consideration as a supplier for a product which they develop and design. In development work it is normal to select firms which have done the most advanced work and which are the most experienced in the field. It is to be expected that these firms will develop and design around their own prior knowledge. Also, a contractor who participates in an early stage of development is not precluded from getting a contract for a later stage of development or production. As part of ERDA's overall planning for the development, design, and the production stages, consideration should be given to the likelihood of competitive solicitations for procuring parts of the design or product effort. The arrangement for such procurement should provide for the maximum competition consistent with satisfying ERDA requirements. Where the designer and developer is permitted to compete with others for the furnishing of the final product, Managers of Field Offices should take appropriate steps to see that the information furnished ERDA under the design and development contract is available to other potential bidders, on a timely basis.

(c) If a single contractor, other than a company which has participated in the development referred to in paragraph (b) of this section undertakes a contract which essentially is to assist the ERDA or a contractor of ERDA in preparation of a statement of work, or to provide material leading directly and predictably to a statement of work, to be used in the competitive procurement of a product or service, that contractor should not be allowed to supply the service, or the product or major components thereof either as a prime or subcontractor or vendor, except when it is determined and justified in accordance with established criteria that such contractor is a sole source for the required product or service. The content of a statement of work is not considered predictable if two or more contractors, unaffiliated with each other, are involved substantially in the preparation of material leading to it. Generally, feasibility studies which do not propose in detail the characteristics of a possible final product, are not work statements and a company should not be barred from bidding subsequently on the product.

(d) If a contractor agrees to prepare and furnish essentially complete specifications to be used in competitive procurement, that contractor should not be allowed to compete either as a prime or subcontractor or vendor, for a reasonable period including, at least, the initial procurement. This prohibition should not be applied to:

(1) Contractors who have furnished at ERDA request specifications or data with respect to a product sold to ERDA, even though the specifications or data may have been paid for separately or in the price of the product.

(2) Contractors acting as industry representatives who assist ERDA in preparing, refining, or coordinating specifications, if such assistance is supervised and controlled by ERDA representatives.

(3) Contracts for a developmental or prototype item. However, the principle in the concluding sentence of paragraph (b) of this section should be applied.

(4) Purchases from divisions of or companies affiliated with the performing contractor, provided such purchases are supervised and controlled by ERDA representatives.

(e) A contractor performing evaluation or consulting services for ERDA in connection with a competitive procurement should not be allowed to evaluate or give other consulting services: (1) On a product or service which the contractor provides; (2) on the product or services of any company with which the contractor has a consulting relationship; or (3) on his own product or on similar services which he has performed for others. Such a contractor should not be allowed to give consulting services to prospective bidders on a procurement item for which he has performed or will perform evaluation services for ERDA. It is recognized that under ERDA management contracts for the operation of ERDA facilities and certain research and development contracts, the performing contractor may solicit proposals and advise ERDA concerning proposed purchases from competitors as well as from its own affiliated divisions or companies not directly engaged in the performance of the ERDA management contract. In such cases the contracting officer should assure by appropriate review and supervision that the action taken is sound.

(f) A contractor's judgment may be biased because of past or present relationships of its officers or employees with other organizations and because of organizational relationships (e.g., interlocking directorships). In selecting a contractor to develop technical specifications in connection with competitive procurement or to perform evaluation services on technical proposals, consideration should be given to present and past relationships of the contractor's organization and personnel to the companies whose proposals are to be evaluated. In order to avoid or minimize organizational conflicts of interest and to avoid assignments of work which would create unavoidable conflicts of interest, these relationships may require that an organization be eliminated from consideration for selection, or that a reasonable period of restraint, for example, 1 year, be imposed on the organization or on the use of certain employees in the performance of contract work.

(g) Combinations of contracts for architect-engineering and construction services, which may result in self-inspection of construction work, tend to prevent a contractor from rendering unbiased decisions, or create difficulties in segregating costs between contracts, and should be avoided. However, it is recognized that sometimes it is advantageous under carefully circumscribed conditions for ERDA to obligate a single firm to perform both architect-engineer and construction work, or for ERDA to enter into a contract for architect-engineer and construction management services which may include performance of a segment of the construction work with the contractor's own forces. Unless otherwise authorized by the Director of Procurement, the following combinations of contracts shall not be awarded to the same firm or to affiliated companies:

(1) CPFF and fixed-price contracts for construction services, for on-site architectengineer services, or for construction and on-site architect-engineer services on different construction projects, if the performance of any portion of the work under each contract is to be concurrent and in the same general location.

(2) A fixed-price contract or contracts, for both architect-engineer and construction services on the same construction project, or a CPFF contract for architect-engineer services and a fixed-price contract for construction services on the same construction project. If a firm is to be responsible under such contractual arrangements for both design and construction services, title III architect-engineer services shall be performed by another organization selected by the ERDA.

(3) A CPFF contract for both architect-engineer and construction services on the same construction project (engineer-constructor contract). If this contractual arrangement is used, the contract shall provide for performance of the title III architect-engineer

services by contractor's engineering personnel who are not responsible to the contractor's construction personnel, or the title III services shall be performed by another organization selected by the ERDA.

89-1.5408 Commercial or other use of information and data obtained under ERDA costtype contracts.

(a) Cost-type contractors may be permitted to use, in their private activities, information and data developed or obtained in the performance of such contracts as provided in this section.

(b) The contractor shall be required to inform the contracting officer of all situations in which such information or data is proposed to be used. To assure that no unfair competitive advantage results to the contractor, the contracting officer shall be guided by the following principles in permitting the use of such information or data for private purposes:

(1) No part of the plans, specifications, cost estimates, technical information, or other data which are developed or acquired in the performance of the contract and which are required by the terms of the contract to be reported to ERDA shall be used in the contractor's private activities, unless such information has been reported to ERDA. Where ERDA furnishes such information to the contractor for the performance of contract work, it shall not be used in the contractor's private activities, unless such information is generally available to others.

(2) Information which is reported to ERDA by ERDA contractors will normally be disseminated by ERDA to others.

(3) Employees of management contractors operating ERDA facilities may not be used to assist in the preparation of a proposal or bid for the performance of private commercial services similar or related to those being performed under the ERDA contract unless such employee has been separated, with ERDA approval, from performance of work under the ERDA contract for such period as the contracting officer shall direct consistent with the purpose of this section.

(4) ERDA management contractors operating ERDA facilities, and performing services, as a part of their contract work, for other Government agencies or private organizations, should not be permitted to utilize information which is furnished by such customers, for their own private activities, unless it is generally available to others, or unless the customer authorizes such use.

(c) As used in this section, the term "cost-type contractor” shall include affiliated companies, parent organizations, or wholly owned subsidiaries.

This part implements and supplements the requirements for procurement of personal property and nonpersonal services (including construction) by formal advertising set forth in FPR Part 1-2.

Subpart 9-2.1-Use of Formal Advertising

89-2.102 Policy.

Procurement by formal advertising for ERDA direct procurement shall be followed, except where negotiation is authorized by the Federal Property and Administrative Services Act of 1949, as amended. Section 302(c)(15) of that Act authorizes negotiation when "otherwise authorized by law” (see §9–3.200). Direct ERDA procurement of supplies and services by formal advertising shall comply with the requirements of this part and FPR Part 1-2.

89-2.105-50 Prebidding conferences.

See 89-1.354.

Subpart 9-2.2-Solicitation of Bids

§9-2.201 Preparation of invitations for bids.

When an option to increase or decrease the quantities specified is employed, the percentage inserted in the option should not normally exceed 25 percent and in no event shall it exceed 50 percent without prior authorization of the Director of the Headquarters division or office concerned. The following language is suggested for incorporation in invitations for bids:

"The Government reserves the right to increase or decrease the quantity specified in any item of the schedule by --percent without change in the unit price, if at any time during the life of the contract such an increase or decrease shall be determined to be in the interests of the Government.”

When the contract contains a provision for termination for convenience of the Government, the words "or decrease" in the option may be deleted.

89-2.202-50 Postponement of bid openings.

(a) Whenever such action is determined by the contracting officer to be in the best interest of the Government, bid openings may be postponed by issuance and distribution to all prospective bidders of an amendment (see FPR 1-2.207) to the invitation for bids. Notices of postponement shall be issued by mail or telegraph as early as possible, but in any event prior to the time specified for the opening of bids.