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(b) Unsatisfactory. Contractor fails to tion was taken by the contractor to corcomply with labor laws, nondiscrimina- rect the deficiencies. The routing of any tion provisions, etc.; and it was necessary supplements shall be the same as the for the contracting officer to repeatedly initial notice. instruct him to comply.

§ 2-1.315 Use of liquidated damages (iv) Cost contract management (ap

provisions in procurement contracts. plicable to cost-type contracts only) (a) Outstanding. Contractor has dem- § 2-1.315–2 Policy. onstrated ability to control costs for

(a) Determination as to the use of highly complex work under cost con

liquidated damages provisions in a contracts, or contractor was extremely effi

tract, and of the rate of such damages, cient in managing Government-fur- is solely the responsibility of the connished property and Government-owned tracting officer. In making the deterfacilities.

mination, he shall obtain essential facts (b) Unsatisfactory. Contractor failed

from the requisitioning office and be to properly manage contract resulting in

guided by a strict application of the substantial cost overruns, or he was care- criteria set forth in § 1-1.315-2 of this less in managing Government-owned

title and by the following general property and facilities.

policies: (v) General business conduct-(a)

(1) Liquidated damages provisions will Outstanding. Contractor maintained an

not be used routinely in Agency contracts, effective line of communication with the

but they may be used when failure to contracting officer concerning progres- meet the completion or delivery schedule sion of the contract, and anticipated de

in a proposed facility or equipment conlays; or demonstrated unusual persever

tract will seriously delay established ance and integrity in discharging his

commissioning dates. They may also be contractual responsibilities.

used in other situations when failure to (b) Unsatisfactory. Contractor ig

perform will likely cause the Agency to nored instructions of the contracting

suffer substantial damages, the amount officer to take corrective actions to com

of which is difficult or impossible to ply with contract, failed to respond to

determine. communications, or in any way failed to

(2) Liquidated damages provisions demonstrate integrity in the conduct of

generally should not be used: (i) In conhis business dealings with the Govern

tracts for supplies or services that are ment.

for administrative purposes; (ii) in con(d) Filing of completed form. The

tracts for standard commercial or "shelf original shall be placed in the contract

items”; (iii) in any contract where the file.

needs of the Agency can bet met by ter(e) Interim notice. FAA Form 3458

mination and reprocurement if the is to be prepared upon the completion

initial contractor defaults; (iv) in small of termination of contracts exceeding

purchases (under $2,500); and (v) in $10,000. However, in the event a serious

study, experimental, development or resituation develops with a contractor be

search contracts including equipment fore the form is due, the interim notice

contracts requiring developmental work. procedure set forth in this paragraph

(3) In transactions involving an item will be used. These serious situations

where only a portion of the quantity orwould include such things as (1) antici

dered is for immediate programs, and pated bankruptcy, (2) labor statute violations so acute that a recommenda

liquidated damages provisions would be tion for debarment is contemplated, or

applicable in accordance with prescribed

policies, care should be taken to have (3) serious performance problems which

the liquidated damages provisions apply indicate an inability or unwillingness to

only to the urgent quantity. perform. When such situations develop, an interim notice in memo form shall be

(4) A fixed formula, based on percentsent to the Washington Procurement

age of value, shall not be used to estabPolicy and Standards Division, IM-600,

lish the rate of damages. Consideration who in turn will alert all Agency pro

shall be given to the following factors in curement offices. If the contractor later

establishing the rate of damages: (i) The cures his unsatisfactory performance or

importance of the item in relation to the the condition which prompted the sub- facility or project for which it is intendmission of the initial notice, the notice ed; (ii) the number of facilities or projshall be supplemented stating what ac

ects involved; (iii) the relative impor

tance of the facility or project in the over-all program of the Agency; (iv) the tightness of the contract schedule and (v) any unusual damages that can be anticipated.

(5) Unless it is clear that partial delivery will proportionately reduce the extent of probable damages, rates shall not be applied to individual units of an item, but rather to quantities of an item, or to groups of items, which are required for delivery or completion at the same time. Rates should generally be expressed in terms of even dollars per day of delay with a minimum of $1. Where rates are applied to quantities or groups, assessment of damages will not be prorated for delay of partial quantities.

(b) Positive followup on the contractor's performance and actions to eliminate delays in all contracts shall be maintained at all times. Serious consideration shall be given to termination of contracts which included liquidated damages provisions in any case where the accrued damages reach 15 percent of the contract value.

(c) Where liquidated damages provisions are used, they shall be strictly enforced. In making partial or progress payments, deductions

damages should be made on the basis of the actual number of days of delay multiplied by the rate. Exception may be made if the contractor has applied for an extension of time and provided sufficient information to permit a finding by the contracting officer, or if delays caused by the Government are clearly established. In such cases appropriate adjustments should be made and the contractor notified of the action taken. It is the contractor's responsibility to give notice of delays and to provide evidence to support any remission of damages or con« tract time extension.

(d) Submission to the Comptroller General with a recommendation for the remission of liquidated damages (41 U.S.C. 256A) shall be prepared for the signature of the Associate Administrator for Development and forwarded to IM600. All relevant facts and documents shall accompany the submission, e.g., (1) conditions which prompted the assessment of damages, (2) findings and decisions of the contracting officer, and (3) any decision of the Agency Contract Appeals Panel.

(e) If the contract is terminated, the contractor remains liable for liquidated damages that have accrued. Moreover, on a default termination of a fixed price supply contract, liquidated damages continue to accrue, even after default, until the FAA can reasonably obtain delivery of the supplies or performance of the services. This is in addition to any other FAA rights to damages under default provision for the excess costs of reproducing the supplies or services of the terminated contract. § 2-1.318 Contracting Officer's decision

under a Disputes clause. When a final decision of the contracting officer involves a dispute that is or may be subject to the Disputes clause, a paragraph substantially the same as that set forth in 1-1.318(a) of this title shall be included in the decision with the title “Administrator" inserted in the blank space in the paragraph. The decision shall also contain the following paragraph:

The FAA Contract Appeals Panel is the authorized representative of the Administrator in hearing, considering, and deciding such appeals. The rules of the FAA Contract Appeals Panel are set forth in the Code of Federal Regulations (41 CFR 2–60 et seq.). § 2-1.351 Agency policy on precontract

and anticipatory costs. Agency policy set forth in Agency Order 4450.2 requires that there be a contract in existence prior to permitting performance of work or services. No. Agency employee may enter into informal, unauthorized arrangements with proposed contractors nor permit them to proceed with performance under “precontract cost," "anticipatory cost," or any other arrangements including "proceeding at the contractor's own risk.” § 2-1.352 Sole source procurement.

It is basic Government policy that the selection of contractors shall be competitive among qualified persons and businesses. The requirement for competition exists whether the procurement is formally advertised or negotiated. The law requires that negotiated procurements must be, to the fullest practical extent, competitive. To insure that Agency procurement conforms fully with basic Government policy favoring competitive procurement, all proposed sole source procurements must be fully justified and approved in accordance with


Agency Order 4400.8A, “Justification for lished policy of higher authority, and Sole Source Procurement.” As stated in (4) the contract complies with all other Agency Order 4400.8A, “where follow-on requirements of law, the FPR, FAPM, contracts are anticipated, sufficient data and applicable procurement office inshould be obtained under early contracts structions. to permit competition on later con- (c) A contracting officer must assure tracts.”

himself that the contract is authorized by

law and that funds are available. Subpart 2-1.4 Procurement Respon

(d) The acts of a contracting officer sibility and Authority

must be within the scope of the written & 2-1.400 Scope of subpart.

orders designating him a contracting

officer. Purchases, contractual commitThis subpart deals with procurement

ments, and changes to contracts will be responsibility and authority of the head

made only by duly designated contractof a procuring activity, contracting offi

ing officers. Technical personnel and cers and their representatives; and with others whose duties require meetings and delegations of contracting authority.

discussions with contractors, are withThis subpart also imposes limitations

out authority to direct changes in the upon the authority to enter into con

work which may change the contractual tracts.

terms or result in claims against the § 2-1.401 Responsibility of the head of

Government. a procuring activity.

§ 2-1.403 Requirements to be met beThe head of a procuring activity (de

fore entering into contracts. fined in § 2–1.206) is responsible for the No contract shall be entered into unprocurement of supplies and services un

less all applicable requirements of law der or assigned to the procurement and of FPR and FAPM, and all other apcognizance of his activity. This respon- plicable procedures, including clearances sibility includes the authority to issue

and approvals, have been met. The condelegations of authority, to impose limi

tracting officer will coordinate, as aptations upon the authority delegated, to propriate, his procurement and contractrequire such approvals as he may pre- ing activities with: scribe, and maintain required surveil

(a) Appropriate legal counsel, as relance over delegated procurement per- quired by Order OA 2220.1, formance. Except as specifically limited (b) Agency contract auditors of the or prohibited in the FPR, FAPR, Agency

Office of Audit on the financial, accountOrders, or by law, the authorities vested

ing and cost aspects of contractual acin the head of a procuring activity may tions, as required by Order 2930.1, be delegated with power of redelegation. (c) Pricing and transportation spe§ 2-1.402 General authority of contract

cialists, where they have been assigned ing officers.

or are available to the procurement of

fice, and (a) Subject to any limitation in the

(d) Cognizant engineering and techorders or other instruments designating

nical personnel where there are technical an individual as a contracting officer, a

considerations involved in the procureproperly designated contracting officer

ment. is granted all authority conferred by law,

(e) The Compliance and Equal OpFPR, FAPR, and procurement office in

portunity Officer for matters pertaining structions.

to equal employment opportunity. (b) A contracting officer may enter

(f) The appropriate Accounting Diviinto, amend, modify, and take other ac

sion when other than standard financing tion with respect to contracts, provided

or payment provisions are contemplated. (1) prior approval of award has been obtained if approval is required, (2) the 8 2–1.404 Special requirements to be contract is in writing (on a standard or met before entering into negotiated approved form if such form is pre

contracts. scribed), (3) the contract and modifica- In addition to the requirements in tions are authorized by law and comply § 2-1.403, no negotiated contract shall with the provisions of FPR and FAPM be entered into until the determinations with respect to the use of contract clauses and findings required by Subparts 1–3.3 and does not contain any clause or in- and 1-3.4 of this title and 2-3.3 and 2-3.4 volve matters in conflict with the estab- of this chapter, with respect to the cir

cumstances justifying negotiation and with respect to any use of a special method of contracting, have been made. 82–1.405 Contracting officers

representatives. (a) A contracting officer may designate Government personnel to act as his authorized representative. Such designation shall be in writing and shall contain specific instructions as to the extent to which the representative may take action for the contracting officer, but will not contain authority to sign contractual documents. Such actions may include inspection, approval of shop drawings, testing, approval of samples, determining number of hours for a job, and other functions of a technical nature not involving a change in the scope, price, terms, or conditions of the contract or order. The responsibilities and limitations will be set forth in the contract or in a separate letter.

(b) A person assigned to and performing his primary duty within a procurement office, and who is under the supervision of a contracting officer, does not require designation as a representative nor designation in a contractual document to perform his assigned duties. Such a person is considered to be an employee of the contracting officer, acting in his behalf and as such has the authority to perform acts as assigned by the contracting officer. The contracting officer cannot authorize his employees to sign any contractual document or letter where the signature of a contracting officer is required. § 2-1.406 Delegation of contracting au

thority. The authority of the contracting officer to enter into and execute contracts has been successively delegated from the Administrator to (a) the regional and center directors, (b) the Director, Installation and Materiel Service, (c) the Director, Office of Supersonic Transport Development, (d) the Director, Bureau of National Capital Airports, with the power to redelegate, and to (e) the Chief, Procurement Division of the National Airspace Systems Program Office, without power to redelegate. The contracting officer is responsible for knowing and observing the scope and limitations of his authority and may not exceed such authority.

§ 2-1.407 Responsibility of procure

ment personnel to question require

ments and reaffirm their validity. Procurement personnel are responsible for questioning any contemplated procurement action or its validity under the circumstances described in § 2-1.5207. § 2-1.408 Release of information.

(a) General information, other than classified information, concerning Agency procurement policy and practices, invitations for bids, or requests for proposals may be released to parties having a legitimate interest. However, in no event will an offeror's cost breakdown, profit, overhead rates, trade secrets, or other confidential or prejudicial business information be disclosed to others than another Government agency or to the business firm whose information is being released. Classified information may be furnished only in accordance with regulations governing classified information.

(b) Instructions pertaining to release of other types of information (e.g., information which is to be made public for the first time to the press, radio, and other media) are described in Order OA P 1200.2. Subpart 2-1.7-Small Business

Concerns § 2-1.701–1 Small business

(for Government procurement). (a) When the procurement is either partially or totally set-aside for small business participation, the small business employment size standard (or other criteria) shall be stated in the solicitation.

(1) When the solicitation is for a manufactured product classified within an industry set forth in § 1-1.701–1(h) of this title, language reading substantially as follows shall be used:

The small business employment size standard prescribed for this procurement is not more than 1

employees, except when the concern is a small business nonmanufacturer in which case the employment size standard is not more than five hundred (500) employees.

(2) When the solicitation is for a manufactured product that is not classified within an industry set forth in


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1 Insert "750" or "1000", as appropriate.

$ 1–1.701-1(h) of this title, language reading substantially as follows shall be used:

The small business employment size standard prescribed for this procurement is not more than five hundred (500) employees.

(3) Similar language shall be used to prescribe the employment size standard, average annual receipts, or other criteria, in procurements for construction, research, development, and testing, services, transportation, and manufacturing. § 2-1.702 Small business policies.

(a) It is the Agency's policy as expressed in § 1-1.702 of this title to aid, counsel, assist, and protect-as far as possible—the interests of small businesses and to place a fair proportion of its total purchases and contracts for supplies, services, and research and development with small business concerns. This policy implements the Small Business Act of 1953 and the Federal Property and Administrative Services Act of 1949, both as amended.

(b) The responsibility for conscientiously and effectively carrying out the policies, procedures, and the aims of the Congress and this Agency will be the responsibility of all personnel engaged in procurement and related activities.

(c) Liaison shall be maintained and information exchanged with Federal, State, local and community agencies and organizations for the purpose of rendering the maximum amount of assistance to small business concerns. § 2-1.704 Agency program

direction and operation. $ 2–1.704–1 Small Business Assistance

Officer. The Agency's Small Business Assistance Officer located in the Agency's Headquarters Office is responsible for the establishment, implementation, and execution of an appropriate Agency Small Business Program. $ 2–1.704–3 Small business specialists.

(a) Small business specialists shall be appointed by name, in writing for each procurement office of the Agency. In any instance where the duty of a small business specialist is on a part-time basis, the appointment shall clearly indicate that assignment of such additional duty in no way relieves the individual from full responsibility for effectively ac

complishing the activity's small business program requirements. A copy of each appointment and termination of appointment of all such specialists shall be forwarded to the Agency's Small Business Assistance Officer. In addition to performing that portion of the specific program outlined in paragraph (c) of this section that is normally performed in the activity to which he is assigned, the small business specialist shall perform such additional functions as are prescribed for him in furtherance of the overall small business program; i.e., attend and prepare exhibits for business clinics, provide information on the Agency's procurement programs to all segments of the business community, etc.

(b) Only those individuals possessing the necessary business acumen, knowledge of the Agency's procurement policies and procedures, training and background to accomplish effectively the objectives of the small business program shall be considered for appointment.

(c) A small business specialist appointed pursuant to paragraph (a) of this section shall perform the following duties, as determined to be appropriate to the activity by the appointing officer or his designee:

(1) He shall maintain a program designed to locate capable small business sources for current and future procurements, through SBA or other methods;

(2) He shall coordinate inquiries and requests for advice from small business concerns on procurement matters;

(3) Prior to issuance of solicitations or contract modifications for additional supplies or services, he shall determine that small business concerns will receive adequate consideration including initiation of set-asides. This determination may be made jointly with the contracting officer or may be in the form of a recommendation to him. Disagreements between the small business specialist and the contracting officer shall be resolved at a level above that of the contracting officer, which decision shall be final;

(4) If small business concerns cannot be given an opportunity to compete because adequate specifications or drawings are not available, unless there are sufficient and valid reasons to the contrary, initiate action, in writing, with appropriate technical and contracting personnel to insure that necessary spec

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