(b) When soliciting prospective contractors to perform services of this nature, the NASA policy of obtaining competition to the maximum practicable extent will be observed. Geographic

limitations imposed on prospective contractors are apt to appear arbitrary to the business community and therefore are proper only in those cases where such limitations are demonstrably justifiable. Even in those circumstances, however, no firm desiring to compete for the procurement shall be denied the opportunity to do so, merely because it is located outside the geographic area. Such firms will be permitted to submit bids or proposals and will be considered for award, if otherwise qualified, provided they can substantiate their capability to establish a facility in a location which complies with any such required geographical limitation (see § 18-1.903-1(c)).

(c) A preferred method of obtaining services or supplies, which are required on a prompt response basis, is by clearly setting forth in the request for proposals or invitation for bids such requirement in terms of maximum time which may elapse between placement of the "order" or "call" and delivery date. Such time limitations, when required by the nature of the procurement, will normally meet the needs of NASA for prompt delivery without introducing any unnecessarily restrictive criteria on the competitive field of prospective contractors.

(d) Invitations for bid or requests for proposal which contemplate either a geographical area or time of performance limitation will be reviewed and approved by the Procurement Officer, or his designee, prior to distribution.

§ 18-1.355 Civil Rights Act of 1964nondiscrimination in federally assisted programs.

(a) Section 602 of the Civil Rights Act of 1964 (Public Law 88-352; 42 U.S.C. 2000 d-1) requires that each Government agency which is empowered to extend Federal financial assistance shall issue rules or regulations effectuating Title VI (sec. 601-605) of the Act with respect to the Federal financial assistance programs or activities administered by the agency. NASA's Regulation is published in the FEDERAL REGISTER of January 9, 1965 (30 F.R. 301-305, 14 CFR Part 1250).

(b) The following NASA Grants and Contracts are within the purview of Title VI of the Act:

(1) Grants made under the authority of Public Law 85-934, approved September 6, 1958 (42 U.S.C. 1891-1893).

(2) Contracts with nonprofit institutions of higher education or with nonprofit organizations whose primary purpose is the conduct of scientific research wherein title to equipment purchased with funds under such contracts may be vested in such institutions or organizations under the authority of section 2 of Public Law 85-934, approved September 6, 1958 (42 U.S.C. 1892).

(3) Training grants made under the authority of the National Aeronautics and Space Act of 1958, as amended (42 U.S.C. 2451-2460, 2472-2473).

(4) Facilities grants made under authority in annual NASA authorization and appropriation acts.

(c) Further implementation, setting forth procedures and guidance, and assigning responsibilities to NASA officials, is contained in NASA Management Instruction 2090.1. For requirements for obtaining an Assurance of Compliance (NASA Form 1206), see §§ 18-3.501(e) and 18-4.5103(c).

§ 18-1.356 Procurement request.

(a) Procurement requests will be prepared and submitted to the procurement office in accordance with the provisions of NASA Management Instruction 5101.12.

(b) Except in unusual circumstances, the procurement office will not issue invitations for bids or requests for proposals until an approved procurement request, containing a certification that funds are available, has been received. However, the procurement office may take all necessary actions up to the point of contract obligation prior to the receipt of the approved procurement request certifying that funds are available, when:

(1) Such action is necessary to meet critical program schedules;

(2) It has been established that program authority has been issued and that funds to cover the procurement will be available prior to the date set for contract award or contract modification; and

(3) The Procurement Officer authorizes such action prior to the issuance of the invitation for bids or request for proposals.

(c) The procurement request shall be assigned within the procurement office to

a negotiator who will be responsible to the contracting officer for conducting the business aspects of the transaction. The negotiator will review the request to ensure that it complies with NASA Management Instruction 5101.12, this chapter, and that the information contained in the request is in sufficient detail to prepare the invitation for bids or the request for proposals. Uncertain requirements or inconsistencies in the procurement request will be discussed with the initiator of the request and clarified prior to the initiation of procurement action.

§ 18-1.357 Procurement of liquid hydrogen.

(a) To ensure that adequate supplies of liquid hydrogen are readily available to meet current and future program requirements, NASA has established contractual arrangements with primary supply sources located at Michoud, La., and at Sacramento and Long Beach, Calif. These contracts will be used to the maximum extent practicable in supplying both in-house and contractor requirements for liquid hydrogen.

(b) Responsibility for administration of the sources and management of production and distribution operations have been vested in:

(1) The Marshall Space Flight Center for the Louisiana source; and

(2) The NASA Pasadena Office, for the California sources.

(c) Requests for furnishing liquid hydrogen will be submitted to either the Marshall Space Flight Center or to the NASA Pasadena Office. The supply source used will be the one located nearest the receiving destination.

§ 18-1.358 Funding by letter of credit.

Any contract with a nonprofit institution (including an educational institution) which, in accordance with the policy established in FMM 9280, is to provide for letter of credit funding and the use of a special bank account, shall contain the clause set forth in § 181.358-1. When deemed desirable, this clause may be modified to give the Government security other than that provided therein. The form of "Agreement for Special Bank Account," set forth in §18-1.358-2 shall be used to establish the special bank account to cover funds provided by Letter of Credit.

Except as provided in § 18-1.358, the following clause shall be used when a contract is to provide for advance funding by the Letter of Credit Method. CONTRACTOR FINANCING BY LETTER OF CREDIT (MARCH 1967)

(a) The letter of credit procedures set forth in paragraphs 9280-1 through 9280-8 of the NASA Financial Management Manual shall be used by the contractor to obtain funds for allowable costs under this contract.

(b) The initial Letter of Credit will be issued in an amount determined by the Contracting Officer based on the needs of the Contractor. Subsequent amendments to the Letter of Credit will be on the basis of quarterly NASA Form 1031 reports submitted by the contractor and as approved by the Contracting Officer. In no instance will the initial Letter of Credit, any amendments thereto, or the aggregate of such initial Letter of Credit and any amendments, exceed the amount of the contract, as from time to time amended, less the amount of withholding provided therein.

(c) The funds in the special bank account shall be withdrawn by the Contractor solely for the purposes of making payments for items of allowable cost as defined in this contract, or to reimburse the Contractor for such items of allowable cost and for making payments for such other costs as the Contracting Officer otherwise has authority to approve, and does approve in writing.

(d) The Contractor may draw on the Letter of Credit using payment vouchers as follows:

(1) Payment vouchers may be executed only for the purpose of obtaining funds in the minimum amounts necessary for the following purposes: (1) Making payments for items of allowable costs as defined in this contract; (ii) reimbursing the Contractor for such items of allowable costs; and (iii) for making payments for such other costs as the Contracting Officer otherwise has authority to approve, and does approve in writing; and the funds so obtained may be used only for such purposes.

(2) Payment vouchers drawn should be timed to be in accordance with the actual cash requirements of the contractor in carrying out the purpose of the contract.

(e) NASA Form 1031 shall be submitted by the 20th of the month following the quarter being reported.

(f) Credits obtained under the Letter of Credit shall be in the special bank account with the bank executing the "Agreement for Special Bank Account". This account shall be separate from all other bank accounts and shall be so designated as to indicate clearly to the bank its special character and purpose. Withdrawals from this account shall

be by the Contractor's check only; unless and until the Contracting Officer determines, and notifies the bank in writing, that such check shall be countersigned on behalf of the Government by the Contracting Officer.

(g) The Contractor may at any time repay all or any part of the funds or credit obtained under the Letter of Credit. When so requested in writing by the Contracting Officer, the Contractor shall repay to the Government such part of the unliquidated balance of advance payments as shall, in the opinion of the Contracting Officer, be in excess of the Contractor's current needs or in excess of the contract price or estimated cost as revised from time to time. In the event the Contractor fails to make repayment in accordance with such written request by the Contracting Officer, the amount of unliquidated advance payments requested may be withdrawn from the special bank account by checks payable to the Treasurer of the United States signed solely by the Contracting Officer.

(h) If upon completion or termination of this contract all amounts obtained by the Contractor under the Letter of Credit have not been fully liquidated by authorized charges under the contract, the balance thereof shall be deducted from any sums otherwise due or which may be due to the Contractor from the Government, and any excess funds shall be repaid by the Contractor to the Government upon demand.

(1) Before a withdrawal against the Letter of Credit is made hereunder, an "Agreement for Special Bank Account," in the form prescribed by the Contracting Officer, must be executed by and between the Contracting Officer, the Contractor and the bank in which the special account is to be established. Such bank shall be a member of the Federal Reserve System, or an "insured" bank within the meaning of the Act creating the Federal Deposit Insurance Corporation (Act of Aug. 23, 1935, 49 Stat. 694, as amended; 12 U.S.C. 264).

(j) Notwithstanding any other provisions of this contract, the Contractor shall not transfer, pledge, or otherwise assign this contract or any interest therein, or any claim arising thereunder, to any party or parties, bank, trust company, or other financing institution.

(k) The Government shall have a lien upon any balance in the special bank account paramount to all other liens, which lien shall secure the repayment of any funds obtained under the Letter of Credit.

(1) Any and all advance payments made under this contract shall be secured by a lien in favor of the Government, paramount to all other liens, upon the supplies or other things covered by this contract and on all material and other property acquired for or allocated to the performance of this contract, except to the extent that the Government by virue of any other provision of this contract, or otherwise, shall have valid title to such supplies, materials, or other property as against

other creditors of the Contractor. The Contractor shall identify by marking or segregation all property which is subject to a lien in favor of the Government by virtue of any provision of this contract in such a way as to indicate that it is subject to such lien and that it has been acquired for or allocated to the performance of this contract. If for any reason such supplies, materials, or other property are not identified by marking or segregation, the Government shall be deemed to have a lien to the extent of the Government's interest under this contract on any mass of property with which such supplies, materials, or other property are commingled. The Contractor shall maintain adequate accounting control over such property on his books and records. If at any time during the progress of the work on the contract it becomes necessary to deliver any item or items and materials upon which the Government has a lien as aforesaid to a third person, the Contractor shall notify such third person of the lien herein provided and shall obtain from such third person a receipt, in duplicate, acknowledging, inter alia, the existence of such lien. A copy of each receipt shall be delivered by the Contractor to the Contracting Officer. If this contract is terminated in whole or in part and the Contractor is authorized to sell or retain termination inventory acquired for or allocated to this contract, such sale or retention shall be made only if approved by the Contracting Officer, which approval shall constitute a release of the Government's lien hereunder to the extent that such termination inventory is sold or retained, and to the extent that the proceeds of the sale, or the credit allowed for such retention on the Contractor's termination claim, is applied in reduction of advance payments then outstanding hereunder. § 18-1.358-2 Form of agreement for special bank account.

The following form shall be used to establish the special bank account or accounts for funds provided to a contractor by the Letter of Credit method.

of such advance payment provisions has been furnished to the Bank.

of

(b) Said Contract or Supplemental Agreement requires that amounts advanced to the Contractor thereunder be deposited in a Special Bank Account or accounts at a member bank or banks of the Federal Reserve System or any "insured" bank within the meaning of the Act creating the Federal Deposit Insurance Corporation (Act Aug. 23, 1935; 49 Stat. 684, as amended; 12 U.S.C. 264), separate from the Contractor's general or other funds; and, the Bank being such a bank, the parties are agreeable to so depositing said amounts with the Bank. (c) This Special Bank Account shall be designated

In consideration of the foregoing, and for other good and valuable considerations, it is agreed that

(1) The Government shall have a lien upon the credit balance in said account to secure the repayment of all advance payments made to the Contractor, which lien shall be superior to any lien or claim of the Bank with respect to such account.

(2) The Bank will be bound by the provisions of said contract or contracts relating to the deposit and withdrawal of funds in the above Special Bank Account, but shall not be responsible for the application of funds withdrawn from said account. After receipt by the Bank of written directions from the Contracting Officer, or from the Administering Office designated in the advance payment contract mentioned above, or from the duly authorized representative of the Contracting Officer or the Administering Office, the Bank shall act thereon and shall be under no liability to any party hereto for any action taken in accordance with the said written directions. Any written directions received by the Bank through the Contracting Officer upon National Aeronautics and Space Administration stationery and purporting to be signed by, or by the direction of

or

his duly authorized representative, shall, in so far as the rights, duties and liabilities of the Bank are concerned, be conclusively deemed to have been properly issued and filed with the Bank by the National Aeronautics and Space Administration.

(3) The Government, or its authorized representatives, shall have access to the books and records maintained by the Bank with respect to such Special Bank Account at all reasonable times and for all reasonable purposes, including (but without limiting the generality thereof) the inspection or copying of such books and records and any and all memoranda, checks, correspondence, or documents appertaining thereto. Such books and records shall be preserved by the Bank for a

period of six (6) years after the closing of this Special Bank Account.

(4) In the event of the service of any writ of attachment, levy of execution, or commencement of garnishment proceedings, with respect to the Special Bank Account, the Bank will promptly notify

(Administering Office)

In witness whereof the parties hereto have caused this agreement to be executed as of the day and year first above written.

(Signatures and Official Titles) Subpart 18-1.5-Contingent or Other Fees

§ 18-1.500 Scope of subpart.

This subpart sets forth the procedures to be followed and prescribes the form to be used for obtaining information concerning contingent or other fees paid by contractors for soliciting or securing contracts.

§ 18-1.502 Applicability.

This subpart applies to all contracts. § 18-1.503 Covenant against contingent fees clause.

Every contract, except when Standard Forms 19 and 19A are used for formally advertised construction contracts, shall contain the following clause:

COVENANT AGAINST CONTINGENT FEES
(FEBRUARY 1962)

The Contractor warrants that no person or selling agency has been employed or retained to solicit or secure this contract upon an agreement or understanding for a commission, percentage, brokerage, or contingent fee, excepting bona fide employees or bona fide established commercial or selling agencies maintained by the Contractor for the purpose of securing business. For breach or violation of this warranty, the Government shall have the right to annul this contract without liability or in its discretion to deduct from the contract price or consideration, or otherwise recover, the full amount of such commission, percentage, brokerage, or contingent fee.

§ 18-1.504 Improper influence.

The term "improper influence” means influence, direct or indirect, which induces or tends to induce consideration or action by any employee or officer of the United States with respect to any Government contract on any basis other than the merits of the matter.

§ 18-1.505 General principles and standards applicable to the covenant. The principles and standards set forth in this subpart are intended to be used

as a guide in the negotiation, award, administration, and enforcement of all contracts.

§ 18-1.505-1 Contingent character of the fee.

Any fee, whether called commission, percentage, brokerage, or contingent fee, or otherwise denominated, is within the purview of the covenant if, in fact, any portion thereof is dependent upon success in obtaining or securing the Government contract or contracts involved. The fact, however, that a fee of a contingent nature is involved does not preclude a relationship which qualifies under the exceptions to the prohibition of the covenant.

Excepted from the prohibition of the covenant are "bona fide employees" and "bona fide established or selling agencies maintained by the contractor for the purpose of securing business."

§ 18-1.505-3 Bona fide employee.

The term "bona fide employee," for the purpose of the exception to the prohibition of the covenant, means an individual (including a corporate office) employed in good faith by a concern to devote his full time to such concern and no other concern and over whom the concern has the right to exercise supervision and control as to time, place, and manner of performance of work. It is recognized that a concern, especially a small business concern, may employ an individual who represents other concerns. The factors set forth in § 181.505-4, except paragraph (d) thereof, shall be applied to determine whether such an individual comes within the exception to the prohibition of the covenant. (However, in applying such factors, the word "employee" shall be substituted for the word or words "agent" and "selling agency" as they appear throughout § 18-1.505-4, except paragraph (d) thereof.)

(a) A person may be a bona fide employee whether his compensation is on a fixed salary basis or, when customary in the trade, on a percentage, commission, or other contingent basis or a combination of the foregoing.

(b) The hiring must contemplate some continuity and it may not be related only to the obtaining of one or more specific Government contracts.

(c) An employee is not "bona fide" who seeks to obtain any Government contract or contracts for his employer through the use of improper influence or who holds himself out as being able to obtain any Government contract or contracts through improper influence. § 18-1.505-4 Bona fide established commercial or selling agency maintained by the contractor for the purpose of securing business.

In determining whether an agency is a "bona fide established commercial or selling agency maintained by the contractor for the purpose of securing business," the factors set forth in paragraphs (a) through (e) of this section shall be considered. They are necessarily incapable of exact measurement or precise definition, and it is neither possible nor desirable to prescribe the relative weight to be given any single factor as against any other factor or as against all other factors. The conclusions to be reached in a given case will necessarily depend upon a careful evaluation of the agreement and other attendant facts and circumstances.

(a) The fees charged should not be inequitable and exorbitant in relation to the services actually rendered. That is, the compensation should be commensurate with the nature and extent of the services and should not be excessive as compared with the fees customarily allowed in the trade concerned for similar services related to commercial (non-Government) business. In evaluating reasonableness of the fee, the services of the agent other than actual solicitation should be considered; for example, technical, consultant, or managerial services, and assistance in the procurement of essential personnel, facilities, equipment, materials, or subcontractors for performance of the contract.

(b) The selling agency should have adequate knowledge of the products and the business of the concern represented, as well as other qualifications necessary to sell the products or services on their merits.

(c) There should ordinarily be a continuity of relationship between the contractor and the agency. The fact that the agency has represented the contractor over a considerable period of time is a factor for favorable consideration. It is not intended, however, to disqualify a newly established contractoragent relationship where a continuing