transactions related to, such contracts or subcontracts.

12. Nothing herein contained shall be construed to constitute authorization hereunder for

(a) the use of the cost-plus-a-percentage-of-cost system of contracting;

(b) any contract in violation of existing law relating to limitation of profits or fees;

(c) the negotiation of purchases of or contracts for property or services required by law to be procured by formal advertising and competitive bidding;

(d) the waiver of any bid, payment, performance, or other bond required by law; (e) the amendment of a contract negotiated under section 2304 (a) (15) of title 10 of the United States Code to increase the contract price to an amount higher than the lowest rejected bid of any responsible bidder;

or

(f) the formalization of an informal commitment, unless the Secretary of Defense, the Secretary of the Army, the Secretary of the Navy, or the Secretary of the Air Force, or the duly authorized representative of any such Secretary, finds that at the time the commitment was made it was impracticable to use normal procurement procedures.

13. The provisions of the Walsh-Healey Act (49 Stat. 2036), as amended, the DavisBacon Act (49 Stat. 1011), as amended, the Copeland Act (48 Stat. 948), as amended, and the Eight Hour Law (37 Stat. 137), as amended, if otherwise applicable, shall apply to contracts made and performed under the authority of this order.

14. Nothing herein contained shall prejudice anything heretofore done under Executive Order No. 9001 of December 27, 1941, or Executive Order No. 10210 of February 2, 1951, or any amendments or extensions thereof, or the continuance in force of any action heretofore taken under those orders or any amendments or extensions thereof.

15. Nothing herein contained shall prejudice any other authority which the Department of Defense may have to enter into, amend, or modify contracts, and to make advance payments.

PART II-EXTENSION OF PROVISIONS OF

PARAGRAPHS 1-14

21. Subject to the limitations and regulations contained in paragraphs 1 to 14, in

clusive, hereof, and under any regulations prescribed by him in pursuance of the provisions of paragraph 22 hereof, the head of each of the following-named agencies is authorized to perform or exercise as to his agency, independently of any Secretary referred to in the said paragraphs 1 to 14, all the functions and authority vested by those paragraphs in the Secretaries mentioned therein:

Department of the Treasury
Department of the Interior

Department of Agriculture
Department of Commerce
Atomic Enegry Commission
General Services Administration
National Aeronautics and Space

Administration

Federal Aviation Agency
Tennessee Valley Authority

Government Printing Office

22. The head of each agency named in paragraph 21 hereof is authorized to prescribe regulations governing the carrying out of the functions and authority vested with respect to his agency by the provisions of paragraph 21 hereof. Such regulations shall, to the extent practicable, be uniform with the regulations prescribed or approved by the Secretary of Defense under the provisions of Part I of this order.

23. Nothing contained herein shall prejudice any other authority which any agency named in paragraph 21 hereof may have to enter into, amend, or modify contracts and to make advance payments.

24. Nothing contained in this Part shall constitute authorization thereunder for the amendment of a contract negotiated under section 302 (c) (14) of the Federal Property and Administrative Services Act of 1949 (63 Stat. 394), as amended by section 2(b) of the act of August 28, 1958, 72 Stat. 966, to increase the contract price to an amount higher than the lowest rejected bid of any responsible bidder.

DWIGHT D. EISENHOWER

3 Executive Order No. 11051 of October 2. 1962, deleted the Office of Civil and Defense Mobilization.

System prescribed by the Administrator of General Services under the Federal Property and Administrative Services Act of 1949.

§ 2-1.103

Relation to Federal Procurement Regulations System.

The Federal Procurement Regulations System is designed to bring together, under Title 41, Subtitle A, of the Code of Federal Regulations, the procurement regulations applicable to all civilian Federal agencies of the Government. Procurement Regulations (FPR) are Chapter 1. Chapter 2 is assigned for the procurement regulations of the Federal Aviation Agency (FAA). Chapters 3 through 49 will be used by other agencies. FPR (Chapter 1) is subdivided into 49 parts. Parts 1 through 49 of FAPR (Chapter 2) will be used to expand upon or modify the policies and procedures included in FPR. Material issued in the first 49 parts of FAPR will be numerically keyed to the corresponding sections of FPR. Parts 50 through 99 of FAPR will be used for procurement policies and procedures for which there is no counterpart in FPR. The numbering system established by § 1-1.007-2 of this title will be utilized to the maximum practicable extent in FAPR.

§ 2-1.104 Content.

The basic Chapter 2 will contain procurement policies and procedures, prescribed by the Assistant Administrator for Management Services, for uniform application throughout the Federal Aviation Agency. Subsidiary chapters shall be used by Heads of Bureaus and Offices to set forth significant Bureau or Office procurement policies or procedures which are considered to be of interest to the general public. Material which is only for internal guidance of a Bureau or Office may also be included in chapters assigned to them. Chapters for Bureau and Office use are assigned as follows:

Chapter 2A-Bureau of Facilities and
Materiel
Chapter 2B-Bureau of Research and
Development

Chapter 2C-Bureau of National Capital
Airports

Chapter 2D-Office of Management Services (OMS) Applicability.

§ 2-1.105

Except where a deviation is specifically authorized in accordance with § 2-1.110,

FAPR will be published in loose-leaf form for distribution within the Federal Aviation Agency to procurement offices and others concerned. Requests to be placed on the distribution list, or for extra copies, should be addressed to the Printing Section of the Administrative Services Division, OMS.

§ 2-1.107-2 Public.

Those parts of FAPR which contain basic and significant policies and procedures considered to be of interest to the general public will be published in the daily issue of the FEDERAL REGISTER and, in cumulated form, in the Code of Federal Regulations. Copies of FAPR in FEDERAL REGISTER and Code of Federal Regulations form may be purchased by the public, at nominal cost, from the Superintendent of Documents, Government Printing Office, Washington 25, D.C.

Bureaus or Offices shall prepare for publication in the FEDERAL REGISTER Such instructions, which implement or supplement FPR or FAPR, as are considered to be of interest to the general public. Such material shall be submitted to the Materiel Policy Division, OMS, for review and publication arrangements. Bureaus or Offices may issue additional detailed operating instructions, consistent with FPR and FAPR, using FAPR style and arrangement or such other format as they elect. A copy of each such instruction shall be furnished to the Materiel Policy Division, OMS.

§ 2-1.110 Deviation.

Deviations (as defined in § 1-1.009-1 of this title) shall be kept to a minimum and, with respect to FPR or the basic Chapter 2 of FAPR shall be controlled as follows:

(a) The principal contracting officers in the Washington offices of the Bureau of Facilities and Materiel and the Bureau of Research and Development are each authorized to approve deviation from FPR and FAPR in individual cases in connection with contracts entered into under their immediate supervision, when such action is clearly in the best interests of the Agency. A record of the nature of each such deviation and the justification for it shall be prepared and included in the contract file, with a copy being forwarded promptly to the Materiel Policy Division, OMS. All other deviations shall be approved in advance by the Materiel Policy Division, OMS, and handled in the following manner:

(b) Requests for deviation may be initiated by the principal contracting officer of any procuring activity of the Agency. A request shall cite the specific part or section of FPR or FAPR from which it is desired to deviate, shall set forth the nature of the deviation, and shall give the reasons why such action is considered necessary or desirable. Requests shall be routed through the head of the procuring activity (as defined in § 1-1.206 of this title) for concurrence or additional comments. If the initiating office is at a field location, the

request shall also be routed through the cognizant Washington office of the Bureau concerned. After the indicated concurrence has been obtained, requests shall be submitted to the Materiel Policy Division, OMS.

(c) If a requested deviation is considered appropriate, approval will be accomplished as follows:

(1) Where the deviation applies to an individual case, approval will be granted by memorandum addressed to the requesting contracting officer with copies to interested offices. The case file of the requesting office shall include a copy of the request and approval.

(2) Where the deviation applies to a class of cases, necessary coordination with the General Services Administration will be accomplished by the Materiel Policy Division, OMS. The deviation may be issued as a part of FAPR, or the Bureau or Office concerned may be authorized to issue internal instructions which incorporate the deviation.

(d) The requesting office will be notified by memorandum, with copies to other interested offices, whenever a requested deviation is disapproved.

(e) In emergency situations involving individual cases, deviation clearance may be handled by telephone or telegraph and later confirmed in writing.

(f) Requests for deviation may be made at any time, but contracting officers are urged to review new FPR releases as they are issued so that requests for deviation can be considered prior to the effective date of the FPR.

Subpart 2-1.3-General Policies SOURCE: §§ 2-1.315 and 2-1.315-2 appear at 26 F.R. 12126, Dec. 19, 1961.

§ 2-1.315 Use of liquidated damages provisions in procurement contracts. § 2-1.315-2 Policy.

(a) Determination as to the use of liquidated damages provisions in a contract, and of the rate of such damages is solely the responsibility of the Contracting Officer. In making the determination, he shall obtain essential facts from the requisitioning office and be guided by a strict application of the criteria set forth in § 1-1.315-2 of this title, and by the following general policies:

(1) Liquidated damages provisions will not be used routinely in Agency contracts, but they may be used when fail

ure to meet the completion or delivery schedule in a proposed facility or equipment contract will seriously delay established commissioning dates. They may also be used in other situations when failure to perform will likely cause the Agency to suffer substantial damages, the amount of which is difficult or impossible to determine.

(2) Liquidated damages provisions generally should not be used: (i) In contracts for supplies or services that are for administrative purposes; (ii) in contracts for standard commercial or "shelf" items; (iii) in any contract where the needs of the Agency can be met by termination and re-procurement if the initial contractor defaults; (iv) in small purchases (under $2,500); and (v) in study, experimental, developmental, or research contracts, including equipment contracts requiring developmental work.

(3) In transactions involving an item where only a portion of the quantity ordered is for immediate programs, and liquidated damages provisions would be applicable in accordance with prescribed policies, care should be taken to have the liquidated damages provisions apply only to the urgent quantity.

(4) A fixed formula, based on percentage of value, shall not be used to establish the rate of damages. Consideration shall be given to the following factors in establishing the rate of damages: (i) The importance of the item in relation to the facility or project for which it is intended; (ii) the number of facilities or projects involved; (iii) the relative importance 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 one dollar.

Where rates are applied to quantities or groups, assessment of damages will not be prorated for delay of partial quantities.

(b) A statement justifying the use of liquidated damages provisions shall be included in the contract file, together