propriate one of the following phrases, in both of the indicated spaces:

1. "[On] (on or before) the date(s) specified below."

2. "Within the number of days stated below after date of contract."

3. "Within the number of days stated below after the date of receipt of a written notice of award."

4. "Within the periods specified below." (NOTE: When this phrase is inserted, the wording "during month(s) of or "not sooner than than

the periods.

and not later ." should be used to specify

In the interest of maintaining a minimum priorities and allocations system as a mobilization preparedness measure, it is national policy to require contractors to use rating and allotment authority to support military procurement, to the extent required by the Business and Defense Services Administration.

(a) DOD Priorities and Allocations Manual. Department of Defense implementation of all rules and regulations published by the Business and Defense Services Administration, with respect to which the Department of Defense is delegated administrative responsibility, will be published in the Priorities and Allocations Manual promulgated by Department of Defense Instruction 4410.1. Authorized deviations to the priorities and allocations rules and regulations will likewise be published in the Manual.

set

(b) Operating responsibility. In accordance with § 1.403, the Military Departments shall comply with the priorities and allocations program, including the Defense Materials System, as forth in the Priorities and Allocations Manual and in the rules and regulations published by the Business and Defense Services Administration.

[25 F.R. 14084, Dec. 31, 1960, as amended at 31 F.R. 13326, Oct. 14, 1966]

§ 1.307-2 Required use of priorities, allocations, and allotments clause. The contract clause set forth in § 7.104-18 of this chapter shall be inserted in or attached to all rateable con

(a) In accordance with the policies and procedures of the Priorities and Allocations System rated contracts and purchase orders or Authorized Controlled Material Orders may be placed on selected suppliers when adequate response to a solicitation is not received. Therefore, when there are no bids or proposals received as a result of a solicitation or if the bids or proposals received do not cover the entire requirement, normal procurement procedures shall be followed in attempting to locate sources, to the extent exigencies of the procurement will permit. If such efforts are unsuccessful, and it is determined at this point in time that the procurement must ⚫ be accomplished, then rated orders in the form of rated contracts, rated purchase orders or an Authorized Controlled Material Order shall be presented, to one or more (as appropriate) selected suppliers or manufacturers qualified to produce the item or material. This will be accomplished by a cover letter signed by the contracting officer, citing the requirements of the Defense Production Act and BDSA Regulation 2, and requesting timely acceptance thereof by the contractor. The letter shall also request that any reasons for rejection be promptly furnished in writing, as required by the BDSA Regulations. Rated orders will be placed pursuant to appro[priate negotiation authority. Contracts and purchase orders shall contain, as a minimum, the following information in addition to normal contractual requirements to be a valid rated order:

(1) DO or DX rating on contracts or purchase orders as appropriate.

(2) DMS allotment number on Authorized Controlled Material Orders.

(3) Certification "Certified for Naje tional Defense Use Under DMS Regulation 1 or BDSA Regulation 2 (as appropriate)."

(4) Delivery schedule.
(5) Signature.

(b) Rated orders or Authorized Controlled Material Orders which are rejected by suppliers shall be forwarded to BDSA, through established Departmental priorities assistance channels, for such action as BDSA considers appropriate.

[31 F.R. 13326, Oct. 14, 1966]

§ 1.308 Records of contract actions.

(a) Each contract file shall contain documentation of actions taken with respect to the contract, including final disposition, sufficient to constitute a full history of the transaction, to permit ready reconstruction of all of the stages of the transaction to (1) support actions taken by various personnel in the procurement cycle, (2) provide information for reviews conducted by the Department concerned, the Department of Defense, the General Accounting Office, or others, (3) supply data for use in preparing replies to Congressional inquiries, and (4) furnish essential facts in the event of litigation. To the extent that retained copies of documents do not represent all actions taken, suitable memoranda or summary statements of undocumented actions should be prepared promptly and be retained in the contract file in chronological order.

(b) Each contract file shall include the following data, if applicable:

(1) a copy of the procurement directives or request, or appropriate reference thereto;

(2) On negotiated procurement, the original or a copy of the Determination and Findings and any request for authority to negotiate;

(3) The list of sources solicited or justification for limiting such sources and a list of any firms or persons whose requests for copies of the solicitation were denied, together with the reasons for denial;

(4) Any small business or labor surplus set-aside determinations

§§ 1.706 and 1.804);

(see

(5) A copy of the Invitation for Bids or the Request for Proposals, including the drawings and specifications or an identifiable reference thereto;

(6) The Security Requirements Check List (DD Form 254) (see § 16.811 of this chapter);

(7) One copy of each signed bid or proposal received, together with an abstract of bids or proposals received (With respect to formally advertised procurements, unsuccessful bids may be re

moved and destroyed either after one year from date of award of the contract or after final payment has been made, whichever occurs later. However, in no event will such bids be destroyed prior to final resolution of any protest or complaint submitted by an unsuccessful bidder. Furthermore, when the contracting officer determines that technical data contained in an unsuccessful bid are of sufficient value to the Government or could be reasonably considered of value to the Government in the future, such bid shall be retained.);

(8) The bidders' Statements of Contingent Fees (see § 16.802 of this chapter);

(9) All pre-award

§ 1.905-4);

surveys

(see

(10) Selection of the successful contractor, including:

(i) The reasons for selection,

(ii) The contracting officer's determination of the contractor's responsibility (see § 1.904-1);

(iii) Any Small Business Administration Certificate of Competency (see § 1.705-4);

(11) All price and cost data submitted or used, including Certificates of Current Cost or Pricing Data (see §§ 2.102-1(b), 3.807-3, and 3.807-4 of this chapter);

(12) A full record of negotiations, including but not limited to: participants; dates of meetings or phone calls; Government-furnished materials or facilities provided; subcontracting; terms and conditions agreed to; deviations, if any, from prescribed contract clauses; technical recommendations; and justification for final price;

(13) Justification for type of contract used (see § 3.303 of this chapter);

(14) Any exceptions or exemptions from the Buy American Act or appropriations act restrictions (see Part 6 of this chapter);

(15) A copy of contract or award; (16) Required approvals of award; (17) A copy of Individual Procurement Action Report (DD Form 350);

(18) A copy of Statement and Certificate of Award (SF 1036) (see § 16.801 of this chapter);

(19) All pertinent correspondence; (20) Copies of all change orders, and supplements, with supporting documents;

(21) Comprehensive termination data; (22) Copies of royalty reports received (see § 16.806 of this chapter);

(23) Final release upon completion of the contract; and

(24) Information appropriate for renegotiation purposes (see § 1.319); and (25) any additional documents reflecting actions peculiar to a specific activity or service.

(c) Complete record of all negotiated contract actions, including unsuccessful proposals, shall be preserved in the cognizant procuring activity or in the Department concerned for a period of six years following final payment on each contract.

(d) This section does not apply in the case of small purchases (see § 3.604 of this chapter).

[25 F.R. 14084, Dec. 31, 1960, as amended at 27 F.R. 3443, Apr. 11, 1962; 27 F.R. 6120, June 29, 1962; 27 F.R. 11644, Nov. 27, 1962; 28 FR. 2093, Mar. 5, 1963; 28 F.R. 2572, Mar. 16, 1963; 28 F.R. 12546, Nov. 23, 1963; 29 F.R. 11809, Aug. 19, 1964; 30 F.R. 5961, Apr. 29, 1965] § 1.309 Solicitations for informational or planning purposes.

It is the general policy of the Department of Defense to solicit bids, proposals or quotations only where there is a definite intention to award a contract or purchase order. However, in some cases solicitation for informational or planning purposes may be justified. Invitations for bids and requests for proposals will not be used for this purpose. Requests for quotations may be issued for informational or planning purposes only with prior approval of an individual at a level higher than the contracting officer. In such cases, the request for quotation shall clearly state its purpose and, in addition, the following statement in capital letters shall be placed on the face of the request: THE GOVERNMENT DOES NOT INTEND TO AWARD A CONTRACT ON THE BASIS OF THIS REQUEST FOR QUOTATION, OR OTHERWISE PAY FOR THE INFORMATION SOLICITED. The foregoing does not prohibit the allowance, in accordance with § 15.205-3 of this chapter, of the cost of preparing such quotations.

[26 F.R. 2599, Mar. 28, 1961]

§ 1.310 Liquidated damages.

(a) This section applies to procurement by formal advertising and procurement by negotiation. Liquidated damages provisions normally will not be utilized but may be used where both (1) the time of delivery or performance is such an important factor in the award of the contract that the Government may

reasonably expect to suffer damages if the delivery or performance is delinquent, and (2) the extent or amount of such damages would be difficult or impossible of ascertainment or proof. Where a Liquidated damages provision is to be used in a supply or service contract, insert the provision set forth in § 7.105-5 of this chapter in accordance with the instructions thereof. Liquidated damages provisions for construction contracts are covered by §§ 18.113, 7.603-39 and 8.709 of this chapter.

(b) The rate of assessment of liquidated damages must be reasonable, considered in the light of procurement requirements on a case-by-case basis, since liquidated damages fixed without reference to probable actual damages may be held to be a penalty and therefore unenforceable.

(c) The law imposes the duty upon a party injured by another to mitigate the damages which result from such wrongful action. Therefore, where a liquidated damages provision is included in a contract and a basis for termination for default exists, appropriate action should be taken expeditiously by the Government to obtain performance by the contractor or to terminate the contract. If delivery or performance is desired after termination for default, efforts must be made to obtain either de- livery or performance elsewhere within a reasonable time. For these reasons, particularly close administration over contracts containing liquidated damages provisions is imperative.

(d) Whenever any contract includes a provision for liquidated damages for delay, the Comptroller General on the recommendation of the Secretary concerned is authorized and empowered to remit the whole or any part of such damages as in his discretion may be just and equitable. Accordingly, recommendations concerning such remissions may be transmitted to the Secretary concerned in accordance with Departmental procedures.

[25 FR. 14085, Dec. 31, 1960, as amended at 30 FR. 5961, Apr. 29, 1965]

§ 1.311 "Buying In”.

"Buying in" refers to the practice of attempting in procurements involving price competition, to obtain a contract award by knowingly offering a price less than anticipated costs with the expectaEtion of either (a) increasing the contract price during the period of performance

through change orders or other means, or (b) receiving future "follow-on" contracts at prices high enough to recover any losses on the original "buy-in” contract. Such a practice is not favored by the Department of Defense since its longterm effects may diminish competition and it may result in poor contract performance. Where there is reason to believe that "buying in" has occurred, contracting officers shall assure that amounts thereby excluded in the development of the original contract price are not recovered in the pricing of change orders or of follow-on procurements subject to cost analysis.

[29 FR. 9747, July 21, 1964]

§ 1.312 Voluntary refunds.

(a) General. A voluntary refund is a payment or credit, not required by any contractual or other legal obligation, made to the Government by a contractor or subcontractor either as a payment or as an adjustment under one or more contracts or subcontracts. It may be unsolicited or it may be made in response to a request by the Government. Where it is desired to solicit a voluntary refund from a subcontractor, the prime contractor should be encouraged to facilitate the making of such refund. In deciding whether to solicit a voluntary refund or to accept an unsolicited refund, the contracting officer shall ask legal counsel to review the contract or contracts and all data relevant thereto to determine whether the Government's rights would be jeopardized or impaired by the contracting officer's proposed action.

(b) Solicited refunds. Voluntary refunds may be requested during or after contract performance. They shall be requested only when it is considered that the Government was overcharged under a contract or was inadequately compensated for the use of Government-owned property, or in the disposition of contractor inventory, and retention by the contractor or subcontractor of the amount in question would be contrary to good conscience and equity. Generally, retention by the contractor or subcontractor shall not be considered contrary to good conscience and equity, and thus a voluntary refund shall not be requested, unless the overcharge or inadequate compensation was due, at least in part, to the fault of the contractor or subcontractor. The decision to solicit

U.S. Army Communications Zone, Europe; U.S. Army, Hawaii; U.S. Army, Japan; National Guard Bureau; Office of the Chief of Engineers; Strategic Communications Command; Office of the Chief of Support Services; Office of The Surgeon General; U.S. Army Security Agency; and Military Traffic Management and Terminal Service; for the Navy: Each Bureau; the Naval Material Command; the Office of the Deputy Chief of Naval Material (Procurement); the Naval Air Systems Command; the Naval Electronic Systems Command; the Naval Facilities Engineering Command; the Naval Ordnance Systems Command; the Naval Ship Systems Command; the Naval Supply Systems Command; the Office of Naval Research; the Navy Aviation Supply Office; the Military Sea Transportation Service; and the U.S. Marine Corps; for the Air Force: The Air Force Logistics Command and the Air Force Systems Command; for the Defense Supply Agency: the Office of the Deputy Director for Contract Administration Services; the Office of the Executive Director, Procurement and Production; the Defense Supply Centers; and the Defense Personnel Support Center; for the Defense Communications Agency: The Headquarters, Defense Communications Agency, and the Defense Commercial Communications Office; for the Defense Atomic Support Agency: Headquarters, Defense Atomic Support Agency. It also includes any other procuring activity hereafter established. The number and designation of particular procuring activities of any Military Department may be changed by directive of the Secretary. [31 F.R. 13326, Oct. 14, 1966]

§ 1.201-15 Secretary.

"Secretary" means the Secretary, the Under Secretary, or any Assistant Secretary of any Military Department. Secretary shall also include the Director and Deputy Director of the Defense Supply Agency, the Director of the Defense Communications Agency, and the Director, Defense Atomic Support Agency, except to the extent that any law or executive order limits the exercise of authority to persons at the Secretarial level. In the latter situation, such authority shall be exercised by the Assistant Secretary of Defense (Installations and Logistics.). [30 F.R. 5961, Apr. 29, 1965]

§ 1.201-16 Shall.

"Shall" is used in an imperative sense. [25 F.R. 14081, Dec. 31, 1960]

§ 1.201-17 Small business concerns.
See § 1.701-1.

[25 F.R. 14081, Dec. 31, 1960]
§1.201-18 Supplemental agreement.

"Supplemental agreement" means any contract modification which is accomplished by mutual action of the parties (see § 16.815-2 of this chapter). [30 F.R. 14071, Nov. 9, 1965]

§ 1.201-19 Supplies.

Supplies means all property except land or interests in land. It includes public works, buildings, and facilities; ships, floating equipment, and vessels of every character, type, and description, together with parts and accessories thereto; aircraft and aircraft parts, accessories, and equipment, machine tools; and the alteration or installation of any of the foregoing. "Supplies" as used in this subchapter is synonymous with "property" as described in 10 U.S.C. 2303(b).

[27 F.R. 11643, Nov. 27, 1962] § 1.201-20

United States.