$9-50.302-4 Procurement from contractor-controlled sources.

(a) When an operating or on-site service contractor maintains a separate procurement function for performance of work in DOE facilities on DOE sites, procurement from contractor-controlled sources (any division, subsidiary, or affiliate of the contractor under a common control) may be treated in the same manner as procurement from other sources provided the procurement is made:

(1) Under the same terms and conditions as would apply if the purchase were from a third party;

(2) In accordance with policies and procedures particularly designed to permit fair and open competition which have been approved by the Contracting Officer; and

(3) In a manner which results in legally enforceable terms and conditions.

When any of the conditions above cannot be met, procurements involving contractorcontrolled sources should be made with the prior approval of, or in rare instances, directly by the DOE.

(b) Subcontracts for performance of contract work itself (as distinguished from procurement of supplies and services needed in connection with the performance of work) require DOE authorization which may involve an adjustment of the contractor's fixed fee. If the contractor seeks authorization to have some part of the contract work performed by a contractor-controlled source, and the contractor's performance of that work was a factor in the negotiated fixed fee, DOE approval would normally require (1) that the contractorcontrolled source perform such work on a basis without profit, or (2) an equitable downward adjustment to the contractor's (i.e., the contracting component's) fixed fee.

89-50.302-5 Review and approval.

(a) Heads of Procuring Activities shall require contractors to obtain the approval of the Contracting Officer before entering into any subcontracts or purchase orders within the following categories:

(1) Specified contract types. Approval shall be required before entering into cost reimbursement, labor hour, and time and materials type subcontracts in excess of $500.

(2) Specified dollar amounts. Approval shall be required prior to entering into subcontracts or purchase orders above specified dollar amounts. Dollar limits will be established at the discretion of Heads of Procuring Activities, taking into consideration such factors as the nature of work under each contract, the estimated cost of work under the contract, the contractor's procurement organization, other controls exercised over the contractor's procurement operations, and policies with respect to approvals established by Headquarters or field offices. Except as provided in paragraph 5(a) and 5(b) of this section, subcontracts or purchase orders in excess of the following amounts shall require prior DOE approval:

(i) Construction and A-E, $10,000;

(ii) Off-site R&D, $10,000; and

(iii) All others, $25,000.

(3) Contracts entered into under section 41. Prior approval shall be required for the subcontracting of any work a contractor is obligated to perform under a contract entered into under section 41 of the Atomic Energy Act of 1954, as amended.

(4) Specified materials, equipment, or services. Heads of Procuring Activities shall take such action as may be required to insure compliance with the procedure for purchases from contractor-controlled sources or the procurement of specific items, or classes of items which by the terms of the contract may require DOE approval.

(5) Exceptions.

(i) In the event application of any of the dollar amount limitations established in subparagraph (1) and (2) above would impair the DOE program of the field office or would be impracticable under the circumstances, or such higher levels would be in the Government's best interest, the Head of a Procuring Activity may, upon making such determination, establish a dollar amount up to $100,000 subject to advance notification limitations set forth in §93.901(c). Requests to establish dollar levels in excess of $100,000 shall be submitted to the Director, Office of Procurement Management (Attn PR-32) for approval and contain the applicable information required in §9–23..107(b). Advance notification required in §9-23.108(c) shall be applicable to all such higher levels established.

(ii) When a review has been made of the contractor's procurement system in accordance with Subpart 9-23 and the contractor's procurement system has been approved, the Head of the Procuring Activity may raise the dollar limitations in paragraph (1) and (2) above as follows (subject to the advance notification limitations set forth in §9-3.901 (c)) may be raised to the lower of (a) the limits established by the performing activity, or (b) the amount of the HPA's delegated authority, provided approval has been obtained as required in section §9-23.107 (a).

(6) Emergency approvals.

(i) Heads of Procuring Activities may, up to the limits of their delegated authority, give oral approval (or approval by telephone or teletype) to any subcontract or purchase order requiring DOE approval in instances of compelling or unusual urgency, such as circumstances under which an DOE program would be seriously hampered or delayed if supplies or services are not obtained by a certain date and time does not permit the obtaining of formal approval. Such emergency approvals shall be confirmed in writing.

(ii) Operating and other on-site contractors shall be required to justify procurements in writing, setting forth the information and data used in determining that the procurements are in the best interests of the Government. The scope and detail of this documentation shall be consistent with the nature, dollar value, and complexity of the procurement.

(A) Contracting Officers shall assure that operating and other on-site contractors establish and maintain procurement files which contain those documents essential to present an accurate and adequate record of the transaction.

(B) Field offices will establish files for the review and approval of contractor procurement actions, including among other necessary documentation, an appraisal of the proposed action and a copy of suggestions, deficiencies, or improvements forwarded to the

contractor.

§9-50.303 Operating and on-site service contracts.

(a) The criteria herein are only available to extension of operating and on-site service contracts for the performance of functions transferred from the Atomic Energy Commission (AEC). Extensions of other operating and on-site service contracts must be justified on the basis of generally applicable exceptions to competition or as a result of competition.

(b) Competition for existing operating and on-site service contracts will be sought whenever it appears likely that the Government's position may be meaningfully improved in terms of cost or performance, unless it is determined that to change a contractor would be contrary to the best interest of the Government. Except in those cases where the contract specifically permits the Government to bring in a replacement contractor, normally it would not be practical to compete an operating contract which includes major Government-owned facilities on contractor-owned or leased sites. In such cases, the alternatives would be to extend

the contract or to allow the contract to expire and, if the work is to be continued, place all or some part of the work with another contractor at a different site.

(c) The following factors, as a minimum, should be considered in determining whether an existing operating or on-site service contract should be competed.

(1) Overall performance of an incumbent contractor including specific consideration of the contractor's technical, administrative, and cost performance.

(2) Potential impact of change of contractors on programmatic activities.

(3) The likelihood that qualified industrial firms or other organizations will compete for the contract.

§9-50.304 Field recommendations to extend or compete operating contracts and on-site service contracts.

(a) The provisions of §9-50.303(a) apply.

(b) The decision to extend or compete operating contracts or on-site service contracts in conformity with §9-50.303 above, requires advance Headquarters' approval when the proposed action is in excess of $5 million. The request to extend or compete operating contracts or on-site service contracts, when the action does not exceed $5 million, must comply with the policy stated in §9-50.303 and be supported in writing as thoroughly as if it were to be submitted to Headquarters.

(c) If an action requires advance Headquarters approval, the Head of the Procuring Activity will submit a memorandum that recommends either extending or not extending an operating or on-site service contract. This summary of recommended action, together with attachments supporting it, will be submitted at least 18 months prior to expiration of the contract. The attachments shall include the following information:

(1) A full and complete justification of the recommendation that is made, i.e., either to obtain competition or to extend the contract without obtaining competition. This justification must address the policy stated in §9–50.303. It shall also discuss the availability of other qualified firms or organizations, if any, to compete for the contract.

(2) A statement of the present contractor's overall performance since award of the contract, or if previously extended, since Headquarters' last authorized extension of the contract. This should be supported by a copy or detailed summary of the most recent overall DOE management appraisal of the contractor's performance.

(i) The technical appraisal shall include data which indicates the contractor's success or failure in meeting established program goals and objectives during the appraisal period. It is recognized that in some cases, the contracting office will not have the technical staffing necessary to perform an appraisal of the scientific and technical work under the contracts they are administering, as in the case with the contracts for the operation of DOE's national laboratories. When this is the situation, the contracting office shall obtain the necessary technical appraisal information from the appropriate Headquarters' program division(s) for incorporation into the overall management appraisal.

(ii) The cost appraisal shall include data that indicates the contractor's success or failure in controlling both direct and indirect costs.

(iii) Where the contract is a cost-plus-award-fee (CPAF) or similar arrangement, include a discussion of award fee experience since the date that the contract has been on a CPAF basis, showing the base fee, award fee pool, award fee appraisals, and award fee earned.

(3) The jusification for use of the contract type contemplated, including discussion of consideration given to use of the CPAF type contract.

(4) Summary description of scope of work and brief listing of some of the important projects which have been performed under this contract. A list of any important projects planned for assignment in the future should be included.

(5) The cost level and fee or management allowance over the past contract period and expected cost level in the future.

(6) While a copy of the proposed contract document should not be submitted with the recommendation, Headquarters should be advised of the following:

(i) Any special or unique features (with brief supporting rationale) in the existing contract expected to be continued in either the extension of the existing contract or in the replacement contract. This shall include any provisions which deviate from standard clauses. (ii) An outline of the principal issues to be negotiated if the contract is extended, with arguments pro and con, with a recommended position. This should include the identification of any anticipated problem areas for which Headquarters guidance is needed and should also include a justification for any provisions which deviate from standard clauses and continued use of deviations granted in the past.

(d) If Headquarters makes the decision to extend the existing contract without obtaining competition, the HPA or designee will be authorized to negotiate an extension to the contract. The HPA or designee shall submit the negotiated contract to Headquarters for the approval of the Senior Procurement Official, Headquarters, prior to execution, only if the action exceeds the HPA's delegated dollar authority. The proposed contract document shall be accompanied by the following:

(1) A complete justification of the negotiated contract in accordance with the relevant provisions of § §9–51.103–1 and §9–51.602–2;

(2) A summary of the major provisions of the proposed contract with particular attention to indemnity, patents, and conduct of work (including provisions concerning control over work and termination). Any deviations from current FPR or DOE procurement policies or standard contract clauses should be identified with the reasons therefore;

(3) A listing of any significant changes from the existing contract.

Subpart 9-50.4 Special Types and Methods of Procurement

$9-50.400 Scope of subpart.

This subpart implements and supplements the policies and procedures set forth in FPR Part 1-4 and DOE-PR Part 9-4, as these relate to operating contractors.

$9-50.401 Public utilities.

The requirements of §9-4.4 and FPR 1-4.4 shall be applied to contractors that manage and operate Government-owned facilities, when such contractors are authorized pursuant to §94.406-1 to procure utility services.

§9-50.402 Nuclear material transfers.

(a) Operating contractors and on-site service contractors, in preparing contracts or other agreements in which monetary payments or credits depend on the quantity and quality of nuclear material, shall assure that each such contract or agreement contains a:

(1) Description of the material to be transferred;

(2) Provision specifying the method by which the quantities are to be measured and reported;

(3) Provision specifying the procedures to be used in resolving any differences arising as a result of such measurements;

(4) Provision providing for the use of an umpire to settle unresolved differences in the analytical samples; and

(5) Provision specifying in detail which party shall bear the costs of resolving a difference and what constitutes such costs.

(b) The provisions providing for resolution of measurement differences must be such that resolution is always accomplished, while at the same time minimizing any advantage one party may have over the other.