(b) Unsatisfactory. Contractor fails to comply with labor laws, nondiscrimination provisions, etc.; and it was necessary for the contracting officer to repeatedly instruct him to comply.

(iv) Cost contract management (applicable to cost-type contracts only)(a) Outstanding. Contractor has demonstrated ability to control costs for highly complex work under cost contracts, or contractor was extremely efficient in managing Government-furnished property and Government-owned facilities.

(b) Unsatisfactory. Contractor failed to properly manage contract resulting in substantial cost overruns, or he was careless in managing Government-owned property and facilities.

conduct-(a)

(v) General business Outstanding. Contractor maintained an effective line of communication with the contracting officer concerning progression of the contract, and anticipated delays; or demonstrated unusual perseverance and integrity in discharging his contractual responsibilities.

ig

(b) Unsatisfactory. Contractor nored instructions of the contracting officer to take corrective actions to comply with contract, failed to respond to communications, or in any way failed to demonstrate integrity in the conduct of his business dealings with the Government.

(d) Filing of completed form. The original shall be placed in the contract file.

(e) Interim notice. FAA Form 3458 is to be prepared upon the completion of termination of contracts exceeding $10,000. However, in the event a serious situation develops with a contractor before the form is due, the interim notice procedure set forth in this paragraph will be used. These serious situations would include such things as (1) anticipated bankruptcy, (2) labor statute violations so acute that a recommendation for debarment is contemplated, or (3) serious performance problems which indicate an inability or unwillingness to perform. When such situations develop, an interim notice in memo form shall be sent to the Washington Procurement Policy and Standards Division, IM-600, who in turn will alert all Agency procurement offices. If the contractor later cures his unsatisfactory performance or the condition which prompted the submission of the initial notice, the notice shall be supplemented stating what ac

tion was taken by the contractor to correct the deficiencies. The routing of any supplements shall be the same as the initial notice.

§ 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 failure 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 bet met by termination and reprocurement if the initial contractor defaults; (iv) in small purchases (under $2,500); and (v) in study, experimental, development 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 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 for 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 contract 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 Sole Source Procurement." As stated in Agency Order 4400.8A, "where follow-on contracts are anticipated, sufficient data should be obtained under early contracts to permit competition on later contracts."

Subpart 2-1.4-Procurement Responsibility and Authority

§ 2-1.400 Scope of subpart.

This subpart deals with procurement responsibility and authority of the head of a procuring activity, contracting officers and their representatives; and with delegations of contracting authority. This subpart also imposes limitations upon the authority to enter into contracts.

The head of a procuring activity (defined in § 2-1.206) is responsible for the procurement of supplies and services under or assigned to the procurement cognizance of his activity. This responsibility includes the authority to issue delegations of authority, to impose limitations upon the authority delegated, to require such approvals as he may prescribe, and maintain required surveillance over delegated procurement performance. Except as specifically limited or prohibited in the FPR, FAPR, Agency Orders, or by law, the authorities vested in the head of a procuring activity may be delegated with power of redelegation. § 2-1.402 General authority of contracting officers.

(a) Subject to any limitation in the orders or other instruments designating an individual as a contracting officer, a properly designated contracting officer is granted all authority conferred by law, FPR, FAPR, and procurement office instructions.

(b) A contracting officer may enter into, amend, modify, and take other action with respect to contracts, provided (1) prior approval of award has been obtained if approval is required, (2) the contract is in writing (on a standard or approved form if such form is prescribed), (3) the contract and modifications are authorized by law and comply with the provisions of FPR and FAPM with respect to the use of contract clauses and does not contain any clause or involve matters in conflict with the estab

lished policy of higher authority, and (4) the contract complies with all other requirements of law, the FPR, FAPM, and applicable procurement office instructions.

(c) A contracting officer must assure himself that the contract is authorized by law and that funds are available.

(d) The acts of a contracting officer must be within the scope of the written orders designating him a contracting officer. Purchases, contractual commitments, and changes to contracts will be made only by duly designated contracting officers. Technical personnel and others whose duties require meetings and discussions with contractors, are without authority to direct changes in the work which may change the contractual terms or result in claims against the Government.

§ 2-1.403

Requirements to be met before entering into contracts.

No contract shall be entered into unless all applicable requirements of law and of FPR and FAPM, and all other applicable procedures, including clearances and approvals, have been met. The contracting officer will coordinate, as appropriate, his procurement and contracting activities with:

(a) Appropriate legal counsel, as required by Order OA 2220.1,

(b) Agency contract auditors of the Office of Audit on the financial, accounting and cost aspects of contractual actions, as required by Order 2930.1,

(c) Pricing and transportation specialists, where they have been assigned or are available to the procurement office, and

(d) Cognizant engineering and technical personnel where there are technical considerations involved in the procure

ment.

(e) The Compliance and Equal Opportunity Officer for matters pertaining to equal employment opportunity.

(f) The appropriate Accounting Division when other than standard financing or payment provisions are contemplated. § 2-1.404 Special requirements to be

met before entering into negotiated

contracts.

In addition to the requirements in § 2-1.403, no negotiated contract shall be entered into until the determinations and findings required by Subparts 1-3.3 and 1-3.4 of this title and 2-3.3 and 2-3.4 of this chapter, with respect to the cir

(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 authority.

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 procurement personnel to question requirements 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 concern (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

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