and 3.801-2(c) of this chapter concerning price quotations which the contracting officer considers unreasonable. [33 F.R. 10187, July 17, 1968]

§ 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. 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.

In

(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 a voluntary refund shall be made by the Secretary concerned.

(c) Disposition of voluntary refunds. (1) If a refund is offered prior to final payment, it is preferable that the contract price be appropriately modified to reflect the refund. In such a case, the amount of the refund shall be credited to the applicable appropriation cited in the contract.

(2) In cases where the refund is to be made by check rather than by an adjustment in the contract price, the check shall be made payable to the Treasurer

of the United States and shall be forwarded immediately to the comptroller of the appropriate Department, or other Departmental officer responsible for the control of funds. When forwarded, the check shall be accompanied by a letter identifying it as a voluntary refund, giving the number of the contract or contracts involved and, where possible, giving the account number of the appropriation to which the refund should be credited.

[30 F.R. 14887, Dec. 2, 1965]

§ 1.313

Procurement of parts.

(a) Any part, subassembly or component (called "part" in this section) for military equipment, to be used for replenishment of stock, repair, or replacement, must be procured so as to assure the requisite safe, dependable, and effective operation of the equipment. (Items procured as spare parts are governed by the "DOD High Dollar Spare Parts Breakout Program" described in DOD Joint Regulation AR 715-22, NAVMATINST P4200.33, AFR 57-6, MCO P4200.13, DSAM 4105.2.) Where it is feasible to do so without impairing this assurance, parts should be procured on a competitive basis, as in the kind of cases described in paragraph (b) of this section. However, where this assurance can be had only if the parts are procured from the original manufacturer of the equipment or his supplier, the procurement should be restricted accordingly, as in the kind of cases described in paragraph (c) of this section.

(b) Parts that are fully identified and can be obtained from a number of known sources, and parts for which fully adequate manufacturing drawings and any other needed data are available with the right to use for procurement purposes (or can be made so available in keeping with the policies in Subpart B, Part 9 of this chapter) are to be procured on a competitive basis. In general, such parts are of a standard design configuration. They include individual items that are susceptible of separate procurement, such as resistors, transformers, generators, spark plugs, electron tubes, or other parts having commercial equivalents.

(c) Parts not within the scope of paragraph (b) of this section generally should be procured (either directly or indirectly) only from sources that have satisfactorily manufactured or furnished such parts in the past, unless fully adequate data (including any necessary data de

veloped at private expense), test results, and quality assurance procedures, are available with the right to use for procurement purposes (or can reasonably be made so available in keeping with the policies in Subpart B, Part 9 of this chapter) to assure the requisite reliability and interchangeability of the parts, and procurement on a competitive basis would be consistent with the assurance described in paragraph (a) of this section. In assessing this assurance, the nature and function of the equipment for which the part is needed should be considered. Parts qualifying under this criteria are normally sole source or source controlled parts (see MILSTD 100) which exclusively provide the performance, installation and interchangeability characteristics required for specific critical applications. To illustrate, acceptable tolerances for a commercial television part may be far less stringent than those for a comparable military radar part, permitting competitive procurement of the former but not of the latter. The exacting performance requirements of specially designed military equipment may demand that parts be closely controlled and have proven capabilities of precise integration with the system in which they operate, to a degree that precludes the use of even apparently identical parts from new sources, since the functioning of the whole may depend on latent characteristics of each part which are not definitely known.

(d) When an award is made to a source that has not previously produced the item, the cognizant Government inspection activity and the appropriate contract administration office should be notified by the procurement contracting office that the contractor will be producing the item for the first time. [32 F.R. 10157, July 11, 1967, as amended at 33 F.R. 7347, May 18, 1968]

§ 1.314 Disputes and appeals.

(a) When a dispute cannot be settled by agreement and a decision under the Disputes clause is necessary, the contracting officer shall review the available facts pertinent to the dispute before making his final decision. When there is any doubt as to whether the issue in dispute is subject to the disputes procedure, a decision will be made pursuant to the Disputes clause. The disputes procedure shall not be invoked in cases when a dispute is clearly not subject to the procedure. The contracting officer

shall obtain, from assigned legal and other advisors, such advice and assistance as is required to render a decision. Prior to issuing the decision, the contracting officer shall consider the necessity for coordination with the contract administration office or the purchasing office, as appropriate. However, the decision must be that of the contracting officer.

(b) The final decision should include a statement of facts sufficient to enable the contractor to understand both the decision and the basis therefor. Normally, the decision should be in the form of a statement of the claim or other description of the nature of the dispute, with necessary references to pertinent contract provisions; a statement as to which of the facts relevant to the dispute the parties are in agreement and, as clearly as possible, the area of disagreement; and the contracting officer's statement of his decision and the basis therefor.

(c) The contracting officer (PCO, ACO, or TCO) shall decide all questions subject to the disputes procedures as to which he has the authority to act.

(d) When a final decision of the contracting officer involves a dispute that is subject to the procedure of a Disputes clause, or when there is doubt as to whether the decision is subject to such procedure, a paragraph substantially as follows, appropriately modified where other appeal Boards are authorized, shall be included in such decision.

This is the final decision of the Contracting Officer. Decisions on disputed questions of fact and on other questions that are subject to the procedure of the Disputes clause may be appealed in accordance with the provisions of the Disputes clause. If you decide to make such an appeal from this decision, written notice thereof (in triplicate) must be mailed or otherwise furnished to the Contracting Officer within 30 days from the date you receive this decision. Such notice should indicate that an appeal is intended and should reference this decision and identify the The contract by number. Armed Services Board of Contract Appeals is the authorized representative of the Secretary for hearing and determining such disputes. The rules of the Armed Services Board of Contract Appeals are set forth in the Armed Services Procurement Regulation, Appendix A, Part 2.

(e) After an appeal has been filed, contracting agencies are not precluded from further seeking agreement as to disposition of the controversy. How

ever, such efforts to dispose of a controversy shall not be conducted pursuant to formal board actions or hearings, and shall not result in suspension of processing of an appeal, except as ordered or authorized by the Armed Services Board of Contract Appeals.

(f) In the event of an appeal, the amount determined to be payable in the decision of the contracting officer, less any portion previously paid, normally should be paid in advance of any decision by the Board without prejudice to the rights of either party or the appeal.

(g) Decisions of the Armed Services Board of Contract Appeals constitute decisions of the Head of the Department as referenced in the Disputes clause standard in all Government contracts. It is expected that decisions favorable to the appellant in whole or in part will be promptly implemented by payment at the contracting officer level. In cases where the question of entitlement only has been decided by the Board and the matter of amount has been remanded to the parties for negotiation, if agreement is not reached, appellant will be afforded a prompt decision and opportunity to appeal on the matter of amount. [30 F.R. 14071, Nov. 9, 1965, as amended at 31 F.R. 13326, Oct. 14, 1966]

§ 1.315

Mobilization base preparedness.

(a) It has been determined that defense interests require the continued maintenance of an active and versatile mobilization base for the production of jewel bearings. This base has been established at the Government-owned William Langer Jewel Bearing Plant, Rolla, N. Dak. In support of this policy, Government purchases of jewel bearings shall be made from that plant in all cases where it can meet purchase requirements. Additionally, all procurements of items containing jewel bearings shall provide, in the solicitations and resulting contracts, a requirement that jewel bearings in the quantities, and of the types and sizes necessary for the end items to be supplied under the contract, be purchased from the William Langer Jewel Bearing Plant and be incorporated in the delivered items, subject to the criteria provided in paragraphs (b), (c), and (d) of this section, except:

(1) When quantity requirements, quality standards, or delivery requirements cannot be satisfied by bearings manufactured at the William Langer Jewel Bearing Plant;

(2) For purchases of commercial end items or of military end items having jeweled components used in commercial end items, when the quantities of such end items or components are such that the contracting officer either knows or reasonably expects that all such commercial end items or commercial components of military end items are already manufactured and available from the stock of any dealer, wholesaler, distributor, or manufacturer; or

(3) For bearings used in items that are to be procured and used outside the United States, its possessions, and Puerto Rico.

(b) In order to assure that all bidders or offerors are competing on the same basis, it is necessary that the solicitation for items containing jewel bearings clearly state:

(1) The successful contractor will be required to purchase (directly or through subcontractors, as appropriate) William Langer Jewel Bearing Plant bearings at prices established in the U.S. Government Jewel Bearing Price List then in effect, and to incorporate such bearings in the items to be delivered; and

(2) Bids or proposals are to be predicated on this requirement.

If it should occur, after award, that the William Langer Jewel Bearing Plant rejects the contractor's (or subcontractor's) purchase order entirely or in part, the contractor (or subcontractor) shall be required to so notify the contracting officer who will effect an equitable adjustment in the contract price to reflect any costs or savings accruing to contractor by reason of any price differential for such bearings, pursuant to the clause of this contract entitled "Changes."

(c) To the extent William Langer Jewel Bearing Plant bearings are fungible with other bearings and it is not practical or would be costly to segregate jewel bearing inventories or work in process for items to be furnished the Government from that to be furnished commercial customers, or for other similar reasons, it may be in the Government's interest to waive the use requirements at the discretion of the contracting officer. No waiver will be granted to prospective contractors prior to award and no assurance will be given prior to award to any prospective contractors that such waiver will be granted after award. Minor inconvenience to contractors alone will not satisfy the need for demonstrating that the Government's interests are served by

such waiver. When the use requirement is waived, an equitable adjustment for cost savings resulting therefrom shall be made.

(d) In circumstances where a procurement is not exempt from this procedure but it would be impractical or contrary to the Government's best interest to require actual use of all of the William Langer Jewel Bearing Plant bearings required to be purchased, the contracting officer may provide in the solicitation and resulting contract that a minimum fixed percentage of the total bearings requirements be of William Langer Jewel Bearing Plant origin, or that William Langer Jewel Bearing Plant bearings be purchased for and used in a certain number of the total items to be supplied.

(e) In all procurements subject to these procedures, the following clause is required for use:

REQUIRED SOURCES FOR JEWEL BEARINGS
(APRIL 1967)

Jewel bearings required in the performance of this contract shall be procured from the William Langer Jewel Bearing Plant, Rolla, N. Dak., at prices established in the Official U.S. Government Jewel Bearing Price List dated (insert latest effective date). The Contractor agrees that the delivery dates specified for the quantities and types of jewel bearings so ordered will be reasonably related to manufacturing schedules and delivery requirements of this contract. The Contractor agrees to notify the Contracting Officer promptly of the rejection of his (or any subcontractor) purchase order in whole or in part by the William Langer Jewel Bearing Plant and further agrees to an equitable adjustment in the contract price pursuant to the "Changes" clause of this contract to reflect any costs or savings to the Contractor (or subcontractor) resulting from such rejection. The Contractor further agrees to incorporate or to have his subcontractors incorporate the purchased William Langer Jewel Bearing Plant jewel bearings in the items to be delivered under this contract.1 The requirement for use (but not the re

1 Where less than total purchase and usage of William Langer Jewel Bearing Plant bearings is to be required, substitute "The Contractor further agrees to purchase and incorporate William Langer Jewel Bearing Plant bearings in items to be delivered under this contract equivalent to at least percent of the total quantity of bearings required to perform this contract." (Percentage to be inserted by Contracting Officer.) In lieu of a percentage, the clause may refer to specific quantities of items listed in the schedule for which William Langer Jewel Bearing Plant bearings must be purchased and used.

quirement for purchase) of such bearings may be waived in the discretion of the Contracting Officer when such waiver is determined by him to be in the Government's interest, and where agreement is reached for an equitable adjustment in the contract price by reason of such waiver.

[32 F.R. 10157, July 11, 1967, as amended at 37 FR 12563, June 27, 1972] § 1.315-1 General policy.

To insure the continued existence of an industrial mobilization base necessary for National Defense and in the public interest, it has been determined to restrict purchases of the following items to United States or United States and Canadian manufactured products. [37 FR 12563, June 27, 1972]

(a) Definitions. As used in this section:

(1) "Jewel bearings" means a piece of synthetic sapphire or ruby of any shape, except a phonograph needle, which has one or more polished surfaces and which is suitable for use in an instrument, mechanism, subassembly or part without any additional processing to the synthetic sapphire or ruby. A jewel bearing may be either unmounted, or mounted into a ring or bushing. Examples of types of jewel bearings are: watch hole-olive, watch hole-straight, pallet stones, roller jewels (jewel pins), end stones (caps), vee (cone) jewels, instrument rings, cups, double cups and orifice jewels.

(2) "Price List" is the official U.S. Government Jewel Bearing Price List for jewel bearings produced by the William Langer Jewel Bearing Plant in Rolla, N. Dak., which is issued periodically by the General Services Administration.

(3) "Plant" means the Governmentowned William Langer Jewel Bearing Plant, Rolla, N. Dak.

(b) Policy. It has been determined that Defense requirements for jewel bearings must, to the maximum extent practicable, be procured from the Government-owned William Langer Jewel Bearing Plant, Rolla, N. Dak., which is operated through a contractor by the General Services Administration.

(c) Procedures. (1) All direct Government purchases of jewel bearings shall be made from the plant where it can meet the requirements.

(2) All procurements of items in the Federal Supply Classes and Groups listed in paragraph (d) of this section, or any subassembly, component or part thereof, shall provide that jewel bearings, in the quantities and of the types and sizes (including tolerances) required to produce the end items to be supplied, be purchased from the plant and incorporated in the items delivered by contractor and subcontractor at every tier. To accomplish this, the clause in § 7.104-37 of this chapter shall be inserted in all contracts for items in paragraph (d) of this section except:

(i) In small purchases using small purchase procedures;

(ii) When the procuring contracting officer knows that the item being procured does not contain jewel bearings;

(iii) When quantity requirements, quality standards, or delivery requirements cannot be satisfied by bearings manufactured by the plant;

(iv) For jewel bearings used in items that are to be procured by a DOD activity outside the United States and the procured items are intended for use outside the United States, its possessions, and Puerto Rico; or

(v) When the urgency of the military requirement for all or part of a procurement of a jeweled item is such that delivery of prefabricated end items offers the best possible solution. The required source provision will apply to any quantity in excess of the prefabricated items specified for immediate delivery.

(3) Whenever it is necessary to redesign or re-engineer jeweled items in the Federal Supply Classes and Groups cited in paragraph (d) of this section to satisfy military performance requirements, the contractors or subcontractors who manufacture the jeweled items shall be required to use military standard jewel bearings in the redesign. The only exception to this requirement will be when the dimensional tolerances or configurations of military standard jewel bearings are such that their use in the product would prevent attainment of the required level of performance specified for the item. When one or more nonstandard bearings must be used to satisfy performance requirements of the jeweled product but military standard bearings will function satisfactorily for other applications within the same item, the item will be required to be redesigned to provide for the use of military standard bearings in such "other" applications. However, in

no case shall a contractor or subcontractor be required to redesign a jeweled item solely for the purpose of converting from the use of nonstandard to military standard jewel bearings. This is not intended to prevent any military contractor or subcontractor from voluntarily redesigning a jeweled item solely to accommodate the use of military standard bearings. Such voluntary redesign may be economically advantageous due to the lower unit price of military standard bearings from the plant.

(4) The plant may reject a contractor's or subcontractor's purchase order due to currently outstanding, excessive and overdue indebtedness to the plant by such customer. The plant is required to refuse shipments against purchase orders whenever shipments would increase the indebtedness of a customer beyond a credit limit which may have been set by the General Services Administration. Rejection by the plant of a contractor's or subcontractor's purchase order, or refusal to ship against an accepted purchase order under these circumstances will not be considered justification for a waiver of the purchase requirement and adjustment in the contract price as specified in paragraph (b) of the contract clause in § 7.104-37 of this chapter. In the event the contractor or subcontractor whose purchase order is rejected or to whom shipments are refused for the foregoing reasons, and the customer and the management of the plant are in disagreement on whether such indebtedness actually exists or the amount of such indebtedness, the Government will require the plant to accept the contractor's purchase order and to make shipments against such purchase order on a "cash-on-delivery" (c.o.d.) basis for each lot shipped. If necessary, arrangements can be made with the PCO for "progress payments" by the Government to finance the c.o.d. requirements. Such measures will be independent of and have no effect on the final disposition of the alleged indebtedness or controversy between the contractor and management of the Langer plant.

(5) The cost differential between Langer-made bearings and imported bearings shall not be used as justification to avoid the purchase and use of bearings from the plant.

(6) Subsequent to award of a contract which includes the clause, the ACO will waive the "use" requirement of the