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of this g 1-6.104-4 may be authorized by dane prescribed in $ 1-6.104-5(a) when product"

(d) Deviations from the requirements the agency" may be substituted in the the head of the agency in accordancta contract does not contain the clause with the Buy American Act and Execu-111-1.102-1.

(a) The following clause shall be in 46.105 Excepted articles, materials, in contracts for services involving fure Determinations under $ 1-6.103–2 that nishing supplies; except that it need not stain articles, materials, and supplies articles, materials, and supplies for use bulbured in the United States in suffi

Sibopart 1-6.2—Buy American Act- plies to be (111) A "domestic source end product'

Borek: The provisions of this Subpart Virgin Isla

He appear at 32 F.R. 6622, Apr. 6, 1967,

the appropriate factor shall be applied on Taited States and (B) an end product manu $ 1-6.800 an item-by-item basis, except that the fetared in the United States 11 the cost of factor may be applied to any group of

the components thereof which are mined, This su

produced, or manufactured in the United Items as to which the invitation for bids

procedure

States exceeds 50 percent of the cost of all of articles or request for proposals specifically pro

is components. For the purposes of this vides that award is to be made on & par

ices (othe

(1) (W) (B), components of foreign origin ticular group of items.

U.S.-flag

d the same type or kind as the products (c) Proposed awards shall be submit slerred to in (b) (11) or (111) of this clause

United si ted, in accordance with agency proce hall be treated as components mined, pro

Balance o dures, to the agency head for decision toed, or manufactured in the United States. where:

(b) The Contractor agrees that there will

$ 1-6.801

dellvered under this contract only (1) Rejection of an acceptable low for

meste source end products, except end

The po eign bid is considered necessary to pro

subpart p tect essential national security interests

,

Which are for use outside the United near exce such as maintenance of a mobilization

flect the base. Prior to rejection of bids or offered

(H) Which the Government determines dent's Cal prices on the grounds that such rejection

un set mined, produced, or manufactured
the Unlted States in sufficient and reason-

Payments is necessary to protect essential national

bly stallable commercial quantities and

Agency fc security interests, advice shall be ob

all Federe tained from the President or Director, dostlsfactory quality:

(6) As to which the Secretary deter

abroad sh Office of Emergency Planning. (2) Rejection of any bid or proposal that ith the public interest; or

miss the domestic preference to be incon.

mestic ma

of domest for other reasons of the national Interest

(6

) As to which the Secretary deteris considered necessary. However, infor

the cost to the Government to be

50 percen

materials mation concerning rejection of bids or offered prices for reasons of the national

pected to interest not described or referred to in

Istrative p Executive Order No. 10582 shall be fur.

more resti nished to the Executive Office of the

procureme President, Bureau of the Budget.

out this d

Order No tive Order No. 10582, as amended.

nized that § 1-6.104–5 Contract clause.

this defini

ceptional serted in all contracts for supplies and

§ 1-6.802

As used inserted in contracts

terms hav

§ 1-6.802. outside the United States or which are

(a) "E of Panamanian origin for use in the

materials, Canal Zone: BUY AMERICAN ACT SUPPLY AND SERVICE

contract, CONTRACTS

to be del (a) In acquiring end products, the Buy

specified i American Act (41 U.S. Code 108-10d) provides that the Government give preference to domestic source end products. For the pur pose of this clause:

(1) "Components" means those articles, materials, and supplies which are directly incorporated in the end products;

(11) "End products" means those articles materlals, and supplies which are to be ac quired under this contract for public use; and means (A) an unmanufactured end product which has been mined or produced in the

De foregoing requirements are ad-
istered in accordance with Executive
hele No. 10582, dated December 17, 1954.)
) Where the term “secretary" is in-
aplicable to the agency, the term "head abroad, It

foll

Construction Contracts

for public contracts,

other serv Se Subpart 1-18.6 for implementation livery. the Buy American Act with respect

(b) "CC cles, mate directly ir

(c) "Ur

ject to tl States.

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United States and (B) an end product manufactured in the United States 11 the cost of the components thereof which are mined, produced, or manufactured in the United States exceeds 50 percent of the cost of all Its components. For the purposes of this (a) (111) (B), componen of foreign origin of the same type or kind as the products referred to in (b) (11) or (111) of this clause shall be treated as components mined, produced, or manufactured in the United States.

(b) The Contractor agrees that there will be delivered under this contract only domestic source end products, except end products:

(1) Which are for use outside the United States;

(11) Which the Government determines are not mined, produced, or manufactured in the United States in sufficient and reasonably avallable commercial quantities and of a satisfactory quality:

(11) As to which the Secretary determines the domestic preference to be incon. sistent with the public interest; or

(10) As to which the Secretary determines the cost to the Government to be unreasonable.

(The foregoing requirements are administered in accordance with Executive Order No. 10582, dated December 17, 1954.)

(b) Where the term "secretary" is inapplicable to the agency, the term “head of the agency” may be substituted in the clause prescribed in § 1-6.104–5(a) when the contract does not contain the clause In § 1-7.102–1. (29 FR 10189, July 24, 1964, as amended at 38 FR 6670, Mar. 12, 1973) § 1-6.105 Excepted articles, materials,

and supplies. Determinations under $ 1-6.103-2 that certain articles, materials, and supplies are not mined, produced, or manufactured in the United States in sufficlent and reasonably available commercial quantities and of a satisfactory quality shall be made by each agency in accordance with agency procedures. Subpart 1-6.2–Buy American Act

Construction Contracts § 1-6.201 Cross-reference.

See Subpart 1-18.6 for implementation of the Buy American Act with respect to construction contracts. (33 F.R. 14287, Sept. 21, 1968] Subpart 1-6.8—Balance of Payments

Program SOURCE: The provisions of this subpart 1-0.8 appear at 32 F.R. 6622, Apr. 6, 1987. unless otherwise noted.

$ 1-6.800 Scope.

This subpart prescribes policies and procedures applicable to the procurement of articles, materials, supplies, and seryices (other than construction and use of U.S.-flag vessels) for use outside the United States in order to further the Balance of Payments Program. § 1-6.801 General.

The policies and procedures in this subpart provide for the use of excess and near excess foreign currencies and reflect the recommendation of the President's Cabinet Committee on Balance of Payments that, with the exception of the Agency for International Development, all Federal agencies procuring for use Abroad should, in general, procure domestic materials unless the delivered cost of domestic materials is estimated to be 50 percent greater than the cost of Uke materials of foreign origin. AID is expected to follow this policy on its administrative procurement only. continuing its more restrictive buying policies on other procurement. For purposes of carrying out this decision on procurement for use abroad, it is suggested that agencies generally follow the definition of "domestic product" which is provided in Executive Order No. 10582, although it is recognized that some flexibility in the use of this definition may be warranted in exceptional circumstances. § 1-6.802 Definitions.

As used in this subpart, the following terms have the meanings set forth in this § 1-6.802.

(a) “End products" means articles. materials, and supplies, which are to be acquired for public use As to a given contract, the end products are the items to be delivered to the Government, as specified in the contract, including supplies to be acquired by the Government for public use in connection with service contracts, but excluding installation and other services to be performed after delivery.

(b) "Components” means those articles, materials, and supplies, which are directly incorporated into end products

(c) "United States” means the States, District of Columbia, Puerto Rico, American Samoa, the Canal Zone, the Virgin Islands, and any other place subject to the jurisdiction of the United States.

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neden cost exceeds 50 percent of the

artid to the head of the agency or his olic Contracts, Property Management Chapter 1-Federal Procurement Regulations § 1-6.803 Deviations from evaluation

vided in 1-6.805, proposed procurement purchased and preference procedures.

d'articles, materials, supplies, and sery- ments sha (a) The evaluation and preference les for use outside the United States dollars wil procedures for U.S. end products and shall be restricted to U.S. end products validated services, as described in this subpart, re and services.

export cor duce overseas dollar expenditures result (e) Procurements shall not be broken excess or ing from agency procurement at an ac into several separate smaller procure Is avallabi ceptable increase in budgetary costs. ments for the purpose of bringing the ments in However, this result is an average and wirddual amounts of such procurements practicabl overall result rather than one which within the dollar limitations of the ex (7) Wh precisely obtains in each case, because, estons in $1-6.805 which permit the from the for reasons of administrative practicabll.

rocurement of foreign items.

"near-exco
aty, Items are considered absolutely as

(8) Wh
foreign" or "domestic" and varying de-
grees within each class are not recog.

services h
nized.

regulation
(b) In some cases, consideration of

(b) Cor
Items on such an absolute basis does not
produce a satisfactory result. Accord-
Ingly, deviation from the evaluation pro-
cedures or from the definitions of "U.S.
end product” (see 88 1-6.802 and 1-6.806–

) should be considered for major pro-
curements (e.g., over $250,000) where it
Is anticipated that the low domestic bid
vill involve relatively substantial ex-
penditures for foreign components in the
end product offered or that the low for-
eign bid will involve relatively substan-
cial expenditures for domestic compo-
ments in the end product offered. In
such cases, agencies should determine
vhether an award based on the domestic
end product offered would produce a
sufficient balance of payments advan-
cage to warrant the resulting increased
cost of procurement.

(c) A request for a deviation should
be made sufficiently in advance of the
-olicitation to describe the evaluation
procedure that will be used. The devia-
ion should be approved by the head of
-he agency or his designee.
51-6.804 Policy.

(a) Wherever feasible, excess forelg
urrencies (see Bureau of the Budget
Circular No. A-20) shall be used for the
rocurement of articles, materials, sup-
les, and services for use outside the
United States. Contracts for such pro-
urements may also provide for payment

both local currency and dollars if the Lollar portion is limited to the contracr's validated direct dollar costs of the U.S. export content of these procurenents.

(b) When use of excess currencies is Sund not feasible, and except as pro

ing procul
of this s
requiring
contract fi
132 FR 562
FR 44140, S
81-6.806
8 1-6.806

(a) Int
than thos
and 1-6.8
is estimate
mates of 1
products a
to solicita
cures for
agency sh

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[Reserved]
Where, in connection with the
prarement of perishable subsistence
as it is determined that delivery from
be United States would destroy or sig.
Hantly impalr their quality at the
pilot of consumption. Such determi.

atlons shall be made by each agency in
wsrdance with agency procedures.

Where it is determined, in accord-
be with agency procedures, that a re-
perment can only be filled by a foreign If the dor
sa product or service, and that it is not ceed the 1
kable to forego filling the requirement 50 percent
to provide a U.S. substitute for the tation sho

products a
Where, with respect to procure (b) If
tents other than those covered in para of proposa
Plughs (a) (1) through (8) of this sec ing officer
In us. end products or services cost excee
evailable, the domestic cost is esti-
sted not to exceed $10,000, and the

50 percen
terence between
the domestic cost and

proceed as
lorelgn cost is determined to be so

(1) Wh as to make procurements of foreign

excess of to the hea for determ

(2) Wh excess of for U.S. e the domes

se products and services clearly desir

Such determinations shall be
in accordance with agency proce-

Where the domestic cost is esti-
Belted to exceed $10,000, and the differ-
te between the domestic cost and the Is so large

of foreign
elan cost, the matter shall be for- ly desirab
selerage for determination. In either and a no

et the agency determines that the (c) If t.
worden end product or service shall be forelgn er

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. doo valuatori Jtlons d' 12 and 14 or materi ,000) The domesti abstanta! ponents t the lo Ively mestic offered ald deler

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vided in § 1-6.805, proposed procurement of articles, materials, supplies, and serve ices for use outside the United States shall be restricted to U.S. end products and services.

(c) Procurements shall not be broken into several separate smaller procurements for the purpose of bringing the individual amounts of such procurements within the dollar limitations of the exceptions in § 1-6.805 which permit the procurement of foreign items. 8 1-6.805 Exceptions.

(a) Foreign end products and services may be procured, without regard to the provisions of $$ 1-6.804 and 1-6.806, as follows:

(1) Where required to be made in accordance with a treaty or international agreement.

(2) Where the estimated cost of the product does not exceed $10,000.

(3) [Reserved]

(4) Where, in connection with the procurement of perishable subsistence Items, it is determined that delivery from the United States would destroy or sig. nificantly impair their quality at the point of consumption. Such determi. nations shall be made by each agency in accordance with agency procedures.

(5) Where it is determined, in accordance with agency procedures, that a requirement can only be Alled by a foreign end product or service, and that it is not feasible to forego Alling the requirement or to provide a U.S. substitute for the requirement.

(6) Where, with respect to procurements other than those covered in paragraphs (a)(1) through (8) of this section, U.S. end products services are available, the domestic cost is estimated not to exceed $10,000, and the difference between the domestic cost and the foreign cost is determined to be so large as to make procurements of foreign end products and services clearly desirable. Such determinations shall be made in accordance with agency proce. dures. Where the domestic cost is estimated to exceed $10,000, and the difference between the domestic cost and the foreign cost exceeds 50 percent of the foreign cost, the matter shall be forwarded to the head of the agency or his designee for determination. In either case, if the agency determines that the forelgn end product or service shall be

purchased, contracts for such procurements shall provide that the payment in dollars will be limited to the contractor's validated direct dollar costs of the U.S. export content of the procurement where excess or near-excess foreign currency is available and such a limitation on payments in dollars is considered to be practicable.

(7) Where procurements are financed from the Treasury Department supply of "near-excess" foreign currencies.

(8) Where individual products or services have been excepted by agency regulations.

(b) Complete documentation justifying procurements under paragraph (a) of this section shall be prepared by requiring activities and included in the contract file. 132 FR 5622, Apr. 6, 1967, as amended at 40 FR 44140, Sept. 25, 1975) 8 1-6.806 Procedures. § 1-6.806–1 Restricted solicitation.

(a) In the case of procurements other than those referred to in $81-6.804(a) and 1-6.805, where the domestic cost is estimated to exceed $10,000, cost estimates of United States and foreign end products and services shall be made prior to solicitation (where one agency procures for another agency the requiring agency shall make the cost estimate). If the domestic cost is estimated to exceed the foreign cost by not more than 50 percent of the foreign cost, the solicia tation shall be restricted to U.S. end products and services.

(b) It after bid opening, or receipt of proposals or quotations, the contracting officer has knowledge that domestic cost exceeds foreign cost by more than 50 percent of the foreign cost, he shall proceed as follows:

(1) Where the domestic cost is in excess of $10,000, forward the matter to the head of the agency or his designee for determination; or

(2) Where the domestic cost is not in excess of $10,000, award the contract for U.S. end products or services unless the domestic and foreign cost differential is so large as to make the procurement of foreign end products or services clearly desirable. Should the latter be the case, the solicitation shall be canceled and a nonrestricted solicitation issued.

(c) If the agency determines that the foreign end product or service shall be

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contractor and the contracting officer's au- sold in substan
thorized representatives, Interim G&A rates public, or (b)
were established, based on the net balance of tion.
allowable G&A costs. Application of the rates
negotiated to proposals

, and on an interim $40620 Purpo
basis to bilings, for covered contracts con The purpose
stilates compliance with the standard.

Standard is to (e) An official of a company, whose sal

tion of the tin 17, travel, and subsistence expenses are

accounting peri charged regularly as general and administra

ing, accumulati tre (G&A) expenses, takes several business

ard will reduce
associates on what is clearly a business enter-

the flow of cost
tainment trip. The entertainment costs of
sich trips is expressly unallowable because

period. It will
i constitutes entertainment expense, and is

sistency, and v separately identified by the contractor. The

formity and cc
contractor does not regularly include his

measurements.
GkA expenses in any indirect-expense alloca $ 406.30 Defin
tion base. In these circumstances, the off) -
clal's travel and subsistence expenses would

(a) The foll
be directly associated costs for identification

prominent in from Part 400 lence. Other te standard and a chapter have to

Hve regulations. If manufacturing overis regularly a part of the contractor's for allocation of general and adminise (G&A) or other indirect expenses, the actor must allocate the G&A or other ect expenses to contracts and other final objectives by means of a base which des the identified unallowable manufacg overhead costs. 7 TO LORD

An auditor recommends disallowance e total direct Indirect costs attributable

organizational planning activity. The actor claims that the total of these ity costs are allowable under the Armed ces Procurement Regulation as "Ecoc Planning Costs" (ASPR 15-205.47) - Note: Comparable section in the FPR 15.205.47); the auditor contends that constitute "Organization Costs" (ASPR 5.23) (FPR Note: Comparable section ne FPR is 1-15.205.23) and therefore are lowable. The issue is referred to the racting officer for resolution pursuant he contract disputes clause. The coneing officer Issues a written decision suping the auditor's position that the total

questioned are unallowable under the lation. Following receipt of the contractofficer's decision, the contractor must tify the disallowed costs and specific r costs incurred for the same purpose ke circumstances in any subsequent esting, cost accumulation or reporting for ernment contracts, in which such costs Included. If the contracting officer's den had supported the contractor's conion, the costs questioned by the auditor ld have been allowable "Economic Plan

Costs," and the contractor would not e been required to provide special idenation. 1) A defense contractor was engaged in cogram of expansion and diversification orporate activities. This involved internal orate reorganization, as well as mergers

acquisitions. All costs of this activity e charged by the contractor as corporate segment general and administrative A) expense. In the contractor's proposals Anal segment G&A rates (including cor. Bte home ofice allocations) to be applied letermining allowable costs of its defense tracts subject to section XV, Part 2, of Armed Services Procurements Regulation R Note: Comparable reference in the

Is Subpart 1–15.2), the contractor idened and excluded the expressly unallowable Es (as listed in ASPR 15--205.23) (FPR e: Comparable section in the FPR 18 5.205.23) incurred for incorporation fees

for charges for special services of outside orneys, accountants, promoters, and con. tants. In addition, during the course of cotiation of interim bidding and buling A rates, the contractor agreed to classity unallowable various in-house costs in. red for the expansion program, and varl- directly associated costs of the identii

unallowable costs. On the basis of gotiations and agreements between the

with the unallowable entertainment expense. Honeter, unless this type of activity constibuted a significant part of the official's regtar duties and responsibilities on which his

in that part ur salary was based, no part of the official's sal

ferent definitio ity would be required to be identified as a

in paragraph (t directly associated cost of the unallowable

(1) Allocate. entertainment expense.

or & group of 14570 Exemptions.

cost objectives. Sone for this standard.

rect assignmer

ment of a shar 145.80 Efective date.

(2) Cost obi April 1, 1974

tional subdivis FR31813, Nov. 19, 1973)

unit for which

which provision 11-3.1220–6 Cost accounting period.

measure the co Part 406–COST ACCOUNTING STANDARD--Cost

capitalized pro ACCOUNTING PERIOD

(3) Fiscal ye which annual ularly prepare months, 52 we

(4) Indirect
cured costs Ide
jectives but nc
any final cost

(b) The folle
tions set forth
applicable: Nor
$406.40 Fundo

48.10 General applicability.
2) Purpose.
11830 Definitions.
48.40 Fundamental requirement.
$850 Techniques for application.
$Illustrations.
4870 Exemptions
y Elective date.
AUTHORITY: Sec. 719, Defense Production
best of 1950, as amended (Pub. L. 91-379, 50
T&C. App. 2168)

(a) A contra

his cost accoui Source: 38 FR 30730, Nov. 7, 1973 unless

(1) Costs of therwise noted.

exists for only 196.10 General applicability.

period may be This standard shall be used by defense

that same part
bontractors and subcontractors under Fed-

$ 406.50(a).
tal contracts entered into after the effec (2) An annu
the date bereof and by all relevant Fed-

year may, as pr
mal agencies in estimating, accumulating,

as the cost acco A reporting costs in connection with the

established pra pricing, administration, and settlement of

(3) A transi negotiated prime contract and subcon other than a y het national defense procurements with

change of fisca han contracts or subcontracts where the

(4) Where a were negotiated Is based on: (a) Established

period is differ stalog or market prices of commercial Items

required by Rei

the latter may 247

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