Code of Federal Regulations: 1949-1984

(d) "U.S. end product" means an unmanufactured end product which has been mined or produced in the United States, or an end product manufactured in the United States if the cost of its components which are mined, produced, or manufactured in the United States exceeds 50 percent of the cost of all its components. The cost of components shall include transportation costs to the place of incorporation into the end product and, in the case of a component of foreign origin, duty (whether or not a duty free entry certificate may be issued). A component shall be considered to have been mined, produced, or manufactured in the United States (regardless of its source in fact) if the end product into which it is incorporated is manufactured in the United States and the component is of a class or kind determined by the procuring agency not to be mined, produced, or manufactured in the United States in sufficient and reasonably available commercial quantities and of a satisfactory quality.

(e) "Foreign end products" means those other than U.S. end products.

(f) "Domestic cost" means the total estimated or actual cost of U.S. end products and services, including all transportation and handling charges.

(g) "Foreign cost" means the total estimated or actual cost of foreign end products and services, including all transportation and handling charges.

(h) "U.S. services" means those that are performed within the United States. In some instances, services provided under a single contract are performed partially in the United States and partially abroad. Such services shall be considered U.S. services if 25 percent or less of the total cost of the services is attributable to services (including incidental supplies used in connection therewith) performed outside the United States.

(1) "Foreign services" means those other than U.S. services.

(j) "Excess and near-excess foreign currencies" means those currencies of other countries held by the United States in amounts determined by the Secretary of the Treasury to be "excess" to the foreseeable, or above the immediate (near-excess), requirements of the U.S. Government, as publicized to U.S. agencies by Bureau of the Budget bulletins.

§ 1-6.803

Deviations from evaluation and preference procedures.

(a) The evaluation and preference procedures for U.S. end products and services, as described in this subpart, reduce overseas dollar expenditures resulting from agency procurement at an acceptable increase in budgetary costs. However, this result is an average and overall result rather than one which precisely obtains in each case, because, for reasons of administrative practicability, items are considered absolutely as "foreign" or "domestic" and varying degrees within each class are not recognized.

(b) In some cases, consideration of items on such an absolute basis does not produce a satisfactory result. Accordingly, deviation from the evaluation procedures or from the definitions of "U.S. end product" (see §§ 1-6.802 and 1-6.8064) should be considered for major procurements (e.g., over $250,000) where it is anticipated that the low domestic bid will involve relatively substantial expenditures for foreign components in the end product offered or that the low foreign bid will involve relatively substantial expenditures for domestic components in the end product offered. In such cases, agencies should determine whether an award based on the domestic end product offered would produce a sufficient balance of payments advantage to warrant the resulting increased cost of procurement.

(c) A request for a deviation should be made sufficiently in advance of the solicitation to describe the evaluation procedure that will be used. The deviation should be approved by the head of the agency or his designee.

§ 1-6.804 Policy.

(a) Wherever feasible, excess foreign currencies (see Bureau of the Budget Circular No. A-20) shall be used for the procurement of articles, materials, supplies, and services for use outside the United States. Contracts for such procurements may also provide for payment in both local currency and dollars if the dollar portion is limited to the contractor's validated direct dollar costs of the U.S. export content of these procurements.

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

(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 determinations 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 filled by a foreign end product or service, and that it is not feasible to forego filling 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 or services are available, the domestic cost is est!mated 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 procedures. 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 foreign 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.

[32 FR 5622, Apr. 6, 1967, as amended at 40 FR 44140, Sept. 25, 1975] § 1-6.806

Procedures.

§ 1-6.806-1 Restricted solicitation.

(a) In the case of procurements other than those referred to in §§ 1-6.804(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 solicitation shall be restricted to U.S. end products and services.

(b) If 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.

§ 1–6.806–2 Method of purchase.

Contracts in furtherance of this Subpart 1-6.8 are considered to be negotiated procurements and may be entered into by conventional negotiation or by special method of negotiated procurement knows as "Balance of Payments Restricted Advertising." Within the United States, the latter method shall be used wherever possible. Balance of Payments Restricted Advertising, including awards thereunder, shall be conducted in the same manner as prescribed for formal advertising in Part 1-2 of this chapter, except that bids and awards shall be restricted to U.S. end products and services. Contracts entered into pursuant to conventional negotiation shall cite exceptions (2) through (15) of 41 U.S.C. 252(c), as appropriate. Where such negotiation authority is not applicable or where contracts are entered into pursuant to the Balance of Payments Restricted Advertising method of procurement, 41 U.S.C. 252(c) (1) shall be cited as negotiation authority. Invitations for bids and requests for proposals shall clearly designate items being procured pursuant to the Balance of Payments Program.

To the extent that the Government specifles that the items being purchased are in Implementation of the Balance of Payments Program, the bidder or offeror hereby certifies that each such item is a .8. end product or comprises U.S. services (as defined in the contract clause entitled "U.S. Products and Services (Balance of Payments Program)"), and that components of unknown origin have been considered to have been mined, produced, or manufactured outside the United States.

§ 1-6.806-4 Contract clause.

The clause set forth below shall be inserted in contracts resulting from

Balance of Payments Program procurements.

U.S. PRODUCTS AND SERVICES (BALANCE OF PAYMENTS PROGRAM)

(a) To the extent that the Government specifies that the items being purchased are in implementation of the Balance of Payments Program, the Contractor agrees that there will be delivered or performed under this contract only U.S. end products or US. services.

(b) For the purpose of this clause:

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

(2) "End products" means those articles, materials, and supplies which are acquired under this contract for public use;

(3) "U.S. end product” means: (1) An unmanufactured end product which has been mined or produced in the United States; or

(11) An end product manufactured in the United States, if 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 purpose of this subparagraph, components of foreign origin of the same type and kind which the Government determines are not mined, produced, or manufactured in sufficient and reasonably available commercial quantities and of satisfactory quality shall be treated as components mined, produced, or manufactured in the United States. (4) "U.S. services" means those that are performed within the United States. In some instances, services provided under single contract are performed partially in the United States and partially abroad Such services shall be considered U.S. services if 25 percent or less of the total cost of the services is attributable to services (including incidental supplies used in connection therewith) performed outside the United States.

Subpart 1-6.9-[Reserved]

Subpart 1-6.10—Omission of the Examination of Records Clause From Contracts With Foreign Contractors

SOURCE: The provisions of this Subpart 1-6.10 appear at 34 F.R. 6844, Apr. 24, 1969, unless otherwise noted.

§ 1-6.1000 Scope.

This subpart sets forth policies and procedures for omitting the Examination of Records clause from contracts with foreign contractors and foreign subcontractors where agencies desire to omit such clause under the authority granted in section 304 (c) of the Federal Prop

erty and Administrative Services Act of 1949, as amended.

§ 1-6.1001

Statutory requirements.

(a) In accordance with section 304 (c) of the Federal Property and Administrative Services Act of 1949, as amended (41 U.S.C. 254 (c)), the Examination of Records by Comptroller General clause (see § 1-7.103-3) may be omitted from negotiated contracts and subcontracts with foreign contractors and foreign subcontractors.

(1) Where the head of the agency determines, with the concurrence of the Comptroller General or his designee, that omission of the clause will serve the best interests of the United States; or

(2) Where (i) the contractor or subcontractor is a foreign government or agency thereof, or is precluded by the law of the country involved from making its books, documents, papers, or records available for examination; and (ii) the head of the agency determines, after taking into account the price and availability of the property or services from U.S Sources, that the public interest would best be served by the omission of the clause.

(b) A determination by the head of the agency under paragraph (a)(2) of this § 1-6.1001 does not require the concurrence of the Comptroller General or his designee. However, where a determination by the head of the agency under paragraph (a) (2) of this § 1-6.1001 is the basis for omission of the Examination of Records clause, the statute requires that а written report be furnished to the Congress. This report, which shall explain the reasons for the determination, shall be prepared and forwarded to the Congress in accordance with agency procedures.

[34 FR 6844, Apr. 24, 1969, as amended at 41 FR 19313, May 12, 1976]

§ 1-6.1002 Policy.

The Examination of Records clause shall be included where possible. Omission of the clause should be allowed only after the contracting agency has made all reasonable efforts to include the clause and has considered such factors as alternate sources of supply, additional cost, and time of delivery. "Foreign contractor" for the purposes of this Subpart 1-6.10 is defined as "one that is organized or existing under the laws of a country other than the United States" (see § 1-6.101(c)).

§ 1-6.1003 Requests for determinations and findings.

A request for a determination and findings to omit the Examination of Records clause (see § 1-3.302) ordinarily will be initiated by the contracting officer. The request shall consist of a letter submitted through normal procurement channels, addressed to the head of the agency, setting forth all the facts necessary to arrive at an appropriate determination and findings. The power of the agency head to make such a determination is not delegable (see § 1-3.303).

§ 1-6.1004 Determinations and findings.

The determinations and findings by the head of an agency authorizing the omission of the Examination of Records clause from a contract with a foreign contractor or foreign subcontractor shall:

(a) Identify the contract or subcontract and its purpose, and state that it is a contract or subcontract with a foreign contractor or foreign subcontractor, or that the contractor or subcontractor 8 foreign government or agency thereof;

(b) Describe the efforts that have been made to include the clause in the contract or subcontract:

(d) Describe the price and availability of the property or services from United States and other sources; and

(e) Determine, as appropriate, (1) that the omission of the clause will serve the best interests of the United States, or (2) that the public interest would be best served by the omission of the clause, pursuant to the provisions of section 304 (c) of the Federal Property and Administrative Services Act of 1949, as amended (41 U.S.C. 254(c)), (see § 1-6.1001).

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