consistent with the above policy. The list of categories of work will be included as an Attachment to the Bid Form, SF 21. (d) The requirement to list subcontractors may be excluded when it would be clearly inappropriate, for example, if the invitation involves work of only one category. Determinations to exempt from the requirement shall be made by the contracting officer and shall be documented and the record retained in the contract file. There is no authority in the contracting bureau, office or officer to require listing of subcontractors as to projects which do not exceed $150,000.

(e) Nothing in this directive shall be interpreted to require the listing, at any time, of any subcontractor below the first tier. However, in order to provide protection to subcontractors below the first tier and to suppliers and labor, each bureau and office is hereby authorized, through its contracting officers and in their discretion, to require first tier subcontractors to provide payment bonds to the prime contractor.

(f) The contracting officer may permit substitution of an subcontractor for one named in a bid pursuant to the Listing of Subcontractors provision in unusual situations, upon submission by the contractor or bidder of a complete justification therefor. The term "unusual situations" includes (but is not limited to) a subcontractor's

(1) Death or physical disability, if the named subcontractor is an individual. (2) Dissolution, if a corporation or partnership.

(3) Bankruptcy.

(4) Inability to furnish a reasonable performance and payment bond.

(5) Inability to obtain, or loss of, a license necessary for the performance of the particular category of work.

(6) Failure or inability to comply with a requirement of law applicable to contractors, subcontractors, or construction, alteration, or repair projects.

(7) Failure or refusal to execute the subcontract in accordance with the terms of an offer submitted to the contractor or bidder prior to the latter's submission of his bid, but only where the contracting officer can ascertain with reasonable certainty the terms of such offer. In the absence of any other factors, such a failure or refusal will be considered an unusual situation only if the bidder obtained, prior to bidding, an enforceable commitment from the subcontractor involved.

(8) Failure to meet any criteria of responsibility set out in § 1-1.310-5, but only when the contracting officer, in the exercise of sound discretion, finds that substitution for this cause would be in the best interests of the Government (Le., that it would not be prejudicial to the rights of other bidders and that the contractor or bidder has not attempted to circumvent the restraint on bid shopping by listing a nonresponsible subcontractor in order to gain an opportunity to bid shop prior to making the requested substitution).

(9) Failure to meet the qualifications requirements of an applicable Specialist or Competency of Bidder clause, but only when the contracting officer, in the exercise of sound discretion, after discussion with the contractor or bidder and, if appropriate, the named subcontractor, finds that substitution for this cause would be in the best interests of the Government as specified in subparagraph (8) of this paragraph.

Where the contracting officer ascertains that a proposed substitution is justified, the substitution shall be authorized at no increase in the bid or contract price, or, if the proposed substitute offers the contractor or bidder a lower price than the named subcontractor, at a reduction in the bid or contract price.

(g) The clause titled “Listing of Subcontractors" set forth below shall be inserted in the contract at an appropriate location.

LISTING OF SUBCONTRACTORS

(a) For each of the categories of work contained in the list included as an attachment of the Bid Form, SF 21, the bidder shall submit the name and address of the firm to whom he proposes to subcontract the work to be performed on the site. Failure to submit the list by the time set for bid opening shall cause the bid to be considered nonresponsive except in accordance with Instruction No. 7 of the Instructions to Bidders (Standard Form 22). Except as otherwise provided herein, the successful bidder agrees that he will not have any of the listed categories of work involved in the performance of this contract performed by any subcontractor other than the subcontractor named for the performance of such work.

(b) The term "subcontractor" for the purposes of this requirement shall mean an individual or firm who performs active duties on the work site, involving (1) construction, (2) fabrication and/or installation of materials or items of equipment in connection with one or more of the categories of work contained in the list of subcontractors included as part of the Bid Form and shall not

include suppliers unless the supplier and installer are one individual or firm by reason of construction practice.

(c) The bidder shall list himself for each of those listed categories of work which he intends to perform. In such instances all personnel performing such work shall be carried on his own payroll. Equipment may be self-owned or leased. If more than one subcontractor will perform a single category of work, the portion to be performed by each shall be specified.

(d) Nothing contained in this clause shall be construed as changing any provisions in the contract requiring the contractor to perform work with his own forces.

(e) The contractor shall be responsible for all work performed by subcontractors.

(f) No additions to or substitutions for the firms named will be permitted except in unusual situations and then only upon the submission in writing to the Contracting Officer of a complete justification therefor and receipt of the Contracting Officer's written approval. In the event the Contracting Officer finds that substitution is not justified, the Contractor's failure or refusal to proceed with the work by or through the named subcontractor shall be grounds for termination of the contract under the provisions of Clause 5 of the General Provisions.

(g) Notwithstanding any of the provisions of this clause, the Contracting Officer shall have authority to disapprove or reject the employment of any subcontractor he has determined nonresponsible. He shall have the right to require any information and supporting evidence he may deem relevant and necessary in connection with the approval or disapproval of a request for substitution and the appropriate adjustment of the contract price in the event substitution is approved, including but not limited to certified copies of the original worksheets used in the preparation of the bid on the prime contract, certified copies of the offers submitted to the successful bidder by the named subcontractor and the proposed substitute, and affidavits as to the circumstances relating to the request for substitution or the estimated cost of performance by any subcontractor named or proposed as substitute. The Contractor's failure or refusal to proceed with the work by or through a named subcontractor after failing or refusing for any unreasonable period of time to furnish information and supporting evidence as required by the Contracting Officer in connection with a request for approval for a substitution shall be grounds for termination under the provisions of Clause 5 of the General Provisions. Imposition of any requirements under this subparagraph shall not give rise to any cause of action against the Government by the successful bidder or by any subcontractor engaged or proposed to be engaged hereunder.

(h) Nothing contained in this clause shall in itself be construed to create any contract or property rights in the successful bidder or any subcontractor.

(1) In the event the bidder fails in connection with this bid (1) to identify the subcontractors as required by subparagraph (a), or (2) to comply with subparagraph (c) if the bidder himself intends to perform one or more listed categories of work, the bid will be rejected as nonresponsive to the invitation. Care should be taken to avoid omitting an entry of a name and address in each space opposite a designation of a category listed in the Attachment to Bid Form, SF 21.

(1) To promote the objectives of the foregoing provisions and to assure the timely receipt of accurate bids, the bidder is requested to urge all subcontractors intending to submit a proposal for work involved in the project to submit to all bidders to whom they intend to bid a written proposal (or written abstract) with or without price, outlining in detail the specific sections of the specifications to be included in their work as well as any exceptions or exclusions therefrom. It is suggested that such written proposal be submitted to the bidder at least 48 hours in advance of the bid opening.

§ 14-7.602-50 (2) Bonding of subcon

tractor.

The following clause may be used in fixed price construction contracts using Standard Forms 23: Construction Contract, and 23-A: General Provisions (Construction Contract).

BONDING OF SUBCONTRACTORS

(a) The prime contractor shall be responsible to assure that all work at the Jobsite which is subcontracted under these specifications shall be performed only by rellable and financially responsible subcontractors.

(b) For the purposes of this paragraph, the term "subcontractor" shall mean every party to whom a part of the contract may be sublet to perform construction, alteration, or repair work on the jobsite regardless of the tier in the chain of subcontractual relationships. The term "subcontractor" does not include suppliers or others not actually performing work at the jobsite.

(c) Except for subcontracts of $2,000 or less, the prime contractor shall require every subcontractor of whatever tier, as evidence of his reliability and financial responsibility, to furnish a payment bond in form and with a responsible surety thereon acceptable to the prime contractor in a penal sum of not less than 50 percent of the subcontract price to assure payment to all persons supplying labor, materials, or rental equipment to such subcontractor for either incorporation or consumption in the work covered by these specifications or in its performance.

(d) The obligee under the payment bond shall be the party who has let the subcontract. The bond shall give a right of action to those persons supplying such labor, materials, or rental equipment due to loss caused by the nonpayment of any and all

moneys owing on account thereof: Provided however, That written notice of such indebtedness is furnished to the prime contractor, the principal, and surety within 90 days, and suit therefor is initiated within 1 year, both periods to commence on the day on which the last of the labor, materials, or rental equipment were performed or furnished.

(e) At the time the prime contractor submits a copy of each subcontract as required under the Labor Standards Provisions, he shall also furnish to the contracting officer a copy of the payment bond.

(f) Nothing contained in this paragraph shall create any contractual relationship between any subcontractor and the Government.

The following clause may be used in fixed-price construction contracts using Standard Forms 23: Construction Contract, and 23A: General Provisions (Construction Contract). See § 14-7.154.

If the contractor disagrees with any direction, instruction, interpretation, or determination of the contracting officer, his authorized representative, or an inspector, he shall immediately ask, in writing, for a written decision from the contracting officer or his authorized representative. Upon receipt of the decision the contractor shall proceed without delay to comply therewith. Directions, instructions, interpretations, or determinations of the contracting officer or his authorized representative relating to drawings, samples, and literature shall be subject to the provisions of this clause. [34 F.R. 20348, Dec. 30, 1969]

§ 14-7.602-50 (4) Requirements for execution of surety bonds.

The following clause shall be used in fixed price construction contracts when the estimated cost of the construction is in excess of $2,000.

REQUIREMENTS FOR EXECUTION OF SURETY

as a minimum those requirements. Insert in the blank space of the clause the title of (1) the bureaus' and offices' own approved construction safety manual, (2) "Construction Safety Standards" of the Bureau of Reclamation,1 or (3) “Manual of Accident Prevention in Construction" (latest revised edition) of the Associated General Contractors of America, Inc.

(b) Additional safety requirements may be added to cover special circumstances.

(c) The clause below is prescribed for use in fixed price construction contracts. SAFETY AND HEALTH

(a) In order to protect the life and health of employees and other person; prevent damage to property, materials, supplies, and equipment; and to avoid work interruptions, the contractor shall, in the performance of this contract, comply with the applicable provisions of Federal, State, and municipal safety, health, and sanitation laws and codes.

(b) The contractor shall also comply with all pertinent provisions of the (----) published by the (----) and amendments thereto. The contracting officer shall notify the contractor, in writing, of any noncompliance and indicate to the contractor the action to be taken. The contractor shall, after receipt of such notice, immediately correct the conditions to which attention has been directed. Such notice, when served on the contractor or his representative(s) at the site of the work, shall be deemed sufficient.

(c) If the contractor fails or refuses to comply promptly with requirements, the contracting officer may issue an order to suspend all or any part of the work. When satisfactory corrective action is taken an order to resume work will be issued. No part of the time lost due to any such suspension order shall entitle the contractor to any extension of time for the performance of the contract or to excess costs or damages.

(d) The contractor shall maintain an accurate record of, and shall report to the contracting officer in the manner and on the forms prescribed by the contracting agency, all cases of death, occupational diseases, or traumatic injury arising out of or in the course of employment incident to the performance of work under the contract.

[33 F.R. 7432, May 18, 1968, as amended at 34 F.R. 6982, Apr. 26, 1969]

§ 14-7.602-50(6)(a) North Carolina sales and use tax.

The following clause is prescribed for use in all fixed price construction con

1 The publication referred to may be obtained from the Bureau of Reclamation, Office of Chief Engineer, Denver, Colo. Price $2.40.

tracts when the work is to be performed in the State of North Carolina.

NORTH CAROLINA SALES AND USE TAX

(a) As used throughout this clause, the term "materials" means buliding materials, supplies, fixtures, and equipment which become a part of or are annexed to any building or structure erected, altered, or repaired under this contract.

(b) If this is a fixed-price type contract as defined in the Federal Procurement Regulations, the contract price includes North Carolina sales and use taxes to be paid with respect to materials, notwithstanding any other provision of this contract. If this is a cost-reimbursement type contract as defined in such regulations, any North Carolina sales and use taxes paid by the contractor with respect to materials shall constitute allowable cost under this contract.

an

(c) At the time specified in paragraph (d) below:

(1) The contractor shall furnish the contracting officer certified statements setting forth the cost of the materials purchased from each vendor and the amount of North Carolina sales and use taxes paid thereon. In the event the contractor makes several purchases from the same vendor, such certified statement shall indicate the invoice numbers, the inclusive dates of the invoices, the total amount of the invoices and the North Carolina sales and use taxes paid thereon. Such statement shall also include the cost of any tangible personal property withdrawn from the contractor's warehouse stock and the amount of North Carolina sales or use tax paid thereon by the contractor. The contractor shall furnish such additional information as the Commissioner of Revenue of the State of North Carolina may require to substantiate a refund claim for sales or use taxes.

(11) The contractor shall obtain and furnish to the contracting officer similar certified statements by its subcontractors.

(d) If this contract is completed before the next July 1, the certified statements to be furnished pursuant to paragraph (c) above shall be submitted within 60 days after completion. If this contract is not completed before the next July 1, such certified statements shall be submitted on or before the 31st day of August of each year and shall cover taxes paid during the 12-month period which ended the preceding June 30. (e) The certified statements to be furnished pursuant to paragraph (c) above shall be in the following form:

I hereby certify that during the period to (name of contractor or subcontractor), paid North Carolina sales and use taxes aggregating $--with respect to building materials, supplies, fixtures, and equipment which have become a part of or annexed to a building or structure erected, altered, or repaired by (name of contractor) for the United States of America, and that the vendors from whom the proper

ty was purchased, the dates and numbers of the invoices covering the purchases, the total amount of the invoices of each vendor, the North Carolina sales and use taxes paid thereon, and the cost of property withdrawn from warehouse stock and North Carolina sales and use taxes paid thereon are as set forth in the attachments hereto.

§ 14-7.602-50(6)(b)

Texas limited

sales, excise, and use tax.

The following clause is prescribed for use in all fixed price construction contracts when the work is to be performed in the State of Texas:

This contract is issued by an organization which qualifies for exemption pursuant to the provisions of Article 20.04 (F) of the Texas Limited Sales, Excise, and Use Tax Act.

The contractor performing this contract may purchase, rent, or lease free of such tax all materials, supplies, and equipment used or consumed in the performance of this contract by issuing to his supplier an exemption certificate in lieu of the tax, said exemption certificate complying with State Comptroller's ruling No. 95-0.07. Any such exemption certificate issued by the contractor in lieu of the tax shall be subject to the provisions of the State Comptroller's ruling No. 95-0.09 amended to be effective October 2, 1968. [34 F.R. 199, Jan. 7, 1969]

as

§ 14-7.602-50(6)(c) Nebraska sales and use tax.

The following clause is prescribed for use in all fixed price construction contracts when the work is to be performed in the State of Nebraska.

(a) This contract is a construction contract which contains separate amounts applicable to the performance of the services and the furnishing of materials (including materials furnished by subcontractors) as defined in the Nebraska Revenue Act of 1967, as amended.

(b) The contractor has or shall obtain a Sales Tax Permit in accordance with "Rules and Regulations for Sales and Use Tax," published by the Nebraska State Tax Commissioner.

(c) If the contractor awards any subcontract under this contract, such subcontract (or subcontracts) shall also contain separate amounts applicable to the performance of services and the furnishing of materials.

(d) Notwithstanding any other provisions of this contract, the contract prices does not include any amount for Nebraska Sales and Use Tax on materials to be incorporated by the contractor (or subcontractor whose subcontract is prepared in accordance with (c) above) into the structure or improvement upon real estate. The Government agrees to furnish to the contractor appropriate tax exemption certificate or certificates as requested.

(e) When the contract is modified, the modification shall, if appropriate, separate the amount applicable to material to be incorporated into the structure or improvement upon real estate and the amount applicable to labor, services and the other obligations of the contract.

Instructions to specification writers: The following language will be included in the Invitation for Bids (Standard Form 20) following the listing of estimated quantities:

NEBRASKA SALES AND USE TAX

(1) The contract to be awarded will be a construction contract which contains separate amounts applicable to the performance of the services and the furnishing of the materials, as defined in Rule TC-1-17 of "Rules and Regulations for Sales and Use Tax" published by the Nebraska State Tax Commissioner. The person or firm to whom this contract is awarded must obtain a Tax Permit as provided by the rules and regulations. Exemption from the Nebraska Sales and Use Tax on material to be incorporated by the contractor (and his subcontractors) into the structure or improvement to real estate may be secured under the terms of the Nebraska Revenue Act of 1967 and the cited regulations.

(2) The contract will be awarded in accordance with Paragraph 10 of the Instructions to Bidders on the basis of the total of the amount applicable to the material to be incorporated into the structure or improvement and the amount applicable to the performance of service and other obligation of the construction contract.

Lump-sum schedules will be separated into two lump-sum items, otherwise, the following will be inserted in the bidding schedule after the "Total for Schedule": The above Total for Schedule consists of separate amounts for (see paragraph ------):

(1) Materials or equipment to be incorporated into the structure or improvement upon real estate

(2) Labor, services, and other obligations of the Construction Contract

§ 14-7.602-50(6)(d)

and use tax.

Colorado sales

(a) A specific exemption from Colorado Sales and Use Tax is available with respect to materials of a value of $2,500 or more incorporated by a prime contractor or subcontractor into a structure furnished under contract to a Government agency.

(b) Exemption certificates will be issued to such contractors or subcontractors upon personal application therefor to the Department of Revenue, State of

Colorado, State Capital, Denver, Colo. The contractor or subcontractor will be required to submit the date of the contract, the contract number, the amount of the contract, and the proposed date of completion.

(c) Invitations for bids for construction contracts which may reasonably be expected to involve purchases of materials of more than $2,500 should contain a notification to bidders concerning the availability of this exemption, a requirement that the bidder exclude these taxes from the bid price, and the method of obtaining exemption certificates. [34 F.R. 199, Jan. 7, 1969]

§ 14-7.602-50(6) (e)

come tax.

Indiana gross in

(a) The Indiana Gross Income Tax is applicable to gross receipts received by a Government contractor under a contract for services performed in Indiana, and under a contract for supplies produced in Indiana and delivered to the Government in Indiana (including contracts requiring delivery f.o.b. carries equipment, wharf, or freight station in Indiana for shipment on a Government bill of lading to destinations outside Indiana).

(b) The tax does not apply to gross receipts received by a Government contractor under a contract for supplies produced in Indiana and delivered to the Government at a destination outside Indiana if the contract provides that title to the supplies shall vest in the Government at destination, and shipment is made on a commercial bill of lading or a commercial bill of lading convertible to a Government bill of lading at destination.

[34 F.R. 199, Jan. 7, 1969]

§ 14-7.602-50 (6) (f)

use tax.

Iowa sales and

(a) Government agencies may obtain from the Iowa State Tax Commission refunds of Sales or Use Tax paid by their construction contractors with respect to goods, wares, or merchandise which becomes an integral part of the project.

(b) The contracting officer shall obtain from the contractor the statement required by section 422.45 (6a), Iowa Code Annotated, and file an application for refund with the Iowa State Tax Commission within 60 days after final settlement as required by section 422.45 (6b), Iowa Code Annotated.

(c) A provision shall be inserted in invitations for bids and construction con