nature of the item being procured. If a contracting officer requests an FCR on a procurement of less than $20,000 or on any procurement for which an FCR is not otherwise required, he will indicate the need therefor in Item 21 of AFPI Form 63, "Request for Facility Capability Report." A copy of the request will be placed in the contract file as documentation. If the request is made because one of the conditions outlined in paragraph (b) or (c) of this section is present, a brief description of the condition will suffice. If the FCR is required by command procedures as authorized by paragraph (e) of this section, an appropriate statement will be made.

(e) Regardless of the dollar amount of the procurement or exemptions outlined in § 1001.902-2, an FCR may be required by purchasing activities, if deemed necessary because of the critical nature of the item or service, peculiar nature of the procurement, or past experience of the command.

(f) A contracting officer may request a complete FCR only when an award is contemplated to a firm from which a bid or proposal has been received or to which an award of a letter contract is contemplated. Concurrent requests for complete FCRS on the same procurement will not be made. An FCR will first be requested on the lowest responsive bidder. Successive requests will be made only after a negative reply to the last request is received. A negative FCR on a small business firm requires special handling and compliance with §§ 1001.904-1(a) (4) and 1001.950.

(g) Before awarding a contract on the basis of an FCR more than 60 days old, a contracting officer must confirm its validity with the preparing office and record the confirmation in the contract file.

[27 F.R. 1615, Feb. 21, 1962, as amended at 27 F.R. 11761, Nov. 29, 1962; 27 F.R. 12213, Dec. 11, 1962; 28 F.R. 2796, Mar. 21, 1963; 28 F.R. 5570, June 6, 1963; 28 F.R. 14315, Dec. 27 1963]

(2) Contracts placed pursuant to Hq USAF approved production program contained in the "W" series program directives (WA, WM, WTD, and WE).

(3) Contracts placed pursuant to recommendations made by a SSS (if not older than 60 days) or a SSSB.

(4) Purchase of additional quantities of supplies or services, or election to extend the period of performance, in the exercise of a contract option clause (Subpart O, Part 1 of this title).

(5) Procurements outside United States and contracts with Canadian Commercial Corporation.

(6) A facilities contract supporting one or more supply or service contracts containing a facilities clause.

(7) Contracts written under authority of Public Law 85-804 which made formal/informal commitments, amend without consideration, or correct mistakes.

(8) Purchase of continued research and development work when the proposed contract is an extension of work previously satisfactorily performed, if the dollar value of the proposed contract does not exceed that of the previous procurement. (See § 1001.902-3.)

(9) Contracts with educational institutions.

(b) An FCR is not required for the following types of contracts and/or procurements or purchases except as required by § 1001.902-1 (b) or (e).

(1) Purchases from Schedule of BlindMade Products, Federal Supply Schedules, Government Departments, and Federal Prisons.

(2) Purchases of standard commercial articles or basic materials, such as sheet aluminum, bar steel, etc., from manufacturers of, or regular dealers in, the articles to be purchased.

(3) Purchases under Federal Supply Classification 76, except group 7650 (drawings and specifications).

(4) Personal services or professional services contracts negotiated under authority of Public Law 79-600.

(5) Basic Ordering Agreement and Call Procurement Arrangements (§§ 1003.4102 and 1003.409-50 of this subchapter). However, a complete FCR is required for orders or calls of more than $20,000.

(6) Procurements from the surplus market where the vendor has authority to dispose of the merchandise.

(8) Base procurement up to $500,000 within United States if not to be supported by government financing. (See Part 163, Subchapter E of this title.)

(9) Procurement of nonpersonal services for training of AF personnel on weapon systems and related equipment up to $500,000.

[27 F.R. 9916, Oct. 9, 1962, as amended at 27 F.R. 11761, Nov. 29, 1962; 27 F.R. 12213, Dec. 11, 1962; 28 F.R. 2796, Mar. 21, 1963; 29 F.R. 1681, Feb. 4, 1964; 29 F.R. 15257, Nov. 13, 1964]

Financial clearance is required prior to award of a contract described in § 1001.902-2(b)(5). If a complete FCR is not obtained for any reason, financial clearance is required prior to award of any contract if the prospective contractor requests advance payments or unusual progress payments. (See Part 163, Subchapter E of this title.) No further financial clearance is required for any contractor on the approved "Prior Financial Clearance List," within the limits outlined in the list, unless (a) The prospective contractor has requested advance payments or unusual progress payments or, (b) if, in the opinion of the FCR activity, or the contracting officer, as indicated in his request for an FCR, the proposed contract might impose a serious burden on the contractor's ability to perform. (See E-212.52, § 1030.5 of this subchapter.) Contracting officers may request financial clearance from the FCR activity having contract administration jurisdiction or

from AFSC (ASXKMF), WPAFB, Ohio, whichever is nearer. To obtain financial clearance, indicate on the request for FCR "Financial Clearance Only" and include answers to items 6 through 13 of AFPI Form 63. Items 14 through 20 will be marked "N/A" (not applicable) if such is the case. If the clearance is granted by other than ASXKMF, the activity granting the clearance will furnish a completed AFPI Form 63C, "FCR Financial Action Summary," to ASXKMF. AFPI Form 63C is required for every FCR except when financial clearance is given pursuant to the authority of the "Prior Financial Clearance List." See question two under § 1001.905-1 (a). [27 F.R. 9916, Oct. 9, 1962]

§ 1001.904 Determinations of responsibility and nonresponsibility. [27 F.R. 1616, Feb. 21, 1962]

§ 1001.904-1 Requirement.

(a) Financial and technical ability clauses. (1) Include the following clause in all invitations for bid or requests for proposal estimated to involve a procurement of $10,000 or more:

(Nov. 1961)

If a bid or proposal submitted in response to this invitation is favorably considered, a survey team may contact your facility to determine your ability to perform. Current financial statements and other pertinent data should be available at that time if not already on file with the Air Force Systems Command. The team may also evaluate your system for determining the financial and technical ability of your proposed subcontract or procurement sources to perform. Examples of the type of matters the survey team may examine and evaluate are: 1. Past experience with firm (if any). 2. Financial condition.

3. Accounting system. 4. Facilities.

5. Plant loading.

6. Production control system.

7. Materiel control system.

8. Ability to meet required schedule.

delivery

9. Receiving and inspection system. 10. Purchasing and subcontracting systems.

11. Quality control system.

12. Apparent understanding of specification requirements.

13. Realism of lead time estimates. 14. Scrap and rework control procedures. 15. Packing and shipping procedures. 16. Facilities and procedures for storing and handling Government-furnished property.

17. General housekeeping.

18. Manpower availability and labor relations.

19. Engineering capability. 20. Management controls. 21. Any other areas pertinent to possible performance of the prospective contract.

(2) Include the following clause in all invitations for bids or requests for proposals estimated to involve a procurement of less than $10,000:

(Nov. 1961)

If a bid or proposal submitted in response to this invitation is favorably considered, a survey team may contact your facility to determine your ability to perform. Current financial statements and other pertinent data should be available at that time if not already on file with the Air Force Systems Command. The team may also

evaluate your system for determining the financial and technical ability of your proposed subcontract or procurement sources to perform.

(3) The PCO will make, sign, and place in the contract file the necessary determination required by § 1.904-1 of this title. Except as provided in subparagraph (4) of this paragraph, an FCR, SSS, or SSSB recommendation will constitute sufficient basis for either an affirmative or negative finding by a contracting officer. See also $ 1001.902-1 (c). The FCR, SSS, or SSSB report and supporting data made will be attached to the determination. If additional explanation of an FCR is required, the PCO will request the FCR activity to furnish any data he requires before making a determination. If the PCO is aware of factors that may not have been considered by the FCR activity, he may request a review of the FCR in the light of such information before making a determination. In making the determination, the PCO through channels prescribed by his command and AFSC divisions and centers, may reject a FCR recommendation, provided clear and compelling circumstances dictate such action. Complete documentation is required. When an AFLC AMA is the procuring activity, the contracting officer will, prior to rejecting the recommendation contained in a FCR, submit written findings supported by necessary and relevant documentation through normal channels to the director of procurement and production of the AMA for review and approval. The FCR serial number as furnished by the FCR activity will be shown on the contract cover page (face). If an FCR was not required "FCR not required" with the specific applicable AFPI section relied upon will be shown on the contract file cover sheet.

(4) Negative FCR. SSS, or SSSB recommendation with respect to "capacity" or "credit" of a small business concern ($ 1.701 of this title) require special handling. See § 1.705-4 of this title. (See also §§ 1001.902-1(c) and 1001.950.) The fact that the SBA has issued a Certificate of Competency as to the capacity or credit of a small business concern does not relieve the contracting officer from the responsibility for certifying that the prospective contractor is responsible as to the other factors of responsibility, i.e., questions Three, Five and Six of the FCR as applicable. (See

[27 F.R. 1617, Feb. 21, 1962] § 1001.905-1 General.

(a) See § 1001.902 (d). A complete FCR consists of answers to the following questions, as applicable. Replies will be either "affirmative," "negative," or “qualified." A "qualified" reply is an "affirmative" subject to certain conditions being met. "Qualified" replies must indicate clearly the action necessary, and the activity responsible, to satisfy the conditions. If the conditions are not met, the reply will be considered negative. Negative or qualified answers must explain the negation or qualification. Replies will be arranged in the same order as the questions and will be identified by the question number.

(1) One: Is the prospective contractor considered capable of performing the proposed contract taking into consideration:

(i) Facilities: The required quality and quantity of machine tools, production and test equipment, manufacturing and warehouse areas, and material handling devices necessary to complete the work or ability to obtain them. (See $ 1.903-3 of this title.) When the IFB/RFP states that Government facility support will be available, the extent of such support must be determined. A dollar estimate of facility support required should be indicated when applicable.

(ii) Production and engineering capabilities: The necessary experience and organization to perform present and projected production and engineering load. An understanding of the production and engineering specifications. Proper alignment of available facilities.

(iii) The delivery schedule: The backlog and anticipated workload measured against the planned maximum capacity required during the performance period. Past and current record of meeting delivery schedules insofar as related to any factor under questions One or Two of the FCR. On advertised procurements see § 1.305-4 of this title. If the bid is responsive to the IFB de

livery requirements, and the bidder is deemed capable of meeting the delivery terms offered in his bid, the answer should be affirmative. If a bidder cannot meet his proposed schedule but can deliver within the required schedule, a qualified answer should be given and the contracting officer notified of that fact. If it is determined that a bidder cannot meet the required schedule, the answer should be negative.

(iv) Availability of material: Ability to obtain and maintain the necessary inventory of supplies and component parts. Planned sources for purchase of materials, component parts, and services, including subcontracting, required to support the proposed contract. Adequacy of system for determining technical and financial ability of subcontractor's procurement sources to perform. (See § 1.906 of this title.)

The

(v) Availability of manpower: quantity and quality of labor requirements. The necessary organization and management controls.

(vi) Quality control capabilities: The necessary experience, organization and technical qualifications to provide and maintain an adequate system for control of quality for manufacturing, supplying, or overhauling the items called for. Thoroughly understanding the specifications and contract requirements for inspection, test, and control of quality throughout purchasing, subcontracting, production, storage, shipment, and maintenance. The contractor must demonstrate a sound management approach to the control of quality and experiences sufficient to indicate a capability to perform satisfactorily on the proposed contract. This includes the contractor's responsibility for GFAE and GFP.

(2) Two: Does the prospective contractor have sufficient financial stability to perform the contract?

(i) See Part 163, Subchapter E of this title and § 1001.902-3.

(ii) If government financial assistance in the form of a loan guarantee, unusual progress payments, or advance payment will enable the contractor to perform state: "Yes, if (guaranteed loan) (progress payments *** percent of incurred costs) (advance payments) are provided by the Government. Data is being submitted to AFSC (ASXKM), WPAFB, Ohio, which will directly notify the PCO as to approval." If the name of the prospective contrac

tor is on the Financial Control Report (see paragraph E-212.51, § 1030.5 of this subchapter) and if the FCR activity is convinced that the contractor is able to perform under the proposed contract, issue a qualified clearance as follows: "yes, subject to approval by AFSC (ASXKM) Wright-Patterson AFB, Ohio, which will directly notify the PCO."

(iii) If the prospective contractor requests customary progress payments (see Part 163, Subchapter E of this title) and is otherwise entitled to a financial clearance, the answer to question "Two" will be "Yes."

(iv) Send a copy of the completed AFPI Form 63C with case history if necessary to explain the answer regarding financial stability to AFSC (ASXKM) WPAFB, Ohio, at time of reply. If the answer to question Two is negative or qualified, send an information copy of the complete FCR to ASXKMF with supporting financial data, facility advisory board findings and recommendations.

(3) Three: Are the business practices of the prospective contractor considered satisfactory?

(i) Cooperation with FCR team (see Comptroller General Decision 145350— May 5, 1961).

(ii) Attitude toward commitments.

(iii) Actual performance as to quality and delivery on previous or current Government contracts to the extent that such performance reflects factors other than "capacity" or "credit." (See note below.)

(iv) An apparent ability to conform to the requirements of the standard nondiscrimination clause (§ 12.802 of this title).

(v) If the proposed contract is for manufacture, supplies, or construction, indicate whether the bidder is a manufacturer, regular dealer, or construction contractor. (Sections 12.603 and 1.903-1 of this title.)

(vi) Is otherwise qualified and eligible for award under applicable laws and regulations not considered under the other five questions of the FCR.

(vii) See § 1.903-1(e) of this title. NOTE: If the reply to question Three is negative, identify the deficiencies and furnish a complete explanation. Performance as to quality or delivery on previous or current Government contracts related to "capacity" or "credit" is considered under questions One and Two of the FCR and is subject to certification of competency by

the SBA in the case of a small business concern.

(4) Four: What percentage of subcontracting is contemplated for production of, or work upon, each item, component, or assembly called for by the IFB/RFP? Show the percentage of subcontracting contemplated as a percent of the contract price. In the case of a letter contract furnish an estimate. If the percentage differs substantially from that indicated in the request for FCR, submit the facts to support the findings or estimate. Show separately the percentage of subcontracting to be performed by a parent, subsidiary or other affiliate of the prospective contractor.

(5) Five: Is the prospective contractor's accounting system adequate for administration of the type of contract proposed or if progress or advance payments are requested? See Subpart D, Part 3 and Part 163, Subchapter E of this title. An answer to question Five is required only when the request for FCR or the IFB/RFP indicates the question is applicable or when reply to question Two indicates that approval of progress or advance payments will be necessary. If no reply is necessary indicate "N/A" (not applicable). An affirmative reply is appropriate if either of the following conditions prevail:

(i) The prospective contractor is being paid under any similar type of Government contract or Government financing is being provided, and there is no evidence in the Air Force Contract Administration files of serious deficiencies, or major administrative irregularities insofar as the accounting system is concerned.

(ii) The appropriate military audit agency has determined within the preceding 6 months that the prospective contractor's accounting system is adequate (with changes, if any, to which he has agreed in a signed statement) for the type of contract or for administration of the type of Government financing being proposed.

A negative answer is required if the contractor does not agree to make changes deemed necessary by the audit agency to make the system adequate. In such case, identify the change to which the prospective contractor will not agree. (6) Six: Is the prospective contractor's purchasing system adequate to assure efficiency and economy in subcontracting and purchasing under the proposed con

tract? An answer to question Six is required when the request for FCR indicates one of the following types of contracts is contemplated: Fixed-price redeterminable or incentive, time and material, or cost-reimbursement. If no reply is necessary indicate "N/A" (not applicable). See § 1.906 of this title. An affirmative reply is appropriate only if it has been determined that the prospective contractor's purchasing system is adequate, or if the prospective contractor presents a satisfactory plan and has adequate capability to make required changes and states in writing that he will make necessary changes if awarded the proposed contract, to assure efficiency and economy in subcontracting and purchasing activities in support of the proposed contract. The plan and the signed statement will become a part of the contract file with a copy retained for the FCR file. Among the factors which must be considered are the following:

(i) Company policy with respect to assuring efficiency and economy in subcontracting and purchasing vendor items and services.

(ii) Procedures for determining financial and technical ability of subcontractors.

(iii) Pricing policies with respect to subcontracts.

(iv) Controls to assure compliance with subdivisions (i), (ii), and (iii) of this subparagraph.

(b) See § 1001.902(c).

(1) AFSC (ASXKM) WPAFB, Ohio will advise Army, National Aeronautical and Space Administration, and Navy of locations where data concerning AF contractors may be obtained and will secure similar information from them concerning Army, National Aeronautical and Space Administration and Navy contractors for AF purchasing activities.

(2) A contracting officer may request an EDR on a prospective contractor either from an FCR activity, if a contract on which information is desired is administered by that activity, or from a DOD or NASA purchasing activity that had recent experience under a contract not assigned to an FCR activity for administration. Requests may be made directly to Army, NASA or Navy purchasing activities if known or according to information furnished by ASXKM. See subparagraph (1) of this paragraph.