Subpart 304.71-Review and Approval of 304.7100 Scope of subpart. 304.7102 Conduct of the review. 304.7103 Approvals. AUTHORITY: 5 U.S.C. 301; 40 U.S.C. 486(c). SOURCE: 49 FR 13965, Apr. 9, 1984, unless otherwise noted. Subpart 304.1-Contract Execution 304.101 Contracting officer's signature. An original of each bilateral contract or modification shall be executed by the contractor and contracting officer. An original of each unilateral contract or modification shall be executed by the contracting officer. The contracting officer need only sign the original when carbon paper is used in sets of forms such as Standard Form 44 or Optional Form 347 or 348. A legi ble carbon impression of the contracting officer's signature shall carry the same force and effect as a pen and ink signature for unilateral contracts. 304.170 Ratification of unauthorized contract awards. (a) The Government is not bound by agreements or contractual commitments made to prospective contractors by persons to whom contracting authority has not been delegated. Such unauthorized acts may be in violation of the Federal Property and Administrative Services Act, other Federal laws, the FAR, the HHSAR, and good acquisition practice; e.g., certain requirements of law and regulation necessary for the proper establishment of a contractual obligation may not be met; i.e., certification of the availability of funds, determinations and findings, competition of sources, determination of contractor responsibility, certification of current pricing data, price/cost analysis, administrative approvals, negotiation of appropriate contract clauses, etc. (b) The execution of otherwise proper contracts made by individuals without contracting authority, or by contracting officers in excess of the limits of their delegated authority, may be later ratified. To be effective, the ratification must be in the form of a written document clearly stating that ratification of a previously unauthorized act is intended and must be signed by the head of the contracting activity, provided the head of the contracting activity could have granted authority to enter into the commitment at the time it was made and still has the power to do so. Contracting officers shall not ratify contractual commitments made by other personnel of the Department without the prior approval of the head of the contracting activity. (This approval authority may be redelegated to a designee not lower than the principal official responsible for acquisition.) (c) Requests received by contracting officers for ratification of commitments made by personnel lacking contracting authority shall be processed as follows: (1) The individual who made the unauthorized contractual commitment shall furnish the contracting officer all records and documents concerning the commitment and a complete written statement of facts, including, but not limited to: a statement as to why the contracting office was not used, a statement as to why the proposed contractor was selected, a list of other sources considered, a description of work to be performed or products to be furnished, the estimated or agreed contract price, a citation of the appropriation available, and a statement of whether the contractor has commenced performance. (2) The contracting officer will review the file and forward it to the head of the contracting activity with any comments or information which should be considered in evaluation of the request for ratification. If legal review is desirable, the head of the contracting activity will coordinate the request for ratification with the Office of General Counsel, Business and Administrative Law Division. (3) If ratification is authorized by the head of the contracting activity, the file will be returned to the contracting officer for issuance of a purchase order or contract, as appropriate, along with the ratification document. (4) Heads of contracting activities or their designees will report the number and dollar value of requests for ratifications received and ratifications authorized each calendar quarter. Reports shall be submitted in an original and one copy to the Deputy Assistant Secretary for Procurement, Assistance and Logistics to arrive no later than 30 calendar days after the close of each calendar quarter. Subpart 304.2-Contract Distribution 304.201 Procedures. The signed original of bilateral contracts and modifications shall be placed in the contract file, and duplicate originals shall be furnished the contractor, the appropriate accounting point, the project officer, and other individuals or offices, as applicable. Purchase orders, delivery orders, and other unilateral contracts and modifi The Department-wide Contract Information System (DCIS) represents the Department's implementation of the FPDS. All departmental contracting activities are required to participate in the DCIS and follow the procedures stated in the Contract Information System Manual and amendments to it. The principal official responsible for acquisition shall ensure that all required contract information is collected, submitted, and received into the DCIS on or before the 15th of each month for all appropriate contract and contract modification awards of the prior month. [49 FR 13965, Apr. 9, 1984. Redesignated at 51 FR 44293, Dec. 9, 1986] Subpart 304.8-Contract Files 304.801 General. OPDIVS shall prescribe the contents of contract files and establish filing procedures consistent with the nature of the contracting actions and in accordance with FAR 4.801, 4.802, and 4.803. Contract files should contain an index of the contents to facilitate review and should be separated into logical categories (see FAR 4.803). 304.804 Closeout of contract files. 304.804-1 Closeout by the office administering the contract. (3) Files for all cost-reimbursement type contracts should be closed within 20 months of the month in which the contracting officer receives evidence of physical completion (see FAR 4.804-4). The contracting officer responsible for contract closeout may negotiate settle ment of indirect costs for a specific contract, in advance of the determination of final indirect cost rates in accordance with FAR 42.708. 304.870 Closing review. (a) Contracting officers shall assure the applicable items in FAR 4.804-5, other than a field audit, have been accomplished prior to closing any physically completed contract. Cost-reimbursement type contracts will be subject to the additional requirements set forth below before they may be closed. (b) Contracting officers shall use the instructions in the October 5, 1982 memorandum from the Deputy Assistant Secretary for Procurement, Assistance and Logistics to closeout cost-reimbursement type contracts physically completed prior to fiscal year 1977 and cost-reimbursement type contracts completed subsequent to that date for which field audit information is available. (c) Contracting officers shall closeout all other cost-reimbursement type contracts physically completed after September 30, 1977 in accordance with the following procedures: (1) Field audits will be conducted for contracts in excess of $250,000 awarded to commercial organizations and non-profit organizations other than colleges and universities, hospitals and State and local units of government for which an agency other than HHS has audit cognizance. Field audits will also be conducted each year on approximately 25 of the same type contractors for which HHS has audit cognizance. These contracts may be closed after receipt of the field audit report. (2) Contracts of any dollar value with non-proprietary colleges and universities, hospitals and State and local units of government and contracts not in excess of $250,000 with other institutions/organizations shall be closed out on the basis of a desk audit. The desk audit should include (i) a confirmation from the project officer that labor, material, travel, and other types of direct costs are commensurate with contract requirements, (ii) a review of available audit reports to determine if any adjustments were made that may be applicable to the contract under review, and (iii) discussions with the cognizant government auditor when considered appropriate. These contracts shall be closed with the condition that they are subject to adjustment should an on-site audit be conducted at a later date and should unallowable costs be identified as a result of that audit. The release executed by the contractor shall contain the following: The Contractor agrees, pursuant to the clause in this contract entitled Allowable Cost (for cost-reimbursement contracts) or Allowable Cost and Fixed Fee (for CPFF contracts), that the amount of any sustained audit exceptions resulting from any audit made after final payment will be refunded to the Government. (3) The contracting officer may request a field audit of any contract when, in his/her judgment, the risk attendant with the contract warrants it. The contracting officer, however, shall exercise discretion in requesting such audits on creditable evidence such as unsatisfactory dealings with the contractor during the period of contract performance, prior audit reports containing serious findings against the contractor, the known experience of other government officials in dealing with the contractor when the contracting officer is personally knowledgeable about the circumstances, formal third party complaints or allegations which bear upon the contractor's integrity or the propriety of costs charged to the Government, and other comparable allegations or advice of a derogatory nature about the contractor made by responsible individuals which in the contracting officer's judgment should be investigated. Except where a contracting officer suspects misrepresentation or fraud, audits should not be requested if their cost of performance is likely to exceed their potential cost recovery. (4) When an audit is warranted prior to closing out a contract, the contracting officer should request the audit directly from the Department of Health and Human Services Office of the Inspector General, Office of Audits (HHSOA). The request should cite the reasons the contracting officer believes an audit is warranted. A copy of the request should be forwarded to the Office of Procurement, Assistance and Logistics (OPAL), ASMB. In the event the Office of the Inspector General cannot honor the request in a reasonable period of time, it will consult with OPAL and the contracting officer. The final decision on the need and scope of an audit will be made on the basis of the value of the contract, the nature of the contracting officer's concerns, and the availability of HHSOA or other existing resources in the Department to perform a review to satisfy the contracting officer's concerns. (5) Closeout procedures are to be followed in conjunction with the regular procedures now followed in administering contracts. These procedures are not meant or to be interpreted as imposing any requirement or responsibility on contracting officers or necessitating any reviews on the part of the contracting officials not currently required by the FAR. With some rare exceptions, Standard Form 1035, Public Voucher for Purchases and Services Other than Personal, or Form HHS 646, Financial Report of Individual Project/Contract, will contain sufficient information to allow a contracting officer to satisfy requirements for desk audits. Accordingly, these closeout procedures shall not cause contracting officers to engage in extraordinary oversight or review and shall not be used by contracting officers as the basis for requiring contractors to submit extraordinary documentation such as payroll listing, labor billings, travel details, etc. Subpart 304.70—Acquisition Instrument Identification Numbering System 304.7000 Scope of subpart. This subpart prescribes policy and procedures for assigning identifying numbers to contracts and related instruments, including solicitation documents, purchase orders, and delivery orders. 304.7001 Numbering contracts. (a) Contracts which require numbering. The following contracts shall be numbered in accordance with the system prescribed in paragraph (b) of this section: (1) All contracts, including letter contracts and task orders under basic ordering agreements, which involve the payment of $2,500 or more for the acquisition of personal property or nonpersonal services. (2) All contracts which involve the payment of $2,000 or more for construction (including renovation or alteration). (3) All contracts which involve more than one payment regardless of amount. (The number assigned to a letter contract shall be assigned to the superseding definitized contract.) (b) Numbering system. All contracts which require numbering shall be assigned a number consisting of the following: (1) The three digit code assigned to the contracting office by the Division of Management Information Systems Services, OMAS, OS; (2) A two digit fiscal year designation; and (3) A four digit serial number. While it is required that a different series of four digit serial numbers be used for each fiscal year, serial numbers assigned need not be sequential. (c) Illustration of contract numbers. The initial contract executed by the Division of Contract and Grant Operations, Office of Management Services, Office of the Secretary, for fiscal year 1983 should be numbered 100-830001, the second contract 100-83-0002. Alternatively, if it is desirable for internal identification purposes to establish separate series of numbers for sealed bid and negotiated contracts, this procedure is permissible. In this instance, the initial sealed bid contract might be numbered 100-83-0001 and the initial negotiated contract numbered 100-83-0500. tion staff office of the contracting activity to the Director, Division of Management Information Systems Services. Conversely, in the event that a contracting office is to be disestablished, the Director, Division of Management Information Systems Services shall be notified. A listing of the contracting office identification codes currently in use is contained in the Department-wide Contract Information System Manual (DCIS). [49 FR 13961, Apr. 9, 1984, as amended at 50 FR 23126, May 31, 1985; 50 FR 38004, Sept. 19, 1985] Subpart 304.71-Review and Approval of Proposed Contract Awards 304.7100 Scope of subpart. This subpart prescribes review and approval procedures for contract actions to ensure that: (a) Contract awards are in conformance with law, established policies and procedures, and sound business practices; (b) Contractual documents properly reflect the mutual understanding of the parties; and (c) The contracting officer is informed of deficiencies and items of questionable acceptability and corrective action is taken. 304.7101 Contracts requiring review and approval. (a) General. All contractual documents, regardless of dollar value, are to be reviewed by the contracting officer prior to award, even if the review and approval procedures prescribed in this section are applicable. However, under no circumstances may the individual who signs a contract instrument as contracting officer perform final review and approval of that contract action if it, or any modification to it, is expected to exceed the levels set forth in (b) (1) or (2) below. (b) Required reviews and approvals. (1) Officials responsible for the acquisition function in the Office of the Secretary, OPDIVS (except the Public Health Service), and regional offices are to assure that sealed bid or negotiated contracts, and/or modifications to them, expected to exceed $300,000, are reviewed and approved prior to award. In order to assure the propriety of smaller dollar acquisitions, a statistically significant sample of contract actions not expected to exceed $300,000 are to be reviewed and approved prior to award. (2) Contract actions of the Public Health Service are to be reviewed and approved prior to award in accordance with the dollar thresholds stated in Subpart PHS 304.71. In order to assure the propriety of smaller dollar acquisitions, a statistically significant sample of contract actions not expect |