on the needs of the Contractor. Subsequent amendments to the Letter of Credit will be on the basis of: (1) Quarterly NASA Form 1031 reports submitted by the Contractor and as approved by the Contracting Officer, and (ii) amendments to the contract. In no instance will the advance funds provided by the letter of credit procedure exceed the amount of the contract as from time to time amended, less the amount of withholding provided therein.

(c) The funds provided by the letter of credit procedure shall be used by the Contractor solely for the purposes of making payments for items of allowable costs as defined in this contract, or to reimburse the Contractor for such items of allowable cost and for making payments for such other costs as the Contracting Officer otherwise has authority to approve, and does approve in writing.

(d) The Contractor may draw on the Letter of Credit using payment vouchers as follows:

(1) Payment vouchers may be executed only for the purpose of obtaining funds in the minimum amounts necessary for the following purposes: (1) Making payments for items of allowable costs as defined in this contract; (ii) reimbursing the Contractor for such items of allowable costs; and (iii) for making payments for such other costs as the Contracting Officer otherwise has authority to approve, and does approve in writing; and the funds so obtained may be used only for such purposes.

(2) Payment vouchers drawn should be timed to be in accordance with the actual cash requirements of the contractor in carrying out the purpose of the contract.

(e) NASA Form 1031 shall be submitted by the 20th of the month following the quarter being reported.

(f) The Contractor may at any time repay all or any part of the funds or credit obtained under the Letter of Credit. When so requested in writing by the Contracting Officer, the Contractor shall repay to the Government such part of the unliquidated balance of advance payments as shall, in the opinion of the Contracting Officer, be in excess of the Contractor's current needs or in excess of the contract price or estimated cost as revised from time to time.

(g) If upon completion or termination of this contract all amounts obtained by the Contractor under the Letter of Credit have not been fully liquidated by authorized charges under the contract, the balance thereof shall be deducted from any sums otherwise due or which may be due to the Contractor from the Government, and any excess funds shall be repaid by the Contractor to the Government upon demand.

(h) Notwithstanding any other provisions of this contract, the Contractor shall not transfer, pledge, or otherwise assign this contract or any interest therein, or any claim arising thereunder, to any party or parties,

bank, trust company, or other financing institution.

(1) Any and all advance payments made under this contract shall be secured by a lien in favor of the Government, paramount to all other liens, upon the supplies or other things covered by this contract and on all material and other property acquired for or allocated to the performance of this contract, except to the extent that the Government by virtue of any other provision of this contract, or otherwise, shall have valid title to such supplies, materials, or other property as against other creditors of the Contractor. The Contractor shall identify by marking or segregation all property which is subject to lien in favor of the Government by virtue of any provision of this contract in such a way as to indicate that it is suject to such lien and that it has been acquired for or allocated to the performance of this contract. If for any reason such supplies, materials, or other property are not identified by marking or segregation, the Government shall be deemed to have a lien to the extent of the Government's interest under this contract on any mass of property with which such supplies, materials, or other property are commingled. The Contractor shall maintain adequate accounting control over such property on his books and records. If at any time during the progress of the work on the contract it becomes necessary to deliver any item or items and materials upon which the Government has a lien as aforesaid to a third person, the Contractor shall notify such third person of the lien herein provided and shall obtain from such third person a receipt, in duplicate, acknowledging, inter alia, the existence of such lien. A copy of each receipt shall be delivered by the Contractor to the Contracting Officer. If this contract is terminated in whole or in part and the Contractor is authorized to sell or retain termination inventory acquired for or allocated to this contract, such sale or retention shall be made only if approved by the Contracting Officer, which approval shall constitute a release of the Government's lien hereunder to the extent that such termination inventory is sold or retained, and to the extent that the proceeds of the sale, or the credit allowed for such retention on the Contractor's termination claim, is applied in reduction of advance payments then outstanding hereunder.

§ 18-1.359 Aircraft noise research and development programs.

NASA and the Department of Transportation have executed an agreement (NMI 1052.103A) to coordinate their research and development efforts in aircraft noise reduction, control, prediction techniques and other aircraft noise related problems. Proposed procurement actions relating to this program will be coordinated with the Deputy Associate Administrator (Aeronautics), NASA Headquarters in accordance with the

Many aerospace contractors conduct independent Cost Reduction Programs similar to the NASA Cost Reduction Program. The cost saving achievements of these programs are of significant benefit to the Government. NASA installations should encourage contractors to report significant cost reductions which are related to individual NASA contracts. NASA Form 1105 or a brief narrative statement may be used by contractors to report cost reduction program achievements. Contractors should forward reports which they desire to be included in the NASA Cost Reduction Report to the President, directly to the Director of Procurement, NASA Headquarters (Code KDP-3).

[36 F.R. 25104, Dec. 29, 1971]

Subpart 18-1.4—Appointment and Authority of Contracting Officers § 18-1.400 Scope of subpart.

This subpart deals with the appointment and procurement authority of contracting officers. It also imposes limitations upon the authority of contracting officers to enter into contracts. For the purpose of this subpart, the term "contracting officer" does not include representatives of the contracting officer.

§ 18-1.401 Authority of contracting officers.

Contracting officers are authorized to enter into or modify contracts for supplies or services, including construction, on behalf of the Government and in the name of the United States of America, by formal advertising, negotiation, or by other authorized method of procurement, and to administer such contracts, in accordance with applicable laws and this chapter. The foregoing authorization is subject to the requirements prescribed in § 18-1.402 and any further limitations, consistent with this chapter imposed by the appointing authority.

§ 18-1.402 Requirements to be met before entering into contracts.

(a) General. Whether the procurement is to be effected by formal advertising or by negotiation, a contract or modification may be entered into by a contracting officer only if:

(1) All applicable requirements of law, NASA regulations, and instructions of the installation have been met;

(2) Required approvals have been obtained from the technical and management authorities at the installation concerned; this includes, prior to the incurrence of an obligation, obtaining approval as to the availability of funds; (3) The contract is written on a standard or an approved form of contract; and

from

(4) Approval of deviations standard or authorized contract clauses has been obtained from the Director of Procurement (see § 18-1.109).

(b) Special requirements for negotiated contracts. In addition to the requirements in paragraph (a) of this section, no negotiated contract shall be entered into until the determinations and findings required by Subparts 183.2 and 18-3.3, with respect to the circumstances justifying negotiation and with respect to any use of a special method of contracting have been made. § 18-1.403 Selection, appointment, and termination of appointment of contracting officers.

The selection, appointment and termination of the appointment of contracting officers shall be made only by the Administrator or his designees, and by subsequent designees to whom such authority has been redelegated.

§ 18-1.403-1 Selection.

(a) Considerations. In selecting contracting officers, the appointing authority shall consider experience, training, education, business acumen, judgment, character, reputation and ethics.

(b) Evaluation of experience, training, and education. In considering experience, training, and education, the following shall be evaluated:

(1) Experience in a Government procurement office, commercial procurement, or related fields;

(2) Formal education or special training in business administration, law, accounting, or related fields;

(3) Completion of specialized courses in the field of Government procurement;

(4) Knowledge of the provisions of this chapter and of other applicable regulations; and

(5) Where the appointment of contracting officers for construction contracts is involved, experience in the

construction field, including the administration of construction contracts.

§ 18-1.403-2 Appointment.

(a) Except for those individuals who are authorized to enter into contracts by virtue of their position, appointment of contracting officers shall be made on NASA Form 1350, Certificate of Appointment, issued by the appointing official. Any limitations on the scope of the authority to be exercised by the contracting officer, other than those contained in this chapter, shall be entered on the face of the certificate. Certificates may be serially numbered.

(b) The office of each appointing authority shall maintain a file of all documents (such as résumés, references, and records of training) considered in the selection of each contracting officer.

§ 18-1.403-3 Termination of appoint

ment.

(a) Automatic termination. Unless the Certificate of Appointment of a contracting officer contains other provision for automatic termination, the appointment shall remain in effect, unless sooner revoked, until the contracting officer is reassigned or his employment is terminated.

or

(b) Revocation. The appointment of a contracting officer may be revoked at any time by the appointing authority, higher appointing authority, or any successor to either, but no such revocation shall operate retroactively. Revocation of the appointment shall be made by letter. reading substantially as follows: Date

To: (Name, grade and position title.)
From: (Appointing Authority.)
Subject: Termination of Appointment as

Contracting Officer, Certificate of Ap-
pointment, Serial No.

Your appointment as Contracting Officer contained in the subject Certificate is hereby terminated effective 19--.

This subpart sets forth the procedures to be followed and prescribes the form to be used for obtaining information concerning contingent or other fees paid by contractors for soliciting or securing contracts.

§ 18-1.502 Applicability.

This subpart applies to all contracts. § 18-1.503 Covenant against contingent fees clause.

Every contract, except when Standard Forms 19 and 19A are used for formally advertised construction contracts, shall contain the clause set forth below:

COVENANT AGAINST CONTINGENT FEES
(FEBRUARY 1962)

The Contractor warrants that no person or selling agency has been employed or retained to solicit or secure this contract upon an agreement or understanding for a commission, percentage, brokerage, or contingent fee, excepting bona fide employees or bona fide established commercial or selling agencies maintained by the Contractor for the purpose of securing business. For breach or violation of this warranty, the Government shall have the right to annul this contract without liability or in its discretion to deduct from the contract price or consideration, or otherwise recover, the full amount of such commission, percentage, brokerage, or contingent fee.

§ 18-1.504 Improper influence.

The term "improper influence" means influence, direct or indirect, which induces or tends to induce consideration or action by any employee or officer of the United States with respect to any Government contract on any basis other than the merits of the matter.

§ 18-1.505 General principles and standards applicable to the covenant. The principles and standards set forth in this subpart are intended to be used as a guide in the negotiation, award, administration, and enforcement of all contracts.

§ 18-1.505-1 Contingent character of the fee.

Any fee, whether called commission, percentage, brokerage, or contingent fee, or otherwise denominated, is within the purview of the covenant if, in fact, any portion thereof is dependent upon success in obtaining or securing the Government contract or contracts involved. The fact, however, that a fee of a contingent nature is involved does not preclude a relationship which qualifies under the exceptions to the prohibition of the covenant.

§ 18-1.505-2

Exceptions to the prohi

bition of the covenant. Excepted from the prohibition of the covenant are "bona fide employees” and "bona fide established or selling agencies maintained by the contractor for the purpose of securing business."

§ 18-1.505-3 Bona fide employee.

The term "bona fide employee," for the purpose of the exception to the prohibition of the covenant, means an individual (including a corporate officer) employed in good faith by a concern to devote his full time to such concern and no other concern and over whom the concern has the right to exercise supervision and control as to time, place, and manner of performance of work. It is recognized that a concern, especially a small business concern, may employ an individual who represents other concerns. The factors set forth in § 18-1.505-4, except paragraph (d) thereof, shall be applied to determine whether such an individual comes within the exception to the prohibition of the covenant. (However, in applying such factors, the word "employee" shall be substituted for the word or words "agent" and "selling agency" as they appear throughout § 18-1.505-4, except paragraph (d) thereof.)

(a) A person may be a bona fide employee whether his compensation is on a fixed salary basis, or, when customary in the trade, on a percentage, commission, or other contingent basis or a combination of the foregoing.

(b) The hiring must contemplate some continuity and it may not be related only to the obtaining of one or more specific Government contracts.

(c) An employee is not "bona fide" who seeks to obtain any Government contract or contracts for his employer through the use of improper influence or who holds himself out as being able

to obtain any Government contract or contracts through improper influence. § 18-1.505-4 Bona fide established commercial or selling agency maintained by the contractor for the purpose of securing business.

In determining whether an agency is a "bona fide established commercial or selling agency maintained by the contractor for the purpose of securing business," the factors set forth in paragraphs (a) through (e) of this section shall be considered. They are necessarily incapable of exact measurement or precise definition, and it is neither possible nor desirable to prescribe the relative weight to be given any single factor as against any other factor or as against all other factors. The conclusions to be reached in a given case will necessarily depend upon a careful evaluation of the agreement and other attendant facts and circumstances.

(a) The fees charged should not be inequitable and exorbitant in relation to the services actually rendered. That is, the compensation should be commensurate with the nature and extent of the services and should not be excessive as compared with the fees customarily allowed in the trade concerned for similar services related to commercial (nonGovernment) business. In evaluating reasonableness of the fee, the services of the agent other than actual solicitation should be considered; for example, technical, consultant, or managerial services, and assistance in the procurement of essential personnel, facilities, equipment, materials, or subcontractors for performance of the contract.

(b) The selling agency should have adequate knowledge of the products and the business of the concern represented, as well as other qualifications necessary to sell the products or services on their merits.

(c) There should ordinarily be a continuity of relationship between the contractor and the agency. The fact that the agency has represented the contractor over a considerable period of time is a factor for favorable consideration. It is not intended, however, to disqualify a newly established contractor-agent relationship where a continuing relationship is contemplated by the parties.

(d) It should appear that the agency is an established concern. The agency may be either one which has been in business for a considerable period of time

construction field, including the administration of construction contracts.

§ 18-1.403-2 Appointment.

(a) Except for those individuals who are authorized to enter into contracts by virtue of their position, appointment of contracting officers shall be made on NASA Form 1350, Certificate of Appointment, issued by the appointing official. Any limitations on the scope of the authority to be exercised by the contracting officer, other than those contained in this chapter, shall be entered on the face of the certificate. Certificates may be serially numbered.

(b) The office of each appointing authority shall maintain a file of all documents (such as résumés, references, and records of training) considered in the selection of each contracting officer. § 18-1.403-3

ment.

Termination of appoint

(a) Automatic termination. Unless the Certificate of Appointment of a contracting officer contains other provision for automatic termination, the appointment shall remain in effect, unless sooner revoked, until the contracting officer is reassigned or his employment is terminated.

(b) Revocation. The appointment of a contracting officer may be revoked at any time by the appointing authority, or higher appointing authority, or any successor to either, but no such revocation shall operate retroactively. Revocation of the appointment shall be made by letter. reading substantially as follows:

ability, training, and experienc contracting officer. Duties, invol tracts of large dollar value and ity, shall be given only to persor commensurate experience, train ability.

Subpart 18-1.5—Contingent ‹ Fees

§ 18-1.500

Scope of subpart.

This subpart sets forth the pr to be followed and prescribes t to be used for obtaining infc concerning contingent or other f by contractors for soliciting or contracts.

§ 18-1.502 Applicability.

This subpart applies to all co § 18-1.503 Covenant against co fees clause.

Every contract, except when S Forms 19 and 19A are used for f advertised construction contract contain the clause set forth belov

COVENANT AGAINST CONTINGENT (FEBRUARY 1962)

The Contractor warrants that no p selling agency has been employed or to solicit or secure this contract u agreement or understanding for a sion, percentage, brokerage, or conting excepting bona fide employees or b established commercial or selling a maintained by the Contractor for the of securing business. For breach or v of this warranty, the Government sh the right to annul this contract liability or in its discretion to dedu the contract price or consideration, ox wise recover, the full amount O commission, percentage, brokerage, tingent fee.

§ 18-1.504 Improper influence.

The term "improper influence" influence, direct or indirect, whi duces or tends to induce considerat action by any employee or officer United States with respect to any ernment contract on any basis othe the merits of the matter.

§ 18-1.505 General principles standards applicable to the cov The principles and standards set in this subpart are intended to be as a guide in the negotiation, awar ministration, and enforcement contracts.