§ 12-1.311 Priorities, allocations and allotments.

The programs of the Coast Guard and certain programs of the Federal Aviation Administration are defenserelated programs to which the priorities and allocations regulations apply. Ratable contracts and purchase orders shall contain the clause set forth in DOTPR 12-7.150-3 and the appropriate DO or DX rating (and the appropriate allotment number if the order calls for authorized controlled materials) in accordance with the provisions of DMS (Defense Materials System) Regulation 1 and BDSA Regulation 2. These regulations are available from the Business and Defense Services Administration of the Department of Commerce.

§ 12-1.313 Records of contract actions.

(a) In compliance with the requirements of FPR 1-1.313, each procurement office shall maintain for each procurement exceeding $2,500 a contract file containing a comprehensive record of all preaward and postaward actions and other data. Adherence to this policy will require the assembly of either the original or a copy of all documents pertaining to the procurement in a file consisting of one or more folders. It will also require documentation for the record of all understandings, oral agreements, and any other facts or information pertinent to the transaction. It is left to the discretion of the procurement official to determine the manner in which unwritten matters are documented. However, it would be expected, for example, that those of a complex nature would be carefully documented by typewritten "memorandum for the record", while routine data might be recorded by a handwritten notation in the file. Photographs should be employed wherever they will serve to effectively document pertinent contract matters.

(b) Complete documentation will permit ready reconstruction of all stages of the transaction in order to: (1) Support actions taken by various personnel in the procurement cycle.

(2) Provide information for internal management review and for reviews by the General Accounting Office.

(3) Supply data for use in preparing replies to legitimate inquiries.

(4) Furnish essential facts in the event of litigation.

(c) Small purchase records shall be maintained in accordance with FPR Subpart 1-3.6 and DOTPR Subpart 12-3.6.

§ 12-1.315 Use of liquidated damages provisions in procurement contracts.

§ 12-1.315-2 Policy.

(a) Criteria for use. (1) In proposed contracts involving an item where only a portion of the quantity ordered is for immediate programs, and liquidated damages provisions are considered to be necessary, care shall be taken to have the liquidated damages provisions apply only to the urgent quantity.

(2) The use of liquidated damages provisions should never be construed as relieving procurement officials of the obligation of establishing realistic delivery or performance schedules. Realistic delivery or performance schedules should be a prerequisite to the use of liquidated damages.

(3) Liquidated damages provisions generally should not be used:

(i) In contracts for supplies or services required for routine administrative purposes.

(ii) In contracts for standard commercial or "shelf items".

(iii) In any contract where time would permit the needs of the Department to be met by termination and reprocurement if the initial contractor defaults.

(iv) In small purchases.

(v) In study, experimental, development, or research contracts, including equipment contracts requiring developmental work.

(4) Liquidated damages provisions are generally appropriate in construction contracts in accordance with the provisions of FPR 1-1.315-2(a). How

ever, inclusion of liquidated damages provisions may be inappropriate in situations such as a construction contract consisting of repairs, alteration or improvements, where any delay in the completion would still permit the user to continue its normal function in an uninterrupted manner without resulting in added expense to the Government.

(b) Rate of assessment. (1) Contracting officers must assure that the rate of liquidated damages stipulated for a given contract is a reasonable forecast of the Government's anticipated damages. A fixed formula, based on percentage of value, shall not be used to establish the rate of damages. The minimum amount of liquidated damages should be based on the estimated cost of inspection and superintendence for each day of delay in completion. In addition, the following factors are examples of matters to be considered in establishing the rate of damages:

(i) The importance of the item in relation to the facility or project for which it is intended.

(ii) The relative importance of the item to the facility or project in the overall program of the Department.

(iii) Any rental of facilities necessitated by the delay in a construction completion date.

(iv) Cost of additional maintenance required on structures being replaced by contract items.

(v) Any unusual damages that can be anticipated.

(2) Unless it is clear that partial delivery will proportionately reduce the extent of probable damages, rates shall not be specified to be applicable to individual units of an item, but rather to quantities of an item or to groups of items which are required for delivery or completion at the same time. Rates should generally be expressed in terms of even dollars per day of delay.

(c) Enforcement. Where liquidated damages provisions are used, they shall be strictly enforced. In making partial or progress payments, deductions for damages should be made on the basis of the actual number of days of delay multiplied by the rate.

(d) Termination. If the contract is terminated, the contractor remains

liable for liquidated damages that have accrued. Moreover, on a default termination, liquidated damages continue to accrue even after default, until the Department can reasonably obtain delivery of the supplies or performance of the service. This is in addition to any other rights of the Government to damages under default provisions for the excess costs of reprocuring the supplies or services of the terminated contract.

(e) Remission. An information copy of each submission to the Comptroller General of a recommendation for the remission of liquidated damages shall be forwarded to the Director of Installations and Logistics, OST.

§ 12-1.318 Disputes clause.

When a dispute cannot be settled by agreement and a decision under the Disputes clause is necessary, the contracting officer shall review the available facts pertinent to the dispute before making his final decision. When there is any doubt as to whether the issue in dispute is subject to the disputes procedure, a decision will be made pursuant to the Disputes clause. The disputes procedure shall not be invoked in cases when a dispute is clearly not subject to the procedure. The contracting officer shall obtain, from assigned legal and other advisors, such advice and assistance as is required to render a decision. However, the decision must be that of the contracting officer.

§ 12-1.318-50 Contracting officer's decision under the disputes clause.

The final decision should include a statement of facts sufficient to enable the contractor to understand both the decision and the basis therefor. Normally, the decision should be in the form of a statement of the claim or other description of the nature of the dispute with necessary references to pertinent contract provisions; a statement of the facts relevant to the dispute on which the parties are in agreement and, as clearly as possible, the area of disagreement; and the contracting officer's statement of his decision and the basis therefor. The decision shall contain the following paragraphs:

This decision is made in accordance with the Disputes clause and shall be final and conclusive as provided therein, unless, within 30 days from the date of receipt of this decision, a written notice of appeal (in triplicate) addressed to the Secretary of Transportation is mailed or otherwise furnished to the Contracting Officer. The notice of appeal, which is to be signed by you as the contractor or by an attorney acting on your behalf, and which may be in letter form, should indicate that an appeal is intended, should refer to this decision, and should identify the contract by number. The notice of appeal may include a statement of the reasons why the decision is considered to be erroneous.

The Department of Transportation Contract Appeals Board is the authorized representative of the Secretary in hearing, considering, and deciding such appeals. The rules of the Department of Transportation Contract Appeals Board are set forth in the Code of Federal Regulations (41 CFR Part 12-60 et seq.).

§ 12-1.318-51 Agreement after appeal is filed.

After an appeal has been filed, contracting agencies are encouraged to seek agreement as to disposition of the controversy. However, such efforts to dispose of a controversy shall not be conducted in lieu of formal Board actions or hearings and shall not result in suspension of processing of an appeal, except as ordered or authorized by the Department of Transportation Contract Appeals Board.

§ 12-1.318-52 Payment after appeal is filed.

In the event of an appeal, the amount determined to be payable in the decision of the contracting officer, less any portion previously paid, normally should be paid in advance of any decision by the Board without prejudice to the rights of either party or the appeal.

§ 12-1.318-53 Implementation of decisions of the Contract Appeals Board.

(a) It is the policy of the Department of Transportation to take prompt action to effect payment in accordance with any decision of the Contract Appeals Board wholly or partially favorable to the appellant. If, however, an Administration believes such decision is not supportable under the

standards of the Wunderlich Act, 41 U.S.C. 321-322, it may recommend that action be taken to seek judicial review of the Board's decision. The recommendation shall be made to the DOT General Counsel who shall determine whether or not judicial review of the Board's decision will be sought. In the event that the DOT General Counsel determines that judicial review will be sought, the matter shall be referred to the Department of Justice and the appellant shall be promptly advised that payment in accordance with the Board's decision will not be made.

(b) In cases where the question of entitlement only has been decided by the Board and the matter of amount has been remanded to the parties for negotiation, if agreement is not reached the appellant will be afforded a prompt decision and an opportunity to appeal on the matter of amount. § 12-1.320 Subcontractor gifts and kickbacks.

Reports of suspected violations and action being taken shall be furnished the Director of Installations and Logistics, OST.

§ 12-1.350 Contract number prefixes.

All contracts, exclusive of purchase orders, issued by the Department will be identified by a number or combination of letters and numbers, in accordance with Department Order 4220.1A (set forth in DOTPR Part 12-99).

§ 12-1.351 Industrial security.

(a) Pursuant to Executive Order 10865 (3 CFR, 1959-63 Comp.) an agreement between the Department of Defense and the Department of Transportation was entered into on June 1, 1967, extending regulations prescribed by the Secretary of Defense under the Executive order to apply to protect releases of classified information relating to DOT contracts and releases of other classified information which DOT has the responsibility for safeguarding. The Office of Investigations and Security, OST, has been designated as the Department of Transportation liaison for industrial security matters. The Defense Supply Agency will perform all cognizant security office

functions specified in, and will have the authority and responsibilities prescribed by, Department of Defense Industrial Security Regulations (ISR) (DOD 5220.22R) and Department of Defense Industrial Security Manual (DOD 5220.22M).

(b) Any DOT contract or prospective contract which would require access to classified information by the contractor or any of his employees in the bid, negotiation, award, performance, or termination of the contract, including clearances required for visit purposes, is considered to be a "classified contract" subject to the procedures of this section, even though the contract document itself is unclassified.

(c) All proposed procurements shall be reviewed specifically to determine if access to classified information will be required by prospective contractors during the solicitation period or by a contractor at any time in the performance of the contract. If access to classified information will be required during the solicitation period, the security staff of the headquarters of the Administration, as designated in DOT Order 1600.22, shall be advised immediately and furnished the list of firms to be solicited. Initiations for bid or requests for proposals shall not be issued until notification has been received from the appropriate security staff that the firms to be solicited have a valid facility security clearance. If access to classified information will not be required during the solicitation period but will be required during the performance of the contract, the invitation for bids or requests for proposals shall so state, and award shall only be made after the facility security clearance of the proposed contractor has been verified and approved by the appropriate security staff.

(d) Immediately upon the award of a classified contract, or in connection with precontract negotiations, if appropriate, the contracting officer shall furnish a copy of DD Form 254, Contract Security Classification Specification, to the prime contractor.

(e) Any DOT contract, the performance of which will require access to classified information by the contractor or any of his employees, shall contain a security requirements clause.

For classified fixed-price supply contracts, the Military Security Requirements clause as set forth in the Armed Services Procurement Regulations, paragraph 7-104.12, shall be used. Other types of classified contracts shall contain the appropriate Military Security Requirements clause of section VII of ASPR.

(f) The Industrial Security Program encompassed by the publication cited in paragraph (a) of this section applies only to contracts involving access to classified information which are performed within the United States, its territories, Puerto Rico and Canada. Offices which may wish to let classified contracts for performance outside the United States, its territories, Puerto Rico or Canada shall consult with their appropriate security staff. § 12-1.352 Variation in quantity.

(a) To the extent that a variation in quantity is caused by any of the conditions specified in the Variation in Quantity clause at FPR 1-7.101-4, the varied quantity may be accepted only to the extent specified in the contract. The Extent of Quantity Variation clause in DOTPR 12-7.151-9, or a substantially similar clause, shall be used for this purpose. The acceptable variation stated in the Extent of Quantity Variation clause shall be stated as a percentage of the required quantity, and may be an increase, a decrease, or a combination of both. There should be no standard or usual percentage or variation. The variation in quantity permitted in any procurement should be based upon the normal commercial practices of the particular industry for the particular items, and the permitted percentage should be no larger than is necessary to afford a contractor reasonable protection against the conditions specified in the Variation in Quantity clause. In no event may the acceptable variation exceed plus or minus 10 percent. The clause set forth in DOTPR 12-7.151-9 may be included in the contract only when one or more of the conditions specified in the Variation in Quantity clause is foreseeable at the time of solicitation in the case of an advertised procurement, or at the time of award in the case of a negotiated procurement.

(b) Consideration shall be given to the quantity to which the percentage variation applies. For example, when it is contemplated that delivery will be made to multiple destinations and it is desired that the quantity variation extend to the item quantity for each destination, this requirement must be set forth with particularity. Similarly, when it is desired that the quantity variation extend to the total quantity of each item and not to the quantity for each destination, it may be desirable to express a percentage limitation for each destination to prevent unrealistic distribution of any increase or decrease.

§ 12-1.353 Standards of conduct.

All governmental personnel engaged in procurement and related activities shall conduct business dealings with industry in a manner above reproach in every respect. Transactions relating to expenditure of public funds require the highest degree of public trust to protect the interests of the Government. While many Federal laws and regulations place restrictions on the actions of governmental personnel, the latter's official conduct must, in addition, be such that the individual would have no reticence about making a full public disclosure thereof. DOT regulations on Employee Responsibilities and Conduct are set forth in the Department of Transportation regulations (49 CFR Part 99).

§ 12-1.354 General procurement policy— Departmental orders.

DOT policy on selected subjects related to procurement matters is set forth in the Departmental orders contained in DOTPR Part 12-99.

Subpart 12-1.4-Procurement Responsibility and Authority

§ 12-1.402 Authority of contracting offi

cers.

§ 12-1.402-50 Contracting officer's representatives.

(a) A contracting officer may designate Government personnel to act as his authorized representatives for such functions as inspection, approval

of shop drawings, testing, approval of samples and other functions of a technical nature not involving a change in the scope, price, terms, or conditions of the contract or order. Such designation shall be in writing and shall contain specific instructions as to the extent to which the representative may take action for the contracting officer, but will not contain authority to sign contractual documents. The responsibilities and limitations of the contracting officer's representatives may be set forth in the contract or in a separate letter, a copy of which shall be furnished to the contractor.

(b) A person assigned to and performing his primary duty within a procurement office, and who is under the supervision of a contracting officer, does not require designation as a representative to perform his assigned duties. Such a person is considered to be an employee of the contracting officer, acting in his behalf and as such has the authority to perform acts as assigned by the contracting officer. The contracting officer cannot, without delegating contracting officer authority, authorize his employees to sign any contract document or letter where the signature of a contracting officer is required.

§ 12-1.450 Responsibility of procurement personnel to question requirements and reaffirm their validity.

(a) Procurement personnel have a responsibility to question any contemplated procurement action which appears inconsistent with their knowledge of commodities, markets, prices, and normal processes of doing business, or inconsistent with the authority of the requisitioner.

(b) When the award of a proposed procurement has been prolonged over an extended period of time or when during the processing of the procurement, matters are disclosed which give rise to questioning the magnitude of or necessity for the requirement, procurement personnel should reaffirm the validity of the requirement before award of contract.