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more than 6 percent of the estimated cost of that work or project, not including fees. The fee for performing any other cost-plus-afixed-fee contract may not be more than 10 percent of the estimated cost of the contract, not including the fee. Determinations under this subsection of the estimated costs of a contractor project shall be made by the head of the agency at the time the contract is made.

(e) Each cost contract and each cost-plus-fixed-fee contract shall provide for notice to the agency by the contractor before the making, under the prime contract, of

(1) a cost-plus-a-fixed-fee subcontract; or

(2) a fixed-price subcontract or purchase order involving more than $25,000 or 5 percent of the estimated cost of the prime contract. (Aug. 10, 1956, ch. 1041, § 1, 70A Stat. 130.)

Section 2307. Advance payments.
(a) The head of any agency may-

(1) make advance, partial, progress, or other payments under contracts for property or services made by the agency; and

(2) insert in bid solicitations for procurement of property or services a provision limiting to small business concerns advance or progress payments.

(b) Payments made under subsection (a) may not exceed the unpaid contract price.

(c) Advance payments made under subsection (a) may be made only if the contractor gives adequate security and after a determination by the head of the agency that to do so would be in the public interest. Such security may be in the form of a lien in favor of the United States on the property contracted for, on the balance in an account in which such payments are deposited, and on such of the property acquired for performance of the contract as the parties may agree. This lien is paramount to any other liens. Aug. 10, 1956, c. 1041, § 1, 70A Stat. 131, amended Aug. 28, 1958, Pub.L. 85-800, $ 9, 72 Stat. 967.

Section 2308. Assignment and delegation of procurement func

tions and responsibilities. Subject to section 2311 of this title, to facilitate the procurement of property and services covered by this chapter by each agency named in section 2303 of this title for any other agency, and to facilitate joint procurement by those agencies

(1) the head of an agency may, within his agency, delegate functions and assign responsibilities relating to procurement;

(2) the heads of two or more agencies may by agreement delegate procurement functions and assign procurement responsibilities from one agency to another of those agencies or to an officer or civilian employee of another of those agencies; and

(3) the heads of two or more agencies may create joint or combined offices to exercise procurement functions and responsibilities. (Aug. 10, 1956, ch. 1041, § 1, 70A Stat. 131.)

Section 2309. Allocation of appropriations.

(a) Appropriations available for procurement by an agency named in section 2303 of this title may, through administrative allotment, be made available for obligation for procurement by any other agency in amounts authorized by the head of the allotting agency and without transfer of funds on the books of the Department of the Treasury.

(b) A disbursing officer of the allotting agency may make any disbursement chargeable to an allotment under subsection (a) upon a voucher certified by an officer or civilian employee of the procuring agency. (Aug. 10, 1956, ch. 1041, § 1, 70A Stat. 132.)

Section 2310. Determinations and decisions.

(a) Determinations and decisions required to be made under this chapter by the head of an agency may be made for an individual purchase or contract or for a class of purchases or contracts. Such a determination or decision is final.

(b) Each determination or decision under clauses (11)-(16) of section 2304(a), section 2306, or section 2307 (c) of this title shall be based on a written finding by the person making the determination or decision. Such a finding is final and shall be kept available in the agency for at least six years after the date of the determination or decision. A copy of the finding shall be submitted to the General Accounting Office with each contract to which it applies. Aug. 10, 1956, c. 1041, § 1, 70A Stat. 132, amended Aug. 28, 1958, Pub.L. 85-800, $ 10, 72 Stat. 967.

Section 2311. Delegation.

The head of an agency may delegate, subject to his direction, to any other officer or official of that agency, any power under this chapter except the power to make determinations and decisions under clauses (11)-(16) of section 2304(a) of this title. However, the power to make a determination or decision under section 2304(a) (11) of this title may be delegated only to a chief officer or official of that agency who is responsible for procurement, and only for contracts requiring the expenditure of not more than $25,000. Aug. 10, 1956, c. 1041, § 1, 70A Stat, 132, amended Aug. 28, 1958, Pub.L. 85–800, § 11, 72 Stat. 967.

Section 2312. Remission of liquidated damages.

Upon the recommendation of the head of an agency, the Comptroller General may remit all or part, as he considers just and equitable, of any liquidated damages assessed for delay in performing a contract, made by that agency, that provides for such damages. (Aug. 10, 1956, ch. 1041, § 1, 70A Stat. 132.)

Section 2313. Examination of books and records of contractor.

(a) An agency named in section 2303 of this title is entitled, through an authorized representative, to inspect the plant and audit the books and records of

(1) a contractor performing a cost or cost-plus-a-fixed-fee contract made by that agency under this chapter; and

(2) a subcontractor performing any subcontract under a cost or cost-plus-a-fixed-fee contract made by that agency under this chapter.

(b) Each contract negotiated under this chapter shall provide that the Comptroller General and his representatives are entitled, until the expiration of three years after final payment, to examine any books, documents, papers, or records of the contractor, or any of his subcontractors, that directly pertain to, and involve transactions relating to, the contract or subcontract. (Aug. 10, 1956, ch. 1041, § 1, 70A Stat. 132.)

Section 2314. Laws applicable to agencies named in section 2303

of this title. Sections 5, 6, 6a, and 13 of title 41 do not apply to the procurement of property or services by the agencies named in section 2303 of this title. (Aug. 10, 1956, ch. 1041, § 1, 70A Stat. 133.)

CHAPTER 139.-RESEARCH AND DEVELOPMENT

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Section 2352. Contracts: limited to five-year terms.

Subject to availability of appropriations, contracts of a military department for services and the use of facilities for research or development, or both, may be for a term of not more than five years, and may be extended for not more than five additional years. (Aug. 10, 1956, ch. 1041, § 1, 70A Stat. 133.)

Section 2353. Contracts: acquisition, construction, or furnishing

of test facilities and equipment. (a) A contract of a military department for research and development, or both, may provide for the acquisition or construction by, or furnishing to, the contractor, of research, developmental, or test facilities and equipment that the Secretary of the military department concerned determines to be necessary for the performance of the contract. The facilities and equipment, and specialized housing for them, may be acquired or constructed at the expense of the United States, and may be lent or leased to the contractor with or without reimbursement, or may be sold to him at fair value. This subsection does not authorize new construction or improvements having general utility.

(b) Facilities that would not be readily removable or separable without unreasonable expense or unreasonable loss of value may not be installed or constructed under this section on property not owned by the United States, unless the contract contains

(1) a provision for reimbursing the United States for the fair value of the facilities at the completion or termination of the contract or within a reasonable time thereafter;

(2) an option in the United States to acquire the underlying land; or

(3) an alternative provision that the Secretary concerned considers to be adequate to protect the interests of the United States in the facilities.

(c) Proceeds of sales or reimbursements under this section shall be paid into the Treasury as miscellaneous receipts, except to the extent otherwise authorized by law with respect to property acquired by the contractor. (Aug. 10, 1956, ch, 1041, § 1, 70A Stat. 134.)

Section 2354. Contracts: indemnification provisions.

(a) With the approval of the Secretary of the military department concerned, any contract of a military department for research or development, or both, may provide that the United States will indemnify the contractor against either or both of the following, but only to the extent that they arise out of the direct performance of the contract and to the extent not compensated by insurance or otherwise:

(1) Claims (including reasonable expenses of litigation or settlement) by third persons, including employees of the contractor, for death, bodily injury, or loss of or damage to property, from a risk that the contract defines as unusually hazardous.

(2) Loss of or damage to property of the contractor from a risk that the contract defines as unusually hazardous.

(b) A contract, made under subsection (a), that provides for indemnification must also provide for

(1) notice to the United States of any claim or suit against the contractor for the death, bodily injury, or loss of or damage to property; and

(2) control of or assistance in the defense by the United States, at its election, of that suit or claim.

(c) No payment may be made under subsection (a) unless the Secretary of the department concerned, or an officer or official of his department designated by him, certifies that the amount is just and reasonable.

(d) Upon approval by the Secretary concerned, payments under subsection (a) may be made from

(1) funds obligated for the performance of the contract concerned;

(2) funds available for research or development, or both, and not otherwise obligated; or

(3) funds appropriated for those payments. (Aug. 10, 1956, ch. 1041, § 1, 70A Stat. 134.)

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Section 2355. Contracts: vouchering procedures.

Notwithstanding any law relating to the expenditure of and accounting for public funds, the Secretary of each military department may, with the approval of the Secretary of Defense and the Comptroller General, prescribe by regulation the extent to which vouchers for funds spent under a contract of his department for research or development, or both, must be itemized, substantiated, or certified before payment. (Aug. 10, 1956, ch. 1041, § 1, 70A Stat. 135.)

Section 2356. Contracts: delegations.

(a) The Secretary of a military department may delegate any authority under section 1584, 2353, 2354, 2355 of this title to

(1) the Under Secretary of his department;
(2) an Assistant Secretary of his department; or

(3) the chief, and one assistant to the chief, of any technical service, bureau, or office. However, the authority of the Secretary under section 2353(b) (3) of this title may not be delegated to a person described in clause (3) of this subsection.

(b) Subject to other provisions of law, the power to negotiate and administer contracts for research or development, or both, may be further delegated. In this section “negotiate” means make without the formal advertising prescribed by section 2305 of this title. Aug. 10, 1956, c. 1041, § 1, 70A Stat. 135, amended Sept. 2, 1958, Pub.L. 85-861, $ 1(43A), 72 Stat. 1457.

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Section 2357. Contracts: reports to Congress.

The Secretary of each military department shall report to Congress on contracts for research or development, or both, made during each six-month period ending on January 16 or July 16. The report shall

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