41 U.s.c. 251

TITLE 41--PUBLIC CONTRACTS

CHAPTER 4--PROCUREMENT PROCEDURES

SUBCHAPTER IV--PROCUREMENT PROVISIONS

Sec. 254. Contract requirements

(a) Contracts awarded using procedures other than sealed-bid procedures

Except as provided in subsection (b) of this section, contracts

awarded after using procedures other than sealed-bid procedures may be

of any type which in the opinion of the agency head will promote the

best interests of the Government. Every contract awarded after using

procedures other than sealed-bid procedures shall contain a suitable

warranty, as determined by the agency head, by the contractor that no

person or selling agency has been employed or retained to solicit or

secure such 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

the breach or violation of which warranty the Government shall have the

right to annul such contract without liability or in its discretion to

deduct from the contract price or consideration the full amount of such

commission, percentage, brokerage, or contingent fee. The preceding

sentence does not apply to a contract for an amount that is not greater

than the simplified acquisition threshold or to a contract for the

acquisition of commercial items.

(b) Barred contracts; fee limitation; determination of use; advance

notification

The cost-plus-a-percentage-of-cost system of contracting shall not

be used, and in the case of a cost-plus-a-fixed-fee contract the fee

shall not exceed 10 percent of the estimated cost of the contract,

exclusive of the fee, as determined by the agency head at the time of

entering into such contract (except that a fee not in excess of 15

percent of such estimated cost is authorized in any such contract for

experimental, developmental, or research work and that a fee inclusive

of the contractor's costs and not in excess of 6 percent of the

estimated cost, exclusive of fees, as determined by the agency head at

the time of entering into the contract, of the project to which such fee

is applicable is authorized in contracts for architectural or

engineering services relating to any public works or utility project).

All cost and cost-plus-a-fixed-fee contracts shall provide for advance

notification by the contractor to the procuring agency of any

subcontract thereunder on a cost-plus-a-fixed-fee basis and of any

fixed-price subcontract or purchase order which exceeds in dollar amount

either the simplified acquisition threshold or 5 percent of the total

estimated cost of the prime contract; and a procuring agency, through

any authorized representative thereof, shall have the right to inspect

the plans and to audit the books and records of any prime contractor or

subcontractor engaged in the performance of a cost or cost-plus-a-fixed-

fee contract.

(June 30, 1949, ch. 288, title III, Sec. 304, 63 Stat. 395; Oct. 31,

1951, ch. 652, 65 Stat. 700; July 12, 1952, ch. 703, Sec. 1(m), 66 Stat.

594; Pub. L. 89-607, Sec. 2, Sept. 27, 1966, 80 Stat. 850; Pub. L. 98-

369, div. B, title VII, Secs. 2712, 2714(a)(2), (3), July 18, 1984, 98

Stat. 1181, 1184; Pub. L. 103-355, title I, Secs. 1071, 1251(a)(1),

title II, Sec. 2251(b), title IV, Secs. 4103(c), 4402(c), title VIII,

Sec. 8204(b), title X, Sec. 10005(e), Oct. 13, 1994, 108 Stat. 3270,

3278, 3320, 3341, 3349, 3396, 3408.)

Amendments

1994--Subsec. (a). Pub. L. 103-355, Secs. 4103(c), 8204(b), inserted

at end ``The preceding sentence does not apply to a contract for an

amount that is not greater than the simplified acquisition threshold or

to a contract for the acquisition of commercial items.''

Subsec. (b). Pub. L. 103-355, Secs. 4402(c), 10005(e), substituted

``percent'' for ``per centum'' wherever appearing and ``either the

simplified acquisition threshold'' for ``either $25,000'' in last

sentence.

Pub. L. 103-355, Sec. 1071, struck out after first sentence

``Neither a cost nor a cost-plus-a-fixed-fee contract nor an incentive-

type contract shall be used unless the agency head determines that such

method of contracting is likely to be less costly than other methods or

that it is impractical to secure property or services of the kind or

quality required without the use of a cost or cost-plus-a-fixed-fee

contract or an incentive-type contract.''

Subsec. (c). Pub. L. 103-355, Sec. 2251(b), struck out subsec. (c)

which related to examination of books, records, etc. of contractors,

time limitations, exemptions, exceptional conditions, and reports to

Congress. See section 254d of this title.

Subsec. (d). Pub. L. 103-355, Sec. 1251(a)(1), struck out subsec.

(d) which related to submission of cost or pricing data by contractors

and subcontractors, certificate requirements, adjustment of price,

inspection of books, records, etc., necessity of data, and exceptions.

See section 254b of this title.

1984--Pub. L. 98-369, Sec. 2714(a)(2), amended section catchline

generally.

Subsec. (a). Pub. L. 98-369, Sec. 2714(a)(3)(A), (B), substituted

``awarded after using procedures other than sealed-bid procedures'' for

``negotiated pursuant to section 252(c) of this title'' in first and

second sentences.

Subsec. (c). Pub. L. 98-369, Sec. 2714(a)(3)(C), substituted

``awarded after using procedures other than sealed-bid procedures'' for

``negotiated without advertising pursuant to authority contained in this

Act'' in first sentence.

Subsec. (d). Pub. L. 98-369, Sec. 2712, added subsec. (d).

1966--Subsec. (c). Pub. L. 89-607 provided for exemption of certain

contracts with foreign contractors from the requirement for an

examination-of-records clause, such determination to be reported to

Congress.

1952--Subsec. (b). Act July 12, 1952, substituted ``property'' for

``supplies''.

1951--Subsec. (c). Act Oct. 31, 1951, added subsec. (c).

Effective Date of 1994 Amendment

For effective date and applicability of amendment by Pub. L. 103-

355, see section 10001 of Pub. L. 103-355, set out as a note under

section 251 of this title.

Effective Date of 1984 Amendment

Amendment by Pub. L. 98-369 applicable with respect to any

solicitation for bids or proposals issued after Mar. 31, 1985, see

section 2751 of Pub. L. 98-369, set out as a note under section 251 of

this title.

Effective Date

Section effective July 1, 1949, see section 605, formerly section

505, of act June 30, 1949, ch. 288, 63 Stat. 403; renumbered by act

Sept. 5, 1950, ch. 849, Sec. 6(a), (b), 64 Stat. 583.

Exemption of Functions

Functions authorized by Foreign Assistance Act of 1961, as amended,

as exempt, see Ex. Ord. No. 11223, eff. May 12, 1965, 30 F.R. 6635, set

out as a note under section 2393 of Title 22, Foreign Relations and

Intercourse.

Foreign Contractors

Secretaries of Defense, Army, Navy, or Air Force, or their

designees, to determine, prior to exercising the authority provided in

the amendment of this section by Pub. L. 89-607 to exempt certain

contracts with foreign contractors from the requirement of an

examination-of-records clause, that all reasonable efforts have been

made to include such examination-of-records clause, as required by par.

(11) of Part I of Ex. Ord. No. 10789, and that alternate sources of

supply are not reasonably available, see par. (11) of Part I of Ex. Ord.

No. 10789, eff. Nov. 14, 1958, 23 F.R. 8897, as amended, set out as a

note under section 1431 of Title 50, War and National Defense.

Executive Order No. 12800

Ex. Ord. No. 12800, Apr. 13, 1992, 57 F.R. 12985, 13413, which

required Federal contractors to post a notice that employees could not

be required to be members of a union in order to retain their jobs, was

revoked by Ex. Ord. No. 12836, Sec. 1, Feb. 1, 1993, 58 F.R. 7045, which

was itself revoked as it relates to notification of employee rights

concerning payment of union dues or fees by Ex. Ord. No. 13201, Sec. 11,

Feb. 17, 2001, 66 F.R. 11221, and as it relates to project agreements by

Ex. Ord. No. 13202, Sec. 8, Feb. 17, 2001, 66 F.R. 11226.

Ex. Ord. No. 13201. Notification of Employee Rights Concerning Payment

of Union Dues or Fees

Ex. Ord. No. 13201, Feb. 17, 2001, 66 F.R. 11221, provided:

By the authority vested in me as President by the Constitution and

the laws of the United States of America, including the Federal Property

and Administrative Services Act, 40 U.S.C. 471 et seq. [now chapters 1

to 11 of Title 40, Public Buildings, Property, and Works, and title III

of the Act of June 30, 1949 (41 U.S.C. 251 et seq.)], and in order to

ensure the economical and efficient administration and completion of

Government contracts, it is hereby ordered that:

Section 1. (a) This order is designed to promote economy and

efficiency in Government procurement. When workers are better informed

of their rights, including their rights under the Federal labor laws,

their productivity is enhanced. The availability of such a workforce

from which the United States may draw facilitates the efficient and

economical completion of its procurement contracts.

(b) The Secretary of Labor (Secretary) shall be responsible for the

administration and enforcement of this order. The Secretary shall adopt

such rules and regulations and issue such orders as are deemed necessary

and appropriate to achieve the purposes of this order.

Sec. 2. (a) Except in contracts exempted in accordance with section

3 of this order, all Government contracting departments and agencies

shall, to the extent consistent with law, include the following

provisions in every Government contract, other than collective

bargaining agreements as defined in 5 U.S.C. 7103(a)(8) and purchases

under the ``Simplified Acquisition Threshold'' as defined in the Office

of Federal Procurement Policy Act (41 U.S.C. 403).

``1. During the term of this contract, the contractor agrees to post

a notice, of such size and in such form as the Secretary of Labor shall

prescribe, in conspicuous places in and about its plants and offices,

including all places where notices to employees are customarily posted.

The notice shall include the following information (except that the last

sentence shall not be included in notices posted in the plants or

offices of carriers subject to the Railway Labor Act, as amended (45

U.S.C. 151-188)):

``NOTICE TO EMPLOYEES

Under Federal law, employees cannot be required to join a union or

maintain membership in a union in order to retain their jobs. Under

certain conditions, the law permits a union and an employer to enter

into a union-security agreement requiring employees to pay uniform

periodic dues and initiation fees. However, employees who are not union

members can object to the use of their payments for certain purposes and

can only be required to pay their share of union costs relating to

collective bargaining, contract administration, and grievance

adjustment.

``If you do not want to pay that portion of dues or fees used to

support activities not related to collective bargaining, contract

administration, or grievance adjustment, you are entitled to an

appropriate reduction in your payment. If you believe that you have been

required to pay dues or fees used in part to support activities not

related to collective bargaining, contract administration, or grievance

adjustment, you may be entitled to a refund and to an appropriate

reduction in future payments.

``For further information concerning your rights, you may wish to

contact the National Labor Relations Board (NLRB) either at one of its

Regional offices or at the following address:

National Labor Relations Board

Division of Information

1099 14th Street, N.W.

Washington, D.C. 20570

``To locate the nearest NLRB office, see NLRB's website at

www.nlrb.gov.''

``2. The contractor will comply with all provisions of Executive

Order 13201 of February 17, 2001, and related rules, regulations, and

orders of the Secretary of Labor.

``3. In the event that the contractor does not comply with any of

the requirements set forth in paragraphs (1) or (2) above, this contract

may be cancelled, terminated, or suspended in whole or in part, and the

contractor may be declared ineligible for further Government contracts

in accordance with procedures authorized in or adopted pursuant to

Executive Order 13201 of February 17, 2001. Such other sanctions or

remedies may be imposed as are provided in Executive Order 13201 of

February 17, 2001, or by rule, regulation, or order of the Secretary of

Labor, or as are otherwise provided by law.

``4. The contractor will include the provisions of paragraphs (1)

through (3) herein in every subcontract or purchase order entered into

in connect