E.o. 10789

  EX. ORD. NO. 10789. CONTRACTING AUTHORITY OF GOVERNMENT AGENCIES IN

CONNECTION WITH NATIONAL DEFENSE FUNCTIONS

Ex. Ord. No. 10789, Nov. 14, 1958, 23 F.R. 8897, as amended by

Ex. Ord. No. 11051, Sept. 27, 1962, 27 F.R. 9683; Ex. Ord. No.

11382, Nov. 28, 1967, 32 F.R. 16247; Ex. Ord. No. 11610, July 22,

1971, 36 F.R. 13755; Ex. Ord. No. 12148, July 20, 1979, 44 F.R.

43239; Ex. Ord. No. 12919, Sec. 904(b), June 3, 1994, 59 F.R.

29534; Ex. Ord. No. 13232, Oct. 20, 2001, 66 F.R. 53941; Ex. Ord.

No. 13286, Sec. 73, Feb. 28, 2003, 68 F.R. 10630, provided:

By virtue of the authority vested in me by the act of August 28,

1958, 72 Stat. 972, hereinafter called the act [this chapter], and

as President of the United States, and deeming that such action

will facilitate the national defense, it is hereby ordered as

follows:

PART I - DEPARTMENT OF DEFENSE

Under such regulations, which shall be uniform to the extent

practicable, as may be prescribed or approved by the Secretary of

Defense:

1. The Department of Defense is authorized, within the limits of

the amounts appropriated and the contract authorization provided

therefor, to enter into contracts and into amendments or

modifications of contracts heretofore or hereafter made, and to

make advance payments thereon, without regard to the provisions of

law relating to the making, performance, amendment, or modification

of contracts, whenever, in the judgment of the Secretary of

Defense, the Secretary of the Army, the Secretary of the Navy, or

the Secretary of the Air Force, or the duly authorized

representative of any such Secretary, the national defense will be

facilitated thereby.

1A. (a) The limitation in paragraph 1 to amounts appropriated and

the contract authorization provided therefor shall not apply to

contractual provisions which provide that the United States will

hold harmless and indemnify the contractor against any of the

claims or losses set forth in subparagraph (b), whether resulting

from the negligence or wrongful act or omission of the contractor

or otherwise (except as provided in subparagraph (b)(2)). This

exception from the limitations of paragraph 1 shall apply only to

claims or losses arising out of or resulting from risks that the

contract defines as unusually hazardous or nuclear in nature. Such

a contractual provision shall be approved in advance by an official

at a level not below that of the Secretary of a military department

and may require each contractor so indemnified to provide and

maintain financial protection of such type and in such amounts as

is determined by the approving official to be appropriate under the

circumstances. In deciding whether to approve the use of an

indemnification provision and in determining the amount of

financial protection to be provided and maintained by the

indemnified contractor, the appropriate official shall take into

account such factors as the availability, cost and terms of private

insurance, self-insurance, other proof of financial responsibility

and workmen's compensation insurance. Such approval and

determination, as required by the preceding two sentences, shall be

final.

(b)(1) Subparagraph (a) shall apply to claims (including

reasonable expenses of litigation and settlement) or losses, not

compensated by insurance or otherwise, of the following types:

(A) Claims by third persons, including employees of the

contractor, for death, personal injury, or loss of, damage to, or

loss of use of property;

(B) Loss of, damage to, or loss of use of property of the

contractor;

(C) Loss of, damage to, or loss of use of property of the

Government;

(D) Claims arising (i) from indemnification agreements between

the contractor and a subcontractor or subcontractors, or (ii) from

such arrangements and further indemnification arrangements between

subcontractors at any tier; provided that all such arrangements

were entered into pursuant to regulations prescribed or approved by

the Secretaries of Defense, the Army, the Navy, or the Air Force.

(2) Indemnification and hold harmless agreements entered into

pursuant to this subsection, whether between the United States and

a contractor, or between a contractor and a subcontractor, or

between two subcontractors, shall not cover claims or losses caused

by the willful misconduct or lack of good faith on the part of any

of the contractor's or subcontractor's directors or officers or

principal officials which are (i) claims by the United States

(other than those arising through subrogation) against the

contractor or subcontractor, or (ii) losses affecting the property

of such contractor or subcontractor. Regulations to be prescribed

or approved by the Secretaries of Defense, the Army, the Navy or

the Air Force shall define the scope of the term principal

officials.

(3) The United States may discharge its obligation under a

provision authorized by subparagraph (a) by making payments

directly to subcontractors or to third persons to whom a contractor

or subcontractor may be liable.

(c) A contractual provision made under subparagraph (a) that

provides for indemnification must also provide for -

(1) notice to the United States of any claim or action against,

or of any loss by, the contractor or subcontractor which is covered

by such contractual provision; and

(2) control or assistance by the United States, at its election,

in the settlement or defense of any such claim or action.

2. The Secretaries of Defense, the Army, the Navy, and the Air

Force, respectively, may exercise the authority herein conferred

and, in their discretion and by their direction, may delegate such

authority to any other military or civilian officers or officials

of their respective departments, and may confer upon any such

military or civilian officers or officials the power to make

further delegations of such authority within their respective

commands or organizations: Provided, That the authority herein

conferred shall not be utilized to obligate the United States in an

amount in excess of $50,000 without approval by an official at or

above the level of an Assistant Secretary or his Deputy, or by a

departmental Contract Adjustment Board.

3. The contracts hereby authorized to be made shall include

agreements of all kinds (whether in the form of letters of intent,

purchase orders, or otherwise) for all types and kinds of property

or services necessary, appropriate, or convenient for the national

defense, or for the invention, development, or production of, or

research concerning, any such property or services, including, but

not limited to, aircraft, missiles, buildings, vessels, arms,

armament, equipment or supplies of any kind, or any portion

thereof, including plans, spare parts and equipment therefor,

materials, supplies, facilities, utilities, machinery, machine

tools, and any other equipment without any restriction of any kind

as to type, character, location, or form.

4. The Department of Defense may by agreement modify or amend or

settle claims under contracts heretofore or hereafter made, may

make advance payments upon such contracts of any portion of the

contract price, and may enter into agreements with contractors or

obligors modifying or releasing accrued obligations of any sort,

including accrued liquidated damages or liability under surety or

other bonds. Amendments or modifications of contracts may be with

or without consideration and may be utilized to accomplish the same

things as any original contract could have accomplished hereunder,

irrespective of the time or circumstances of the making, or the

form, of the contract amended or modified, or of the amending or

modifying contract, and irrespective of rights which may have

accrued under the contract or the amendments or modifications

thereof.

5. Proper records of all actions taken under the authority of the

act shall be maintained within the Department of Defense. The

Secretaries of Defense, the Army, the Navy, and the Air Force shall

make such records available for public inspection except to the

extent that they, or their duly authorized representatives, may

respectively deem the disclosure of information therein to be

detrimental to the national security.

6. The Department of Defense shall, by March 15 of each year,

report to the Congress all actions taken within that department

under the authority of the act during the preceding calendar year.

With respect to actions which involve actual or potential cost to

the United States in excess of $50,000, the report shall (except as

the disclosure of such information may be deemed to be detrimental

to the national security) -

(a) name the contractor;

(b) state the actual cost or estimated potential cost involved;

(c) describe the property or services involved; and

(d) state further the circumstances justifying the action taken.

7. There shall be no discrimination in any act performed

hereunder against any person on the ground of race, religion,

color, or national origin, and all contracts entered into, amended,

or modified hereunder shall contain such nondiscrimination

provision as otherwise may be required by statute or Executive

order.

8. No claim against the United States arising under any purchase

or contract made under the authority of the act and this order

shall be assigned except in accordance with the Assignment of

Claims Act of 1940 (54 Stat. 1029), as amended [section 3727 of

Title 31, Money and Finance, and section 15 of Title 41, Public

Contracts].

9. Advance payments shall be made hereunder only upon obtaining

adequate security.

10. Every contract entered into, amended, or modified pursuant to

this order shall contain a warranty by the contractor in

substantially the following terms:

"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, except bonafide employees or bonafide

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."

11. Except as provided in the Act of September 27, 1966, 80 Stat.

850 [which amended section 1433 of this title, sections 2310 and

2313 of Title 10, Armed Forces, and section 254 of Title 41, Public

Contracts] contracts entered into, amended, or modified pursuant to

authority of this order shall include a clause to the effect that

the Comptroller General of the United States or any of his duly

authorized representatives shall, until the expiration of three

years after final payment, have access to and the right to examine

any directly pertinent books, documents, papers, and records of the

contractor or any of his subcontractors engaged in the performance

of, and involving transactions related to, such contracts or

subcontracts. Before exercising the authority provided in the Act

of September 27, 1966, 80 Stat. 850 the Secretaries of Defense, the

Army, the Navy, or the Air Force, or their designees, shall first

determine that all reasonable efforts have been made to include the

clause prescribed above and that alternate sources of supply are

not reasonably available.

12. Nothing herein contained shall be construed to constitute

authorization hereunder for -

(a) the use of the cost-plus-a-percentage-of-cost system of

contracting;

(b) any contract in violation of existing law relating to

limitation of profits or fees;

(c) the negotiation of purchases of or contracts for property or

services required by law to be procured by formal advertising and

competitive bidding;

(d) the waiver of any bid, payment, performance, or other bond

required by law;

(e) the amendment of a contract negotiated under section

2304(a)(15) of Title 10 of the United States Code to increase the

contract price to an amount higher than the lowest rejected bid of

any responsible bidder; or

(f) the formalization of an informal commitment, unless the

Secretary of Defense, the Secretary of the Army, the Secretary of

the Navy, or the Secretary of the Air Force, or the duly authorized

representative of any such Secretary, finds that at the time the

commitment was made it was impracticable to use normal procurement

procedures.

13. The provisions of the Walsh-Healey Act (49 Stat. 2036), as

amended [sections 35 to 45 of Title 41, Public Contracts], the

Davis-Bacon Act (49 Stat. 1011), as amended [now sections 3141-

3144, 3146, and 3147 of Title 40, Public Buildings, Property, and

Works], the Copeland Act (48 Stat. 948), as amended, and the Eight-

Hour Law (37 Stat. 137), as amended [sections 321 to 323 of former

Title 40, Public Buildings, Property, and Works], if otherwise

applicable, shall apply to contracts made and performed under the

authority of this order.

14. Nothing herein contained shall prejudice anything heretofore

done under Executive Order No. 9001 of December 27, 1941, or

Executive Order No. 10210 of February 2, 1951, or any amendments or

extensions thereof, or the continuance in force of an action

heretofore taken under those orders or any amendments or extensions

thereof.

15. Nothing herein contained shall prejudice any other authority

which the Department of Defense may have to enter into, amend, or

modify contracts, and to make advance payments.

PART II - EXTENSION OF PROVISIONS OF PARAGRAPHS 1 TO 14

21. Subject to the limitations and regulations contained in

paragraphs 1 to 14, inclusive, hereof, and under any regulations

prescribed by him in pursuance of the provisions of paragraph 22

hereof, the head of each of the following-named agencies is

authorized to perform or exercise as to his agency, independently

of any Secretary referred to in the said paragraphs 1 to 14, all

the functions and authority vested by those paragraphs in the

Secretaries mentioned therein:

Department of the Treasury.

Department of the Interior.

Department of Agriculture.

Department of Commerce.

Department of Health and Human Services[.]

Department of Transportation.

Atomic Energy Commission.

General Services Administration.

National Aeronautics and Space Administration.

Tennessee Valley Authority.

Government Printing Office.

Department of Homeland Security.

22. The head of each agency named in paragraph 21 hereof is

authorized to prescribe regulations governing the carrying out of

the functions and authority vested with respect to his agency by

the provisions of paragraph 21 hereof. Such regulations shall, to

the extent practicable, be uniform with the regulations prescribed

or approved by the Secretary of Defense under the provisions of

Part I of this order.

23. Nothing contained herein shall prejudice any other authority

which any agency named in paragraph 21 hereof may have to enter

into, amend, or modify contracts and to make advance payments.

24. Nothing contained in this Part shall constitute authorization

thereunder for the amendment of a contract negotiated under section

322(c)(14) of the Federal Property and Administrative Services Act

of 1949 (63 Stat. 394), as amended by section 2(b) of the act of

August 28, 1958, 72 Stat. 966 [section 252(c)(14) of Title 41,

Public Contracts], to increase the contract price to an amount

higher than the lowest rejected bid of any responsible bidder.

PART III - COORDINATION WITH OTHER AUTHORITIES

25. After March 1, 2003, no executive department or agency shall

exercise authority granted under paragraph 1A of this order with

respect to any matter that has been, or could be, designated by the

Secretary of Homeland Security as a qualified anti-terrorism

technology as defined in section 865 of the Homeland Security Act

of 2002 [6 U.S.C. 444], unless -

(a) in the case of the Department of Defense, the Secretary of

Defense has, after consideration of the authority provided under

subtitle G of title VIII of the Homeland Security Act of 2002 [6

U.S.C. 441 et seq.], determined that the exercise of authority

under this order is necessary for the timely and effective conduct

of United States military or intelligence activities; and

(b) in the case of any other executive department or agency that

has authority under this order, (i) the Secretary of Homeland

Security has advised whether the use of the authority provided

under subtitle G of title VIII of the Homeland Security Act of 2002

would be appropriate, and (ii) the Director of the Office and

Management and Budget has approved the exercise of authority under

this order.

-End-