48 Cfr 1

1.102

48 CFR Ch. 1 (10–1–96 Edition)

FAR. The FAR System does not include internal agency guidance of the
type described in 1.301(a)(2).

or procedure is a permissible exercise
of authority.
[60 FR 34733, July 3, 1995]

[48 FR 42103, Sept. 19, 1983, as amended at 51
FR 27116, July 29, 1986]

1.102–1

Discussion.

(a) Introduction. The statement of
Guiding Principles for the Federal Acquisition System (System) represents a
concise statement designed to be userfriendly for all participants in Government acquisition. The following discussion of the principles is provided in
order to illuminate the meaning of the
terms and phrases used. The framework for the System includes the Guiding Principles for the System and the
supporting policies and procedures in
the FAR.
(b) Vision. All participants in the
System are responsible for making acquisition decisions that deliver the
best value product or service to the
customer. Best value must be viewed
from a broad perspective and is
achieved by balancing the many competing interests in the System. The result is a system which works better
and costs less.

1.102 Statement of guiding principles
for the federal acquisition system.
(a) The vision for the Federal Acquisition System is to deliver on a timely
basis the best value product or service
to the customer, while maintaining the
public’s trust and fulfilling public policy objectives. Participants in the acquisition process should work together
as a team and should be empowered to
make decisions within their area of responsibility.
(b) The Federal Acquisition System
will—
(1) Satisfy the customer in terms of
cost, quality, and timeliness of the delivered product or service by, for example—
(i) Maximizing the use of commercial
products and services;
(ii) Using contractors who have a
track record of successful past performance or who demonstrate a current superior ability to perform; and
(iii) Promoting competition;
(2) Minimize administrative operating costs;
(3) Conduct business with integrity,
fairness, and openness; and
(4) Fulfill public policy objectives.
(c) The Acquisition Team consists of
all participants in Government acquisition including not only representatives
of the technical, supply, and procurement communities but also the customers they serve, and the contractors
who provide the products and services.
(d) The role of each member of the
Acquisition Team is to exercise personal initiative and sound business
judgment in providing the best value
product or service to meet the customer’s needs. In exercising initiative,
Government members of the Acquisition Team may assume if a specific
strategy, practice, policy or procedure
is in the best interests of the Government and is not addressed in the FAR
nor prohibited by law (statute or case
law), Executive order or other regulation, that the strategy, practice, policy

[60 FR 34733, July 3, 1995]

1.102–2

Performance standards.

(a) Satisfy the customer in terms of cost,
quality, and timeliness of the delivered
product or service. (1) The principal customers for the product or service provided by the System are the users and
line managers, acting on behalf of the
American taxpayer.
(2) The System must be responsive
and adaptive to customer needs, concerns, and feedback. Implementation of
acquisition policies and procedures, as
well as consideration of timeliness,
quality and cost throughout the process, must take into account the perspective of the user of the product or
service.
(3) When selecting contractors to provide products or perform services the
Government will use contractors who
have a track record of successful past
performance or who demonstrate a current superior ability to perform.
(4) The Government must not hesitate to communicate with the commercial sector as early as possible in the

6

Federal Acquisition Regulation

1.102–4

acquisition cycle to help the Government determine the capabilities available in the commercial marketplace.
The Government will maximize its use
of commercial products and services in
meeting Government requirements.
(5) It is the policy of the System to
promote competition in the acquisition
process.
(6) The System must perform in a
timely, high quality, and cost-effective
manner.
(7) All members of the Team are required to employ planning as an integral part of the overall process of acquiring products or services. Although
advance planning is required, each
member of the Team must be flexible
in order to accommodate changing or
unforeseen mission needs. Planning is a
tool for the accomplishment of tasks,
and application of its discipline should
be commensurate with the size and nature of a given task.
(b) Minimize administrative operating
costs. (1) In order to ensure that maximum efficiency is obtained, rules, regulations, and policies should be promulgated only when their benefits
clearly exceed the costs of their development, implementation, administration, and enforcement. This applies to
internal administrative processes, including reviews, and to rules and procedures applied to the contractor community.
(2) The System must provide uniformity where it contributes to efficiency or where fairness or predictability is essential. The System should
also, however, encourage innovation,
and local adaptation where uniformity
is not essential.
(c) Conduct business with integrity,
fairness, and openness. (1) An essential
consideration in every aspect of the
System is maintaining the public’s
trust. Not only must the System have
integrity, but the actions of each member of the Team must reflect integrity,
fairness, and openness. The foundation
of integrity within the System is a
competent, experienced, and welltrained, professional workforce. Accordingly each member of the Team is
responsible and accountable for the
wise use of public resources as well as
acting in a manner which maintains
the public’s trust. Fairness and open-

ness require open communication
among team members, internal and external customers, and the public.
(2) To achieve efficient operations,
the System must shift its focus from
‘‘risk avoidance’’ to one of ‘‘risk management.’’ The cost to the taxpayer of
attempting to eliminate all risk is prohibitive. The Executive Branch will accept and manage the risk associated
with empowering local procurement officials to take independent action
based on their professional judgment.
(d) Fulfill public policy objectives. The
System must support the attainment
of public policy goals adopted by the
Congress and the President. In attaining these goals, and in its overalll operations, the process shall ensure the efficient use of public resources.
[60 FR 34734, July 3, 1995]

1.102–3 Acquisition team.
The purpose of defining the Federal
Acquisition Team (Team) in the Guiding Principles is to ensure that participants in the System are identified—beginning with the customer and ending
with the contractor of the product or
service. By identifying the team members in this manner, teamwork, unity
of purpose, and open communication
among the members of the Team in
sharing the vision and achieving the
goal of the System are encouraged. Individual team members will participate
in the acquisition process at the appropriate time.
[60 FR 34734, July 3, 1995]

1.102–4 Role of the acquisition team.
(a) Government members of the
Team must be empowered to make acquisition decisions within their areas
of responsibility, including selection,
negotiation, and administration of contracts consistent with the Guiding
Principles. In particular, the contracting officer must have the authority to
the maximum extent practicable and
consistent with law, to determine the
application of rules, regulations, and
policies, on a specific contract.
(b) The authority to make decisions
and the accountability for the decision
made will be delegated to the lowest
level within the System, consistent
with law.

7

1.103

48 CFR Ch. 1 (10–1–96 Edition)

(c) The Team must be prepared to
perform the functions and duties assigned. The Government is committed
to provide training, professional development, and other resources necessary
for maintaining and improving the
knowledge, skills, and abilities for all
Government participants on the Team,
both with regard to their particular
area of responsibility within the System, and their respective role as a
team member. The contractor community is encouraged to do likewise.
(d) The System will foster cooperative relationships between the Government and its contractors consistent
with its overriding responsibility to
the taxpayers.
(e) The FAR outlines procurement
policies and procedures that are used
by members of the Acquisition Team.
If a policy or procedure, or a particular
strategy or practice, is in the best interest of the Government and is not
specifically addressed in the FAR, nor
prohibited by law (statute or case law),
Executive order or other regulation,
Government members of the Team
should not assume it is prohibited.
Rather, absence of direction should be
interpreted as permitting the Team to
innovative and use sound business
judgment that is otherwise consistent
with law and within the limits of their
authority.

1.104

[60 FR 34734, July 3, 1995]

1.105–2

Applicability.

The FAR applies to all acquisitions
as defined in part 2 of the FAR, except
where expressly excluded.
[48 FR 42103, Sept. 19, 1983. Redesignated at
60 FR 34733, July 3, 1995]

1.105

Issuance.

1.105–1 Publication and code arrangement.
(a) The FAR is published in (1) the
daily issue of the Federal Register, (2)
cumulated form in the Code of Federal
Regulations (CFR), and (3) a separate
loose-leaf edition.
(b) The FAR is issued as Chapter 1 of
Title 48, CFR. Subsequent chapters are
reserved for agency acquisition regulations that implement or supplement
the FAR (see subpart 1.3). The CFR
Staff will assign chapter numbers to
requesting agencies.
(c) Each numbered unit or segment
(e.g., part, subpart, section, etc.) of an
agency acquisition regulation that is
codified in the CFR shall begin with
the chapter number. However, the
chapter number assigned to the FAR
will not be included in the numbered
units or segments of the FAR.
[48 FR 42103, Sept. 19, 1983. Redesignated at
60 FR 34733, July 3, 1995]

Arrangement of regulations.

(a) General. The FAR is divided into
subchapters, parts (each of which deals
with a separate aspect of acquisition),
subparts, sections, and subsections.
(b) Numbering. (1) The numbering system permits the discrete identification
of every FAR paragraph. The digits to
the left of the decimal point represent
the part number. The numbers to the
right of the decimal point and to the
left of the dash, represent, in order, the
subpart (one or two digits), and the
section (two digits). The number to the
right of the dash represents the subsection. Subdivisons may be used at
the section and subsection level to
identify individual paragraphs. The following example illustrates the makeup of a FAR number citation (note that
subchapters are not used with citations):

1.103 Authority.
(a) The development of the FAR System is in accordance with the requirements of the Office of Federal Procurement Policy (OFPP) Act of 1974 (Pub.
L. 93–400), as amended by Pub. L. 96–83,
and OFPP Policy Letter 85–1, Federal
Acquisition Regulations System, dated
August 19, 1985.
(b) The FAR is prepared, issued, and
maintained, and the FAR System is
prescribed, jointly by the Secretary of
Defense, the Administrator of General
Services, and the Administrator, National Aeronautics and Space Administration, under their several statutory
authorities.
[48 FR 42103, Sept. 19, 1983, as amended at 51
FR 27116, July 29, 1986. Redesignated at 60 FR
34733, July 3, 1995]

8

Federal Acquisition Regulation

1.106
Documents, Government Printing Office (GPO), Washington, DC 20402.
[48 FR 42103, Sept. 19, 1983. Redesignated at
60 FR 34733, July 3, 1995]

1.106 OMB approval under the Paperwork Reduction Act.
The Paperwork Reduction Act of 1980
(Pub. L. 96–511) imposes a requirement
on Federal agencies to obtain approval
from the Office of Management and
Budget (OMB) before collecting information from ten or more members of
the public. The information collection
and recordkeeping requirements contained in this regulation have been approved by the OMB. The following OMB
control numbers apply:

(2) Subdivisions below the section or
subsection level shall consist of parenthetical alphanumerics reading from
highest to lowest indenture as follows:
lower case alphabet, Arabic numbers,
lower case Roman numerals, and upper
case alphabet. The following example
is illustrative:
(a)(1)(i)(A)

Subdivisions, below the 4th level
shall repeat the sequence.
(c) References and citations. (1) Unless
otherwise stated, cross-references indicate parts, subparts, sections, subsections, paragraphs, subparagraphs, or
subdivisions of this regulation.
(2) This regulation may be referred to
as the Federal Acquisition Regulation
or the FAR.
(3) Using the FAR coverage at 9.106–
4(d) as a typical illustration, reference
to the—
(i) Part would be ‘‘FAR Part 9’’ outside the FAR and ‘‘Part 9’’ within the
FAR.
(ii) Subpart would be ‘‘FAR Subpart
9.1’’ outside the FAR and ‘‘Subpart 9.1’’
within the FAR.
(iii) Section would be ‘‘FAR 9.106’’
outside the FAR and ‘‘9.106’’ within the
FAR.
(iv) Subsection would be ‘‘FAR 9.106–
4’’ outside the FAR and ‘‘9.106–4’’ within the FAR.
(v) Paragraph would be ‘‘FAR 9.106–
4(d)’’ outside the FAR and ‘‘9.106–4(d)’’
within the FAR.
(4) Citations of authority (e.g., statutes or executive orders) in the FAR
shall follow the Federal Register form
guides.
[48 FR 42103, Sept. 19, 1983. Redesignated at
60 FR 34733, July 3, 1995]

1.105–3 Copies.
Copies of the FAR in Federal Register, loose-leaf, and CFR form may be
purchased from the Superintendent of

9

FAR segment

OMB control No.

3.103 ..................................................................
3.104–9 ..............................................................
3.104–12(a)(12) .................................................
3.4 ......................................................................
4.102 ..................................................................
4.7 ......................................................................
4.9 ......................................................................
5.405 ..................................................................
7.2 ......................................................................
8.203–2 ..............................................................
8.5 ......................................................................
9.1 ......................................................................
9.2 ......................................................................
9.5 ......................................................................
14.201 ................................................................
14.202–4 ............................................................
14.202–5 ............................................................
14.205 ................................................................
14.205–4(c) ........................................................
14.214 ................................................................
14.407 ................................................................
14.5 ....................................................................
15.106 ................................................................
15.404 ................................................................
15.7 ....................................................................
15.8 ....................................................................
15.804–8 ............................................................
15.812–1(b) .......................................................
15.813–1 ............................................................
15.813–2 ............................................................
15.813–3 ............................................................
15.813–6 ............................................................
19.7 ....................................................................
22.103 ................................................................
22.606–2(b) .......................................................
22.8 ....................................................................
22.11 ..................................................................
22.13 ..................................................................
22.14 ..................................................................
22.15 ..................................................................
23.602 ................................................................
27.3 ....................................................................
27.4 ....................................................................
28.1 ....................................................................
28.106–1(b) .......................................................
28.2 ....................................................................
29.304 ................................................................
30 .......................................................................
30.6 ....................................................................

9000–0018
9000–0103
9000–0103
9000–0003
9000–0033
9000–0034
9000–0097
9000–0036
9000–0082
9000–0017
9000–0113
9000–0011
9000–0020
9000–0111
9000–0034
9000–0040
9000–0039
9000–0002
9000–0037
9000–0105
9000–0038
9000–0041
9000–0034
9000–0037
9000–0078
9000–0013
9000–0115
9000–0080
9000–0105
9000–0105
9000–0105
9000–0105
9000–0006
9000–0065
1215–0157
1215–0072
9000–0066
1215–0072
1215–0072
9000–0127
9000–0107
9000–0095
9000–0090
9000–0045
9000–0119
9000–0045
9000–0059
9000–0093
9000–0129

1.106

48 CFR Ch. 1 (10–1–96 Edition)
FAR segment

OMB control No.

FAR segment

OMB control No.

31.205–2 ............................................................
31.205–46 ..........................................................
31.205–46(a)(3) .................................................
32 .......................................................................
32.000 ................................................................
32.1 ....................................................................

9000–0072
9000–0079
9000–0088
9000–0035
9000–0138.
9000–0070
and 9000–
0138.
9000–0138.
9000–0073
9000–0010
and 9000–
0138.
9000–0074
9000–0102
9000–0138.
9000–0035
9000–0132
9000–0037
9000–0004
and
9000–0005
9000–0037
9000–0125
9000–0026
9000–0013
9000–0076
9000–0076
9000–0056
9000–0075
9000–0077
9000–0061
9000–0027
9000–0028
9000–0029
9000–0031
9000–0032
9000–0018
9000–0091
9000–0103
9000–0103
9000–0097
9000–0114
9000–0017
9000–0047
9000–0044
9000–0044
9000–0018
9000–0039
9000–0034
9000–0013
9000–0034
9000–0046
9000–0048
9000–0044
9000–0047
9000–0078
9000–0013
9000–0013
9000–0080
9000–0015
9000–0013
9000–0013
9000–0068
9000–0068
9000–0068
9000–0071
9000–0071
9000–0069
9000–0067
9000–0069
9000–0069
9000–0067

52.216–17 ..........................................................
52.219–9 ............................................................
52.219–10 ..........................................................
52.219–19 ..........................................................
52.219–20 ..........................................................
52.219–21 ..........................................................
52.222–2 ............................................................
52.222–4 ............................................................
52.222–6 ............................................................
52.222–8 ............................................................

9000–0067
9000–0006
9000–0006
9000–0100
9000–0100
9000–0100
9000–0065
1215–0119
1215–0140
1215–0149
and
1215–0017
9000–0014
9000–0127
1215–0072
1215–0072
1215–0072
1215–0072
1215–0072
1215–0072
1215–0072
1215–0072
1215–0017
and
1215–0150
9000–0066
9000–0021
9000–0101
9000–0117
9000–0024
9000–0023
9000–0025
9000–0022
9000–0130
9000–0045
9000–0045
9000–0045
9000–0059
9000–0129
9000–0070
9000–0070
9000–0070
9000–0073
9000–0010
9000–0010
9000–0010
9000–0010
9000–0074
9000–0074
9000–0074
9000–0102
9000–0138.
9000–0138.
9000–0138.
9000–0138.
9000–0035
9000–0133
9000–0062
1220–0029
and
9000–0060
9000–0058
9000–0064
9000–0122
9000–0123
9000–0126
9000–0124
9000–0056
9000–0026
9000–0026
9000–0026
9000–0026
9000–0026

32.2 ....................................................................
32.4 ....................................................................
32.5 ....................................................................

32.7 ....................................................................
32.9 ....................................................................
32.10 ..................................................................
33 .......................................................................
34.1 ....................................................................
36.302 ................................................................
36.603 ................................................................

36.701 ................................................................
41.004–2(c) ........................................................
42.203 ................................................................
42.7 ....................................................................
42.12 ..................................................................
42.13 ..................................................................
42.14 ..................................................................
45 .......................................................................
46 .......................................................................
47 .......................................................................
48 .......................................................................
49 .......................................................................
50 .......................................................................
51.1 ....................................................................
51.2 ....................................................................
52.203–2 ............................................................
52.203–7 ............................................................
52.203–8 ............................................................
52.203–9 ............................................................
52.204–3 ............................................................
52.207–3 ............................................................
52.208–1 ............................................................
52.214–14 ..........................................................
52.214–15 ..........................................................
52.214–16 ..........................................................
52.214–17 ..........................................................
52.214–21 ..........................................................
52.214–26 ..........................................................
52.214–28 ..........................................................
52.215–2 ............................................................
52.215–6 ............................................................
52.215–11 ..........................................................
52.215–19 ..........................................................
52.215–20 ..........................................................
52.215–21 ..........................................................
52.215–24 ..........................................................
52.215–25 ..........................................................
52.215–26 ..........................................................
52.215–40 ..........................................................
52.215–41 ..........................................................
52.215–42 ..........................................................
52.216–2 ............................................................
52.216–3 ............................................................
52.216–4 ............................................................
52.216–5 ............................................................
52.216–6 ............................................................
52.216–7 ............................................................
52.216–10 ..........................................................
52.216–13 ..........................................................
52.216–15 ..........................................................
52.216–16 ..........................................................

52.222–11
52.222–18
52.222–21
52.222–22
52.222–23
52.222–25
52.222–26
52.222–27
52.222–35
52.222–36
52.222–41

..........................................................
..........................................................
..........................................................
..........................................................
..........................................................
..........................................................
..........................................................
..........................................................
..........................................................
..........................................................
..........................................................

52.222–46 ..........................................................
52.223–1 ............................................................
52.223–6(b)(5) ...................................................
52.233–7 ............................................................
52.225–1 ............................................................
52.225–6 ............................................................
52.225–8 ............................................................
52.225–10 ..........................................................
52.225–20 ..........................................................
52.228–1 ............................................................
52.228–2 ............................................................
52.228–3 ............................................................
52.229–2 ............................................................
52.230–6 ............................................................
52.232–5 ............................................................
52.232–7 ............................................................
52.232–10 ..........................................................
52.232–12 ..........................................................
52.232–13 ..........................................................
52.232–14 ..........................................................
52.232–15 ..........................................................
52.232–16 ..........................................................
52.232–20 ..........................................................
52.232–21 ..........................................................
52.232–22 ..........................................................
52.232–27 ..........................................................
52.232–29 ..........................................................
52.232–30 ..........................................................
52.232–31 ..........................................................
52.232–32 ..........................................................
52.233–1 ............................................................
52.234–1 ............................................................
52.236–5 ............................................................
52.236–13 ..........................................................

52.236–15 ..........................................................
52.236–19 ..........................................................
52.241–2 ............................................................
52.241–6 ............................................................
52.241–11 ..........................................................
52.241–13 ..........................................................
52.242–12 ..........................................................
52.243–1 ............................................................
52.243–2 ............................................................
52.243–3 ............................................................
52.243–4 ............................................................
52.243–6 ............................................................

10

Federal Acquisition Regulation

1.201–1

FAR segment

OMB control No.

FAR segment

OMB control No.

52.243–7 ............................................................
52.245–2 ............................................................
52.245–3 ............................................................
52.245–5 ............................................................
52.245–7 ............................................................
52.245–8 ............................................................
52.245–9 ............................................................
52.245–10 ..........................................................
52.245–11 ..........................................................
52.245–16 ..........................................................
52.245–17 ..........................................................
52.245–18 ..........................................................
52.246–2 ............................................................
52.246–3 ............................................................
52.246–4 ............................................................
52.246–5 ............................................................
52.246–6 ............................................................
52.246–7 ............................................................
52.246–8 ............................................................
52.246–10 ..........................................................
52.246–12 ..........................................................
52.246–15 ..........................................................
52.247–2 ............................................................
52.247–29 ..........................................................
52.247–30 ..........................................................
52.247–31 ..........................................................
52.247–32 ..........................................................
52.247–33 ..........................................................
52.247–34 ..........................................................
52.247–35 ..........................................................
52.247–36 ..........................................................
52.247–37 ..........................................................
52.247–38 ..........................................................
52.247–39 ..........................................................
52.247–40 ..........................................................
52.247–41 ..........................................................
52.247–42 ..........................................................
52.247–43 ..........................................................
52.247–44 ..........................................................
52.247–51 ..........................................................
52.247–53 ..........................................................
52.247–57 ..........................................................
52.247–63 ..........................................................
52.247–64 ..........................................................
52.248–1 ............................................................
52.248–2 ............................................................
52.248–3 ............................................................
52.249–2 ............................................................
52.249–3 ............................................................
52.249–5 ............................................................
52.249–6 ............................................................
52.249–11 ..........................................................
52.250–1 ............................................................
52.253–1 ............................................................
53.105 ................................................................
53.236–1(a) .......................................................
SF 24 .................................................................
SF 25 .................................................................
SF 25–A .............................................................
SF 28 .................................................................
SF 34 .................................................................
SF 35 .................................................................
SF 129 ...............................................................
SF 254 ...............................................................
SF 255 ...............................................................
SF 273 ...............................................................
SF 274 ...............................................................
SF 275 ...............................................................
SF 294 ...............................................................
SF 295 ...............................................................
SF 1403 .............................................................
SF 1404 .............................................................
SF 1405 .............................................................

9000–0026
9000–0075
9000–0075
9000–0075
9000–0075
9000–0075
9000–0075
9000–0075
9000–0075
9000–0075
9000–0075
9000–0075
9000–0077
9000–0077
9000–0077
9000–0077
9000–0077
9000–0077
9000–0077
9000–0077
9000–0077
9000–0077
9000–0053
9000–0061
9000–0061
9000–0061
9000–0061
9000–0061
9000–0061
9000–0061
9000–0061
9000–0061
9000–0061
9000–0061
9000–0061
9000–0061
9000–0061
9000–0061
9000–0061
9000–0057
9000–0055
9000–0061
9000–0054
9000–0054
9000–0027
9000–0027
9000–0027
9000–0028
9000–0028
9000–0028
9000–0028
9000–0028
9000–0029
9000–0104
9000–0104
9000–0037
9000–0045
9000–0045
9000–0045
9000–0001
9000–0045
9000–0045
9000–0002
9000–0004
9000–0005
9000–0045
9000–0045
9000–0045
9000–0006
9000–0007
9000–0011
9000–0011
9000–0011

SF 1406 .............................................................
SF 1407 .............................................................
SF 1408 .............................................................
SF 1411 .............................................................
SF 1413 .............................................................
SF 1416 .............................................................
SF 1417 .............................................................
SF 1418 .............................................................
SF 1423 .............................................................
SF 1424 .............................................................
SF 1426 .............................................................
SF 1427 .............................................................
SF 1428 .............................................................
SF 1429 .............................................................
SF 1430 .............................................................
SF 1431 .............................................................
SF 1432 .............................................................
SF 1433 .............................................................
SF 1434 .............................................................
SF 1435 .............................................................
SF 1436 .............................................................
SF 1437 .............................................................
SF 1438 .............................................................
SF 1439 .............................................................
SF 1440 .............................................................
SF 1443 .............................................................
SF 1444 .............................................................
SF 1445 .............................................................
SF 1446 .............................................................
SF 1448 .............................................................
SF 1449 .............................................................
All other requirements .......................................

9000–0011
9000–0011
9000–0011
9000–0013
9000–0014
9000–0045
9000–0037
9000–0119
9000–0015
9000–0015
9000–0015
9000–0015
9000–0015
9000–0015
9000–0015
9000–0015
9000–0015
9000–0015
9000–0015
9000–0012
9000–0012
9000–0012
9000–0012
9000–0012
9000–0012
9000–0010
9000–0089
9000–0089
9000–0089
9000–0013
9000–0136
9000–0063

[59 FR 67065, Dec. 28, 1994. Redesignated at 60
FR 34733, 34736, July 3, 1995, as amended at 60
FR 42650, 42665, Aug. 16, 1995; 60 FR 48211,
Sept. 18, 1995; 60 FR 49710, Sept. 26, 1995; 61
FR 18916, Apr. 29, 1996; 61 FR 39188, July 26,
1996]

Subpart 1.2—Administration
1.201

Maintenance of the FAR.

1.201–1 The two councils.
(a) Subject to the authorities discussed in 1.102, revisions to the FAR
will be prepared and issued through the
coordinated action of two councils, the
Defense Acquisition Regulatory Council (DAR Council) and the Civilian
Agency Acquisition Council (CAA
Council). Members of these councils
shall—
(1) Represent their agencies on a fulltime basis;
(2) Be selected for their superior
qualifications in terms of acquisition
experience and demonstrated professional expertise; and
(3) Be funded by their respective
agencies.
(b) The chairperson of the CAA Council shall be the representative of the

11

1.201–2

48 CFR Ch. 1 (10–1–96 Edition)
(b) Additionally, the FAR Secretariat
shall provide the two councils with
centralized services for—
(1) Keeping a synopsis of current
FAR cases and their status;
(2) Assigning FAR case numbers;
(3) Maintaining official files;
(4) Assisting parties interested in reviewing the files on completed cases;
and
(5) Performing miscellaneous administrative tasks pertaining to the maintenance of the FAR.

Administrator of General Services. The
other members of this council shall be
one each representative from the (1)
Departments of Agriculture, Commerce, Energy, Health and Human
Services, Interior, Labor, State, Transportation, and Treasury, and (2) Environmental Protection Agency, Small
Business Administration, and Department of Veterans Affairs.
(c) The Director of the DAR Council
shall be the representative of the Secretary of Defense. The operation of the
DAR Council will be as prescribed by
the Secretary of Defense. Membership
shall include representatives of the
military Departments, the Defense Logistics Agency, and the National Aeronautics and Space Administration.
(d) Responsibility for processing revisions to the FAR is apportioned by the
two councils so that each council has
cognizance over specified parts or subparts.
(e) Each council shall be responsible
for—
(1) Agreeing on all revisions with the
other council;
(2) Submitting to the FAR Secretariat (see 1.201–2) the information required under paragraphs 1.501–2(b) and
(e) for publication in the FEDERAL REGISTER of a notice soliciting comments
on a proposed revision to the FAR;
(3) Considering all comments received in response to notice of proposed
revisions;
(4) Arranging for public meetings;
(5) Preparing any final revision in the
appropriate FAR format and language;
and
(6) Submitting any final revision to
the FAR Secretariat for publication in
the FEDERAL REGISTER and printing for
distribution.

1.202 Agency
FAR.

compliance

with

the

Agency compliance with the FAR
(see 1.304) is the responsibility of the
Secretary of Defense (for the military
departments and defense agencies), the
Administrator of General Services (for
civilian agencies other than NASA),
and the Administrator of NASA (for
NASA activities).

Subpart 1.3—Agency Acquisition
Regulations
1.301

Policy.

(a)(1) Subject to the authorities in
paragraph (c) below and other statutory authority, an agency head may
issue or authorize the issuance of agency acquisition regulations that implement or supplement the FAR and incorporate, together with the FAR,
agency policies, procedures, contract
clauses, solicitation provisions, and
forms that govern the contracting
process or otherwise control the relationship between the agency, including
any of its suborganizations, and contractors or prospective contractors.
(2) Subject to the authorities in (c)
below and other statutory authority,
an agency head may issue or authorize
the issuance of internal agency guidance at any organizational level (e.g.,
designations and delegations of authority, assignments of responsibilities,
work-flow procedures, and internal reporting requirements).
(b) Agency heads shall establish procedures to ensure that agency acquisition regulations are published for comment in the FEDERAL REGISTER in conformance with the procedures in subpart 1.5 and as required by section 22 of

[48 FR 42103, Sept. 19, 1983, as amended at 50
FR 2269, Jan. 15, 1985; 50 FR 26903, June 28,
1985; 51 FR 2649, Jan. 17, 1986; 54 FR 29280,
July 11, 1989]

1.201–2 FAR Secretariat.
(a) The General Services Administration is responsible for establishing and
operating the FAR Secretariat to
print, publish, and distribute the FAR
through the Code of Federal Regulations system (including a loose-leaf
edition with periodic updates).

12

Federal Acquisition Regulation

1.304

the Office of Federal Procurement Policy Act, as amended (41 U.S.C. 418b),
and other applicable statutes, when
they have a significant effect beyond
the internal operating procedures of
the agency or have a significant cost or
administrative impact on contractors
or offerors. However, publication is not
required for issuances that merely implement or supplement higher level
issuances that have previously undergone the public comment process, unless
such
implementation
or
supplementation results in an additional significant cost or administrative impact on contractors or offerors
or effect beyond the internal operating
procedures of the issuing organization.
Issuances under 1.301(a)(2) need not be
publicized for public comment.
(c) When adopting acquisition regulations, agencies shall ensure that they
comply with the Paperwork Reduction
Act (44 U.S.C. 3501, et seq.) as implemented in 5 CFR part 1320 (see 1.105)
and the Regulatory Flexibility Act (5
U.S.C. 601, et seq.). Normally, when a
law requires publication of a proposed
regulation, the Regulatory Flexibility
Act applies and agencies must prepare
written analyses or certifications as
provided in the law.
(d) Agency acquisition regulations
implementing or supplementing the
FAR are, for—
(1) The military departments and defense agencies, issued subject to the
authority of the Secretary of Defense;
(2) NASA activities, issued subject to
the authorities of the Administrator of
NASA; and
(3) The civilian agencies other than
NASA, issued by the heads of those
agencies subject to the overall authority of the Administrator of General
Services or independent authority the
agency may have.

clauses that supplement the FAR to
satisfy the specific needs of the agency.
1.303

Publication and codification.

(a) Agency-wide acquisition regulations shall be published in the FEDERAL
REGISTER as required by law, shall be
codified under an assigned chapter in
Title 48, Code of Federal Regulations,
and shall parallel the FAR in format,
arrangement, and numbering system
(but see 1.104–1(c)). Coverage in an
agency acquisition regulation that implements a specific part, subpart, section, or subsection of the FAR shall be
numbered and titled to correspond to
the appropriate FAR number and title.
Supplementary material for which
there is no counterpart in the FAR
shall be codified using chapter, part,
subpart, section, or subsection numbers of 70 and up (e.g., for the Department of Interior, whose assigned chapter number in Title 48 is 14, part 1470,
subpart 1401.70, section 1401.370, or subsection 1401.301–70.)
(b) Issuances under 1.301(a)(2) need
not be published in the FEDERAL REGISTER.
[48 FR 42103, Sept. 19, 1983, as amended at 50
FR 2269, Jan. 15, 1985]

1.304 Agency control and compliance
procedures.
(a) Under the authorities of 1.301(c),
agencies shall control and limit issuance of agency acquisition regulations
and, in particular, local agency directives that restrain the flexibilities
found in the FAR, and shall establish
formal procedures for the review of
these documents to assure compliance
with this part 1.
(b) Agency acquisition regulations
shall not—
(1) Unnecessarily repeat, paraphrase,
or otherwise restate material contained in the FAR or higher-level agency acquisition regulations; or
(2) Except as required by law or as
provided in subpart 1.4, conflict or be
inconsistent with FAR content.
(c) Agencies shall evaluate all regulatory coverage in agency acquisition
regulations to determine if it could
apply to other agencies. Coverage that

[48 FR 42103, Sept. 19, 1983, as amended at 50
FR 2269, Jan. 15, 1985; 54 FR 5054, Jan. 31,
1989]

1.302 Limitations.
Agency acquisition regulations shall
be limited to—
(a) Those necessary to implement
FAR policies and procedures within the
agency; and
(b) Additional policies, procedures,
solicitation provisions, or contract

13

1.400

48 CFR Ch. 1 (10–1–96 Edition)

is not peculiar to one agency shall be
recommended for inclusion in the FAR.

1.402 Policy.
Unless precluded by law, executive
order, or regulation, deviations from
the FAR may be granted as specified in
this subpart when necessary to meet
the specific needs and requirements of
each agency. The development and
testing of new techniques and methods
of acquisition should not be stifled
simply because such action would require a FAR deviation. The fact that
deviation authority is required should
not, of itself, deter agencies in their development and testing of new techniques and acquisition methods. Refer
to 31.101 for instructions concerning deviations pertaining to the subject matter of part 31, Contract Cost Principles
and Procedures. Deviations are not authorized with respect to part 30. Refer
to 30.201–5 for instructions concerning
waivers pertaining to Cost Accounting
Standards.

[48 FR 42103, Sept. 19, 1983, as amended at 61
FR 39190, July 26, 1996]

Subpart 1.4—Deviations from the
FAR
1.400 Scope of subpart.
This subpart prescribes the policies
and procedures for authorizing deviations from the FAR. Exceptions pertaining to the use of forms prescribed
by the FAR are covered in part 53 rather than in this subpart.
1.401 Definition.
Deviation means any one or combination of the following:
(a) The issuance or use of a policy,
procedure, solicitation provision (see
definition in 52.101(a)), contract clause
(see definition in 52.101(a)), method, or
practice of conducting acquisition actions of any kind at any stage of the
acquisition process that is inconsistent
with the FAR.
(b) The omission of any solicitation
provision or contract clause when its
prescription requires its use.
(c) The use of any solicitation provision or contract clause with modified
or alternate language that is not authorized by the FAR (see definitions of
modification and alternate in 52.101(a)).
(d) The use of a solicitation provision
or contract clause prescribed by the
FAR on a substantially as follows or substantially the same as basis (see definitions in 52.101(a)), if such use is inconsistent with the intent, principle, or
substance of the prescription or related
coverage on the subject matter in the
FAR.
(e) The authorization of lesser or
greater limitations on the use of any
solicitation provision, contract clause,
policy, or procedure prescribed by the
FAR.
(f) The issuance of policies or procedures that govern the contracting process or otherwise control contracting relationships that are not incorporated
into agency acquisition regulations in
accordance with 1.301(a).

[48 FR 42103, Sept. 19, 1983, as amended at 52
FR 35612, Sept. 22, 1987]

1.403 Individual deviations.
Individual deviations affect only one
contracting action, and, unless 1.405(e)
is applicable, may be authorized by
agency heads or their designees. The
justification and agency approval shall
be documented in the contract file and
a copy of the approved deviation shall
be furnished to the FAR Secretariat
through a central agency control point.
1.404 Class deviations.
Class deviations affect more than one
contracting action. When it is known
that a class deviation will be required
on a permanent basis, an agency should
propose an appropriate FAR revision to
cover the matter. A copy of each approved class deviation shall be furnished to the FAR Secretariat.
(a) For civilian agencies except
NASA, class deviations may be authorized by agency heads or their designees, unless 1.405(e) is applicable.
Delegation of this authority shall not
be made below the head of a contracting activity. Authorization of class deviations by agency officials is subject
to the following limitations:
(1) An agency official who may authorize a class deviation, before doing
so, shall consult with the chairperson

14

Federal Acquisition Regulation

1.501–3

of the Civilian Agency Acquisition
Council (CAA Council), unless that
agency official determines that urgency precludes such consultation.
(2) Recommended revisions to the
FAR shall be transmitted to the FAR
Secretariat by agency heads or their
designees for authorizing class deviations.
(b) For DOD, class deviations shall be
controlled, processed, and approved in
accordance with the Defense FAR Supplement.
(c) For NASA, class deviations shall
be controlled and approved by the Associate Administrator for Procurement. Deviations shall be processed in
accordance with agency regulations.

Subpart 1.5—Agency and Public
Participation
SOURCE: 50 FR 2269, Jan. 15, 1985, unless
otherwise noted.

1.501 Solicitation of agency and public
views.
1.501–1 Definition.
Significant revisions, as used in this
subpart, means revisions that alter the
substantive meaning of any coverage in
the FAR System having a significant
cost or administrative impact on contractors or offerors, or a significant effect beyond the internal operating procedures of the issuing agency. This expression, for example, does not include
editorial, stylistic, or other revisions
that have no impact on the basic meaning of the coverage being revised.

[48 FR 42103, Sept. 19, 1983, as amended at 56
FR 15148, Apr. 15, 1991; 59 FR 11387, March 10,
1994]

1.501–2 Opportunity for public comments.
(a) Views of agencies and nongovernmental parties or organizations will be
considered in formulating acquisition
policies and procedures.
(b) The opportunity to submit written comments on proposed significant
revisions shall be provided by placing a
notice in the FEDERAL REGISTER. Each
of these notices shall include—
(1) The text of the revision or, if it is
impracticable to publish the full text,
a summary of the proposal;
(2) The address and telephone number
of the individual from whom copies of
the revision, in full text, can be requested and to whom comments thereon should be addressed; and
(3) When 1.501–3(b) is applicable, a
statement that the revision is effective
on a temporary basis pending completion of the public comment period.
(c) A minimum of 30 days and, normally, at least 60 days will be given for
the receipt of comments.

1.405 Deviations pertaining to treaties
and executive agreements.
(a) Executive agreements, as used in
this section, means Government-toGovernment
agreements,
including
agreements with international organizations, to which the United States is a
party.
(b) Any deviation from the FAR required to comply with a treaty to
which the United States is a party is
authorized, unless the deviation would
be inconsistent with FAR coverage
based on a law enacted after the execution of the treaty.
(c) Any deviation from the FAR required to comply with an executive
agreement is authorized unless the deviation would be inconsistent with
FAR coverage based on law.
(d) A copy of the text of any deviation authorized under paragraphs (b)
or (c) of this section shall be transmitted to the FAR Secretariat through a
central agency control point.
(e) If a deviation required to comply
with a treaty or an executive agreement is not authorized by paragraphs
(b) or (c) of this section, then the request for deviation shall be processed
through the FAR Secretariat to the appropriate council.

1.501–3 Exceptions.
(a) Comments need not be solicited
when the proposed coverage does not
constitute a significant revision.
(b) Advance comments need not be
solicited when urgent and compelling
circumstances make solicitation of

15

1.502

48 CFR Ch. 1 (10–1–96 Edition)
1.602

comments impracticable prior to the
effective date of the coverage, such as
when a new statute must be implemented in a relatively short period of
time. In such case, the coverage shall
be issued on a temporary basis and
shall provide for at least a 30 day public comment period.

Contracting officers.

1.602–1 Authority.
(a) Contracting officers have authority to enter into, administer, or terminate contracts and make related determinations and findings. Contracting officers may bind the Government only
to the extent of the authority delegated to them. Contracting officers
shall receive from the appointing authority (see 1.603–1) clear instructions
in writing regarding the limits of their
authority. Information on the limits of
the contracting officers’ authority
shall be readily available to the public
and agency personnel.
(b) No contract shall be entered into
unless the contracting officer ensures
that all requirements of law, executive
orders, regulations, and all other applicable procedures, including clearances
and approvals, have been met.

1.502 Unsolicited proposed revisions.
Consideration shall also be given to
unsolicited recommendations for revisions that have been submitted in writing with sufficient data and rationale
to permit their evaluation.
1.503 Public meetings.
Public meetings may be appropriate
when a decision to adopt, amend, or delete coverage is likely to benefit from
significant additional views and discussion.

1.602–2 Responsibilities.
Contracting officers are responsible
for ensuring performance of all necessary actions for effective contracting, ensuring compliance with the
terms of the contract, and safeguarding
the interests of the United States in its
contractual relationships. In order to
perform these responsibilities, contracting officers should be allowed
wide latitude to exercise business judgment. Contracting officers shall—
(a) Ensure that the requirements of
1.602–1(b) have been met, and that sufficient funds are available for obligation;
(b) Ensure that contractors receive
impartial, fair, and equitable treatment; and
(c) Request and consider the advice of
specialists in audit, law, engineering,
transportation, and other fields, as appropriate.

Subpart 1.6—Career Development, Contracting Authority,
and Responsibilities
1.601 General.
(a) Unless specifically prohibited by
another provision of law, authority and
responsibility to contract for authorized supplies and services are vested in
the agency head. The agency head may
establish contracting activities and
delegate broad authority to manage
the agency’s contracting functions to
heads of such contracting activities.
Contracts may be entered into and
signed on behalf of the Government
only by contracting officers. In some
agencies, a relatively small number of
high level officials are designated contracting officers solely by virtue of
their positions. Contracting officers
below the level of a head of a contracting activity shall be selected and appointed under 1.603.
(b) Agency heads may mutually agree
to—
(1) Assign contracting functions and
responsibilities from one agency to another; and
(2) Create joint or combined offices
to exercise acquisition functions and
responsibilities.

1.602–3 Ratification of unauthorized
commitments.
(a) Definitions.
Ratification, as used in this subsection, means the act of approving an
unauthorized commitment by an official who has the authority to do so.
Unauthorized commitment, as used in
this subsection, means an agreement
that is not binding solely because the
Government representative who made
it lacked the authority to enter into

[60 FR 49721, Sept. 26, 1995]

16

Federal Acquisition Regulation

1.603–2

that agreement on behalf of the Government.
(b) Policy. (1) Agencies should take
positive action to preclude, to the maximum extent possible, the need for
ratification actions. Although procedures are provided in this section for
use in those cases where the ratification of an unauthorized commitment is
necessary, these procedures may not be
used in a manner that encourages such
commitments being made by Government personnel.
(2) Subject to the limitations in paragraph (c) of this subsection, the head of
the contracting activity, unless a higher level official is designated by the
agency, may ratify an unauthorized
commitment.
(3) The ratification authority in subparagraph (b)(2) of this subsection may
be delegated in accordance with agency
procedures, but in no case shall the authority be delegated below the level of
chief of the contracting office.
(4) Agencies should process unauthorized commitments using the ratification authority of this subsection instead of referring such actions to the
General Accounting Office for resolution. (See 1.602–3(d).)
(5) Unauthorized commitments that
would involve claims subject to resolution under the Contract Disputes Act
of 1978 should be processed in accordance with subpart 33.2, Disputes and
Appeals.
(c) Limitations. The authority in subparagraph (b)(2) of this subsection may
be exercised only when—
(1) Supplies or services have been
provided to and accepted by the Government, or the Government otherwise
has obtained or will obtain a benefit resulting from performance of the unauthorized commitment;
(2) The ratifying official has the authority to enter into a contractual
commitment;
(3) The resulting contract would otherwise have been proper if made by an
appropriate contracting officer;
(4) The contracting officer reviewing
the unauthorized commitment determines the price to be fair and reasonable;
(5) The contracting officer recommends payment and legal counsel
concurs in the recommendation, unless

agency procedures expressly do not require such concurrence;
(6) Funds are available and were
available at the time the unauthorized
commitment was made; and
(7) The ratification is in accordance
with any other limitations prescribed
under agency procedures.
(d) Nonratifiable commitments. Cases
that are not ratifiable under this subsection may be subject to resolution as
recommended by the General Accounting Office under its claim procedure
(GAO Policy and Procedures Manual
for Guidance of Federal Agencies, Title
4, Chapter 2), or as authorized by FAR
part 50. Legal advice should be obtained in these cases.
[53 FR 3689, Feb. 8, 1988, as amended at 60 FR
48225, Sept. 18, 1995]

1.603 Selection, appointment, and termination of appointment.
1.603–1

General.

Subsection 414(4) of title 41, United
States Code, requires agency heads to
establish and maintain a procurement
career management program and a system for the selection, appointment,
and termination of appointment of contracting officers. Agency heads or their
designees may select and appoint contracting officers and terminate their
appointments. These selections and appointments shall be consistent with Office of Federal Procurement Policy’s
(OFPP) standards for skill-based training in performing contracting and purchasing duties as published in OFPP
Policy Letter No. 92–3, Procurement
Professionalism
Program
Policy—
Training for Contracting Personnel,
June 24, 1992.
[59 FR 67015, Dec. 28, 1994]

1.603–2

Selection.

In selecting contracting officers, the
appointing official shall consider the
complexity and dollar value of the acquisitions to be assigned and the candidate’s experience, training, education, business acumen, judgment,
character, and reputation. Examples of
selection criteria include—
(a) Experience in Government contracting and administration, commercial purchasing, or related fields;

17

1.603–3

48 CFR Ch. 1 (10–1–96 Edition)

(b) Education or special training in
business administration, law, accounting, engineering, or related fields;
(c) Knowledge of acquisition policies
and procedures, including this and
other applicable regulations;
(d) Specialized knowledge in the particular assigned field of contracting;
and
(e) Satisfactory completion of acquisition training courses.

can be found with the appropriate subject matter.
1.701

Definition.

Determination and Findings (D&F)
means a special form of written approval by an authorized official that is
required by statute or regulation as a
prerequisite to taking certain contracting actions. The determination is a
conclusion or decision supported by the
findings. The findings are statements of
fact or rationale essential to support
the determination and must cover each
requirement of the statute or regulation.

1.603–3 Appointment.
(a) Contracting officers shall be appointed in writing on an SF 1402, Certificate of Appointment, which shall
state any limitations on the scope of
authority to be exercised, other than
limitations contained in applicable law
or regulation. Appointing officials
shall maintain files containing copies
of all appointments that have not been
terminated.
(b) Agency heads are encouraged to
delegate micro-purchase authority to
individuals who are employees of an
executive agency or members of the
Armed Forces of the United States who
will be using the supplies or services
being purchased. Individuals delegated
this authority are not required to be
appointed on an SF 1402, but shall be
appointed in writing in accordance
with agency procedures.

1.702

General.

(a) A D&F shall ordinarily be for an
individual contract action. Unless otherwise prohibited, class D&F’s may be
executed for classes of contract action
(see 1.703). The approval granted by a
D&F is restricted to the proposed contract action(s) reasonably described in
that D&F. D&F’s may provided for a
reasonable degree of flexibility. Furthermore, in their application, reasonable variations in estimated quantities
or prices are permitted, unless the D&F
specifies otherwise.
(b) When an option is anticipated, the
D&F shall state the approximate quantity to be awarded initially and the extent of the increase to be permitted by
the option.

[61 FR 39190, July 26, 1996]

1.603–4 Termination.
Termination of a contracting officer
appointment will be by letter, unless
the Certificate of Appointment contains other provisions for automatic
termination. Terminations may be for
reasons such as reassignment, termination of employment, or unsatisfactory performance. No termination shall
operate retroactively.

1.703 Class determinations and findings.
(a) A class D&F provides authority
for a class of contracting actions. A
class may consist of contracting actions for the same or related supplies
or services or other contracting actions
that require essentially identical justification.
(b) The findings in a class D&F shall
fully support the proposed action either for the class as a whole or for each
action. A class D&F shall be for a specified period, with the expiration date
stated in the document.
(c) The contracting officer shall ensure that individual actions taken pursuant to the authority of a class D&F
are within the scope of the D&F.

Subpart 1.7—Determinations and
Findings
SOURCE: 50 FR 1726, Jan. 11, 1985 (interim
rule), and 50 FR 52429, Dec. 23, 1985 (final
rule), unless otherwise noted.

1.700 Scope of subpart.
This subpart prescribes general policies and procedures for the use of determinations and findings (D&F’s). Requirements for specific types of D&F’s

18

Federal Acquisition Regulation

2.101

1.704 Content.
Each D&F shall set forth enough
facts and circumstances to clearly and
convincingly justify the specific determination made. As a minimum, each
D&F shall include, in the prescribed
agency format, the following information:
(a) Identification of the agency and
of the contracting activity and specific
identifications of the document as a
Determination and Findings.
(b) Nature and/or description of the
action being approved.
(c) Citation of the appropriate statute and/or regulation upon which the
D&F is based.
(d) Findings that detail the particular circumstances, facts, or reasoning
essential to support the determination.
Necessary supporting documentation
shall be obtained from appropriate requirements and technical personnel.
(e) A determination, based on the
findings, that the proposed action is
justified under the applicable statute
or regulation.
(f) Expiration date of the D&F, if required (see 1.706(b)).
(g) The signature of the official authorized to sign the D&F (see 1.706) and
the date signed.

1.707

Signatory authority.

When a D&F is required, it shall be
signed by the appropriate official in accordance with agency regulations. Authority to sign or delegate signature
authority for the various D&F’s is as
shown in the applicable FAR part.

PART 2—DEFINITIONS OF WORDS
AND TERMS
Sec.
2.000

Scope of part.

2.101

Definitions.

2.201

Contract clause.

Subpart 2.1—Definitions

Subpart 2.2—Definitions Clause

AUTHORITY: 40 U.S.C. 486(c); 10 U.S.C. Chapter 137; and 42 U.S.C. 2473(c).
SOURCE: 48 FR 42107, Sept. 19, 1983, unless
otherwise noted.

2.000

Scope of part.

This part defines words and terms
commonly used in this regulation.
Other terms are defined in the part or
subpart with which they are particularly associated (see the Index for locations).

1.705 Supersession and modification.
(a) If a D&F is superseded by another
D&F, that action shall not render invalid any action taken under the original D&F prior to the date of its supersession.
(b) A modification of the D&F will
not require cancellation of the solicitation if the D&F, as modified, supports
the contracting action.

Subpart 2.1—Definitions
2.101

Definitions.

As used throughout this regulation,
the following words and terms are used
as defined in this subpart unless (a) the
context in which they are used clearly
requires a different meaning or (b) a
different definition is prescribed for a
particular part or portion of a part.
Acquisition means the acquiring by
contract with appropriated funds of
supplies or services (including construction) by and for the use of the
Federal Government through purchase
or lease, whether the supplies or services are already in existence or must be
created, developed, demonstrated, and
evaluated. Acquisition begins at the
point when agency needs are established and includes the description of
requirements to satisfy agency needs,
solicitation and selection of sources,
award of contracts, contract financing,

1.706 Expiration.
Expiration dates are required for
class D&F’s and are optional for individual D&F’s. Authority to act under
an individual D&F expires when it is
exercised or on an expiration date specified in the document, whichever occurs first. Authority to act under a
class D&F expires on the expiration
date specified in the document. When a
solicitation has been furnished to prospective offerors before the expiration
date, the authority under the D&F will
continue until award of the contract(s)
resulting from that solicitation.

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48 CFR Ch. 1 (10–1–96 Edition)

contract performance, contract administration, and those technical and management functions directly related to
the process of fulfilling agency needs
by contract.
Affiliates means associated business
concerns or individuals if, directly or
indirectly, (a) either one controls or
can control the other or (b) a third
party controls or can control both.
Agency head (see head of the agency).
Commercial component means any
component that is a commercial item.
Commercial item means—
(a) Any item, other than real property, that is of a type customarily used
for nongovernmental purposes and
that—
(1) Has been sold, leased, or licensed
to the general public; or,
(2) Has been offered for sale, lease, or
license to the general public;
(b) Any item that evolved from an
item described in paragraph (a) of this
definition through advances in technology or performance and that is not
yet available in the commercial marketplace, but will be available in the
commercial marketplace in time to
satisfy the delivery requirements under
a Government solicitation;
(c) Any item that would satisfy a criterion expressed in paragraphs (a) or
(b) of this definition, but for—
(1) Modifications of a type customarily available in the commercial marketplace; or
(2) Minor modifications of a type not
customarily available in the commercial marketplace made to meet Federal
Government requirements. ‘‘Minor’’
modifications
means
modifications
that do not significantly alter the nongovernmental function or essential
physical characteristics of an item or
component, or change the purpose of a
process. Factors to be considered in determining whether a modification is
minor include the value and size of the
modification and the comparative
value and size of the final product. Dollar values and percentages may be used
as guideposts, but are not conclusive
evidence that a modification is minor;
(d) Any combination of items meeting the requirements of paragraphs (a),
(b), (c), or (e) of this definition that are
of a type customarily combined and

sold in combination to the general public;
(e) Installation services, maintenance services, repair services, training services, and other services if such
services are procured for support of an
item referred to in paragraphs (a), (b),
(c), or (d) of this definition, and if the
source of such services—
(1) Offers such services to the general
public and the Federal Government
contemporaneously and under similar
terms and conditions; and
(2) Offers to use the same work force
for providing the Federal Government
with such services as the source uses
for providing such services to the general public;
(f) Services of a type offered and sold
competitively in substantial quantities
in the commercial marketplace based
on established catalog or market prices
for specific tasks performed under
standard commercial terms and conditions. This does not include services
that are sold based on hourly rates
without an established catalog or market price for a specific service performed;
(g) Any item, combination of items,
or service referred to in paragraphs (a)
through (f), notwithstanding the fact
that the item, combination of items, or
service is transferred between or
among separate divisions, subsidiaries,
or affiliates of a contractor; or
(h) A nondevelopmental item, if the
procuring agency determines the item
was developed exclusively at private
expense and sold in substantial quantities, on a competitive basis, to multiple State and local governments.
Component means any item supplied
to the Federal Government as part of
an end item or of another component.
Contract means a mutually binding
legal relationship obligating the seller
to furnish the supplies or services (including construction) and the buyer to
pay for them. It includes all types of
commitments that obligate the Government to an expenditure of appropriated funds and that, except as otherwise authorized, are in writing. In addition to bilateral instruments, contracts include (but are not limited to)
awards and notices of awards; job orders or task letters issued under basic
ordering agreements; letter contracts;

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2.101
Delivery order means an order for supplies placed against an established contract or with Government sources.
Executive agency means an executive
department, a military department, or
any independent establishment within
the meaning of 5 U.S.C. 101, 102, and
104(1), respectively, and any wholly
owned Government corporation within
the meaning of 31 U.S.C. 9101.
Facsimile means electronic equipment
that communicates and reproduces
both printed and handwritten material.
If used in conjunction with a reference
to a document, e.g., facsimile bid, the
term refers to a document (in the example given, a bid) that has been transmitted to and received by the Government via facsimile.
Federal Acquisition Computer Network
(FACNET) Architecture means the Governmentwide Electronic Commerce/
Electronic Data Interchange (EC/EDI)
operational capability for the acquisition of supplies and services that provides for electronic data interchange of
acquisition information between the
Government and the private sector,
employs nationally and internationally
recognized data formats, and provides
universal user access.
Federal agency means any executive
agency or any independent establishment in the legislative or judicial
branch of the Government (except the
Senate, the House of Representatives,
the Architect of the Capitol, and any
activities under the Architect’s direction).
Full FACNET means an agency has
certified that it has implemented all of
the FACNET functions outlined in
4.504, and more than 75 percent of eligible contracts (not otherwise exempted
from FACNET) in amounts exceeding
the micro-purchase threshold, but not
exceeding the simplified acquisition
threshold, were entered into by the
agency during the preceding fiscal year
using an interim FACNET certified
electronic automated information system.
Governmentwide FACNET means that
the Federal Government has certified
its FACNET capability, and more than
75 percent of eligible contracts (not
otherwise exempted from FACNET) in
amounts exceeding the micro-purchase

orders, such as purchase orders, under
which the contract becomes effective
by written acceptance or performance;
and bilaterial contract modifications.
Contracts do not include grants and cooperative agreements covered by 31
U.S.C. 6301, et seq. For discussion of
various types of contracts, see part 16.
Contract administration office means
an office that performs (a) assigned
postaward functions related to the administration of contracts and (b) assigned preaward functions.
Contracting means purchasing, renting, leasing, or otherwise obtaining
supplies or services from nonfederal
sources. Contracting includes description (but not determination) of supplies and services required, selection
and solicitation of sources, preparation
and award of contracts, and all phases
of contract administration. It does not
include making grants or cooperative
agreements.
Contracting activity means an element
of an agency designated by the agency
head and delegated broad authority regarding acquisition functions.
Contracting office means an office
that awards or executes a contract for
supplies or services and performs
postaward functions not assigned to a
contract administration office.
Contracting officer means a person
with the authority to enter into, administer, and/or terminate contracts
and make related determinations and
findings. The term includes certain authorized representatives of the contracting officer acting within the limits of their authority as delegated by
the contracting officer. Administrative
contracting officer (ACO) refers to a contracting officer who is administering
contracts. Termination contracting officer (TCO) refers to a contracting officer
who is settling terminated contracts. A
single contracting officer may be responsible for duties in any or all of
these areas. Reference in this regulation to administrative contracting officer or termination contracting officer
does not (a) require that a duty be performed at a particular office or activity or (b) restrict in any way a contracting officer in the performance of
any duty properly assigned.
Day means, unless otherwise specified, a calendar day.

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48 CFR Ch. 1 (10–1–96 Edition)

threshold, but not exceeding the simplified acquisition threshold, entered
into by the executive agencies during
the preceding fiscal year were made
through electronic automated information systems with full FACNET certification.
Head of the agency (also called agency
head) means the Secretary, Attorney
General,
Administrator,
Governor,
Chairperson, or other chief official of
an executive agency, unless otherwise
indicated, including any deputy or assistant chief official of an executive
agency; and the term authorized representative means any person, persons,
or board (other than the contracting
officer) authorized to act for the head
of the agency or Secretary.
Head of the contracting activity includes the official who has overall responsibility for managing the contracting activity.
Information technology means any
equipment, or interconnected system(s) or subsystem(s) of equipment,
that is used in the automatic acquisition, storage, manipulation, management, movement, control, display,
switching, interchange, transmission,
or reception of data or information by
the agency.
(a) For purposes of this definition,
equipment is used by an agency if the
equipment is used by the agency directly or is used by a contractor under
a contract with the agency which—
(1) Requires the use of such equipment; or
(2) Requires the use, to a significant
extent, of such equipment in the performance of a service or the furnishing
of a product.
(b) The term information technology
includes computers, ancillary equipment, software, firmware and similar
procedures, services (including support
services), and related resources.
(c) The term information technology
does not include any equipment that is
acquired by a contractor incidental to
a contract.
Interim FACNET means a contracting
office has been certified as having implemented the electronic automated
information systems capability to provide widespread public notice of contracting opportunities, issue solicitations, and receive responses to solicita-

tions and associated requests for information. Such capability must allow
the private sector to access notices of
solicitations, access and review solicitations, and respond to solicitations.
In writing or written means any worded or numbered expression which can
be read, reproduced, and later communicated, and includes electronically
transmitted and stored information.
Major system means that combination
of elements that will function together
to produce the capabilities required to
fulfill a mission need. The elements
may include hardware, equipment,
software, or any combination thereof,
but exclude construction or other improvements to real property. A system
shall be considered a major system if—
(a) The Department of Defense is responsible for the system and the total
expenditures for research, development, test, and evaluation for the system are estimated to be more than
$75,000,000 (based on fiscal year 1980
constant dollars) or the eventual total
expenditure for the acquisition exceeds
$300,000,000 (based on fiscal year 1980
constant dollars);
(b) A civilian agency is responsible
for the system and total expenditures
for the system are estimated to exceed
$750,000 (based on fiscal year 1980 constant dollars) or the dollar threshold
for a ‘‘major system’’ established by
the agency pursuant to Office of Management and Budget Circular A–109, entitled ‘‘Major System Acquisitions,’’
whichever is greater; or
(c) The system is designated a
‘‘major system’’ by the head of the
agency responsible for the system.
Market research means collecting and
analyzing information about capabilities within the market to satisfy agency needs.
May denotes the permissive. However, the words no person may... mean
that no person is required, authorized,
or permitted to do the act described.
Micro-purchase means an acquisition
of supplies or services (except construction), the aggregate amount of
which does not exceed $2,500, except
that in the case of construction, the
limit is $2,000.
Micro-purchase threshold means $2,500.
National defense means any activity
related to programs for military or

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2.201

atomic energy production or construction, military assistance to any foreign
nation, stockpiling, or space.
Nondevelopmental item means—
(a) Any previously developed item of
supply used exclusively for governmental purposes by a Federal agency, a
State or local government, or a foreign
government with which the United
States has a mutual defense cooperation agreement;
(b) Any item described in paragraph
(a) of this definition that requires only
minor modification or modifications of
a type customarily available in the
commercial marketplace in order to
meet the requirements of the procuring
department or agency; or
(c) Any item of supply being produced that does not meet the requirements of paragraph (a) or (b) solely because the item is not yet in use.
Offer means a response to a solicitation that, if accepted, would bind the
offeror to perform the resultant contract. Responses to invitations for bids
(sealed bidding) are offers called bids or
sealed bids; responses to requests for
proposals (negotiation) are offers
called proposals; responses to requests
for quotations (negotiation) are not offers and are called quotes. For unsolicited proposals, see subpart 15.5.
Possessions includes the Virgin Islands, Johnston Island, American
Samoa, Guam, Wake Island, Midway Island, and the guano islands, but does
not include Puerto Rico, leased bases,
or trust territories.
Senior procurement executive means
the individual appointed pursuant to
section 16(3) of the Office of Federal
Procurement Policy Act (41 U.S.C.
414(3)) who is responsible for management direction of the acquisition system of the executive agency, including
implementation of the unique acquisition policies, regulations, and standards of the executive agency.
Shall denotes the imperative.
Signature or signed means the discrete, verifiable symbol of an individual which, when affixed to a writing
with the knowledge and consent of the
individual, indicates a present intention to authenticate the writing. This
includes electronic systems.
Simplified acquisition procedures means
the methods prescribed in part 13 for

making purchases of supplies or services.
Simplified acquisition threshold means
$100,000, except that in the case of any
contract to be awarded and performed,
or purchase to be made, outside the
United States in support of a contingency operation as defined in 10 U.S.C.
101(a)(13), the term means $200,000.
Supplies means all property except
land or interest in land. It includes
(but is not limited to) public works,
buildings, and facilities; ships, floating
equipment, and vessels of every character, type, and description, together
with parts and accessories; aircraft and
aircraft parts, accessories, and equipment; machine tools; and the alteration or installation of any of the foregoing.
Task order means an order for services placed against an established contract or with Government sources.
United States, when used in a geographic sense, means the 50 States and
the District of Columbia.
[48 FR 42107, Sept. 19, 1983, as amended at 50
FR 1727, Jan. 11, 1985; 50 FR 4221, Jan. 30,
1985; 50 FR 26903, June 28, 1985; 50 FR 52429,
Dec. 23, 1985; 51 FR 2649, Jan. 17, 1986; 52 FR
19802, May 27, 1987; 54 FR 48981, Nov. 28, 1989;
56 FR 41744, Aug. 22, 1991; 60 FR 34736, July 3,
1995; 60 FR 42653, Aug. 16, 1995; 60 FR 48235,
Sept. 18, 1995; 61 FR 39190, July 26, 1996; 61 FR
41468, Aug. 8, 1996]

Subpart 2.2—Definitions Clause
2.201

Contract clause.

The contracting officer shall insert
the clause at 52.202–1, Definitions, in
solicitations and contracts except
when the contract is not expected to
exceed
the
simplified
acquisition
threshold. If the contract is for personal services, construction, architectengineer services, or dismantling, demolition, or removal of improvements,
the contracting officer shall use the
clause with its Alternate I. Additional
definitions may be included, provided
they are consistent with the clause and
the FAR.
[60 FR 34744, July 3, 1995, as amended at 61
FR 39190, July 26, 1996]

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Pt. 3

48 CFR Ch. 1 (10–1–96 Edition)
Subpart 3.4—Contingent Fees

PART
3—IMPROPER
BUSINESS
PRACTICES
AND
PERSONAL
CONFLICTS OF INTEREST
Sec.
3.000

3.400 Scope of subpart.
3.401 Definitions.
3.402 Statutory requirements.
3.403 Applicability.
3.404 Contract clause.
3.405 Misrepresentations or violations of the
Covenant Against Contingent Fees.
3.406 Records.

Scope of part.

Subpart 3.1—Safeguards
3.101 Standards of conduct.
3.101–1 General.
3.101–2 Solicitation and acceptance of gratuities by Government personnel.
3.101–3 Agency regulations.
3.102 [Reserved]
3.103 Independent pricing.
3.103–1 Solicitation provision.
3.103–2 Evaluating the certification.
3.103–3 The need for further certifications.
3.104 Procurement integrity.
3.104–1 General.
3.104–2 Applicability.
3.104–3 Statutory prohibitions and restrictions.
3.104–4 Definitions.
3.104–5 Disclosure, protection, and marking
of proprietary and source selection information.
3.104–6 Restrictions on employment or business opportunity discussions between
competing contractors and procurement
officials.
3.104–7 Postemployment restrictions applicable to Government officers and employees serving as procurement officials
and certifications required from procurement officials leaving Government service.
3.104–8 Knowing violations, duty to inquire,
and ethics advisory opinions.
3.104–9 Certification requirements.
3.104–10 Solicitation provision and contract
clauses.
3.104–11 Processing violations or possible
violations.
3.104–12 Ethics program training requirements.

Subpart 3.5—Other Improper Business
Practices
3.501 Buying-in.
3.501–1 Definition.
3.501–2 General.
3.502 Subcontractor kickbacks.
3.502–1 Definitions.
3.502–2 Subcontractor kickbacks.
3.502–3 Contract clause.
3.503 Unreasonable restrictions
contractor sales.
3.503–1 Policy.
3.503–2 Contract clause.

on

sub-

Subpart 3.6—Contracts With Government
Employees or Organizations Owned or
Controlled by Them
3.601 Policy.
3.602 Exceptions.
3.603 Responsibilities of the contracting officer.

Subpart 3.7—Voiding and Rescinding
Contracts
3.700
3.701
3.702
3.703
3.704
3.705

Scope of subpart.
Purpose.
Definition.
Authority.
Policy.
Procedures.

Subpart 3.8—Limitation on the Payment of
Funds to Influence Federal Transactions
3.800 Scope of subpart.
3.801 Definitions.
3.802 Prohibitions.
3.803 Certification and disclosure.
3.804 Policy.
3.805 Exemption.
3.806 Processing suspected violations.
3.807 Civil penalties.
3.808 Solicitation provision and contract
clause.

Subpart 3.2—Contractor Gratuities to
Government Personnel
3.201 Applicability.
3.202 Contract clause.
3.203 Reporting suspected violations of the
Gratuities clause.
3.204 Treatment of violations.

Subpart 3.9—Whistleblower Protections for
Contractor Employees

Subpart 3.3—Reports of Suspected Antitrust
Violations

3.900
3.901
3.902
3.903
3.904

3.301 General.
3.302 Definitions.
3.303 Reporting suspected antitrust violations.

24

Scope of subpart.
Definitions.
Applicability.
Policy.
Procedures for filing complaints.

Federal Acquisition Regulation
3.905 Procedures
plaints.
3.906 Remedies.

for

investigating

3.103–2
com-

3.101–3 Agency regulations.
(a) Agencies are required by Executive Order 11222 of May 8, 1965, and 5
CFR part 735 to prescribe Standards of
Conduct. These agency standards contain—
(1) Agency-authorized exceptions to
3.101–2; and
(2) Disciplinary measures for persons
violating the standards of conduct.
(b) Requirements for employee financial disclosure and restrictions on private employment for former Government employees are in Office of Personnel Management and agency regulations implementing Public Law 95–521,
which amended 18 U.S.C. 207.

AUTHORITY: 40 U.S.C. 486(c); 10 U.S.C. Chapter 137; and 42 U.S.C. 2473(c).
SOURCE: 48 FR 42108, Sept. 19, 1983, unless
otherwise noted.

3.000 Scope of part.
This part prescribes policies and procedures for avoiding improper business
practices and personal conflicts of interest and for dealing with their apparent or actual occurrence.

Subpart 3.1—Safeguards
3.101 Standards of conduct.

3.102

[Reserved]

3.101–1 General.

3.103

Independent pricing.

Government business shall be conducted in a manner above reproach
and, except as authorized by statute or
regulation, with complete impartiality
and with preferential treatment for
none. Transactions relating to the expenditure of public funds require the
highest degree of public trust and an
impeccable standard of conduct. The
general rule is to avoid strictly any
conflict of interest or even the appearance of a conflict of interest in Government-contractor relationships. While
many Federal laws and regulations
place restrictions on the actions of
Government personnel, their official
conduct must, in addition, be such that
they would have no reluctance to make
a full public disclosure of their actions.

3.103–1 Solicitation provision.
The contracting officer shall insert
the provision at 52.203–2, Certificate of
Independent Price Determination, in
solicitations when a firm-fixed-price
contract or fixed-price contract with
economic price adjustment is contemplated, unless—
(a) The acquisition is to be made
under the simplified acquisition procedures in part 13;
(b) [Reserved]
(c) The solicitation is a request for
technical proposals under two-step
sealed bidding procedures; or
(d) The solicitation is for utility
services for which rates are set by law
or regulation.
[48 FR 42108, Sept. 19, 1983, as amended at 50
FR 1727, Jan. 11, 1985; 50 FR 52429, Dec. 23,
1985; 55 FR 25526, June 21, 1990; 60 FR 34744,
July 3, 1995]

3.101–2 Solicitation and acceptance of
gratuities by Government personnel.

3.103–2 Evaluating the certification.
(a) Evaluation guidelines. (1) None of
the following, in and of itself, constitutes disclosure as it is used in subparagraph (a)(2) of the Certificate of
Independent
Price
Determination
(hereafter, the certificate):
(i) The fact that a firm has published
price lists, rates, or tariffs covering
items being acquired by the Government.
(ii) The fact that a firm has informed
prospective customers of proposed or
pending publication of new or revised

As a rule, no Government employee
may solicit or accept, directly or indirectly, any gratuity, gift, favor, entertainment, loan, or anything of monetary value from anyone who (a) has or
is seeking to obtain Government business with the employee’s agency, (b)
conducts activities that are regulated
by the employee’s agency, or (c) has interests that may be substantially affected by the performance or nonperformance of the employee’s official
duties. Certain limited exceptions are
authorized in agency regulations.

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48 CFR Ch. 1 (10–1–96 Edition)

price lists for items being acquired by
the Government.
(iii) The fact that a firm has sold the
same items to commercial customers
at the same prices being offered to the
Government.
(2) For the purpose of subparagraph
(b)(2) of the certificate, an individual
may use a blanket authorization to act
as an agent for the person(s) responsible for determining the offered prices
if—
(i) The proposed contract to which
the certificate applies is clearly within
the scope of the authorization; and
(ii) The person giving the authorization is the person within the offeror’s
organization who is responsible for determining the prices being offered at
the time the certification is made in
the particular offer.
(3) If an offer is submitted jointly by
two or more concerns, the certification
provided by the representative of each
concern applies only to the activities
of that concern.
(b) Rejection of offers suspected of being
collusive. (1) If the offeror deleted or
modified subparagraph (a)(1) or (a)(3)
or paragraph (b) of the certificate, the
contracting officer shall reject the
offeror’s bid or proposal.
(2) If the offeror deleted or modified
subparagraph (a)(2) of the certificate,
the offeror must have furnished with
its offer a signed statement of the circumstances of the disclosure of prices
contained in the bid or proposal. The
chief of the contracting office shall review the altered certificate and the
statement and shall determine, in writing, whether the disclosure was made
for the purpose or had the effect of restricting competition. If the determination is positive, the bid or proposal shall be rejected; if it is negative,
the bid or proposal shall be considered
for award.
(3) Whenever an offer is rejected
under subparagraph (1) or (2) above, or
the certificate is suspected of being
false, the contracting officer shall report the situation to the Attorney General in accordance with 3.303.
(4) The determination made under
subparagraph (2) above shall not prevent or inhibit the prosecution of any
criminal or civil actions involving the

occurrences or transactions to which
the certificate relates.
[48 FR 42108, Sept. 19, 1983, as amended at 55
FR 25526, June 21, 1990]

3.103–3 The need for further certifications.
A contractor that properly executed
the certificate before award does not
have to submit a separate certificate
with each proposal to perform a work
order or similar ordering instrument
issued pursuant to the terms of the
contract, where the Government’s requirements cannot be met from another source.
3.104

Procurement integrity.

3.104–1

General.

(a) Section 3.104 implements section
27 of the Office of Federal Procurement
Policy Act (41 U.S.C. 423), as amended
by section 814 of the FY 90/91 National
Defense Authorization Act, Pub. L. 101–
189, and section 815 of the 1991 National
Defense Authorization Act, Pub. L. 101–
510 (hereinafter, section 27 is referred
to as ‘‘the Act’’ or ‘‘the law as amended.’’). Agency supplementation of 3.104
and any clauses required by 3.104 must
be approved at a level not lower than
the Senior Procurement Executive of
the agency, unless a higher level of approval is required by law for that agency.
(b) Agency employees are reminded
that much of the conduct prohibited by
the Act is also prohibited by other
statutes and regulations. For example—
(1) The offer or acceptance of a bribe
or gratuity is prohibited by 18 U.S.C.
201, 10 U.S.C. 2207, 5 U.S.C. 7353, and 5
CFR parts 735 and 2635;
(2) Employment discussions are covered by 18 U.S.C. 208, which precludes a
Government employee from participating personally and substantially in any
particular matter that would affect the
financial interests of any person with
whom the employee is negotiating for
employment;
(3) Post-employment restrictions are
covered by 18 U.S.C. 207, which prohibits certain activities by former Government employees, including representation of a contractor before the

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3.104–2

Government in relation to any contract on which the former employee
worked while employed by the Government; and
(4) FAR parts 14 and 15, which place
restrictions on the release of information related to procurements and other
contractor information which must be
protected under 18 U.S.C. 1905. In addition, 5 CFR part 735 protects non-public Government information.

the prohibitions on gratuities, employment discussions, and soliciting or obtaining proprietary or source selection
information contained in subsection
27(a) of the law as originally enacted is
subject to the prohibitions under subsection 27(a) of the law as amended if it
is still a competing contractor for that
procurement on or after December 1,
1990.
(2) Post-employment restrictions. (i)
Current and former Government employees who were procurement officials
during the period July 16, 1989, through
November 30, 1989, are subject, during
that period, to the post-employment
restrictions contained in section 27 as
originally enacted.
(ii) On or after June 1, 1991, current
and former Government employees who
were procurement officials during the
period July 16, 1989, through November
30, 1989, become subject to the post-employment restrictions contained in subsection 27(f) of the law as amended, if:
(A) The activities performed by the
procurement official during the period
July 16, 1989, through November 30,
1989, would also make him or her a procurement official under section 27, of
the law as amended; and
(B) The 2-year period of any post-employment restriction that attached
during the period July 16, 1989, through
November 30, 1989, has not expired.
(b) Conduct and procurement activities
during the period December 1, 1989,
through November 30, 1990—(1) Gratuities,
employment discussions, and soliciting,
obtaining, or disclosing proprietary or
source selection information. (i) The prohibitions on gratuities, employment
discussions, and soliciting, obtaining,
or disclosing proprietary or source selection information contained in section 27 were suspended during the period December 1, 1989, through November 30, 1990. Neither the prohibitions
contained in section 27 as originally
enacted nor as amended apply during
the suspension period. Participation in
a procurement solely during the suspension period does not subject any
person to any of these prohibitions on
or after December 1, 1990.
(2) Post-employment restrictions. (i)
The post-employment restrictions contained in section 27 were suspended
during the period December 1, 1989,

[55 FR 36784, Sept. 6, 1990, as amended at 55
FR 49853, Nov. 30, 1990]

3.104–2 Applicability.
(a) Conduct and procurement activities
during the period July 16, 1989, through
November 30, 1989—(1) Gratuities, employment discussions, and soliciting, obtaining, or disclosing proprietary or source selection information. (i) Participation in
a procurement during the period July
16, 1989, through November 30, 1989,
whether as a procurement official,
competing contractor or through access to information, subjects the participant, during that period, to the prohibitions contained in section 27 as
originally enacted.
(ii) If a particular procurement which
was begun during the period July 16,
1989, through November 30, 1989, has
not been completed by November 30,
1990, then on or after December 1, 1990:
(A) Any person who was subject to
the prohibitions on disclosing proprietary or source selection information
contained in subsection 27(c) of the law
as originally enacted is subject to the
disclosure prohibitions of subsection
27(d) of the law as amended;
(B) Except as provided in subdivision
(a)(1)(ii)(A) of this subsection, a procurement official who was subject to
the prohibitions on gratuities, employment discussions, and disclosing proprietary or source selection information contained in subsection 27(b) of
the law as originally enacted is subject
to the prohibitions under subsection
27(b) of the law as amended, if the activities performed by the procurement
official prior to December 1, 1989, would
also make him or her a procurement
official under subsection 27(b) of the
law as amended; and
(C) Except as provided in subdivision
(a)(1)(ii)(A) of this subsection, a competing contractor who was subject to

27

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48 CFR Ch. 1 (10–1–96 Edition)

through November 30, 1990. Neither the
post-employment
restrictions
contained in section 27 as originally enacted nor as amended apply to any person during the suspension period. In
addition, these post-employment restrictions do not apply on or after December 1, 1990, to any current or
former Government employee whose
only participation in a procurement occurred during the period from December 1, 1989, through November 30, 1990.
(ii) The suspension of the post-employment restrictions during the period December 1, 1989, through November 30, 1990, does not interrupt the running of the 2-year period of any postemployment restriction that attached
to a Government employee who was a
procurement official during the period
July 16, 1989, through November 30,
1989.
(c) Conduct and procurement activities
on or after December 1, 1990—(1) Gratuities, employment discussions, and soliciting, obtaining, or disclosing proprietary or
source selection information. (i) The prohibitions contained in section 27, of the
law as amended, apply on or after December 1, 1990, to persons who participate in a procurement on or after that
date, whether as a procurement official, a competing contractor, or
through access to information.
(ii) As provided in subdivision
(a)(1)(ii) of this subsection, the prohibitions contained in section 27, of the law
as amended, may also apply to procurement officials, competing contractors,
and other persons who, during the period July 16, 1989, through November
30, 1989, were subject to the prohibitions of section 27 as originally enacted.
(2) Post-employment restrictions. (i)
Public Law 101–510 continues the suspension of the post-employment restrictions contained in subsection 27(f)
of the law as amended through May 31,
1991. Government employees who perform procurement official activities
solely during the period December 1,
1990, through May 31, 1991, do not become subject to the post-employment
restrictions contained in subsection
27(f) of the law as amended either during or after the suspension period.
(ii) The post-employment restrictions of subsection 27(f) of the law as

amended are effective June 1, 1991.
Government employees who perform
procurement official activities on or
after June 1, 1991, are subject to those
restrictions.
(iii) As provided in subdivision
(a)(2)(ii) of this subsection, the postemployment restrictions contained in
subsection 27(f) of the law as amended
may also apply, on or after June 1, 1991,
to current or former Government employees who were procurement officials
during the period July 16, 1989, through
November 30, 1989.
(iv) The continued suspension of the
post-employment restrictions does not
interrupt the running of the 2-year period of any post-employment restriction that attached to a procurement official during the period July 16, 1989,
through November 30, 1989.
[55 FR 49853, Nov. 30, 1990]

3.104–3 Statutory prohibitions and restrictions.
As provided in section 27 of the Act,
the following conduct is prohibited:
(a) Prohibited conduct by competing
contractors (subsection 27(a) of the Act).
During the conduct of any Federal
agency procurement of property or
services, no competing contractor or
any officer, employee, representative,
agent, or consultant of any competing
contractor shall knowingly—
(1) Make, directly or indirectly, any
offer or promise of future employment
or business opportunity to, or engage,
directly or indirectly, in any discussion
of future employment or business opportunity with, any procurement official of such agency, except as provided
in 3.104–6(b);
(2) Offer, give, or promise to offer or
give, directly or indirectly, any money,
gratuity, or other thing of value to any
procurement official of such agency; or
(3) Solicit or obtain, directly or indirectly, from any officer or employee of
such agency, prior to the award of a
contract any proprietary or source selection information regarding such procurement.
(b) Prohibited conduct by procurement
officials (subsection 27(b) of the Act).
During the conduct of any Federal
agency procurement of property or
services, no procurement official of
such agency shall knowingly—

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3.104–4

(1) Solicit or accept, directly or indirectly, any promise of future employment or business opportunity from, or
engage, directly or indirectly, in any
discussion of future employment or
business opportunity with, any officer,
employee, representative, agent, or
consultant of a competing contractor,
except as provided in 3.104–6(a);
(2) Ask for, demand, exact, solicit,
seek, accept, receive, or agree to receive, directly or indirectly, any
money, gratuity, or other thing of
value from any officer, employee, representative, agent, or consultant of
any competing contractor for such procurement; or
(3) Disclose any proprietary or source
selection information regarding such
procurement directly or indirectly to
any person other than a person authorized by the head of such agency or the
contracting officer to receive such information.
(c) Disclosure to unauthorized persons
(subsection 27(d) of the Act). During the
conduct of any Federal agency procurement of property or services, no person
who is given authorized or unauthorized access to proprietary or source selection information regarding such procurement, shall knowingly disclose
such information, directly or indirectly, to any person other than a person authorized by the head of such
agency or the contracting officer to receive such information.
(d) Post-employment Restrictions resulting from procurement activities of Government officers or employees who are or
were procurement officials (subsection
27(f) of the Act; not effective until June 1,
1991). (1) No individual who, while serving as an officer or employee of the
Government or member of the Armed
Forces, was a procurement official with
respect to a particular procurement
may knowingly—
(i) Participate in any manner, as an
officer, employee, agent, or representative of a competing contractor, in any
negotiations leading to the award,
modification, or extension of a contract for such procurement; or
(ii) Participate personally and substantially on behalf of the competing
contractor in the performance of such
contract.

The restrictions in subdivisions (d)(1)(i)
and (d)(1)(ii) of this subsection apply
during the period ending 2 years after
the last date such individual participated personally and substantially in
the conduct of such procurement or
personally reviewed and approved the
award, modification, or extension of
any contract for such procurement.
(2) This subsection does not apply to
any participation referred to in subdivisions (d)(1)(i) and (d)(1)(ii) of this
subsection with respect to a subcontractor who is a competing contractor unless—
(i) The subcontractor is a first or second tier subcontractor and the subcontract is for an amount that is in excess of $100,000; or
(ii) The subcontractor significantly
assisted the prime contractor with respect to negotiation of the prime contract; or
(iii) The procurement official involved in the award, modification, or
extension of the prime contract personally directed or recommended the particular subcontractor to the prime contractor as a source for the subcontract;
or
(iv) The procurement official personally reviewed and approved the award,
modification, or extension of the subcontract.
[55 FR 36784, Sept. 6, 1990, as amended at 55
FR 49854, Nov. 30, 1990]

3.104–4

Definitions.

As used in this subsection—
(a) Agency ethics official means the
designated agency ethics official described in 5 CFR 2638.201 and any other
person, including deputy ethics officials described in 5 CFR 2638.204, to
whom authority under 3.104–6(f) and
3.104–8(e) has been delegated by the designated agency ethics official.
(b)(1) Competing contractor, with respect to any procurement (including
any procurement using procedures
other than competitive procedures) of
property or services means any entity
(such as an individual, partnership,
corporation, educational institution,
nonprofit or not for profit organization, or business unit) legally capable
of entering into a contract or subcontract in its own name that is, or is

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48 CFR Ch. 1 (10–1–96 Edition)

reasonably likely to become, a competitor for or recipient of a contract or
subcontract under such procurement,
and includes any other person acting
on behalf of such an entity.
(2) The term competing contractor includes the incumbent contractor in the
case of a contract modification.
(3) An entity shall not be considered
a competing contractor whenever, by
action of the Government or the entity, it is clear that the entity will not,
or will no longer, participate in a particular procurement.
(4) For purposes of subsections 27(a)
and 27(b) of the Act, the phrase representative, agent, or consultant of a competing contractor means any entity,
other than an officer or employee of a
competing contractor, acting on behalf
of, or providing advice to, a competing
contractor with regard to a particular
Federal agency procurement.
(c)(1) During the conduct of any Federal agency procurement of property or
services means, except for broad agency
announcements, small business innovative research programs, and unsolicited
proposals (see subparagraphs (c)(3) and
(c)(4) of this subsection), the period beginning on the earliest date upon
which an identifiable, specific action is
taken for the particular procurement
and concluding upon the award or
modification of a contract or the cancellation of the procurement; provided,
however, that in no event shall the
conduct of the procurement be deemed
to have begun prior to the decision by
an authorized agency official to satisfy
a specific agency need or requirement
by procurement. These actions are—
(i) Drafting a specification or a statement of work;
(ii) Review and approval of a specification;
(iii) Requirements computation at an
inventory control point;
(iv) Development of procurement or
purchase requests;
(v) Preparation or issuance of a solicitation;
(vi) Evaluation of bids or proposals;
(vii) Selection of sources;
(viii) Conduct of negotiations; or
(ix) Review and approval of the award
of a contract or contract modification.
(2) Each contract award and each
contract modification constitutes a

separate procurement action, i.e., a
separate period to which the prohibitions and the requirements of the Act
apply.
(3) For broad agency announcements
and small business innovative research
programs, each proposal received by an
agency shall constitute a separate procurement for purposes of the Act. The
conduct of each procurement shall be
deemed to have begun upon the date a
Commerce Business Daily announcement was made regarding the availability of the broad agency announcement or the date a solicitation was released for the small business innovative research program. The conduct of
the procurement shall end upon the
award of a contract or contract modification incident to each proposal or
the written rejection of each specific
proposal.
(4) Each unsolicited proposal shall be
considered a separate procurement for
purposes of the Act. For unsolicited
proposals, the conduct of the procurement shall be deemed to have begun
upon the publication date of a general
statement of agency needs (see
15.503(d)), or if an agency does not publicize a general statement of agency
needs, upon the provision of advance
guidance related to agency needs (see
15.504(a)(1)) or the receipt of the unsolicited proposal, whichever is earlier.
The conduct of the procurement shall
end upon the award of a contract or
contract modification or the rejection
of the proposal.
(d) Government officer or employee
means a person who is employed by a
Federal agency (see subpart 2.1) and
who is in such status during the period
July 16, 1989 through November 30, 1989,
or on or after December 1, 1990. This includes—
(1) A member of the uniformed services as defined in section 101(3) of title
37 U.S.C.;
(2) A person who is appointed to a position in the Federal Government
under title 5 U.S.C., or any other title
authorizing such appointments, including a person under a temporary appointment; and
(3) A special Government employee
as defined in section 202 of title 18
U.S.C.

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3.104–4

(e) Modification means the addition of
new work to a contract, or the extension of a contract, which requires a justification and approval (see subpart
6.3). It does not include an option
where all the terms of the option, including option prices, are set forth in
the contract and all requirements for
option exercise have been satisfied,
change orders, administrative changes,
or any other contract changes that are
within the scope of the contract.
(f)(1) Gratuity or other thing of value
includes any gift, favor, entertainment,
or other item having monetary value.
The phrase includes services, conference fees, vendor promotional training,
transportation,
lodgings
and
meals, as well as discounts not available to the general public and loans extended by anyone other than a bank or
financial institution. The phrase does
not include—
(i) Anything for which market value
is paid by the procurement official, or
on his behalf, by someone other than a
competing contractor, or a representative, agent, or consultant of the competing contractor;
(ii) Anything which is paid for by the
Government, secured under Government contract, or accepted by the Government under specific statutory authority;
(iii) Plaques or certificates having no
intrinsic value; or
(iv) Any unsolicited item, other than
money, having a market value of $10 or
less per event or presentation.
For these purposes, market value
means the retail cost the procurement
official would incur to purchase the
item and, in the case of items such as
tickets, refers to their face value. A
thing of value given or received or otherwise offered or sought directly or indirectly includes a thing of value directed
to a person other than a procurement
official, such as a spouse or child, solely because of that person’s relationship
to the procurement official or on the
basis of designation, recommendation,
or suggestion by the procurement official.
(2) Promotional vendor training does
not include training provided by a vendor when a vendor’s products are furnished under contract to the Govern-

ment and the training is to facilitate
the use of those products.
(g) Participated personally and substantially means active and significant
involvement of the individual in activities directly related to the procurement. To participate personally means
directly, and includes the participation
of a subordinate when actually directed
by the supervisor in the matter. To
participate substantially means that the
employee’s involvement must be of significance to the matter. For example,
the review of procurement documents
solely to determine compliance with
applicable regulatory, administrative,
or budgetary requirements or procedures does not constitute substantial
participation in a procurement. It requires more than official responsibility, knowledge, perfunctory involvement, or involvement on an administrative or peripheral issue. A finding of
substantiality should be based not only
on the effort devoted to a matter, but
on the importance of the effort. While
a series of peripheral involvements
may be insubstantial, the single act of
approving or participating in a critical
step may be substantial.
(h)(1) Procurement official means any
civilian or military official or employee of an agency who has participated personally and substantially in
any of the following activities for a
particular procurement—
(i) Drafting a specification or a statement of work for that procurement;
(ii) Review and approval of a specification or statement of work developed for that procurement;
(iii) Preparaton or development of
procurement or purchase requests for
that procurement;
(iv) The preparation or issuance of a
solicitation for that procurement;
(v) Evaluation of bids or proposals for
that procurement;
(vi) Selection of sources for that procurement;
(vii) Negotiations to establish the
price or terms and conditions of a particular contract or contract modification; or
(viii) Review and approval of the
award of a contract or contract modification.
(2) For purposes of 3.104–4(h), the
term employee of an agency includes a

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48 CFR Ch. 1 (10–1–96 Edition)

contractor, subcontractor, consultant,
expert, or advisor (other than a competing contractor) acting on behalf of,
or providing advice to, the agency with
respect to any phase of the agency procurement concerned.
(3) Generally, an individual will not
become a procurement official solely
by participating in the following activities—
(i) Federal advisory committees that
are established and function in accordance with the Federal Advisory Committee Act, 5 U.S.C. app. 2, unless the
Federal advisory committee is established or used for the purpose of performing a function listed in subparagraph (h)(1) of this subsection and the
individual member’s participation in
that function is personal and substantial;
(ii) Agency level boards, panels, or
other advisory committees that review
program milestones or evaluate and
make recommendations regarding alternative technologies or approaches
for satisfying broad agency level missions or objectives;
(iii) The performance of general,
technical, engineering, or scientific effort having broad application not directly associated with a particular procurement, notwithstanding that such
general, technical, engineering, or scientific effort subsequently may be incorporated into a particular procurement;
(iv) Clerical functions supporting the
conduct of a particular procurement;
and
(v) For procurements to be conducted
under the procedures of OMB Circular
A–76, participation in management
studies, preparation of in-house cost
estimates, preparation of most efficient
organization analyses, and furnishing of
data or technical support to be used by
others in the development of performance standards, statements of work, or
specifications.
(4) An employee of an agency does
not become a procurement official for a
particular procurement until the onset
of the employee’s personal and substantial participation in that particular procurement.
(5) For purposes of 3.104–4(h), the
term procurement official does not include contracting officers or other in-

dividuals whose authority is limited to
the micro-purchase threshold if the
head of the contracting activity determines that it is unlikely that the individual will make purchases in a total
amount greater than $20,000 in any 12month period.
(i) Property means supplies as defined
in 2.101.
(j)(1) Proprietary information means
information contained in a bid or proposal or otherwise submitted to the
Government by a competing contractor
in response to the conduct of a particular Federal agency procurement, or in
an unsolicited proposal, that has been
marked by the competing contractors
as proprietary information in accordance with applicable law and regulation.
(2) Information shall be considered
proprietary information, for purposes
of section 27 of the Act, only when—
(i) An attached transmittal document, such as a cover page or the label
of a magnetic media storage container,
is clearly marked with a restrictive
legend; and
(ii) The specific portions of the information whose disclosure the competing
contractor desires to restrict are clearly and separately marked.
(3) Proprietary information does not
include information—
(i) That is otherwise available without restrictions to the Government,
another competing contractor, or the
public;
(ii) Contained in bid documents following bid opening (but see 14.404–4); or
(iii) That the contracting officer determines to release in accordance with
3.104–5(d).
(k)(1) Source selection information is
information, including information
stored in electronic, magnetic, audio or
video formats, which is prepared or developed for use by the Government to
conduct a particular procurement
and—
(i) The disclosure of which to a competing contractor would jeopardize the
integrity or successful completion of
the procurement concerned; and
(ii) Is required by statute, regulation,
or order to be secured in a source selection file or other facility to prevent
disclosure.

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3.104–5
proprietary or source selection information, or does not know if the person
or entity may disclose or receive such
information, shall make the inquiries
prescribed at 3.104–8(d).
(b)(1) Proprietary and source selection information shall be protected
from unauthorized disclosure in accordance with 14.401, 15.411, 15.413, applicable law, and agency regulations.
(2) Information contained in a bid or
proposal that bears the legend required
by 3.104–4(j)(2) shall be considered to be
proprietary information for purposes of
the Act. However, information contained in a bid or proposal that does
not bear that legend shall remain subject to the restrictions on disclosure
contained in 15.413, 15.509, 24.202, or as
otherwise required by law.
(c) In determining whether particular
information is source selection information under 3.104–4(k)(2)(x), the originator shall assure that the information
meets the criteria in 3.104–4(k)(1) and
consult with agency officials as appropriate. Individuals responsible for preparing material that may include information designated as source selection information in accordance with
3.104–4 (k)(2)(x) shall mark the cover
page and each page that contains
source selection information with the
legend ‘‘SOURCE SELECTION INFORMATION—SEE FAR 3.104.’’ Although
the material described in 3.104–4(k)(2)
(i) through (ix) is considered to be
source selection information whether
or not marked, all reasonable efforts
shall be made to mark such material
with this legend.
(d)(1) The head of the agency, or his
or her designee, or the contracting officer, has the authority, in accordance
with applicable agency regulations or
procedures, to authorize persons, or
classes of persons, to receive proprietary or source selection information
when necessary to the conduct of the
procurement.
(2) For contracts and contract modifications in excess of $100,000, the head
of the agency, or his or her designee,
shall establish procedures to assure
that the names of all persons, identification of the classes of persons and,
to the maximum extent practicable,
the names of all individuals within a
class of persons, authorized access to

(2) Source selection information is
limited to—
(i) Bid prices submitted in response
to a Federal agency solicitation for
sealed bids, or lists of those bid prices
prior to public bid opening;
(ii) Proposed costs or prices submitted in response to a Federal agency solicitation (for other than sealed bids),
or lists of those proposed costs or
prices;
(iii) Source selection plans;
(iv) Technical evaluation plans;
(v) Technical evaluations of proposals;
(vi) Cost or price evaluations of proposals;
(vii) Competitive range determinations which identify proposals that
have a reasonable chance of being selected for award of a contract;
(viii) Rankings of bids, proposals, or
competitors;
(ix) The reports and evaluations of
source selection panels or boards or advisory councils; or
(x) Other information marked as
‘‘SOURCE
SELECTION
INFORMATION—SEE FAR 3.104’’ based upon a
case-by-case determination by the
Head of the Agency, his designee, or
the contracting officer that the information meets the standards in subdivisions (k)(1) (i) and (ii) of this subsection.
(l) Possible violation means, for purposes of the certification requirements
under 3.104–9, specifically identified or
documented circumstances that provide a reasonable basis to believe that
a violation of the Act may have occurred. Rumor and hearsay are not, by
themselves, a reasonable basis to conclude that a possible violation exists.
[55 FR 36785, Sept. 6, 1990, as amended at 55
FR 49854, Nov. 30, 1990; 59 FR 64787, Dec. 15,
1994; 61 FR 39191, July 26, 1996]

3.104–5 Disclosure, protection, and
marking of proprietary and source
selection information.
(a) Except as specifically provided for
in this subsection, no person or other
entity may disclose proprietary or
source selection information to any
person other than a person authorized
by the Head of the Agency to receive
such information. A person or entity
who does not know if information is

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48 CFR Ch. 1 (10–1–96 Edition)

proprietary or source selection information at the contracting activity are
listed in the contract file.
(3) For contracts and contract modifications expected to exceed $100,000, if
proprietary or source selection information is authorized to be released to
Government activities outside the contracting activity responsible for the
conduct of the procurement, the head
of the office receiving the information,
or his or her designee, shall maintain a
list of persons, a list of classes of persons and, to the maximum extent practicable, the names of all individuals
within classes of persons, who have
been authorized access to the proprietary or source selection information.
The list shall be forwarded to the contracting office responsible for the conduct of the procurement to be included
in the contract file.
(4) For release to other than Government employees, see 15.413–2. The
names of those individuals shall also be
listed in the contract file when the
contract or contract modification is
expected to exceed $100,000.
(5) The lists prescribed by this subsection shall be forwarded to the contracting officer for inclusion in the
contract file within the time specified
by the contracting officer.
(e)(1) Except as provided in subparagraph (e)(4) of this subsection, if the
contracting officer believes that information marked as proprietary (see
3.104–4(j)) is not proprietary, the competing contractor that has affixed the
marking shall be notified in writing
and given an opportunity to justify the
proprietary marking. If the competing
contractor agrees that the material is
not proprietary information, or does
not respond within the time specified
in the notice, the contracting officer
may remove the proprietary marking
and the information may be released.
(2) After reviewing any justification
submitted by the competing contractor, if the contracting officer determines that the proprietary marking is
not justified, the contracting officer
shall so notify the competing contractor in writing.
(3) Information marked by the competing contractor as proprietary shall
not be released until—

(i) The review of the contractor’s justification has been completed; or
(ii) The period specified for the contractor’s response has elapsed, whichever is earlier.
Thereafter, the contracting officer may
release the information.
(4) With respect to technical data
that are marked proprietary by a competing contractor, the contracting officer shall generally follow the procedures in 27.404(h).
(f) Nothing in 3.104 prohibits competing contractors from disclosing or authorizing the Government to disclose
their company-specific proprietary information to any other person or entity where not otherwise prohibited by
law.
(g) Proprietary markings under 3.104
do not limit the Government’s use of
technical data to which the Government has rights.
(h) Source selection or proprietary
information that is properly in the possession of a competing contractor as a
result of a prior disclosure that was
not prohibited by the Act shall not be
considered to have been solicited or obtained, directly or indirectly, in violation of the Act.
(i) Nothing in 3.104 shall be construed
to authorize the withholding of any information pursuant to a proper request
from the Congress, any committee or
subcommittee thereof, a Federal agency, any board of contract appeals of a
Federal agency, the Comptroller General, or an Inspector General of a Federal agency, except as otherwise authorized by law or regulation. Any such
release which contains proprietary or
source selection information shall
clearly notify the recipient that the information or portions thereof are proprietary or source selection information related to the conduct of a Federal
agency procurement whose disclosure
is restricted by section 27 of the Act.
[55 FR 36787, Sept. 6, 1990]

3.104–6 Restrictions on employment or
business opportunity discussions
between competing contractors and
procurement officials.
(a) Applicability to procurement officials. During the conduct of a Federal
agency
procurement,
subsection

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3.104–6

27(b)(1) of the Act prohibits an individual who has become a procurement official from knowingly, directly or indirectly, soliciting or accepting from or
discussing with any officer, employee,
representative, agent, or consultant of
a competing contractor, future employment or business opportunity. Subsection 27(b)(1) of the Act also applies
to individuals acting as procurement
officials on behalf of the procuring
agency who are, or are employed by,
contractors, subcontractors, consultants, experts, or advisors (other than
employees of a competing contractor).
The prohibition in subsection 27(b)(1)
does not apply to a procurement official—
(1) After the contract has been
awarded, the procurement canceled, or
the contract modification has been executed;
(2) After the procurement official
leaves Government service;
(3) Who is, or is employed by, a contractor, subcontractor, consultant, expert, or advisor, after such procurement official ceases to act on behalf of,
or provide advice to, the procuring
agency concerning the procurement;
(4) Described in paragraph (c) of this
subsection who has received written
authorization for recusal from further
participation in a procurement, and
who has in fact discontinued participation in the procurement.
(5) Whose only communication with a
competing contractor is for the purpose of—
(i) Rejecting an unsolicited offer of
employment or business opportunity;
or
(ii) Advising the competing contractor that he or she must seek recusal in
accordance with paragraph (d) of this
subsection prior to any discussions regarding the unsolicited offer. A procurement official who wishes to conduct such discussions with the competing contractor shall promptly submit a
recusal proposal.
(b) Applicability to competing contractors. During the conduct of a Federal
agency
procurement,
subsection
27(a)(1) of the Act prohibits a competing contractor from knowingly, directly or indirectly, offering or promising to, or discussing with, a procurement official any future business or

employment opportunity. The prohibition does not apply to—
(1) An initial contact for the sole purpose of determining whether an individual or other entity is able to engage
in discussions concerning future employment or business opportunity either because the individual or entity
has been recused or is not a procurement official.
(2) A contact or discussion with an
individual or other entity who may engage in such contact or discussion
under subparagraphs (a)(1) through
(a)(4) of this subsection.
(c) Eligibility for recusal. An individual
or other entity who is a procurement
official may be eligible for recusal if
the individual or entity has not participated personally and substantially
in—
(1) The evaluation of bids or proposals, the selection of sources, or the conduct of negotiations in connection with
such solicitation or contract during
the period beginning with the issuance
of a procurement solicitation and ending with the award of a contract or
cancellation of a procurement; or
(2) The evaluation of a proposed
modification, or the conduct of negotiations during the period beginning
with the negotiation of a modification
of a contract and ending with an agreement to modify the contract or a decision not to modify the contract.
(d) Recusal proposal. An eligible procurement official who wishes to discuss
future employment or business opportunities with a competing contractor
during the conduct of a procurement
shall submit to the Head of the Contracting Activity (HCA), or his or her
designee, prior to initiating or engaging in such discussions, a written proposal of disqualification from further
participation in the procurement which
relates to that competing contractor.
Concurrent copies of the written proposal shall be submitted to the contracting officer, the Source Selection
Authority if the contracting officer is
not the Source Selection Authority,
and the procurement official’s immediate supervisor. As a minimum, the
proposal shall—
(1) Identify the procurement involved;

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48 CFR Ch. 1 (10–1–96 Edition)

(2) Describe the nature of the procurement official’s participation in the
procurement and specify the approximate dates or time period of participation; and
(3) Identify the competing contractor
and describe its interest in the procurement.
(e) Suspension from participation in a
procurement. The contracting officer, or
the Source Selection Authority if the
contracting officer is not the Source
Selection Authority, may suspend the
individual’s or entity’s participation in
the procurement pending evaluation of
the recusal proposal. Notwithstanding
submission of a recusal proposal or suspension from participation in a procurement, an individual or entity shall
not solicit or engage in discussions of
employment or business opportunity
until authorized in writing by the HCA
or his or her designee.
(f) Evaluation of recusal proposal. (1) If
the HCA or his or her designee determines that the procurement official’s
further participation is not essential to
the activity’s conduct of the procurement and that recusal will not jeopardize the integrity of the procurement
process, the HCA may, after consulting
with the agency ethics official, grant
written approval of the recusal proposal. In evaluating the recusal proposal, the HCA or his or her designee
may consider any relevant factors, including—
(i) The importance of the procurement official’s role to the completion
of the procurement action;
(ii) The procurement official’s prior
participation in key procurement decisions and actions;
(iii) The timing of the proposal in relation to significant procurement milestones; and
(iv) Potential disruption to the procurement schedule as a result of the
procurement official’s recusal.
(2) The HCA or his or her designee
may request that any person, including
the procurement official, the Source
Selection Authority, the contracting
officer or the procurement official’s
immediate supervisor, provide any additional information necessary to
evaluate the recusal proposal.
(3) Any rejection of the recusal proposal shall be in writing and shall state

the basis for rejection. A determination by the HCA or his or her designee
to reject a recusal proposal shall be
final. Rejection of a Government officer’s or employee’s recusal proposal
shall not be deemed to be an adverse
personnel action or be subject to agency or negotiated grievance procedures.
(g) Duration of recusal. A procurement
official whose recusal proposal has
been approved shall be disqualified—
(1) As a minimum, for any period during which future employment or business opportunities with the competing
contractor have not been rejected by
either the procurement official or the
competing contractor; or
(2) For the period the procurement
official and competing contractor have
an employment or business relationship or an arrangement concerning future employment or business relationships.
(h) Reinstatement to participation in a
procurement. Subsequent to a period of
disqualification, if an agency wishes to
reinstate the procurement official to
participation in the procurement, the
HCA or his or her designee may authorize immediate reinstatement or, in his
or her discretion, may authorize reinstatement following whatever additional period of disqualification he or
she determines is necessary to ensure
the integrity of the procurement process. It is within the discretion of the
HCA, or his or her designee, to determine that the procurement official
shall not be reinstated to participation
in the procurement. In determining
that any additional period of disqualification is necessary, the HCA or his or
her designee shall consider any factors
that might give rise to an appearance
that the procurement official acted
without complete impartiality with respect to issues involved in the procurement.
[55 FR 36788, Sept. 6, 1990]

3.104–7 Postemployment
restrictions
applicable to Government officers
and employees serving as procurement officials and certifications required from procurement officials
leaving Government service.
(a) Subsection 27(e)(4) of the Act provides that if a procurement official

36

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leaves the Government during the conduct of a procurement expected to result in a contract or modification in
excess of $100,000, such official shall
certify to the contracting officer that
he or she understands the continuing
obligation, during the conduct of the
procurement, not to disclose propriety
or source selection information related
to such agency procurement. This certification requirement also applies to
individuals acting as procurement officials on behalf of the procuring activity who are, or are employed by, contractors, subcontractors, consultants,
experts, or advisors other than employees of the competing contractor when
such individuals, during the conduct of
the procurement, cease to function as
procurement officials for the procurement.
(b) Subsection 27(f)(1)(A) of the Act
restricts a current or former Government officer or employee, as defined in
3.104–4(d), who was a procurement official with respect to a particular procurement, from knowingly participating in any manner in negotiations as
an officer, employee, representative,
agent, or consultant of a competing
contractor leading to the award or
modification of the contract for such
procurement. This restriction not only
includes representing the competing
contractor in negotiations with the
contracting activity, but also includes
providing advice or information for the
specific purpose of influencing negotiation strategies. For purposes of this restriction,
‘‘negotiation
strategies’’
mean the contractor’s approach to the
preparation and presentation of its
offer or the conduct of negotiations
with the Government. This restriction
does not apply to providing scientific,
technical, or other advice that is unrelated to negotiation strategies. This restriction lasts for 2 years from the date
of the individual’s last personal and
substantial participation in the Federal agency procurement. This restriction is not effective until June 1, 1991.
(c) Subsection 27(f)(1)(B) of the Act
restricts a current or former Government officer or employee, as defined in
3.104–4(d), who was a procurement official with respect to a particular procurement, from knowingly participating personally and substantially on be-

half of the competing contractor in
performance of the contract. To participate ‘‘personally and substantially’’
requires the presence of both direct and
significant involvement in the performance of the specific contract. The
performance of general engineering,
scientific or technical work, or providing general budgetary or policy advice,
shall not be considered personal and
substantial participation on behalf of a
competing contractor in the performance of the contract for which the Government officer or employee is or was a
procurement official. Where participation is on behalf of a competing contractor who is a subcontractor, the significance of that participation will be
determined in relation to the prime
contract. This restriction lasts for 2
years from the date of the last personal
and substantial participation in the
Federal agency procurement. This restriction is not effective until June 1,
1991.
(d) The restrictions in paragraphs (b)
and (c) of this subsection do not apply
to—
(1) Individuals acting as procurement
officials on behalf of the procuring
agency who are or were, or who are or
were employed by, contractors, subcontractors, consultants, experts, or
advisors and who are not Government
officers or employees as defined in
3.104–4(d).
(2) Participation in the negotiation
or performance of any other contract
of the competing contractor.
(3) General scientific and technical
work on an independent research and
development project, unless such work
involves the negotiation or performance of a specific contract that the individual worked on as a Government
employee.
(4) Participation with respect to a
subcontractor who is a competing contractor unless—
(i) The subcontractor is a first or second tier subcontractor and the subcontract is for an amount that is in excess of $100,000; or
(ii) The subcontractor significantly
assisted the prime contractor with respect to negotiation of the prime contract; or
(iii) The procurement official involved in the award or modification of

37

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48 CFR Ch. 1 (10–1–96 Edition)

the prime contract personally directed
or recommended the particular subcontractor as a source for the subcontract; or
(iv) The procurement official personally reviewed and approved the award
or modification of the subcontract. A
contracting officer’s consent, in accordance with part 44, to the placement
of a subcontract or, with respect to architect-engineer contracts, the substitution of a subcontractor, associate, or
consultant, does not constitute approval of the subcontract, subcontractor, associate, or consultant. Similarly, approval of a contractor’s purchasing system does not constitute approval of a particular subcontract or
subcontractor.
(5) An individual who has been granted a waiver by the President in accordance with subsection 27(f)(3) of the Act.
Waivers under that subsection may be
granted only to a civilian officer or
employee of the Executive branch
other than an officer and employee in
the Executive Office of the President
who, after his or her Federal Government employment is terminated, is or
will be engaged in activities at a Government-owned,
contractor-operated
entity at which he or she served as an
officer or employee immediately before
his or her Federal Government employment began. Subsection 27(f)(3) is not
effective until June 1, 1991.
(6) An individual whose only personal
and substantial participation in the
procurement occurred during the period December 1, 1989, through May 31,
1991.

good faith reliance on an agency ethics
advisory opinion issued to a current or
former procurement official under
paragraph (e) of this subsection.
(2) A procurement official engages in
specific conduct after having satisfied
the duty to inquire under paragraphs
(b), (c), and (d) of this subsection or has
acted in good faith reliance on an ethics advisory opinion obtained under
paragraph (e) of this subsection.
(b) Duty to inquire—general. (1) For
some procurements, neither competing
contractors nor all procurement officials will have knowledge as to when
the conduct of a particular procurement has begun. However, certain conduct and activities that are prohibited
by the Act would be inappropriate at
any time. There are prohibitions on the
receipt of gratuities from agency contractors that apply without regard to
whether an employee is involved in the
conduct of a particular procurement.
Similarly, potential contractors should
not solicit, and agency personnel
should not offer, proprietary or source
selection information at any time.
However, potential contractors may
offer, and Government employees may
solicit, employment except as prohibited by law.
(2) Agency personnel shall be presumed to know the procurements for
which they are procurement officials.
Contractor personnel are presumed to
know the procurements for which the
organization they represent is reasonably likely to be competing. Individuals who do not know whether they are
procurement officials, or whether the
organization they represent is or is
reasonably likely to become a competing contractor, should defer any discussions regarding employment until
these questions are resolved by consulting appropriate parties within their
respective organizations. Agency personnel who cannot ascertain, after discussions with the contracting officer,
or the Source Selection Authority if
the contracting officer is not the
Source Selection Authority, whether
they are procurement officials, may request an ethics advisory opinion under
paragraph (e) of this subsection for
purposes of determining their status.
(b) Duty to inquire—employment discussions. (1) A contractor who wishes to

[55 FR 36789, Sept. 6, 1990, as amended at 55
FR 49854, Nov. 30, 1990]

3.104–8 Knowing violations, duty to inquire, and ethics advisory opinions.
(a) Knowing violations. Neither a procurement official nor a competing contractor violates the restrictions set
forth in 3.104–3 unless the prohibited
conduct is engaged in knowingly. For
these purposes, conduct is not knowing
when—
(1) A competing contractor engages
in specific conduct after having satisfied the duty to inquire under paragraphs (b), (c), and (d) of this subsection, or when the competing contractor engages in conduct based upon

38

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3.104–8

discuss employment opportunities with
an individual whose duties and functions may make that individual a procurement official (see 3.104–4(h)) should
ask if that individual is a procurement
official for a procurement for which
the contractor is a competing contractor or is likely to become a competing
contractor before conducting any discussion related to employment. A competing contractor shall not be considered to have knowingly violated the
prohibitions set forth in subsection
27(a)(1) of the Act (see 3.104–3(a)(1)) if
the contractor has made an inquiry in
good faith of the possible procurement
official and has been advised that the
individual is not a procurement official
for any procurement for which the contractor is or is reasonably likely to become a competing contractor, or is advised that the procurement official has
been recused from participation in the
procurement in accordance with 3.104–
6.
(2) A procurement official may not
solicit or engage in employment or
business opportunity discussions with
a competing contractor or a contractor
who is reasonably likely to become a
competing contractor unless the procurement official has been recused
from participation in the procurement
in accordance with the procurements
at 3.104–6.
(3) A procurement official who wishes
to solicit employment from, or discuss
employment with, a contractor and
does not know if the contractor is or is
reasonably likely to become a competing contractor should ask whether the
contractor is or is reasonably likely to
become a competing contractor on any
procurement for which the individual
is serving as a procurement official.
The procurement official—
(i) May rely on the contractor’s representation that it is not or is not likely to become a competing contractor,
and enter into employment or business
opportunity dicussions with that contractor; or
(ii) Shall not, if the contractor represents that it is or is reasonably likely to become a competing contractor,
enter into employment or business opportunity discussions with that contractor. If the procurement official is
an eligible procurement official as de-

fined at 3.104–6(c), and desires to pursue
discussions with that contractor, the
procurement official must first seek
and obtain written authorization for
recusal in accordance with the procedures at 3.104–6 before entering into
further discussions with that contractor.
(4) A procurement official shall not
be considered to have knowingly violated the prohibitions set forth in subsection 27(b)(1) of the Act (see 3.104–
3(b)(1)) if—
(i) The procurement official has made
inquiry in good faith of the potential
contractor, and has been advised that
the contractor is not or will not be a
competing contractor on a procurement under the responsibility of the
procurement official; or
(ii) The procurement official has been
recused from participation in the procurement.
(d) Duty to inquire—proprietary and
source selection information. (1) A competing contractor shall not be considered to have knowingly violated the
prohibitions in subsection 27(a)(3) of
the Act (see 3.104–3(a)(3)) if, before proprietary or source selection information was solicited or obtained, the contractor—
(i) Had made an inquiry in good faith
of the contracting officer (or, if a contracting officer has not been appointed,
the Head of the Agency or his or her
designee) regarding whether information was proprietary or source selection information; and
(ii) Had been advised by such official
that the information was not proprietary or source selection information.
(2) A procurement official shall not
be considered to have knowingly violated the prohibitions in subsection
27(b)(3) of the Act (see 3.104–3(b)(3)) if,
prior to disclosing information, the
procurement official had made an inquiry in good faith of the contracting
officer (or, if a contracting officer has
not been appointed, the Head of the
Agency or his or her designee) and had
been advised that—
(i) The information was not proprietary or source selection information;
or
(ii) The information is proprietary or
source selection information and the
individual to whom the procurement

39

3.104–8

48 CFR Ch. 1 (10–1–96 Edition)

official wishes to disclose the information has been authorized access to such
information by the Head of the Agency
or the contracting officer.
(3) No person who is given authorized
or unauthorized access to proprietary
or source selection information shall
be considered to have knowingly violated the prohibition in subsection
27(d) or the Act (see 3.104–3(c)) if, before
disclosing such information, the person:
(i) Had made an inquiry in good faith
of the contracting officer (or, if a contracting officer has not been appointed,
the Head of the Agency or his or her
designee) as to whether or not the individual to whom he seeks to diclose the
proprietary or source selection information has been authorized access to
such information by the Head of the
Agency or the contracting officer; and
(ii) Had been advised by such official
that such individual has been so authorized.
(e) Ethics advisory opinions. (1) An employee or former employee of an agency who is or was a procurement official
may request an ethics advisory opinion
from the agency ethics official as to
whether specific conduct which has not
yet occurred would violate section 27 of
the Act. An individual who cannot determine, after discussions with the
contracting officer (see subparagraph
(b)(2) of this subsection), if he or she is
or was a procurement official may request an ethics advisory opinion for
the purpose of determining his or her
status. Ethics advisory opinions may
not be obtained, however, for the purpose of establishing whether—
(i) Prior to bid opening or receipt of
proposals, a particular contractor is a
competing contractor;
(ii) Items of information constitute
proprietary or source selection information as defined in 3.104–4; or
(iii) Proprietary or source selection
information may be disclosed.
Questions regarding proprietary and
source selection information shall be
referred to the contracting officer or, if
a contracting officer has not been appointed, the Head of the Agency or his
or her designee (see subparagraphs
(d)(1) through (d)(3) of this subsection).
Questions regarding a contractor’s status as a competing contractor shall be

resolved in accordance with subparagraph (c)(3) of this subsection.
(2) The request for an advisory opinion shall be submitted in writing, shall
be dated and signed, and shall include
all information reasonably available to
the procurement official or former procurement official that is relevant to
the inquiry. As a minimum, the request shall include—
(i) Information about the procurement in which the individual was or is
involved, including contract or solicitation numbers, dates of solicitation or
award, and a description of the goods
or services procured or to be procured;
(ii) Information about the individual’s participation in the procurement,
including the dates or time periods of
that participation, and the nature of
the individual’s duties or responsibilities;
(iii) Information about the competing contractor who would be a party to
the proposed conduct, and the nature
of the competing contractor’s interest
in the procurement.
(iv) A description of the possible gratuity or other thing of value if the request concerns conduct that might violate the prohibition of subsection
27(b)(2) of the Act. It shall be the responsibility of the individual requesting an advisory opinion to furnish an
appraisal or good faith estimate of
market value where the value of an
item is in question.
(v) Specific information about the
particular duties to be performed on
behalf of the competing contractor if
the request concerns conduct that
might violate either or both of the prohibitions of subsection 27(f) of the Act.
Where the issue concerns whether employment with a subcontractor is permissible under subsection 27(f)(2), the
request shall include information
about the subcontract level and dollar
amount, the subcontractor’s role in assisting the prime contractor in negotiating the prime contract, and the individual’s role in directing or recommending the subcontractor to the
prime contractor as a source for the
subcontract or reviewing and approving the award or modification of the
subcontract.
(3) Within 30 days after the date a request containing complete information

40

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3.104–9

is received, or as soon thereafter as
practicable, the agency ethics official
shall issue an opinion as to whether
proposed conduct is proper or would
violate section 27 of the Act.
(i) Where complete information is
not included in the request, the agency
ethics official may ask the requester to
provide any information reasonably
available to that person, and the 30-day
period will run from the date that additional information is received. Additional information may also be requested from other persons, including
the Source Selection Authority, the
contracting officer, or the requester’s
immediate supervisor.
(ii) Where the opinion cannot be issued within 30 days, the reason for the
delay will be documented in the file.
Acceptable reasons for delay include,
but are not limited to, the necessity
for the agency ethics official to independently develop information not reasonable available to the requester, or
to verify questionably information furnished by the requester.
(iii) In issuing an opinion, the agency
ethics official may rely upon the accuracy of information furnished by the
requester or other agency sources, unless he has reason to believe that the
information is fraudulent, misleading,
or otherwise incorrect.
(4) A copy of the request and ethics
advisory opinion shall be retained for a
period of 6 years. Agencies shall not
provide copies of the advisory opinions
to any person other than the requester,
except with the express authorization
of the requester or where release is
otherwise permitted by law.
(5) Where the requester engages in
conduct in good faith reliance upon an
ethics advisory opinion, or a competing
contractor engages in conduct based
upon good faith reliance on the requester’s ethics advisory opinion, neither the requester nor the competing
contractor shall be found to have
knowingly violated the restriction in
issue. Where the requester or the competing contractor has actual knowledge or reason to believe that the opinion is based upon fraudulent, misleading, or otherwise incorrect information
provided by the requester, their reli-

ance upon the opinion will not be
deemed to be in good faith.
[55 FR 36790, Sept. 6, 1990]

3.104–9 Certification requirements.
(a) Applicability. Subsection 27(e) of
the Act requires certifications, prior to
the award of a Federal agency contract
or contract modification for property
or services in excess of $100,000 awarded
or executed on or after December 1,
1990, by the officer or employee of the
contractor responsible for the offer or
bid for that particular contract or contract modification for property or services, and by the contracting officer for
that procurement.
(b) Competing contractor certification.
(1) Except as provided in 3.104–9(f), contracting officers shall require the competing contractor to—
(i) Certify in writing to the contracting officer responsible for the procurement that, to the best of his or her
knowledge and belief, such officer or
employee of the competing contractor
has no information concerning a violation or possible violation of subsections 27 (a), (b), (d), or (f) of the Act
(see 3.104–3) as implemented in the
FAR; or
(ii) Disclose to such contracting officer any and all such information, and
certify in writing to such contracting
officer that any and all such information has been disclosed; and
(iii) Except in the case of a contract
for the procurement of commercial
items, certify in writing to such contracting officer that, to the best of his
or her knowledge and belief, each officer, employee, agent, representative,
and consultant of such competing contractor who, on or after December 1,
1990, has participated personally and
substantially in the preparation or submission of such bid or offer, or in a
modification of a contract, as the case
may be, has certified in writing to such
competing contractor that he or she—
(A) Is familiar with, and will comply
with, the requirements of subsection
27(a) of the Act (see 3.104–3) as implemented in the FAR; and
(B) Will report immediately to the
officer or employee of the competing
contractor responsible for the offer or
bid for any contract or the modification of a contract, as the case may be,

41

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48 CFR Ch. 1 (10–1–96 Edition)

any information concerning a violation
or possible violation of subsections 27
(a), (b), or (f) of the Act (see 3.104–3),
occuring on or after December 1, 1990,
as implemented in the FAR.
(2) Subcontractors are not required
to submit the certificate required by
subsection 27(e)(1) of the Act. However,
nothing in 3.104 precludes a competing
contractor from requesting certifications from its subcontractors.
(3) The signed certifications prescribed in 3.104–10 shall be submitted as
follows:
(i) Procurements exceeding $100,000
using sealed bidding procedures: (A) For
procurements using sealed bidding procedures, the signed certifications shall
be submitted by each bidder with the
bid submission, except for procurements using two-step sealed bidding
procedures (see subpart 14.5). For those
procurements, the certifications shall
be submitted with submission of the
step two sealed bids. A certificate is
not required for indefinite delivery
contracts (see subpart 16.5) unless the
total estimated value of all orders
eventually to be placed under the contract is expected to exceed $100,000.
(B) For contracts and contract modifications which include options, a certificate is required when the aggregate
value of the contract or contract modification and all options (see 3.104–4(e))
exceeds $100,000.
(C) Failure of a bidder to submit the
signed certificate with its bid render
the bid nonresponsive.
(ii) Procurements exceeding $100,000
using other than sealed bidding procedures: (A) For procurements, including
contract modifications, made using
procedures other than sealed bidding,
the signed certifications shall be submitted by the successful offeror to the
contracting officer within the time period specified by the contracting officer when requesting the certificates,
except as provided in subdivisions
(b)(3)(ii) (B) through (F) of this subsection. In no event shall the certificate be submitted subsequent to award
of a contract or execution of a contract
modification.
(B) For letter contracts, other unpriced contracts, or unpriced contract
modifications, whether or not the unpriced contract or modification con-

tains a maximum or not to exceed
price, the signed certifications shall be
submitted prior to the award of the letter contract, unpriced contract, or unpriced contract modification, and prior
to the definitization of the letter contract or the establishment of the price
of the unpriced contract or unpriced
contract modification. The second certification shall apply only to the period
between award of the letter contract
and execution of the document definitizing the letter contract, or award of
the unpriced contract or unpriced contract modification and execution of the
document establishing the definitive
price of such unpriced contract or unpriced contract modification.
(C) For basic ordering agreements—
prior to the execution of a priced order;
prior to the execution of an unpriced
order, whether or not the unpriced
order contains a maximum or not to
exceed price; and prior to establishing
the price of an unpriced order. The second certificate to be submitted for unpriced orders shall apply only to the
period between award of the unpriced
order and execution of the document
establishing the definitive price for
such order.
(D) A certificate is not required for
indefinite delivery contracts (see subpart 16.5) unless the total estimated
value of all orders eventually to be
placed under the contract is expected
to exceed $100,000.
(E) For contracts and contract modifications which include options, a certificate is required when the aggregate
value of the contract or contract modification and all options exceeds
$100,000.
(F) For purposes of contracts entered
into under section 8(a) of the SBA, the
business entity with whom the SBA
contracts, and not the SBA, shall be required to comply with the certification
requirements of subsection 27(e). The
SBA shall obtain the signed certificate
from the business entity, and forward
the certificate to the contracting officer prior to the award of a contract to
the SBA.
(G) Failure of an offeror to submit
the signed certificate within the time
prescribed by the contracting officer is

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3.104–9
OF A FALSE, FICTITIOUS, OR FRAUDULENT CERTIFICATION MAY RENDER THE
MAKER
SUBJECT
TO
PROSECUTION
UNDER TITLE 18, UNITED STATES CODE,
SECTION 1001.
(End of certification)

a failure to comply with a material requirement of the solicitation and shall
cause the offer to be rejected.
(c) Contracting officer certifications. (1)
In accordance with subsection 27(e)(2)
of the Act, a Federal agency may not
award a contract for the procurement
of property or services, or agree to a
modification of any contract, if the
contract or contract modification exceeds $100,000, unless the contracting
officer responsible for such procurement—
(i) Certifies in writing to the head of
such agency that, to the best of his or
her knowledge and belief, the contracting officer has no information concerning a violation or possible violation of
subsections 27 (a), (b), (d), or (f) of the
Act (see 3.104–3), as implemented in the
FAR, pertaining to such procurement;
or
(ii) Discloses to the head of such
agency any and all such information
and certifies in writing that any and
all such information has been disclosed.
(2) Immediately prior to contract
award or execution of a contract modification, the contracting officer shall
execute the following certificate and
maintain the completed certificate in
the contract file:

(d) Additional certifications. (1) Subsection 27(e)(3) of the Act provides that
the head of a Federal agency may require any procurement official or any
competing contractor, at any time during the conduct of any Federal agency
procurement of property or services—
(i) To certify in writing that, to the
best of his or her knowledge and belief,
such procurement official or the officer
or employee of the competing contractor responsible for the offer or bid for a
contract or the modification of a contract, has no information concerning a
violation or possible violation of subsections 27 (a), (b), (d), and (f) of the
Act (see 3.104–3), as implemented in the
FAR, occurring during the procurement; or
(ii) To disclose any and all such information and to certify in writing
that any and all such information has
been disclosed.
(2) In addition to the Head of the
Agency, additional certifications may
be required only by the HCA or his or
her designee, provided that the designee is an individual of General Officer, Flag, SES or equivalent rank and
is at least one organizational level
above the contracting officer.
(3) Any additional certifications shall
be submitted to the contracting officer
unless another person is specified by
the individual requiring the additional
certifications.
(4) Each procurement official or competing contractor shall be afforded a
reasonable time to comply with the additional certification requirements.
(5) A competing contractor’s failure
to submit any additional certifications
that may be required shall cause the
competing contractor’s offer to be rejected.
(e) Recordkeeping requirements. (1) In
accordance with subsections 27(e)(5) (A)
and (B) and 27(e)(7)(A) of the Act, the
contracting officer responsible for the
award or modification of a contract in
excess of $100,000 shall maintain, as
part of the contract file—

CONTRACTING OFFICER CERTIFICATE OF
PROCUREMENT INTEGRITY
1. I, [Name of contracting officer], hereby
certify that, to the best of my knowledge
and belief, with the exception of any information described in this certificate, I have
no information concerning a violation or
possible violation of subsection (a), (b), (d),
or (f) of section 27 of the Office of Federal
Procurement Policy Act* (41 U.S.C. 423), as
implemented in the FAR, occurring during
the conduct of this procurement (contract/
modification number).
2. Violations or possible violations: (Continue on plain bond paper if necessary, and
label Contracting Officer Certificate of Procurement Integrity (Continuation Sheet),
ENTER ‘‘NONE’’ IF NONE EXISTS.)
————————————————————————
————————————————————————
————————————————————————
(Signature of contracting officer and date)
* Subsections 27 (a), (b), and (d), are effective on December 1, 1990. Subsection 27(f) is
effective on June 1, 1991. THIS CERTIFICATION CONCERNS A MATTER WITHIN
THE JURISDICTION OF AN AGENCY OF
THE UNITED STATES AND THE MAKING

43

3.104–10

48 CFR Ch. 1 (10–1–96 Edition)

(i) All competing contractor, contracting officer, and procurement official certifications required by subsections 27 (e)(1), (e)(2), and (e)(4) of the
Act, and any additional certifications
required by subsection 27(e)(3) of the
Act for that particular procurement.
(ii) All certifications required by subsection 27(l) of the Act (see 3.104–12)
from individuals acting as procurement
officials on behalf of the procuring
agency, who are, or are employed by,
contractors, subcontractors, consultants, experts, or advisors (other than
competing contractors).
(iii) A record of all persons who have
been authorized by the Head of the
Agency or the contracting officer to
have access to proprietary or source selection information regarding the procurement. When classes of persons have
been authorized, this record shall identify the class of persons so authorized
and, to the maximum extent practicable, the names of the individuals
within the class.
(2) Certifications obtained from Government officers or employees (see
3.104–4(d)) who are required to submit a
certification under subsection 27(l) of
the Act shall be maintained in accordance with agency procedures.
(3) Ethics advisory opinions shall be
retained, in accordance with agency
procedures, for a period of 6 years.
(f) Exceptions to certification requirements.
Pursuant
to
subsection
27(e)(7)(B) of the Act, certification requirements set forth in 3.104–9 do not
apply—
(1) To contracts with a foreign government or an international organization that are not required to be awarded using competitive procedures pursuant to section 303(c)(4) of the Federal
Property and Administrative Services
Act of 1949 (41 U.S.C. 253(c)(4)), or section 2304(c)(4) of title 10 U.S.C.; or
(2) In an exceptional case, when the
Head of the Agency concerned determines in writing that the certification
requirement should be waived. This authority may not be delegated. The contracting officer shall submit the request for waiver in accordance with
agency procedures. The request shall
clearly identify the procurement or
class of procurements and provide the
rationale for the requested waiver. The

decision of the agency head shall state
the reasons for approving or disapproving the waiver. The agency head shall
promptly notify Congress in writing of
each waiver approved. Procurements
for which a waiver may be appropriate
include—
(i) Where prices are set by law or regulation;
(ii) Where terms and conditions of a
contract are specified by an agreement
with a foreign government or governments;
(iii) Where supplies or services are
provided by foreign nationals to United
States facilities overseas for use outside the United States;
(iv) Where a foreign government
specifies a particular U.S. contractor
to satisfy its requirements (see 6.302–
4(b)(1)).
[55 FR 36792, Sept. 6, 1990, as amended at 55
FR 49854, Nov. 30, 1990; 59 FR 11387, Mar. 10,
1994; 60 FR 37774, July 21, 1995]

3.104–10 Solicitation provision and
contract clauses.
(a) The contracting officer shall insert the provision at 52.203–8, Requirement for Certificate of Procurement
Integrity, in all solicitations where the
resultant contract award is expected to
exceed $100,000, unless, pursuant to
3.104–9(f), a certification is not required
or a waiver has been granted. For procurements using other than sealed bidding procedures, the contracting officer shall substitute Alternate I for
paragraph (c) of that provision.
(b) The contracting officer shall insert the clause at 52.203–9, Requirement
for Certificate of Procurement Integrity-Modification, in all solicitations
where the resultant contract award is
expected to exceed $100,000, all contracts in excess of $100,000, and modifications to contracts which do not already contain the clause when the
modification is expected to exceed
$100,000, unless, pursuant to 3.104–9(f), a
certificate is not required or a waiver
has been granted.
(c) The contracting officer shall insert the clause at 52.203–10, Price or
Fee Adjustment for Illegal for Improper Activity, in all solicitations
where the resultant contract award is
expected to exceed the simplified acquisition threshold and all contracts

44

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3.104–11

and modifications to contracts exceeding that threshold which do not already contain the clause when the
modification is expected to exceed that
threshold.
(d) The contracting officer shall insert the clause at 52.203–13, Procurement Integrity-Service Contracting, in
all solicitations and contracts where
the Government is procuring or may
order the services of contractor employees to serve as procurement officials for another agency procurement.
In addition, the contracting officer
shall insert the provisions and clauses
at 52.203–8, 52.203–9, and 52.203–10 in
such solicitations and contracts as prescribed in this subsection.

forward the information and documentation to the HCA or his or her
designee.
(3) If the contracting officer determines that the violation or possible
violation impacts the procurement, the
contracting officer shall promptly forward the information to the HCA or his
or her designee.
(b) The HCA or his or her designee receiving any information describing an
actual or possible violation of subsection 27 (a), (b), (d), or (f) of the Act,
shall review all information available
and take appropriate action in accordance with agency procedures, such as—
(1) Advising the contracting officer
to continue with the procurement;
(2) Causing an investigation to be
conducted;
(3) Referring the information disclosed to appropriate criminal investigative agencies;
(4) Determining that a violation occurred.
(c) Prior to determining that a competing contractor (see 3.104–4(b)) has
violated the Act, the HCA or his or her
designee may request information from
appropriate parties regarding the violation or possible violation when considered in the best interests of the Government.
(d) If the HCA or his or her designee
determines that the prohibitions of
section 27 of the Act have been violated, then the HCA or his or her designee may direct the contracting officer to—
(1) If a contract has not been awarded, or a contract modification has not
been executed—
(i) Cancel the procurement;
(ii) Disqualify an offeror; or
(iii) Take any other appropriate actions in the interests of the Government.
(2) If a contract has been awarded or
a contract modification has been executed—
(i) Effect appropriate contractual
remedies, including profit recapture as
provided for in the clause at 52.203–10,
Price or Fee Adjustment for Illegal or
Improper Activity;
(ii) Void or rescind the contract, or
contract modification; or

[55 FR 36793, Sept. 6, 1990, as amended at 60
FR 34744, July 3, 1995; 61 FR 39191, July 26,
1996]

3.104–11 Processing violations or possible violations.
(a) If the contracting officer makes
or receives a disclosure of information
pursuant to subsection 27(e) of the Act
or otherwise receives or obtains information of a violation or possible violation of subsections 27 (a), (b), (d), or (f)
of the Act (see 3.104–3), the contracting
officer shall determine whether the reported violation or possible violation
has any impact on the pending award
or selection of the source therefor.
(1) If the contracting officer concludes that there is no impact on the
procurement, the contracting officer
shall forward the information concerning the violation or possible violation,
accompanied by appropriate documentation supporting that conclusion,
to an individual designated in accordance with agency procedures. With the
concurrence of that individual, the
contracting officer shall, without further approval, proceed with the procurement. The individual concurring
with that conclusion shall forward all
information relating to the violation
or possible violation to the HCA, or his
or her designee, to satisfy the disclosure requirements of subsection 27(e)(2)
of the Act.
(2) If the individual reviewing the
contracting officer’s conclusion does
not agree with that conclusion, he or
she shall advise the contracting officer
to withhold award and shall promptly

45

3.104–12

48 CFR Ch. 1 (10–1–96 Edition)

(iii) Take any other appropriate actions in the best interests of the Government.
(3) Refer the matter to the agency
suspension and debarment official.
(e) The HCA or his or her designee
shall, in his or her best judgment, recommend or direct an administrative or
contractual
remedy
commensurate
with the severity and effect of the violation.
(f) If the HCA or his or her designee
receiving information concerning a
violation or possible violation determines that award is justified by urgent
and compelling circumstances, or is
otherwise in the interests of the Government, he or she may authorize the
contracting officer to award the contract or execute the contract modification after notification to the Head of
the Agency in accordance with agency
procedures.
(g) The designee of the HCA referenced in paragraphs (a), (b), (c), (d),
and (e) of this subsection must be an
individual at least one organizational
level above the contracting officer and
be of General Officer, Flag, SES or
equivalent rank.

mented in the FAR do not satisfy the
certification requirements of subparagraph (a)(2) of this subsection. Agencies may use Optional Form 333 at
53.302–333 to obtain the certifications
required by subparagraph (a)(2) of this
subsection.
(b) Contractors, subcontractors, consultants, experts, or advisors (other
than competing contractors) are responsible for establishing a procurement ethics training program for individuals in their employ who may serve
as procurement officials on behalf of a
Federal agency. The program shall, as
a minimum, comply with subparagraphs (a)(1) and (a)(2) of this subsection.
[55 FR 36794, Sept. 6, 1990]

Subpart 3.2—Contractor Gratuities
to Government Personnel
3.201

Applicability.

This subpart applies to all executive
agencies, except that coverage concerning exemplary damages applies
only to the Department of Defense (10
U.S.C. 2207).

[55 FR 36794, Sept. 6, 1990]

3.202
3.104–12 Ethics program training requirements.
(a) Subsection 27(l) of the Act provides that the head of each Federal
agency shall establish a procurement
ethics training program for its procurement officials. The program shall, as a
minimum—
(1) Provide for the distribution of a
written explanation of subsections 27
(a) through (f) of the Act to such procurement officials; and
(2) Require each such procurement
official, as a condition of serving as a
procurement official, to certify in writing that he or she is familiar with the
provisions of subsections 27 (b), (c), and
(e) of the Act and will not engage in
any conduct prohibited by such subsections, and will report immediately
to the contracting officer any information concerning a violation or possible
violation of subsection 27 (a), (b), (d),
or (f) of the Act as implemented in the
FAR.
(3) Certification made under section
27 as originally enacted and imple-

Contract clause.

The contracting officer shall insert
the clause at 52.203–3, Gratuities, in solicitations and contracts with a value
exceeding the simplified acquisition
threshold, except those for personal
services and those between military departments or defense agencies and foreign governments that do not obligate
any funds appropriated to the Department of Defense.
[61 FR 39200, July 26, 1996]

3.203 Reporting suspected violations
of the Gratuities clause.
Agency personnel shall report suspected violations of the Gratuities
clause to the contracting officer or
other designated official in accordance
with agency procedures. The agency reporting procedures shall be published
as an implementation of this section
3.203 and shall clearly specify—
(a) What to report and how to report
it; and
(b) The channels through which reports must pass, including the function

46

Federal Acquisition Regulation

3.303

and authority of each official designated to review them.

offerors and contractors. Agency personnel shall report, in accordance with
agency regulations, evidence of suspected antitrust violations in acquisitions for possible referral to (1) the Attorney General under 3.303 and (2) the
agency office responsible for contractor debarment and suspension under
subpart 9.4.

3.204 Treatment of violations.
(a) Before taking any action against
a contractor, the agency head or a designee shall determine, after notice and
hearing under agency procedures,
whether the contractor, its agent, or
another representative, under a contract
containing
the
Gratuities
clause—
(1) Offered or gave a gratuity (e.g., an
entertainment or gift) to an officer, official, or employee of the Government;
and
(2) Intended by the gratuity to obtain
a contract or favorable treatment
under a contract (intent generally
must be inferred).
(b) Agency procedures shall afford
the contractor an opportunity to appear with counsel, submit documentary
evidence,
present
witnesses,
and
confront any person the agency presents. The procedures should be as informal as practicable, consistent with
principles of fundamental fairness.
(c) When the agency head or designee
determines that a violation has occurred, the Government may—
(1) Terminate the contractor’s right
to proceed;
(2) Initiate debarment or suspension
measures as set forth in subpart 9.4;
and
(3) Assess exemplary damages, if the
contract uses money appropriated to
the Department of Defense.

[48 FR 42108, Sept. 19, 1983, as amended at 50
FR 1727, Jan. 11, 1985; 50 FR 52429, Dec. 23,
1985]

3.302

Definitions.

Identical bids means bids for the same
line item that are determined to be
identical as to unit price or total line
item amount, with or without the application of evaluation factors (e.g.,
discount or transportation cost).
Line item means an item of supply or
service, specified in an invitation for
bids, for which the bidder must bid a
separate price.
[49 FR 12974, Mar. 30, 1984]

3.303 Reporting
violations.

suspected

antitrust

(a) Agencies are required by 41 U.S.C.
253(B)(e) and 10 U.S.C. 2305(b)(5) to report to the Attorney General any bids
or proposals that evidence a violation
of the antitrust laws. These reports are
in addition to those required by subpart 9.4.
(b) The antitrust laws are intended to
ensure that markets operate competitively. Any agreement or mutual understanding among competing firms
that restrains the natural operation of
market forces is suspect. Paragraph (c)
below identifies behavior patterns that
are often associated with antitrust violations. Activities meeting the descriptions in paragraph (c) are not necessarily improper, but they are sufficiently questionable to warrant notifying the appropriate authorities, in accordance with agency procedures.
(c) Practices or events that may evidence violations of the antitrust laws
include—
(1) The existence of an industry price
list or price agreement to which contractors refer in formulating their offers;
(2) A sudden change from competitive
bidding to identical bidding;

Subpart 3.3—Reports of Suspected
Antitrust Violations
3.301 General.
(a) Practices that eliminate competition or restrain trade usually lead to
excessive prices and may warrant
criminal, civil, or administrative action against the participants. Examples of anticompetitive practices are
collusive
bidding,
follow-the-leader
pricing, rotated low bids, collusive
price estimating systems, and sharing
of the business.
(b) Contracting personnel are an important potential source of investigative leads for antitrust enforcement
and should therefore be sensitive to indications of unlawful behavior by

47

3.400

48 CFR Ch. 1 (10–1–96 Edition)

(3) Simultaneous price increases or
follow-the-leader pricing;
(4) Rotation of bids or proposals, so
that each competitor takes a turn in
sequence as low bidder, or so that certain competitors bid low only on some
sizes of contracts and high on other
sizes;
(5) Division of the market, so that
certain competitors bid low only for
contracts let by certain agencies, or for
contracts in certain geographical
areas, or on certain products, and bid
high on all other jobs;
(6) Establishment by competitors of a
collusive price estimating system;
(7) The filing of a joint bid by two or
more competitors when at least one of
the competitors has sufficient technical capability and productive capacity for contract performance;
(8) Any incidents suggesting direct
collusion among competitors, such as
the appearance of identical calculation
or spelling errors in two or more competitive offers or the submission by one
firm of offers for other firms; and
(9) Assertions by the employees,
former employees, or competitors of
offerors, that an agreement to restrain
trade exists.
(d) Identical bids shall be reported
under this section if the agency has
some reason to believe that the bids resulted from collusion.
(e) For offers from foreign contractors for contracts to be performed outside the United States, contracting officers may refer suspected collusive offers to the authorities of the foreign
government concerned for appropriate
action.
(f) Agency reports shall be addressed
to the Attorney General, U.S. Department of Justice, Washington, DC 20530,
Attention: Assistant Attorney General,
Antitrust Division, and shall include—
(1) A brief statement describing the
suspected practice and the reason for
the suspicion; and
(2) The name, address, and telephone
number of an individual in the agency
who can be contacted for further information.
(g) Questions concerning this reporting requirement may be communicated
by telephone directly to the Office of

the Assistant Attorney General, Antitrust Division.
[48 FR 42108, Sept. 19, 1983, as amended at 49
FR 12974, Mar. 30, 1984; 50 FR 1727, Jan. 11,
1985; 50 FR 52429, Dec. 23, 1985; 55 FR 25526,
June 21, 1990]

Subpart 3.4—Contingent Fees
3.400 Scope of subpart.
This subpart prescribes policies and
procedures that restrict contingent fee
arrangements for soliciting or obtaining Government contracts to those permitted by 10 U.S.C. 2306(b) and 41
U.S.C. 254(a).
3.401 Definitions.
Bona fide agency, as used in this subpart, means an established commercial
or selling agency, maintained by a contractor for the purpose of securing
business, that neither exerts nor proposes to exert improper influence to solicit or obtain Government contracts
nor holds itself out as being able to obtain any Government contract or contracts through improper influence.
Bona fide employee, as used in this
subpart, means a person, employed by
a contractor and subject to the contractor’s supervision and control as to
time, place, and manner of performance, who neither exerts nor proposes
to exert improper influence to solicit
or obtain Government contracts nor
holds out as being able to obtain any
Government contract or contracts
through improper influence.
Contingent fee, as used in this subpart, means any commission, percentage, brokerage, or other fee that is contingent upon the success that a person
or concern has in securing a Government contract.
Improper influence, as used in this
subpart, means any influence that induces or tends to induce a Government
employee or officer to give consideration or to act regarding a Government
contract on any basis other than the
merits of the matter.
3.402 Statutory requirements.
Contractors’ arrangements to pay
contingent fees for soliciting or obtaining Government contracts have long
been considered contrary to public policy because such arrangements may

48

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3.501–2
propriate, take or direct one or more of
the following, or other, actions:
(1) If before award, reject the bid or
proposal.
(2) If after award, enforce the Government’s right to annul the contract or
to recover the fee.
(3) Initiate suspension or debarment
action under subpart 9.4.
(4) Refer suspected fraudulent or
criminal matters to the Department of
Justice, as prescribed in agency regulations.

lead to attempted or actual exercise of
improper influence. In 10 U.S.C. 2306(b)
and 41 U.S.C. 254(a), Congress affirmed
this public policy but permitted certain exceptions. These statutes—
(a) Require in every negotiated contract a warranty by the contractor
against contingent fees;
(b) Permit, as an exception to the
warranty, contingent fee arrangements
between contractors and bona fide employees or bona fide agencies; and
(c) Provide that, for breach or violation of the warranty by the contractor,
the Government may annul the contract without liability or deduct from
the contract price or consideration, or
otherwise recover, the full amount of
the contingent fee.

[48 FR 42108, Sept. 19, 1983. Redesignated at
61 FR 39188, July 26, 1996]

3.406

Records.

For enforcement purposes, agencies
shall preserve any specific evidence of
one or more of the violations in
3.405(a), together with all other pertinent data, including a record of actions
taken. Contracting offices shall not retire or destroy these records until it is
certain that they are no longer needed
for enforcement purposes. If the original record is maintained in a central
file, a copy must be retained in the
contract file.

3.403 Applicability.
This subpart applies to all contracts.
Statutory requirements for negotiated
contracts are, as a matter of policy, extended to sealed bid contracts.
[48 FR 42108, Sept. 19, 1983, as amended at 50
FR 1727, Jan. 11, 1985; 50 FR 52429, Dec. 23,
1985]

3.404 Contract clause.
The contracting officer shall insert
the clause at 52.203–5, Covenant
Against Contingent Fees, in all solicitations and contracts exceeding the
simplified acquisition threshold, other
than those for commercial items (see
parts 2 and 12).

[48 FR 42108, Sept. 19, 1983. Redesignated and
amended at 61 FR 39188, July 26, 1996]

[61 FR 39188, July 26, 1996]

3.501–1

3.405 Misrepresentations or violations
of the Covenant Against Contingent
Fees.

Buying-in means submitting an offer
below anticipated costs, expecting to—
(a) Increase the contract amount
after award (e.g., through unnecessary
or excessively priced change orders); or
(b) Receive follow-on contracts at artificially high prices to recover losses
incurred on the buy-in contract.

Subpart 3.5—Other Improper
Business Practices
3.501

(a) Government personnel who suspect or have evidence of attempted or
actual exercise of improper influence,
misrepresentation of a contingent fee
arrangement, or other violation of the
Covenant Against Contingent Fees
shall report the matter promptly to
the contracting officer or appropriate
higher authority in accordance with
agency procedures.
(b) When there is specific evidence or
other reasonable basis to suspect one
or more of the violations in paragraph
(a) above, the chief of the contracting
office shall review the facts and, if ap-

Buying-in.

3.501–2

Definition.

General.

(a) Buying-in may decrease competition or result in poor contract performance. The contracting officer must
take appropriate action to ensure buying-in losses are not recovered by the
contractor through the pricing of (1)
change orders or (2) follow-on contracts
subject to cost analysis.

49

3.502–1

48 CFR Ch. 1 (10–1–96 Edition)

(b) The Government should minimize
the opportunity for buying-in by seeking a price commitment covering as
much of the entire program concerned
as is practical by using—
(1) Multiyear contracting, with a requirement in the solicitation that a
price be submitted only for the total
multiyear quantity; or
(2) Priced options for additional
quantities that, together with the firm
contract quantity, equal the program
requirements (see subpart 17.2).
(c) Other safeguards are available to
the contracting officer to preclude recovery of buying-in losses (e.g., amortization of nonrecurring costs (see 15.804–
6(f)) and treatment of unreasonable
price quotations (see 15.803(d)).

or service of any kind under a prime
contract.
Subcontractor, as used in this section,
(a) means any person, other than the
prime contractor, who offers to furnish
or furnishes any supplies, materials,
equipment, or services of any kind
under a prime contract or a subcontract entered into in connection
with such prime contract, and (b) includes any person who offers to furnish
or furnishes general supplies to the
prime contractor or a higher tier subcontractor.
Subcontractor employee, as used in this
section, means any officer, partner,
employee, or agent of a subcontractor.
[52 FR 6121, Feb. 27, 1987, as amended at 53
FR 34226, Sept. 2, 1988]

3.502 Subcontractor kickbacks.

3.502–2

3.502–1 Definitions.

Subcontractor kickbacks.

The Anti-Kickback Act of 1986 (41
U.S.C. 51–58) was passed to deter subcontractors from making payments
and contractors from accepting payments for the purpose of improperly
obtaining or rewarding favorable treatment in connection with a prime contract or a subcontract relating to a
prime contract. The Act—
(a) Prohibits any person from—
(1) Providing, attempting to provide,
or offering to provide any kickback;
(2) Soliciting, accepting, or attempting to accept any kickbacks; or
(3) Including, directly or indirectly,
the amount of any kickback in the
contract price charged by a subcontractor to a prime contractor or a
higher tier subcontractor or in the contract price charged by a prime contractor to the United States.
(b) Imposes criminal penalties on any
person who knowingly and willfully engages in the prohibited conduct addressed in paragraph (a) of this subsection.
(c) Provides for the recovery of civil
penalties by the United States from
any person who knowingly engages in
such prohibited conduct and from any
person whose employee, subcontractor,
or subcontractor employee provides,
accepts, or charges a kickback.
(d) Provides that—
(1) The contracting officer may offset
the amount of a kickback against monies owed by the United States to the

Kickback, as used in this section,
means any money, fee, commission,
credit, gift, gratuity, thing of value, or
compensation of any kind which is provided, directly or indirectly, to any
prime contractor, prime contractor
employee,
subcontractor,
or
subcontractor employee for the purpose of
improperly obtaining or rewarding favorable treatment in connection with a
prime contract or in connection with a
subcontract relating to a prime contract.
Person, as used in this section, means
a corporation, partnership, business association of any kind, trust, jointstock company, or individual.
Prime contract, as used in this section,
means a contract or contractual action
entered into by the United States for
the purpose of obtaining supplies, materials, equipment, or services of any
kind.
Prime Contractor, as used in this section, means a person who has entered
into a prime contract with the United
States.
Prime Contractor employee, as used in
this section, means any officer, partner, employee, or agent of a prime contractor.
Subcontract, as used in this section,
means a contract or contractural action entered into by a prime contractor
or subcontractor for the purpose of obtaining supplies, materials, equipment,

50

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3.502–3

prime contractor under the prime contract to which such kickback relates;
(2) The contracting officer may direct a prime contractor to withhold
from any sums owed to a subcontract
under a subcontractor of the prime
contract the amount of any kickback
which was or may be offset against the
prime contractor under subparagraph
(d)(1) of this subsection; and
(3) An offset under subparagraph
(d)(1) or a direction under subparagraph (d)(2) of this subsection is a
claim by the Government for the purposes of the Contract Disputes Act of
1978.
(e) Authorizes contracting officers to
order that sums withheld under subparagraph (d)(2) of this subsection be
paid to the contracting agency, or if
the sum has already been offset against
the prime contractor, that it be retained by the prime contractor.
(f) Requires the prime contractor to
notify the contracting officer when the
withholding under subparagraph (d)(2)
of this subsection has been accomplished unless the amount withheld has
been paid to the Government.
(g) Requires a prime contractor or
subcontractor to report in writing to
the inspector general of the contracting agency, the head of the contracting
agency if the agency does not have an
inspector general, or the Department
of Justice any possible violation of the
Act when the prime contractor or subcontractor has reasonable grounds to
believe such violation may have occurred.
(h) Provides that, for the purpose of
ascertaining whether there has been a
violation of the Act with respect to
any prime contract, the General Accounting Office and the inspector general of the contracting agency, or a
representative of such contracting
agency designated by the head of such
agency if the agency does not have an
inspector general, shall have access to
and may inspect the facilities and
audit the books and records, including
any electronic data or records, of any
prime contractor or subcontractor
under a prime contract awarded by
such agency.
(i) Requires each contracting agency
to include in each prime contract exceeding $100,000 for other than commer-

cial items (see part 12), a requirement
that the prime contractor shall—
(1) Have in place and follow reasonable procedures designed to prevent
and detect violations of the Act in its
own operations and direct business relationships (e.g., company ethics rules
prohibiting kickbacks by employees,
agents, or subcontractors; education
programs for new employees and subcontractors, explaining policies against
kickbacks, related company procedures
and the consequences of detection; procedures requiring subcontractors to
certify they have not paid kickbacks;
procurement procedures to minimize
the opportunity for kickbacks; audit
procedures designed to detect kickbacks; periodic surveys of subcontractors to elicit information about kickbacks; procedures to report kickbacks
to law enforcement officials; annual
declarations by employees of gifts or
gratuities received from subcontractors; annual employee declarations
that they have violated no company
ethics rules; personnel practices that
document unethical or illegal behavior
and make such information available
to prospective employers); and
(2) Cooperate fully with any Federal
agency investigating a possible violation of the Act.
(j) Notwithstanding paragraph (i) of
this subsection, a prime contractor
shall cooperate fully with any Federal
government agency investigating a
violation of Section 3 of the Anti-Kickback Act of 1986 (41 U.S.C. 51–58).
[52 FR 6121, Feb. 27, 1987; 52 FR 9989, Mar. 27,
1987, as amended at 53 FR 34226, Sept. 2, 1988;
60 FR 48235, Sept. 18, 1995; 61 FR 39191, July
26, 1996]

3.502–3

Contract clause.

The contracting officer shall insert
the clause at 52.203–7, Anti-Kickback
Procedures, in solicitations and contracts exceeding the simplified acquisition threshold, other than those for
commercial items (see part 12).
[60 FR 48235, Sept. 18, 1995, as amended at 61
FR 39190, July 26, 1996]

51

3.503–1
3.503 Unreasonable restrictions
subcontractor sales.

48 CFR Ch. 1 (10–1–96 Edition)
on

(1) The contract arises directly out of
the individual’s activity as a special
Government employee;
(2) In the individual’s capacity as a
special Government employee, the individual is in a position to influence
the award of the contract; or
(3) Another conflict of interest is determined to exist.

3.503–1 Policy.
10 U.S.C. 2402 and 41 U.S.C. 253(g) require that subcontractors not be unreasonably precluded from making direct
sales to the Government of any supplies or services made or furnished
under a contract. However, this does
not preclude contractors from asserting rights that are otherwise authorized by law or regulation.

[55 FR 34864, Aug. 24, 1990]

3.602 Exceptions.
The agency head, or a designee not
below the level of the head of the contracting activity, may authorize an exception to the policy in 3.601 only if
there is a most compelling reason to do
so, such as when the Government’s
needs cannot reasonably be otherwise
met.

[50 FR 35475, Aug. 30, 1985, and 51 FR 27116,
July 29, 1986]

3.503–2 Contract clause.
The contracting officer shall insert
the clause at 52.203–6, Restrictions on
Subcontractor Sales to the Government, in solicitations and contracts exceeding the simplified acquisition
threshold. For the acquisition of commercial items, the contracting officer
shall use the clause with its Alternate
I.

3.603 Responsibilities of the contracting officer.
(a) Before awarding a contract, the
contracting officer shall obtain an authorization under 3.602 if—
(1) The contracting officer knows, or
has reason to believe, that a prospective contractor is one to which award
is otherwise prohibited under 3.601; and
(2) There is a most compelling reason
to make an award to that prospective
contractor.
(b) The contracting officer shall comply with the requirements and guidance in subpart 9.5 before awarding a
contract to an organization owned or
substantially owned or controlled by
Government employees.

[60 FR 48235, Sept. 18, 1995, as amended at 61
FR 39190, July 26, 1996]

Subpart 3.6—Contracts With Government Employees or Organizations Owned or Controlled
by Them
3.601 Policy.
(a) Except as specified in 3.602, a contracting officer shall not knowingly
award a contract to a Government employee or to a business concern or
other organization owned or substantially owned or controlled by one or
more Government employees. This policy is intended to avoid any conflict of
interest that might arise between the
employees’ interests and their Government duties, and to avoid the appearance of favoritism or preferential
treatment by the Government toward
its employees.
(b) For purposes of this subpart, special Government employees (as defined
in 18 U.S.C. 202) performing services as
experts, advisors, or consultants, or as
members of advisory committees, are
not considered Government employees
unless—

Subpart 3.7—Voiding and
Rescinding Contracts
SOURCE: 51 FR 27116, July 29, 1986, unless
otherwise noted.

3.700 Scope of subpart.
(a) This subpart prescribes Governmentwide policies and procedures for
exercising discretionary authority to
declare void and rescind contracts in
relation to which there has been a final
conviction for bribery, conflict of interest, or similar misconduct, and to
recover the amounts expended and
property transferred therefor.
(b) This subpart does not prescribe
policies or procedures for, or govern

52

Federal Acquisition Regulation

3.705

the exercise of, any other remedy
available to the Government with respect to such contracts, including but
not limited to, the common law right
of avoidance, rescission, or cancellation.

the party involved is not presently responsible, the agency should consider
initiating debarment proceedings in accordance with FAR subpart 9.4, Debarment, Suspension, and Ineligibility, if
debarment has not been initiated or is
not in effect at the time the final conviction is entered.

3.701 Purpose.
This subpart provides a means to—
(a) Provide the Government with an
administrative remedy with respect to
contracts in relation to which there
has been a final conviction for bribery,
conflict of interest, or similar misconduct; and
(b) Deter similar misconduct in the
future by those who are involved in the
award, performance, and administration of Government contracts.

3.705 Procedures.
(a) Reporting. The facts concerning
any final conviction for any violation
of 18 U.S.C. 201–224 involving or relating to agency contracts shall be reported promptly to the agency head or
designee for that official’s consideration. The agency head or designee
shall promptly notify the Civil Division, Department of Justice, that an
action is being considered under this
subpart.
(b) Decision. Following an assessment
of the facts, the agency head or designee may declare void and rescind
contracts with respect to which a final
conviction has been entered, and recover the amounts expended and the
property transferred by the agency
under the terms of the contracts involved.
(c) Decision-making process. Agency
procedures governing the voiding and
rescinding decision-making process
shall be as informal as is practicable,
consistent with the principles of fundamental fairness. As a minimum,
however, agencies shall provide the following:
(1) A notice of the proposed action to
declare void and rescind the contract
shall be made in writing and sent by
certified mail, return receipt requested.
(2) A thirty calendar day period after
receipt of the notice, for the contractor
to submit pertinent information before
any final decision is made.
(3) Upon request made within the period for submission of pertinent information, an opportunity shall be afforded for a hearing at which witnesses
may be presented, and any witness the
agency presents may be confronted.
However, no inquiry shall be made regarding the validity of the conviction.
(4) If the agency head or designee decides to declare void and rescind the
contracts involved, that official shall
issue a written decision which—

3.702 Definition.
Final conviction means a conviction,
whether entered on a verdict or plea,
including a plea of nolo contendere, for
which sentence has been imposed.
3.703 Authority.
Section 1(e) of Pub. L. 87–849, 18
U.S.C. 218 (the Act), empowers the
President or the heads of executive
agencies acting under regulations prescribed by the President, to declare
void and rescind contracts and other
transactions enumerated in the Act, in
relation to which there has been a final
conviction for bribery, conflict of interest, or any other violation of Chapter 11 of Title 18 of the United States
Code (18 U.S.C. 201–224). Executive
Order 12448, November 4, 1983, delegates
the President’s authority under the
Act to the heads of the executive agencies and military departments.
3.704 Policy.
(a) In cases in which there is a final
conviction for any violation of 18
U.S.C. 201–224 involving or relating to
contracts awarded by an agency, the
agency head or designee shall consider
the facts available and, if appropriate,
may declare void and rescind contracts, and recover the amounts expended and property transferred by the
agency in accordance with the policies
and procedures of this subpart.
(b) Since a final conviction under 18
U.S.C. 201–224 relating to a contract
also may justify the conclusion that

53

3.800

48 CFR Ch. 1 (10–1–96 Edition)

(i) States that determination;
(ii) Reflects consideration of the fair
value of any tangible benefits received
and retained by the agency; and
(iii) States the amount due, and the
property to be returned, to the agency.
(d) Notice of proposed action. The notice of the proposed action, as a minimum shall—
(1) Advise that consideration is being
given to declaring void and rescinding
contracts awarded by the agency, and
recovering the amounts expended and
property transferred therefor, under
the provisions of 18 U.S.C. 218;
(2) Specifically identify the contracts
affected by the action;
(3) Specifically identify the final conviction upon which the action is based;
(4) State the amounts expended and
property transferred under each of the
contracts involved, and the money and
the property demanded to be returned;
(5) Identify any tangible benefits received and retained by the agency
under the contract, and the value of
those benefits, as calculated by the
agency;
(6) Advise that pertinent information
may be submitted within 30 calendar
days after receipt of the notice, and
that, if requested within that time, a
hearing shall be held at which witnesses may be presented and any witness the agency presents may be confronted; and
(7) Advise that action shall be taken
only after the agency head or designee
issues a final written decision on the
proposed action.
(e) Final agency decision. The final
agency decision shall be based on the
information available to the agency
head or designee, including any pertinent information submitted or, if a
hearing was held, presented at the
hearing. If the agency decision declares
void and rescinds the contract, the
final
decision
shall
specify
the
amounts due and property to be returned to the agency, and reflect consideration of the fair value of any tangible benefits received and retained by
the agency. Notice of the decision shall
be sent promptly by certified mail, return receipt requested. Rescission of
contracts under the authority of the
Act and demand for recovery of the
amounts expended and property trans-

ferred therefor, is not a claim within
the meaning of the Contract Disputes
Act of 1978 (CDA), 41 U.S.C. 601–613, or
part 33. Therefore, the procedures required by the CDA and the FAR for the
issuance of a final contracting officer
decision are not applicable to final
agency decisions under this subpart,
and shall not be followed.

Subpart 3.8—Limitations on the
Payment of Funds to Influence
Federal Transactions
SOURCE: 55 FR 3190, Jan. 30, 1990, unless
otherwise noted.

3.800 Scope of subpart.
This subpart prescribes policies and
procedures implementing section 319 of
the Department of the Interior and Related Agencies Appropriations Act,
Pub. L. 101–121, which added a new section 1352 to title 31 U.S.C., entitled
‘‘Limitation on use of appropriated
funds to influence certain Federal contracting and financial transactions’’
(the Act).
3.801 Definitions.
Agency, as used in this section,
means an executive agency as defined
in 2.101.
Covered Federal action, as used in this
section, means any of the following
Federal actions:
(a) The awarding of any Federal contract.
(b) The making of any Federal grant.
(c) The making of any Federal loan.
(d) The entering into of any cooperative agreement.
(e) The extension, continuation, renewal, amendment, or modification of
any Federal contract, grant, loan, or
cooperative agreement.
Indian tribe and tribal organization, as
used in this section, have the meaning
provided in section 4 of the Indian SelfDetermination and Education Assistance Act (25 U.S.C. 450B) and include
Alaskan Natives.
Influencing or attempting to influence,
as used in this section, means making,
with the intent to influence, any communication to or appearance before an
officer or employee of any agency, a
Member of Congress, an officer or employee of Congress, or an employee of a

54

Federal Acquisition Regulation

3.802
Recipient, as used in this section, includes the contractor and all subcontractors. This term excludes an Indian tribe, tribal organization, or any
other Indian organization with respect
to expenditures specifically permitted
by other Federal law.
Regularly employed, as used in this
section, means, with respect to an officer or employee of a person requesting
or receiving a Federal contract, an officer or employee who is employed by
such person for at least 130 working
days within 1 year immediately preceding the date of the submission that initiates agency consideration of such
person for receipt of such contract. An
officer or employee who is employed by
such person for less than 130 working
days within 1 year immediately preceding the date of the submission that initiates agency consideration of such
person shall be considered to be regularly employed as soon as he or she is
employed by such person for 130 working days.
State, as used in this section, means a
State of the United States, the District
of Columbia, the Commonwealth of
Puerto Rico, a territory or possession
of the United States, an agency or instrumentality of a State, and multiState, regional, or interstate entity
having governmental duties and powers.

Member of Congress in connection with
any covered Federal action.
Local government, as used in this section, means a unit of government in a
State and, if chartered, established, or
otherwise recognized by a State for the
performance of a governmental duty,
including a local public authority, a
special district, an intrastate district,
a council of governments, a sponsor
group representative organization, and
any other instrumentality of a local
government.
Officer or employee of an agency, as
used in this section, includes the following individuals who are employed
by an agency:
(a) An individual who is appointed to
a position in the Government under
title 5, United States Code, including a
position under a temporary appointment;
(b) A member of the uniformed services, as defined in subsection 101(3),
title 37, United States Code;
(c) A special Government employee,
as defined in section 202, title 18, United States Code; and
(d) An individual who is a member of
a Federal advisory committee, as defined by the Federal Advisory Committee Act, title 5, United States Code, appendix 2.
Person, as used in this section, means
an individual, corporation, company,
association, authority, firm, partnership, society, State, and local government, regardless of whether such entity is operated for profit or not for
profit. This term excludes an Indian
tribe, tribal organization, or any other
Indian organization with respect to expenditures specifically permitted by
other Federal law.
Reasonable compensation, as used in
this section, means, with respect to a
regularly employed officer or employee
of any person, compensation that is
consistent with the normal compensation for such officer or employee for
work that is not furnished to, not funded by, or not furnished in cooperation
with the Federal Government.
Reasonable payment, as used in this
section, means, with respect to professional and other technical services, a
payment in an amount that is consistent with the amount normally paid for
such services in the private sector.

3.802

Prohibitions.

(a) Section 1352 of title 31, United
States Code, among other things, prohibits a recipient of a Federal contract,
grant, loan, or cooperative agreement
from using appropriated funds to pay
any person for influencing or attempting to influence an officer or employee
of any agency, a Member of Congress,
an officer or employee of Congress, or
an employee of a Member of Congress
in connection with any of the following
covered Federal actions: the awarding
of any Federal contract; the making of
any Federal grant; the making of any
Federal loan; the entering into of any
cooperative agreement; or, the modification of any Federal contract, grant,
loan, or cooperative agreement.
(b) The Act also requires offerors to
furnish a declaration consisting of both
a certification and a disclosure. These

55

3.802

48 CFR Ch. 1 (10–1–96 Edition)

requirements are contained in the provision at 52.203–11, Certification and
Disclosure Regarding Payments to Influence Certain Federal Transactions,
and the clause at 52.203–12, Limitation
on Payments to Influence Certain Federal Transactions.
(1) By signing its offer, an offeror certifies that no appropriated funds have
been paid or will be paid in violation of
the prohibitions in 31 U.S.C. 1352.
(2) The disclosure shall identify if
any funds other than Federal appropriated funds (including profit or fee
received under a covered Federal action) have been paid, or will be paid, to
any person for influencing or attempting to influence an officer or employee
of any agency, a Member of Congress,
an officer or employee of Congress, or
an employee of a Member of Congress
in connection with a Federal contract,
grant, loan, or cooperative agreement.
(c) The prohibitions of the Act do not
apply under the following conditions:
(1) Agency and legislative liaison by
own employees. (i) The prohibition on
the use of appropriated funds, in paragraph (a) of this section, does not apply
in the case of a payment of reasonable
compensation made to an officer or
employee of a person requesting or receiving a covered Federal action if the
payment is for agency and legislative
liaison activities not directly related
to a covered Federal action.
(ii) For purposes of subdivision
(c)(1)(i) of this section, providing any
information specifically requested by
an agency or Congress is permitted at
any time.
(iii) The following agency and legislative liaison activities are permitted
at any time where they are not related
to a specific solicitation for any covered Federal action:
(A) Discussing with an agency the
qualities and characteristics (including
individual demonstrations) of the person’s products or services, conditions
or terms of sale, and service capabilities;
(B) Technical discussions and other
activities regarding the application or
adaptation of the person’s products or
services for an agency’s use.
(iv) The following agency and legislative liaison activities are permitted

where they are prior to formal solicitation of any covered Federal action:
(A) Providing any information not
specifically requested but necessary for
an agency to make an informed decision about initiation of a covered Federal action;
(B) Technical discussions regarding
the preparation of an unsolicited proposal prior to its official submission;
and
(C) Capability presentations by persons seeking awards from an agency
pursuant to the provisions of the Small
Business Act, as amended by Pub. L.
95–507, and subsequent amendments.
(v) Only those activities expressly
authorized by subparagraph (c)(1) of
this section are permitted under this
section.
(2) Professional and technical services.
(i) The prohibition on the use of appropriated funds, in paragraph (a) of this
section, does not apply in the case of—
(A) Payment of reasonable compensation made to an officer or employee of
a person requesting or receiving a covered Federal action or an extension,
continuation, renewal, amendment, or
modification of a covered Federal action, if payment is for professional or
technical services rendered directly in
the preparation, submission, or negotiation of any bid, proposal, or application for that Federal action or for
meeting requirements imposed by or
pursuant to law as a condition for receiving that Federal action;
(B) Any reasonable payment to a person, other than an officer or employee
of a person requesting or receiving a
covered Federal action, if the payment
is for professional or technical services
rendered directly in the preparation,
submission, or negotiation of any bid,
proposal, or application for that Federal action, or for meeting requirements imposed by or pursuant to law
as a condition for receiving that Federal action. Persons other than officers
or employees of a person requesting or
receiving a covered Federal action include consultants and trade associations.
(ii) For purposes of subdivision
(c)(2)(i) of this section, ‘‘professional
and technical services’’ shall be limited

56

Federal Acquisition Regulation

3.803

to advice and analysis directly applying any professional or technical discipline. For example, drafting of a
legal document accompanying a bid or
proposal by a lawyer is allowable.
Similarly, technical advice provided by
an engineer on the performance or
operational capability of a piece of
equipment rendered directly in the negotiation of a contract is allowable.
However, communications with the intent to influence made by a professional (such as a licensed lawyer) or a
technical person (such as a licensed accountant) are not allowable under this
section unless they provide advice and
analysis directly applying their professional or technical expertise and unless
the advice or analysis is rendered directly and solely in the preparation,
submission or negotiation of a covered
Federal action. Thus, for example,
communications with the intent to influence made by a lawyer that do not
provide legal advice or analysis directly and solely related to the legal
aspects of his or her client’s proposal,
but generally advocate one proposal
over another are not allowable under
this section because the lawyer is not
providing professional legal services.
Similarly, communications with the
intent to influence made by an engineer providing an engineering analysis
prior to the preparation or submission
of a bid or proposal are not allowable
under this section since the engineer is
providing technical services but not directly in the preparation, submission
or negotiation of a covered Federal action.
(iii) Requirements imposed by or pursuant to law as a condition for receiving a covered Federal award include
those required by law or regulation and
any other requirements in the actual
award documents
(iv) Only those services expressly authorized by subdivisions (c)(2)(i) (A)
and (B) of this section are permitted
under this section.
(v) The reporting requirements of
3.803(a) shall not apply with respect to
payments of reasonable compensation
made to regularly employed officers or
employees of a person.

3.803

Certification and disclosure.

(a) Any contractor who requests or
receives a Federal contract exceeding
$100,000 shall submit the certification
and disclosures required by the provision at 52.203–11, Certification and Disclosure Regarding Payments to Influence Certain Federal Transactions,
with its offer. Disclosures under this
section shall be submitted to the contracting officer using OMB standard
form LLL, Disclosure of Lobbying Activities.
(b) The contractor shall file a disclosure form at the end of each calendar
quarter in which there occurs any
event that materially affects the accuracy of the information contained in
any disclosure form previously filed by
such person under paragraph (a) of this
section. An event that materially affects the accuracy of the information
reported includes—
(1) A cumulative increase of $25,000 or
more in the amount paid or expected to
be paid for influencing or attempting
to influence a covered Federal action;
or
(2) A change in the person(s) or individual(s) influencing or attempting to
influence a covered Federal action; or
(3) A change in the officer(s), employee(s), or Member(s) of Congress
contacted to influence or attempt to
influence a covered Federal action.
(c) The contractor shall require the
submittal of a certification, and if required, a disclosure form, by any person who requests or receives any subcontract exceeding $100,000 under the
Federal contract.
(d) All subcontractor disclosure
forms (but not certifications), shall be
forwarded from tier to tier until received by the prime contractor. The
prime contractor shall submit all disclosure forms to the contracting officer
at the end of the calendar quarter in
which the disclosure form is submitted
by the subcontractor. Each subcontractor certification shall be retained in
the subcontract file of the awarding
contractor.
[55 FR 3190, Jan. 30, 1990, as amended at 55
FR 38516, Sept. 18, 1990]

57

3.804

48 CFR Ch. 1 (10–1–96 Edition)
in solicitations and contracts expected
to exceed $100,000.

3.804 Policy.
(a) The contracting officer shall obtain certifications and disclosures as
required by the provision at 52.203–11,
Certification and Disclosure Regarding
Payments to Influence Certain Federal
Transactions, prior to the award of any
contract exceeding $100,000.
(b) The contracting officer shall forward a copy of all contractor disclosures furnished pursuant to the clause
at 52.203–12, Limitation on Payments
to Influence Certain Federal Transactions, to the official designated in
accordance with agency procedures, for
subsequent submission to Congress.
The original of the disclosure shall be
retained in the contract file.

Subpart 3.9—Whistleblower Protections for Contractor Employees
SOURCE: 60 FR 37776, July 21, 1995, unless
otherwise noted.

3.900

Scope of subpart.

This subpart implements 10 U.S.C.
2409 and 41 U.S.C. 251, et seq., as amended by Sections 6005 and 6006 of the Federal Acquisition Streamlining Act of
1994 (Pub. L. 103–355).
3.901

3.805 Exemption.

Definitions.

Authorized official of an agency means
an officer or employee responsible for
contracting, program management,
audit, inspection, investigation, or enforcement of any law or regulation relating to Government procurement or
the subject matter of the contract.
Authorized official of the Department of
Justice means any person responsible
for the investigation, enforcement, or
prosecution of any law or regulation.
Inspector General means an Inspector
General appointed under the Inspector
General Act of 1978, as amended. In the
Department of Defense that is the DOD
Inspector General. In the case of an executive agency that does not have an
Inspector General, the duties shall be
performed by an official designated by
the head of the executive agency.

The Secretary of Defense may exempt, on a case-by-case basis, a covered Federal action from the prohibitions of this section whenever the Secretary determines, in writing, that
such an exemption is in the national
interest. The Secretary shall transmit
a copy of such exemption to Congress
immediately after making such a determination.
3.806 Processing suspected violations.
Suspected violations of the requirements of the Act shall be referred to
the official designated in agency procedures.
3.807 Civil penalties.
Agencies shall impose and collect
civil penalties pursuant to the provisions of the Program Fraud and Civil
Remedies Act, 31 U.S.C. 3803 (except
subsection (c)), 3804–3408, and 3812, insofar as the provisions therein are not inconsistent with the requirements of
this subpart.

3.902

Applicability.

This subpart applies to all Government contracts.
3.903

Policy.

Government contractors shall not
discharge, demote or otherwise discriminate against an employee as a reprisal for disclosing information to a
Member of Congress, or an authorized
official of an agency or of the Department of Justice, relating to a substantial violation of law related to a contract (including the competition for or
negotiation of a contract).

3.808 Solicitation provision and contract clause.
(a) The provision at 52.203–11, Certification and Disclosure Regarding Payments to Influence Certain Federal
Transactions, shall be included in solicitations expected to exceed $100,000.
(b) The clause at 52.203–12, Limitation on Payments to Influence Certain
Federal Transactions, shall be included

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Federal Acquisition Regulation

3.906
be granted by the head of the agency or
designee.
(e) At any time, the head of the agency or designee may request additional
investigative work be done on the complaint.

3.904 Procedures for filing complaints.
(a) Any employee of a contractor who
believes that he or she has been discharged, demoted, or otherwise discriminated against contrary to the policy in 3.903 may file a complaint with
the Inspector General of the agency
that awarded the contract.
(b) The complaint shall be signed and
shall contain—
(1) The name of the contractor;
(2) The contract number, if known; if
not, a description reasonably sufficient
to identify the contract(s) involved;
(3) The substantial violation of law
giving rise to the disclosure;
(4) The nature of the disclosure giving rise to the discriminatory act; and
(5) The specific nature and date of
the reprisal.
3.905 Procedures
complaints.

for

3.906 Remedies.
(a) If the head of the agency or designee determines that a contractor has
subjected one of its employees to a reprisal for providing information to a
Member of Congress, or an authorized
official of an agency or of the Department of Justice, the head of the agency
or designee may take one or more of
the following actions:
(1) Order the contractor to take affirmative action to abate the reprisal.
(2) Order the contractor to reinstate
the person to the position that the person held before the reprisal, together
with the compensation (including back
pay), employment benefits, and other
terms and conditions of employment
that would apply to the person in that
position if the reprisal had not been
taken.
(3) Order the contractor to pay the
complainant an amount equal to the
aggregate amount of all costs and expenses (including attorneys’ fees and
expert witnesses’ fees) that were reasonably incurred by the complainant
for, or in connection with, bringing the
complaint regarding the reprisal.
(b) Whenever a contractor fails to
comply with an order, the head of the
agency or designee shall request the
Department of Justice to file an action
for enforcement of such order in the
United States district court for a district in which the reprisal was found to
have occurred. In any action brought
under this section, the court may grant
appropriate relief, including injunctive
relief and compensatory and exemplary
damages.
(c) Any person adversely affected or
aggrieved by an order issued under this
section may obtain review of the order’s conformance with the law, and
this subpart, in the United States
Court of Appeals for a circuit in which
the reprisal is alleged in the order to
have occurred. No petition seeking
such review may be filed more than 60
days after issuance of the order by the
head of the agency or designee. Review

investigating

(a) Upon receipt of a complaint, the
Inspector General shall conduct an initial inquiry. If the Inspector General
determines that the complaint is frivolous or for other reasons does not merit
further investigation, the Inspector
General shall advise the complainant
that no further action on the complaint will be taken.
(b) If the Inspector General determines that the complaint merits further investigation, the Inspector General shall notify the complainant, contractor, and head of the contracting activity. The Inspector General shall conduct an investigation and provide a
written report of findings to the head
of the agency or designee.
(c) Upon completion of the investigation, the head of the agency or designee shall ensure that the Inspector
General provides the report of findings
to—
(1) The complainant and any person
acting on the complainant’s behalf;
(2) The contractor alleged to have
committed the violation; and
(3) The head of the contracting activity.
(d) The complainant and contractor
shall be afforded the opportunity to
submit a written response to the report
of findings within 30 days to the head
of the agency or designee. Extensions
of time to file a written response may

59

Pt. 4

48 CFR Ch. 1 (10–1–96 Edition)
4.704 Calculation of retention periods.
4.705 Specific retention periods.
4.705–1 Financial
and
cost
accounting
records.
4.705–2 Pay administration records.
4.705–3 Acquisition and supply records.
4.706 [Reserved]

shall conform to Chapter 7 of Title 5,
United States Code.

PART 4—ADMINISTRATIVE MATTERS
Sec.
4.000

Scope of part.

Subpart 4.8—Government Contract Files

Subpart 4.1—Contract Execution
4.101
4.102
4.103

4.800 Scope of subpart.
4.801 General.
4.802 Contract files.
4.803 Contents of contract files.
4.804 Closeout of contract files.
4.804–1 Closeout by the office administering
the contract.
4.804–2 Closeout of the contracting office
files if another office administers the
contract.
4.804–3 Closeout of paying office contract
files.
4.804–4 Physically completed contracts.
4.804–5 Detailed procedures for closing out
contract files.
4.805 Storage, handling, and disposal of contract files.

Contracting officer’s signature.
Contractor’s signature.
Contract clause.

Subpart 4.2—Contract Distribution
4.201 Procedures.
4.202 Agency distribution requirements.
4.203 Taxpayer identification number information.

Subpart 4.3—Paper Documents
Sec.
4.300
4.301
4.302
4.303
4.304

Scope of subpart.
Authority.
Definition.
Policy.
Contract clause.

Subpart 4.9—Information Reporting to the
Internal Revenue Service

Subpart 4.4—Safeguarding Classified
Information Within Industry

4.900
4.901
4.902
4.903
4.904

4.401 Definitions.
4.402 General.
4.403 Responsibilities of contracting officers.
4.404 Contract clause.

AUTHORITY: 40 U.S.C. 486(c); 10 U.S.C. Chapter 137; and 42 U.S.C. 2473(c).
SOURCE: 48 FR 42113, Sept. 19, 1983, unless
otherwise noted.

Subpart 4.5—Electronic Commerce in
Contracting
4.500 Scope of subpart.
4.501 Definitions.
4.502 Policy.
4.503 Contractor registration.
4.504 FACNET functions.
4.505 FACNET certification.
4.505–1 Interim certification.
4.505–2 Full certification.
4.505–3 Governmentwide certification.
4.505–4 Contract actions excluded.
4.506 Exemptions.

4.000

[60 FR 28493, May 31, 1995]

Subpart 4.1—Contract Execution

Scope of subpart.
Record requirements.
Federal Procurement Data System.
Solicitation provision.

4.101

Contracting officer’s signature.

Only contracting officers shall sign
contracts on behalf of the United
States. The contracting officer’s name
and official title shall be typed,
stamped, or printed on the contract.
The contracting officer normally signs
the contract after it has been signed by
the contractor. The contracting officer

Subpart 4.7—Contractor Records Retention
4.700
4.701
4.702
4.703

Scope of part.

This part prescribes policies and procedures relating to the administrative
aspects of contract execution, contractor-submitted paper documents, distribution, reporting, retention, and
files.

Subpart 4.6—Contract Reporting
4.600
4.601
4.602
4.603

Scope of subpart.
Definitions.
Contract information.
Payment information.
Solicitation provision.

Scope of subpart.
Purpose.
Applicability.
Policy.

60

Federal Acquisition Regulation

4.201

shall ensure that the signer(s) have authority to bind the contractor (see specific requirements in 4.102 of this subpart).

tract, in solicitations and contracts if
required by agency procedures.
[49 FR 26741, June 29, 1984]

Subpart 4.2—Contract Distribution

[60 FR 34736, July 3, 1995]

4.102 Contractor’s signature.

4.201

(a) Individuals. A contract with an individual shall be signed by that individual. A contract with an individual
doing business as a firm shall be signed
by that individual, and the signature
shall be followed by the individual’s
typed, stamped, or printed name and
the words ‘‘, an individual doing business as .......................’’ [insert name of
firm].
(b) Partnerships. A contract with a
partnership shall be signed in the partnership name. Before signing for the
Government, the contracting officer
shall obtain a list of all partners and
ensure that the individual(s) signing
for the partnership have authority to
bind the partnership.
(c) Corporations. A contract with a
corporation shall be signed in the corporate name, followed by the word
‘‘by’’ and the signature and title of the
person authorized to sign. The contracting officer shall ensure that the
person signing for the corporation has
authority to bind the corporation.
(d) Joint venturers. A contract with
joint venturers may involve any combination of individuals, partnerships,
or corporations. The contract shall be
signed by each participant in the joint
venture in the manner prescribed in
paragraphs (a) through (c) above for
each type of participant. When a corporation is participating, the contracting officer shall obtain from the corporation secretary a certificate stating
that the corporation is authorized to
participate in the joint venture.
(e) Agents. When an agent is to sign
the contract, other than as stated in
paragraphs (a) through (d) above, the
agent’s authorization to bind the principal must be established by evidence
satisfactory to the contracting officer.

Contracting officers shall distribute
copies of contracts or modifications
within 10 working days after execution
by all parties. As a minimum, the contracting officer shall—
(a) Distribute simultaneously one
signed copy or reproduction of the
signed contract to the contractor and
the paying office;
(b) When a contract is assigned to another office for contract administration (see subpart 42.2), provide to that
office—
(1) One copy or reproduction of the
signed contract and of each modification; and
(2) A copy of the contract distribution list, showing those offices that
should receive copies of modifications,
and any changes to the list as they
occur;
(c) Distribute one copy to each accounting and finance office (funding office) whose funds are cited in the contract;
(d) When the contract is not assigned
for administration but contains a Cost
Accounting Standards clause, provide
one copy of the contract to the cognizant administrative contracting officer and mark the copy ‘‘FOR COST ACCOUNTING STANDARDS ADMINISTRATION ONLY’’ (see 30.601(b));
(e) Provide one copy of each contract
or modification that requires audit
service to the appropriate field audit
office listed in the ‘‘Directory of Federal Contract Audit Offices’’ (copies of
this directory can be ordered from the
U.S. Government Printing Office, Superintendent of Documents, Washington, DC 20402, referencing stock numbers 008–007–03189–9 and 008–007–03190–2
for Volumes I and II, respectively); and
(f) Provide copies of contracts and
modifications to those organizations
required to perform contract administration support functions (e.g., when

4.103 Contract clause.
The contracting officer shall insert
the clause at 52.204–1, Approval of Con-

61

Procedures.

4.202

48 CFR Ch. 1 (10–1–96 Edition)

manufacturing is performed at multiple sites, the contract administration
office cognizant of each location).

amended by Executive
March 25, 1996.

distribution

12995,

[60 FR 28493, May 31, 1995, as amended at 61
FR 31616, June 20, 1996]

[48 FR 42113, Sept. 19, 1983, as amended at 60
FR 34736, July 3, 1995]

4.202 Agency
ments.

Order

4.302 Definition.
Printing/copying double-sided, as used
in this subpart, means printing or reproducing a document so that information is on both sides of a sheet of paper.

require-

Agencies shall limit additional distribution requirements to the minimum necessary for proper performance
of essential functions. When contracts
are assigned for administration to a
contract administration office located
in an agency different from that of the
contracting office (see part 42), the two
agencies shall agree on any necessary
distribution in addition to that prescribed in 4.201 above.

4.303 Policy.
It is the policy of the Government
that a contractor submitting paper
documents to the Government relating
to an acquisition should, if possible,
submit those documents printed/copied
double-sided on recycled paper. If the
contractor can only print/copy doublesided or use recycled paper, the contractor should accomplish whichever
one the contractor has the ability to
achieve.

4.203 Taxpayer identification number
information.
(a) If the contractor has furnished a
taxpayer identification number (TIN)
when completing the solicitation provision at 52.204–3, Taxpayer Identification, the contracting officer shall, unless otherwise provided in agency procedures, attach a copy of the completed
solicitation provision as the last page
of the copy of the contract sent to the
paying office.
(b) If the TIN or corporate status is
derived from a source other than the
provision at 52.204–3, the last page of
the contract forwarded to the paying
office will be annotated to state the
contractor’s TIN and corporate status.

4.304 Contract clause.
The contracting officer shall insert
the clause at 52.204–4, Printing/Copying
Double-Sided on Recycled Paper, in solicitations and contracts greater than
the simplified acquisition threshold.
[60 FR 28494, May 31, 1995, as amended at 60
FR 34744, July 3, 1995]

Subpart 4.4—Safeguarding Classified Information Within Industry
4.401 Definitions.
Classified acquisition means an acquisition that consists of one or more contracts in which offerors would be required to have access to classified information (Confidential, Secret, or Top
Secret) to properly submit an offer or
quotation, to understand the performance requirements of a classified contract under the acquisition, or to perform the contract.
Classified contract means any contract
that requires, or will require, access to
classified information (Confidential,
Secret, or Top Secret) by the contractor or its employees in the performance
of the contract. A contract may be a
classified contract even though the
contract document is not classified.
Classified information means any information or material, regardless of its

[54 FR 34752, Aug. 21, 1989, as amended at 55
FR 52788, Dec. 21, 1990]

Subpart 4.3—Paper Documents
Source: At 60 FR 28493, May 31, 1995, unless
otherwise noted.

4.300 Scope of subpart.
This subpart provides policies and
procedures on contractor-submitted
paper documents.
4.301 Authority.
The authority for this subpart is established in Executive Order 12873, Sections 402(d) and 504, October 20, 1993, as

62

Federal Acquisition Regulation

4.403

physical form or characteristics, that
is owned by, produced by or for, or
under the control of the United States
Government, and determined pursuant
to Executive Order 12356, April 2, 1982
(47 FR 14874, April 6, 1982) or prior orders to require protection against unauthorized disclosure, and is so designated.

for safeguarding classified information
in patent applications and patents.
[48 FR 42113, Sept. 19, 1983, as amended at 61
FR 31617, June 20, 1996]

4.403 Responsibilities
officers.

of

contracting

(a) Presolicitation phase. Contracting
officers shall review all proposed solicitations to determine whether access to
classified information may be required
by offerors, or by a contractor during
contract performance.
(1) If access to classified information
of another agency may be required, the
contracting officer shall—
(i) Determine if the agency is covered
by the NISP; and
(ii) Follow that agency’s procedures
for determining the security clearances
of firms to be solicited.
(2) If the classified information required is from the contracting officer’s
agency, the contracting officer shall
follow agency procedures.
(b) Solicitation phase. Contracting officers shall—
(1) Ensure that the classified acquisition is conducted as required by the
NISP or agency procedures, as appropriate; and
(2) Include (i) an appropriate Security Requirements clause in the solicitation (see 4.404), and (ii) as appropriate, in solicitations and contracts
when the contract may require access
to classified information, a requirement for security safeguards in addition to those provided in the clause
(52.204–2, Security Requirements).
(c) Award phase. Contracting officers
shall inform contractors and subcontractors of the security classifications and requirements assigned to the
various documents, materials, tasks,
subcontracts, and components of the
classified contract as follows:
(1) Agencies covered by the NISP
shall use the Contract Security Classification Specification, DD Form 254.
The contracting officer, or authorized
representative, is the approving official
for the form and shall ensure that it is
prepared and distributed in accordance
with the ISR.

[48 FR 42113, Sept. 19, 1983, as amended at 51
FR 2649, Jan. 17, 1986]

4.402 General.
(a) Executive Order 12829, January 6,
1993 (58 FR 3479, January 8, 1993), entitled ‘‘National Industrial Security Program’’ (NISP), establishes a program to
safeguard Federal Government classified information that is released to
contractors, licensees, and grantees of
the United States Government. Executive Order 12829 amends Executive
Order 10865, February 20, 1960 (25 FR
1583, February 25, 1960), entitled ‘‘Safeguarding Classified Information Within
Industry,’’ as amended by Executive
Order 10909, January 17, 1961 (26 FR 508,
January 20, 1961).
(b) The National Industrial Security
Program Operating Manual (NISPOM)
incorporates the requirements of these
Executive Orders. The Secretary of Defense, in consultation with all affected
agencies and with the concurrence of
the Secretary of Energy, the Chairman
of the Nuclear Regulatory Commission,
and the Director of Central Intelligence, is responsible for issuance and
maintenance of this Manual. The following DOD publications implement
the program:
(1) National Industrial Security Program Operating Manual (NISPOM) (DOD
5220.22–M).
(2) Industrial Security Regulation (ISR)
(DOD 5220.22–R).
(c) Procedures for the protection of
information relating to foreign classified contracts awarded to U.S. industry, and instructions for the protection
of U.S. information relating to classified contracts awarded to foreign firms,
are prescribed in Chapter 10 of the
NISPOM.
(d) Part 27, Patents, Data, and Copyrights, contains policy and procedures

63

4.404

48 CFR Ch. 1 (10–1–96 Edition)
coordinator and clearinghouse for national standards in the United States.
Electronic commerce (EC), as used in
this subpart, means a paperless process
including electronic mail, electronic
bulletin boards, electronic funds transfer, electronic data interchange, and
similar techniques for accomplishing
business transactions. The use of terms
commonly associated with paper transactions (e.g., ‘‘copy’’, ‘‘document’’,
‘‘page’’, ‘‘printed’’, ‘‘sealed envelope’’
and ‘‘stamped’’) shall not be interpreted to restrict the use of electronic
commerce.
Electronic data interchange (EDI), as
used in this subpart, means a technique
for electronically transferring and
string formatted information between
computers utilizing established and
published formats and codes, as authorized by the applicable Federal Information Processing Standards.
Implementation convention (IC), as
used in this subpart, means the common practices and/or interpretations of
the use of ANSI X12 standards. Conventions define how trading partners will
use the standards for their mutual
needs. The Federal IC will be used by
organizational elements of the Federal
community and by government organizations and by Trading Partners to exchange data with the Federal community.
Trading partner, as used in this subpart, means a business that has agreed
to exchange business information electronically.
Transaction set, as used in this subpart, means the data that is exchanged
to convey meaning between Trading
Partners engaged in EC/EDI.

(2) Contracting officers in agencies
not covered by the NISP shall follow
agency procedures.
[48 FR 42113, Sept. 19, 1983, as amended at 61
FR 31617, June 20, 1996]

4.404 Contract clause.
(a) The contracting officer shall insert the clause at 52.204–2, Security Requirements, in solicitations and contracts when the contract may require
access to classified information, unless
the conditions specified in paragraph
(d) below apply.
(b) If a cost contract (see 16.302) for
research and development with an educational institution is contemplated,
the contracting officer shall use the
clause with its Alternate I.
(c) If a construction or architect-engineer contract where employee identification is required for security reasons
is contemplated, the contracting officer shall use the clause with its Alternate II.
(d) If the contracting agency is not
covered by the NISP and has prescribed
a clause and alternates that are substantially the same as those at 52.204–
2, the contracting officer shall use the
agency-prescribed clause as required by
agency procedures.
[48 FR 42113, Sept. 19, 1983, as amended at 61
FR 31617, June 20, 1996]

Subpart 4.5—Electronic
Commerce in Contracting
SOURCE: 60 FR 34744, July 3, 1995, unless
otherwise noted.

4.500 Scope of subpart.

[60 FR 34744, July 3, 1995, as amended at 61
FR 39191, July 26, 1996]

This subpart provides policy and procedures for the establishment and use
of the Federal Acquisition Computer
Network (FACNET) as required by Section 30 of the Office of Federal Procurement Policy (OFPP) Act (41 U.S.C. 426).

4.502 Policy.
(a) The Federal Government shall use
FACNET whenever practicable or costeffective. Contracting officers may supplement FACNET transactions by
using other media to meet the requirements of any contract action governed
by the FAR (e.g., transmit hard copy of
drawings).
(b) Before using FACNET, or any
other method of electronic data interchange, The agency head shall ensure
that the electronic data interchange

4.501 Definitions.
ANSI X12, as used in this subpart,
means the designation assigned by the
American National Standards Institute
(ANSI) for the structure, format, and
content of electronic business transactions conducted through Electronic
Data Interchange (EDI). ANSI is the

64

Federal Acquisition Regulation

4.505–2

system is capable of ensuring authentication and confidentiality commensurate with the risk and magnitude of
the harm from loss, misuse, or unauthorized access to or modification of
the information.

(6) Receive payment by purchase
card, electronic funds transfer, or other
automated means, if practicable.
[60 FR 34744, July 3, 1995, as amended at 61
FR 39191, July 26, 1996]

4.505

[60 FR 34744, July 3, 1995, as amended at 61
FR 39191, July 26, 1996]

FACNET certification.

4.505–1 Interim certification.
(a) A contracting office is considered
to have implemented interim FACNET
if—
(1) The contracting office—
(i) Has implemented the FACNET
functions described in 4.504(a)(1) and
(2), and (b)(1), (2), and (3); and
(ii) Issues notices of solicitations and
receives responses to solicitations in a
system having those functions;
(2) The contracting office can use
FACNET for contracts, not otherwise
exempted (see 4.506), that exceed the
micro-purchase threshold but do not
exceed
the
simplified
acquisition
threshold; and
(3) the senior procurement executive
of the agency, or the Under Secretary
of Defense for Acquisition and Technology for the military departments
and defense agencies, has certified to
the Administrator of OFPP that the
contracting office has implemented interim FACNET.
(b) The senior procurement executive
of the agency, or the Under Secretary
of Defense for Acquisition and Technology for the military departments
and defense agencies, shall notify the
private sector via the Commerce Business Daily that a contracting office of
the agency has certified interim
FACNET. The notice shall establish a
date after which it will be required
that all responses to solicitations issued by the contracting office through
FACNET, must be submitted through
FACNET, unless otherwise authorized.

4.503 Contractor registration.
(a) In order for a contractor to conduct electronic commerce with the
Federal Government, the contractor
must provide registration information
to the Central Contractor Registration
(CCR). Phone (800) EDI–3414 for information regarding FACNET.
(b) The contractor will be required to
submit trading partner profile information, including a Data Universal Numbering System (DUNS) number, in accordance with the Federal implementation conventions of the appropriate
ANSI X12 transaction set for contractor registration.
[61 FR 39191, July 26, 1996]

4.504 FACNET functions.
(a) For agencies—
(1) Provide widespread public notice
of contracting opportunities, and issue
solicitations;
(2) Receive responses to solicitations
and associated requests for information;
(3) Provide widespread public notice
of contract awards and issuance of orders (including price);
(4) Receive questions regarding solicitations, if practicable;
(5) Issue contracts and orders, if practicable;
(6) Initiate payments to contractors,
if practicable; and
(7) Archive data relating to each procurement action.
(b) For the private sector—
(1) Access notices of solicitation;
(2) Access and review solicitations;
(3) Respond to solicitations;
(4) Receive contracts and orders, if
practicable;
(5) Access information on contract
awards and issuance of orders; and

4.505–2 Full certification.
(a) An agency is considered to have
implemented full FACNET if—
(1) The agency has implemented all
of the FACNET functions described in
4.504;
(2) During the entire preceding fiscal
year, more than 75 percent of the agency’s eligible contracts, not otherwise
exempted (see 4.506), that exceeded the
micro-purchase threshold but did not

65

4.505–3

48 CFR Ch. 1 (10–1–96 Edition)

exceed
the
simplified
acquisition
threshold, were entered into vai
FACNET; and.
(3) The head of the agency, with the
concurrence of the Administrator of
OFPP, has certified to the Congress
that the agency has implemented full
FACNET. For the Department of Defense, the certification shall be made
by the Secretary of Defense for the Department as a whole.
(b) Eligible contracts do not include
any class or classes of contracts that
the Federal Acquisition Regulatory
Council determines, after October 13,
1997, are not suitable for acquisition
through FACNET.

shall be centrally maintained at the
contracting office.
(2) Contracts that do not require notice under subpart 5.2.
(b) Full FACNET. Contracts awarded
by a contracting office (or a portion of
a contracting office), if the office is exempted from use of FACNET by the
head of the agency, or the Secretary of
Defense for the military departments
and defense agencies. Any such exemption shall be based on a written determination that FACNET processing is
not cost-effective or practicable for the
contracting office, or portions thereof.
Determinations shall be maintained in
the office of the senior procurement executive, or the Under Secretary of Defense for Acquisition and Technology
for the military departments and defense agencies.

4.505–3 Governmentwide certification.
The Federal Government is considered to have implemented Governmentwide FACNET if—
(a) During the preceding fiscal year,
at least 75 percent of eligible contracts
entered into by executive agencies,
that exceeded the micro-purchase
threshold but did not exceed the simplified acquisition threshold, were
made via full FACNET; and
(b) the Administrator of OFPP has
certified implementation of Governmentwide FACNET to the Congress.

Subpart 4.6—Contract Reporting
4.600

Scope of subpart.

This subpart prescribes uniform reporting requirements for the Federal
Procurement Data System (FPDS).
4.601

Record requirements.

(a) Each executive agency shall establish and maintain for a period of 5
years a computer file, by fiscal year,
containing unclassified records of all
procurements exceeding $25,000.
(b) With respect to each procurement
carried out using competitive procedures, agencies shall be able to access
from the computer file, as a minimum,
the following information:
(1) The date of contract award.
(2)
Information
identifying
the
source to whom the contract was
awarded.
(3) The property or services obtained
by the Government under the procurement.
(4) The total cost of the procurement.
(5) Those procurements which result
in the submission of a single bid or proposal so that they can be separately
categorized
and
designated
noncompetitive procurements using competitive procedures.
(c) In addition to paragraph (b) of
this section with respect to each procurement carried out using procedures
other than competitive procedures,

4.505–4 Contract actions excluded.
For purposes of calculating the percentage of FACNET use referred to in
4.505–2 and 4.505–3, actions issued
against established contracts, such as
delivery orders, task orders, and inscope modifications, shall not be included.
4.506 Exemptions.
The following are exempted from the
use of FACNET as specified and shall
not be considered when determining
compliance with the requirements to
implement FACNET:
(a) Interim FACNET. (1) Classes of
procurements exempted by the head of
the contracting activity after a written
determination is made that FACNET
processing of those procurements is not
cost-effective or practicable; and specific purchases for which the contracting officer determines that it is not
practicable or cost-effective to process
via FACNET. Such determinations

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Federal Acquisition Regulation

4.603
charge from the General Services Administration, Federal Procurement
Data Center, 7th & D Streets SW.,
room 5652, Washington, DC 20407, telephone (202) 401–1529, FTS 441–1529, FAX
(202) 401–1546) provides the necessary
instruction to the data collection point
in each agency as to what data are required and how often to provide the
data.
(c) Data collection points in each
agency report data on SF 279, Federal
Procurement Data System (FPDS) Individual Contract Action Report, and
SF 281, Federal Procurement Data System (FPDS) Summary Contract Action
Report ($25,000 or Less), or computergenerated equivalent. Although the SF
279 and SF 281 are not mandatory for
use by the agencies, they do provide
the mandatory format for submitting
data to the FPDS.
(d) The contracting officer shall obtain and report a Contractor Establishment Code for each awardee from information on file or available to the contracting office. The contracting office
or other designated agency office shall
request a code using the procedures in
the FPDS Reporting Manual or in accordance with agency procedures. Requests for codes shall be made by Government offices and only for the apparent awardees.

agencies shall be able to access from
the computer file—
(1) The reason under subpart 6.3 for
the use of such procedures; and
(2) The identity of the organization
or activity which conducted the procurement.
(d) In addition to the information described in paragraphs (b) and (c) of this
section, for procurements in excess of
$25,000, agencies shall be able to access
information on the following from the
computer file:
(1) Awards to small disadvantaged
businesses using either set-asides or
full and open competition.
(2) Awards to business concerns
owned and controlled by women.
(3) The number of offers received in
response to a solicitation.
(4) Task or delivery order contracts.
(5) Contracts for the acquisition of
commercial items.
(e) This information shall be transmitted to the Federal Procurement
Data System in accordance with agency procedures.
[50 FR 52429, Dec. 23, 1985, as amended at 52
FR 19802, May 27, 1987; 60 FR 42653, Aug. 16,
1995]

4.602 Federal Procurement Data System.
(a) The FPDS provides a comprehensive mechanism for assembling, organizing, and presenting contract placement data for the Federal Government.
Federal agencies report data to the
Federal Procurement Data Center
(FPDC), which collects, processes, and
disseminates official statistical data
on Federal contracting. The data provide (1) a basis for recurring and special reports to the President, the Congress, the General Accounting Office,
Federal executive agencies, and the
general public; (2) a means of measuring and assessing the impact of Federal
contracting on the Nation’s economy
and the extent to which small, small
disadvantaged and women-owned small
business concerns are sharing in Federal contracts; and (3) data for other
policy and management control purposes.
(b) The FPDS Reporting Manual provides a complete list of reporting and
nonreporting agencies and organizations. This manual (available at no

[48 FR 42113, Sept. 19. 1983. Redesignated at
50 FR 52429, Dec. 23, 1985, and amended at 54
FR 29280, July 11, 1989; 53 FR 43388, Oct. 26,
1988; 55 FR 52788, Dec. 21, 1990; 56 FR 41744,
Aug. 22, 1991; 57 FR 60572, Dec. 21, 1992; 60 FR
48259, Sept. 18, 1995]

4.603

Solicitation provision.

The contracting officer shall insert
the provision at 52.204–5, Women-Owned
Business, in all solicitations that are
not set aside for small business concerns and that exceed the simplified
acquisition threshold, when the contract is to be performed inside the
United States, its territories or possessions, Puerto Rico, the Trust Territory
of the Pacific Islands, or the District of
Columbia.
[60 FR 48259, Sept. 18, 1995, as amended at 61
FR 39190, July 26, 1996]

67

4.700

48 CFR Ch. 1 (10–1–96 Edition)
cies and the Comptroller General for (1)
3 years after final payment or, for certain records, (2) the period specified in
4.705 through 4.705–3, whichever of
these periods expires first.
(b) Contractors shall make available
the foregoing records and supporting
evidence for a longer period of time
than is required in 4.703(a) if—
(1) A retention period longer than
that cited in 4.703(a) is specified in any
contract clause; or
(2) The contractor, for its own purposes, retains the foregoing records and
supporting evidence for a longer period.
Under this circumstance, the retention
period shall be the period of the contractor’s retention or 3 years after
final payment, whichever period expires first.
(3) The contractor does not meet the
original 90-day due date for submission
of final indirect cost rate proposals
specified in subparagraph (d)(2) of the
clause at 52.216–7, Allowable Cost and
Payment, and subparagraph (c)(2) of
the clause at 52.216–13, Allowable Cost
and Payment—Facilities. Under these
circumstances, the retention periods in
4.705 shall be automatically extended
one day for each day the proposal is
not submitted after the original 90-day
due date.
(c) Nothing in this section shall be
construed to preclude a contractor
from duplicating or storing original
records in electronic form unless they
contain significant information not
shown on the record copy. Original
records need not be maintained or produced in an audit if the contractor or
subcontractor provides photographic or
electronic images of the original
records and meets the following requirements:
(1) The contractor or subcontractor
has established procedures to ensure
that the imaging process preserves accurate images of the original records,
including signatures and other written
or graphic images, and that the imaging process is reliable and secure so as
to maintain the integrity of the
records.
(2) The contractor or subcontractor
maintains an effective indexing system
to permit timely and convenient access
to the imaged records.

Subpart 4.7—Contractor Records
Retention
4.700 Scope of subpart.
This subpart provides policies and
procedures for retention of records by
contractors to meet the records review
requirements of the Government. In
this subpart, the terms ‘‘contracts’’
and
‘‘contractors’’
include
‘‘subcontracts’’ and ‘‘subcontractors.’’
4.701 Purpose.
The purpose of this subpart is to generally describe records retention requirements and to allow reductions in
the retention period for specific classes
of records under prescribed circumstances.
4.702 Applicability.
(a) This subpart applies to records
generated under contracts that contain
one of the following clauses:
(1) Audit and Records—Sealed Bidding (52.214–26).
(2) Audit and Records—Negotiation
(52.215–2).
(3) Audit—Commercial Items (52.215–
43).
(b) This subpart is not mandatory on
Department of Energy contracts for
which the Comptroller General allows
alternative records retention periods.
Apart from this exception, this subpart
applies to record retention periods
under contracts that are subject to
Chapter 137, Title 10, U.S.C., and the
Federal Property and Administrative
Services Act of 1949, as amended, 40
U.S.C. 471 et seq.
[48 FR 42113, Sept. 19, 1983, as amended at 50
FR 1727, Jan. 11, 1985; 50 FR 52429, Dec. 23,
1985; 60 FR 42650, Aug. 16, 1995; 60 FR 48211,
Sept. 18, 1995]

4.703 Policy.
(a) Except as stated in 4.703(b), contractors shall make available records,
which includes books, documents, accounting procedures and practices, and
other data, regardless of type and regardless of whether such items are in
written form, in the form of computer
data, or in any other form, and other
supporting evidence to satisfy contract
negotiation, administration, and audit
requirements of the contracting agen-

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(3) The contractor or subcontractor
retains the original records for a minimum of one year after imaging to permit periodic validation of the imaging
systems.
(d) If the information described in
paragraph (a) of this section is maintained on a computer, contractors shall
retain the computer data on a reliable
medium for the time periods prescribed. Contractors may transfer computer data in machine readable form
from one reliable computer medium to
another. Contractors’ computer data
retention and transfer procedures shall
maintain the integrity, reliability, and
security of the original computer data.
Contractors shall also retain an audit
trail describing the data transfer. For
the record retention time periods prescribed, contractors shall not destroy,
discard, delete, or write over such computer data.

4.705–3 for the periods designated, provided retention is required under 4.702.
Records are identified in this subpart
in terms of their purpose or use and
not by specific name or form number.
Although the descriptive identifications may not conform to normal contractor usage or filing practices, these
identifications apply to all contractor
records that come within the description.
4.705–1 Financial and cost accounting
records.
(a) Accounts receivable invoices, adjustments to the accounts, invoice registers, carrier freight bills, shipping orders, and other documents which detail
the material or services billed on the
related invoices: Retain 4 years.
(b) Material, work order, or service
order files, consisting of purchase requisitions or purchase orders for material or services, or orders for transfer
of material or supplies: Retain 4 years.
(c) Cash advance recapitulations, prepared as posting entries to accounts receivable ledgers for amounts of expense
vouchers prepared for employees’ travel and related expenses: Retain 4 years.
(d) Paid, canceled, and voided checks,
other than those issued for the payment of salary and wages: Retain 4
years.
(e) Accounts payable records to support disbursements of funds for materials, equipment, supplies, and services,
containing originals or copies of the
following and related documents: remittance advices and statements, vendors’ invoices, invoice audits and distribution slips, receiving and inspection reports or comparable certifications of receipt and inspection of material or services, and debit and credit
memoranda: Retain 4 years.
(f) Labor cost distribution cards or
equivalent documents: Retain 2 years.
(g) Petty cash records showing description of expenditures, to whom
paid, name of person authorizing payment, and date, including copies of
vouchers and other supporting documents: Retain 2 years.

[48 FR 42113, Sept. 19, 1983, as amended at 51
FR 2649, Jan. 17, 1986; 53 FR 43388, Oct. 26,
1988; 54 FR 48982, Nov. 28, 1989; 59 FR 67015,
Dec. 28, 1994; 60 FR 42650, Aug. 16, 1995]

4.704 Calculation of retention periods.
(a) The retention periods in 4.705 are
calculated from the end of the contractor’s fiscal year in which an entry is
made charging or allocating a cost to a
Government contract or subcontract. If
a specific record contains a series of
entries, the retention period is calculated from the end of the contractor’s fiscal year in which the final
entry is made. The contractor should
cut off the records in annual blocks
and retain them for block disposal
under the prescribed retention periods.
(b) When records generated during a
prior contract are relied upon by a contractor for cost or pricing data in negotiating a succeeding contract, the prescribed periods shall run from the date
of the succeeding contract.
(c) If two or more of the record categories described in 4.705 are interfiled
and screening for disposal is not practical, the contractor shall retain the
entire record series for the longest period prescribed for any category of
records.

4.705–2

4.705 Specific retention periods.
The contractor shall retain the
records identified in 4.705–1 through

Pay administration records.

(a) Payroll sheets, registers, or their
equivalent, of salaries and wages paid

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48 CFR Ch. 1 (10–1–96 Edition)

to individual employees for each payroll period; change slips; and tax withholding statements: Retain 4 years.
(b) Clock cards or other time and attendance cards: Retain 2 years.
(c) Paid checks, receipts for wages
paid in cash, or other evidence of payments for services rendered by employees: Retain 2 years.
4.705–3 Acquisition
records.

and

documentation requirements in 13.106–
2(d).)
[60 FR 34746, July 3, 1995, as amended at 61
FR 39191, July 26, 1996]

4.801

General.

(a) The head of each office performing contracting, contract administration, or paying functions shall establish files containing the records of all
contractual actions.
(b) The documentation in the files
(see 4.803) shall be sufficient to constitute a complete history of the transaction for the purpose of—
(1) Providing a complete background
as a basis for informed decisions at
each step in the acquisition process;
(2) Supporting actions taken;
(3) Providing information for reviews
and investigations; and
(4) Furnishing essential facts in the
event of litigation or congressional inquiries.
(c) The files to be established include—
(1) A file for cancelled solicitations;
(2) A file for each contract; and
(3) A file such as a contractor general
file, containing documents relating—
for example—to (i) no specific contract,
(ii) more than one contract, or (iii) the
contractor in a general way (e.g., contractor’s management systems, past
performance, or capabilities).

supply

(a) Store requisitions for materials,
supplies, equipment, and services: Retain 2 years.
(b) Work orders for maintenance and
other services: Retain 4 years.
(c) Equipment records, consisting of
equipment usage and status reports
and equipment repair orders: Retain 4
years.
(d) Expendable property records, reflecting accountability for the receipt
and use of material in the performance
of a contract: Retain 4 years.
(e) Receiving and inspection report
records, consisting of reports reflecting
receipt and inspection of supplies,
equipment, and materials: Retain 4
years.
(f) Purchase order files for supplies,
equipment, material, or services used
in the performance of a contract; supporting documentation and backup
files including, but not limited to, invoices, and memoranda; e.g., memoranda of negotiations showing the principal elements of subcontract price negotiations (see 52.244–1 and 52.244–2):
Retain 4 years.
(g) Production records of quality control, reliability, and inspection: Retain
4 years.

4.802

Contract files.

(a) A contract file should generally
consist of—
(1) The contracting office contract
file, which shall document the basis for
the acquisition and the award, the assignment of contract administration
(including payment responsibilities),
and any subsequent actions taken by
the contracting office;
(2) The contract administration office contract file, which shall document actions reflecting the basis for
and the performance of contract administration responsibilities; and
(3) The paying office contract file,
which shall document actions prerequisite to, substantiating, and reflecting contract payments.
(b) Normally, each file should be kept
separately; however, if appropriate,
any or all of the files may be combined;

4.706 [Reserved]

Subpart 4.8—Government
Contract Files
4.800 Scope of subpart.
This subpart prescribes requirements
for establishing, maintaining, and disposing of contract files for all contractual actions. The application of this
subpart to contracts awarded using the
simplified acquisition procedures covered by part 13 is optional. (See also

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e.g., if all functions or any combination of the functions are performed by
the same office.
(c) Files shall be maintained at organizational levels that shall ensure—
(1) Effective documentation of contract actions;
(2) Ready accessibility to principal
users;
(3) Minimal establishment of duplicate and working files;
(4) The safeguarding of classified documents; and
(5) Conformance with agency regulations for file location and maintenance.
(d) If the contract files or file segments are decentralized (e.g., by type
or function) to various organizational
elements or to other outside offices, responsibility for their maintenance
shall be assigned. A central control
and, if needed, a locator system should
be established to ensure the ability to
locate promptly any contract files.
(e) Contents of contract files that are
proprietary or source selection information as defined in 3.104–4 shall be
protected from disclosure to unauthorized persons (see 3.104–5).
(f) Agencies may retain contract files
in any medium (paper, electronic,
microfilm, etc.) or any combination of
media, as long as the requirements of
this subpart are satisfied.

(6) Set-aside decision.
(7) Government estimate of contract
price.
(8) A copy of the solicitation and all
amendments thereto.
(9) Security requirements and evidence of required clearances.
(10) A copy of each offer or quotation,
the related abstract, and records of determinations concerning late offers or
quotations. Unsuccessful offers or
quotations may be maintained separately, if cross-referenced to the contract file. The only portions of the unsuccessful offer or quotation that need
be retained are—
(i) Completed solicitation sections A,
B, and K;
(ii) Technical and management proposals;
(iii) Cost/price proposals;
(iv) Any other pages of the solicitation that the offeror or quoter has altered or annotated.
(11) Contractor’s certifications and
representatives.
(12) Preaward survey reports or reference to previous preaward survey reports relied upon.
(13) Source selection documentation.
(14) Contracting officer’s determination of the contractor’s responsibility.
(15) Small Business Administration
Certificate of Competency.
(16) Records of contractor’s compliance with labor policies including
equal employment opportunity policies.
(17) Cost or pricing data and Certificates of Current Cost or Pricing Data
or a required justification for waiver,
or information other than cost or pricing data.
(18) Packaging and transportation
data.
(19) Cost or price analysis.
(20) Audit reports or reasons for
waiver.
(21) Record of negotiation.
(22) Justification for type of contract.
(23) Authority for deviations from
this regulation, statutory requirements, or other restrictions.
(24) Required approvals of award and
evidence of legal review.
(25) Notice of award.

[48 FR 42113, Sept. 19, 1983, as amended at 54
FR 20496, May 11, 1989; 55 FR 36794, Sept. 6,
1990; 59 FR 67016, Dec. 28, 1994]

4.803 Contents of contract files.
The following are examples of the
records normally contained, if applicable, in contract files:
(a) Contracting office contract file. (1)
Purchase request, acquisition planning
information, and other presolicitation
documents.
(2) Justifications and approvals, determinations and findings, and associated documents.
(3) Evidence of availability of funds.
(4) Synopsis of proposed acquisition
as published in the Commerce Business
Daily or reference thereto.
(5) The list of sources solicited, and a
list of any firms or persons whose requests for copies of the solicitation
were denied, together with the reasons
for denial.

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48 CFR Ch. 1 (10–1–96 Edition)

(26) The original of (i) the signed contract or award, (ii) all contract modifications, and (iii) documents supporting modifications executed by the contracting office.
(27) Synopsis of award or reference
thereto.
(28) Notice to unsuccessful quoters or
offerors and record of any debriefing.
(29) Acquisition management reports
(see subpart 4.6).
(30) Bid, performance, payment, or
other bond documents, or a reference
thereto, and notices to sureties.
(31) Report of postaward conference.
(32) Notice to proceed, stop orders,
and any overtime premium approvals
granted at the time of award.
(33) Documents requesting and authorizing modification in the normal
assignment of contract administration
functions and responsibility.
(34) Approvals or disapprovals of requests for waivers or deviations from
contract requirements.
(35) Rejected engineering change proposals. These proposals may be filed
separately for early disposal (see
4.805(h)).
(36) Royalty, invention, and copyright reports (including invention disclosures) or reference thereto.
(37) Contract completion documents.
(38) Documentation regarding termination actions for which the contracting office is responsible.
(39) Cross-references to pertinent
documents that are filed elsewhere.
(40) Any additional documents on
which action was taken or that reflect
actions by the contracting office pertinent to the contract.
(41) A current chronological list identifying the awarding and successor contracting officers, with inclusive dates
of responsibility.
(42) All certifications required by
3.104–9(e)(1).
(43) For contracts and contract modifications in excess of $100,000, a record
of all persons or classes of persons authorized to have access to proprietary
or source selection information and, to
the maximum extent practicable, the
names of all individuals within the
class.
(b) Contract administration office contract file. (1) Copy of the contract and
all modifications, together with offi-

cial record copies of supporting documents executed by the contract administration office.
(2) Any document modifying the normal assignment of contract administration functions and responsibility.
(3) Security requirements.
(4) Cost or pricing data, Certificates
of Current Cost or Pricing Data, or information other than cost or pricing
data; cost or price analysis; and other
documentation supporting contractual
actions executed by the contract administration office.
(5) Preaward survey information.
(6) Purchasing system information.
(7) Consent to subcontract or purchase.
(8) Performance and payment bonds
and surety information.
(9) Postaward conference records.
(10) Orders issued under the contract.
(11) Notice to proceed and stop orders.
(12) Insurance policies or certificates
of insurance or references to them.
(13) Documents supporting advance
or progress payments.
(14) Progressing, expediting, and production surveillance records.
(15) Quality assurance records.
(16) Property administration records.
(17) Documentation regarding termination actions for which the contract
administration office is responsible.
(18) Cross reference to other pertinent documents that are filed elsewhere.
(19) Any additional documents on
which action was taken or that reflect
actions by the contract administration
office pertinent to the contract.
(20) Contract completion documents.
(c) Paying office contract file. (1) Copy
of the contract and any modifications.
(2) Bills, invoices, vouchers, and supporting documents.
(3) Record of payments or receipts.
(4) Other pertinent documents.
[48 FR 42113, Sept. 19, 1983, as amended at 50
FR 1727, Jan. 11, 1985; 50 FR 52429, Dec. 23,
1985; 54 FR 5054, Jan. 31, 1989; 55 FR 36794,
Sept. 6, 1990; 60 FR 48211, Sept. 18, 1995; 61 FR
39188, July 26, 1996]

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4.804–5

4.804 Closeout of contract files.

unless otherwise specified by agency
regulation.
(b) All other contract files shall be
closed as soon as practicable after the
contracting officer receives a contract
completion statement from the contract administration office. The contracting officer shall ensure that all
contractual actions required have been
completed and shall prepare a statement to that effect. This statement is
authority to close the contract file and
shall be made a part of the official contract file.

4.804–1 Closeout by the office administering the contract.
(a) Except as provided in paragraph
(c) below, time standards for closing
out contract files are as follows:
(1) Files for contracts using simplified acquisition procedures should be
considered closed when the contracting
officer receives evidence of receipt of
property and final payment, unless
otherwise specified by agency regulations.
(2) Files for firm-fixed-price contracts, other than those using simplified acquisition procedures, should
be closed within 6 months after the
date on which the contracting officer
receives evidence of physical completion.
(3) Files for contracts requiring settlement of indirect cost rates should be
closed within 36 months of the month
in which the contracting officer receives evidence of physical completion.
(4) Files for all other contracts
should be closed within 20 months of
the month in which the contracting officer receives evidence of physical completion.
(b) When closing out the contract
files at 4.804–1(a)(2), (3), and (4), the
contracting officer shall use the closeout procedures at 4.804–5. However,
these closeout actions may be modified
to reflect the extent of administration
that has been performed. Quick closeout procedures (see 42.708) should be
used, when appropriate, to reduce administrative costs and to enable
deobligation of excess funds.
(c) A contract file shall not be closed
if (1) the contract is in litigation or
under appeal, or (2) in the case of a termination, all termination actions have
not been completed.

[48 FR 42113, Sept. 19, 1983, as amended at 60
FR 34746, July 3, 1995]

4.804–3 Closeout of paying office contract files.
The paying office shall close the contract file upon issuance of the final
payment voucher.
4.804–4 Physically
completed
contracts.
(a) Except as provided in paragraph
(b) below, a contract is considered to be
physically completed when—
(1)(i) The contractor has completed
the required deliveries and the Government has inspected and accepted the
supplies;
(ii) The contractor has performed all
services and the Government has accepted these services; and
(iii) All option provisions, if any,
have expired; or
(2) The Government has given the
contractor a notice of complete contract termination.
(b) Facilities contracts and rental,
use, and storage agreements are considered to be physically completed
when—
(1) The Government has given the
contractor a notice of complete contract termination; or
(2) The contract period has expired.

[48 FR 42113, Sept. 19, 1983, as amended at 54
FR 34752, Aug. 21, 1989; 60 FR 34746, July 3,
1995]

4.804–5 Detailed procedures for closing out contract files.
(a) The office administering the contract is responsible for initiating (automated or manual) administrative
closeout of the contract after receiving
evidence of its physical completion. At
the outset of this process, an initial
contract funds status review shall be
accomplished and, where appropriate,

4.804–2 Closeout of the contracting office files if another office administers the contract.
(a) Contract files for contracts using
simplified
acquisition
procedures
should be considered closed when the
contracting officer receives evidence of
receipt of property and final payment,

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48 CFR Ch. 1 (10–1–96 Edition)

excess funds identified to the contracting office. When complete, the administrative closeout procedures shall ensure that—
(1) Disposition of classified material
is completed;
(2) Final patent report is cleared;
(3) Final royalty report is cleared;
(4) There is no outstanding value engineering change proposal;
(5) Plant clearance report is received;
(6) Property clearance is received;
(7) All interim or disallowed costs are
settled;
(8) Price revision is completed;
(9) Subcontracts are settled by the
prime contractor;
(10) Prior year indirect cost rates are
settled;
(11) Termination docket is completed;
(12) Contract audit is completed;
(13) Contractor’s closing statement is
completed;
(14) Contractor’s final invoice has
been submitted; and
(15) Contract funds review is completed and deobligation of any excess
funds is recommended.
(b) When the actions in paragraph (a)
above have been verified, the contracting officer administering the contract
shall ensure that a contract completion statement, containing the following information, is prepared:
(1) Contract administration office
name and address (if different from the
contracting office).
(2) Contracting office name and address.
(3) Contract number.
(4) Last modification number.
(5) Last call or order number.
(6) Contractor name and address.
(7) Dollar amount of excess funds, if
any.
(8) Voucher number and date, if final
payment has been made.
(9) Invoice number and date, if the
final approved invoice has been forwarded to a disbursing office of another
agency or activity and the status of
the payment is unknown.
(10) A statement that all required
contract administration actions have
been fully and satisfactorily accomplished.
(11) Name and signature of the contracting officer.

(12) Date.
(c) When the statement is completed,
the contracting officer shall ensure
that—
(1) The signed original is placed in
the contracting office contract file (or
forwarded to the contracting office for
placement in the files if the contract
administration office is different from
the contracting office); and
(2) A signed copy is placed in the appropriate contract administration file
if administration is performed by a
contract administration office.
[48 FR 42113, Sept. 19, 1983, as amended at 54
FR 34752, Aug. 21, 1989]

4.805 Storage, handling, and disposal
of contract files.
(a) Agencies shall prescribe procedures for the handling, storing, and disposing of contract files. Such procedures shall take into account documents held in other than paper format,
such as microfilm and various electronic media. The original medium on
which the document was created may
be changed to facilitate storage as long
as the requirements of part 4, law and
other regulations are satisfied. The
process used to create and store
records must record and reproduce the
original document, including signatures and other written and graphic
images completely, accurately, and
clearly. Data transfer, storage, and retrieval procedures shall protect the
original data from alteration. Unless
law or other regulations require signed
originals to be kept, they may be destroyed after the record copies on alternate media and copies reproduced
from the record copy are verified to be
accurate, complete and clear representations of the originals. Agency procedures for contract file disposal shall include provisions that the documents
specified in paragraph (b) of this section shall not be destroyed before the
times indicated. When original documents have been converted to alternate
media for storage, the requirements in
paragraph (b) of this section shall
apply to the record copies on the alternate media instead of the original documents.
(b) If administrative records are
mixed with program records and cannot be economically segregated, the

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entire file should be kept for the period
of time approved for the program
records. Similarly, if documents, specified below, are part of a subject or case
file which documents activities different from those specified below, they
should be treated in the same manner
as the files of which they are a part.
Document

Retention Period

(1) Records pertaining to exceptions or protests, claims
for or against the United
States, investigations,
cases pending or in litigation, or similar matters.

Until final clearance or settlement, or until the retention
period otherwise specified
for the document in paragraphs (b)(2) through (13)
below is completed, whichever is later.
6 years and 3 months after
initial payment.

(2) Signed originals of construction contracts over
$2,000 and all other contracts over $25,000.
(3) Signed originals of justifications and approvals
and determinations and
findings required by part 6,
and copies of supporting
documents and data.
(4) Signed originals of construction contracts of
$2,000 or less and all other
contracts of $25,000 or
less.
(5) Unsuccessful offers or
quotations that pertain to
contracts using simplified
acquisition procedures.

(6) Contract status (progressing), expediting, and
production surveillance
records.
(7) Rejected engineering
change proposals.
(8) Labor compliance
records, including equal
employment opportunity
records.
(9) Documents pertaining
generally to the contractor
as described at 4.801(c)(3).
(10) Records or documents
other than those in paragraphs 4.805(b) (1)–(9) of
this section pertaining to
contracts using simplified
acquisition procedures.
(11) Records or documents
other than those in paragraphs 4.805(b) (1)–(10) of
this section pertaining to
contracts not using simplified acquisition procedures.
(12) Files for cancelled solicitations (see 4.801(c)(1)).
(13) Solicited and unsolicited
unsuccessful offers and
quotations above the simplified acquisition threshold:

Document
(i)

When filed separately
from contract case files.
(ii) When filed with contract case files.

Retention Period
Until contract completion
date.
6 years and 3 months after
final payment.

(c) Documents listed in paragraph
(b)(1) under ‘‘Document’’ shall not be
destroyed until final clearance or settlement.
[48 FR 42113, Sept. 19, 1983, as amended at 50
FR 1727, Jan. 11, 1985; 50 FR 52429, Dec. 23,
1985; 54 FR 5054, Jan. 31, 1989; 57 FR 60573,
Dec. 21, 1992; 59 FR 67016, Dec. 28, 1994; 60 FR
34746, July 3, 1995; 61 FR 39190, July 26, 1996]

Subpart 4.9—Information Reporting to the Internal Revenue
Service

6 years and 3 months after
final payment.

SOURCE: 57 FR 44260, Sept. 24, 1992, unless
otherwise noted.

4.900

3 years after final payment.

Scope of subpart.

This subpart provides policies and
procedures applicable to reporting contract and payment information to the
Internal Revenue Service (IRS).

Retain 1 year after date of
award or until final payment, whichever is later;
but if the contracting officer determines that the
files have future value to
the Government, retain as
long as advisable.
6 months after final payment.

4.901

Definitions.

Common parent, as used in this subpart, means that corporate entity that
owns or controls an affiliated group of
corporations that files its Federal income tax returns on a consolidated
basis, and of which the offeror is a
member.
Corporate status, as used in this subpart, means a designation as to whether the offeror is a corporate entity, an
unincorporated entity (e.g., sole proprietorship or partnership), or a corporation providing medical and health care
services.
Taxpayer Identification Number (TIN),
as used in this subpart, means the
number required by the IRS to be used
by the offeror in reporting income tax
and other returns.

6 months after final payment.
3 years after final payment.

Until superseded or obsolete.

1 year after final payment.

6 years and 3 months after
final payment.

4.902

Contract information.

(a) 26 U.S.C. 6050M, as implemented
in 26 CFR, requires heads of Federal executive agencies to report certain information to the IRS.
(b)(1) The required information applies to contract modifications—

5 years after cancellation.

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48 CFR Ch. 1 (10–1–96 Edition)

(i) Increasing the amount of a contract awarded before January 1, 1989,
by $50,000 or more; and
(ii) Entered into on or after April 1,
1990.
(2) The reporting requirement also
applies to certain contracts and modifications thereto in excess of $25,000 entered into on or after January 1, 1989.
(c) The information to report is—
(1) Name, address, and the Taxpayer
Identification Number (TIN) of contractor;
(2) Name and TIN of common parent
(if any);
(3) Date of the contract action;
(4) Amount obligated on the contract
action; and
(5) Estimated contract completion
date.
(d) Transmit the information to the
IRS through the Federal Procurement
Data System (see subpart 4.6 and implementing instructions).

payments for such services are not exempted.
(2) Payments for bills for merchandise, telegrams, telephone, freight,
storage, and similar charges.
(3) Payments of income required to
be reported on an IRS Form W–2 (e.g.,
contracts for personal services).
(4) Payments to a hospital or extended care facility described in 26 CFR
501(c)(3) that is exempt from taxation
under 26 CFR 501(a).
(5) Payments to a hospital or extended care facility owned and operated by the United States, a state, the
District of Columbia, a possession of
the United States, or a political subdivision, agency, or instrumentality of
any of the foregoing.
(6) Payments for any contract with a
state, the District of Columbia, a possession of the United States, or a political subdivision, agency, or instrumentality of any of the foregoing.
(c) The following information is required to provide reports to the IRS:
(1) Name, address, and TIN of contractor.
(2) Corporate status (see 4.901).
(d) Transmit to paying offices the information specified in 4.203.

4.903 Payment information.
(a) 26 U.S.C. 6041 and 6041A, as implemented in 26 CFR, in part, require
payors, including Federal Government
agencies, to report to the IRS payments made to certain contractors.
(b) The following payments are exempt from this reporting requirement:
(1) Payments to corporations. However, payments to corporations providing medical and health care services or
engaged in the billing and collecting of

4.904

Solicitation provision.

The contracting officer shall insert
the provision at 52.204–3, Taxpayer
Identification, in solicitations, unless
the TIN of each offeror has previously
been obtained and is known.

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