Federal Acquisition Regulation; Acquisition of Commercial Items

DEPARTMENT OF DEFENSE

48 CFR Parts 2, 3, 5, 6, 7, 8, 9, 10, 11, 12, 14, 15, 16, 22, 23,

31, 36, 42, 44, 46, 47, 49, 52, and 53

[FAC 90-32; FAR Case 94-790; Item III]

RIN 9000-AG38

Federal Acquisition Regulation; Acquisition of Commercial Items

AGENCIES: Department of Defense (DOD), General Services Administration

(GSA), and National Aeronautics and Space Administration (NASA).

ACTION: Final rule.

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SUMMARY: This final rule is issued pursuant to the Federal Acquisition

Streamlining Act of 1994 to implement the revised statutory authorities

in Title VIII of the Act for the acquisition of commercial items and

components by Federal Government agencies as well as contractors and

subcontractors at all levels. This regulatory action was subject to

Office of Management and Budget review under Executive Order 12866,

dated September 30, 1993.

EFFECTIVE DATE: October 1, 1995.

Applicability date: For solicitations issued on or after October 1,

1995; use of the new policies, provisions and clauses is optional for

solicitations issued before December 1, 1995, and mandatory for

solicitations issued after December 1, 1995.

FOR FURTHER INFORMATION CONTACT: Colonel Laurence M. Trowel, Commercial

Item Team Leader, at (703) 695-3858 in reference to this FAR case. For

general information, contact the FAR Secretariat, Room 4037, GS

Building, Washington, DC 20405 (202) 501-4755. Please cite FAC 90-32,

FAR case 94-790.

SUPPLEMENTARY INFORMATION:

A. Background

The Federal Acquisition Streamlining Act of 1994, Pub. L. 103-355,

provides authorities that streamline the acquisition process and

minimize burdensome Government-unique requirements. This notice

announces revisions developed under FAR case 94-790, Acquisition of

Commercial Items, which encourage the acquisition of commercial end

items and components by Federal Government agencies as well as

contractors and subcontractors at all levels. The most significant

revisions are in the following FAR parts:

Part 2 has been amended to incorporated the definitions of

``commercial item,'' ``component,'' ``commercial component'' and

``nondevelopmental item'' from the Act with only minor revisions for

clarification. The clause at 52.202-1, Definitions, has been similarly

revised to make the definitions available to prime and subcontractors.

Part 10 has been completely revised to address market research. It

contains some language taken from the current FAR Part 11. This new

part establishes the requirement for market research as the first step

in the acquisition process. Market research is an essential element in

the later steps of describing the agency's need, developing the overall

acquisition strategy and identifying terms and conditions unique to the

item being acquired.

Part 11 has been completely revised to address the process of

describing agency needs. It contains some of the language on

specifications and standards formerly found in FAR Part 10, but takes a

more streamlined approach. In addition, the revised Part 11 establishes

the Government's order of precedence for requirements documents and

addresses the concept of market acceptance contained in the Act. The

revised Part 11 also contains coverage on Delivery or Performance

Schedules, Liquidated Damages, Priorities and Allocations, and

Variations in Quantity taken from the current Part 12 with only minor

editorial revisions. The current Part 12 coverage on Suspension of

Work, Stop Work Orders, and Government Delay of Work has been moved to

Subpart 42.13 with only minor editorial revisions.

Part 12 has been completely revised to address the acquisition of

commercial items. The Team created this entirely new coverage to

address in one FAR part the policies for the acquisition of commercial

items.

--Subpart 12.1 states that the policies in the revised Part 12 are

applicable to all acquisitions of commercial items above the micro-

purchase threshold. The requirements of other parts of the FAR apply to

commercial items to the extent they are not inconsistent with Part 12;

--Subpart 12.2 identifies special requirements for the acquisition of

commercial items. These requirements generally reflect the requirements

of Title VIII.

--Subpart 12.3 establishes standard provisions and clauses for use in

the acquisition of commercial items. This approach is essential to meet

the requirements of the statute and provide contracting officers and

industry with an easy to use, simplified method for acquiring

commercial items. However, it is essential that contracting officers be

allowed to tailor solicitations and contracts to meet the needs of the

particular acquisition and the marketplace for that item. Subpart 12.3

gives contracting officers broad authority to tailor solicitations and

contracts, a practice itself that is consistent with commercial

practices. The Act requires that some limitations be placed on this

authority to tailor, and that has also been accommodated in this

subpart.

--A new form, the Standard Form 1449, Solicitation/Contract/Order for

Commercial Items, was established.

[[Page 48232]]

The SF 1449 combines features of the SF 33, Solicitation, Offer and

Award; the SF 1447, Solicitation/Contract; and the DD 1155, Order for

Supplies and Services. The most significant element is the addition of

acceptance blocks at the bottom of the form (patterned after the DD

Form 1155). This will allow suppliers of commercial items to utilize

the SF 1449 to document receipt of the supplies or services by the

government avoiding the need for preparation of separate receipt/

acceptance forms.

--Subpart 12.5 identifies the applicability of certain laws to the

acquisition of commercial items. This subpart is intended to meet the

requirements of Section 8003(a) of the Act which requires that the FAR

contain a list of laws determined to be inapplicable to prime contracts

for commercial items.

--Section 12.503 contains the list of laws determined to be not

applicable to executive agency prime contracts for acquisition of

commercial items. This list has been expanded to also include those

laws that have been revised in some manner to modify their

applicability to commercial items. In each instance, the specific

prescriptive language elsewhere in the FAR has been revised to reflect

this modified applicability. FAR 12.503 only includes those laws that

apply to prime contracts awarded by both DOD and civilian agencies.

Agency unique laws determined to be not applicable to prime contracts

are not addressed in this rule and may be addressed separately by the

respective agencies.

--Section 12.504 contains the list of laws determined to be not

applicable to subcontracts for commercial items. This list has been

expanded to also include those laws that have been revised in some

manner to modify their applicability to subcontracts for commercial

items.

--Subpart 12.6 identifies two streamlined procedures for the evaluation

and solicitation of contracts for commercial items. These procedures

may be used at the discretion of the contracting officer.

Part 52 has been amended to include several new provisions and

clauses to be inserted in all solicitations and contracts for the

acquisition of commercial items:

--Section 52.212-1, Instructions to Offerors--Commercial Items,

contains solicitation instructions unique to Government procurement and

is based upon existing FAR language. The information has been

simplified and tailored to meet the requirements of commercial items.

For the most part, the simplified paragraphs in the new provision do

not contain new concepts.

--Section 52.212-2, Evaluation--Commercial Items, contains evaluation

information that has been simplified and tailored to meet the

requirements of commercial items. Again, this provision does not

contain new concepts and is generally based upon provisions prescribed

in Parts 14 and 15. This provision may be used at the discretion of the

contracting officer. It requires the contracting officer to establish

specific evaluation factors and the relative order of importance for

each acquisition.

--Section 52.212-3, Offeror Representations and Certifications--

Commercial Items, includes the certifications and representations

required to comply with laws or Executive orders. Instead of using the

numerous certifications contained in the FAR, the Team drafted a single

provision containing all the requirements that may apply to the

acquisition of commercial items.

--Section 52.212-4, Contract Terms and Conditions--Commercial Items,

contains the terms and conditions the Team believes are consistent with

customary commercial practice by addressing general areas that previous

studies have identified as the ``core'' areas covered by commercial

contracts. Several concepts included in the clause at 52.212-4

represent significant changes from standard Government practices to

commercial-like practices.

--Section 52.212-5, Contract Terms and Conditions Required to Implement

Statutes or Executive orders--Commercial Items, implements provisions

of law or executive orders applicable to Government acquisitions of

commercial items or commercial components. The Team believes the clause

at 52.212-5 represents the minimum number of clauses required to

implement statutes and Executive orders. Certain clauses may apply

depending upon the circumstances; the contracting officer will indicate

which of these clauses apply for the specific acquisition. In addition,

this clause provides that the contractor is not required to include any

FAR provision or clause in its subcontracts other than those listed in

the clause as applying to subcontracts for commercial items.

--Section 52.244-6, Subcontracts for Commercial Items and Commercial

Components, implements the preference for the acquisition of commercial

items or nondevelopmental items as components of items to be supplied

under Federal contracts. This clause will be inserted in all

solicitations and contracts for supplies and services other than

commercial items. It provides that the contractor is not required to

include in its subcontracts for commercial items any FAR provision or

clause, other than those listed in the clause.

B. Regulatory Flexibility Act

This final rule will have a significant economic impact on a

substantial number of small entities within the meaning of the

Regulatory Flexibility Act, 5 U.S.C. 601, et seq. This rule will have

this impact as a result of the following:

(1) It establishes a much broader definition of ``commercial

items'' compared to the language of Part 11, it includes certain

modifications to existing items, and includes certain commercial

services. In all these cases, small business is very likely to benefit

from this expanded definition;

(2) It establishes a requirement for conducting market research in

certain circumstances before issuing solicitations which should benefit

small business by ensuring the contracting activity has conducted

sufficient research to be aware of the availability of commercial items

and the practices used in the commercial marketplace to acquire them.

The rule also cautions contracting officers not to request potential

sources to submit more than the minimum information necessary as a part

of market research.

(3) It establishes a preference for the acquisition of commercial

items thereby enabling more small businesses that offer commercial

items to participate in Government acquisition;

(4) It establishes a preference for stating Government requirements

in terms of functions to be performed, performance required, or

essential physical characteristics rather than detailed, Government-

unique design specifications thereby allowing a broader range of

products of small businesses to satisfy the Government need;

(5) It establishes the Government order of precedence for

requirements documents emphasizing performance-oriented documents and

nongovernment standards rather than Federal/Military-unique standards

thereby allowing a broader range of small businesses to participate in

Government acquisitions;

[[Page 48233]]

(6) It allows contracting officers the flexibility to use either

the streamlined solicitation procedure in the revised Subpart 12.6 for

acquiring commercial items, or the existing procedures in Parts 13, 14

or 15, as applicable, if they are more streamlined and beneficial,

thereby allowing maximum flexibility for contracting with small

businesses;

(7) It allows the use of the streamlined terms and conditions for

acquiring commercial items for every acquisition above the

micropurchase threshold thereby allowing the maximum number of small

businesses to benefit from these procedures;

(8) It requires, except in unique circumstances, that the

Government rely on the contractor's quality assurance system thereby

allowing small businesses to utilize their own quality system when

selling commercial items rather than a Government-specified system;

(9) It requires that, when acquiring commercial items, the

contracting officer use the solicitation provisions and contract

clauses specifically established for acquiring commercial items. The

contracting officer may tailor those provisions and clauses when the

customary practices in the market dictate the use of other terms and

conditions or when a waiver is approved; and

(10) By significantly limiting the flow down of Government-unique

terms and conditions to subcontractors at all levels thereby minimizing

the burden on a significant number of small businesses.

A Final Regulatory Flexibility Analysis (FRFA) has been prepared

and will be provided to the Chief Counsel for Advocacy for the Small

Business Administration. A copy of the FRFA may be obtained from the

FAR Secretariat.

C. Paperwork Reduction Act

The Paperwork Reduction Act (Pub. L. 96-511) is deemed to apply

because the final rule contains information collection requirements.

Accordingly, a request for approval of a new information collection

requirement concerning Acquisition of Commercial Items was submitted to

the Office of Management and Budget and approved through OMB Control

No. 9000-0136. Public comments concerning this request were invited in

a Federal Register notice at 60 FR 11219, March 1, 1995.

D. Public Comments

Title VIII of the Act makes significant statutory revisions to

facilitate the acquisition of commercial items and components by

Federal Government agencies, as well as contractors and subcontractors

at all levels. This final rule incorporates revisions to two proposed

rules resulting from a public meeting held on April 3, 1995, and

written comments received in response to publication of the two

proposed rules in the Federal Register. The first proposed rule was

published in the Federal Register on March 1, 1995 (60 FR 11198), under

FAR case 94-790. That proposed rule made changes throughout the FAR to

incorporate provisions of Title VIII. The second proposed rule was

published in the Federal Register on March 22, 1995 (60 FR 15220),

under FAR case 94-791. That case contained the list of laws required by

Section 8003(a) of the Act that were determined to be inapplicable to

Executive agency contracts and subcontracts for commercial items. FAR

case 94-791 also contained the list of contract clauses determined to

be applicable to subcontracts for the acquisition of commercial items.

On April 4, 1995, a correction to the proposed rule under FAR case 94-

791 was published in the Federal Register (60 FR 17184), to correct

section 52.212-5 to include access to contractor records by the

Comptroller General of the United States for contracts awarded using

other than sealed bidding in excess of the simplified acquisition

threshold.

A total of 559 written comments were received on the proposed rule

from 60 commentors. Each comment was analyzed by the Commercial Items

Drafting Team and, where appropriate, changes were made in the proposed

FAR language as reflected in this final rule. The comments largely fell

in the following general areas:

1. Definitions of Commercial Items and Nondevelopmental Item

The language describing a ``minor'' modification was revised to

clarify the intent. The revised language was drawn from a related

Congressional report. The definition of nondevelopmental items was also

clarified to alleviate confusion regarding what commentors identified

as the ``circular logic'' of commercial items being a subset of

nondevelopmental items, and certain nondevelopmental items being a

subset of commercial items. The revision clarifies the distinction

between commercial items and nondevelopmental items. Several commentors

asked that specific examples of items that would be considered

``commercial'' be included in the definition. The Team rejected this

suggestion citing the impossibility of developing examples that would

adequately describe the range of commercial items the government might

buy while not unnecessarily limiting the breadth of the definition.

2. Decision to Utilize Commercial Items Authority

Several commentors expressed confusion over how the Government

would decide when the commercial items authorities in Part 12 could be

used. FAR 10.002 was revised to include language explaining the

decision process that would follow the completion of market research.

3. Market Acceptance

Several commentors were concerned with the lack of sufficient

guidance on market acceptance. Several changes were made in an effort

to balance the concerns expressed by the public and those expressed by

Government agencies. The final rule clarifies the circumstances where

market acceptance may be appropriate, cautions that it is not

appropriate when new or evolving commercial items may meet the agency's

needs, and contains guidance on developing criteria for demonstrating

market acceptance.

4. Relationship of Part 12 to Other FAR Parts

Several commentors expressed confusion over the relationship of

Part 12 to other Parts, especially Part 13, Simplified Acquisition

Procedures; Part 14, Sealed Bidding; and Part 15, Contracting By

Negotiation. FAR 12.203 was revised to clarify that Part 12 contains

unique policies for the acquisition of commercial items. These unique

policies are intended to be used in conjunction with the existing

procedures contained in Parts 13, 14, and 15 for the solicitation,

evaluation, and award of contracts, purchase orders and other

instruments. Part 12 will take precedence over other FAR parts only

where the policies in those parts are inconsistent.

5. Use of the Standard Form (SF) 1449

Several commentors questioned the rationale for requiring the use

of the new SF 1449 for all acquisitions of commercial items. The SF

1449 was specifically developed in conjunction with the provisions and

clauses developed for the acquisition of commercial items. The SF 1449

and the prescribed provisions and clauses are designed to complement

each other in several respects. Forms currently prescribed in the FAR

contain references to FAR provisions and clauses that are not used for

commercial items, and references to the Uniform

[[Page 48234]]

Contract Format, also not used for acquiring commercial items. Finally,

the use of a single form throughout the Federal Government for all

acquisitions of commercial items will aid those offerors that will, as

a result of the publication of this rule, seek to do business with the

Federal Government.

6. Quality Assurance

Several commentors questioned the intent of the language regarding

the reliance on contractors' existing quality assurance systems. The

rule has been revised to clarify that where buyer in-process inspection

is a customary practice, any Government inprocess inspection shall be

conducted in a manner consistent with commercial practice.

7. Commercial Item Pricing

Commentors suggested that Part 12 should discuss the techniques for

pricing commercial items. The policies and procedures for determining

the price reasonableness of commercial items are contained in Subpart

15.8 and the Team did not want to conflict with those policies.

However, a brief summary of pricing considerations used when

contracting by negotiation under Part 15 has been included in Part 12.

8. Technical Data and Computer Software

In response to numerous comments on technical data and computer

software, the final rule has been revised. The subpart on technical

data has been revised to cover the general principle that the

Government will acquire only technical data customarily provided to the

public, except as provided by agency-specific statutes. The technical

data subpart references FAR Part 27 and agency supplements, where

detailed rules implementing the technical data statutes can be found. A

new section on computer software was added to require that commercial

computer software be acquired under licenses customarily provided to

the public to the extent those licenses are consistent with Federal

procurement law.

9. Discretionary Use of FAR Provisions and Clauses

Several commentors asked if existing FAR provisions and clauses

could be used if needed. Guidance concerning the discretionary use of

other FAR clauses, consistent with market research and customary

commercial practice, has been provided in the final rule. Specific

examples of FAR clauses that may be appropriate for use include clauses

for ordering procedures for indefinite delivery contracts and option

exercise.

10. Tailoring of Provisions and Clauses

Additional guidance concerning contracting officer authority to

tailor Part 12 clauses, consistent with customary commercial market

practices, has also been provided. Specific paragraphs of the clause at

52.212-4, Contract Terms and Conditions--Commercial Items, that are

based in statute and may not be tailored, have been identified.

11. Unique Requirements Regarding Terms and Conditions for Commercial

Items.

Many commentors from both industry and Government noted that the

new terms and conditions prescribed for commercial items are

significantly different than the existing FAR provisions and clauses.

In response to the numerous questions and concerns, the Team expanded

the discussion in the proposed rule describing the key features of

these unique provisions and clauses.

12. Laws Inapplicable to Contractors and Subcontractors

The language describing the laws determined inapplicable to prime

and subcontractors has been revised to clarify several areas of

confusion. In addition, the Service Contract Act (SCA) was added to the

list of laws inapplicable to subcontractors. The proposed rule clearly

did not call out the SCA for flow down to subcontractors in paragraph

(e) of the clause at 52.212-5, but inadvertently omitted the law from

the list of laws inapplicable to subcontractors. Finally, as indicated

in the March 22, 1995, Federal Register notice, the DOD-unique laws

identified in the proposed rule have been removed from the FAR rule and

will appear in the DOD FAR Supplement (DFARS) coverage.

13. Certification Regarding Debarment and Suspension

A certification regarding an offeror's debarment, suspension or

ineligibility for award was added to the provision at 52.212-3 to

implement the requirements of Executive Order 12549.

14. Acceptance and Warranties

The language concerning acceptance and warranties in the clause at

52.212-4 was revised to incorporate the acceptance principles found in

the Uniform Commercial Code. It was also revised to establish the

implied warranties of merchantability and fitness for a particular

purpose as the Government's minimum warranties. Corresponding guidance

is provided in Part 12 on evaluating and incorporating express

warranties, which may overcome the implied warranties, and ensuring any

express warranty and the acceptance terms of the contract are

consistent with the concepts contained in the rule.

15. Terminations

Guidance on procedures for contract terminations, reflecting the

language in the clause at 52.212-4, has been provided in FAR Part 12.

In addition, language has been included to clarify that negotiation of

termination charges in terminations for the Government's convenience

does not require government unique record keeping, compliance with the

cost accounting standards or the contract cost principles.

16. Limitation of Liability

The limitation of contractor liability language, which appeared in

the proposed rule in the ``Warranty'' paragraph of the clause at

52.212-4, has been moved to a separate paragraph to clarify that the

limitation does not apply solely to liability relating to any warranty.

17. Subcontracting Plans

The requirement for Small, Small Disadvantaged and Women Owned

Small Business Subcontracting Plans was included in the clause at

52.212-5 after it was determined that there was no exemption from this

requirement for commercial items. However, in this regard, the Office

of Procurement Policy (OFPP) is preparing to issue Policy Letter 95-1,

Subcontracting Plans for Companies Supplying Commercial Items. This

Policy Letter states that when a subcontracting plan is required,

annual commercial subcontracting plans that relate to the company's

commercial and noncommercial production are authorized and preferred

for (1) prime contracts for commercial items; or (2) subcontractors

that provide commercial items under a prime contract, whether or not

the prime contractor is supplying a commercial item. The policy

revisions contained in Policy Letter 95-1 will be incorporated into the

FAR by a separate FAR case.

18. Other Revisions to the Proposed Rule

Numerous other revisions were made to the proposed rule to correct

inconsistencies, clarify intent, improve editorial clarity and to bring

the language of the case up to the latest FAR baseline through FAC 90-

31.

[[Page 48235]]

List of Subjects in 48 CFR Parts 2, 3, 5, 6, 7, 8, 9, 10, 11, 12, 14,

15, 16, 22, 23, 31, 36, 42, 44, 46, 47, 49, 52 and 53

Government procurement.

Dated: September 7, 1995.

Edward C. Loeb,

Deputy Project Manager for the Implementation of the Federal

Acquisition Streamlining Act of 1994.

Therefore, 48 CFR Parts 2, 3, 5, 6, 7, 8, 9, 10, 11, 12, 14, 15,

16, 22, 23, 31, 36, 42, 44, 46, 47, 49, 52, and 53 are amended as set

forth below:

1. The authority citation for 48 CFR Parts 2, 3, 5, 6, 7, 8, 9, 10,

11, 12, 14, 15, 16, 22, 23, 31, 36, 42, 44, 46, 47, 49, 52, and 53

continues to read as follows:

Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42

U.S.C. 2473(c).

PART 2--DEFINITIONS OF WORDS AND TERMS

2. Section 2.101 is amended by adding in alphabetical order the

definitions ``Commercial component'', ``Commercial item'',

``Component'', ``Market research'', and ``Nondevelopmental item'' to

read as follows:

2.101 Definitions.

* * * * *

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.

* * * * *

Market research means collecting and analyzing information about

capabilities within the market to satisfy agency needs.

* * * * *

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.

* * * * *

PART 3--IMPROPER BUSINESS PRACTICES AND PERSONAL CONFLICTS OF

INTEREST

3. Section 3.404 is amended by removing ``or'' from the end of

paragraph (b)(4); by redesignating paragraph (b)(5) as (b)(6) and

adding a new paragraph (b)(5); and by revising paragraph (c) to read as

follows:

3.404 Solicitation provision and contract clause.

* * * * *

(b) * * *

(5) The solicitation is for a commercial item (see parts 2 and 12);

or

* * * * *

(c) The contracting officer shall insert the clause at 52.203-5,

Covenant Against Contingent Fees, in solicitations and contracts

exceeding the simplified acquisition threshold in part 13 other than

those for commercial items (see Parts 2 and 12).

4. Section 3.502-2 is amended by revising the introductory text of

paragraph (i) to read as follows:

3.502-2 General.

* * * * *

(i) Requires each contracting agency to include in each prime

contract, except contracts for commercial items (see part 12), a

requirement that the prime contractor shall--

* * * * *

5. Section 3.502-3 is revised to read as follows:

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 in part 13, other than those for

commercial items (see part 12).

6. Section 3.503-2 is revised to read as follows:

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 in

[[Page 48236]]

part 13. For the acquisition of commercial items, the contracting

officer shall use the clause with its Alternate I.

PART 5--PUBLICIZING CONTRACT ACTIONS

7. Section 5.203 is amended by revising paragraphs (a), (b), and

(c) to read as follows:

5.203 Publicizing and response time.

* * * * *

(a) A notice of contract action shall be published in the CBD at

least 15 days before issuance of a solicitation except when the

combined CBD synopsis/solicitation procedure for acquisition of

commercial items is used (see 12.603).

(b) The contracting officer shall establish a solicitation response

time which will afford potential offerors a reasonable opportunity to

respond for (1) each contract action, including actions via FACNET, in

an amount estimated to be greater than $25,000, but not greater than

the simplified acquisition threshold; or (2) each contract action for

the acquisition of commercial items in an amount estimated to be

greater than $25,000 (see part 12). The contracting officer should

consider the circumstances of the individual acquisition, such as the

complexity, commerciality, availability, and urgency, when establishing

the solicitation response time.

(c) Except for the acquisition of commercial items (see 5.203(b)),

agencies shall allow at least a 30-day response time for receipt of

bids or proposals from the date of issuance of a solicitation, if the

contract action is expected to exceed the simplified acquisition

threshold.

* * * * *

8. Section 5.207 is amended by adding paragraph (e)(4) to read as

follows:

5.207 Preparation and transmittal of synopses.

* * * * *

(e) * * *

(4) If, under the proposed acquisition, the Government does not

intend to acquire a commercial item using part 12, the synopsis shall

refer to Numbered Note 26.

* * * * *

PART 6--COMPETITION REQUIREMENTS

9. Section 6.303-2 is amended by revising paragraph (a)(8) to read

as follows:

6.303-2 Content.

(a) * * *

(8) A description of the market research conducted (see part 10)

and the results or a statement of the reason market research was not

conducted.

* * * * *

10. Section 6.502 is revised to read as follows:

6.502 Duties and responsibilities.

(a) Agency and procuring activity competition advocates are

responsible for promoting the acquisition of commercial items,

promoting full and open competition, challenging requirements that are

not stated in terms of functions to be performed, performance required

or essential physical characteristics, and challenging barriers to the

acquisition of commercial items and full and open competition such as

unnecessarily restrictive statements of work, unnecessarily detailed

specifications, and unnecessarily burdensome contract clauses.

(b) Agency competition advocates shall--

(1) Review the contracting operations of the agency and identify

and report to the agency senior procurement executive--

(i) Opportunities and actions taken to acquire commercial items to

meet the needs of the agency;

(ii) Opportunities and actions taken to achieve full and open

competition in the contracting operations of the agency;

(iii) Actions taken to challenge requirements that are not stated

in terms of functions to be performed, performance required or

essential physical characteristics;

(iv) Any condition or action that has the effect of unnecessarily

restricting the acquisition of commercial items or competition in the

contracting actions of the agency;

(2) Prepare and submit an annual report to the agency senior

procurement executive, in accordance with agency procedures,

describing--

(i) Such advocate's activities under this subpart;

(ii) New initiatives required to increase the acquisition of

commercial items;

(iii) New initiatives required to increase competition;

(iv) New initiatives to ensure requirements are stated in terms of

functions to be performed, performance required or essential physical

characteristics;

(v) Any barriers to the acquisition of commercial items or

competition that remain; and

(vi) Other ways in which the agency has emphasized the acquisition

of commercial items and competition in areas such as acquisition

training and research;

(3) Recommend to the senior procurement executive of the agency

goals and plans for increasing competition on a fiscal year basis; and

(4) Recommend to the senior procurement executive of the agency a

system of personal and organizational accountability for competition,

which may include the use of recognition and awards to motivate program

managers, contracting officers, and others in authority to promote

competition in acquisition.

PART 7--ACQUISITION PLANNING

7.101 [Amended]

11. Section 7.101 is amended by removing the definition ``Market

survey''.

12. Section 7.102 is revised to read as follows:

7.102 Policy.

(a) Agencies shall perform acquisition planning and conduct market

research (see part 10) for all acquisitions in order to promote and

provide for--

(1) Acquisition of commercial items or, to the extent that

commercial items suitable to meet the agency's needs are not available,

nondevelopmental items, to the maximum extent practicable (10 U.S.C.

2377 and 41 U.S.C. 251, et seq.); and

(2) Full and open competition (see part 6) or, when full and open

competition is not required in accordance with part 6, to obtain

competition to the maximum extent practicable, with due regard to the

nature of the supplies or services to be acquired (10 U.S.C. 2301(a)(5)

and 41 U.S.C. 253a(a)(1)).

(b) This planning shall integrate the efforts of all personnel

responsible for significant aspects of the acquisition. The purpose of

this planning is to ensure that the Government meets its needs in the

most effective, economical, and timely manner. Agencies that have a

detailed acquisition planning system in place that generally meets the

requirements of 7.104 and 7.105 need not revise their system to

specifically meet all of these requirements.

13. Section 7.103 is amended by revising paragraph (b); and in

paragraph (m) by removing ``10.002(c)'' and inserting ``11.001(b)'' to

read as follows:

7.103 Agency-head responsibilities.

* * * * *

(b) Encouraging offerors to supply commercial items, or to the

extent that commercial items suitable to meet the agency needs are not

available,

[[Page 48237]]

nondevelopmental items in response to agency solicitations (10 U.S.C.

2377 and 41 U.S.C. 251, et seq.); and

* * * * *

14. Section 7.105 is amended in paragraph (a)(5) by removing

``subpart 12.1'' and inserting ``subpart 11.4'' in its place; in

paragraph (a)(8)(iii) by removing the parenthetical ``(see

10.002(c))''; by revising paragraph (b)(1); in paragraph (b)(6) by

removing ``part 10'' and inserting ``part 11'' in its place; in

paragraph (b)(7) by removing ``subpart 12.3'' and inserting ``subpart

11.6'' in its place; and by revising paragraph (b)(12)(i) to read as

follows:

7.105 Contents of written acquisition plans.

* * * * *

(b) Plan of action--(1) Sources. Indicate the prospective sources

of supplies and/or services that can meet the need. Consider required

sources of supplies or services (see part 8). Include consideration of

small business, small disadvantaged business, and women-owned small

business concerns (see part 19). Address the extent and results of the

market research and indicate their impact on the various elements of

the plan (see part 10).

* * * * *

(12) * * *

(i) The assumptions determining contractor or agency support, both

initially and over the life of the acquisition, including consideration

of contractor or agency maintenance and servicing (see subpart 7.3) and

distribution of commercial items;

* * * * *

PART 8--REQUIRED SOURCES OF SUPPLIES AND SERVICES

8.1104 [Amended]

15. Section 8.1104 is amended in paragraph (e)(1) by removing

``52.212-9'' and inserting ``52.211-16'' in its place.

PART 9--CONTRACTOR QUALIFICATIONS

16. Section 9.106-1 is amended by revising paragraph (a) to read as

follows:

9.106-1 Conditions for preaward surveys.

(a) A preaward survey is normally required when the information on

hand or readily available to the contracting officer is not sufficient

to make a determination regarding responsibility. However, if the

contemplated contract will have a fixed price at or below the

simplified acquisition threshold or will involve the acquisition of

commercial items (see part 12), the contracting officer should not

request a preaward survey unless circumstances justify its cost.

* * * * *

17. Section 9.306 is amended in the introductory text of paragraph

(f) by revising the parenthetical to read ``(see 11.404)''.

18. Section 9.405-2 is amended by revising the second sentence of

paragraph (b) introductory text to read as follows:

9.405-2 Restrictions on subcontracting.

* * * * *

(b) * * * By operation of the clause at 52.209-6, Protecting the

Government's Interests When Subcontracting with Contractors Debarred,

Suspended or Proposed for Debarment, contractors shall not enter into

any subcontract in excess of $25,000 with a contractor that has been

debarred, suspended, or proposed for debarment unless there is a

compelling reason to do so. * * *

* * * * *

19. Part 10 is revised to read as follows:

PART 10--MARKET RESEARCH

Sec.

10.000 Scope of part.

10.001 Policy.

10.002 Procedures.

Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42

U.S.C. 2473(c).

10.000 Scope of part.

This part prescribes policies and procedures for conducting market

research to arrive at the most suitable approach to acquiring,

distributing, and supporting supplies and services. This part

implements requirements of 41 U.S.C. 253a(a)(1), 41 U.S.C 264b, and 10

U.S.C. 2377.

10.001 Policy.

(a) Agencies shall--

(1) Ensure that legitimate needs are identified and trade-offs

evaluated to acquire items which meet those needs;

(2) Conduct market research appropriate to the circumstances--

(i) Before developing new requirements documents for an acquisition

by that agency;

(ii) Before soliciting offers for acquisitions with an estimated

value in excess of the simplified acquisition threshold; and

(iii) Before soliciting offers for acquisitions with an estimated

value less than the simplified acquisition threshold when adequate

information is not available and the circumstances justify its cost;

and

(3) Use the results of market research to--

(i) Determine if sources capable of satisfying the agency's

requirements exist;

(ii) Determine if commercial items or, to the extent commercial

items suitable to meet the agency's needs are not available,

nondevelopmental items are available that--

(A) Meet the agency's requirements;

(B) Could be modified to meet the agency's requirements; or

(C) Could meet the agency's requirements if those requirements were

modified to a reasonable extent;

(iii) Determine the extent to which commercial items or

nondevelopmental items could be incorporated at the component level;

(iv) Determine the practices of firms engaged in producing,

distributing, and supporting commercial items, such as terms for

warranties, buyer financing, maintenance and packaging, and marking;

and

(v) Ensure maximum practicable use of recovered materials (see

subpart 23.4) and promote energy conservation and efficiency.

(b) When conducting market research, agencies should not request

potential sources to submit more than the minimum information

necessary.

10.002 Procedures.

(a) Acquisitions begin with a description of the Government's needs

stated in terms sufficient to allow conduct of market research.

(b) Market research is then conducted to determine if commercial

items or nondevelopmental items are available to meet the Government's

needs or could be modified to meet the Government's needs.

(1) The extent of market research will vary, depending on such

factors as urgency, estimated dollar value, complexity, and past

experience. Market research involves obtaining information specific to

the item being acquired and should include--

(i) Whether the Government's needs can be met by--

(A) Items of a type customarily available in the commercial

marketplace;

(B) Items of a type customarily available in the commercial

marketplace with modifications; or

(C) Items used exclusively for governmental purposes;

(ii) Customary practices regarding customizing, modifying or

tailoring of items to meet customer needs and associated costs;

(iii) Customary practices, including warranty, buyer financing,

discounts, etc., under which commercial sales of the products are made;

[[Page 48238]]

(iv) The requirements of any laws and regulations unique to the

item being acquired;

(v) The availability of items that contain recovered materials and

items that are energy efficient;

(vi) The distribution and support capabilities of potential

suppliers, including alternative arrangements and cost estimates; and

(vii) Size and status of potential sources (see part 19).

(2) Techniques for conducting market research may include any or

all of the following:

(i) Contacting knowledgeable individuals in Government and industry

regarding market capabilities to meet requirements.

(ii) Reviewing the results of recent market research undertaken to

meet similar or identical requirements.

(iii) Publishing formal requests for information in appropriate

technical or scientific journals or business publications.

(iv) Querying Government data bases that provide information

relevant to agency acquisitions.

(v) Participating in interactive, on-line communication among

industry, acquisition personnel, and customers.

(vi) Obtaining source lists of similar items from other contracting

activities or agencies, trade associations or other sources.

(vii) Reviewing catalogs and other generally available product

literature published by manufacturers, distributors, and dealers or

available on-line.

(viii) Conducting interchange meetings or holding presolicitation

conferences to involve potential offerors early in the acquisition

process.

(c) If market research indicates commercial or nondevelopmental

items might not be available to satisfy agency needs, agencies shall

reevaluate the need in accordance with 10.001(a)(3)(ii) and determine

whether the need can be restated to permit commercial or

nondevelopmental items to satisfy the agency's needs.

(d)(1) If market research establishes that the Government's need

may be met by a type of item or service customarily available in the

commercial marketplace that would meet the definition of a commercial

item at subpart 2.1, the contracting officer shall solicit and award

any resultant contract using the policies and procedures in part 12.

(2) If market research establishes that the Government's need

cannot be met by a type of item or service customarily available in the

marketplace, part 12 shall not be used. When publication of the notice

at 5.201 is required, the contracting officer shall include a notice to

prospective offerors that the Government does not intend to use part 12

for the acquisition (see 5.207(e)(4)).

(e) Agencies should document the results of market research in a

manner appropriate to the size and complexity of the acquisition.

20. Part 11 is revised to read as follows:

PART 11--DESCRIBING AGENCY NEEDS

Sec.

11.000 Scope of part.

11.001 Definitions.

11.002 Policy.

Subpart 11.1--Selecting and Developing Requirements Documents

11.101 Order of precedence for requirements documents.

11.102 Standardization program.

11.103 Market acceptance.

11.104 Items peculiar to one manufacturer.

Subpart 11.2--Using and Maintaining Requirements Documents

11.201 Identification and availability of specifications.

11.202 Maintenance of standardization documents.

11.203 Customer satisfaction.

11.204 Solicitation provisions and contract clauses.

Subpart 11.3--Acquiring Other Than New Material, Former Government

Surplus Property and Residual Inventory

11.301 Policy.

11.302 Solicitation provisions and contract clauses.

Subpart 11.4--Delivery or Performance Schedules

11.401 General.

11.402 Factors to consider in establishing schedules.

11.403 Supplies or services.

11.404 Contract clauses.

Subpart 11.5--Liquidated Damages

11.501 General.

11.502 Policy.

11.503 Procedures.

11.504 Contract clauses.

Subpart 11.6--Priorities and Allocations

11.600 Scope of part.

11.601 Definitions.

11.602 General.

11.603 Procedures.

11.604 Solicitation provisions and contract clauses.

Subpart 11.7--Variation in Quantity

11.701 Supply contracts.

11.702 Construction contracts.

11.703 Contract clauses.

11.000 Scope of part.

This part prescribes policies and procedures for describing agency

needs.

11.001 Definitions.

Material, as used in this part, includes, but is not limited to,

raw material, parts, items, components, and end products.

New, as used in this part, means previously unused or composed of

previously unused materials and may include unused residual inventory

or unused former Government surplus property.

Other than new, as used in this part, includes, but is not limited

to, recycled, recovered, remanufactured, used, and reconditioned.

Reconditioned, as used in this part, means restored to an earlier

normal operating condition by readjustments and replacement of parts.

Remanufactured, as used in this part, means factory rebuilt to new

equipment performance specification and unused subsequent to

rebuilding.

11.002 Policy.

(a) In fulfilling requirements of 10 U.S.C. 2305(a)(1), 10 U.S.C.

2377, 41 U.S.C. 253a(a), and 41 U.S.C. 264b, agencies shall--

(1) Specify needs using market research in a manner designed to--

(i) Promote full and open competition (see part 6), with due regard

to the nature of the supplies or services to be acquired; and

(ii) Only include restrictive provisions or conditions to the

extent necessary to satisfy the minimum needs of the agency or as

authorized by law.

(2) To the maximum extent practicable, ensure that acquisition

officials--

(i) State requirements with respect to an acquisition of supplies

or services in terms of--

(A) Functions to be performed;

(B) Performance required; or

(C) Essential physical characteristics;

(ii) Define requirements in terms that enable and encourage

offerors to supply commercial items, or, to the extent that commercial

items suitable to meet the agency's needs are not available,

nondevelopmental items, in response to the agency solicitations;

(iii) Provide offerors of commercial items and nondevelopmental

items an opportunity to compete in any acquisition to fill such

requirements;

(iv) Require prime contractors and subcontractors at all tiers

under the agency contracts to incorporate commercial items or

nondevelopmental items as components of items supplied to the agency;

and

(v) Modify requirements in appropriate cases to ensure that the

requirements can be met by commercial items or, to the extent that

commercial

[[Page 48239]]

items suitable to meet the agency's needs are not available,

nondevelopmental items.

(b) The Metric Conversion Act of 1975, as amended by the Omnibus

Trade and Competitiveness Act of 1988 (15 U.S.C. 205a, et seq.),

designates the metric system of measurement as the preferred system of

weights and measures for United States trade and commerce, and it

requires that each agency use the metric system of measurement in its

acquisitions, except to the extent that such use is impracticable or is

likely to cause significant inefficiencies or loss of markets to United

States firms. Requiring activities are responsible for establishing

guidance implementing this policy in formulating their requirements for

acquisitions.

(c) To the extent practicable and consistent with subpart 9.5,

potential offerors should be given an opportunity to comment on agency

requirements or to recommend application and tailoring of requirements

documents and alternative approaches. Requiring agencies should apply

specifications, standards, and related documents initially for guidance

only, making final decisions on the application and tailoring of these

documents as a product of the design and development process. Requiring

agencies should not dictate detailed design solutions prematurely (see

7.101 and 7.105(a)(8)).

(d) The Resource Conservation and Recovery Act of 1976 (42 U.S.C.

6901, et seq.), as amended, and Executive Order 12873, dated October

20, 1993, establish requirements for the procurement of products

containing recovered materials, and environmentally preferable and

energy-efficient products and services. Requiring activities shall

prepare plans, drawings, specifications, standards (including voluntary

standards), and purchase descriptions that consider the requirements

set forth in part 23.

Subpart 11.1--Selecting and Developing Requirements Documents

11.101 Order of precedence for requirements documents.

(a) Agencies may select from existing requirements documents,

modify or combine existing requirements documents, or create new

requirements documents to meet agency needs, consistent with the

following order of precedence:

(1) Documents mandated for use by law.

(2) Performance-oriented documents.

(3) Detailed design-oriented documents.

(4) Standards, specifications and related publications issued by

the Government outside the Defense or Federal series for the non-

repetitive acquisition of items.

(b) Agencies should prepare product descriptions to achieve maximum

practicable use of recovered material and other materials that are

environmentally preferable (see subparts 23.4 and 23.7).

11.102 Standardization program.

Agencies shall select existing requirements documents or develop

new requirements documents that meet the needs of the agency in

accordance with the guidance contained in the Federal Standardization

Manual and, for DOD components, DOD 4120.3-M, Defense Standardization

Program Policies and Procedures. The Federal Standardization Manual may

be obtained from General Services Administration, Federal Supply

Service Bureau, Specifications Section, Suite 8100, 470 L'Enfant Plaza,

SW, Washington, DC 20407. DOD 4120.3-M may be obtained from DOD Single

Stock Point, Standardization Document Order Desk, Building 4D, 700

Robbins Avenue, Philadelphia, PA 19111-5094.

11.103 Market acceptance.

(a) Section 8002(c) of Pub. L. 103-355 provides that, in accordance

with agency procedures, the head of an agency may, under appropriate

circumstances, require offerors to demonstrate that the items offered--

(1) Have either--

(i) Achieved commercial market acceptance; or

(ii) Been satisfactorily supplied to an agency under current or

recent contracts for the same or similar requirements; and

(2) Otherwise meet the item description, specifications, or other

criteria prescribed in the public notice and solicitation.

(b) Appropriate circumstances may, for example, include situations

where the agency's minimum need is for an item that has a demonstrated

reliability, performance or product support record in a specified

environment. Use of market acceptance is inappropriate when new or

evolving items may meet the agency's needs.

(c) In developing criteria for demonstrating that an item has

achieved commercial market acceptance, the contracting officer shall

ensure the criteria in the solicitation--

(1) Reflect the minimum need of the agency and are reasonably

related to the demonstration of an item's acceptability to meet the

agency's minimum need;

(2) Relate to an item's performance and intended use, not an

offeror's capability;

(3) Are supported by market research;

(4) Include consideration of items supplied satisfactorily under

recent or current Government contracts, for the same or similar items;

and

(5) Consider the entire relevant commercial market, including small

business concerns.

(d) Commercial market acceptance shall not be used as a sole

criterion to evaluate whether an item meets the Government's

requirements.

(e) When commercial market acceptance is used, the contracting

officer shall document the file to--

(1) Describe the circumstances justifying the use of commercial

market acceptance criteria; and

(2) Support the specific criteria being used.

11.104 Items peculiar to one manufacturer.

Agency requirements shall not be written so as to require a

particular brand-name, product, or a feature of a product, peculiar to

one manufacturer, thereby precluding consideration of a product

manufactured by another company, unless--

(a) The particular brand-name, product, or feature is essential to

the Government's requirements, and market research indicates other

companies' similar products, or products lacking the particular

feature, do not meet, or can not be modified to meet, the agency's

minimum needs; and

(b) The authority to contract without providing for full and open

competition is supported by the required justifications and approvals

(see 6.302-1).

Subpart 11.2--Using and Maintaining Requirements Documents

11.201 Identification and availability of specifications.

(a) Solicitations citing requirements documents listed in the

General Services Administration (GSA) Index of Federal Specifications,

Standards and Commercial Item Descriptions, the DoD Index of

Specifications and Standards (DoDISS), or other agency index shall

identify each document's approval date and the dates of any applicable

amendments and revisions. Do not use general identification references,

such as ``the issue in effect on the date of the solicitation.''

Contracting offices will not normally furnish these cited documents

with the solicitation, except when--

(1) The requirements document must be furnished with the

solicitation to

[[Page 48240]]

enable prospective contractors to make a competent evaluation of the

solicitation;

(2) In the judgment of the contracting officer, it would be

impracticable for prospective contractors to obtain the documents in

reasonable time to respond to the solicitation; or

(3) A prospective contractor requests a copy of a Government

promulgated requirements document.

(b) Contracting offices shall clearly identify in the solicitation

any pertinent documents not listed in the GSA Index of Federal

Specifications, Standards and Commercial Item Descriptions or DoDISS.

Such documents shall be furnished with the solicitation or specific

instructions shall be furnished for obtaining or examining such

documents.

(c) When documents refer to other documents, such references shall

(1) Be restricted to documents, or appropriate portions of

documents, that apply in the acquisition;

(2) Cite the extent of their applicability;

(3) Not conflict with other documents and provisions of the

solicitation; and

(4) Identify all applicable first tier references.

(d) The GSA Index of Federal Specifications, Standards and

Commercial Item Descriptions may be purchased from the General Services

Administration, Federal Supply Service Bureau, Specification Section,

Suite 8100, 470 L'Enfant Plaza, SW, Washington, DC 20407, telephone

(202) 755-0325/0326. The DoDISS may be purchased from the

Standardization Documents Desk, Building 4D, 700 Robbins Avenue,

Philadelphia, PA 19111-5094, telephone (215) 697-2569.

(e) Agencies may generally obtain from the GSA Specification

Section or the DOD Standardization Documents Desk those nongovernment

(voluntary) standards adopted for use by Federal or Defense activities.

Standards not available from these sources may be obtained from

Government libraries, activities subscribing to document handling

services or the organization responsible for the preparation,

publication or maintenance of the standard.

11.202 Maintenance of standardization documents.

(a) Recommendations for changes to standardization documents listed

in the GSA Index of Federal Specifications, Standards and Commercial

Item Descriptions should be submitted to the General Services

Administration, Federal Supply Service, Office of Acquisition,

Washington, DC 20406. Agencies shall submit recommendations for changes

to standardization documents listed in the DoDISS to the cognizant

preparing activity.

(b) When an agency cites an existing standardization document but

modifies it to meet its needs, the agency shall follow the guidance in

Federal Standardization Manual and, for Defense components, DoD 4120.3-

M, Defense Standardization Program Policies and Procedures.

11.203 Customer satisfaction.

Acquisition organizations shall communicate with customers to

determine how well the requirements document reflects the customer's

needs and to obtain suggestions for corrective actions. Whenever

practicable, the agency may provide affected industry an opportunity to

comment on the requirements documents.

11.204 Solicitation provisions and contract clauses.

(a) The contracting officer shall insert the provision at 52.211-1,

Availability of Specifications Listed in the GSA Index of Federal

Specifications, Standards and Commercial Item Descriptions, in

solicitations that

(1) Are issued by civilian agency contracting offices and

(2) Cite specifications listed in the Index that are not furnished

with the solicitation.

(b) The contracting officer shall insert the provision at 52.211-2,

Availability of Specifications Listed in the DoD Index of

Specifications and Standards (DoDISS), in solicitations that

(1) Are issued by DoD contracting offices and

(2) Cite specifications listed in the DoDISS that are not furnished

with the solicitation.

(c) The contracting officer shall insert a provision substantially

the same as the provision at 52.211-3, Availability of Specifications

Not Listed in the GSA Index of Federal Specifications, Standards and

Commercial Item Descriptions, in solicitations that cite specifications

that are not listed in the Index and are not furnished with the

solicitation, but may be obtained from a designated source.

(d) The contracting officer shall insert a provision substantially

the same as the provision at 52.211-4, Availability for Examination of

Specifications Not Listed in the GSA Index of Federal Specifications,

Standards and Commercial Item Descriptions, in solicitations that cite

specifications that are not listed in the Index and are available for

examination at a specified location.

Subpart 11.3--Acquiring Other Than New Material, Former Government

Surplus Property, and Residual Inventory

11.301 Policy.

(a) Agencies shall allow offers of other than new material, former

Government surplus property, or residual inventory unless it is

determined that such materials are unacceptable. When acquiring

commercial items, the contracting officer should consider the customary

practice in the industry for the item being acquired. When only new

material is acceptable, the solicitation shall clearly identify the

material that must be new. Offerors providing other than new material

shall be required to comply with the clause at 52.211-5, New Material,

the provision at 52.211-6, Listing of Other Than New Material, Residual

Inventory, and Former Government Surplus Property, and the clause at

52.211-7, Other Than New Material, Residual Inventory, and Former

Government Surplus Property, as appropriate.

(b) Agencies shall specify products, including packaging, that

contain the highest practicable percentage of recovered and

environmentally preferable materials, and where applicable, post-

consumer material, consistent with performance requirements,

availability, price reasonableness, and cost-effectiveness.

(c) Contracting officers shall consider the following when

determining whether other than new materials, former Government surplus

property, or residual inventory are acceptable:

(1) Safety of persons or property.

(2) Specification and performance requirements.

(3) Price reasonableness.

(4) Total cost to the Government (including maintenance,

inspection, testing, and useful life).

(d) When a contract calls for material to be furnished at cost, the

allowable charge for former Government surplus property shall not

exceed the cost at which the contractor acquired the property.

11.302 Solicitation provisions and contract clauses.

(a) The contracting officer may insert the clause at 52.211-5, New

Material, in solicitations and contracts for supplies. The clause shall

not be used if it would be contrary to customary commercial practices

for the item being acquired.

(b) The contracting officer shall insert the provision at 52.211-6,

Listing of Other Than New Material, Residual Inventory, and Former

Government

[[Page 48241]]

Surplus Property, in solicitations containing the clause at 52.211-5.

(c) The contracting officer shall insert the clause at 52.211-7,

Other Than New Material, Residual Inventory, and Former Government

Surplus Property, in contracts containing the clause at 52.211-5.

Subpart 11.4--[Redesignated from 12.1]

21. and 22. Subpart 11.4 is redesignated from Subpart 12.1 and

sections 12.101 through 12.104 are redesignated as sections 11.401

through 11.404, respectively.

23. Newly redesignated section 11.401 is amended in paragraph (a)

by revising the last sentence; and in the parenthetical of paragraph

(c) by removing ``Subpart 12.2'' and inserting ``Subpart 11.5''. The

revised text reads as follows:

11.401 General.

(a) * * * Schedules that are unnecessarily short or difficult to

attain

(1) Tend to restrict competition,

(2) Are inconsistent with small business policies, and

(3) May result in higher contract prices.

* * * * *

24. Newly redesignated section 11.402 is amended by revising

paragraphs (a) (2) and (5) to read as follows:

11.402 Factors to consider in establishing schedules.

(a) * * *

(2) Industry practices;

* * * * *

(5) Production time;

* * * * *

11.404 [Amended]

25. Newly redesignated section 11.404 is amended in paragraph

(a)(2) by removing ``52.212-1'' and inserting ``52.211-8''; in

paragraph (a)(3) by removing ``52.212-2'' and inserting ``52.211-9'';

and in paragraph (b) by removing ``52.212-3'' and inserting ``52.211-

10''.

Subpart 11.5--[Redesignated From Subpart 12.2]

26. Subpart 11.5 is redesignated from Subpart 12.2 and sections

11.501 through 11.504 are redesignated from sections 12.201 through

12.204, respectively.

11.504 [Amended]

27. Newly designated 11.504 is amended in paragraph (a) by removing

``52.212-4'' and inserting ``52.211-11''; in paragraph (b) by removing

``52.212-5'' and inserting ``52.211-12''; and in paragraph (c) by

removing ``52.212-6'' and ``52.212-5'' and inserting ``52.211-13'' and

``52.211-12'', respectively.

Subpart 11.6 [Redesignated From 12.3]

28. Subpart 11.6 is redesignated from Subpart 12.3 and sections

11.600 through 11.604 are redesignated from sections 12.300 through

12.304, respectively.

11.604 [Amended]

29. Newly redesignated section 11.604 is amended in paragraph (a)

by removing ``52.212-7'' and inserting ``52.211-14''; and in paragraph

(b) by removing ``52.212-8'' and inserting ``52.211-15''.

Subpart 11.7--[Redesignated From 12.4]

30. Subpart 11.7 is redesignated from Subpart 12.4 and sections

11.701 through 11.703 are redesignated from 12.401 through 12.403,

respectively.

11.703 [Amended]

31. Newly redesignated section 11.703 is amended in paragraph (a)

by removing ``52.212-9'' and inserting ``52.211-16''; in paragraph (b)

by removing ``52.212-10'' and inserting ``52.211-17''; and in paragraph

(c) by removing ``52.212-11'' and inserting ``52.211-18''.

32. Subpart 12.5 is redesignated as Subpart 42.13 and sections

12.501 through 12.505 are redesignated as sections 42.1301 through

42.1305, respectively.

33. Part 12 is revised to read as follows:

PART 12--ACQUISITION OF COMMERCIAL ITEMS

Sec.

12.000 Scope of part.

12.001 Definition.

Subpart 12.1--Acquisition of Commercial Items--General

12.101 Policy.

12.102 Applicability.

Subpart 12.2--Special Requirements for the Acquisition of Commercial

Items

12.201 General.

12.202 Market research and description of agency need.

12.203 Procedures for solicitation, evaluation, and award.

12.204 Solicitation/contract form.

12.205 Offers.

12.206 Use of past performance.

12.207 Contract type.

12.208 Contract quality assurance.

12.209 Pricing of commercial items when contracting by negotiation.

12.210 Contract financing.

12.211 Technical data.

12.212 Computer software.

12.213 Other customary commercial practices.

Subpart 12.3--Solicitation Provisions and Contract Clauses for the

Acquisition of Commercial Items

12.300 Scope of subpart.

12.301 Solicitation provisions and contract clauses for the

acquisition of commercial items.

12.302 Tailoring of provisions and clauses for the acquisition of

commercial items.

12.303 Contract format.

Subpart 12.4--Unique Requirements Regarding Terms and Conditions for

Commercial Items

12.401 General.

12.402 Acceptance.

12.403 Termination.

12.404 Warranties.

Subpart 12.5--Applicability of Certain Laws to the Acquisition of

Commercial Items

12.500 Scope of subpart.

12.501 Applicability.

12.502 Procedures.

12.503 Applicability of certain laws to Executive agency contracts

for the acquisition of commercial items.

12.504 Applicability of certain laws to subcontracts for the

acquisition of commercial items.

Subpart 12.6--Streamlined Procedures for Evaluation and Solicitation

for Commercial Items

12.601 General.

12.602 Streamlined evaluation of offers.

12.603 Streamlined solicitation for commercial items.

Authority: 40 U.S.C. 486(c); 10 U.S.C. chapter 137; and 42

U.S.C. 2473(c).

12.000 Scope of part.

This part prescribes policies and procedures unique to the

acquisition of commercial items. It implements the Federal Government's

preference for the acquisition of commercial items contained in Title

VIII of the Federal Acquisition Streamlining Act of 1994 (Public Law

103-355) by establishing acquisition policies more closely resembling

those of the commercial marketplace and encouraging the acquisition of

commercial items and components.

12.001 Definition.

Subcontract, as used in this part, includes, but is not limited to,

a transfer of commercial items between divisions, subsidiaries, or

affiliates of a contractor or subcontractor.

Subpart 12.1--Acquisition of Commercial Items-- General

12.101 Policy.

Agencies shall--

(a) Conduct market research to determine whether commercial items

or

[[Page 48242]]

nondevelopmental items are available that could meet the agency's

requirements;

(b) Acquire commercial items or nondevelopmental items when they

are available to meet the needs of the agency; and

(c) Require prime contractors and subcontractors at all tiers to

incorporate, to the maximum extent practicable, commercial items or

nondevelopmental items as components of items supplied to the agency.

12.102 Applicability.

(a) This part shall be used for the acquisition of supplies or

services that meet the definition of commercial items at section 2.101.

(b) Contracting officers shall use the policies in this part in

conjunction with the policies and procedures for solicitation,

evaluation and award prescribed in part 13, Simplified Acquisition

Procedures; part 14, Sealed Bidding; or part 15, Contracting by

Negotiation, as appropriate for the particular acquisition.

(c) Contracts for the acquisition of commercial items are subject

to the policies in other parts of this chapter. When a policy in

another part of this chapter is inconsistent with a policy in this

part, this part 12 shall take precedence for the acquisition of

commercial items.

(d) This part shall not apply to the acquisition of commercial

items--

(1) At or below the micro-purchase threshold (see subpart 13.6);

(2) Using the SF 44 (see section 13.505-3);

(3) Using the imprest fund (see subpart 13.4); or

(4) Using the Governmentwide commercial purchase card (see subpart

13.6).

Subpart 12.2--Special Requirements for the Acquisition of

Commercial Items

12.201 General.

Public Law 103-355 establishes special requirements for the

acquisition of commercial items intended to more closely resemble those

customarily used in the commercial marketplace. This subpart identifies

those special requirements as well as other considerations necessary

for proper planning, solicitation, evaluation and award of contracts

for commercial items.

12.202 Market research and description of agency need.

(a) Market research (see 10.001) is an essential element of

building an effective strategy for the acquisition of commercial items

and establishes the foundation for the agency description of need (see

part 11), the solicitation, and resulting contract.

(b) The description of agency need must contain sufficient detail

for potential offerors of commercial items to know which commercial

products or services to offer. Generally, for acquisitions in excess of

the simplified acquisition threshold, an agency's statement of need for

a commercial item will describe the product or service to be acquired

and explain how the agency intends to use the product or service in

terms of function to be performed, performance requirement or essential

physical characteristics. Describing the agency's need in these terms

allows offerors to propose methods that will best meet the needs of the

Government.

(c) Follow the procedures in subpart 11.2 regarding the

identification and availability of specifications, standards and

commercial item descriptions.

12.203 Procedures for solicitation, evaluation, and award.

Contracting officers shall use the policies unique to the

acquisition of commercial items prescribed in this part in conjunction

with the policies and procedures for solicitation, evaluation and award

prescribed in part 13, Simplified Acquisition Procedures; part 14,

Sealed Bidding; or part 15, Contracting by Negotiation, as appropriate

for the particular acquisition. The contracting officer may use the

streamlined procedure for soliciting offers for commercial items

prescribed in 12.603.

12.204 Solicitation/contract form.

The Standard Form 1449, Solicitation/Contract/Order for Commercial

Items, shall be used by the contracting officer when issuing written

solicitations and awarding contracts and placing orders for commercial

items. This form contains the information necessary for solicitations

and contracts. The form may also be used for documenting receipt,

inspection and acceptance of commercial items. Other forms shall not be

used for solicitation or award of contracts or orders for the

acquisition of commercial items.

12.205 Offers.

(a) Where technical information is necessary for evaluation of

offers, agencies should, as part of market research, review existing

product literature generally available in the industry to determine its

adequacy for purposes of evaluation. If adequate, contracting officers

shall request existing product literature from offerors of commercial

items in lieu of unique technical proposals.

(b) Contracting officers should allow offerors to propose more than

one product that will meet a Government need in response to

solicitations for commercial items. The contracting officer shall

evaluate each product as a separate offer.

(c) Contracting officers may, considering the circumstances

described in 5.203(b), allow fewer than 30 days response time for

receipt of offers for commercial items.

12.206 Use of past performance.

Past performance should be an important element of every evaluation

and contract award for commercial items. Contracting officers should

consider past performance data from a wide variety of sources both

inside and outside the Federal Government in accordance with the

policies and procedures contained in subpart 9.1, section 13.106-1, or

subpart 15.6, as applicable.

12.207 Contract type.

Agencies shall use firm-fixed-price contracts or fixed-price

contracts with economic price adjustment for the acquisition of

commercial items. Indefinite-delivery contracts (see subpart 16.5) may

be used where the prices are established based on a firm-fixed-price or

fixed-price with economic price adjustment. Use of any other contract

type to acquire commercial items is prohibited.

12.208 Contract quality assurance.

Contracts for commercial items shall rely on contractors' existing

quality assurance systems as a substitute for Government inspection and

testing before tender for acceptance unless customary market practices

for the commercial item being acquired include in-process inspection.

Any in-process inspection by the Government shall be conducted in a

manner consistent with commercial practice.

12.209 Pricing of commercial items when contracting by negotiation.

(a) When contracting by negotiation for commercial items, the

policies and procedures in part 15 shall be used to establish the

reasonableness of prices.

(b) The provisions and clauses prescribed in this part for the

acquisition of commercial items do not include the provisions and

clauses prescribed in part 15 because they assume prices for commercial

items will either

(1) Not be subject to the Truth in Negotiations Act because the

contract

[[Page 48243]]

price is below the dollar threshold for application of the Act; or

(2) Be based upon one of the exceptions to cost or pricing data

requirements contained in 15.804-1(a)(1).

(c) If the contracting officer determines it is appropriate to use

the commercial item exception to cost or pricing data requirements (see

15.804-1(a)(2)), the provisions and clauses prescribed in 15.804-8 and

15.106 for this purpose shall be inserted in an addendum to the

solicitation and contract.

(d) If the contracting officer is required to obtain cost or

pricing data (see 15.804-1(b)(4) and 15.804-2), the provisions and

clauses prescribed in 15.804-8 and 15.106 for this purpose shall be

inserted in an addendum to the solicitation and contract.

(e) When a contract is priced using the exceptions at 15.804-

1(a)(1), no cost or pricing data may be obtained for modifications

unless the proposed modification would change the contract from a

contract for a commercial item to a contract for other than a

commercial item (see 15.804-1(b)(6)). If the exceptions at 15.804-

1(a)(1) are not used, the contracting officer may be required to obtain

cost or pricing data to determine the reasonableness of prices for

subsequent modifications (see 15.804-2(a)(1)) and the contracting

officer shall insert the provisions and clauses prescribed for this

purpose in an addendum to the solicitation and contract.

12.210 Contract financing.

Customary market practice for some commercial items may include

buyer contract financing. The contracting officer may offer Government

financing in accordance with the policies and procedures in part 32.

12.211 Technical data.

Except as provided by agency-specific statutes, the Government

shall acquire only the technical data and the rights in that data

customarily provided to the public with a commercial item or process.

The contracting officer shall presume that data delivered under a

contract for commercial items was developed exclusively at private

expense. When a contract for commercial items requires the delivery of

technical data, the contracting officer shall include appropriate

provisions and clauses delineating the rights in the technical data in

addenda to the solicitation and contract (see part 27 or agency FAR

supplements).

12.212 Computer software.

(a) Commercial computer software or commercial computer software

documentation shall be acquired under licenses customarily provided to

the public to the extent such licenses are consistent with Federal law

and otherwise satisfy the Government's needs. Generally, offerors and

contractors shall not be required to--

(1) Furnish technical information related to commercial computer

software or commercial computer software documentation that is not

customarily provided to the public; or

(2) Relinquish to, or otherwise provide, the Government rights to

use, modify, reproduce, release, perform, display, or disclose

commercial computer software or commercial computer software

documentation except as mutually agreed to by the parties.

(b) With regard to commercial computer software and commercial

computer software documentation, the Government shall have only those

rights specified in the license contained in any addendum to the

contract.

12.213 Other customary commercial practices.

It is customary practice in the commercial marketplace for both the

buyer and seller to propose terms and conditions for a given

transaction, each written from their particular perspectives. The terms

and conditions prescribed in this part 12 seek to balance the interests

of both the buyer and seller. These terms and conditions are generally

appropriate for use in a wide range of acquisitions. However, market

research may indicate other customary commercial practices that are

appropriate for the acquisition of the particular item. These practices

should be considered for incorporation into the solicitation and

contract if the contracting officer determines them appropriate in

concluding a business arrangement satisfactory to both parties and not

otherwise precluded by law or executive order.

Subpart 12.3--Solicitation Provisions and Contract Clauses for the

Acquisition of Commercial Items

12.300 Scope of subpart.

This subpart establishes provisions and clauses to be used when

acquiring commercial items.

12.301 Solicitation provisions and contract clauses for the

acquisition of commercial items.

(a) In accordance with Section 8002 of Public Law 103-355 (41 U.S.C

264, note), contracts for the acquisition of commercial items shall, to

the maximum extent practicable, include only those clauses--

(1) Required to implement provisions of law or executive orders

applicable to the acquisition of commercial items; or

(2) Determined to be consistent with customary commercial practice.

(b) To implement this Act, the contracting officer shall insert the

following provisions in solicitations for the acquisition of commercial

items, and clauses in solicitations and contracts for the acquisition

of commercial items:

(1) The provision at 52.212-1, Instructions to Offerors--Commercial

Items. This provision provides a single, streamlined set of

instructions to be used when soliciting offers for commercial items and

is incorporated in the solicitation by reference (see Block 26, SF

1449). The contracting officer may tailor these instructions or provide

additional instructions tailored to the specific acquisition in

accordance with 12.302;

(2) The provision at 52.212-3, Offeror Representations and

Certifications--Commercial Items. This provision provides a single,

consolidated list of certifications and representations for the

acquisition of commercial items and is attached to the solicitation for

offerors to complete and return with their offer. This provision may

not be tailored except in accordance with Subpart 1.4;

(3) The clause at 52.212-4, Contract Terms and Conditions--

Commercial Items. This clause includes terms and conditions which are,

to the maximum extent practicable, consistent with customary commercial

practices and is incorporated in the solicitation and contract by

reference (see Block 26, SF 1449). The contracting officer may tailor

this clause in accordance with 12.302; and

(4) The clause at 52.212-5, Contract Terms and Conditions Required

to Implement Statutes or Executive Orders--Commercial Items. This

clause incorporates by reference only those clauses required to

implement provisions of law or executive orders applicable to the

acquisition of commercial items. The contracting officer shall attach

this clause to the solicitation and contract and, using the appropriate

clause prescriptions, indicate which, if any, of the additional clauses

cited in 52.2125(b) or (c) are applicable to the specific acquisition.

When cost information is obtained pursuant to part 15 to establish the

reasonableness of prices for commercial items, the contracting officer

shall insert the clauses prescribed for this purpose in an addendum to

the solicitation and contract. This clause may not be tailored.

[[Page 48244]]

(c) When the use of evaluation factors is appropriate, the

contracting officer may--

(1) Insert the provision at 52.212-2, Evaluation-- Commercial

Items, in solicitations for commercial items (see 12.602); or

(2) Include a similar provision containing all evaluation factors

required by section 13.106-1, Subpart 14.2 or subpart 15.6, as an

addendum (see 12.302(d)).

(d) Use of required provisions and clauses. Notwithstanding

prescriptions contained elsewhere in the FAR, when acquiring commercial

items, contracting officers shall be required to use only those

provisions and clauses prescribed in this part. The provisions and

clauses prescribed in this part shall be revised, as necessary, to

reflect the applicability of statutes and executive orders to the

acquisition of commercial items.

(e) Discretionary use of FAR provisions and clauses. The

contracting officer may include in solicitations and contracts by

addendum other FAR provisions and clauses when their use is consistent

with the limitations contained in 12.302. For example:

(1) The contracting officer may include appropriate clauses when an

indefinite-delivery type of contract will be used. The clauses

prescribed at 16.505 may be used for this purpose.

(2) The contracting officer may include appropriate provisions and

clauses when the use of options is in the Government's interest. The

provisions and clauses prescribed in 17.208 may be used for this

purpose. If the provision at 52.212-2 is used, paragraph (b) provides

for the evaluation of options.

(3) The contracting officer may use the provisions and clauses

contained in part 23 regarding the use of recovered material when

appropriate for the item being acquired.

(f) Agencies may supplement the provisions and clauses prescribed

in this part (to require use of additional provisions and clauses) only

as necessary to reflect agency unique statutes applicable to the

acquisition of commercial items or as may be approved by the agency

senior procurement executive, or the individual responsible for

representing the agency on the FAR Council, without power of

delegation.

12.302 Tailoring of provisions and clauses for the acquisition of

commercial items.

(a) General. The provisions and clauses established in this subpart

are intended to address, to the maximum extent practicable, customary

commercial market practices for a wide range of potential Government

acquisitions of commercial items. However, because of the broad range

of commercial items acquired by the Government, variations in customary

commercial practices across markets and the relative volume of the

Government's acquisitions in the specific market, contracting officers

may, within the limitations of this subpart, and after conducting

appropriate market research, tailor the provision at 52.212-1,

Instructions to Offerors--Commercial Items, and the clause at 52.212-4,

Contract Terms and Conditions--Commercial Items, to adapt to the market

conditions for each acquisition.

(b) Tailoring 52.212-4, Contract Terms and Conditions--Commercial

Items. The following paragraphs of the clause at 52.212-4, Contract

Terms and Conditions--Commercial Items, implement statutory

requirements and shall not be tailored--

(1) Assignments;

(2) Disputes;

(3) Payment;

(4) Invoice;

(5) Other compliances; and

(6) Compliance with laws unique to Government contracts.

(c) Tailoring inconsistent with customary commercial practice. The

contracting officer shall not tailor any clause or otherwise include

any additional terms or conditions in a solicitation or contract for

commercial items in a manner that is inconsistent with customary

commercial practice for the item being acquired unless a waiver is

approved in accordance with agency procedures. The request for waiver

must describe the customary commercial practice found in the

marketplace, support the need to include a term or condition that is

inconsistent with that practice and include a determination that use of

the customary commercial practice is inconsistent with the needs of the

Government. A waiver may be requested for an individual or class of

contracts for that specific item.

(d) Tailoring shall be by addenda to the solicitation and contract.

The contracting officer shall indicate in Block 26 of the SF 1449 if

addenda are attached. These addenda may include, for example, a

continuation of the schedule of supplies/services to be acquired from

blocks 18 through 21 of the SF 1449; a continuation of the description

of the supplies/services being acquired; further elaboration of any

other item(s) on the SF 1449; any other terms or conditions necessary

for the performance of the proposed contract (such as options, ordering

procedures for indefinite-delivery type contracts, warranties, contract

financing arrangements, etc.).

12.303 Contract format.

Solicitations and contracts for the acquisition of commercial items

prepared using this part 12 shall be assembled, to the maximum extent

practicable, using the following format:

(a) Standard Form (SF) 1449;

(b) Continuation of any block from SF 1449, such as--

(1) Block 10 if set-aside for emerging small businesses;

(2) Block 16B for remittance address;

(3) Block 18 for contract line item numbers;

(4) Block 19 for schedule of supplies/services; or

(5) Block 24 for accounting data;

(c) Contract clauses--

(1) 52.212-4, Contract Terms and Conditions--Commercial Items, by

reference (see SF 1449, Block 26);

(2) Any addendum to 52.212-4; and

(3) 52.212-5, Contract Terms and Conditions Required to Implement

Statutes and Executive Orders;

(d) Any contract documents, exhibits or attachments; and

(e) Solicitation provisions--

(1) 52.212-1, Instructions to Offerors--Commercial Items, by

reference (see SF 1449, Block 26);

(2) Any addendum to 52.212-1;

(3) 52.212-2, Evaluation--Commercial Items, or other description of

evaluation factors for award, if used; and

(4) 52.212-3, Offeror Representations and Certifications--

Commercial Items.

Subpart 12.4--Unique Requirements Regarding Terms and Conditions

for Commercial Items

12.401 General.

This subpart provides--

(a) Guidance regarding tailoring of the paragraphs in the clause at

52.212-4, Contract Terms and Conditions--Commercial Items, when the

paragraphs do not reflect the customary practice for a particular

market; and

(b) Guidance on the administration of contracts for commercial

items in those areas where the terms and conditions in 52.212-4 differ

substantially from those contained elsewhere in the FAR.

12.402 Acceptance.

(a) The acceptance paragraph in 52.212-4 is based upon the

assumption that the Government will rely on the contractor's assurances

that the commercial item tendered for acceptance conforms to the

contract requirements. The Government inspection of commercial items

will not

[[Page 48245]]

prejudice its other rights under the acceptance paragraph.

Additionally, although the paragraph does not address the issue of

rejection, the Government always has the right to refuse acceptance of

nonconforming items. This paragraph is generally appropriate when the

Government is acquiring noncomplex commercial items.

(b) Other acceptance procedures may be more appropriate for the

acquisition of complex commercial items or commercial items used in

critical applications. In such cases, the contracting officer shall

include alternative inspection procedure(s) in an addendum and ensure

these procedures and the postaward remedies adequately protect the

interests of the Government. The contracting officer must carefully

examine the terms and conditions of any express warranty with regard to

the effect it may have on the Government's available postaward remedies

(see 12.404).

(c) The acquisition of commercial items under other circumstances

such as on an ``as is'' basis may also require acceptance procedures

different from those contained in 52.212-4. The contracting officer

should consider the effect the specific circumstances will have on the

acceptance paragraph as well as other paragraphs of the clause.

12.403 Termination.

(a) General. The clause at 52.212-4 permits the Government to

terminate a contract for commercial items either for the convenience of

the Government or for cause. However, the paragraphs in 52.212-4

entitled ``Termination for the Government's Convenience'' and

``Termination for Cause'' contain concepts which differ from those

contained in the termination clauses prescribed in part 49.

Consequently, the requirements of part 49 do not apply when terminating

contracts for commercial items and contracting officers shall follow

the procedures in this section. Contracting officers may continue to

use part 49 as guidance to the extent that part 49 does not conflict

with this section and the language of the termination paragraphs in

52.212-4.

(b) Policy. The contracting officer should exercise the

Government's right to terminate a contract for commercial items either

for convenience or for cause only when such a termination would be in

the best interests of the Government. The contracting officer should

consult with counsel prior to terminating for cause.

(c) Termination for cause. (1) The paragraph in 52.2124 entitled

``Excusable Delay'' requires contractors notify the contracting officer

as soon as possible after commencement of any excusable delay. In most

situations, this requirement should eliminate the need for a show cause

notice prior to terminating a contract. The contracting officer shall

send a cure notice prior to terminating a contract for a reason other

than late delivery.

(2) The Government's rights after a termination for cause shall

include all the remedies available to any buyer in the marketplace. The

Government's preferred remedy will be to acquire similar items from

another contractor and to charge the defaulted contractor with any

excess reprocurement costs together with any incidental or

consequential damages incurred because of the termination.

(3) When a termination for cause is appropriate, the contracting

officer shall send the contractor a written notification regarding the

termination. At a minimum, this notification shall--

(i) Indicate the contract is terminated for cause;

(ii) Specify the reasons for the termination;

(iii) Indicate which remedies the Government intends to seek or

provide a date by which the Government will inform the contractor of

the remedy; and

(iv) State that the notice constitutes a final decision of the

contracting officer and that the contractor has the right to appeal

under the Disputes clause (see 33.211).

(d) Termination for the Government's convenience. (1) When the

contracting officer terminates a contract for commercial items for the

Government's convenience, the contractor shall be paid--

(i) The percentage of the contract price reflecting the percentage

of the work performed prior to the notice of the termination, and

(ii) Any charges the contractor can demonstrate directly resulted

from the termination. The contractor may demonstrate such charges using

its standard record keeping system and is not required to comply with

the cost accounting standards or the contract cost principles in part

31. The Government does not have any right to audit the contractor's

records solely because of the termination for convenience.

(2) Generally, the parties should mutually agree upon the

requirements of the termination proposal. The parties must balance the

Government's need to obtain sufficient documentation to support payment

to the contractor against the goal of having a simple and expeditious

settlement.

12.404 Warranties.

(a) Implied warranties. The Government's post award rights

contained in 52.212-4 are the implied warranty of merchantability, the

implied warranty of fitness for particular purpose and the remedies

contained in the acceptance paragraph.

(1) The implied warranty of merchantability provides that an item

is reasonably fit for the ordinary purposes for which such items are

used. The items must be of at least average, fair or medium-grade

quality and must be comparable in quality to those that will pass

without objection in the trade or market for items of the same

description.

(2) The implied warranty of fitness for a particular purpose

provides that an item is fit for use for the particular purpose for

which the Government will use the items. The Government can rely upon

an implied warranty of fitness for particular purpose when--

(i) The seller knows the particular purpose for which the

Government intends to use the item; and

(ii) The Government relied upon the contractor's skill and judgment

that the item would be appropriate for that particular purpose.

(3) Contracting officers should consult with legal counsel prior to

asserting any claim for a breach of an implied warranty.

(b) Express warranties. The Federal Acquisition Streamlining Act of

1994 (41 U.S.C. 264 note) requires contracting officers to take

advantage of commercial warranties. To the maximum extent practicable,

solicitations for commercial items shall require offerors to offer the

Government at least the same warranty terms, including offers of

extended warranties, offered to the general public in customary

commercial practice. Solicitations may specify minimum warranty terms,

such as minimum duration, appropriate for the Government's intended use

of the item.

(1) Any express warranty the Government intends to rely upon must

meet the needs of the Government. The contracting officer should

analyze any commercial warranty to determine if--

(i) The warranty is adequate to protect the needs of the

Government, e.g., items covered by the warranty and length of warranty;

(ii) The terms allow the Government effective postaward

administration of the warranty to include the identification of

warranted items, procedures for the return of warranted items to the

contractor for repair or replacement, and collection of product

performance information; and

(iii) The warranty is cost-effective.

[[Page 48246]]

(2) In some markets, it may be customary commercial practice for

contractors to exclude or limit the implied warranties contained in

52.212-4 in the provisions of an express warranty. In such cases, the

contracting officer shall ensure that the express warranty provides for

the repair or replacement of defective items discovered within a

reasonable period of time after acceptance.

(3) Express warranties shall be included in the contract by

addendum (see 12.302).

Subpart 12.5--Applicability of Certain Laws to the Acquisition of

Commercial Items

12.500 Scope of subpart.

As required by Section 34 of the Office of Federal Procurement

Policy Act (41 U.S.C. 430), this subpart lists provisions of laws that

are not applicable to contracts for the acquisition of commercial

items, or are not applicable to subcontracts, at any tier, for the

acquisition of a commercial item. This subpart also lists provisions of

law that have been amended to eliminate or modify their applicability

to either contracts or subcontracts for the acquisition of commercial

items.

12.501 Applicability.

(a) This subpart applies to any contract or subcontract at any tier

for the acquisition of commercial items.

(b) Nothing in this subpart shall be construed to authorize the

waiver of any provision of law with respect to any subcontract if the

prime contractor is reselling or distributing commercial items of

another contractor without adding value. This limitation is intended to

preclude establishment of unusual contractual arrangements solely for

the purpose of Government sales.

(c) For purposes of this subpart, contractors awarded subcontracts

under subpart 19.8, Contracting with the Small Business Administration

(the 8(a) Program), shall be considered prime contractors.

12.502 Procedures.

(a) The FAR prescription for the provision or clause for each of

the laws listed in 12.503 has been revised in the appropriate part to

reflect its proper application to prime contracts for the acquisition

of commercial items.

(b) For subcontracts for the acquisition of commercial items or

commercial components, the clauses at 52.212-5, Contract Terms and

Conditions Required to Implement Statutes or Executive Orders--

Commercial Items, and 52.244-6, Subcontracts for Commercial Items and

Commercial Components, reflect the applicability of the laws listed in

12.504 by identifying the only provisions and clauses that are required

to be included in a subcontract at any tier for the acquisition of

commercial items or commercial components.

12.503 Applicability of certain laws to executive agency contracts for

the acquisition of commercial items.

(a) The following laws are not applicable to executive agency

contracts for the acquisition of commercial items:

(1) 41 U.S.C. 43, Walsh-Healey Act (see subpart 22.6).

(2) 41 U.S.C. 254(a) and 10 U.S.C. 2306(b), Contingent Fees (see

3.404).

(3) 41 U.S.C. 416(a)(6), Minimum Response Time for Offers under

Office of Federal Procurement Policy Act (see 5.203).

(4) 41 U.S.C. 701, et seq., Drug-Free Workplace Act of 1988 (see

23.501).

(b) Certain requirements of the following laws have been eliminated

for executive agency contracts for the acquisition of commercial items:

(1) 33 U.S.C. 1368, Requirement for a certificate and clause under

the Federal Water Pollution Control Act (see 23.105).

(2) 40 U.S.C. 327 et seq., Requirement for a certificate and clause

under the Contract Work Hours and Safety Standards Act (see 22.305).

(3) 41 U.S.C. 57(a) and (b), and 58, Requirement for a clause and

certain other requirements related to the Anti-Kickback Act of 1986

(see 3.502).

(4) 41 U.S.C. 423(e)(1)(B), Requirement for a certain certification

under the Procurement Integrity Act (see 3.104-9).

(5) 42 U.S.C. 7606, Requirements for a certificate and clause under

the Clean Air Act (see 23.105).

(6) 49 U.S.C. 40118, Requirement for a certificate and clause under

the Fly American provisions (see 47.405).

(c) The applicability of the following laws have been modified in

regards to Executive agency contracts for the acquisition of commercial

items:

(1) 41 U.S.C. 253g and 10 U.S.C. 2402, Prohibition on Limiting

Subcontractor Direct Sales to the United States (see 3.503).

(2) 41 U.S.C. 254(d) and 10 U.S.C. 2306a, Truth in Negotiations Act

(see 15.804).

(3) 41 U.S.C. 422, Cost Accounting Standards (see 48 CFR chapter

99).

12.504 Applicability of certain laws to subcontracts for the

acquisition of commercial items.

(a) The following laws are not applicable to subcontracts at any

tier for the acquisition of commercial items or commercial components

at any tier:

(1) 15 U.S.C. 644(d), Requirements relative to labor surplus areas

under the Small Business Act (see subpart 19.2).

(2) 19 U.S.C. 1202, Tariff Act of 1930 (see subpart 25.6).

(3) 19 U.S.C. 1309, Supplies for Certain Vessels and Aircraft (see

subpart 25.6).

(4) 19 U.S.C. 2701, et seq., Authority to Grant Duty Free Treatment

(see subpart 25.6).

(5) 31 U.S.C. 1352, Limitation on Payments to Influence Certain

Federal Transactions (see subpart 3.8).

(6) 41 U.S.C. 43, Walsh-Healey Act (see subpart 22.6).

(7) 41 U.S.C. 253d, Validation of Proprietary Data Restrictions

(see subpart 27.4).

(8) 41 U.S.C. 254(a) and 10 U.S.C. 2306(b), Contingent Fees (see

subpart 3.4).

(9) 41 U.S.C. 254d(c) and 10 U.S.C. 2313(c), Examination of Records

of Contractor, when a subcontractor is not required to provide cost or

pricing data (see subpart 15.1).

(10) 41 U.S.C. 351, Service Contract Act of 1965, as amended (see

subpart 22.10).

(11) 41 U.S.C. 416(a)(6), Minimum Response Time for Offers under

Office of Federal Procurement Policy Act (see subpart 5.2).

(12) 41 U.S.C. 418a, Rights in Technical Data (see subpart 27.4).

(13) 41 U.S.C. 701, et seq., Drug-Free Workplace Act of 1988 (see

subpart 23.5).

(14) 46 U.S.C. 1241(b), Transportation in American Vessels of

Government Personnel and Certain Cargo (see subpart 47.5)

(inapplicability effective May 1, 1996).

(15) 49 U.S.C. 40118, Fly American provisions (see subpart 47.4).

(16) Public Law 90-469, William Langer Jewel Bearing Plant Special

Act (see subpart 8.2).

(b) Certain requirements of the following laws have been eliminated

for subcontracts at any tier for the acquisition of commercial items or

commercial components:

(1) 33 U.S.C. 1368, Requirement for a certificate and clause under

the Federal Water Pollution Control Act (see subpart 23.1).

(2) 40 U.S.C. 327, et seq., Requirement for a certificate and

clause under the Contract Work Hours and Safety Standards Act (see

subpart 22.3).

(3) 41 U.S.C. 423(e)(1)(B), Requirement for certain certifications

under the Procurement Integrity Act (see subpart 3.1).

[[Page 48247]]

(4) 42 U.S.C. 7606, Requirements for a certificate and clause under

the Clean Air Act (see subpart 23.1).

(c) The applicability of the following laws have been modified in

regards to subcontracts at any tier for the acquisition of commercial

items or commercial components:

(1) 41 U.S.C. 253g and 10 U.S.C. 2402, Prohibition on Limiting

Subcontractor Direct Sales to the United States (see subpart 3.5).

(2) 41 U.S.C. 254(d) and 10 U.S.C. 2306a, Truth in Negotiations Act

(see subpart 15.8).

(3) 41 U.S.C. 422, Cost Accounting Standards (see 48 CFR chapter

99).

Subpart 12.6--Streamlined Procedures for Evaluation and

Solicitation for Commercial Items

12.601 General.

This subpart provides optional procedures for--

(a) Streamlined evaluation of offers for commercial items; and

(b) Streamlined solicitation of offers for commercial items for use

where appropriate.

These procedures are intended to simplify the process of preparing

and issuing solicitations, and evaluating offers for commercial items

consistent with customary commercial practices.

12.602 Streamlined evaluation of offers.

(a) When evaluation factors are used, the contracting officer may

insert a provision substantially the same as the provision at 52.212-2,

Evaluation--Commercial Items, in solicitations for commercial items or

comply with the procedures in 13.106-1 if the acquisition is being made

using the procedures in part 13. When the provision at 52.212-2 is

used, paragraph (a) of the provision shall be tailored to the specific

acquisition to describe the evaluation factors and relative importance

of those factors. This provision contemplates an approach designed to

select the source whose offer will provide the Government with the

greatest value in terms of performance and other factors. Other methods

of evaluation and basis for award may be more appropriate for a given

acquisition.

(b) Offers shall be evaluated in accordance with the criteria

contained in the solicitation. For many commercial items, the criteria

need not be more detailed than technical (capability of the item

offered to meet the agency need), price and past performance. Technical

capability may be evaluated by how well the proposed products meet the

Government requirement instead of predetermined subfactors.

Solicitations for commercial items do not have to contain subfactors

for technical capability when the solicitation adequately describes the

item's intended use. A technical evaluation would normally include

examination of such things as product literature, product samples (if

requested), technical features and warranty provisions. Past

performance shall be evaluated in accordance with the procedures in

section 13.106-1 or subpart 15.6, as applicable. The contracting

officer shall ensure the instructions provided in the provision at

52.212-1, Instructions to Offerors--Commercial Items, and the

evaluation criteria provided in the provision at 52.212-2, Evaluation--

Commercial Items, are in agreement.

(c) Select the offer that is most advantageous to the Government

based on the factors contained in the solicitation. Fully document the

rationale for selection of the successful offeror including discussion

of any tradeoffs considered.

12.603 Streamlined solicitation for commercial items.

(a) When a written solicitation will be issued, the contracting

officer may use the following procedure to reduce the time required to

solicit and award contracts for the acquisition of commercial items.

This procedure combines the Commerce Business Daily (CBD) synopsis

required by 5.203 and the issuance of the solicitation into a single

document with the following limitations:

(1) Section 5.207 limits submissions to the CBD to 12,000 textual

characters (approximately 3 \1/2\ single-spaced pages).

(2) This combined CBD synopsis/solicitation is only appropriate

where the solicitation is relatively simple and is not recommended for

use when lengthy addenda to the solicitation are necessary.

(b) When using the combined synopsis/solicitation procedure, the SF

1449 is not used for issuing the solicitation.

(c) To use these procedures, the contracting officer shall--

(1) Prepare the synopsis as described at 5.207 for items 1-16.

(2) In item 17, Description, include the following additional

information:

(i) The following statement:

This is a combined synopsis/solicitation for commercial items

prepared in accordance with the format in FAR Subpart 12.6, as

supplemented with additional information included in this notice.

This announcement constitutes the only solicitation; proposals are

being requested and a written solicitation will not be issued.

(ii) The solicitation number and a statement that the solicitation

is issued as an invitation to bid (IFB), request for quotation (RFQ) or

request for proposal (RFP).

(iii) A statement that the solicitation document and incorporated

provisions and clauses are those in effect through Federal Acquisition

Circular ______.

(iv) A notice regarding any set-aside and the associated standard

industrial classification code and small business size standard. Also

include a statement regarding the Small Business Competitiveness

Demonstration Program, if applicable.

(v) A list of contract line item number(s) and items, quantities

and units of measure, (including option(s), if applicable).

(vi) Description of requirements for the items to be acquired.

(vii) Date(s) and place(s) of delivery and acceptance and FOB

point.

(viii) A statement that the provision at 52.212-1, Instructions to

Offerors--Commercial, applies to this acquisition and a statement

regarding any addenda to the provision.

(ix) A statement regarding the applicability of the provision at

52.212-2, Evaluation--Commercial Items, if used, and the specific

evaluation criteria to be included in paragraph (a) of that provision.

If this provision is not used, describe the evaluation procedures to be

used.

(x) A statement advising offerors to include a completed copy of

the provision at 52.212-3, Offeror Representations and Certifications--

Commercial Items, with its offer.

(xi) A statement that the clause at 52.212-4, Contract Terms and

Conditions--Commercial Items, applies to this acquisition and a

statement regarding any addenda to the clause.

(xii) A statement that the clause at 52.212-5, Contract Terms and

Conditions Required To Implement Statutes Or Executive Orders--

Commercial Items, applies to this acquisition and a statement regarding

which, if any, of the additional FAR clauses cited in the clause are

applicable to the acquisition.

(xiii) A statement regarding any additional contract requirement(s)

or terms and conditions (such as contract financing arrangements,

warranty requirements or GSA Delegation of Procurement Authority (DPA)

case number (see 48 CFR 201-39.106-4)) determined by the contracting

officer to be necessary for this acquisition and consistent with

customary commercial practices.

[[Page 48248]]

(xiv) A statement regarding the Defense Priorities and Allocations

System (DPAS) and assigned rating, if applicable.

(xv) A statement regarding any applicable Commerce Business Daily

numbered notes.

(xvi) The date, time and place offers are due.

(xvii) The name and telephone number of the individual to contact

for information regarding the solicitation.

(3) Allow response time for receipt of offers as follows:

(i) Because the CBD synopsis and solicitation are contained in a

single document, it is not necessary to publish a separate CBD synopsis

15 days before the issuance of the solicitation.

(ii) When using the combined CBD synopsis/solicitation, contracting

officers shall establish a response time in accordance with 5.203(b),

but shall allow at least 15 days response time from the date the notice

is published in the CBD.

(4) Publish amendments to solicitations in the same manner as the

initial synopsis/solicitation.

PART 14--SEALED BIDDING

14.201-2 [Amended]

34. Section 14.201-2 is amended in the parenthetical of paragraphs

(b) and (c) by removing ``part 10, Specifications, Standards, and Other

Product Descriptions'' and inserting ``part 11'' in its place; in

paragraph (d) by removing ``(see 10.004(e))''; and in the parenthetical

of paragraph (f) by revising the parenthetical to read ``(see subpart

11.4, Delivery or Performance Schedules).''

14.404-1 [Amended]

35. Section 14.404-1 is amended in paragraph (b) by removing

``10.008'' and inserting ``11.201''.

PART 15--CONTRACTING BY NEGOTIATION

15.406-2 [Amended]

36. Section 15.406-2 is amended in the parenthetical of paragraph

(c) by removing ``part 10, Specifications, Standards, and Other Product

Descriptions'' and inserting ``part 11''; in paragraph (d) by removing

``(see 10.004(e))''; and in paragraph (f) by revising the parenthetical

to read ``(subpart 11.4, Delivery or Performance Schedules, and 47.301-

1).''

37. Section 15.501 is amended by revising the definition

``Commercial product offer'' to read as follows:

15.501 Definitions.

* * * * *

Commercial item offer means an offer of a commercial item the

vendor wishes to see introduced in the Government's supply system as an

alternate or replacement for an existing supply item.

* * * * *

15.503 [Amended]

38. Section 15.503 is amended in paragraph (b) by removing the word

``product'' and inserting ``item''.

39. Section 15.704 is amended by revising the second sentence to

read as follows:

15.704 Items and work included.

* * * Raw materials, commercial items (see 2.101), and off-the-

shelf items (see 46.101) shall not be included, unless their potential

impact on contract cost or schedule is critical. * * *

PART 16--TYPES OF CONTRACTS

40. Section 16.201 is amended by adding a sentence at the end of

the paragraph to read as follows:

16.201 General.

* * * The contracting officer shall use firm-fixed-price or fixed-

price with economic price adjustment contracts when acquiring

commercial items.

41. Section 16.202-2 is amended by revising the introductory

paragraph to read as follows:

16.202-2 Application.

A firm-fixed-price contract is suitable for acquiring commercial

items (see parts 2 and 12) or for acquiring other supplies or services

on the basis of reasonably definite functional or detailed

specifications (see part 11) when the contracting officer can establish

fair and reasonable prices at the outset, such as when--

* * * * *

42. Section 16.301-3 is amended by redesignating paragraphs (a)

through (c) as paragraph (a)(1) through (a)(3), respectively;

designating the introductory text as paragraph (a) introductory text

and adding new (b) to read as follows:

16.301-3 Limitations.

* * * * *

(b) The use of cost-reimbursement contracts is prohibited for the

acquisition of commercial items (see parts 2 and 12).

16.603-2 [Amended]

43. Section 16.603-2 is amended in paragraph (e) by removing

``12.304'' and inserting ``11.604''.

PART 22--APPLICATION OF LABOR LAWS TO GOVERNMENT ACQUISITIONS

44. Section 22.305 is amended by redesignating paragraph (g) as (h)

and adding a new paragraph (g) to read as follows:

22.305 Contract clause.

* * * * *

(g) Contracts for commercial items (see parts 2 and 12).

* * * * *

45. Section 22.604-1 is amended by revising paragraph (a) to read

as follows:

22.604-1 Statutory exemptions.

* * * * *

(a) Any item in those situations where the contracting officer is

authorized by the express language of a statute to purchase ``in the

open market'' generally (such as commercial items, see part 12); or

where a specific purchase is made under the conditions described in

6.302-2 in circumstances where immediate delivery is required by the

public exigency.

* * * * *

PART 23--ENVIRONMENTAL, CONSERVATION, OCCUPATIONAL SAFETY, AND

DRUG-FREE WORKPLACE

46. Section 23.104 is amended in paragraph (a)(1) by removing the

word ``or'' the second time it is used; in paragraph (a)(2) by removing

the period and inserting ``; or'' and adding paragraph (a)(3) to read

as follows:

23.104 Exemptions.

(a) * * * (3) for commercial items.

* * * * *

47. Section 23.501 is amended by redesignating paragraphs (b)

through (d) as (c) through (e) and adding a new paragraph (b) to read

as follows:

23.501 Applicability.

* * * * *

(b) Contracts for the acquisition of commercial items (see part

12);

* * * * *

PART 31--CONTRACT COST PRINCIPLES AND PROCEDURES

31.106-3 [Amended]

48. Section 31.106-3 is amended in the section heading and the

first sentence of the undesignated paragraph by removing the word

``products'' and inserting ``items'' in their place.

[[Page 48249]]

PART 36--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS

36.202 [Amended]

49. Section 36.202 is amended in paragraph (a) by removing ``part

10'' and inserting ``part 11'' in its place.

36.206 [Amended]

50. Section 36.206 is amended by removing ``12.202'' and inserting

``11.502''.

36.303 [Amended]

51. Section 36.303 is amended in paragraph (c)(4) by removing

``12.1'' and inserting ``11.4''.

PART 42--CONTRACT ADMINISTRATION

42.1105 [Amended]

53. Section 42.1105 is amended by removing the reference ``subpart

12.3'' and inserting ``subpart 11.6''.

Subpart 42.13--[Redesignated from Subpart 12.5]

42.1304 [Amended]

54. and 55. Newly redesignated section 42.1304 (redesignated from

12.504) is amended in paragraph (a) by removing ``52.212-15'' and

inserting ``52.242-17''; and at the end of paragraph (d) by removing

the period and inserting ``, or information other than cost or pricing

data.'' in its place.

42.1305 [Amended]

56. Newly redesignated section 42.1305 (redesignated from 12.505)

is amended in paragraph (a) by removing ``52.212-12'' and inserting

``52.24214''; in paragraph (b)(1) by removing ``52.212-13'' and

inserting ``52.242-15''; in paragraph (c) by removing ``52.21214'' and

inserting ``52.242-16''; and in paragraph (d) by removing ``52.212-15''

and inserting ``52.242-17''.

PART 44--SUBCONTRACTING POLICIES AND PROCEDURES

57. Subpart 44.4, consisting of sections 44.400 through 44.403, is

added to read as follows:

Subpart 44.4--Subcontracts for Commercial Items and Commercial

Components

Sec.

44.400 Scope of subpart.

44.401 Applicability.

44.402 Policy requirements.

44.403 Contract clause.

Subpart 44.4--Subcontracts for Commercial Items and Commercial

Components

44.400 Scope of subpart.

This subpart prescribes the policies limiting the contract clauses

a prime contractor may be required to apply to any subcontractors that

are furnishing commercial items or commercial components in accordance

with Section 8002(b)(2) (Public Law 103-355).

44.401 Applicability.

This subpart applies to all contracts and subcontracts. For the

purpose of this subpart, the term ``subcontract'' has the same meaning

as defined in part 12.

44.402 Policy requirements.

(a) Contractors and subcontractors at all tiers shall, to the

maximum extent practicable:

(1) Be required to incorporate commercial items or nondevelopmental

items as components of items delivered to the Government; and

(2) Not be required to apply to any of its divisions, subsidiaries,

affiliates, subcontractors or suppliers that are furnishing commercial

items or commercial components any clause, except those--

(i) Required to implement provisions of law or executive orders

applicable to subcontractors furnishing commercial items or commercial

components; or

(ii) Determined to be consistent with customary commercial practice

for the item being acquired.

(b) The clause at 52.244-6, Subcontracts for Commercial Items and

Commercial Components, implements the policy in paragraph (a) of this

section. Notwithstanding any other clause in the prime contract, only

those clauses identified in the clause at 52.244-6 are required to be

in subcontracts for commercial items or commercial components.

(c) Agencies may supplement the clause at 52.244-6 only as

necessary to reflect agency unique statutes applicable to the

acquisition of commercial items.

44.403 Contract clause.

The contracting officer shall insert the clause at 52.244-6,

Subcontracts for Commercial Items and Commercial Components, in

solicitations and contracts for supplies or services other than

commercial items.

PART 46--QUALITY ASSURANCE

58. Section 46.101 is amended by adding in alphabetical order the

definition ``Commercial item'' to read as follows:

46.101 Definitions.

* * * * *

Commercial item (see 2.101).

* * * * *

59. Section 46.102 is amended in paragraph (e) by removing ``and'';

by redesignating paragraph (f) as (g) and adding a new paragraph (f) to

read as follows:

46.102 Policy.

* * * * *

(f) Contracts for commercial items shall rely on a contractor's

existing quality assurance system as a substitute for compliance with

Government inspection and testing before tender for acceptance unless

customary market practices for the commercial item being acquired

permit in-process inspection (Section 8002 of Public Law 103-355). Any

in-process inspection by the Government shall be conducted in a manner

consistent with commercial practice; and

* * * * *

46.202 [Amended]

60. Section 46.202 is amended by removing ``three'' and inserting

``four''.

61. Sections 46.202-1 through 46.202-3 are redesignated as 46.202-2

through 46.202-4 and a new 46.202-1 is added to read as follows:

46.202-1 Contracts for commercial items.

When acquiring commercial items (see part 12), the Government shall

rely on contractors' existing quality assurance systems as a substitute

for Government inspection and testing before tender for acceptance

unless customary market practices for the commercial item being

acquired include in-process inspection. Any in-process inspection by

the Government shall be conducted in a manner consistent with

commercial practice.

46.202-2 [Amended]

62. Newly redesignated section 46.202-2 is amended in paragraph

(b)(1) by removing ``(see 46.204 and Table 46-1)''.

46.202-4 [Amended]

63. Newly redesignated section 46.202-4 is amended in paragraph

(a)(1) by removing ``(see 46.204 and Table 46-1)''.

64. Section 46.203 is amended by revising paragraph (a)(1); at the

end of paragraph (a)(2) by removing ``;or'' and inserting a period; and

by removing paragraph (a)(3). The revised text reads as follows:

46.203 Criteria for use of contract quality requirements.

* * * * *

[[Page 48250]]

(a) * * *

(1) Commercial (described in commercial catalogs, drawings, or

industrial standards; see part 2); or

* * * * *

46.204 [Removed and reserved]

65. Section 46.204 and Table 46-1 are removed.

46.301 [Amended]

66. Section 46.301 is amended by removing ``46.202-1(b)'' and

inserting ``46.202-2(b)'' in its place.

46.311 and 46.402 [Amended]

67. Sections 46.311 and 46.402(e) are amended by removing ``46.202-

3'' and inserting ``46.202-4'' in their place.

46.404 [Amended]

68. Section 46.404 is amended at the end of paragraph (a) by

removing ``46.202-1'' and inserting ``46.202-2'' in its place; in

paragraph (b) introductory text by removing ``46.202-1(b)'' and

inserting ``46.202-2(b)'' in its place; and in paragraph (b)(2) by

removing the last sentence.

69. Section 46.709 is revised to read as follows:

46.709 Warranties of commercial items.

The contracting officer should take advantage of commercial

warranties, including extended warranties, where appropriate and in the

Government's best interests, offered by the contractor for the repair

and replacement of commercial items (see part 12).

70. Section 46.710 is amended by revising the first sentence of the

introductory paragraph; by removing paragraphs (a)(2) and (b)(2) and

redesignating paragraphs (a)(3) through (a)(6) as (a)(2) through

(a)(5), and paragraphs (b)(3) through (b)(5) as (b)(2) through (b)(4),

respectively. The revised text reads as follows:

46.710 Contract clauses.

The clauses and alternates prescribed in this section may be used

in solicitations and contracts in which inclusion of a warranty is

appropriate (see 46.709 for warranties for commercial items). * * *

* * * * *

PART 47--TRANSPORTATION

71. Section 47.405 is amended by revising the last sentence to read

as follows:

47.405 Contract clause.

* * * This clause does not apply to contracts awarded using the

simplified acquisition procedures in part 13 or contracts for

commercial items (see part 12).

72. Section 47.504 is amended by adding paragraph (e) to read as

follows:

47.504 Exceptions.

* * * * *

(e) Beginning May 1, 1996, subcontracts for the acquisition of

commercial items or commercial components (see 12.504(a)(13)). This

exception does not apply to grants-in-aid shipments, such as

agricultural and food-aid shipments, to shipments covered under Export-

Import Bank loans or guarantees, and to subcontracts under Government

contracts or agreements for ocean transportation services.

PART 49--TERMINATION OF CONTRACTS

49.402-7 [Amended]

73. Section 49.402-7 is amended in the last sentence of paragraph

(a) by removing ``52.212-4'' and inserting ``52.211-11'' in its place.

74. Section 49.501 is revised to read as follows:

49.501 General.

This subpart prescribes the principal contract termination clauses.

For contracts for the acquisition of commercial items, this part

provides administrative guidance which may be followed when it is

consistent with the requirements and procedures in the clause at

52.212-4, Contract Terms and Conditions--Commercial Items. In

appropriate cases, agencies may authorize the use of special purpose

clauses, if consistent with this chapter.

49.607 [Amended]

75. Section 49.607 is amended by removing from the introductory

text ``12.5'' and inserting ``42.13''.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

76. Section 52.202-1 is amended by revising the date of the clause;

by redesignating paragraphs (b) and (c) as (f) and (g), and adding new

paragraphs (b), (c), (d), and (e) to read as follows:

52.202-1 Definitions.

* * * * *

Definitions (Oct. 1995)

* * * * *

(b) Commercial component means any component that is a

commercial item.

(c) Commercial item means--

(1) Any item, other than real property, that is of a type

customarily used for nongovernmental purposes and that--

(i) Has been sold, leased, or licensed to the general public; or

(ii) Has been offered for sale, lease, or license to the general

public;

(2) Any item that evolved from an item described in paragraph

(c)(1) of this clause 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;

(3) Any item that would satisfy a criterion expressed in

paragraphs (c)(1) or (c)(2) of this clause, but for--

(i) Modifications of a type customarily available in the

commercial marketplace; or

(ii) 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;

(4) Any combination of items meeting the requirements of

paragraphs (c)(1), (2), (3), or (5) of this clause that are of a

type customarily combined and sold in combination to the general

public;

(5) 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 (c)(1),

(2), (3), or (4) of this clause, and if the source of such

services--

(i) Offers such services to the general public and the Federal

Government contemporaneously and under similar terms and conditions;

and

(ii) 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;

(6) 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;

(7) Any item, combination of items, or service referred to in

subparagraphs (c)(1) through (c)(6), 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

(8) 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.

(d) Component means any item supplied to the Federal Government

as part of an end item or of another component.

(e) Nondevelopmental item means--

(1) Any previously developed item of supply used exclusively for

governmental

[[Page 48251]]

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;

(2) Any item described in paragraph (e)(1) 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

(3) Any item of supply being produced that does not meet the

requirements of paragraph (e)(1) or (e)(2) solely because the item

is not yet in use.

* * * * *

(End of clause)

52.203-4 [Amended]

77. Section 52.203-4 is amended in the first sentence of the

introductory text by removing ``(b)(5)'' and inserting ``(b)(6)'' in

its place.

78. Section 52.203-6 is amended by revising the date of the clause

and adding an Alternate I following paragraph (c) to read as follows:

52.203-6 Restrictions on Subcontractor Sales to the Government.

Restrictions on Subcontractor Sales to the Government (Oct. 1995)

* * * * *

Alternate I (OCT. 1995). As prescribed in 3.503-2, substitute

the following paragraph in place of paragraph (b) of the basic

clause:

(b) The prohibition in paragraph (a) of this clause does not

preclude the Contractor from asserting rights that are otherwise

authorized by law or regulation. For acquisitions of commercial

items, the prohibition in paragraph (a) applies only to the extent

that any agreement restricting sales by subcontractors results in

the Federal Government being treated differently from any other

prospective purchaser for the sale of the commercial item(s).

52.210-1 through 52.210-7 [Redesignated]

79. Sections 52.210-1 through 52.210-7 are redesignated as 52.211-1

through 52.211-7.

52.212-1 through 52.212-11 [Redesignated]

80. Sections 52.212-1 through 52.212-11 are redesignated as 52.211-

8 through 52.211-18.

52.212-12 through 52.212-15 [Redesignated]

81. Sections 52.212-12 through 52.212-15 are redesignated as

52.242-14 through 52.242-17, respectively.

52.212-1 through 52.212-5 [Added]

82. Part 52 is amended by adding new sections 52.212-1 through

52.212-5 to read as follows:

Sec.

52.212-1 Instructions to Offerors-Commercial Items.

52.212-2 Evaluation-Commercial Items.

52.212-3 Offeror Representations and Certifications-Commercial

Items.

52.212-4 Contract Terms and Conditions-Commercial Items.

52.212-5 Contract Terms and Conditions Required to Implement

Statutes or Executive Orders-Commercial Items.

52.212-1 Instructions to Offerors--Commercial Items.

As prescribed in 12.301(b)(1), insert the following provision:

Instructions to Offerors--Commercial Items (Oct. 1995)

(a) Standard industrial classification (SIC) code and small

business size standard. The SIC code and small business size

standard for this acquisition appear in Block 10 of the solicitation

cover sheet (SF 1449). However, the small business size standard for

a concern which submits an offer in its own name, but which proposes

to furnish an item which it did not itself manufacture, is 500

employees.

(b) Submission of offers. Submit signed and dated offers to the

office specified in this solicitation at or before the exact time

specified in this solicitation. Offers may be submitted on the SF

1449, letterhead stationery, or as otherwise specified in the

solicitation. As a minimum, offers must show----

(1) The solicitation number;

(2) The time specified in the solicitation for receipt of

offers;

(3) The name, address, and telephone number of the offeror;

(4) A technical description of the items being offered in

sufficient detail to evaluate compliance with the requirements in

the solicitation. This may include product literature, or other

documents, if necessary;

(5) Terms of any express warranty;

(6) Price and any discount terms;

(7) ``Remit to'' address, if different than mailing address;

(8) A completed copy of the representations and certifications

at FAR 52.212-3;

(9) Acknowledgment of Solicitation Amendments;

(10) Past performance information, when included as an

evaluation factor, to include recent and relevant contracts for the

same or similar items and other references (including contract

numbers, points of contact with telephone numbers and other relevant

information); and

(11) If the offer is not submitted on the SF 1449, include a

statement specifying the extent of agreement with all terms,

conditions, and provisions included in the solicitation. Offers that

fail to furnish required representations or information, or reject

the terms and conditions of the solicitation may be excluded from

consideration.

(c) Period for acceptance of offers. The offeror agrees to hold

the prices in its offer firm for 30 calendar days from the date

specified for receipt of offers, unless another time period is

specified in an addendum to the solicitation.

(d) Product samples. When required by the solicitation, product

samples shall be submitted at or prior to the time specified for

receipt of offers. Unless otherwise specified in this solicitation,

these samples shall be submitted at no expense to the Government,

and returned at the sender's request and expense, unless they are

destroyed during preaward testing.

(e) Multiple offers. Offerors are encouraged to submit multiple

offers presenting alternative terms and conditions or commercial

items for satisfying the requirements of this solicitation. Each

offer submitted will be evaluated separately.

(f) Late offers. Offers or modifications of offers received at

the address specified for the receipt of offers after the exact time

specified for receipt of offers will not be considered.

(g) Contract award (not applicable to Invitation for Bids). The

Government intends to evaluate offers and award a contract without

discussions with offerors. Therefore, the offeror's initial offer

should contain the offeror's best terms from a price and technical

standpoint. However, the Government reserves the right to conduct

discussions if later determined by the Contracting Officer to be

necessary. The Government may reject any or all offers if such

action is in the public interest; accept other than the lowest

offer; and waive informalities and minor irregularities in offers

received.

(h) Multiple awards. The Government may accept any item or group

of items of an offer, unless the offeror qualifies the offer by

specific limitations. Unless otherwise provided in the Schedule,

offers may not be submitted for quantities less than those

specified. The Government reserves the right to make an award on any

item for a quantity less than the quantity offered, at the unit

prices offered, unless the offeror specifies otherwise in the offer.

(i) Availability of requirements documents cited in the

solicitation. (1) The Index of Federal Specifications, Standards and

Commercial Item Descriptions and the documents listed in it may be

obtained from the General Services Administration, Federal Supply

Service Bureau, Specifications Section, Suite 8100, 470 L'Enfant

Plaza, SW., Washington, DC 20407 ((202) 755-0325/0326).

(2) The DOD Index of Specifications and Standards (DODISS) and

documents listed in it may be obtained from the Standardization

Documents Desk, Building 4D, 700 Robbins Avenue, Philadelphia, PA

19111-5094 (telephone (215) 697-2569).

(i) Automatic distribution may be obtained on a subscription

basis.

(ii) Individual documents may be ordered from the Telespecs

ordering system by touch-tone telephone. A customer number is

required to use this service and can be obtained from the

Standardization Documents Order Desk or the Special Assistance Desk

(telephone (610) 607-2667/2179).

(3) Nongovernment (voluntary) standards must be obtained from

the organization responsible for their preparation, publication or

maintenance.

(End of provision)

[[Page 48252]]

52.212-2 Evaluation--Commercial Items.

As prescribed in 12.301(c), the Contracting Officer may insert a

provision substantially as follows:

Evaluation--Commercial Items (Oct. 1995)

(a) The Government will award a contract resulting from this

solicitation to the responsible offeror whose offer conforming to

the solicitation will be most advantageous to the Government, price

and other factors considered. The following factors shall be used to

evaluate offers:

----------------------------------------------------------------------

----------------------------------------------------------------------

(Contracting Officer shall insert the significant evaluation

factors, such as (i) technical capability of the item offered to

meet the Government requirement; (ii) price; (iii) past performance

(see FAR 15.605) and include them in the relative order of

importance of the evaluation factors, such as in descending order of

importance.)

Technical and past performance, when combined, are ------------

-------- (Contracting Officer state, in accordance with FAR 15.605,

the relative importance of all other evaluation factors, when

combined, when compared to price.)

(b) Options. The Government will evaluate offers for award

purposes by adding the total price for all options to the total

price for the basic requirement. The Government may determine that

an offer is unacceptable if the option prices are significantly

unbalanced. Evaluation of options shall not obligate the Government

to exercise the option(s).

(c) A written notice of award or acceptance of an offer, mailed

or otherwise furnished to the successful offeror within the time for

acceptance specified in the offer, shall result in a binding

contract without further action by either party. Before the offer's

specified expiration time, the Government may accept an offer (or

part of an offer), whether or not there are negotiations after its

receipt, unless a written notice of withdrawal is received before

award.

(End of Provision)

52.212-3 Offeror Representations and Certifications Commercial Items.

As prescribed in 12.301(b)(2), insert the following provision:

Offeror Representations and Certifications--Commercial Items (Oct.

1995)

(a) Definitions. As used in this provision:

Emerging small business means a small business concern whose

size is no greater than 50 percent of the numerical size standard

for the standard industrial classification code designated.

Small business concern means a concern, including its

affiliates, that is independently owned and operated, not dominant

in the field of operation in which it is bidding on Government

contracts, and qualified as a small business under the criteria in

13 CFR Part 121 and size standards in this solicitation.

Small disadvantaged business concern means a small business

concern that--

(1) Is at least 51 percent unconditionally owned by one or more

individuals who are both socially and economically disadvantaged, or

a publicly owned business, having at least 51 percent of its stock

unconditionally owned by one or more socially and economically

disadvantaged individuals, and

(2) Has its management and daily business controlled by one or

more such individuals. This term also means a small business concern

that is at least 51 percent unconditionally owned by an economically

disadvantaged Indian tribe or Native Hawaiian organization, or a

publicly owned business having at least 51 percent of its stock

unconditionally owned by one or more of these entities, which has

its management and daily business controlled by members of an

economically disadvantaged Indian tribe or Native Hawaiian

organization and which meets the requirements of 13 CFR Part 124.

Women-owned small business concern means a small business

concern--

(a) Which is at least 51 percent owned by one or more women or,

in the case of any publicly owned business, at least 51 percent of

the stock of which is owned by one or more women; and

(b) Whose management and daily business operations are

controlled by one or more women.

Women-owned business concern means a concern which is at least

51 percent owned by one or more women; or in the case of any

publicly owned business, at least 51 percent of the stock of which

is owned by one or more women; and whose management and daily

business operations are controlled by one or more women.

(b) Taxpayer identification number (TIN) (26 U.S.C. 6050M). (1)

Taxpayer Identification Number (TIN).

{time} TIN: ________________.

{time} TIN has been applied for.

{time} TIN is not required because:

{time} Offeror is a nonresident alien, foreign corporation, or

foreign partnership that does not have income effectively connected

with the conduct of a trade or business in the U.S. and does not

have an office or place of business or a fiscal paying agent in the

U.S.;

{time} Offeror is an agency or instrumentality of a foreign

government;

{time} Offeror is an agency or instrumentality of a Federal,

state, or local government;

{time} Other. State basis. ________________

(2) Corporate Status.

{time} Corporation providing medical and health care services,

or engaged in the billing and collecting of payments for such

services;

{time} Other corporate entity;

{time} Not a corporate entity:

{time} Sole proprietorship

{time} Partnership

{time} Hospital or extended care facility described in 26 CFR

501(c)(3) that is exempt from taxation under 26 CFR 501(a).

(3) Common Parent.

{time} Offeror is not owned or controlled by a common parent.

Name and TIN of common parent:

Name-------------------------------------------------------------------

TIN--------------------------------------------------------------------

(c) Offerors must complete the following representations when

the resulting 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. Check all that

apply.

(1) Small business concern. The offeror represents as part of

its offer that it {time} is, {time} is not a small business

concern.

(2) Small disadvantaged business concern. The offeror represents

and certifies that it {time} is, {time} is not a small

disadvantaged business concern.

(3) Women-owned small business concern. The offeror represents

that it {time} is, {time} is not a women-owned small business

concern.

Note: Complete paragraphs (c)(4) and (c)(5) only if this

solicitation is expected to exceed the simplified acquisition

threshold.

(4) Women-owned business concern. The offeror represents that it

{time} is, {time} is not, a women-owned business concern.

(5) Tie bid priority for labor surplus area concerns. If this is

an invitation for bid, small business offerors may identify the

labor surplus areas in which costs to be incurred on account of

manufacturing or production (by offeror or first-tier

subcontractors) amount to more than 50 percent of the contract

price:

----------------------------------------------------------------------

(6) Small Business Size for the Small Business Competitiveness

Demonstration Program and for the Targeted Industry Categories under

the Small Business Competitiveness Demonstration Program. [Complete

only if the offeror has certified itself to be a small business

concern under the size standards for this solicitation.]

(i) (Complete only for solicitations indicated in an addendum as

being set-aside for emerging small businesses in one of the four

designated industry groups (DIGs).) The offeror represents as part

of its offer that it {time} is, {time} is not an emerging small

business.

(ii) (Complete only for solicitations indicated in an addendum

as being for one of the targeted industry categories (TICs) or four

designated industry groups (DIGs).) Offeror represents and certifies

as follows:

(A) Offeror's number of employees for the past 12 months (check

the Employees column if size standard stated in the solicitation is

expressed in terms of number of employees); or

(B) Offeror's average annual gross revenue for the last 3 fiscal

years (check the Average Annual Gross Number of Revenues column if

size standard stated in the solicitation is expressed in terms of

annual receipts)

(Check one of the following):

Average Annual Gross

Number of Employees Revenues

____ 50 or fewer ____ $1

million or less

____ 51-100 ____

$1,000,001-$2 million

[[Page 48253]]

____ 101-250 ____

$2,000,001-$3.5 million

____ 251-500 ____

$3,500,001-$5 million

____ 501-750 ____

$5,000,001-$10 million

____ 751-1,000 ____

$10,000,001-$17 million

____ Over 1,000 ____

Over $17 million

(d) Certifications and representations required to implement

provisions of Executive Order 11246--

(1) Certification of non-segregated facilities. (Applies only if

the contract amount is expected to exceed $10,000)--

By submission of this offer, the offeror certifies that it does

not and will not maintain or provide for its employees, any

facilities that are segregated on the basis of race, color,

religion, or national origin because of habit, local custom, or

otherwise and that it does not and will not permit its employees to

perform their services at any location where segregated facilities

are maintained. The offeror agrees that a breach of this

certification is a violation of the Equal Opportunity clause in the

contract.

(2) Previous Contracts and Compliance. The offeror represents

that--

(i) It {time} has, {time} has not, participated in a previous

contract or subcontract subject either to the Equal Opportunity

clause of this solicitation, the clause originally contained in

Section 310 of Executive Order 10925, or the clause contained in

Section 201 of Executive Order 11114; and

(ii) It {time} has, {time} has not, filed all required

compliance reports.

(3) Affirmative Action Compliance. The offeror represents that--

(i) It {time} has developed and has on file, {time} has not

developed and does not have on file, at each establishment,

affirmative action programs required by rules and regulations of the

Secretary of Labor (41 CFR Subparts 60-1 and 60-2), or

(ii) It {time} has not previously had contracts subject to the

written affirmative action programs requirement of the rules and

regulations of the Secretary of Labor.

(e) Certification Regarding Payments to Influence Federal

Transactions (31 U.S.C. 1352). (Applies only if the contract is

expected to exceed $100,000.) By submission of its offer, the

offeror certifies to the best of its knowledge and belief that no

Federal appropriated funds 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 on his or her

behalf in connection with the award of any resultant contract.

(f) Buy American Act--Trade Agreements--Balance of Payments

Program Certificate. (Applies only if FAR clause 52.225-9, Buy

American Act--Trade Agreement--Balance of Payments Program, is

included in this solicitation.)

(1) The offeror hereby certifies that each end product, except

those listed in paragraph (f)(2) of this provision, is a domestic

end product (as defined in the clause entitled ``Buy American Act--

Trade Agreements Balance of Payments Program'') and that components

of unknown origin have been considered to have been mined, produced,

or manufactured outside the United States, a designated country, a

North American Free Trade Agreement (NAFTA) country, or a Caribbean

Basin country, as defined in section 25.401 of the Federal

Acquisition Regulation.

(2) Excluded End Products:

Line item No. Country of origin

__________......................... __________

__________......................... __________

(List as necessary)

(3) Offers will be evaluated by giving certain preferences to

domestic end products, designated country end products, NAFTA

country end products, and Caribbean Basin country end products over

other end products. In order to obtain these preferences in the

evaluation of each excluded end product listed in paragraph (f)(2)

of this provision, offerors must identify and certify below those

excluded end products that are designated or NAFTA country end

products, or Caribbean Basin country end products. Products that are

not identified and certified below will not be deemed designated

country end products, NAFTA country end products, or Caribbean Basin

country end products. Offerors must certify by inserting the

applicable line item numbers in the following:

(i) The offeror certifies that the following supplies qualify as

``designated or NAFTA country end products'' as those terms are

defined in the clause entitled ``Buy American Act--Trade

Agreements--Balance of Payments Program:''

----------------------------------------------------------------------

----------------------------------------------------------------------

----------------------------------------------------------------------

(Insert line item numbers)

(ii) The offeror certifies that the following supplies qualify

as ``Caribbean Basin country end products'' as that term is defined

in the clause entitled ``Buy American Act--Trade Agreements--Balance

of Payments Program'':

----------------------------------------------------------------------

----------------------------------------------------------------------

----------------------------------------------------------------------

(Insert line item numbers)

(4) Offers will be evaluated in accordance with FAR Part 25.

(g) Buy American Act--North American Free Trade Agreement

(NAFTA) Implementation Act--Balance of Payments Program Certificate.

(Applies only if FAR clause 52.22521, Buy American Act--North

American Free Trade Agreement (NAFTA) Implementation Act--Balance of

Payments Program, is included in this solicitation.)

(1) The offeror hereby certifies that each end product, except

those listed in paragraph (g)(2) of this provision, is a domestic

end product (as defined in the clause entitled ``Buy American Act--

North American Free Trade Agreement (NAFTA) Implementation Act-

Balance of Payments Program'' and that components of unknown origin

have been considered to have been mined, produced, or manufactured

outside the United States.

(2) Excluded End Products:

Line item No. Country of origin

__________......................... __________

__________......................... __________

(List as necessary )

(3) Offers will be evaluated by giving certain preferences to

domestic end products or NAFTA country end products over other end

products. In order to obtain these preferences in the evaluation of

each excluded end product listed in paragraph (g)(2) of this

provision, offerors must identify and certify below those excluded

end products that are NAFTA country end products. Products that are

not identified and certified below will not be deemed NAFTA country

end products. Offerors must certify by inserting the applicable line

item numbers in the following:

The offeror certifies that the following supplies qualify as

``NAFTA country end products'' as that term is defined in the clause

entitled ``Buy American Act--North American Free Trade Agreement

Implementation Act--Balance of Payments Program:''

----------------------------------------------------------------------

----------------------------------------------------------------------

----------------------------------------------------------------------

(Insert line item numbers)

(4) Offers will be evaluated in accordance with FAR Part 25.

(h) Certification Regarding Debarment, Suspension or

Ineligibility for Award (Executive Order 12549). The offeror

certifies, to the best of its knowledge and belief, that--

(1) The offeror and/or any of its principals {time} are,

{time} are not presently debarred, suspended, proposed for

debarment, or declared ineligible for the award of contracts by any

Federal agency, and

(2) {time} Have, {time} have not, within a three-year period

preceding this offer, been convicted of or had a civil judgment

rendered against them for: commission of fraud or a criminal offense

in connection with obtaining, attempting to obtain, or performing a

Federal, state or local government contract or subcontract;

violation of Federal or state antitrust statutes relating to the

submission of offers; or commission of embezzlement, theft, forgery,

bribery, falsification or destruction of records, making false

statements, or receiving

[[Page 48254]]

stolen property; and {time} are, {time} are not presently indicted

for, or otherwise criminally or civilly charged by a Government

entity with, commission of any of these offenses.

(i) Procurement Integrity Certification (41 U.S.C. 423).

(Applies only if the contract is expected to exceed $100,000.)

I, the undersigned, am the officer or employee responsible for

the preparation of this offer. I certify, to the best of my

knowledge and belief, that either--

{time} I have no information, or

{time} I have disclosed information to the Contracting Officer

concerning a violation or possible violation of subsection (a), (b),

(d) or (f) of 41 U.S.C. 423, Procurement Integrity, or its

implementing regulations that may have occurred during the conduct

of this procurement.

----------------------------------------------------------------------

Signature of the officer or employee responsible for the offer and

date.

(End of Provision)

52.212-4 Contract Terms and Conditions--Commercial Items.

As prescribed in 12.301(b)(3), insert the following clause:

Contract Terms and Conditions--Commercial Items (Oct 1995)

(a) Inspection/Acceptance. The Contractor shall only tender for

acceptance those items that conform to the requirements of this

contract. The Government reserves the right to inspect or test any

supplies or services that have been tendered for acceptance. The

Government may require repair or replacement of nonconforming

supplies or reperformance of nonconforming services at no increase

in contract price. The Government must exercise its postacceptance

rights (1) within a reasonable time after the defect was discovered

or should have been discovered; and (2) before any substantial

change occurs in the condition of the item, unl

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