Federal Acquisition Regulation; Acquisition of Commercial Items

[[Page 11198]]

DEPARTMENT OF DEFENSE-

GENERAL SERVICES ADMINISTRATION-

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION-

48 CFR Chapter 1-

[FAR Case 94-790]-

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: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: This proposed rule is issued pursuant to the Federal

Acquisition Streamlining Act of 1994 to implement the revised statutory

authorities 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.

DATES: Comments should be submitted on or before May 1, 1995 to be

considered in the formulation of a final rule.-

Public Meeting: March 17, 1995, 9:30 a.m. at the following

location: General Services Administration, Auditorium, 18th & F

Streets, NW., Washington, DC 20405.-

Written and Oral Statements: Statements prepared for oral

presentation must be sent to the FAR Secretariat at the address given

below, not later than March 13, 1995.

ADDRESSES: Interested parties should submit written comments to:

General Services Administration, FAR Secretariat (VRS), 18th & F

Streets, NW., room 4037, Washington, DC 20405. Please cite FAR case 94-

790 in all correspondence related to this case.

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 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. Major changes that

can be expected in the acquisition process as a result of Federal

Acquisition Streamlining Act implementation include changes in the

areas of Commercial Item Acquisition, Simplified Acquisition

Procedures, the Truth in Negotiations Act, and Introduction of the

Federal Acquisition Computer Network (FACNET).

This notice announces FAR 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 Commercial

Item Drafting Team was organized and tasked with reviewing Title VIII

of the Act and preparing implementing language for the FAR. The

proposed revisions make changes throughout the FAR to incorporate the

provisions of Title VIII. The most significant proposed revisions are

in the following FAR parts:-

FAR Part 2 has been amended to incorporate 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.-

FAR 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.-

FAR 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 FAR 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.-

FAR Part 12 has been revised to address the acquisition of

commercial items. The Team created this entirely new coverage to

address in one FAR part both the policies and procedures for the

acquisition of commercial items. FAR Part 12 was chosen to reinforce

the expected sequence of events in approaching a given acquisition * *

* market research (FAR Part 10), description of agency need (FAR Part

11), acquisition of commercial items, if they meet the agency's needs

(FAR Part 12); and acquisition of other than commercial items using

current FAR procedures (FAR Parts 13, 14 and 15). The Team also

believes that moving the policies and procedures for the acquisition of

commercial items to FAR Part 12 creates a clean break with past

policies and procedures such as the Acquisition and Distribution of

Commercial Products (ADCOP) program initiated in 1978 and currently

described in FAR Part 11, and the DFARS 211 implementation of Section

824(b) of the 1990-1991 DOD Authorization Act.

--48 CFR Part 12, FAR Subpart 12.1 states that the policies and

procedures in the revised FAR 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 FAR Part 12;-

--48 CFR Part 12, FAR Subpart 12.2 identifies special requirements for

the acquisition of commercial items. These requirements generally

reflect the requirements of Title VIII.-

--48 CFR Part 12, FAR Subpart 12.3 establishes standard provisions and

clauses for use in the acquisition of commercial items. The Team

believes this approach is essential to meet the requirements of the

statute and offers contracting officers and industry an easy to use,

simplified method for acquiring commercial items. However, the Team

also recognizes that it is essential that contracting officers be

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

particular acquisition and the market place 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 constraints be placed on this

authority [[Page 11199]] to tailor, and that has also been accommodated

in this subpart. -

--The Team proposes the establishment of a new form, the Standard Form

XXXX, Solicitation/Contract/Order for Commercial Items. The proposed SF

XXXX 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 XXXX to

document receipt of the supplies or services by the government avoiding

the need for preparation of separate receipt/acceptance forms. -

--48 CFR Part 12, FAR Subpart 12.4 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. -

--FAR 12.402 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

12.402 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.-

--FAR 12.403 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. The list of

laws to be included in 12.403 are contained in FAR case 94-791 which is

currently under agency review and coordination. The list will be

published in the Federal Register for public comment upon completion. -

--48 CFR Part 12, FAR Subpart 12.6 identifies two streamlined

procedures for the solicitation and award of contracts for commercial

items. These procedures may be used at the discretion of the

contracting officer.

FAR Part 52 has been revised to include several new provisions and

clauses to be inserted in all solicitations and contracts for the

acquisition of commercial items:

--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.

--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 FAR 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 order of importance for

each acquisition.

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

Items, includes the certifications 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.

--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 practices.

--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. 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

paragraph (d) of the clause. The clauses to be included on this list

and flowed down to subcontractors for commercial items are currently

under agency review and coordination. The list will be published in the

Federal Register for public comment once coordination is complete.

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

Components, implements the preference for the acquisition of commercial

items or nondevelopmental items other than commercial 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. The

clauses to be included on this list and flowed down to subcontractors

for commercial items are contained in FAR case 94-791 which is

currently in agency review and coordination. This list will be

published in the Federal Register for public comment once coordination

is complete.

Public Meeting. The FAR Council is interested in an exchange of

ideas and opinions on this rule. For that reason, the FAR Council is

conducting a series of public meetings. A public meeting will be held

on March 17, 1995, to enable the public to present its views on this

rule. This rule will only be discussed at the public meeting session.

Any subsequent public meetings will be devoted to other revisions to

the FAR. The public is encouraged to furnish its views; the Council

anticipates that public comments will be very helpful in formulating

final rules.-

Persons or organizations wishing to make presentations will be

allowed 10 minutes each, provided they notify the FAR Secretariat at

(202) 501-4755 and submit written statements of the presentation by

March 13, 1995. Persons or organizations with similar positions are

encouraged to select a common spokesman for presentation of their

views. This meeting, in conjunction with the Federal Register notice

soliciting public comments on the rule, will be the only opportunity

for the public to present its views. [[Page 11200]]

B. Regulatory Flexibility Act-

The proposed language 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 either FAR Part 11 or by including

certain modifications to existing items and by including certain

commercial services. In both 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 market place to acquire them.

The rule also cautions contracting officers not to require potential

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

of market research.-

(3) It establishes a clear 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 clear 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;

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

the solicitation, evaluation and award procedures in the revised Part

12 for acquiring commercial items, or the procedures in Part 13, 14 or

15 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 that, except in unique circumstances, that the

Government utilize 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 may only use the solicitation provisions and

contract clauses specifically established for acquiring commercial

items and may only tailor those provisions and clauses when the

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

conditions; 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.

An Initial Regulatory Flexibility Analysis (IRFA) has been prepared

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

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

FAR Secretariat. Comments are invited. Comments from small entities

concerning the affected FAR subpart will be considered in accordance

with 5 U.S.C. 610. Such comments must be submitted separately and

should cite 5 U.S.C. 601, et seq. (FAR Case 94-790), in correspondence.

C. Paperwork Reduction Act-

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

because the proposed rule contains information collection requirements.

Accordingly, a request for approval of a new information collection

requirement concerning Acquisition of Commercial Items is being

submitted to the Office of Management and Budget under 44 U.S.C. 3501,

et seq. Public comments concerning this request are invited in a

Federal Register notice which appears elsewhere in this issue.

List of Subjects in 48 CFR Chapter 1-

Government procurement.

Dated: February 17, 1995.

Edward C. Loeb,

Deputy Project Manager for the Implementation of the Federal

Acquisition Streamlining Act of 1994.

-Therefore, it is proposed that 48 CFR Chapter 1 be amended as set

forth below:-

1. The authority citation for 48 CFR Chapter 1 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 paragraph

(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 market place made to meet Federal Government requirements.

Such modifications are considered minor if the change does not

significantly alter a commercial item's function or essential physical

characteristics. Minor is not defined by the specific dollar value or

percentage basis of the change;-

(d) Any combination of items meeting the requirements of paragraph

(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 paragraph (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;- [[Page 11201]]

(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 a fixed catalog

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

that the item was developed exclusively at private expense and has been

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 commercial item;

(b) Any previously developed item of supply that is in use by a

department or agency of the United States, a State or local government,

or a foreign government with which the United States has a mutual

defense cooperation agreement;

(c) Any item described in paragraphs (a) or (b) 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

(d) Any item of supply being produced that does not meet the

requirements of paragraph (a), (b), or (c) 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 all solicitations and contracts

exceeding the simplified acquisition threshold 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 all solicitations and contracts exceeding the

simplified acquisition threshold (see 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 part

13. For procurements 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) For each contract action in an amount estimated to be greater

than $25,000 but not greater than the simplified acquisition threshold,

or for the acquisition of commercial items, the contracting officer

shall establish a response time which will afford potential offerors a

reasonable opportunity to respond.

(c) 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 or is for other than the acquisition

of commercial items (see part 12).

* * * * *

PART 6--COMPETITION REQUIREMENTS

8. 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.

* * * * *

9. 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; [[Page 11202]]

(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]

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

survey''.

11. 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 other than commercial 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)); and

(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.

12. Section 7.103 is amended by revising paragraph (b);

redesignating paragraphs (c) through (l) as (d) through (m) and adding

a new paragraph (c); and in newly designated (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, nondevelopmental items other than commercial items in

response to agency solicitations (10 U.S.C. 2377 and 41 U.S.C. 251, et

seq.); and

(c) Promoting and providing for full and open competition with due

regard to the nature of the supplies and services to be acquired (10

U.S.C. 2305(a)(1)(A) and 41 U.S.C. 253a(a)(1) (see parts 6 and 11).

* * * * *

13. Section 7.105 is amended in paragraph (a)(8)(iii) by revising

the parenthetical to read ``(see 11.001(d))''; by revising paragraph

(b)(1); 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 considerations of

small business and small disadvantaged 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.

* * * * *

(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 (see part 11);

* * * * *

PART 9--CONTRACTOR QUALIFICATIONS

14. 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.

* * * * *

15. Section 9.306 is amended in paragraph (f) introductory text by

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

16. 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) The head of an agency shall--

(1) Ensure that, in coordination with customers, 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.

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

[[Page 11203]]

(i) If commercial items or, to the extent commercial items suitable

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

other than commercial 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; and

(ii) Practices of firms engaged in producing, distributing, and

supporting commercial items, such as terms for warranties, buyer

financing, maintenance and packaging, and marking; and

(iii) Sources capable of satisfying the agency's requirements

exist.-

(b) When conducting market research, the head of an agency should

not require 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 general terms sufficient to allow conduct of market research.

(b) Market research is then conducted to ascertain the availability

of commercial items, as well as distribution and logistics support to

meet those needs, and to identify market practices.

(c) 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 such as--

(1) The availability of commercial items suitable as is or that

could be modified to meet the agency's requirements;

(2) Customary practices regarding customizing, modifying or

tailoring of items to meet customer needs and associated costs;

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

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

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

being acquired; and

(5) The distribution and support capabilities of potential

suppliers, including alternative arrangements and cost estimates.

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

all of the following:

(1) Contacting experts regarding market capabilities to meet

requirements.

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

meet similar or identical requirements.

(3) Publishing formal requests for information in appropriate

technical and scientific journals.

(4) Querying Government data bases that provide information

relevant to agency procurements.

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

industry, acquisition personnel, and customers.

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

activities or agencies, trade associations or other sources.

(7) Reviewing catalogs and other generally available product

literature, much of which are available on-line, published by

manufacturers, distributors, and dealers.

(8) Holding presolicitation conferences.

(e) When initial market research indicates commercial or

nondevelopmental items other than commercial items might not be

available to satisfy agency needs, reevaluate the need and determine

whether it can be restated to permit commercial or nondevelopmental

items other than commercial items to satisfy the agency's needs.

17. and 18. Sections 11.000 and 11.001 are revised to read as

follows:

11.000 Scope of part.

This part prescribes policies and procedures for describing agency

needs and related considerations of acquisition streamlining.

11.001 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 other than commercial items, in response to the

agency solicitations;

(iii) Provide offerors of commercial items and nondevelopmental

items other than commercial items an opportunity to compete in any

procurement to fill such requirements;

(iv) Require prime contractors and subcontractors at all levels

under the agency contracts to incorporate commercial items or

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

nondevelopmental items other than commercial 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

procurements, 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, contractors should be involved in

recommending application and tailoring of requirements. 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)).

11.002 through 11.007 [Removed]

19. Sections 11.002 through 11.007 are removed.

20. Subparts 11.1 through 11.3 are added to read as follows:

Subpart 11.1--Selecting and Developing Requirements Documents

11.101 Order of precedence.

Agencies may select from existing requirements documents, modify or

[[Page 11204]] combine existing requirements documents, or create new

requirements documents to meet agency needs, consistent with the

following order of precedence:

(a) Documents mandated for use by law or regulation pursuant to

law.

(b) Performance-oriented documents:

(1) Nongovernment standards.

(2) Commercial item descriptions.

(3) Federal specifications and standards.

(4) Military specifications and standards.

(c) Design-based documents:

(1) Nongovernment standards.

(2) Federal specifications and standards.

(3) Military specifications and standards.

(d) Agency-unique standards, specifications and related

publications issued by the government outside the military or Federal

series for the non-repetitive acquisition of nondevelopmental items.

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 DOD 4120.3-M, Defense Standardization Program Policies and

Procedures.

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) The criteria to be considered in determining commercial market

acceptance include--

(1) The minimum need of the agency concerned; and

(2) The entire relevant commercial market, including small

business.

11.104 Items peculiar to one manufacturer.

Agency requirements shall not be written so as to specify 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 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 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 the 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.

(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 and DoDISS may be purchased from the

Superintendent of Documents, U.S. Government Printing Office,

Washington, DC 20402.

11.202 Acquiring used or reconditioned material, former Government

surplus property and residual inventory.

(a) Generally, all contractually furnished supplies and their

components, including former Government property, will be new,

including recycled (see 48 CFR part 23, FAR subpart 23.4 for policy on

recovered materials). However, agencies may acquire used or

reconditioned material, former Government surplus property, or residual

inventory conforming to the solicitation's requirements, if the

contracting officer determines that it is acceptable. When acquiring

commercial items, the contracting officer should determine the

customary practice in the industry before including a requirement for

new materials. When such a determination is made, the solicitation

shall clearly identify the supplies or their components that need not

be new, along with the necessary details on their acceptability.

Offerors wishing to provide such used or reconditioned material, former

Government surplus property, or residual inventory shall do so in

accordance with the clause at 52.211-5, New Material, or the provision

at 52.211-6, Listing of Used or Reconditioned Material, Residual

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

52.211-7, Used or Reconditioned Material, Residual Inventory, and

Former Government Surplus Property, as appropriate.

(b) Contracting officers shall consider the following when

determining whether used or reconditioned materials, former Government

surplus property, or residual inventory are acceptable:

(1) Safety of persons or property.

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

inspection, testing, and useful life).

(3) Performance requirements.

(4) Availability and cost of new materials and components.

(c) With regard to former Government surplus property, the

contracting officer shall ensure that the prices paid for such items

are reasonable considering overall cost savings to the Government. 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. [[Page 11205]]

11.203 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.

(e)(1) 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.-

(2) The contracting officer may insert the clause in solicitations

and contracts for services that may involve the incidental furnishing

of parts.

(f)(1) The contracting officer may insert the provision at 52.211-

6, Listing of Used or Reconditioned Material, Residual Inventory, and

Former Government Surplus Property, in solicitations for supplies. The

provision shall not be used if it would be contrary to customary

commercial practice for the item being acquired.

(2) The contracting officer may insert the provision in

solicitations for services that may involve the incidental furnishing

of parts.

(g)(1) The contracting officer may insert the clause at 52.211-7,

Used or Reconditioned Material, Residual Inventory, and Former

Government Surplus Property, in solicitations and contracts for

supplies. The clause shall not be used if it would be contrary to

customary commercial practice for the item being acquired.

(2) The contracting officer may insert the clause in solicitations

and contracts for services that may involve the incidental furnishing

of parts.

Subpart 11.3--Maintenance of Requirements Documents

11.301 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.

11.302 Maintenance of standardization documents.

(a) Agencies shall submit recommendations for changes to

standardization documents listed in the GSA Index of Federal

Specifications, Standards and Commercial Item Descriptions to the

General Services Administration, Federal Supply Service, Office of

Commodity Management, 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 DOD 4120.3-M, Defense

Standardization Program Policies and Procedures.

Subpart 11.4 [Redesignated from Subpart 12.1]

21. Subpart 12.1 is redesignated as Subpart 11.4 and sections

12.101 through 12.104 are redesignated as sections 11.401 through

11.404, respectively.

Subpart 11.4 Delivery or Performance Schedules

22. Newly designated 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 unreasonably tight or difficult to

attain (1) tend to restrict competition, (2) are inconsistent with

small business policies, and (3) may result in higher contract prices.

* * * * *

23. Newly designated 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]-

24. Newly designated 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 ``52.211-3'' and inserting ``52.211-10''.

Subpart 11.5 [Redesignated]

25. Subpart 12.2 is redesignated as Subpart 11.5 and sections

11.501 through 11.504 are redesignated from sections 12.201 through

12.204.

11.504 [Amended]

26. Newly designated section 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 inserting ``52.211-13''.

Subpart 11.6 [Redesignated from 12.3]

27. Subpart 12.3 is redesignated as Subpart 11.6 and sections

12.300 through 12.304 are redesignated as sections 11.600 through

11.604, respectively.

11.604 [Amended]

28. Newly designated 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]

29. Subpart 12.4 is redesignated as Subpart 11.7 and sections

12.401 through 12.403 are redesignated as 11.701 through 11.703,

respectively. [[Page 11206]]

11.703 [Amended]

30. Newly designated 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''.

31. 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.

31a. 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 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 Warranties.

12.210 Contract financing methods.

12.211 Technical data.

12.212 Other customary commercial practices.

Subpart 12.3--Solicitation Provisions and Contract Clauses for the

Acquisition of Commercial Items

12.301 Scope of subpart.

12.302 Solicitation provisions and contract clauses for -the

acquisition of commercial items.

12.303 Tailoring of provisions and clauses for the -acquisition of

commercial items.

Subpart 12.4--Applicability of Certain Laws to the Acquisition of

Commercial Items

12.400 Scope of subpart.

12.401 Applicability.

12.402 Applicability of certain laws to Executive agency -contracts

for the acquisition of commercial items.

Subpart 12.5--Unique Requirements for the Administration of Contracts

for Commercial Items

12.501 General.

12.502 Pricing of changes.

12.503 Acceptance.

12.504 Termination.

Subpart 12.6--Streamlined Procedures for Solicitation and Award of

Contracts 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 (Pub. L. 103-

355) by establishing acquisition policies more closely resembling those

of the commercial market place and encouraging the acquisition of

commercial items and components at all levels.

12.001 Definition.

Subcontract, as used in this part, includes 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 nondevelopmental items other than commercial items are available

that could meet the agency's requirements;

(b) Acquire commercial items or nondevelopmental items other than

commercial items when they are available to meet the needs of the

agency; and-

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

incorporate, to the maximum extent practicable, commercial items or

nondevelopmental items other than commercial items as components of

items supplied to the agency.

12.102 Applicability.

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

(1) Commercial items; and

(2) Nondevelopmental items other than commercial items, but only

when competing with commercial items under the same terms, conditions

and evaluation/award criteria (i.e., when at least one offer is

received for a commercial item under the same solicitation).

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

to the requirements in other parts of this chapter. When a requirement

in this part is inconsistent with a requirement in another part of this

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

commercial items.

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

items at or below the micro-purchase threshold (see 48 CFR part 13, FAR

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 market place. 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 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, 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.

12.203 Solicitation, evaluation, and award.

(a) Contracting officers may use the procedures in parts 13,

Simplified Acquisition Procedures; 14, Sealed Bidding; or 15,

Contracting by Negotiation, as appropriate, for the acquisition of

commercial items. However, regardless of the procedures being used,

when a requirement in this part is inconsistent with a requirement in

another part of this chapter, this part 12 shall take precedence.

(b) Where FACNET is available, it may be used to solicit and award

contracts for commercial items (see part 4). [[Page 11207]]

12.204 Solicitation/contract form.

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

Items, shall be used by the contracting officer when soliciting offers

and awarding contracts for commercial items. This form contains the

information necessary for solicitations and contracts as well as

documenting receipt, inspection and acceptance of commercial items.

Other Standard Forms are not compatible with the policies for the

acquisition of commercial items in that they contain references to the

Uniform Contract Format and certain FAR clauses that are not applicable

to the acquisition of commercial items.

12.205 Offers.

(a) Contracting officers 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 use existing product literature from

offerors of commercial items in lieu of requesting 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 allow fewer than 30 days response time

for receipt of offers for commercial items. The response time shall

afford potential offerors a reasonable opportunity to respond to ensure

adequate competition (see 5.203).

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 48 CFR Part 9, (FAR) subpart 9.1

and 48 CFR Part 15, (FAR) subpart 15.6.

12.207 Contract type.

Firm fixed price contracts or fixed price contracts with economic

price adjustment shall be used for the acquisition of commercial items.

Use of any other contract type to acquire commercial items is

prohibited.

12.208 Contract quality assurance.

Solicitations and contracts for commercial items shall use

contractors' existing quality assurance systems as a substitute for

Government inspection and testing before tendering for acceptance

unless customary market practices for the commercial item being

acquired permits in-process inspection.

12.209 Warranties.

(a) 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.

(b) Agencies shall consider warranties offered in light of

established systems for their administration. When necessary, agencies

shall establish procedures to permit the effective administration of

commercial warranties to include identifying warranted items and

warranty periods, facilitating return of warranted commercial items to

the contractor for repair or replacement and collection of product

performance information.

12.210 Contract financing methods.

Customary industry practice for some commercial items may include a

form of buyer financing such as advance (pre-performance) payments or

incremental (pre-delivery) payments based on time or specified

performance milestones. If market research confirms that buyer

financing is the customary industry practice for the commercial item to

be acquired, the contracting officer may offer Government financing.

Such financing shall be consistent with customary industry practices

and the requirements and limitations of part 32.

12.211 Technical data.

Generally, the Government will acquire only the technical data

customarily provided to the public. (See part 27.)

12.212 Other customary commercial practices.

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 essential to

concluding a satisfactory business arrangement, in the Government's

best interest, and not otherwise precluded by law or executive order.

Subpart 12.3--Solicitation Provisions and Contract Clauses for the

Acquisition of Commercial Items.

12.301 Scope of subpart.

This subpart establishes provisions and clauses to be used when

acquiring commercial items.

12.302 Solicitation provisions and contract clauses for the

acquisition of commercial items.

(a) In accordance with Section 8002 of Pub. L. 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

XXXX). The contracting officer is not required to use any other

provision. The contracting officer may tailor these instructions or

provide additional instructions tailored to the specific acquisition in

accordance with 12.303;

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

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

consolidated and streamlined 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. The

contracting officer is not required to use any other provision

containing a certification or representation. 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 XXXX). The contracting officer is not

required to use any other clause except as provided in 12.302(b)(4).

The [[Page 11208]] contracting officer may tailor this clause in

accordance with 12.303; and -

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

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

clause includes 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 indicate which, if any, of the

additional clauses cited in 52.212-5 are applicable to the specific

acquisition. When either 15.804-2(b) or the exception at 15.804-1(a)(2)

apply, the contracting officer shall include the appropriate clauses

prescribed by part 15. The contracting officer is not required to

include any other FAR clause in the contract. This clause may not be

tailored except in accordance with 48 CFR part 1, subpart 1.4.

(c) The contracting officer may insert the provision at 52.212-2,

Evaluation--Commercial Items, in solicitations for commercial items

(see 12.602). If this provision is not used, a similar provision

containing all evaluation factors required by 48 CFR part 14, subpart

14.2 or 48 CFR part 15, subpart 15.6 shall be included in the

solicitation as an addendum (see 12.303(c)).

(d) Notwithstanding prescriptions contained elsewhere in the FAR,

only the provisions and clauses prescribed in this subpart shall be

required for use in solicitations and contracts for the acquisition of

commercial items. The provisions and clauses in this part shall be

revised by the FAR Council, as necessary, to reflect the applicability

of future statutes and executive orders to contracts for the

acquisition of commercial items in accordance with Section 34 of the

Office of Federal Procurement Policy Act.

(e) Agencies shall supplement these provisions and clauses as

necessary to reflect agency unique statutes.

12.303 Tailoring of provisions and clauses for the acquisition of

commercial items.

(a) The provisions and clauses established in this subpart are

intended to address, to the maximum extent practicable, customary

commercial market place 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 and the

variations in customary commercial practices across the entire market

place, contracting officers may, 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) Contracting officers shall not tailor the clause at 52.212-4,

Contract Terms and Conditions--Commercial Items, or otherwise include

any additional terms or conditions in a solicitation or contract for

commercial items that are 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 market place, 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.

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

The contracting officer shall indicate in Block 26 of the SF XXXX 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 XXXX; a continuation of the description

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

other item(s) on the SF XXXX; 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.).

Subpart 12.4--Applicability of Certain Laws to the Acquisition of

Commercial Items

12.400 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

(a) Are not applicable to contracts for the acquisition of commercial

items, or (b) are not applicable to subcontracts, at any level, 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.

12.401 Applicability.

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

level 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.

12.402 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 48 CFR part 22, 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. 423e(1)(B), Requirement for certain certifications

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 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 part 99);

(d) The FAR prescription, provision or clause for each of these

statutes has been revised in the appropriate part to reflect their

proper application to the acquisition of commercial items.

[[Page 11209]]

12.403 Applicability of certain laws to subcontracts for the

acquisition of commercial items.

(a) The following laws are not applicable to subcontracts under

either a contract for the acquisition of commercial items or a

subcontract for the acquisition of commercial items: [list of laws to

be published in the Federal Register in a future proposed rule under

FAR case 94-791]

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

for subcontracts under either a contract for the acquisition of

commercial items or subcontract for the acquisition of commercial

items: [list of laws to be published in the Federal Register in a

future proposed rule under FAR case 94-791]

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

regards to subcontracts under either a contract for the acquisition of

commercial items or a subcontract for the acquisition of commercial

items: [list of laws to be published in the Federal Register in a

future proposed rule under FAR case 94-791]

(d) The FAR prescription, provision or clause for each of these

statutes has been revised in the appropriate part to reflect their

proper application to the acquisition of commercial items.

Subpart 12.5--Unique Requirements for the Administration of

Contracts for Commercial Items

12.501 General.

This subpart outlines selected areas where the administration of

contracts for commercial items differs substantially from the

administration of other Government contracts.

12.502 Pricing of changes.

When the exceptions at 15.804-1(a) do not apply, the contracting

officer shall include the appropriate clauses prescribed by part 15.

12.503 Acceptance.

Acceptance under the clause at 52.212-4, Contract Terms and

Conditions--Commercial Items, assumes that the Government will rely on

the contractor's assurances that commercial items tendered for

acceptance conform to the requirements of the contract. The acceptance

provision at 52.212-4 includes patent defects as a reason to revoke

finality of acceptance.

12.504 Termination.

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

Commercial Items, contains procedures for termination of contracts for

commercial items, either for convenience or for cause, that are

consistent with customary commercial practice. The contracting officer

should consult with legal counsel prior to terminating any contract for

cause.

(b) Contractors are required to notify the Government when there

will be an excusable delay. Failure to notify the Government as soon as

it is reasonably possible could result in termination for cause.

(c) The remedies available to the Government if a contract is

terminated for cause are those available to any buyer in the

marketplace and are not limited by part 49. The Government's preferred

remedy will be to acquire similar items from another contractor and

charge the terminated contractor with any excess reprocurement costs.

Subpart 12.6--Streamlined Procedures for Solicitation and Award of

Contracts for Commercial Items

12.601 General.

This subpart provides (a) a streamlined procedure for evaluating

offers for commercial items; and (b) a streamlined procedure for

soliciting offers for commercial items. These procedures are intended

to simplify the process of preparing and issuing solicitations, and

evaluating offers for commercial items consistent with customary

commercial practices. While the procedures described in this subpart

are appropriate for many commercial items, other methods of evaluation

may also be appropriate. The contracting officer may use these

procedures for soliciting offers for commercial items in lieu of

procedures contained in parts 13, 14 or 15.

12.602 Streamlined evaluation of offers.

(a) 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. 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 tailored

criteria contained in the provision at 52.212-2, Evaluation--Commercial

Items, and any addenda. 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 its intended use.

A technical evaluation would 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 48 CFR part 15, subpart 15.6. 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 trade-offs considered.

12.603 Streamlined solicitation for commercial items.

(a) To reduce the time required to solicit and award contracts for

the acquisition of commercial items, the contracting officer may use

this procedure which combines the CBD synopsis required by 5.203 and

the issuance of the solicitation into a single document with the

following limitations:

(1) FAR 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) 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) A statement that this is a combined synopsis/solicitation for

commercial items prepared in accordance with the format in subpart

12.6, as supplemented with additional information included in this

notice, and that a written solicitation will not be

issued. [[Page 11210]]

(ii) A statement that the solicitation document and incorporated

provisions and clauses are those in effect through FAC ______.

(iii) A notice of small business or other set-aside, if

applicable.-

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

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

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

(vi) Date(s) and place(s) of delivery.

(vii) A statement regarding any addenda to the provision at 52.212-

1, Instructions to Offerors--Commercial.

(viii) 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.

(ix) 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.

(x) A statement regarding any addenda to the clause at 52.212-4,

Contract Terms and Conditions--Commercial Items.

(xi) A statement regarding which, if any, of the additional FAR

clauses cited in the clause at 52.212-5, Contract Terms and Conditions

Required To Implement Statutes Or Executive Orders--Commercial Items,

are applicable to the acquisition.

(xii) 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 FIRMR 201-39.106-4)) determined by the contracting

officer to be necessary for this acquisition and consistent with

customary commercial practices.

(xiii) A statement regarding any applicable Commerce Business Daily

numbered notes.

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

(3) Response time for receipt of offers--

(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; and

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

officers shall allow at least 15 days response time (see 5.203(b)).

(4) Post copies of the combined CBD synopsis/solicitation in

accordance with 5.101(a)(2).

(5) Amendments to solicitations shall be published in the same

manner as the initial synopsis/solicitation.

PART 13--SIMPLIFIED ACQUISITION PROCEDURES

13.501 [Amended]

32. Section 13.501 is amended in paragraph (c) by removing ``12.4''

and inserting ``11.7''.

PART 14--SEALED BIDDING

14.201-2 [Amended]

33. 14.201-2 is amended in the parenthetical of paragraph (c) by

removing ``part 10, Specifications, Standards, and Other Product

Descriptions'' and inserting ``part 11''; and in the parenthetical of

paragraph (d) by removing ``10.004(e)'' and inserting ``part 11''.

14.404-1 [Amended]

34. 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]

35. 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''; and in the parenthetical of

paragraph (d) by removing ``10.004(e)'' and inserting ``part 11''.

36. 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]'

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

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

38. 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

39. 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.

40. 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--

* * * * *

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

through (c) as paragraphs (a)(1) through (a)(3), respectively,

designating the introductory text as paragraph (a) introductory text;

and adding paragraph (b) to read as follows:

16.301-3 Limitations.

(a) A cost-reimbursement contract may be used only when--

* * * * *

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

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

16.603-2 [Amended]

42. 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

43. Section 22.305 is amended by redesignating paragraph (h) as (i)

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

22.305 Contract clause.

* * * * *

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

* * * * *

44. 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

[[Page 11211]] 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

45. Section 23.105 is amended at the end of paragraph (b)(2) by

removing ``or''; by redesignating paragraphs (b)(3) and (4) as (b)(4)

and (5), respectively; and adding a new paragraph (b)(3) to read as

follows:

23.105 Solicitation provision and contract clause.

* * * * *

(b) * * *

(3) The contract is for other than commercial items; or

* * * * *

46. Section 23.501 is amended by redesignating paragraphs (b)

through (d) as (c) through (e) respectively, 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 36--CONSTRUCTION AND ARCHITECT-ENGINEER CONTRACTS

36.206 [Amended]

47. Section 36.206 is amended by removing ``12.202'' and inserting

``11.502''.

36.303 [Amended]

48. Section 36.303 is amended in paragraph (c)(4) by removing

``12.1'' and inserting ``48 CFR part 11, subpart 11.4''.

PART 42--CONTRACT ADMINISTRATION

42.1105 [Amended]

49. and 50. Section 42.1105 is amended by removing the reference

``subpart 12.3'' and inserting ``48 CFR part 11, subpart 11.6''.

Subpart 42.13 [Redesignated from subpart 12.5]

42.1304 [Amended]

51. Newly designated section 42.1304 (redesignated from 12.504) is

amended in paragraph (a) by removing ``52.212-15'' and inserting

``52.242-17''.

42.1305 [Amended]

52. Newly designated section 42.1305 (redesignated from 12.505) is

amended in paragraph (a) by removing ``52.212-12'' and inserting

``52.242-14''; in paragraph (b)(1) by removing ``52.212-13'' and

inserting ``52.242-15''; in paragraph (c) by removing ``52.212-14'' 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

53. 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) (Pub. L. 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) To the maximum extent practicable--

(1) Contractors and subcontractors at all levels shall incorporate

commercial items or nondevelopmental items other than commercial items

as components of items delivered to the Government; and

(2) Agencies shall not require prime contractors 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-XX, 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-XX are required to be

in subcontracts for commercial items or commercial components.

(c) Agencies shall supplement the clause at 52.244-XX, as necessary

to reflect agency unique statutes.

44.403 Contract clause.

The contracting officer shall insert the clause at 52.244-XX,

Subcontracts for Commercial Items and Commercial Components, in

solicitations and contracts for supplies or services other than

commercial items.

PART 46--QUALITY ASSURANCE

54. 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).

* * * * *

55. Section 46.102 is amended by redesignating paragraph (f) as (g)

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

46.102 Policy.

* * * * *-

(f) For the acquisition of commercial items, contractors are

permitted to use their existing quality assurance system as a

substitute for compliance with Government-specified requirements unless

customary market practice for the commercial item being acquired

permits in-process inspection (Pub. L. 103-355);

* * * * *

Subpart 46.2--Contract Quality Requirements

46.202 [Amended]-

56. Section 46.202 is amended by removing ``three'' and inserting

``four''.-

57. Sections 46.202-1 through 46.202-3 are redesignated as 46.202-2

through 46.202-4 respectively, 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

use contractors' existing quality assurance system as a substitute for

Government inspection and testing before tendering for acceptance

unless customary market [[Page 11212]] practices for the commercial

item being acquired permits in-process inspection.

58. Section 46.203 is amended by revising paragraph (a)(1); at the

end of paragraph (a)(2) by removing the semicolon and ``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.

* * * * *-

(a) * * *-

(1) Commercial (described in commercial catalogs, drawing, or

industrial standards; see part 2); or

* * * * *

46.204 [Removed and reserved]-

59. Section 46.204 is removed and reserved.-

60. 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).-

58. 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). * * *

* * * * *

61. 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).

PART 49--TERMINATION OF CONTRACTS-

62. 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]

63. Section 49.607 is amended by removing ``12.5'' in the

introductory text and inserting ``48 CFR part 42, subpart 42.13''.

PART 52--SOLICITATION PROVISIONS AND CONTRACT CLAUSES

64. Section 52.202-1 is amended by revising the date of the clause;

by redesignating paragraphs (b) and (c) as (e) and (f), and adding new

paragraphs (b), (c) and (d) to read as follows:

52.202-1 Definitions.

* * * * *

Definitions (Date)

* * * * *

(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 market place made to meet Federal Government

requirements. Such modifications are considered minor if the change

does not significantly alter a commercial item's function or

essential physical characteristics. Minor is not defined by the

specific dollar value or percentage basis of the change;-

(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 a fixed

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

that the item was developed exclusively at private expense and has

been 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.

* * * * *

(End of clause)

-65. Section 52.203-6 is amended by revising the clause date; and

by adding an Alternate I following paragraph (c)(5) to read as follows:

52.203-6 Restrictions on Subcontractor Sales to the Government.

* * * * *

Restrictions on Subcontractor Sales to the Government (Date)

* * * * *

Alternate I (DATE). 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 procurements 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] -

66. Sections 52.210-1 through 52.210-7 are redesignated as 52.211-1

through 52.211-7, respectively.

52.212-1 through 52.212-11 [Redesignated]

67. Sections 52.212-1 through 52.212-11 are redesignated as 52.211-

8 through 52.211-18, respectively. [[Page 11213]]

52.212-12 through 52.212-15 [Redesignated]

68. Sections 52.212-12 through 52.212-15 are redesignated as

52.242-14 through 52.242-17.-

69. 52.212-1 through 52.212-5 Added.

52.212--1 through 52.242--15 [Added]

70. 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 12.302(b)(1), insert the following provision:

Instructions to Offerors--Commercial Items (Date)

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 XXXX). 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.-

Submission of Offers. Submit 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 XXXX, letterhead

stationery, or as otherwise specified in the solicitation. As a

minimum, offers must show--

(a) The solicitation number;

(b) The time specified for receipt;

(c) The name and address of the offeror;-

(d) A technical description of the items being offered in

sufficient detail to determine compliance with the requirements in

the solicitation. This may include product literature, warranty

provisions, or other documents, if necessary;-

(e) Price;-

(f) ``Remit to'' address, if different than mailing address; -

(g) A completed copy of the representations and certifications

at FAR 52.212-3; -

(h) Acknowledgment of Solicitation Amendments; -

(i) Past performance information, when included as an evaluation

factor, to include recent and relevant contracts for the same or

similar items and other references. At a minimum, this should

include contract numbers, points of contact with telephone numbers

and other relevant information; and--

(j) If the offer is not submitted on the SF XXXX, 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 take

exception to the terms and conditions of the solicitation may be

excluded from consideration. -

Offered Prices. 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.-

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.-

Multiple Offers. Offerors are encouraged to submit multiple

offers presenting alternative commercial items for satisfying the

requirements of this solicitation. Each offer submitted will be

evaluated separately.-

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.-

Contract Award. 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.-

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.

(End of provision)

52.212-2 Evaluation--Commercial Items.-

As prescribed in 12.602(c), the Contracting Officer may insert a

provision substantially as follows:

Evaluation--Commercial Items (Date)-

(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 [Contracting

Officer insert relative order of importance (see 15.605)] shall be

used to evaluate offers:

[Contracting Officer insert the significant evaluation factors

and subfactors, such as (i) technical capability of the item offered

to meet the Government requirement; (ii) price; (iii) past

performance (see 15.605)].

Technical and past performance, when combined, are [Contracting

Officer insert relative importance of evaluation factors (see

15.605)].

(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. Evaluation of options shall not

obligate the Government to exercise the option(s).-

(c) The Government may determine that an offer is unacceptable

if the prices proposed are materially unbalanced between line items

or subline items.

(d) A written award or acceptance of 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 12.302(b)(2), insert the following provision:

Offeror Representations and Certifications--Commercial Items (Date)

(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 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 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 at least 51 percent owned by a woman or women or, in the

case of any publicly owned business, at least 51 percent of the

stock is owned by one [[Page 11214]] or more women; and 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)

The offeror's TIN is ____________. If the offeror does not have a

TIN, provide an explanation with your offer. If the offeror is owned

or controlled by a common parent that files its Federal income tax

returns on a consolidated basis including the offeror, provide the

name and TIN of the common parent--

Name ____________------------------------------------------------------

TIN ____________-------------------------------------------------------

(2) Type of Business Organization. The offeror represents--

(i) If the offeror is a U.S. entity, it operates as:____________

a corporation incorporated under the laws of the State

of____________ providing medical and health care services, or

engaged in the billing and collecting of payments for such services;

____________ an other corporate entity; ____________ a sole

proprietorship; ____________ a partnership; ____________ a hospital

or extended care facility described in 26 CFR 501(c)(3) that is

exempt from taxation under 26 CFR 501(a).

(ii) If the offeror is a foreign entity, it operates

as:____________ an agency or instrumentality of a foreign

government; or agency or instrumentality of a Federal, state or

local Government.

(c) Representations required to implement provisions of the

Small Business Act (15 U.S.C. 631 et seq.):

Note: Offerors must complete this paragraph (c) only if 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.

(1) Small Business Concern. The offeror represents and certifies

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) Priority for Labor Surplus Area Concerns. Offeror 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 in the four designated

industry groups.] The offeror represents and certifies as part of

its offer that it {time} is, {time} is not an emerging small

business.

(ii) [Complete only for solicitations in targeted industry

categories expected to result in an award in excess of $25,000.]

Offeror represents and certifies as follows:

(A) Offeror's number of employees for the past 12 months (check

this 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 this 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.

______ 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 [[Page 11215]] clause entitled ``Buy American Act--Trade

Agreements--Balance of Payments Program'':

(Insert line item numbers)

(4) Offers will be evaluated in accordance with part 25 of the

Federal Acquisition Regulation.

(g) Buy American Act--North American Free Trade Agreement

(NAFTA) Implementation Act--Balance of Payments Program Certificate.

(Applies only if FAR clause 52.225-21, 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) 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--

____________ I have no information, or-

____________ 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 Certification)

(End of Provision)

52.212-4 Contract Terms and Conditions--Commercial Items.-

As prescribed in 12.302(b)(3), insert the following clause:

Contract Terms and Conditions--Commercial Items (Date)-

Acceptance. The Contractor shall tender to the Government for

acceptance only supplies or services that the Contractor has

inspected in accordance with its commercial inspection system and

found to be in conformity with contract requirements. The Government

has the right to inspect or test all supplies or services after they

have been tendered for acceptance. Acceptance shall be conclusive

except for patent defects, latent defects, fraud, gross mistakes

amounting to fraud, or as otherwise provided in the contract. The

Government may require correction or replacement of nonconforming

supplies or reperformance of nonconforming services at no increase

in contract price, or require an adjustment to the contract price to

reflect the reduced value of the nonconforming supplies or services.

Revocation of acceptance shall occur (1) within a reasonable time

after the defect was discovered or should have been discovered; and

(2) before substantial change occurs in the condition of the item.

This limitation does not apply to changes in condition caused by the

defect.-

Assignment. The Contractor or its assignee, may, when done in

accordance with the provisions of the Assignment of Claims Act (31

U.S.C. 3727), assign its rights to be paid amounts due as a result

of performance of this contract to a bank, trust company, or other

financing institution, including any Federal lending agency.-

Changes. Changes in the terms and conditions of this contract

may be made only by written agreement of the parties.-

Disputes. This contract is subject to the Contract Disputes Act

of 1978, as amended (41 U.S.C. 601-613). Failure of the parties to

this contract to reach agreement on any request for equitable

adjustment, claim, appeal or action arising under or relating to

this contract shall be a dispute to be resolved in accordance with

the clause at FAR 52.233-1, Disputes, which is incorporated herein

by reference.-

Definitions. The clause at FAR 52.202-1, Definitions, is

incorporated herein by reference.-

Excusable Delays. The Contractor shall be liable for default

unless nonperformance is caused by an occurrence beyond the

reasonable control of the Contractor and without its fault or

negligence such as, acts of God or the public enemy, acts of the

Government in either its sovereign or contractual capacity, fires,

floods, epidemics, quarantine restrictions, strikes, unusually

severe weather, and delays of common carriers. The Contractor shall

notify the Contracting Officer in writing as soon as it is

reasonably possible after the commencement of any excusable delay,

setting forth the full particulars in connection therewith, shall

remedy such occurrence with all reasonable dispatch, and shall

promptly give written notice to the Contracting Officer of the

cessation of such occurrence.-

Invoice. The Contractor shall submit an original invoice and

three copies to the address designated in the contract to receive

invoices. An invoice must include---

(1) Name and address of the Contractor;-

(2) Invoice date;-

(3) Contract number, contract line item number and, if

applicable, the order number;-

(4) Description, quantity, unit of measure, unit price and

extended price of the items delivered;-

(5) Shipping number and date of shipment including the bill of

lading number and weight of shipment if shipped on Government bill

of lading;-

(6) Terms of any prompt payment discount offered;-

(7) Name and address of official to whom payment is to be sent;

and-

(8) Name, title, and phone number of person to be notified in

event of defective invoice.

If the invoice does not comply with these requirements, the

Contractor will be notified of the defect within 7 days after

receipt of the invoice at the designated office.-

Patent Indemnity. The Contractor shall indemnify the Government

and its officers, employees and agents against liability, including

costs, for actual or alleged direct or contributory infringement of,

or inducement to infringe, any United States or foreign patent,

trademark or copyright, arising out of the performance of this

contract, provided the Contractor is reasonably notified of such

claims and proceedings.-

Payment. Payment shall be made for items accepted by the

Government that have been delivered to the delivery destinations set

forth in this contract. The Government will make payment in

accordance with the Prompt Payment Act (31 U.S.C. 3903) and Office

of Management and Budget (OMB) Circular A-125, Prompt Payment.

In connection with any discount offered for early payment, time

shall be computed from the date of the invoice. For the purpose of

computing the discount earned, payment shall be considered to have

been made on the date which appears on the payment check or the date

on which an electronic funds transfer was made.-

Risk of Loss. Unless the contract specifically provides

otherwise, risk of loss or damage shall remain with the Contractor

until, and shall pass to the Government upon:-

(1) Delivery of the item(s) to a carrier, if transportation is

f.o.b. origin; or-

(2) Acceptance by the Government or delivery of the item(s) to

the Government at the destination specified in the contract,

whichever is later, if transportation is f.o.b. destination.-

Taxes. The contract price includes all applicable Federal,

State, and local taxes and duties. -

Termination. The Government reserves the right to terminate this

contract, or any part hereof, for its sole convenience. In the event

of such termination, the Contractor shall immediately stop all work

hereunder and shall immediately cause any and all of its suppliers

and subcontractors to cease work. Subject to the terms of this

contract, the Contractor shall be paid a reasonable termination

charge considering the percentage of the contract price reflecting

the [[Page 11216]] percentage of the work performed prior to the

notice of termination, plus actual direct costs that the Contractor

can demonstrate have resulted from the termination. The Contractor

shall not be paid for any work done after receipt of the termination

notice, nor for any costs incurred by the Contractor's suppliers or

subcontractors which the Contractor could reasonably have avoided.-

Termination for Cause. The Government may terminate this

contract, or any part hereof, for cause in the event of any default

by the Contractor, or if the Contractor fails to comply with any

contract terms and conditions, or fails to provide the Government,

upon request, with adequate assurances of future performance. In the

event of termination for cause, the Government shall not be liable

to the Contractor for any amount, and the Contractor shall be liable

to the Government for any and all rights and remedies provided by

law. If it should be determined that the Government improperly

terminated this contract for default, such termination shall be

deemed a termination for convenience. -

Title. Unless specified elsewhere in this contract, title to

items furnished under this contract shall pass to the Government

upon final acceptance, regardless of when or where the Government

takes physical possession, unless the contract specifically provides

for earlier passage of title.-

Warranty. Except as expressly set forth elsewhere in this

contract and except for the implied warranty of merchantability,

there are no warranties express or implied. In no event will the

Contractor be liable to the Government for consequential damages

resulting from the seller's breach including--

(a) Any loss resulting from general or particular requirements

and needs of which the seller at the time of contracting had reason

to know and which could not reasonably be prevented by cover or

otherwise; and -

(b) Injury to person or property proximately resulting from any

breach of warranty.-

Other Compliances. The Contractor agrees to comply with all

applicable Federal, State and local laws, executive orders, and

regulations thereunder and amendments thereto, including, without

limitation, 15 U.S.C 2601 et seq., the Federal Occupational Safety

and Health Act of 1970; 42 U.S.C. 7401 et seq., the Clean Air Act;

15 U.S.C. 2601 et seq., the Toxic Substances Control Act; and 33

U.S.C. 1251 et seq., and the Federal Water Pollution Control Act.-

Compliance with Laws Unique to Government Contracts. The

Contractor agrees to comply with 31 U.S.C. 1352 relating to

limitations on the use of appropriated funds to influence certain

Federal contracting; 18 U.S.C. 431 relating to officials not to

benefit; 40 U.S.C 327 et seq., Contract Work Hours and Safety

Standards Act; 41 U.S.C. 51-58, Anti-Kickback Act of 1986; 41 U.S.C.

251 related to whistle blower protections; and 49 U.S.C 40118, Fly

American.

Order of Precedence. Any inconsistencies in this solicitation or

contract shall be resolved by giving precedence in the following

order: (a) addenda to this solicitation or contract; (b)

solicitation provisions; (c) contract clauses; (d) Standard Form

XXXX; (e) Other documents, exhibits, and attachment; and (f) the

specification.

(End of Clause)

52.212-5 Contract Terms and Conditions Required to Implement Statutes

or Executive Orders--Commercial Items.-

As prescribed in 12.302(b)(4), insert the following clause:

Contract Terms and Conditions Required to Implement Statutes or

Executive Orders--Commercial Items (Date)-

(a) The Contractor agrees to comply with the following FAR

clauses, which are incorporated in this contract by reference, to

implement provisions of law or executive orders applicable to

acquisitions of commercial items:-

(1) 52.219-8, Utilization of Small Business Concerns and Small

Disadvantaged Business Concerns (15 U.S.C. 637 (d)(2) and (3)).-

(2) 52.222-3, Convict Labor (E.O. 11755) -

(3) 52.233-3, Protest After Award (31 U.S.C 3553 and 40 U.S.C.

759)-

(b) The Contractor agrees to comply with the following FAR and

FIRMR clauses in this paragraph (b) that are indicated as being

incorporated in this contract by reference to implement provisions

of law or executive orders applicable to acquisitions of commercial

items or components:

-(1) 52.203-6, Restrictions on Subcontractor Sales to the

Government, with Alternate I (41 U.S.C. 253g and 10 U.S.C. 2402).-

(2) 52.203-10, Price or Fee Adjustment for Illegal or Improper

Activity (41 U.S.C. 423).-

(3) 52.219-14, Limitation on Subcontracting (15 U.S.C.

637(a)(14)).-

(4) 52.222-26, Equal Opportunity (E.O. 11246). -

(5) 52.222-35, Affirmative Action for Special Disabled and

Vietnam Era Veterans (38 U.S.C. 2012).-

(6) 52.222-36, Affirmative Action for Handicapped Workers (29

U.S.C. 793).-

(7) 52.222-37, Employment Reports on Special Disabled Veterans

and Veterans of the Vietnam Era (38 U.S.C. 2012).-

(8) 52.225-3, Buy American Act--Supplies (41 U.S.C. 10).-

(9) 52.225-9, Buy American Act--Trade Agreements Act--Balance of

Payments Program (41 U.S.C. 10, 19 U.S.C. 2501-2582).-

(10) 52.225-17, Buy American Act--Supplies Under European

Community Sanctions for End Products (E.O. 12849).-

(11) 52.225-18, European Community Sanctions for End Products

(E.O. 12849).-

(12) 52.225-19, European Community Sanctions for Services (E.O.

12849).-

(13) 52.225-21, Buy American Act--North American Free Trade

Agreement Implementation Act--Balance of Payments Program (41 U.S.C

10, Pub. L. 103-187).-

(14) 52.247-64, Preference for Privately Owned US Flagged

Commercial Vessels (46 U.S.C. 1241).-

(15) 201-39.5202-3, Procurement Authority (FIRMR). -

(This acquisition is being conducted under --------------------

-- delegation of GSA's exclusive procurement authority for FIP

resources. The specific GSA DPA case number is ----------------).-

(c) The Contractor agrees to comply with the following FAR

clauses in this paragraph (c), applicable to commercial services,

that are indicated as being incorporated in this contract by

reference to implement provisions of law or executive orders

applicable to acquisitions of commercial items or components:-

(1) 52.222-41, Service Contract Act of 1965, As amended (41

U.S.C. 351, et seq.).-

(2) 52.222-42, Statement of Equivalent Rates for Federal Hires

(29 U.S.C. 206 and 41 U.S.C. 351, et seq.).-

(3) 52.222-43, Fair Labor Standards Act and Service Contract

Act--Price Adjustment (Multiple Year and Option Contracts) (29

U.S.C. 206 and 41 U.S.C. 351 et seq.).-

(4) 52.222-44, Fair Labor Standards Act and Service Contract

Act--Price Adjustment (29 U.S.C. 206 and 41 U.S.C. 351 et seq.).-

(5) 52.222-47, SCA Minimum Wages and Fringe Benefits Applicable

to Successor Contract Pursuant to Predecessor Contractor Collective

Bargaining Agreement (CBA) (41 U.S.C. 351 et seq.). -

(d) Notwithstanding the requirements of the clauses in

paragraphs (a), (b) or (c) of this clause, the Contractor is not

required to include any FAR clause, other than those listed below,

in a subcontract for commercial items or commercial components--

[list of clauses to be published in the Federal Register in a future

proposed rule under FAR case 94-791]

(End of clause)-

71. In the list of newly redesignated sections below, for each

clause or provision indicated in the left column, remove the reference

listed in the middle column and insert the reference listed in the

right column:

------------------------------------------------------------------------

Clause/provision Remove Insert

------------------------------------------------------------------------

52.211-1-................... 10.011(a)-.......... 11.203(a)

52.211-2-................... 10.011(b)-.......... 11.203(b)

52.211-3-................... 10.011(c)-.......... 11.203(c)

52.211-4-................... 10.011(d)-.......... 11.203(d)

52.211-5-................... 10.011(e)-.......... 11.203(e)

52.211-6-................... 10.011(f)-.......... 11.203(f)

52.211-7-................... 10.011(g)-.......... 11.203(g)

[[Page 11217]]

52.211-8-................... 12.104(a)(2)-....... 11.404(a)(2)

52.211-9-................... 12.104(a)(3)-....... 11.404(a)(3)

52.211-10-.................. 12.104(b)-.......... 11.404(b)

52.211-11-.................. 12.204(a)-.......... 11.504(a)

52.211-11-.................. 12.202 -............ 11.502(b)

52.211-12-.................. 12.204(b)-.......... 11.504(b)

52.211-13-.................. 12.204(c)-.......... 11.504(c)

52.211-14-.................. 12.304(a)-.......... 11.604(a)

52.211-15-.................. 12.304(b)-.......... 11.604(b)

52.211-16-.................. 12.403(a)-.......... 11.703(a)

52.211-17-.................. 12.403(b)-.......... 11.703(b)

52.211-18-.................. 12.403(c)-.......... 11.703(c)

52.242-14-.................. 12.505(a)-.......... 42.1305(a)

52.242-15-.................. 12.505(b)-.......... 42.1305(b)

52.242-16-.................. 12.505(c)-.......... 42.1305(c)

52.242-17-.................. 12.505(d)-.......... 42.1305(d)

------------------------------------------------------------------------

-72. Section 52.244-xx is added to read as follows:

52.244-XX Subcontracts for Commercial Items and Commercial Components

-

As prescribed in 44.403, insert the following clause:

Subcontracts for Commercial Items and Commercial Components (Date)-

(a) Definition. -

Commercial item, as used in this clause, has the meaning

contained in the clause at 52.202-1, Definitions.

Subcontract, as used in this clause, includes a transfer of

commercial items between divisions, subsidiaries, or affiliates of

the Contractor or subcontractor.

(b) To the maximum extent practicable, the Contractor shall

incorporate, and require its subcontractors at all levels to

incorporate, commercial items or nondevelopmental items other than

commercial items, as components of items to be supplied under this

contract.

(c) If in awarding a subcontract for commercial items, an

exception under 15.804-1(a) does not apply, the subcontractor may be

required to submit cost or pricing data and comply with the

appropriate clauses prescribed in FAR part 15.

(d) Notwithstanding any other clause of this contract, the

Contractor is not required to include any FAR provision or clause,

other than those listed below and as may be required by paragraph

(c) of this clause, in a subcontract for commercial items or

commercial components: [list to be published in the Federal Register

in a future proposed rule under FAR case 94-791]

(e) The Contractor shall include the terms of this clause,

including this paragraph (e), in subcontracts awarded under this

contract.

(End of clause)

PART 53--FORMS-

73. Section 53.212 is added to read as follows:

53.212 Acquisition of commercial items.

SF XXXX (XX/95), Solicitation/Contract/Order for Commercial Items.

SF XXXX is prescribed for use in solicitations and contracts for

commercial items. Agencies may prescribe additional detailed

instructions for use of the form.

53.301 [Amended]

74. Section 53.301-xxxx is added to read as follows:

SF XXXX (xx/95), Solicitation/Contract/Order for Commercial Items.

BILLING CODE 6820-34D-M

[[Page 11218]]

[GRAPHIC][TIFF OMITTED]TP01MR95.000

[FR Doc. 95-4535 Filed 2-28-95; 8:45 am]

BILLING CODE 6820-34D-C