DFARS

SUBPART 228.3 - INSURANCE 228.370-2

facility. For acquisitions falling under the exceptions at 228.371(b)(1)(iii), (iv), and (vi), the contracting officer shall review

the documentation the offeror submitted with the proposal in response to the DD Form 1423, Contract Data Requirements

List, to ensure the offeror’s commercial insurance provides the appropriate coverage required by the clause at 252.228-7001.

(c) Foreign military sales. The exception for foreign military sales (FMS) contracts at 228.371(b)(1)(iii) only applies to

FMS cases where the FMS customer has explicitly refused assumption of risk of loss. If the FMS customer has accepted

the standard Letter of Offer and Acceptance Standard Terms and Conditions, as described in DoD 5105.38-M, Security

Assistance Management Manual, they have assumed risk of loss.

(d) Commercial derivative aircraft. The exception at 228.371(b)(1)(iv) for commercial derivative aircraft only applies

if the contractor is a licensed and certified Federal Aviation Administration (FAA) repair station for the specific model of

aircraft under contract, when work is being performed pursuant to the FAA license under 14 CFR part 145. The FAA’s repair

station search tool is available at https://av-info.faa.gov/repairstation.asp. All aircraft flying public aircraft operations operate

under airworthiness certificates maintained by the military services. The FAA airworthiness certificate in the exception in this

paragraph (d) underlies the military service certificate.

(e) Insurance. The clause at 252.228-7001, Ground and Flight Risk, is intended to reduce acquisition costs by eliminating

the costs of commercial insurance premiums. This clause also is intended to encourage the contractor to perform safe and

effective operations through inclusion of a contractor’s share of loss (i.e., a deductible). Additionally, the clause requires

compliance with the combined regulation/instruction entitled “Contractor’s Flight and Ground Operations” (Air Force

Instruction 10-220, Army Regulation 95-20, Naval Air Systems Command (NAVAIR) Instruction 3710.1 (Series), Coast

Guard Instruction M13020.3 (Series), and Defense Contract Management Agency Instruction 8210-1 (Series)), which

provides procedures to mitigate the risk of loss to the Government. For this reason, paragraph (e)(4)(ii) of the clause at

252.228-7001 specifies that insurance premium costs are unallowable. In addition, paragraph (d)(4) of the clause provides

that the Government’s assumption of risk does not apply where the loss or damage is covered by available insurance.

(f) Damage to Government aircraft.

(1) Whenever damage to Government aircraft is reported, each incident should be evaluated on its own merits. When

the cost of repair exceeds the contractor’s share of loss provisions, the contracting officer shall make a liability determination

in accordance with paragraph (g) of this section.

(2) Contracting officers should consult with the requiring activity and the assigned contract administration office on

replacement, repair, or beyond economic repair decisions.

(3) See PGI 228.370-2(f) for an example of accident or mishap damage versus workmanship-error damage.

(g) Contracting officer determination of liability.

(1) When making a liability determination, the contracting officer should seek input from the GFR and legal counsel, as

needed.

(2) The Government’s assumption of risk shall not extend to damage, loss, or destruction of covered aircraft that—

(i) Is the result of willful misconduct or lack of good faith on the part of the contractor’s managerial personnel,

including the contractor’s oversight of subcontractors;

(ii) Is sustained during flight if either the flight or the crew members have not been approved in advance and in

writing by the GFR, who has been authorized in accordance with the combined regulation/instruction entitled “Contractor’s

Flight and Ground Operations”;

(iii) Occurs in the course of transportation by rail, or by conveyance on public streets, highways, or waterways,

unless the transportation is limited to the vicinity of the contractor’s premises, and incidental to work performed under the

contract as described in the Schedule;

(iv) Is covered by insurance;

(v) Occurs after the contracting officer has, in writing, revoked the Government’s assumption of risk; or

(vi) Is sustained due to workmanship errors.

(h) Notice of revocation of the Government’s assumption of risk. The liability provisions of the clause at FAR 52.245-1,

Government Property, do not apply to the aircraft impacted by a notice of revocation.

(1) Preliminary notice of revocation.

(i) When finding that contractor managerial personnel have failed to comply with the combined regulation/

instruction, as required by paragraph (b) of the clause at 252.228-7001, including finding the covered aircraft are exposed

to unreasonable conditions, the contracting officer shall issue a preliminary notice of revocation of the Government’s

assumption of risk to the contractor and shall require the contractor to comply with contract requirements. Factors for

the contracting officer to consider in determining exposure to unreasonable conditions include, but are not limited to, the

following:

228.3-3

228.370-2 DEFENSE FEDERAL ACQUISITION REGULATION

(A) Lack of adequate hangar fire suppression or firefighting vehicles;

(B) Failure to provide adequate procedures to the GFR; or

(C) Systemic failure to comply with approved procedures.

(ii) The preliminary notice of revocation will state the timeframe for the contractor to correct the noncompliance or

conditions.

(2) Notice of revocation. If the contractor fails to correct the cited noncompliance or conditions within the specified

timeframe, the contracting officer shall issue to the contractor a notice of revocation of the Government’s assumption of risk

for any covered aircraft.

(i) Thereafter the contractor assumes the entire risk for damage, loss, or destruction of the previously covered

aircraft.

(ii) Any costs incurred by the contractor, including the costs of the contractor’s self-insurance, insurance premiums

paid to insure the contractor’s assumption of risk, deductibles associated with such purchased insurance, etc., to mitigate its

risk are unallowable costs.

(iii) The notice of revocation does not relieve the contractor of its obligation to comply with all other provisions

of the clause at 252.228-7001, including the combined regulation/instruction entitled “Contractor’s Flight and Ground

Operations.”

(iv) Within 3 days of receipt of the contractor’s notice of correction, the contracting officer shall notify the

contractor whether the Government will resume risk of loss. The contracting officer shall determine that the noncompliance

or cited conditions have been corrected prior to resuming assumption of risk.

(v) Any disputes regarding the contracting officer’s notice of revocation shall be subject to FAR clause 52.233-1,

Disputes.

(i) Procedures in the event of damage, loss, or destruction of covered aircraft.

(1) In the event of damage, loss, or destruction of covered aircraft, except in cases covered by paragraph (j)(2) of this

section, the contracting officer shall evaluate the contractor’s statement of—

(i) The damaged, lost, or destroyed aircraft;

(ii) The time and origin of the damage, loss, or destruction;

(iii) All known interests in commingled property of which aircraft are a part; and

(iv) The insurance, if any, covering the interest in commingled property.

(2) If a new production aircraft is damaged, lost, or destroyed before it has become a covered aircraft, the Government

bears no responsibility for risk of loss.

(3) If a new production aircraft is damaged, lost, or destroyed after it has become a covered aircraft, the contracting

officer shall provide written direction to the contractor to take action in accordance with the contracting officer’s written

direction that the aircraft shall be—

(i) Replaced;

(ii) Repaired to the condition immediately prior to the damage; or

(iii) Considered beyond economic repair. The contracting officer shall decide whether further actions are required

under the contract.

(4) If a covered aircraft that has been furnished by the Government to the contractor is damaged, lost, or destroyed

while covered, the contracting officer shall provide written direction to the contractor that the aircraft shall be—

(i) Repaired; or

(ii) Considered beyond economic repair. The contracting officer shall decide further actions required under the

contract.

(5) The contracting officer shall make an equitable adjustment for expenditures made in performing the obligations

under paragraph (h) of the clause at 252.228-7001.

(j) Contracting officer determination of the contractor’s share of loss.

(1) The contractor’s share of loss or damage to covered aircraft, except for loss or damage caused by negligence of

Government personnel, is the least of—

(i) $200,000;

(ii) 20 percent of the price or estimated acquisition cost of affected aircraft; or

(iii) 20 percent of the price or estimated cost of the contract, task order, or delivery order.

(2) If the Government requires covered aircraft to be replaced or repaired by the contractor, any resulting equitable

adjustment shall not include reimbursement of the contractor’s share of loss.

228.3-4

SUBPART 228.3 - INSURANCE 228.371

(3) In the event the Government does not decide to replace or repair the covered aircraft, the clause at 252.228-7001

requires the contractor to credit the contract price or pay the Government, as directed by the contracting officer, the least of—

(i) $200,000;

(ii) 20 percent of the price or estimated acquisition cost of affected aircraft; or

(iii) 20 percent of the price or estimated cost of the contract, task order, or delivery order.

(4) The costs incurred by the contractor for its share of the loss and for insuring against that loss are unallowable costs,

including but not limited to—

(i) The contractor’s share of loss under the Government’s self-insurance;

(ii) The costs of the contractor’s self-insurance;

(iii) The deductible for any contractor-purchased insurance;

(iv) Insurance premiums paid for contractor-purchased insurance; and

(v) Costs associated with determining, litigating, and defending against the contractor’s liability.

(k) Reimbursement from a third party. If the contracting officer finds or has reason to believe that the contractor has been

reimbursed or otherwise compensated by a third party for damage, loss, or destruction of covered aircraft and has also been

compensated by the Government, then the contracting officer shall demand an equitable reimbursement. If the contracting

officer requests that the contractor provide reasonable assistance in obtaining recovery, such effort shall be an allowable

expense of the contractor.

228.370-3 Aircraft not owned by or to be delivered to the Government.

(a) When a contract involves aircraft not owned by or to be delivered to the Government, the contracting officer may use

the clause at 252.228-7001 only if the contracting officer determines that it is in the best interest of the Government.

(b) Potential factors for the contracting officer to consider when deciding which course of action is in the best interest of

the Government include, but are not limited to, whether—

(1) The cost of hull insurance exceeds the replacement cost of the aircraft;

(2) Insurance is not available (e.g., high-risk experimental flights and operations of aircraft in a war zone); or

(3) Ground or flight activities that involve contractor-owned and contractor-operated aircraft may pose risk to

Government aircraft (e.g., due to close proximity in flight).

228.371 Additional clauses.

(a) Use the clause at 252.228-7000 , Reimbursement for War-Hazard Losses, when—

(1) The clause at FAR 52.228-4, Worker's Compensation and War-Hazard Insurance Overseas, is used; and

(2) The head of the contracting activity decides not to allow the contractor to buy insurance for war-hazard losses.

(b) Use the clause at 252.228-7001 , Ground and Flight Risk, in solicitations and contracts–

(1) For the acquisition, development, production, modification, maintenance, repair, flight, or overhaul of aircraft

owned by or to be delivered to the Government, except those solicitations and contracts

(i) That are strictly for activities incidental to the normal operations of the aircraft (e.g., refueling operations, minor

non-structural actions not requiring towing such as replacing aircraft tires due to wear and tear);

(ii) That are awarded for purchase under FAR part 12 procedures;

(iii) For which a non-DoD customer (including an FMS customer per 225.7305) has decided to allow the use of

commercial insurance or other self-insurance; has not agreed to assume the risk for loss or destruction of, or damages to, the

aircraft; or

(iv) For commercial derivative aircraft with an FAA certificate of airworthiness maintained to FAA standards. when

the work will be performed at a licensed FAA repair station. Performance under the exception in this paragraph (b)(1)(iv)

must be at a licensed and certified FAA repair station rated for the type of aircraft and work to be maintained. This exception

does not apply to contracts requiring flights with contractor crewmembers;

(v) Under which the aircraft are to be dismantled and removed from the inventory; or

(vi) Under which the aircraft are classified as Group 1 or 2 unmanned aircraft systems per DoD Instruction (DoDI)

6055.07, Mishap Notification, Investigation, Reporting, and Record Keeping, and the purchase price of the air vehicle,

including installed Government-furnished equipment, is below the cost threshold for a Class C mishap per DoDI 6055.07; or

(2) Involving aircraft not owned by or to be delivered to the Government, only if the contracting officer determines that

it is in the best interest of the Government. See 228.370-3.

(c) The clause at 252.228-7003 , Capture and Detention, may be used when contractor employees are subject to capture

and detention and may not be covered by the War Hazards Compensation Act (42 U.S.C. 1701 et seq.).

228.3-5

228.371 DEFENSE FEDERAL ACQUISITION REGULATION

(d) Use the clause at 252.228-7005 , Mishap Reporting and Investigation Involving Aircraft, Missiles, and Space Launch

Vehicles, in solicitations and contracts that involve the manufacture, modification, overhaul, or repair of aircraft, missiles, and

space launch vehicles.

(e) Use the clause at 252.228-7006 , Compliance with Spanish Laws and Insurance, in solicitations and contracts for

services or construction to be performed in Spain, unless the Contractor is a Spanish concern.

(f) Use the clause at 252.228-7007, Public Aircraft and State Aircraft Operations-Liability, in solicitations and contracts

that do not include the clause at 252.228-7001 but involve public aircraft operations or state aircraft operations.

228.3-6

PART 229 - TAXES

Sec.

Subpart 229.1 - GENERAL

229.101

Resolving tax problems.

229.170

Reporting of foreign taxation on U.S. assistance programs.

229.170-1

Definition.

229.170-2

Policy.

229.170-3

Reports.

229.170-4

Contract clause.

Subpart 229.2 - FEDERAL EXCISE TAXES

229.204

Federal excise tax on specific foreign contract payments.

Subpart 229.4 - CONTRACT CLAUSES

229.402

Foreign contracts.

229.402-70

Additional provisions and clauses.

Subpart 229.70 - SPECIAL PROCEDURES FOR OVERSEAS

CONTRACTS

229-1

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229-2

SUBPART 229.1 - GENERAL 229.170-4

Subpart 229.1 - GENERAL

229.101 Resolving tax problems.

(a) Within DoD, the agency-designated legal counsels are the defense agency General Counsels, the General Counsels

of the Navy and Air Force, and for the Army, the Chief, Contract Law Division, Office of the Judge Advocate General. For

additional information on the designated legal counsels, see PGI 229.101 (a).

(b) For information on fuel excise taxes, see PGI 229.101 (b).

(c) For guidance on directing a contractor to litigate the applicability of a particular tax, see PGI 229.101 (c).

(d) For information on tax relief agreements between the United States and European foreign governments, see PGI

229.101 (d).

229.170 Reporting of foreign taxation on U.S. assistance programs.

229.170-1 Definition.

“Commodities,” as used in this section, means any materials, articles, supplies, goods, or equipment.

229.170-2 Policy.

(a) By law, bilateral agreements with foreign governments must include a provision that commodities acquired under

contracts funded by U.S. assistance programs shall be exempt from taxation by the foreign government. If taxes or customs

duties nevertheless are imposed, the foreign government must reimburse the amount of such taxes to the U.S. Government

(Section 579 of Division E of the Consolidated Appropriations Act, 2003 (Pub. L. 108-7), as amended by Section 506 of

Division D of the Consolidated Appropriations Act, 2004 (Pub. L. 108-199), and similar sections in subsequent acts).

(b) This foreign tax exemption—

(1) Applies to a contract or subcontract for commodities when—

(i) The funds are appropriated by the annual foreign operations appropriations act; and

(ii) The value of the contract or subcontract is $500 or more;

(2) Does not apply to the acquisition of services;

(3) Generally is implemented through letters of offer and acceptance, other country-to-country agreements, or Federal

interagency agreements; and

(4) Requires reporting of noncompliance for effective implementation.

229.170-3 Reports.

The contracting officer shall submit a report to the designated Security Assistance Office when a foreign government

or entity imposes tax or customs duties on commodities acquired under contracts or subcontracts meeting the criteria of

229.170-2 (b)(1). Follow the procedures at PGI 229.170-3 for submission of reports.

229.170-4 Contract clause.

Use the clause at 252.229-7011 , Reporting of Foreign Taxes – U.S. Assistance Programs, in solicitations and contracts

funded with U.S. assistance appropriations provided in the annual foreign operations appropriations act.

229.1-1

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229.1-2

SUBPART 229.2 - FEDERAL EXCISE TAXES 229.204

Subpart 229.2 - FEDERAL EXCISE TAXES

229.204 Federal excise tax on specific foreign contract payments.

The contracting officer shall not authorize the Governmentwide commercial purchase card as a method of payment

during any contract period of performance if the contract includes the clause at FAR 52.229-12, Tax on Certain Foreign

Procurements, unless the contract also includes the clause at 252.229-7014, Full Exemption from Two-Percent Excise Tax on

Certain Foreign Procurements, indicating that the contractor is fully exempt from the tax.

229.2-1

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229.2-2

SUBPART 229.4 - CONTRACT CLAUSES 229.402-70

Subpart 229.4 - CONTRACT CLAUSES

229.402 Foreign contracts.

229.402-70 Additional provisions and clauses.

(a) Use the basic or the alternate of the clause at 252.229-7001 , Tax Relief, in solicitations and contracts when a contract

will be awarded to a foreign concern for performance in a foreign country.

(1) Use the basic clause in solicitations and contracts when the contract will be performed in a foreign country other

than Germany.

(2) Use the alternate I clause in solicitations and contracts when the contract will be performed in Germany.

(b) Use the clause at 252.229-7002 , Customs Exemptions (Germany), in solicitations and contracts requiring the import of

U.S. manufactured products into Germany.

(c)(1) Use the clause at 252.229-7003 , Tax Exemptions (Italy), in solicitations and contracts when contract performance

will be in Italy.

(2) Use the provision at 252.229-7012 , Tax Exemptions (Italy)—Representation, in solicitations that contain the clause

at 252.229-7003 , Tax Exemptions (Italy). If the solicitation includes the provision at FAR 52.204-7, do not separately list

252.229-7012 in the solicitation.

(d) Use the clause at 252.229-7004 , Status of Contractor as a Direct Contractor (Spain), in solicitations and contracts

requiring the import into Spain of supplies for construction, development, maintenance, or operation of Spanish-American

installations and facilities.

(e) (1) Use the clause at 252.229-7005 , Tax Exemptions (Spain), in solicitations and contracts when contract performance

will be in Spain.

(2) Use the provision at 252.229-7013 , Tax Exemptions (Spain)—Representation, in solicitations that contain the

clause at 252.229-7005 , Tax Exemptions (Spain). If the solicitation includes the provision at FAR 52.204-7, do not separately

list 252.229-7013 in the solicitation.

(f) Use the clause at 252.229-7006 , Value Added Tax Exclusion (United Kingdom), in solicitations and contracts when

contract performance will be in the United Kingdom.

(g) Use the clause at 252.229-7007 , Verification of United States Receipt of Goods, in solicitations and contracts when

contract performance will be in the United Kingdom.

(h) Use the clause at 252.229-7008 , Relief from Import Duty (United Kingdom), in solicitations issued and contracts

awarded in the United Kingdom.

(i) Use the clause at 252.229-7009 , Relief from Customs Duty and Value Added Tax on Fuel (Passenger Vehicles) (United

Kingdom), in solicitations issued and contracts awarded in the United Kingdom for fuels (gasoline or diesel) and lubricants

used in passenger vehicles (excluding taxis).

(j) Use the clause at 252.229-7010 , Relief from Customs Duty on Fuel (United Kingdom), in solicitations issued and

contracts awarded in the United Kingdom that require the use of fuels (gasoline or diesel) and lubricants in taxis or vehicles

other than passenger vehicles.

(k) Use the clause at 252.229-7014, Full Exemption from Two-Percent Excise Tax on Certain Foreign Procurements, in

contracts that include the clause at FAR 52.229-12, Tax on Certain Foreign Procurements, when the contractor has—

(1) Represented that it is a foreign person in response to the provision at FAR 52.229-11, Tax on Certain Foreign

Procurements—Notice and Representation; and

(2) Indicated that it is fully exempt from the tax for reasons cited on their IRS Form W-14, Certificate of Foreign

Contracting Party Receiving Federal Procurement Payments.

229.4-1

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229.4-2

SUBPART 229.70 - SPECIAL PROCEDURES FOR OVERSEAS CONTRACTS

Subpart 229.70 - SPECIAL PROCEDURES FOR OVERSEAS CONTRACTS

To obtain tax relief for overseas contracts, follow the procedures at PGI 229.70.

229.70-1

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229.70-2

PART 230 - COST ACCOUNTING STANDARDS

Sec.

Subpart 230.2 - CAS PROGRAM REQUIREMENTS

230.201

Contract requirements.

230.201-5

Waiver.

Subpart 230.70 - Reserved

Subpart 230.71 - Reserved

230-1

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230-2

SUBPART 230.2 - CAS PROGRAM REQUIREMENTS 230.201-5

Subpart 230.2 - CAS PROGRAM REQUIREMENTS

230.201 Contract requirements.

230.201-5 Waiver.

(a)(1)(A) The military departments and the Principal Director, Defense Pricing, Contracting, and Acquisition Policy

(DPCAP), Office of the Under Secretary of Defense (Acquisition and Sustainment)—

(1) May grant CAS waivers that meet the conditions in FAR 30.201-5(b)(1); and

(2) May grant CAS waivers that meet the conditions in FAR 30.201-5(b)(2), provided the cognizant Federal

agency official granting the waiver determines that—

(i) The property or services cannot reasonably be obtained under the contract, subcontract, or

modification, as applicable, without granting the waiver;

(ii) The price can be determined to be fair and reasonable without the application of the Cost Accounting

Standards; and

(iii) There are demonstrated benefits to granting the waiver.

(B) Follow the procedures at PGI 230.201-5 (a)(1) for submitting waiver requests to the Principal Director,

DPCAP.

(2) The military departments shall not delegate CAS waiver authority below the individual responsible for issuing

contracting policy for the department.

(e) By November 30th of each year, the military departments shall provide a report to the Office of the Principal Director,

DPCAP (Contract Policy) of all waivers granted under FAR 30.201-5(a), during the previous fiscal year, for any contract,

subcontract, or modification expected to have a value of $15 million or more. See PGI 230.201-5 (e) for format and guidance

for the report. The Principal Director, DPCAP, will submit a consolidated report to the CAS Board and the congressional

defense committees.

230.2-1

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230.2-2

SUBPART 230.70 - RESERVED

Subpart 230.70 - Reserved

230.70-1

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230.70-2

SUBPART 230.71 - RESERVED

Subpart 230.71 - Reserved

230.71-1

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230.71-2

PART 231 - CONTRACT COST PRINCIPLES AND PROCEDURES

Sec.

Subpart 231.1 - APPLICABILITY

231.100

Scope of subpart.

231.100-70

Contract clause.

Subpart 231.2 - CONTRACTS WITH COMMERCIAL

ORGANIZATIONS

231.205

Selected costs.

231.205-1

Public relations and advertising costs.

231.205-6

Compensation for personal services.

231.205-18

Independent research and development and bid and proposal costs.

231.205-19

Insurance and indemnification.

231.205-22

Lobbying and political activity costs.

231.205-70

External restructuring costs.

231.205-71

Costs related to counterfeit electronic parts and suspect counterfeit

electronic parts.

Subpart 231.3 - CONTRACTS WITH EDUCATIONAL

INSTITUTIONS

231.303

Requirements.

Subpart 231.6 - CONTRACTS WITH STATE, LOCAL, AND

FEDERALLY

231.603

Requirements.

Subpart 231.7 - CONTRACTS WITH NONPROFIT

ORGANIZATIONS

231.703

Requirements.

231-1

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231-2

SUBPART 231.1 - APPLICABILITY 231.100-70

Subpart 231.1 - APPLICABILITY

231.100 Scope of subpart.

231.100-70 Contract clause.

Use the clause at 252.231-7000 , Supplemental Cost Principles, in all solicitations and contracts, which are subject to the

principles and procedures described in FAR Subparts 31.1, 31.2, 31.6, and 31.7.

When awarding qualified contracts in conjunction with the conveyance of a utility system under 10 U.S.C. 2688, "Utility

Systems: Conveyance Authority," see DoD Class Deviation 2011-O0006, Utilities Privatization –Class Deviation from FAR

Part 31, dated March 31, 2011. This deviation is effective until incorporated into the DFARS or rescinded.

231.1-1

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231.1-2

SUBPART 231.2 - CONTRACTS WITH COMMERCIAL ORGANIZATIONS 231.205-18

Subpart 231.2 - CONTRACTS WITH COMMERCIAL ORGANIZATIONS

231.205 Selected costs.

231.205-1 Public relations and advertising costs.

(e) See 225.7303-2 (e) for allowability provisions affecting foreign military sales contracts.

(f) Unallowable public relations and advertising costs include the following:

(1) Monies paid to the Government associated with the leasing of Government equipment, including lease payments

and reimbursements for support services, except for foreign military sales contracts as provided for at 225.7303-2 .

231.205-6 Compensation for personal services.

(f)(1) In accordance with Section 8122 of Pub. L. 104-61, and similar sections in subsequent Defense appropriations acts,

costs for bonuses or other payments in excess of the normal salary paid by the contractor to an employee, that are part of

restructuring costs associated with a business combination, are unallowable under DoD contracts funded by fiscal year 1996

or subsequent appropriations. This limitation does not apply to severance payments or early retirement incentive payments.

(See 231.205-70 (b) for the definitions of “business combination” and “restructuring costs.”)

(m)(1) Fringe benefit costs that are contrary to law, employer-employee agreement, or an established policy of the

contractor are unallowable.

231.205-18 Independent research and development and bid and proposal costs.

(a) Definitions. As used in this section—

“Covered contract” means a DoD prime contract for an amount exceeding the simplified acquisition threshold, except for

a fixed-price contract without cost incentives. The term also includes a subcontract for an amount exceeding the simplified

acquisition threshold, except for a fixed-price subcontract without cost incentives under such a prime contract.

“Covered segment” means a product division of the contractor that allocated more than $1,100,000 in independent

research and development (IR&D) costs and bid and proposal (B&P) costs to covered contracts during the preceding fiscal

year. In the case of a contractor that has no product divisions, the term means that contractor as a whole. A product division

of the contractor that allocated less than $1,100,000 in IR&D costs and B&P costs to covered contracts during the preceding

fiscal year is not subject to the limitations in paragraph (c) of this section.

“Major contractor” means any contractor whose covered segments allocated a total of more than $11 million in IR&D

costs and B&P costs to covered contracts during the preceding fiscal year. For purposes of calculating the dollar threshold

amounts to determine whether a contractor meets the definition of “major contractor,” do not include contractor segments

allocating less than $1,100,000 of IR&D and B&P costs to covered contracts during the preceding fiscal year.

(c) Allowability.

(i) Departments/agencies shall not supplement this regulation in any way that limits IR&D cost allowability and

B&P cost allowability.

(ii) See 225.7303-2 (c) for allowability provisions affecting foreign military sale contracts.

(iii)(A) For IR&D costs major contractors incurred on covered contracts to be allowable—

(1) The contractor is required to report IR&D projects generating the IR&D costs to the

Defense Technical Information Center (DTIC) using the DTIC’s online input form and instructions at https://

defenseinnovationmarketplace.dtic.mil/industry-portal/ ;and

(2) The contractor is required to update its DTIC inputs at least annually, no later than 3 months after the

end of the contractor’s fiscal year, and when the project is completed.

(B) The amount of IR&D costs allowable under DoD contracts shall not exceed the lesser of—

(1) Such contracts’ allocable share of total incurred IR&D costs; or

(2) The total amount of incurred IR&D costs that the chief executive officer of the contractor has

determined will advance the needs of DoD for future technology and advanced capability as DoD describes such needs in

communications referenced at 242.771-3(c)(1)(i).

(C) Contractors that are not major contractors are encouraged to use the DTIC online input form and instructions

at https://defenseinnovationmarketplace.dtic.mil/industry-portal/ to report IR&D projects in order to provide DoD with

visibility into the technical content of the contractors’ IR&D projects.

(iv) Contractors are required to report incurred IR&D costs separately from indirect costs.

(v) Contractors are required to report incurred B&P costs separately from other indirect costs.

231.2-1

231.205-19 DEFENSE FEDERAL ACQUISITION REGULATION

231.205-19 Insurance and indemnification.

(e) In addition to the cost limitations in FAR 31.205-19(e), self-insurance and purchased insurance costs are subject to the

requirements of the clauses at 252.217-7012 , Liability and Insurance, and 252.228-7001 , Ground and Flight Risk.

231.205-22 Lobbying and political activity costs.

(a) Costs associated with preparing any material, report, list, or analysis on the actual or projected economic or

employment impact in a particular State or congressional district of an acquisition program for which all research,

development, testing, and evaluation has not been completed also are unallowable (10 U.S.C. 4652).

231.205-70 External restructuring costs.

(a) Scope. This subsection—

(1) Prescribes policies and procedures for allowing contractor external restructuring costs when savings would result

for DoD; and

(2) Implements 10 U.S.C. 3761.

(b) Definitions. As used in this subsection:

(1) “Business combination” means a transaction whereby assets or operations of two or more companies not previously

under common ownership or control are combined, whether by merger, acquisition, or sale/purchase of assets.

(2) “External restructuring activities” means restructuring activities occurring after a business combination that affect

the operations of companies not previously under common ownership or control. They do not include restructuring activities

occurring after a business combination that affect the operations of only one of the companies not previously under common

ownership or control, or, when there has been no business combination, restructuring activities undertaken within one

company. External restructuring activities are a direct outgrowth of a business combination. They normally will be initiated

within 3 years of the business combination.

(3) “Restructuring activities” means nonroutine, nonrecurring, or extraordinary activities to combine facilities,

operations, or workforce, in order to eliminate redundant capabilities, improve future operations, and reduce overall costs.

Restructuring activities do not include routine or ongoing repositionings and redeployments of a contractor’s productive

facilities or workforce (e.g., normal plant rearrangement or employee relocation), nor do they include other routine or

ordinary activities charged as indirect costs that would otherwise have been incurred (e.g., planning and analysis, contract

administration and oversight, or recurring financial and administrative support).

(4) “Restructuring costs” means the costs, including both direct and indirect, of restructuring activities. Restructuring

costs that may be allowed include, but are not limited to, severance pay for employees, early retirement incentive payments

for employees, employee retraining costs, relocation expense for retained employees, and relocation and rearrangement of

plant and equipment. For purposes of this definition, if restructuring costs associated with external restructuring activities

allocated to DoD contracts are less than $2.5 million, the costs shall not be subject to the audit, review, and determination

requirements of paragraph (c)(4) of this subsection; instead, the normal rules for determining cost allowability in accordance

with FAR Part 31 shall apply.

(5) “Restructuring savings” means cost reductions, including both direct and indirect cost reductions, that result from

restructuring activities. Reassignments of cost to future periods are not restructuring savings.

(c) Limitations on cost allowability. Restructuring costs associated with external restructuring activities shall not be

allowed unless—

(1) Such costs are allowable in accordance with FAR Part 31 and DFARS Part 231;

(2) An audit of projected restructuring costs and restructuring savings is performed;

(3) The cognizant administrative contracting officer (ACO) reviews the audit report and the projected costs and

projected savings, and negotiates an advance agreement in accordance with paragraph (d) of this subsection; and

(4)(i) The official designated in paragraph (c)(4)(ii) of this subsection determines in writing that the audited projected

savings, on a present value basis, for DoD resulting from the restructuring will exceed either—

(A) The costs allowed by a factor of at least two to one; or

(B) The costs allowed, and the business combination will result in the preservation of a critical capability that

might otherwise be lost to DoD.

(ii)(A) If the amount of restructuring costs is expected to exceed $25 million over a 5-year period, the designated

official is the Under Secretary of Defense (Acquisition and Sustainment) or the Principal Deputy. This authority may not be

delegated below the level of an Assistant Secretary of Defense.

231.2-2

SUBPART 231.2 - CONTRACTS WITH COMMERCIAL ORGANIZATIONS 231.205-71

(B) For all other cases, the designated official is the Director of the Defense Contract Management Agency. The

Director may not delegate this authority.

(d) Procedures and ACO responsibilities.As soon as it is known that the contractor will incur restructuring costs for

external restructuring activities, the cognizant ACO shall follow the procedures at PGI 231.205-70 (d).

(e) Information needed to obtain a determination.

(1) The novation agreement (if one is required).

(2) The contractor’s restructuring proposal.

(3) The proposed advance agreement.

(4) The audit report.

(5) Any other pertinent information.

(6) The cognizant ACO’s recommendation for a determination. This recommendation must clearly indicate one of the

following, consistent with paragraph (c)(4)(i) of this subsection:

(i) The audited projected savings for DoD will exceed the costs allowed by a factor of at least two to one on a

present value basis.

(ii) The business combination will result in the preservation of a critical capability that might otherwise be lost to

DoD, and the audited projected savings for DoD will exceed the costs allowed on a present value basis.

(f) Contracting officer responsibilities.

(1) The contracting officer, in consultation with the cognizant ACO, should consider including a repricing clause in

noncompetitive fixed-price contracts that are negotiated during the period between—

(i) The time a business combination is announced; and

(ii) The time the contractor’s forward pricing rates are adjusted to reflect the impact of restructuring.

(2) The decision to use a repricing clause will depend upon the particular circumstances involved, including—

(i) When the restructuring will take place;

(ii) When restructuring savings will begin to be realized;

(iii) The contract performance period;

(iv) Whether the contracting parties are able to make a reasonable estimate of the impact of restructuring on the

contract; and

(v) The size of the potential dollar impact of restructuring on the contract.

(3) If the contracting officer decides to use a repricing clause, the clause must provide for a downward-only price

adjustment to ensure that DoD receives its appropriate share of restructuring net savings.

231.205-71 Costs related to counterfeit electronic parts and suspect counterfeit electronic parts.

(a) Scope. This section implements the requirements of section 818(c)(2), National Defense Authorization Act for Fiscal

Year 2012 (Pub. L. 112-81), as modified by section 833, National Defense Authorization Act for Fiscal Year 2013 (Pub. L.

112-239), and section 885 of the National Defense Authorization Act for Fiscal Year 2016 (Pub. L. 114-92).

(b) The costs of counterfeit electronic parts and suspect counterfeit electronic parts and the costs of rework or corrective

action that may be required to remedy the use or inclusion of such parts are unallowable, unless—

(1) The contractor has an operational system to detect and avoid counterfeit electronic parts and suspect counterfeit

electronic parts that has been reviewed and approved by DoD pursuant to 244.303 ;

(2) The counterfeit electronic parts or suspect counterfeit electronic parts are Government-furnished property as defined

in FAR 45.101 or were obtained by the contractor in accordance with the clause at 252.246-7008 , Sources of Electronic

Parts; and

(3) The contractor—

(i) Becomes aware of the counterfeit electronic parts or suspect counterfeit electronic parts through inspection,

testing, and authentication efforts of the contractor or its subcontractors; through a Government Industry Data Exchange

Program (GIDEP) alert; or by other means; and

(ii) Provides timely (i.e., within 60 days after the contractor becomes aware) written notice to—

(A) The cognizant contracting officer(s); and

(B) GIDEP (unless the contractor is a foreign corporation or partnership that does not have an office, place of

business, or fiscal paying agent in the United States; or the counterfeit electronic part or suspect counterfeit electronic part is

the subject of an on-going criminal investigation).

231.2-3

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231.2-4

SUBPART 231.3 - CONTRACTS WITH EDUCATIONAL INSTITUTIONS 231.303

Subpart 231.3 - CONTRACTS WITH EDUCATIONAL INSTITUTIONS

231.303 Requirements.

(1) Pursuant to section 841 of the National Defense Authorization Act for Fiscal Year 1994 (Pub. L. 103-160), no

limitation may be placed on the reimbursement of otherwise allowable indirect costs incurred by an institution of higher

education under a DoD contract awarded on or after November 30, 1993, unless that same limitation is applied uniformly to

all other organizations performing similar work under DoD contracts. The 26 percent limitation imposed on administrative

indirect costs by OMB Circular No. A-21 shall not be applied to DoD contracts awarded on or after November 30, 1993, to

institutions of higher education because the same limitation is not applied to other organizations performing similar work.

(2) The cognizant administrative contracting officer may waive the prohibition in 231.303 (1) if the governing body

of the institution of higher education requests the waiver to simplify the institution’s overall management of DoD cost

reimbursements under DoD contracts.

(3) Under 10 U.S.C. 4652, the costs cited in 231.205-22 (a) are unallowable.

231.3-1

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231.3-2

SUBPART 231.6 - CONTRACTS WITH STATE, LOCAL, AND FEDERALLY 231.603

Subpart 231.6 - CONTRACTS WITH STATE, LOCAL, AND FEDERALLY

RECOGNIZED INDIAN TRIBAL GOVERNMENTS

231.603 Requirements.

Under 10 U.S.C. 4652, the costs cited in 231.205-22 (a) are unallowable.

231.6-1

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231.6-2

SUBPART 231.7 - CONTRACTS WITH NONPROFIT ORGANIZATIONS 231.703

Subpart 231.7 - CONTRACTS WITH NONPROFIT ORGANIZATIONS

231.703 Requirements.

Under 10 U.S.C. 4652, the costs cited in 231.205-22 (a) are unallowable.

231.7-1

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231.7-2

PART 232 - CONTRACT FINANCING

Sec.

232.001

Definitions.

232.006

Reduction or suspension of contract payments upon finding of

fraud.

232.006-5

Reporting.

232.007

Contract financing payments.

232.009

Providing accelerated payments to small business contractors and

to prime contractors that subcontractors with a small business

concern.

232.009-1

General.

232.070

Responsibilities.

232.071

Reserved.

232.072

Financial responsibility of contractors.

232.072-1

Required financial reviews.

232.072-2

Appropriate information.

232.072-3

Cash flow forecasts.

Subpart 232.1 - FINANCING FOR OTHER THAN A

COMMERCIAL PURCHASE

232.102

Description of contract financing methods.

232.102-70

Provisional delivery payments.

232.104

Providing contract financing.

Subpart 232.2 - COMMERCIAL PRODUCT AND

COMMERCIAL SERVICE PURCHASE FINANCING

232.202

RESERVED

232.202-4

Security for Government financing.

232.206

Solicitation provisions and contract clauses.

Subpart 232.3 - LOAN GUARANTEES FOR DEFENSE

PRODUCTION

232.302

Authority.

Subpart 232.4 - ADVANCE PAYMENTS FOR OTHER THAN

COMMERCIAL ACQUISITIONS

232.404

Exclusions.

232.409

Contracting officer action.

232.409-1

Recommendation for approval.

232.410

Findings, determination, and authorization.

232.412

Contract clause.

232.412-70

Additional clauses.

232.470

Advance payment pool.

Subpart 232.5 - PROGRESS PAYMENTS BASED ON COSTS

232.501

General.

232.501-1

Customary progress payment rates.

232.501-2

Unusual progress payments.

232.501-3

Contract price.

232.502

Preaward matters.

232.502-4

Contract clauses.

232.502-4-70

Additional clauses.

232.503

Postaward matters.

232.503-6

Suspension or reduction of payments.

232.503-15

Application of Government title terms.

Subpart 232.6 - CONTRACT DEBTS

232.602

Responsibilities.

232.603

Debt determination.

232.604

Demand for payment.

232.610

Compromising debts.

232.611

Contract clause.

232.670

Transfer of responsibility for debt collection.

232.671

Bankruptcy reporting.

Subpart 232.7 - CONTRACT FUNDING

232.702

Policy.

232.703

Contract funding requirements.

232.703-1

General.

232.703-3

Contracts crossing fiscal years.

232.703-70

Military construction appropriations act restriction.

232.704

Limitation of cost or funds.

232.704-70

Incrementally funded fixed-price contracts.

232.706

Contract clauses.

232.706-70

Clause for limitation of Governments obligation.

Subpart 232.8 - ASSIGNMENT OF CLAIMS

232.803

Policies.

232.805

Procedure.

232.806

Contract clauses.

Subpart 232.9 - PROMPT PAYMENT

232.901

Applicability.

232.903

Responsibilities.

232.904

Determining payment due dates.

232.905

Payment documentation and process.

232.906

Making payments.

232.908

Contract clauses.

Subpart 232.10 - PERFORMANCE-BASED PAYMENTS

232.1001

Policy.

232.1003

Reserved.

232.1003-70

Criteria for use.

232.1004

Procedures.

232.1005

Reserved.

232.1005-70

Solicitation provisions and contract clauses.

Subpart 232.11 - ELECTRONIC FUNDS TRANSFER

232.1108

Payment by Governmentwide commercial purchase card.

232.1108-70

Prohibition of Governmentwide commercial purchase card as a

method of payment when the tax on certain foreign procurements

applies.

232.1110

Solicitation provision and contract clauses.

Subpart 232.70 - ELECTRONIC SUBMISSION AND

PROCESSING OF PAYMENT REQUESTS AND RECEIVING

REPORTS

232.7000

Scope of subpart.

232.7001

Definitions.

232.7002

Policy.

232.7003

Procedures.

232.7004

Contract clauses.

Subpart 232.71 - LEVIES ON CONTRACT PAYMENTS

232.7100

Scope of subpart.

232.7101

Policy and procedures.

232.7102

Contract clause.

Subpart 232.72 - Reserved

232-1

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232-2

232.072 FINANCIAL RESPONSIBILITY OF CONTRACTORS. 232.071

232.001 Definitions.

“Incremental funding” means the partial funding of a contract or an exercised option, with additional funds anticipated to

be provided at a later time.

232.006 Reduction or suspension of contract payments upon finding of fraud.

232.006-5 Reporting.

Departments and agencies, in accordance with department/agency procedures, shall prepare and submit to the Under

Secretary of Defense (Acquisition and Sustainment), through the Principal Director, Defense Pricing, Contracting, and

Acquisition Policy, annual reports (Report Control Symbol DD-AT&L(A)1891) containing the information required by FAR

32.006-5.

232.007 Contract financing payments.

(a) DoD policy is to make contract financing payments as quickly as possible. Generally, the contracting officer shall

insert the standard due dates of 7 days for progress payments, and 14 days for performance-based payments and interim

payments on cost-type contracts, in the appropriate paragraphs of the respective payment clauses. For interim payments on

cost-reimbursement contracts for services, see 232.906 (a)(i).

(b) The contracting officer should coordinate contract financing payment terms with offices that will be involved in the

payment process to ensure that specified terms can be met. Where justified, the contracting officer may insert a due date

greater than, but not less than, the standard. In determining payment terms, consider—

(i) Geographical separation;

(ii) Workload;

(iii) Contractor ability to submit a proper request; and

(iv) Other factors that could affect timing of payment.

232.009 Providing accelerated payments to small business contractors and

to prime contractors that subcontractors with a small business concern.

232.009-1 General.

10 U.S.C. 3801(b) requires DoD to provide accelerated payments to small business contractors and subcontractors, to the

fullest extent permitted by law, with a goal of 15 days.

232.070 Responsibilities.

(a) The Principal Director, Defense Pricing, Contracting, and Acquisition Policy (DPCAP), Office of the Under Secretary

of Defense (Acquisition and Sustainment) (OUSD(A&S)DPCAP) is responsible for ensuring uniform administration of DoD

contract financing, including DoD contract financing policies and important related procedures. Agency discretion under

FAR Part 32 is at the DoD level and is not delegated to the departments and agencies. Proposals by the departments and

agencies, to exercise agency discretion, shall be submitted to OUSD(A&S)DPCAP.

(b) Departments and agencies are responsible for their day-to-day contract financing operations. Refer specific cases

involving financing policy or important procedural issues to OUSD(A&S)DPCAP for consideration through the department/

agency Contract Finance Committee members (also see subpart 201.4 for deviation request and approval procedures).

(c) See PGI 232.070 (c) for information on department/agency contract financing offices.

232.071 Reserved.

232.072 Financial responsibility of contractors.

Use the policies and procedures in this section in determining the financial capability of current or prospective contractors.

-1

232.072-1 DEFENSE FEDERAL ACQUISITION REGULATION

232.072-1 Required financial reviews.

The contracting officer shall perform a financial review when the contracting officer does not otherwise have sufficient

information to make a positive determination of financial responsibility. In addition, the contracting officer shall consider

performing a financial review—

(a) Prior to award of a contract, when—

(1) The contractor is on a list requiring preaward clearance or other special clearance before award;

(2) The contractor is listed on the Consolidated List of Contractors Indebted to the Government (Hold-Up List), or is

otherwise known to be indebted to the Government;

(3) The contractor may receive Government assets such as contract financing payments or Government property;

(4) The contractor is experiencing performance difficulties on other work; or

(5) The contractor is a new company or a new supplier of the item.

(b) At periodic intervals after award of a contract, when—

(1) Any of the conditions in paragraphs (a)(2) through (a)(5) of this subsection are applicable; or

(2) There is any other reason to question the contractor’s ability to finance performance and completion of the contract.

232.072-2 Appropriate information.

(a) The contracting officer shall obtain the type and depth of financial and other information that is required to establish

a contractor’s financial capability or disclose a contractor’s financial condition. While the contracting officer should not

request information that is not necessary for protection of the Government’s interests, the contracting officer must insist upon

obtaining the information that is necessary. The unwillingness or inability of a contractor to present reasonably requested

information in a timely manner, especially information that a prudent business person would be expected to have and to use

in the professional management of a business, may be a material fact in the determination of the contractor’s responsibility

and prospects for contract completion.

(b) The contracting officer shall obtain the following information to the extent required to protect the Government’s

interest. In addition, if the contracting officer concludes that information not listed in paragraphs (b)(1) through (b)(10) of

this subsection is required to comply with 232.072-1 , that information should be requested. The information must be for the

person(s) who are legally liable for contract performance. If the contractor is not a corporation, the contracting officer shall

obtain the required information for each individual/joint venturer/partner:

(1) Balance sheet and income statement—

(i) For the current fiscal year (interim);

(ii) For the most recent fiscal year and, preferably, for the 2 preceding fiscal years. These should be certified by an

independent public accountant or by an appropriate officer of the firm; and

(iii) Forecasted for each fiscal year for the remainder of the period of contract performance.

(2) Summary history of the contractor and its principal managers, disclosing any previous insolvencies—corporate or

personal, and describing its products or services.

(3) Statement of all affiliations disclosing—

(i) Material financial interests of the contractor;

(ii) Material financial interests in the contractor;

(iii) Material affiliations of owners, officers, directors, major stockholders; and

(iv) The major stockholders if the contractor is not a widely-traded, publicly-held corporation.

(4) Statement of all forms of compensation to each officer, manager, partner, joint venturer, or proprietor, as appropriate

—

(i) Planned for the current year;

(ii) Paid during the past 2 years; and

(iii) Deferred to future periods.

(5) Business base and forecast that—

(i) Shows, by significant markets, existing contracts and outstanding offers, including those under negotiation; and

(ii) Is reconcilable to indirect cost rate projections.

(6) Cash forecast for the duration of the contract (see 232.072-3 ).

(7) Financing arrangement information that discloses—

(i) Availability of cash to finance contract performance;

(ii) Contractor’s exposure to financial crisis from creditor’s demands;

(iii) Degree to which credit security provisions could conflict with Government title terms under contract financing;

-2

232.072 FINANCIAL RESPONSIBILITY OF CONTRACTORS. 232.072-3

(iv) Clearly stated confirmations of credit with no unacceptable qualifications; and

(v) Unambiguous written agreement by a creditor if credit arrangements include deferred trade payments or creditor

subordinations/repayment suspensions.

(8) Statement of all state, local, and Federal tax accounts, including special mandatory contributions, e.g.,

environmental superfund.

(9) Description and explanation of the financial effect of issues such as—

(i) Leases, deferred purchase arrangements, or patent or royalty arrangements;

(ii) Insurance, when relevant to the contract;

(iii) Contemplated capital expenditures, changes in equity, or contractor debt load;

(iv) Pending claims either by or against the contractor;

(v) Contingent liabilities such as guarantees, litigation, environmental, or product liabilities;

(vi) Validity of accounts receivable and actual value of inventory, as assets; and

(vii) Status and aging of accounts payable.

(10) Significant ratios such as—

(i) Inventory to annual sales;

(ii) Inventory to current assets;

(iii) Liquid assets to current assets;

(iv) Liquid assets to current liabilities;

(v) Current assets to current liabilities; and

(vi) Net worth to net debt.

232.072-3 Cash flow forecasts.

(a) A contractor must be able to sustain a sufficient cash flow to perform the contract. When there is doubt regarding the

sufficiency of a contractor’s cash flow, the contracting officer should require the contractor to submit a cash flow forecast

covering the duration of the contract.

(b) A contractor’s inability or refusal to prepare and provide cash flow forecasts or to reconcile actual cash flow with

previous forecasts is a strong indicator of serious managerial deficiencies or potential contract cost or performance problems.

(c) Single or one-time cash flow forecasts are of limited forecasting power. As such, they should be limited to preaward

survey situations. Reliability of cash flow forecasts can be established only by comparing a series of previous actual cash

flows with the corresponding forecasts and examining the causes of any differences.

(d) Cash flow forecasts must—

(1) Show the origin and use of all material amounts of cash within the entire business unit responsible for contract

performance, period by period, for the length of the contract (or until the risk of a cash crisis ends); and

(2) Provide an audit trail to the data and assumptions used to prepare it.

(e) Cash flow forecasts can be no more reliable than the assumptions on which they are based. Most important of these

assumptions are—

(1) Estimated amounts and timing of purchases and payments for materials, parts, components, subassemblies, and

services;

(2) Estimated amounts and timing of payments for purchase or production of capital assets, test facilities, and tooling;

(3) Amounts and timing of fixed cash charges such as debt installments, interest, rentals, taxes, and indirect costs;

(4) Estimated amounts and timing of payments for projected labor, both direct and indirect;

(5) Reasonableness of projected manufacturing and production schedules;

(6) Estimated amounts and timing of billings to customers (including progress payments), and customer payments;

(7) Estimated amounts and timing of cash receipts from lenders or other credit sources, and liquidation of loans; and

(8) Estimated amounts and timing of cash receipts from other sources.

(f) The contracting officer should review the assumptions underlying the cash flow forecasts. In determining whether the

assumptions are reasonable and realistic, the contracting officer should consult with—

(1) The contractor;

(2) Government personnel in the areas of finance, engineering, production, cost, and price analysis; or

(3) Prospective supply, subcontract, and loan or credit sources.

-3

232.102 DEFENSE FEDERAL ACQUISITION REGULATION

Subpart 232.1 - FINANCING FOR OTHER THAN A COMMERCIAL PURCHASE

232.102 Description of contract financing methods.

(e)(2) Progress payments based on percentage or stage of completion are authorized only for contracts for construction (as

defined in FAR 36.102), shipbuilding, and ship conversion, alteration, or repair. However, percentage or stage of completion

methods of measuring contractor performance may be used for performance-based payments in accordance with FAR Subpart

32.10.

232.102-70 Provisional delivery payments.

(a) The contracting officer may establish provisional delivery payments to pay contractors for the costs of supplies and

services delivered to and accepted by the Government under the following contract actions, if undefinitized:

(1) Letter contracts contemplating a fixed-price contract.

(2) Orders under basic ordering agreements.

(3) Spares provisioning documents annexed to contracts.

(4) Unpriced equitable adjustments on fixed-price contracts.

(5) Orders under indefinite-delivery contracts.

(b) Provisional delivery payments shall be—

(1) Used sparingly;

(2) Priced conservatively; and

(3) Reduced by liquidating previous progress payments in accordance with the Progress Payments clause.

(c) Provisional delivery payments shall not—

(1) Include profit;

(2) Exceed funds obligated for the undefinitized contract action; or

(3) Influence the definitized contract price.

232.104 Providing contract financing.

For fixed-price contracts with a period of performance in excess of a year that meet the dollar thresholds established in

FAR 32.104(d), and for solicitations expected to result in such contracts, in lieu of the requirement at FAR 32.104(d)(1)(ii)

for the contractor to demonstrate actual financial need or the unavailability of private financing, DoD has determined that—

(1) The use of customary contract financing (see FAR 32.113), other than loan guarantees and advance payments, is in

DoD’s best interest; and

(2) Further justification of its use in individual acquisitions is unnecessary.

232.1-4

SUBPART 232.2 - COMMERCIAL PRODUCT AND COMMERCIAL SERVICE PURCHASE FINANCING 232.206

Subpart 232.2 - COMMERCIAL PRODUCT AND

COMMERCIAL SERVICE PURCHASE FINANCING

232.202 RESERVED

232.202-4 Security for Government financing.

(a)(2) When determining whether an offeror’s financial condition is adequate security, see 232.072-2 and 232.072-3 for

guidance. It should be noted that an offeror’s financial condition may be sufficient to make the contractor responsible for

award purposes, but may not be adequate security for commercial contract financing.

232.206 Solicitation provisions and contract clauses.

(f) Prompt payment for commercial purchase payments. The contracting officer shall incorporate the following standard

prompt payment terms for commercial product and commercial service contract financing:

(i) Commercial advance payments: The contractor entitlement date specified in the contract, or 30 days after receipt

by the designated billing office of a proper request for payment, whichever is later.

(ii) Commercial interim payments: The contractor entitlement date specified in the contract, or 14 days after

receipt by the designated billing office of a proper request for payment, whichever is later. The prompt payment standards

for commercial delivery payments shall be the same as specified in FAR Subpart 32.9 for invoice payments for the item

delivered.

(g) Installment payment financing for commercial products and commercial services. Installment payment financing shall

not be used for DoD contracts, unless market research has established that this form of contract financing is both appropriate

and customary in the commercial marketplace. When installment payment financing is used, the contracting officer shall

use the ceiling percentage of contract price that is customary in the particular marketplace (not to exceed the maximum rate

established in FAR 52.232-30).

232.2-1

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232.2-2

SUBPART 232.3 - LOAN GUARANTEES FOR DEFENSE PRODUCTION 232.302

Subpart 232.3 - LOAN GUARANTEES FOR DEFENSE PRODUCTION

232.302 Authority.

(a) The use of guaranteed loans as a contract financing mechanism requires the availability of certain congressional

authority. The DoD has not requested such authority in recent years, and none is now available.

232.3-1

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232.3-2

SUBPART 232.4 - ADVANCE PAYMENTS FOR OTHER THAN COMMERCIAL ACQUISITIONS 232.470

Subpart 232.4 - ADVANCE PAYMENTS FOR

OTHER THAN COMMERCIAL ACQUISITIONS

232.404 Exclusions.

(a)(9) The requirements of FAR Subpart 32.4 do not apply to advertisements in high school and college publications for

military recruitment efforts under 10 U.S.C. 503 when the contract cost does not exceed the micro-purchase threshold.

232.409 Contracting officer action.

232.409-1 Recommendation for approval.

Follow the procedures at PGI 232.409-1 for preparation of the documents required by FAR 32.409-1(e) and (f).

232.410 Findings, determination, and authorization.

If an advance payment procedure is used without a special bank account, follow the procedures at PGI 232.410 .

232.412 Contract clause.

232.412-70 Additional clauses.

(a) Use the clause at 252.232-7000 , Advance Payment Pool, in any contract that will be subject to the terms of an

advance payment pool agreement with a nonprofit organization or educational institution. Normally, use the clause in all cost

reimbursement type contracts with the organization or institution.

(b) Use the clause at 252.232-7005 , Reimbursement of Subcontractor Advance Payments—DoD Mentor-Protege

Program, when advance payments will be provided by the contractor to a subcontractor pursuant to an approved mentor-

protege agreement (see subpart 219.71).

232.470 Advance payment pool.

(a) An advance payment pool agreement—

(1) Is a means of financing the performance of more than one contract held by a single contractor;

(2) Is especially convenient for the financing of cost-type contracts with nonprofit educational or research institutions

for experimental or research and development work when several contracts require financing by advance payments. When

appropriate, pooled advance payments may also be used to finance other types of contracts held by a single contractor; and

(3) May be established—

(i) Without regard to the number of appropriations involved;

(ii) To finance contracts for one or more department(s) or contracting activity(ies); or

(iii) In addition to any other advance payment pool agreement at a single contractor location when it is more

convenient or otherwise preferable to have more than one agreement.

232.4-1

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232.4-2

SUBPART 232.5 - PROGRESS PAYMENTS BASED ON COSTS 232.503-15

Subpart 232.5 - PROGRESS PAYMENTS BASED ON COSTS

232.501 General.

232.501-1 Customary progress payment rates.

(a) The customary progress payment rates for DoD contracts, including contracts that contain foreign military sales (FMS)

requirements, are 80 percent for large business concerns and 90 percent for small business concerns.

232.501-2 Unusual progress payments.

Follow the procedures at PGI 232.501-2 for approval of unusual progress payments.

232.501-3 Contract price.

(b) The contracting officer may approve progress payments when the contract price exceeds the funds obligated under the

contract, provided the contract limits the Government’s liability to the lesser of—

(i) The applicable rate (i.e., the lower of the progress payment rate, the liquidation rate, or the loss-ratio adjusted

rate); or

(ii) 100 percent of the funds obligated.

232.502 Preaward matters.

232.502-4 Contract clauses.

232.502-4-70 Additional clauses.

(a) Use the clause at 252.232-7002 , Progress Payments for Foreign Military Sales Acquisitions, in solicitations and

contracts that—

(i) Contain FMS requirements; and

(ii) Provide for progress payments.

(b) Use the clause at 252.232-7004 , DoD Progress Payment Rates, instead of Alternate I of the clause at FAR 52.232-16,

if the contractor is a small business concern.

(c) Use the clause at 252.232-7018, Progress Payments-Multiple Lots, to authorize separate progress payment requests for

multiple lots.

232.503 Postaward matters.

232.503-6 Suspension or reduction of payments.

(b) Contractor noncompliance. See also 242.7503 .

(g) Loss contracts. Use the following loss ratio adjustment procedures for making adjustments required by FAR

32.503-6(f) and (g)—

(i) Except as provided in paragraph (g)(ii) of this subsection, the contracting officer must prepare a supplementary

analysis of the contractor's request for progress payments and calculate the loss ratio adjustment using the procedures in FAR

32.503-6(g).

(ii) The contracting officer may request the contractor to prepare the supplementary analysis as an attachment to the

progress payment request when the contracting officer determines that the contractor's methods of estimating the “Costs to

Complete” are reliable, accurate, and not susceptible to improper influences.

(iii) To maintain an audit trail and permit verification of calculations, do not make the loss ratio adjustments by

altering or replacing data on the contractor's original request for progress payment (SF 1443, Contractor's Request for

Progress Payment, or computer generated equivalent).

232.503-15 Application of Government title terms.

(d) An administrative contracting officer (ACO) determination that the contractor's material management and accounting

system conforms to the system criteria at 252.242-7004 (d)(7) constitutes the contracting officer approval requirement of

FAR 32.503-15(d). Prior to granting blanket approval of cost transfers between contracts, the ACO should determine that—

(i) The contractor retains records of the transfer activity that took place in the prior month;

232.5-1

232.503-15 DEFENSE FEDERAL ACQUISITION REGULATION

(ii) The contractor prepares, at least monthly, a summary of the transfer activity that took place in the prior month;

and

(iii) The summary report includes as a minimum, the total number and dollar value of transfers.

232.5-2

SUBPART 232.6 - CONTRACT DEBTS 232.671

Subpart 232.6 - CONTRACT DEBTS

232.602 Responsibilities.

(b) Disbursing officers are those officials designated to make payments under a contract or to receive payments of

amounts due under a contract. The disbursing officer is responsible for determining the amount and collecting contract debts

whenever overpayments or erroneous payments have been made. The disbursing officer also has primary responsibility when

the amounts due and dates for payment are contained in the contract, and a copy of the contract has been furnished to the

disbursing officer with notice to collect as amounts become due.

232.603 Debt determination.

When transferring a case to the contract financing office, follow the procedures at PGI 232.603 .

232.604 Demand for payment.

When issuing a demand for payment of a contract debt, follow the procedures at PGI 232.604 .

232.610 Compromising debts.

Only the department/agency contract financing offices (see PGI 232.070 (c)) are authorized to compromise debts covered

by this subpart.

232.611 Contract clause.

(a) The Principal Director, Defense Pricing, Contracting, and Acquisition Policy, Office of the Under Secretary of Defense

(Acquisition and Sustainment), may exempt the contracts in FAR 32.611(a)(2) through (5) and other contracts, in exceptional

circumstances, from the administrative interest charges required by this subpart.

(7) Other exceptions are—

(A) Contracts for instructions of military or ROTC personnel at civilian schools, colleges, and universities;

(B) Basic agreements with telephone companies for communications services and facilities, and purchases under

such agreements; and

(C) Transportation contracts with common carriers for common carrier services.

232.670 Transfer of responsibility for debt collection.

Follow the procedures at PGI 232.670 for transferring responsibility for debt collection.

232.671 Bankruptcy reporting.

Follow the procedures at PGI 232.671 for bankruptcy reporting.

232.6-1

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232.6-2

SUBPART 232.7 - CONTRACT FUNDING 232.706-70

Subpart 232.7 - CONTRACT FUNDING

232.702 Policy.

Fixed-price contracts shall be fully funded except as permitted by 232.703-1 .

232.703 Contract funding requirements.

232.703-1 General.

(1) A fixed-price contract may be incrementally funded only if—

(i) The contract (excluding any options) or any exercised option—

(A) Is for severable services;

(B) Does not exceed one year in length; and

(C) Is incrementally funded using funds available (unexpired) as of the date the funds are obligated; or

(ii) The contract uses funds available from multiple (two or more) fiscal years and—

(A) The contract is funded with research and development appropriations; or

(B) Congress has otherwise authorized incremental funding.

(2) An incrementally funded fixed-price contract shall be fully funded as soon as funds are available.

232.703-3 Contracts crossing fiscal years.

(b) The contracting officer may enter into a contract, exercise an option, or place an order under a contract for severable

services for a period that begins in one fiscal year and ends in the next fiscal year if the period of the contract awarded, option

exercised, or order placed does not exceed 1 year (10 U.S.C. 3133).

232.703-70 Military construction appropriations act restriction.

Annual military construction appropriations acts restrict the use of funds appropriated by the acts for payments under cost-

plus-fixed-fee contracts (see 216.306 (c)).

232.704 Limitation of cost or funds.

232.704-70 Incrementally funded fixed-price contracts.

(a) Upon receipt of the contractor’s notice under paragraph (c) of the clause at 252.232-7007 , Limitation of Government’s

Obligation, the contracting officer shall promptly provide written notice to the contractor that the Government is—

(1) Allotting additional funds for continued performance and increasing the Government’s limitation of obligation in a

specified amount;

(2) Terminating the contract; or

(3) Considering whether to allot additional funds; and

(i) The contractor is entitled by the contract terms to stop work when the Government’s limitation of obligation is

reached; and

(ii) Any costs expended beyond the Government’s limitation of obligation are at the contractor’s risk.

(b) Upon learning that the contract will receive no further funds, the contracting officer shall promptly give the contractor

written notice of the Government’s decision and terminate for the convenience of the Government.

(c) The contracting officer shall ensure that, in accordance with paragraph (b) of the clause at 252.232-7007 , Limitation

of Government’s Obligation, sufficient funds are allotted to the contract to cover the total amount payable to the contractor in

the event of termination for the convenience of the Government.

232.706 Contract clauses.

232.706-70 Clause for limitation of Governments obligation.

Use the clause at 252.232-7007 , Limitation of Government's Obligation, in solicitations and resultant incrementally

funded fixed-price contracts. The contracting officer may revise the contractor’s notification period, in paragraph (c) of the

clause, from “ninety” to “thirty” or “sixty” days, as appropriate.

232.7-1

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232.7-2

SUBPART 232.8 - ASSIGNMENT OF CLAIMS 232.806

Subpart 232.8 - ASSIGNMENT OF CLAIMS

232.803 Policies.

(b) Only contracts for personal services may prohibit the assignment of claims.

(d) Pursuant to 41 U.S.C. 6305, and in accordance with Presidential delegation dated October 3, 1995, Secretary of

Defense delegation dated February 5, 1996, and Under Secretary of Defense (Acquisition and Sustainment) delegation dated

February 23, 1996, the Director of Defense Procurement determined on May 10, 1996, that a need exists for DoD to agree

not to reduce or set off any money due or to become due under the contract when the proceeds under the contract have been

assigned in accordance with the Assignment of Claims provision of the contract. This determination was published in the

Federal Register on June 11, 1996, as required by law. Nevertheless, if departments/agencies decide it is in the Government's

interest, or if the contracting officer makes a determination in accordance with FAR 32.803(d) concerning a significantly

indebted offeror, they may exclude the no-setoff commitment.

232.805 Procedure.

(b) The assignee shall forward—

(i) To the administrative contracting officer (ACO), a true copy of the instrument of assignment and an original and

three copies of the notice of assignment. The ACO shall acknowledge receipt by signing and dating all copies of the notice of

assignment and shall—

(A) File the true copy of the instrument of assignment and the original of the notice in the contract file;

(B) Forward two copies of the notice to the disbursing officer of the payment office cited in the contract;

(C) Return a copy of the notice to the assignee; and

(D) Advise the contracting officer of the assignment.

(ii) To the surety or sureties, if any, a true copy of the instrument of assignment and an original and three copies of

the notice of assignment. The surety shall return three acknowledged copies of the notice to the assignee, who shall forward

two copies to the disbursing officer designated in the contract.

(iii) To the disbursing officer of the payment office cited in the contract, a true copy of the instrument of assignment

and an original and one copy of the notice of assignment. The disbursing officer shall acknowledge and return to the assignee

the copy of the notice and shall file the true copy of the instrument and original notice.

232.806 Contract clauses.

(a)(1) Use the clause at 252.232-7008, Assignment of Claims (Overseas), instead of the clause at FAR 52.232-23,

Assignment of Claims, in solicitations and contracts when contract performance will be in a foreign country.

(2) Use Alternate I with the clause at FAR 52.232-23, Assignment of Claims, unless otherwise authorized under

232.803(d).

232.8-1

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232.8-2

SUBPART 232.9 - PROMPT PAYMENT 232.904

Subpart 232.9 - PROMPT PAYMENT

232.901 Applicability.

(1) Except for FAR 32.908, FAR subpart 32.9, Prompt Payment, does not apply when-

(i) There is-

(A) An emergency, as defined in the Disaster Relief Act of 1974;

(B) A contingency operation (see FAR 2.101(b)); or

(C) The release or threatened release of hazardous substances (as defined in 4 U.S.C. 9606, section 106);

(ii) The head of the contracting activity has made a determination, after consultation with the cognizant comptroller,

that conditions exist that limit normal business operations; and

(iii) Payments will be made in the operational area or made contingent upon receiving supporting documentation

(i.e., contract, invoice, and receiving report) from the operational area.

(2) Criteria limiting normal business operations during emergencies and contingency operations that restrict the use of

FAR 32.9 may include such conditions as—

(i) Support infrastructure, hardware, communications capabilities, and bandwidth are not consistently available such

that normal business operations can be carried out;

(ii) Support resources, facilities, and banking needs are not consistently available for use as necessary in carrying out

normal business operations;

(iii) Military mission priorities override the availability of appropriately skilled personnel in support of back-office

operations;

(iv) Mobility impairments and security concerns restrict free movement of personnel and documents necessary for

timely processing;

(v) Foreign vendors are not familiar with or do not understand DoD contract requirements (i.e., proper invoice,

receiving documentation, and contracting terms); or

(vi) Documents received in support of payment requests and shipments require language translations that cannot be

performed and documented within normal business processing times.

(3) Subsequent Determinations. The head of the contracting activity shall make subsequent determinations, after

consultation with the cognizant comptroller, as the operational area evolves into either a more stable or less stable

environment.

(i) If the head of the contracting activity determines that the operational area has evolved into a more stable

environment, the contracting officer shall notify, by issuance of a contract modification, each contractor performing in the

operational area under review. The modification deactivates this clause 252.232-7011 and activates the applicable FAR

Prompt Payment clause in the contract.

(ii) If after deactivation of this clause, the head of the contracting activity subsequently determines that the

operational area has evolved into a less stable environment, the head of the contracting activity will make a determination that

conditions exist that limit normal business operations. The contracting officer will then reactivate this clause 252.232-7011 by

issuance of a contract modification.

232.903 Responsibilities.

In accordance with 10 U.S.C. 3801(b), DoD shall assist small business concerns by providing payment as quickly as

possible, to the fullest extent permitted by law, with a goal of 15 days after receipt of proper invoices and all required

documentation, including acceptance, and before normal payment due dates established in the contract (see 232.906 (a)).

See DoD Class Deviation 2014-O0015-Update to Accelerated Payments to Small Businesses, dated April 15, 2014. This

deviation is effective until modification of all DoD entitlement and payment systems to accommodate accelerated payments

is completed, or until superseded or rescinded.

232.904 Determining payment due dates.

(d) In most cases, Government acceptance or approval can occur within the 7-day constructive acceptance period specified

in the FAR Prompt Payment clauses. Government payment of construction progress payments can, in most cases, be made

within the 14-day period allowed by the Prompt Payment for Construction Contracts clause. While the contracting officer

may specify a longer period because the period specified in the contract is not reasonable or practical, such change should be

coordinated with the Government offices responsible for acceptance or approval and for payment. Reasons for specifying a

longer period include but are not limited to: the nature of the work or supplies or services, inspection or testing requirements,

232.9-1

232.905 DEFENSE FEDERAL ACQUISITION REGULATION

shipping and acceptance terms, and resources available at the acceptance activity. A constructive acceptance period of less

than the cited 7 or 14 days is not authorized.

232.905 Payment documentation and process.

(b)(1)(iii) For task and delivery orders numbered in accordance with FAR 4.1603 and 204.1603 , the 13-character order

number may serve as the contract number on invoices and receiving reports. The contract or agreement number under which

the order was placed may be omitted from invoices and receiving reports. The contractor may choose to identify both the

contract number and the 13-character order number on invoices and receiving reports. Task and delivery orders numbered

with a four-position alpha-numeric call or order serial number shall include both the 13-position basic contract Procurement

Instrument Identifier and the four-position order number.

232.906 Making payments.

(a)(i) Generally, the contracting officer shall insert the standard due date of 14 days for interim payments on cost-

reimbursement contracts for services in the clause at FAR 52.232-25, Prompt Payment, when using the clause with its

Alternate I.

(ii) The restrictions of FAR 32.906 prohibiting early payment do not apply to invoice payments made to small

business concerns. However, contractors shall not be entitled to interest penalties if the Government fails to make early

payment.

232.908 Contract clauses.

Use the clause at 252.232-7011, Payments in Support of Emergencies and Contingency Operations, in solicitations and

contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial products

and commercial services, in acquisitions that meet the applicability criteria at 232.901 (1). Use of this clause is in addition

to use of either the approved Payment clause prescribed in FAR 32.908 or the clause at FAR 52.212-4, Contract Terms and

Conditions—Commercial Products and Commercial Services.

232.9-2

SUBPART 232.10 - PERFORMANCE-BASED PAYMENTS 232.1005-70

Subpart 232.10 - PERFORMANCE-BASED PAYMENTS

232.1001 Policy.

(a) As with all contract financing, the purpose of performance-based payments is to assist the contractor in the payment

of costs incurred during the performance of the contract. See PGI 232.1001 (a) for additional information on use of

performance-based payments. However, in accordance with 10 U.S.C. 3802(a)(2), performance-based payments shall not

be conditioned upon costs incurred in contract performance, but on the achievement of performance outcomes. Subject to

the criteria in 232.1003-70 , all companies, including nontraditional defense contractors, are eligible for performance-based

payments, consistent with best commercial practices.

(d) The contracting officer shall use the following standard payment terms for performance-based payments: The

contractor entitlement date, if any, specified in the contract, or 14 days after receipt by the designated billing office of a

proper request for payment, whichever is later.

232.1003 Reserved.

232.1003-70 Criteria for use.

In accordance with 10 U.S.C. 3802(c)(1), a contractor’s financial statements shall be in compliance with Generally

Accepted Accounting Principles, in order to receive performance-based payments. 10 U.S.C. 3802(c)(2) specifies that it

does not grant the Defense Contract Audit Agency the authority to audit compliance with Generally Accepted Accounting

Principles.

232.1004 Procedures.

(b) Establishing performance-based finance payment amounts.

(i) The contracting officer should include in a solicitation both the progress payments and performance-based

payments provisions and clauses prescribed in this part, when considering both types of payment methods. Only one type

of financing will be included in the resultant contract, except as may be authorized on separate orders subject to FAR

32.1003(c)).

(ii) The contracting officer shall analyze the performance-based payment schedule using the performance-based

payments (PBP) analysis tool. The PBP analysis tool is on the Defense Pricing, Contracting, and Acquisition Policy website

in the Price, Cost and Finance section. The PBP analysis tool and Performance Based Payment - Guidebook are available at

https://www.acq.osd.mil/asda/dpc/pcf/pricing-topics.html#pdp .

(A) When considering performance-based payments, obtain from the offeror/contractor a proposed performance-

based payments schedule that includes all performance-based payments events, completion criteria and event values along

with the projected monthly expenditure profile in order to negotiate the value of the performance events such that the

performance-based payments are not expected to result in an unreasonably low or negative level of contractor investment in

the contract.

If performance-based payments are deemed practical, the Government will evaluate and negotiate the details of the

performance-based payments schedule.

(B) For modifications to contracts that already use performance-based payments financing, the basis for

negotiation must include performance-based payments. The PBP analysis tool will be used in the same manner to help

determine the price for the modification;

(iii) The contracting officer shall document in the contract file that the performance-based payment schedule

provides a mutually beneficial settlement position that reflects adequate consideration to the Government for the improved

contractor cash flow.

(c) Instructions for multiple appropriations. If the contract contains foreign military sales requirements, the contracting

officer shall provide instructions for distribution of the contract financing payments to each country’s account.

232.1005 Reserved.

232.1005-70 Solicitation provisions and contract clauses.

(a) The contracting officer shall include the following clauses with appropriate fill-ins in solicitations and contracts that

include performance-based payments:

232.10-1

232.1005-70 DEFENSE FEDERAL ACQUISITION REGULATION

(1) For performance-based payments made on a whole-contract basis, use the clause at 252.232-7012 , Performance-

Based Payments–Whole-Contract Basis.

(2) For performance-based payments made on a deliverable-item basis, use the clause at 252.232-7013 , Performance-

Based Payments–Deliverable-Item Basis.

(b) Use the provision at 252.232-7015 , Performance-Based Payments–Representation, in solicitations where the resulting

contract may include performance-based payments.

(c) Use the provision at 252.232-7016 , Notice of Progress Payments or Performance-Based Payments, in lieu of FAR

52.232-13, Notice of Progress Payments, when the solicitation contains clauses for progress payments and performance-

based payments (only one type of financing will be included in the resultant contract, except as may be authorized on

separate orders subject to FAR 32.1003(c)).

232.10-2

SUBPART 232.11 - ELECTRONIC FUNDS TRANSFER 232.1110

Subpart 232.11 - ELECTRONIC FUNDS TRANSFER

232.1108 Payment by Governmentwide commercial purchase card.

232.1108-70 Prohibition of Governmentwide commercial purchase card as a method of payment when the tax on

certain foreign procurements applies.

The contracting officer shall not authorize the Governmentwide commercial purchase card as a method of payment

during any contract period of performance if the contract includes the clause at FAR 52.229-12, Tax on Certain Foreign

Procurements, unless the contract also includes the clause at 252.229-7014, Full Exemption from Two-Percent Excise Tax on

Certain Foreign Procurements, indicating that the contractor is fully exempt from the tax.

232.1110 Solicitation provision and contract clauses.

Use the clause at 252.232-7009 , Mandatory Payment by Governmentwide Commercial Purchase Card, in solicitations,

contracts, and agreements, including solicitations, contracts, and agreements using FAR part 12 procedures for the acquisition

of commercial products and commercial services, when—

(1) Placement of orders or calls valued at or below the micro-purchase threshold is anticipated; and

(2) Payment by Governmentwide commercial purchase card is required for orders or calls valued at or below the micro-

purchase threshold under the contract or agreement.

232.11-1

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232.11-2

SUBPART 232.70 - ELECTRONIC SUBMISSION AND PROCESSING OF PAYMENT REQUESTS AND RECEIVING REPORTS 232.7003

Subpart 232.70 - ELECTRONIC SUBMISSION AND PROCESSING

OF PAYMENT REQUESTS AND RECEIVING REPORTS

232.7000 Scope of subpart.

This subpart prescribes policies and procedures for submitting and processing payment requests in electronic form to

comply with 10 U.S.C. 4601.

232.7001 Definitions.

As used in this subpart—

“Electronic form” means any automated system that transmits information electronically from the initiating system to

affected systems.

“Payment request” means any request for contract financing payment or invoice payment submitted by the contractor

under a contract or task or delivery order.

“Receiving report” means the data prepared in the manner and to the extent required by Appendix F, Material Inspection

and Receiving Report, of the DFARS.

232.7002 Policy.

(a) Payment requests and receiving reports are required to be submitted in electronic form, except for—

(1) Classified contracts or purchases when electronic submission and processing of payment requests and receiving

reports could compromise the safeguarding of classified information or national security;

(2) Cases in which contractor submission of electronic payment requests and receiving reports is not feasible (e.g.,

when contract performance is in an environment where internet connectivity is not available);

(3) Cases in which DoD is unable to receive payment requests or provide acceptance in electronic form;

(4) Cases in which the contractor has requested permission in writing to submit payment requests and receiving

reports by nonelectronic means, and the contracting officer has provided instructions for a temporary alternative method of

submission of payment requests and receiving reports in the contract administration data section of the contract or task or

delivery order (e.g., section G, an addendum to FAR 52.212-4, or applicable clause); and

(5) When the Governmentwide commercial purchase card is used as the method of payment, in which case only

submission of the receiving report in electronic form is required.

(b)(1) The only acceptable electronic form for submission of payment requests and receiving reports is Wide Area

WorkFlow (WAWF) (https://wawf.eb.mil/), except as follows:

(i) For payment of commercial transportation services provided under a Government rate tender, contract, or task

or delivery order for transportation services, the use of a DoD-approved electronic third party payment system or other

exempted vendor payment/invoicing system (e.g., PowerTrack, Transportation Financial Management System, and Cargo and

Billing System) is permitted.

(ii) For submitting and processing payment requests and receiving reports for contracts or task or delivery orders for

rendered health care services, the use of TRICARE Encounter Data System as the electronic form is permitted.

(2) Facsimile, email, and scanned documents are not acceptable electronic forms of payment requests or receiving

reports.

232.7003 Procedures.

(a) DoD officials receiving payment requests in electronic form shall process the payment requests in electronic form. The

WAWF system provides the method to electronically process payment requests and receiving reports.

(1) Documents necessary for payment, such as receiving reports, invoice approvals, contracts, contract modifications,

and required certifications, shall also be processed in electronic form.

(2) Scanned documents and other commonly used file formats are only acceptable for processing supporting

documentation.

(b) If one of the exceptions to submission in electronic form at 232.7002 (a) applies, the contracting officer shall—

(1) Consult the payment office and the contract administration office regarding the alternative method to be used for

submission of payment requests or receiving reports (e.g., facsimile or conventional mail); and

(2) Provide procedures for invoicing in the contract administration data section of the contract or task or delivery order

(e.g., section G, an addendum to FAR 52.212-4, or applicable clause) for submission of invoices by nonelectronic means. If

232.70-1

232.7004 DEFENSE FEDERAL ACQUISITION REGULATION

submission of invoices by nonelectronic means is temporary, the procedures should specify the time period for which they

apply.

232.7004 Contract clauses.

(a) Unless an exception to submission in electronic form at 232.7002 (a) applies and instructions for invoices are contained

in the contract administration data section of the contract, task orders, or delivery order, use the clause at 252.232-7003,

Electronic Submission of Payment Requests and Receiving Reports, in solicitations and contracts, including solicitations and

contracts using FAR part 12 procedures for the acquisition of commercial products and commercial services.

(b) Use the clause at 252.232-7006, Wide Area WorkFlow Payment Instructions, in solicitations and contracts, task orders,

or delivery orders, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial

products and commercial services, when 252.232-7003 is used and none of the exceptions at232.7002(b)(1) apply. See PGI

232.7004 for instructions on completing the clause.

232.70-2

SUBPART 232.71 - LEVIES ON CONTRACT PAYMENTS 232.7102

Subpart 232.71 - LEVIES ON CONTRACT PAYMENTS

232.7100 Scope of subpart.

This subpart prescribes policies and procedures concerning the effect of levies pursuant to 26 U.S.C. 6331(h) on contract

payments. The Internal Revenue Service (IRS) is authorized to levy up to 100 percent of all payments made under a DoD

contract, up to the amount of the tax debt.

232.7101 Policy and procedures.

(a) The contracting officer shall require the contractor to—

(1) Promptly notify the contracting officer when a levy may result in an inability to perform the contract; and

(2) Advise the contracting officer whether the inability to perform may adversely affect national security.

(b) The contracting officer shall promptly notify the Principal Director, Defense Pricing, Contracting, and Acquisition

Policy (DPCAP), when the contractor’s inability to perform will adversely affect national security or will result in significant

additional costs to the Government. Follow the procedures at PGI 232.7101 (b) for reviewing the contractor’s rationale and

submitting the required notification.

(c) The Principal Director, DPCAP, will promptly evaluate the contractor’s rationale and will notify the IRS, the

contracting officer, and the payment office, as appropriate, in accordance with the procedures at PGI 232.7101 (c).

(d) The contracting officer shall then notify the contractor in accordance with paragraph (c) of the clause at 252.232-7010

and in accordance with the procedures at PGI 232.7101 (d).

232.7102 Contract clause.

Use the clause at 252.232-7010 , Levies on Contract Payments, in all solicitations and contracts, including

solicitations and contracts using FAR part 12 procedures for the acquisition of commercial item products and

commercial services.

232.71-1

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232.71-2

SUBPART 232.72 - RESERVED

Subpart 232.72 - Reserved

232.72-1

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232.72-2

PART 233 - PROTESTS, DISPUTES, AND APPEALS

Sec.

Subpart 233.1 - PROTESTS

233.102

General.

233.104

Protests to GAO.

233.170

Briefing requirement for protested acquisitions valued at $1 billion

or more.

233.171

Reporting requirement for protests of solicitations or awards.

Subpart 233.2 - DISPUTES AND APPEALS

233.204

RESERVED

233.204-70

Limitations on payment.

233.210

Contracting officer's authority.

233.215

Contract clauses.

233.215-70

Additional contract clause.

233-1

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233-2

SUBPART 233.1 - PROTESTS 233.171

Subpart 233.1 - PROTESTS

233.102 General.

If the Government exercises the authority provided in 239.7305 (d) to limit disclosure of information, no action

undertaken by the Government under such authority shall be subject to review in a bid protest before the Government

Accountability Office (GAO) or in any Federal court (see subpart 239.73).

233.104 Protests to GAO.

(c) Protests after award. (1) In lieu of the time periods in FAR 33.104 (c)(1), contracting officers shall immediately

suspend performance or terminate the awarded contract, task order, or delivery order upon notice from the GAO of a protest

filed within the time periods listed in paragraphs (c)(1)(A) through (D) of this section, whichever is later, except as provided

in FAR 33.104 (c)(2) and (3)—

(A) Within 10 days after the date of contract award;

(B) Within 10 days after the date a task order or delivery order is issued, where the value exceeds $25 million (10

U.S.C. 3406(f));

(C) Within 5 days after a debriefing date offered to the protestor under a timely debriefing request in accordance

with FAR 15.506 regardless of whether the protestor rejected the offered debriefing date, unless an earlier debriefing date is

negotiated as a result; or

(D) Within 5 days after a postaward debriefing under FAR 15.506 is concluded in accordance with 215.506-70

(b).

233.170 Briefing requirement for protested acquisitions valued at $1 billion or more.

Follow the procedures at PGI 233.170 for briefing protested acquisitions valued at $1 billion or more.

233.171 Reporting requirement for protests of solicitations or awards.

Follow the procedures at PGI 233.171 for reporting information on protests involving the same contract award or proposed

award that have been filed at both the GAO and the United States Court of Federal Claims.

233.1-1

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233.1-2

SUBPART 233.2 - DISPUTES AND APPEALS 233.215-70

Subpart 233.2 - DISPUTES AND APPEALS

233.204 RESERVED

233.204-70 Limitations on payment.

See 10 U.S.C. 3862 for limitations on Congressionally directed payment of a claim under 41 U.S.C. chapter 71 (Contract

Disputes), a request for equitable adjustment to contract terms, or a request for relief under Public Law 85-804.

233.210 Contracting officer's authority.

See PGI 233.210 for guidance on reviewing a contractor’s claim.

233.215 Contract clauses.

Use Alternate I of the clause at FAR 52.233-1, Disputes, when—

(1) The acquisition is for—

(i) Aircraft

(ii) Spacecraft and launch vehicles

(iii) Naval vessels

(iv) Missile systems

(v) Tracked combat vehicles

(vi) Related electronic systems;

(2) The contracting officer determines that continued performance is—

(i) Vital to the national security, or

(ii) Vital to the public health and welfare; or

(3) The head of the contracting activity determines that continued performance is necessary pending resolution of any

claim that might arise under or be related to the contract.

233.215-70 Additional contract clause.

Use the clause at 252.233-7001 , Choice of Law (Overseas), in solicitations and contracts when contract performance will

be outside the United States and its outlying areas, unless otherwise provided for in a government-to-government agreement.

233.2-1

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233.2-2

PART 234 - MAJOR SYSTEM ACQUISITION

Sec.

234.001

Definition.

234.003

Responsibilities.

234.004

Acquisition strategy.

234.005

General requirements.

234.005-1

Competition.

234.005-2

Mission-oriented solicitation.

Subpart 234.2 - EARNED VALUE MANAGEMENT SYSTEM

234.201

Policy.

234.203

Solicitation provisions and contract clause.

Subpart 234.70 - ACQUISITION OF MAJOR WEAPON

SYSTEMS AS COMMERCIAL PRODUCTS

234.7000

Scope of subpart.

234.7001

Definition.

234.7002

Policy.

Subpart 234.71 - COST AND SOFTWARE DATA REPORTING

234.7100

Policy.

234.7101

Solicitation provision and contract clause.

234-1

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234-2

234.004

234.001 Definition.

As used in this subpart—

“Acceptable earned value management system” and “earned value management system” are defined in the clause at

252.234-7002 , Earned Value Management System.

“Production of major defense acquisition program” means the production and deployment of a major system that is

intended to achieve an operational capability that satisfies mission needs, or an activity otherwise defined as Milestone C

under Department of Defense Instruction 5000.02 or related authorities.

“Significant deficiency” is defined in the clause at 252.234-7002 , Earned Value Management System, and is synonymous

with “noncompliance.”

234.003 Responsibilities.

DoDD 5000.01, The Defense Acquisition System, and DoDI 5000.02, Operation of the Adaptive Acquisition Framework,

contain the DoD implementation of OMB Circular A-109 and OMB Circular A-11.

234.004 Acquisition strategy.

(1) See 209.570 for policy applicable to acquisition strategies that consider the use of lead system integrators.

(2) Contract type.

(i) In accordance with section 818 of the National Defense Authorization Act for Fiscal Year 2007 (Pub. L.

109-364), for major defense acquisition programs at Milestone B—

(A) The milestone decision authority shall select, with the advice of the contracting officer, the contract type for a

development program at the time of Milestone B approval or, in the case of a space program, Key Decision Point B approval;

(B) The basis for the contract type selection shall be documented in the acquisition strategy. The documentation

—

(1) Shall include an explanation of the level of program risk; and

(2) If program risk is determined to be high, shall outline the steps taken to reduce program risk and the

reasons for proceeding with Milestone B approval despite the high level of program risk; and

(C) If a cost-reimbursement type contract is selected, the contract file shall include the milestone decision

authority’s written determination that—

(1) The program is so complex and technically challenging that it would not be practicable to reduce

program risk to a level that would permit the use of a fixed-price type contract; and

(2) The complexity and technical challenge of the program is not the result of a failure to meet the

requirements of 10 U.S.C. 4251.

(ii) In accordance with section 811 of the National Defense Authorization Act for Fiscal Year 2013 (Pub. L.

112-239), the contracting officer shall—

(A) Not use cost-reimbursement line items for the acquisition of production of major defense acquisition

programs, unless the Under Secretary of Defense for Acquisition and Sustainment (USDA&S)), or the milestone decision

authority when the milestone decision authority is the service acquisition executive of the military department that is

managing the program, submits to the congressional defense committees—

(1) A written certification that the particular cost-reimbursement line items are needed to provide a required

capability in a timely and cost effective manner; and

(2) An explanation of the steps taken to ensure that cost-reimbursement line items are used only to achieve

the purposes of the exception; and

(B) Include a copy of such congressional certification in the contract file.

(iii) See 216.301-3 for additional contract type approval requirements for cost-reimbursement contracts.

(iv) For fixed-price incentive (firm target) contracts, contracting officers shall comply with the guidance provided at

PGI 216.403-1 (1)(ii)(B) and (C).

(v) In accordance with section 808 of the National Defense Authorization Act for Fiscal Year 2023 (Pub. L.

117-263)—

(A) The contracting officer shall not procure more than one lot for low-rate initial production, as defined at 10

U.S.C. 4231, associated with a major defense acquisition program if—

(1) The milestone decision authority authorizes the use of a fixed-price type contract at the time of Milestone

B approval; and

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234.005-1 DEFENSE FEDERAL ACQUISITION REGULATION

(2) The scope of work of the fixed-price type contract includes both the development and low-rate initial

production of items for such major defense acquisition program; and

(B) This limitation may be waived by the service acquisition executive for the department concerned, delegable

to no lower than one level above the contracting officer, if—

(1) A written notification of the waiver, including associated rationale, is provided to the congressional

defense committees no later than 30 days after issuance of the waiver in accordance with agency procedures; and

(2) A copy of the waiver and such congressional notification are included in the contract file.

(3) The contracting officer shall include in solicitations for contracts for the technical maturation and risk reduction

phase, engineering and manufacturing development phase or production phase of a weapon system, including embedded

software—

(i) Clearly defined measurable criteria for engineering activities and design specifications for reliability and

maintainability provided by the program manager, or the comparable requiring activity official performing program

management responsibilities; or

(ii) Ensure a copy of the justification, executed by the program manager or the comparable requiring activity official

performing program management responsibilities for the decision that engineering activities and design specifications for

reliability and maintainability should not be a requirement, is included in the contract file (10 U.S.C. 4328).

234.005 General requirements.

234.005-1 Competition.

A contract that is initially awarded from the competitive selection of a proposal resulting from a broad agency

announcement ( see 235.016) may contain a contract line item or contract option using funds not limited to those identified

in 235.016 for the development and demonstration or initial production of technology developed under the contract, or the

delivery of initial or additional items if the item or a prototype thereof is created as the result of work performed under the

contract , only when it adheres to the following limitations:

(1) The contract line item or contract option shall be limited to the delivery of the minimal amount of initial or

additional items or prototypes that will allow for timely competitive solicitation and award of a follow-on development or

production contract for those items.

(2) The term of the contract line item or contract option shall be for not more than 2 years.

(3) The dollar value of the work to be performed pursuant to the contract line item or contract option shall not exceed

$100 million in fiscal year 2017 constant dollars. (10 U.S.C. 4004)

(4) See PGI 234.005-1 for guidance on providing, upon request, the benefits derived from use of this competitive

selection method.

234.005-2 Mission-oriented solicitation.

See 215.101-2 -70(b)(2) for the prohibition on the use of the lowest price technically acceptable source selection process

for engineering and manufacturing development of a major defense acquisition program for which budgetary authority is

requested beginning in fiscal year 2019.

Subpart 234.2 - EARNED VALUE MANAGEMENT SYSTEM

234.201 Policy.

(1) DoD applies the earned value management system requirement as follows:

(i) For cost or incentive contracts and subcontracts valued at $20,000,000 or more, the earned value management

system shall comply with the guidelines in the American National Standards Institute/Electronic Industries Alliance Standard

748, Earned Value Management Systems (ANSI/EIA-748).

(ii) For cost or incentive contracts and subcontracts valued at $50,000,000 or more, the contractor shall have an

earned value management system that has been determined by the cognizant Federal agency to be in compliance with the

guidelines in ANSI/EIA-748.

(iii) For cost or incentive contracts and subcontracts valued at less than $20,000,000—

(A) The application of earned value management is optional and is a risk-based decision;

(B) A decision to apply earned value management shall be documented in the contract file; and

(C) Follow the procedures at PGI 234.201 (1)(iii) for conducting a cost-benefit analysis.

-2

SUBPART 234.2 - EARNED VALUE MANAGEMENT SYSTEM 234.201

(iv) For firm-fixed-price contracts and subcontracts of any dollar value—

(A) The application of earned value management is discouraged; and

(B) Follow the procedures at PGI 234.201 (1)(iv) for obtaining a waiver before applying earned value

management.

(2) When an offeror proposes a plan for compliance with the earned value management system guidelines in ANSI/

EIA-748, follow the review procedures at PGI 234.201 (2).

(3) The Defense Contract Management Agency is responsible for determining earned value management system

compliance when DoD is the cognizant Federal agency.

(4) See PGI 234.201 (3) for additional guidance on earned value management.

(5) The cognizant contracting officer, in consultation with the functional specialist and auditor, shall—

(i) Determine the acceptability of the contractor‘s earned value management system and approve or disapprove the

system; and

(ii) Pursue correction of any deficiencies.

(6) In evaluating the acceptability of a contractor’s earned value management system, the contracting officer, in

consultation with the functional specialist and auditor, shall determine whether the contractor’s earned value management

system complies with the system criteria for an acceptable earned value management system as prescribed in the clause at

252.234-7002 , Earned Value Management System.

(7) Disposition of findings—

(i) Reporting of findings. The functional specialist or auditor shall document findings and recommendations in a

report to the contracting officer. If the functional specialist or auditor identifies any significant deficiencies in the contractor’s

earned value management system, the report shall describe the deficiencies in sufficient detail to allow the contracting officer

to understand the deficiencies.

(ii) Initial determination. (A) The contracting officer shall review all findings and recommendations and, if there are

no significant deficiencies, shall promptly notify the contractor, in writing, that the contractor’s earned value management

system is acceptable and approved; or

(B) If the contracting officer finds that there are one or more significant deficiencies (as defined in the clause at

252.234-7002 , Earned Value Management System) due to the contractor’s failure to meet one or more of the earned value

management system criteria in the clause at 252.234-7002 , the contracting officer shall—

(1) Promptly make an initial written determination of any significant deficiencies and notify the contractor,

in writing, providing a description of each significant deficiency in sufficient detail to allow the contractor to understand the

deficiencies;

(2) Request the contractor to respond, in writing, to the initial determination within 30 days; and

(3) Evaluate the contractor’s response to the initial determination, in consultation with the auditor or

functional specialist, and make a final determination.

(iii) Final determination. (A) The contracting officer shall make a final determination and notify the contractor, in

writing, that—

(1) The contractor’s earned value management system is acceptable and approved, and no significant

deficiencies remain, or

(2) Significant deficiencies remain. The notice shall identify any remaining significant deficiencies, and

indicate the adequacy of any proposed or completed corrective action. The contracting officer shall—

(i) Request that the contractor, within 45 days of receipt of the final determination, either correct the

deficiencies or submit an acceptable corrective action plan showing milestones and actions to eliminate the deficiencies;

(ii) Disapprove the system in accordance with the clause at 252.234-7002 , Earned Value Management

System, when initial validation is not successfully completed within the timeframe approved by the contracting officer,

or the contracting officer determines that the existing earned value management system contains one or more significant

deficiencies in high-risk guidelines in ANSI/EIA-748 standards (guidelines 1, 3, 6, 7, 8, 9, 10, 12, 16, 21, 23, 26, 27, 28,

30, or 32). When the contracting officer determines that the existing earned value management system contains one or more

significant deficiencies in one or more of the remaining 16 guidelines in ANSI/EIA-748 standards, the contracting officer

shall use discretion to disapprove the system based on input received from functional specialists and the auditor; and

(iii) Withhold payments in accordance with the clause at 252.242-7005 , Contractor Business Systems, if

the clause is included in the contract.

(B) Follow the procedures relating to monitoring a contractor's corrective action and the correction of significant

deficiencies at PGI 234.201 (7).

234.2-3

234.203 DEFENSE FEDERAL ACQUISITION REGULATION

(8) System approval. The contracting officer shall promptly approve a previously disapproved earned value

management system and notify the contractor when the contracting officer determines that there are no remaining significant

deficiencies.

(9) Contracting officer notifications. The cognizant contracting officer shall promptly distribute copies

of a determination to approve a system, disapprove a system and withhold payments, or approve a previously disapproved

system and release withheld payments to the auditor; payment office; affected contracting officers at the buying activities;

and cognizant contracting officers in contract administration activities.

234.203 Solicitation provisions and contract clause.

For cost or incentive contracts valued at $20,000,000 or more, and for other contracts for which EVMS will be applied in

accordance with 234.201 (1)(iii) and (iv)—

(1) Use the provision at 252.234-7001 , Notice of Earned Value Management System, instead of the provisions at

FAR 52.234-2, Notice of Earned Value Management System – Pre-Award IBR, and FAR 52.234-3, Notice of Earned Value

Management System – Post-Award IBR, in the solicitation; and

(2) Use the clause at 252.234-7002 , Earned Value Management System, instead of the clause at FAR 52.234-4, Earned

Value Management System, in the solicitation and contract.

234.2-4

SUBPART 234.70 - ACQUISITION OF MAJOR WEAPON SYSTEMS AS COMMERCIAL PRODUCTS 234.7002

Subpart 234.70 - ACQUISITION OF MAJOR

WEAPON SYSTEMS AS COMMERCIAL PRODUCTS

234.7000 Scope of subpart.

This subpart—

(a) Implements 10 U.S.C. 3455; and

(b) Requires a determination by the Secretary of Defense and a notification to Congress before acquiring a major weapon

system as a commercial product.

234.7001 Definition.

As used in this subpart—

Major weapon system means a weapon system acquired pursuant to a major defense acquisition program.

234.7002 Policy.

(a) Major weapon systems.

(1) A DoD major weapon system may be treated as a commercial product, or acquired under procedures established for

the acquisition of commercial products, only if—

(i) The Secretary of Defense determines that—

(A) The major weapon system is a commercial product as defined in FAR 2.101; and

(B) Such treatment is necessary to meet national security objectives; and

(ii) The congressional defense committees are notified at least 30 days before such treatment or acquisition occurs.

Follow the procedures at PGI 234.7002 .

(2) The authority of the Secretary of Defense to make a determination under paragraph (a)(1) of this section may not be

delegated below the level of the Deputy Secretary of Defense.

(b) Subsystems. A subsystem of a major weapon system (other than a commercially available off-the-shelf item) shall be

treated as a commercial product and acquired under procedures established for the acquisition of commercial products if—

(1) The subsystem is intended for a major weapon system that is being acquired, or has been acquired, under

procedures established for the acquisition of commercial products in accordance with paragraph (a) of this section; or

(2) The contracting officer determines in writing that the subsystem is a commercial product in accordance with

212.102(a)(iii). For a subsystem of a major weapon system proposed as a commercial product that has not previously been

determined to be a commercial product (see 212.102(a)(ii)), follow the procedures in paragraph (d) of this section.

(3) This paragraph (b) shall apply only to subsystems of major weapon systems that are acquired by DoD through a—

(i) Prime contract;

(ii) Modification to a prime contract; or

(iii) Subcontract under a prime contract for the acquisition of a subsystem proposed as a commercial product that has

not previously been determined to be a commercial product (see 212.102(a)(ii)).

(c) Components and spare parts.

(1) A component or spare part for a major weapon system (other than a commercially available off-the-shelf item) may

be treated as a commercial product only if—

(i) The component or spare part is intended for—

(A) A major weapon system that is being acquired, or has been acquired, under procedures established for the

acquisition of commercial products in accordance with paragraph (a) of this section; or

(B) A subsystem of a major weapon system that is being acquired, or has been acquired, under procedures

established for the acquisition of commercial products in accordance with paragraph (b) of this section; or

(ii) The contracting officer determines in writing that the component or spare part is a commercial product in

accordance with 212.102(a)(iii). For a component or spare part proposed as a commercial product that has not previously

been determined to be a commercial product (see 212.102(a)(ii)), follow the procedures in paragraph (d) of this section.

(2) This paragraph (c) shall apply only to components and spare parts that are acquired by DoD through a—

(i) P rime contract;

(ii) Modification to a prime contract; or

(iii) Subcontract under a prime contract for the acquisition of a component or spare part proposed as a commercial

product that has not previously been determined to be a commercial product (see 212.102(a)(ii)).

234.70-1

234.7002 DEFENSE FEDERAL ACQUISITION REGULATION

(d) Commerciality determination. To the extent necessary to make a commercial product determination in accordance

with 212.102(a)(iii) that relies on paragraph (1), (2), (3), (4), or (5) of the “commercial product” definition at FAR 2.101 for

a subsystem, component, or spare part as described in paragraphs (b) and (c) of this section, the provision at 252.215-7010,

Requirements for Certified Cost or Pricing Data and Data Other Than Certified Cost or Pricing Data, requires the offeror to—

(1) Identify the comparable commercial product the offeror sells to the general public or nongovernmental entities for

other than governmental purposes;

(2) Provide a comparison between the physical characteristics and functionality of the comparable commercial product

and the subsystem, component, or spare part, including—

(i) For products under paragraph (3)(i) of the “commercial product” definition at FAR 2.101, a description of the

modification and documentation to support that the modification is customarily available in the marketplace; or

(ii) For products under paragraph (3)(ii) of the “commercial product” definition at FAR 2.101, a detailed description

of the modification and detailed technical data to demonstrate that the modification is minor (e.g., information on production

processes and material differences); and

(3) Provide the national stock number (NSN) for the comparable commercial product, if one is assigned, and the NSN

for the subsystem, component, or spare part, if one is assigned; or

(4) If the offeror does not sell a comparable commercial product to the general public or nongovernmental entities for

other than governmental purposes, then the offeror is required to—

(i) Notify the contracting officer in writing that it does not sell such a comparable product; and

(ii) Provide the contracting officer a comparison between the physical characteristics and functionality of the most

comparable commercial product in the commercial market and the subsystem, component, or spare part, if available.

(e) Relevant information to determine price reasonableness. For products relying on paragraph (3)(ii) of the “commercial

product” definition at FAR 2.101, see FAR 15.403-1(c)(3)(iii)(C). See 212.209(a) for requirements of 10 U.S.C. 3453 with

regard to market research.

(1) Unless an exception at FAR 15.403-1(b)(1) or (2) applies—

(i) To the extent necessary to make a determination of price reasonableness, the contracting officer shall require the

offeror to submit to or provide the contracting officer access to a representative sample, as determined by the contracting

officer, of prices paid for the same or similar commercial products under comparable terms and conditions by both

Government and commercial customers and the terms and conditions of such sales; or

(ii) If the contracting officer determines that the offeror cannot provide or give access to sufficient information

described in this paragraph (e)(1) to determine the reasonableness of price, the contracting officer shall require the offeror

to submit or provide the contracting officer access to a representative sample, as determined by the contracting officer, of

the prices paid for the same or similar commercial products sold under different terms and conditions and the terms and

conditions of such sales.

(2) The contracting officer shall allow the offeror to redact only information provided pursuant to paragraph (e)(1) of

this section that identifies the customer, if the offeror certifies in writing for each sale that the customer is a—

(i) Government customer (e.g., Federal, State, local, or foreign government);

(ii) Commercial customer purchasing the product for governmental purposes; or

(iii) Commercial customer purchasing the product for a commercial, mixed, or unknown purpose.

(3) If the contracting officer determines that the information submitted pursuant to paragraph (e)(1) of this section is

not sufficient to determine the reasonableness of price because the comparable commercial product provided by the offeror

is not a valid basis for price analysis or the proposed price is not reasonable after evaluating sales data, then the contracting

officer shall obtain approval from an official one level above the contracting officer, without power of delegation, and require

the offeror to submit other relevant information regarding the basis for price or cost, including information on labor costs,

material costs, and overhead rates.

(4) An offeror shall not be required to submit information described in paragraph (e)(1) of this section with regard to

a commercially available off-the-shelf item. An offeror may be required to submit such information with regard to any other

item that was developed exclusively at private expense only after the head of the contracting activity determines in writing

that the information submitted pursuant to paragraph (e)(1) of this section is not sufficient to determine the reasonableness of

price.

(5) An offeror may submit information or analysis relating to the value of a commercial product to aid in the

determination of the reasonableness of the price of such commercial product. A contracting officer may consider such

information or analysis in addition to the information submitted pursuant to paragraph (e)(1) of this section. For additional

guidance see PGI 234.7002(e)(5).

234.70-2

SUBPART 234.71 - COST AND SOFTWARE DATA REPORTING 234.7101

Subpart 234.71 - COST AND SOFTWARE DATA REPORTING

234.7100 Policy.

(a) The cost and software data reporting (CSDR) requirement is mandatory for major defense acquisition programs (as

defined in 10 U.S.C. 4201) as specified in DoDI 5000.02, Operation of the Adaptive Acquisition Framework and the DoD

5000.04–M–1, CSDR Manual. The CSDR system is applied in accordance with the reporting requirements established in

DoDI 5000.02. The two principal components of the CSDR system are contractor cost data reporting and software resources

data reporting.

(b) Prior to contract award, contracting officers shall consult with the Defense Cost and Resource Center to determine that

the offeror selected for award has proposed a standard CSDR system, as described in the offeror's proposal in response to the

provision at 252.234–7003, that is in compliance with DoDI 5000.02, Operation of the Adaptive Acquisition Framework ,

and the DoD 5000.04–M–1, CSDR Manual.

(c) Contact information for the Defense Cost and Resource Center and the Deputy Director, Cost Assessment, is located at

PGI 234.7100 .

234.7101 Solicitation provision and contract clause.

(a) Use the basic or the alternate of the provision at 252.234-7003, Notice of Cost and Software Data Reporting System, in

any solicitation that includes the basic or the alternate of the clause at 252.234-7004 , Cost and Software Data Reporting.

(1) Use the basic provision when the solicitation includes the clause at 252.234-7004 , Cost and Software Data

Reporting—Basic.

(2) Use the alternate I provision when the solicitation includes the clause at 252.234-7004 , Cost and Software Data

Reporting—Alternate I.

(b) Use the basic or the alternate of the clause at 252.234-7004 , Cost and Software Data Reporting System, in solicitations

that include major defense acquisition programs as follows:

(1) Use the basic clause in solicitations and contracts for major defense acquisition programs that exceed $50 million.

(2) Use the alternate I clause in solicitations and contracts for major defense acquisition programs with a value equal to

or greater than $20 million, but less than or equal to $50 million, when so directed by the program manager with the approval

of the OSD Deputy Director, Cost Assessment.

234.71-1

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234.71-2

PART 235 - RESEARCH AND DEVELOPMENT CONTRACTING

Sec.

235.001

Definitions.

235.006

Contracting methods and contract type.

235.006-70

Manufacturing Technology Program.

235.006-71

Competition.

235.008

Evaluation for award.

235.010

Scientific and technical reports.

235.015

RESERVED

235.015-70

Special use allowances for research facilities acquired by

educational institutions.

235.016

Broad agency announcement.

235.017

Federally Funded Research and Development Centers.

235.017-1

Sponsoring agreements.

235.070

Indemnification against unusually hazardous risks.

235.070-1

Indemnification under research and development contracts.

235.070-2

Indemnification under contracts involving both research and

development and other work.

235.070-3

Contract clauses.

235.071

Export-controlled items.

235.072

Additional contract clauses.

Subpart 235.70 - Reserved

235-1

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235-2

235.006 CONTRACTING METHODS AND CONTRACT TYPE. 235.008

235.001 Definitions.

“Research and development” means those efforts described by the Research, Development, Test, and Evaluation

(RDT&E) budget activity definitions found in the DoD Financial Management Regulation (DoD 7000.14-R), Volume 2B,

Chapter 5.

235.006 Contracting methods and contract type.

(b)(i) For major defense acquisition programs as defined in 10 U.S.C. 4201—

(A) Follow the procedures at 234.004 ; and

(B) Notify the milestone decision authority of an intent not to exercise a fixed-price production option on a

development contract for a major weapon system reasonably in advance of the expiration of the option exercise period.

(ii) For other than major defense acquisition programs—

(A) Do not award a fixed-price type contract for a development program effort unless—

(1) The level of program risk permits realistic pricing;

(2) The use of a fixed-price type contract permits an equitable and sensible allocation of program risk

between the Government and the contractor; and

(3) A written determination that the criteria of paragraphs (b)(ii)(A)( 1) and ( 2) of this section have been

met is executed—

(i) By the USD(A&S) if the contract is over $25 million and is for: research and development for a non-

major system; the development of a major system (as defined in FAR 2.101); or the development of a subsystem of a major

system; or

(ii) By the contracting officer for any development not covered by paragraph (b)(ii)(A)( 3)( i) of this

section.

(B) Obtain USD(A&S) approval of the Government’s prenegotiation position before negotiations begin, and

obtain USD(A&S) approval of the negotiated agreement with the contractor before the agreement is executed, for any action

that is—

(1) An increase of more than $250 million in the price or ceiling price of a fixed-price type development

contract, or a fixed-price type contract for the lead ship of a class;

(2) A reduction in the amount of work under a fixed-price type development contract or a fixed-price type

contract for the lead ship of a class, when the value of the work deleted is $100 million or more; or

(3) A repricing of fixed-price type production options to a development contract, or a contract for the lead

ship of a class, that increases the price or ceiling price by more than $250 million for equivalent quantities.

235.006-70 Manufacturing Technology Program.

In accordance with 10 U.S.C. 4841(d) and 4872, for acquisitions under the Manufacturing Technology Program—

(a) Award all contracts using competitive procedures; and

(b) Include in all solicitations an evaluation factor that addresses the extent to which offerors propose to share in the cost

of the project (see FAR 15.304).

235.006-71 Competition.

(a)(1) Use of a broad agency announcement with peer or scientific review for the award of science and technology

proposals in accordance with 235.016 (a) fulfills the requirement for full and open competition (see 206.102 (d)(2)).

(2) Use of a commercial solutions opening with scientific, technological, or other subject-matter expert peer review for

the award of innovative solutions or potential capabilities in accordance with subpart 212.70 fulfills the requirement for full

and open competition (see 206.102-70).

(b) For a contract that is initially awarded from the competitive selection of a proposal resulting from a broad agency

announcement, see 234.005-1 for the use of contract line items or contract options for the development and demonstration or

initial production of technology developed under the contract or the delivery of initial or additional items.

235.008 Evaluation for award.

See 209.570 for limitations on the award of contracts to contractors acting as lead system integrators.

-1

235.010 DEFENSE FEDERAL ACQUISITION REGULATION

235.010 Scientific and technical reports.

(b) For DoD, the Defense Technical Information Center is responsible for collecting all scientific and technical reports.

For access to these reports, follow the procedures at PGI 235.010 (b).

235.015 RESERVED

235.015-70 Special use allowances for research facilities acquired by educational institutions.

(a) Definitions. As used in this subsection—

(1) “Research facility” means—

(i) Real property, other than land; and

(ii) Includes structures, alterations, and improvements, acquired for the purpose of conducting scientific research

under contracts with departments and agencies of the DoD.

(2) “Special use allowance” means a negotiated direct or indirect allowance—

(i) For construction or acquisition of buildings, structures, and real property, other than land; and

(ii) Where the allowance is computed at an annual rate exceeding the rate which normally would be allowed under

FAR Subpart 31.3.

(b) Policy.

(1) Educational institutions are to furnish the facilities necessary to perform defense contracts. FAR 31.3 governs how

much the Government will reimburse the institution for the research programs. However, in extraordinary situations, the

Government may give special use allowances to an educational institution when the institution is unable to provide the capital

for new laboratories or expanded facilities needed for defense contracts.

(2) Decisions to provide a special use allowance must be made on a case-by-case basis, using the criteria in paragraph

(c) of this subsection.

(c) Authorization for special use allowance.The head of a contracting activity may approve special use allowances only

when all of the following conditions are met—

(1) The research facility is essential to the performance of DoD contracts;

(2) Existing facilities, either Government or nongovernment, cannot meet program requirements practically or

effectively;

(3) The proposed agreement for special use allowances is a sound business arrangement;

(4) The Government's furnishing of Government-owned facilities is undesirable or impractical; and

(5) The proposed use of the research facility is to conduct essential Government research which requires the new or

expanded facilities.

(d) Application of the special use allowance.

(1) In negotiating a special use allowance—

(i) Compare the needs of DoD and of the institution for the research facility to determine the amount of the special

use allowance;

(ii) Consider rental costs for similar space in the area where the research facility is or will be located to establish the

annual special use allowance;

(iii) Do not include or allow—

(A) The costs of land; or

(B) Interest charges on capital;

(iv) Do not include maintenance, utilities, or other operational costs;

(v) The period of allowance generally will be—

(A) At least ten years; or

(B) A shorter period if the total amount to be allowed is less than the construction or acquisition cost for the

research facility;

(vi) Generally, provide for allocation of the special use allowance equitably among the Government contracts using

the research facility;

(vii) Special use allowances apply only in the years in which the Government has contracts in effect with the

institution. However, if in any given year there is a reduced level of Government research effort which results in the special

use allowance being excessive compared to the Government research funding, a separate special use allowance may be

negotiated for that year;

-2

235.070 INDEMNIFICATION AGAINST UNUSUALLY HAZARDOUS RISKS. 235.070-1

(viii) Special use allowances may be adjusted for the period before construction is complete if the facility is partially

occupied and used for Government research during that period.

(2) A special use allowance may be based on either total or partial cost of construction or acquisition of the research

facility.

(i) When based on total cost neither the normal use allowance nor depreciation will apply—

(A) During the special use allowance period; and

(B) After the educational institution has recovered the total construction or acquisition cost from the Government

or other users.

(ii) When based on partial cost, normal use allowance and depreciation—

(A) Apply to the balance of costs during the special use allowance period to the extent negotiated in the special

use allowance agreement; and

(B) Do not apply after the special use allowance period, except for normal use allowance applied to the balance.

(3) During the special use allowance period, the research facility—

(i) Shall be available for Government research use on a priority basis over nongovernment use; and

(ii) Cannot be put to any significant use other than that which justified the special use allowance, unless the head of

the contracting activity, who approved the special use allowance, consents.

(4) The Government will pay only an allocable share of the special use allowance when the institution makes any

substantial use of the research facility for parties other than the Government during the period when the special use allowance

is in effect.

(5) In no event shall the institution be paid more than the acquisition costs.

235.016 Broad agency announcement.

(a) General. A broad agency announcement with peer or scientific review may be used for the award of science and

technology proposals. Science and technology proposals include proposals for the following:

(i) Basic research (budget activity 6.1).

(ii) Applied research (budget activity 6.2).

(iii) Advanced technology development (budget activity 6.3).

(iv) Advanced component development and prototypes (budget activity 6.4).

235.017 Federally Funded Research and Development Centers.

(a) Policy.

(2) No DoD fiscal year 1992 or later funds may be obligated or expended to finance activities of a DoD Federally

Funded Research and Development Center (FFRDC) if a member of its board of directors or trustees simultaneously serves

on the board of directors or trustees of a profit-making company under contract to DoD, unless the FFRDC has a DoD-

approved conflict of interest policy for its members (Section 8107 of Pub. L. 102-172 and similar sections in subsequent

Defense appropriations acts).

235.017-1 Sponsoring agreements.

(c)(4) DoD-sponsored FFRDCs that function primarily as research laboratories (C3I Laboratory operated by the Institute

for Defense Analysis, Lincoln Laboratory operated by Massachusetts Institute of Technology, and Software Engineering

Institute operated by Carnegie Mellon) may respond to solicitations and announcements for programs which promote

research, development, demonstration, or transfer of technology (Section 217, Pub. L. 103-337).

235.070 Indemnification against unusually hazardous risks.

235.070-1 Indemnification under research and development contracts.

(a) Under 10 U.S.C. 3861, and if authorized by the Secretary concerned, contracts for research and/or development may

provide for indemnification of the contractor or subcontractors for—

(1) Claims by third persons (including employees) for death, bodily injury, or loss of or damage to property; and

(2) Loss of or damage to the contractor's property to the extent that the liability, loss, or damage—

(i) Results from a risk that the contract defines as “unusually hazardous;”

(ii) Arises from the direct performance of the contract; and

-3

235.070-2 DEFENSE FEDERAL ACQUISITION REGULATION

(iii) Is not compensated by insurance or other means.

(b) Clearly define the specific unusually hazardous risks to be indemnified. Submit this definition for approval with the

request for authorization to grant indemnification. Include the approved definition in the contract.

235.070-2 Indemnification under contracts involving both research and development and other work.

These contracts may provide for indemnification under the authority of both 10 U.S.C. 3861 and Pub. L. 85-804. Pub. L.

85-804 will apply only to work to which 10 U.S.C. 3861 does not apply. Actions under Pub. L. 85-804 must also comply with

FAR 50.104-3.

235.070-3 Contract clauses.

When the contractor is to be indemnified in accordance with 235.070-1 , use either—

(a) The clause at 252.235-7000 , Indemnification Under 10 U.S.C. 3861—Fixed Price; or

(b) The clause at 252.235-7001 , Indemnification Under 10 U.S.C. 3861—Cost-Reimbursement, as appropriate.

235.071 Export-controlled items.

For requirements regarding access to export-controlled items, see 225.7901 .

235.072 Additional contract clauses.

(a) Use a clause substantially the same as the clause at 252.235-7002 , Animal Welfare, in solicitations and contracts

involving research, development, test, and evaluation or training that use live vertebrate animals.

(b) Use the basic or the alternate of the clause at 252.235-7003 , Frequency Authorization, in solicitations and contracts for

developing, producing, constructing, testing, or operating a device requiring a frequency authorization.

(1) Use the basic clause if agency procedures do not authorize the use of DD Form 1494, Application for Equipment

Frequency Allocation, to obtain radio frequency authorization.

(2) Use the alternate I clause if agency procedures authorize the use of DD Form 1494, Application for Equipment

Frequency Allocation, to obtain frequency authorization.

(c) Use the clause at 252.235-7010 , Acknowledgment of Support and Disclaimer, in solicitations and contracts for

research and development.

(d) Use the clause at 252.235-7011 , Final Scientific or Technical Report, in solicitations and contracts for research and

development.

(e) Use the clause at 252.235-7004 , Protection of Human Subjects, in solicitations and contracts that include or may

include research involving human subjects in accordance with 32 CFR Part 219, DoD Directive 3216.02, and 10 U.S.C. 980,

including research that meets exemption criteria under 32 CFR 219.101(b). The clause—

(1) Applies to solicitations and contracts awarded by any DoD component, regardless of mission or funding Program

Element Code; and

(2) Does not apply to use of cadaver materials alone, which are not directly regulated by 32 CFR Part 219 or DoD

Directive 3216.02, and which are governed by other DoD policies and applicable State and local laws.

Subpart 235.70 - Reserved

235.70-4

PART 236 - CONSTRUCTION AND ARCHITECT — ENGINEER CONTRACTS

Sec.

Subpart 236.1 - GENERAL

236.102

Definitions.

Subpart 236.2 - SPECIAL ASPECTS OF CONTRACTING FOR

CONSTRUCTION

236.203

Government estimate of construction costs.

236.204

Disclosure of the magnitude of construction projects.

236.206

Liquidated damages.

236.211

Distribution of advance notices and solicitations.

236.213

Special procedures for sealed bidding in construction contracting.

236.215

Special procedures for cost-reimbursement contracts for

construction.

236.270

Expediting construction contracts.

236.271

Cost-plus-fixed-fee contracts.

236.272

Prequalification of sources.

236.273

Construction in foreign countries.

236.274

Restriction on acquisition of steel for use in military construction

projects.

236.275

Construction of industrial resources.

Subpart 236.3 - TWO-PHASE DESIGN-BUILD SELECTION

PROCEDURES

236.303

RESERVED

236.303-1

Phase One.

Subpart 236.4 - Reserved

Subpart 236.5 - CONTRACT CLAUSES

236.570

Additional provisions and clauses.

Subpart 236.6 - ARCHITECT-ENGINEER SERVICES

236.601

Policy.

236.602

Selection of firms for architect-engineer contracts.

236.602-1

Selection criteria.

236.602-70

Restriction on award of overseas architect-engineer contracts to

foreign firms.

236.604

Performance evaluation.

236.606

Negotiations.

236.606-70

Statutory fee limitation.

236.609

Contract clauses.

236.609-70

Additional provision.

Subpart 236.7 - STANDARD AND OPTIONAL FORMS FOR

CONTRACTING FOR CONSTRUCTION, ARCHITECT-

ENGINEER SERVICES, AND DISMANTLING, DEMOLITION,

OR REMOVAL OF IMPROVEMENTS

236.701

Standard and optional forms for use in contracting for construction

or dismantling, demolition, or removal of improvements.

236-1

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236-2

SUBPART 236.1 - GENERAL 236.102

Subpart 236.1 - GENERAL

236.102 Definitions.

“Construction activity” means an activity at any organizational level of the DoD that—

(1) Is responsible for the architectural, engineering, and other related technical aspects of the planning, design, and

construction of facilities; and

(2) Receives its technical guidance from the Army Office of the Chief of Engineers, Naval Facilities Engineering

Command, or Air Force Directorate of Civil Engineering.

“Marshallese firm” is defined in the provision at 252.236-7012 , Military Construction on Kwajalein Atoll—Evaluation

Preference.

“United States firm” is defined in the provisions at 252.236-7010 , Overseas Military Construction—Preference for United

States Firms, and 252.236-7011 , Overseas Architect-Engineer Services—Restriction to United States Firms.

236.1-1

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236.1-2

SUBPART 236.2 - SPECIAL ASPECTS OF CONTRACTING FOR CONSTRUCTION 236.272

Subpart 236.2 - SPECIAL ASPECTS OF CONTRACTING FOR CONSTRUCTION

236.203 Government estimate of construction costs.

Follow the procedures at PGI 236.203 for handling the Government estimate of construction costs.

236.204 Disclosure of the magnitude of construction projects.

Additional price ranges are—

(i) Between $10,000,000 and $25,000,000;

(ii) Between $25,000,000 and $100,000,000;

(iii) Between $100,000,000 and $250,000,000;

(iv) Between $250,000,000 and $500,000,000; and

(v) Over $500,000,000.

236.206 Liquidated damages.

See 211.503 for instructions on use of liquidated damages.

236.211 Distribution of advance notices and solicitations.

See PGI 236.211 Special situations. for instructions on reporting data for definitization of requests for equitable

adjustment.

236.213 Special procedures for sealed bidding in construction contracting.

If it appears that sufficient funds may not be available for all the desired construction features, consider using a bid

schedule with additive or deductive items in accordance with PGI 236.213 .

236.215 Special procedures for cost-reimbursement contracts for construction.

For contracts in connection with a military construction project or military family housing project, see the prohibition at

216.301-3 .

236.270 Expediting construction contracts.

(a) 10 U.S.C. 2858 requires agency head approval to expedite the completion date of a contract funded by a Military

Construction Appropriations Act, if additional costs are involved. This approval authority may not be redelegated. The

approval authority must—

(1) Certify that the additional expenditures are necessary to protect the National interest; and

(2) Establish a reasonable completion date for the project.

(b) The contracting officer may approve an expedited completion date if no additional costs are involved.

236.271 Cost-plus-fixed-fee contracts.

Annual military construction appropriations acts restrict the use of cost-plus-fixed-fee contracts (see 216.306 (c)). See

also 216.301-3 regarding the prohibition against the use of certain cost-reimbursement contracts in connection with a military

construction project or military family housing project.

236.272 Prequalification of sources.

(a) Prequalification procedures may be used when necessary to ensure timely and efficient performance of critical

construction projects. Prequalification—

(1) Results in a list of sources determined to be qualified to perform a specific construction contract; and

(2) Limits offerors to those with proven competence to perform in the required manner.

(b) The head of the contracting activity must—

(1) Authorize the use of prequalification by determining, in writing, that a construction project is of an urgency or

complexity that requires prequalification; and

(2) Approve the prequalification procedures.

(c) For small businesses, the prequalification procedures must require the qualifying authority to—

(1) Request a preliminary recommendation from the appropriate Small Business Administration regional office, if the

qualifying authority believes a small business is not responsible;

236.2-1

236.273 DEFENSE FEDERAL ACQUISITION REGULATION

(2) Permit the small business to submit a bid or proposal if the preliminary recommendation is that the small business is

responsible; and

(3) Follow the procedures in FAR 19.6, if the small business is in line for award and is found nonresponsible.

236.273 Construction in foreign countries.

(a) In accordance with section 112 of the Military Construction and Veterans Affairs and Related Agencies Appropriations

Act, 2015 (Division I of Pub. L. 113-235) and the same provision in subsequent military construction appropriations acts,

military construction contracts funded with military construction appropriations, that are estimated to exceed $1,000,000 and

are to be performed in the United States outlying areas in the Pacific and on Kwajalein Atoll, or in countries bordering the

Arabian Gulf (i.e., Iran, Oman, United Arab Emirates, Saudi Arabia, Qatar, Bahrain, Kuwait, and Iraq), shall be awarded only

to United States firms, unless—

(1) The lowest responsive and responsible offer of a United States firm exceeds the lowest responsive and responsible

offer of a foreign firm by more than 20 percent; or

(2) The contract is for military construction on Kwajalein Atoll and the lowest responsive and responsible offer is

submitted by a Marshallese firm.

(b) See PGI 236.273 (b) for guidance on technical working agreements with foreign governments.

236.274 Restriction on acquisition of steel for use in military construction projects.

In accordance with section 108 of the Military Construction and Veterans Affairs Appropriations Act, 2009 (Pub. L.

110-329, Division E) and the same provision in subsequent military construction appropriations acts, do not acquire, or

allow a contractor to acquire, steel for any construction project or activity for which American steel producers, fabricators, or

manufacturers have been denied the opportunity to compete for such acquisition of steel.

236.275 Construction of industrial resources.

See Subpart 237.75 for policy relating to facilities projects.

236.2-2

SUBPART 236.3 - TWO-PHASE DESIGN-BUILD SELECTION PROCEDURES 236.303-1

Subpart 236.3 - TWO-PHASE DESIGN-BUILD SELECTION PROCEDURES

236.303 RESERVED

236.303-1 Phase One.

(a)(4) In lieu of the limitations on the maximum number of offerors that may be selected to submit phase-two proposals at

FAR 36.303-1(a)(4), for DoD—

(i) If the contract value exceeds $4.5 million, the maximum number of offerors specified in the solicitation that are

to be selected to submit phase-two proposals shall not exceed five, unless—

(A) The solicitation is issued for an indefinite-delivery indefinite-quantity contract for design-build construction;

or

(B) The head of the contracting activity, delegable to a level no lower than the senior contracting official within

the contracting activity, approves the contracting officer’s decision with respect to an individual solicitation, that a maximum

number greater than five is in the best interest of the Government and is consistent with the purposes and objectives of the

two-phase selection procedures. The decision shall be documented in the contract file (U.S.C. 3241(d)).

(ii) If the contract value is at or below $4.5 million, the maximum number of offerors specified in the solicitation

that are to be selected to submit phase-two proposals is at the discretion of the contracting officer.

236.3-1

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236.3-2

SUBPART 236.4 - RESERVED

Subpart 236.4 - Reserved

236.4-1

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236.4-2

SUBPART 236.5 - CONTRACT CLAUSES 236.570

Subpart 236.5 - CONTRACT CLAUSES

236.570 Additional provisions and clauses.

(a) Use the following clauses in all fixed-price construction solicitations and contracts -

(1) 252.236-7000, Modification Proposals-Price Breakdown; and

(2) 252.236-7001, Contract Drawings and Specifications.

(b) Use the following provisions and clauses in fixed-price construction contracts and solicitations as applicable -

(1) 252.236-7002, Obstruction of Navigable Waterways, when the contract will involve work near or on navigable

waterways.

(2) When the head of the contracting activity has approved use of a separate bid item for mobilization and preparatory

work, use either -

(i) 252.236-7003, Payment for Mobilization and Preparatory Work. Use this clause for major construction contracts

that require -

(A) Major or special items of plant and equipment; or

(B) Large stockpiles of material which are in excess of the type, kind, and quantity which would be normal for a

contractor qualified to undertake the work; or

(ii) 252.236-7004, Payment for Mobilization and Demobilization. Use this clause for contracts involving major

mobilization expense, or plant equipment and material (other than the situations covered in paragraph (b)(2)(i) of this section)

made necessary by the location or nature of the work.

(A) Generally, allocate 60 percent of the lump sum price in paragraph (a) of the clause to the cost of mobilization.

(B) Vary this percentage to reflect the circumstances of the particular contract, but in no event should

mobilization exceed 80 percent of the payment item.

(3) 252.236-7005, Airfield Safety Precautions, when construction will be performed on or near airfields.

(4) 252.236-7006, Cost Limitation, if the solicitation's bid schedule contains one or more items subject to statutory cost

limitations, and if a waiver has not been granted (FAR 36.205).

(5) 252.236-7007, Additive or Deductive Items, if the procedures in 236.213 are being used.

(6) 252.236-7008, Contract Prices - Bidding Schedule, if the contract will contain only unit prices for some items.

(c) Use the following provisions in solicitations for military construction contracts that are funded with military

construction appropriations and are estimated to exceed $1,000,000:

(1) 252.236-7010, Overseas Military Construction - Preference for United States Firms, when contract performance

will be in a United States outlying area in the Pacific or in a country bordering the Arabian Gulf.

(2) 252.236-7012, Military Construction on Kwajalein Atoll - Evaluation Preference, when contract performance will

be on Kwajalein Atoll.

(d) Use the clause at 252.236-7013, Requirement for Competition Opportunity for American Steel Producers, Fabricators,

and Manufacturers, in solicitations and contracts that -

(1) Use funds appropriated for military construction); and

(2) May require the acquisition of steel as a construction material.

(e) Also see 246.710(4) for an additional clause applicable to construction contracts to be performed in Germany.

236.5-1

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236.5-2

SUBPART 236.6 - ARCHITECT-ENGINEER SERVICES 236.606-70

Subpart 236.6 - ARCHITECT-ENGINEER SERVICES

236.601 Policy.

(1) Written notification to the congressional defense committees is required if the total estimated contract price for

architect-engineer services or construction design, in connection with military construction, military family housing, or

restoration or replacement of damaged or destroyed facilities, exceeds $1.5 million. In accordance with 10 U.S.C. 480,

unclassified notifications must be provided by electronic medium.

(i) For military construction or military family housing (10 U.S.C. 2807(b)), the notification—

(A) Must include the scope of the project and the estimated contract price; and

(B)(1) If provided by electronic medium, must be provided at least 14 days before the initial obligation of funds;

or

(2) If provided by other than electronic medium, must be received by the congressional defense committees

at least 21 days before the initial obligation of funds.

(ii) For restoration or replacement of damaged or destroyed facilities (10 U.S.C. 2854(b)), the notification—

(A) Must include the justification for the project, the estimated contract price, and the source of the funds for the

project; and

(B)(1) If provided by electronic medium, must be provided at least 7 days before the initial obligation of funds; or

(2) If provided by other than electronic medium, must be received by the congressional defense committees

at least 21 days before the initial obligation of funds.

(2) During the applicable notice period, synopsis of the proposed contract action and administrative actions leading to

the award may be started.

236.602 Selection of firms for architect-engineer contracts.

236.602-1 Selection criteria.

(a) Establish the evaluation criteria before making the public announcement required by FAR 5.205(d) and include the

criteria and their relative order of importance in the announcement. Follow the procedures at 236.602-1 (a).

236.602-70 Restriction on award of overseas architect-engineer contracts to foreign firms.

In accordance with section 111 of the Military Construction and Veterans Affairs and Related Agencies Appropriations

Act, 2015 (Division I of Pub. L. 113-235) and the same provision in subsequent military construction appropriations acts,

architect-engineer contracts funded by military construction appropriations that are estimated to exceed $500,000 and are to

be performed in Japan, in any North Atlantic Treaty Organization member country, or in countries bordering the Arabian Gulf

(i.e., Iran, Oman, United Arab Emirates, Saudi Arabia, Qatar, Bahrain, Kuwait, and Iraq), shall be awarded only to United

States firms or to joint ventures of United States and host nation firms.

236.604 Performance evaluation.

Prepare a separate performance evaluation after actual construction of the project. Ordinarily, the evaluating official

should be the person most familiar with the architect-engineer contractor’s performance.

236.606 Negotiations.

236.606-70 Statutory fee limitation.

(a) 10 U.S.C. 7540, 8612, and 9540 limit the contract price (or fee) for architect-engineer services for the preparation of

designs, plans, drawings, and specifications to six percent of the project's estimated construction cost.

(b) The six percent limit also applies to contract modifications, including modifications involving—

(1) Work not initially included in the contract. Apply the six percent limit to the revised total estimated construction

cost.

(2) Redesign. Apply the six percent limit as follows—

(i) Add the estimated construction cost of the redesign features to the original estimated construction cost;

(ii) Add the contract cost for the original design to the contract cost for redesign; and

(iii) Divide the total contract design cost by the total estimated construction cost. The resulting percentage may not

exceed the six percent statutory limitation.

236.6-1

236.609 DEFENSE FEDERAL ACQUISITION REGULATION

(c) The six percent limit applies only to that portion of the contract (or modification) price attributable to the preparation

of designs, plans, drawings, and specifications. If a contract or modification also includes other services, the part of the price

attributable to the other services is not subject to the six percent limit.

236.609 Contract clauses.

236.609-70 Additional provision.

Use the provision at 252.236-7011 , Overseas Architect-Engineer Services—Restriction to United States Firms, in

solicitations for architect-engineer contracts that are—

(1) Funded with military construction appropriations;

(2) Estimated to exceed $500,000; and

(3) To be performed in Japan, in any North Atlantic Treaty Organization member country, or in countries bordering the

Arabian Gulf.

236.6-2

SUBPART 236.7 - STANDARD AND OPTIONAL FORMS FOR CONTRACTING FOR CONSTRUCTION, ARCHITECT-ENGINEER SERVICES, AND DISMANTLING, DEMOLITION, OR REMOVAL

OF IMPROVEMENTS 236.701

Subpart 236.7 - STANDARD AND OPTIONAL FORMS FOR CONTRACTING

FOR CONSTRUCTION, ARCHITECT-ENGINEER SERVICES, AND

DISMANTLING, DEMOLITION, OR REMOVAL OF IMPROVEMENTS

236.701 Standard and optional forms for use in contracting for construction or dismantling, demolition, or removal of

improvements.

(c) Do not use Optional Form 347, Order for Supplies or Services (see 213.307 ).

236.7-1

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236.7-2

PART 237 - SERVICE CONTRACTING

Sec.

Subpart 237.1 - SERVICE CONTRACTS—GENERAL

237.101

Definitions.

237.102

Policy.

237.102-70

Prohibition on contracting for firefighting or security-guard

functions.

237.102-71

Limitation on service contracts for military flight simulators.

237.102-72

Contracts for management services.

237.102-73

Prohibition on contracts for services of senior mentors.

237.102-74

Taxonomy for the acquisition of services, and supplies and

equipment.

237.102-75

Defense Acquisition Guidebook.

237.102-76

Acquisition of computer software and computer software

documentation under services contracts.

237.102-77

Acquisition requirements roadmap tool.

237.102-78

Market research report guide for improving the tradecraft in

services acquisition.

237.102-79

Private sector notification requirements in support of in-sourcing

actions.

237.104

Personal services contracts.

237.106

Funding and term of service contracts.

237.109

Services of quasi-military armed forces.

237.170

Approval of contracts and task orders for services.

237.170-1

Scope.

237.170-2

Approval requirements.

237.171

Training for contractor personnel interacting with detainees.

237.171-1

Scope.

237.171-2

Definition.

237.171-3

Policy.

237.171-4

Contract clause.

237.172

Service contracts surveillance.

237.173

Prohibition on interrogation of detainees by contractor personnel.

237.173-1

Scope.

237.173-2

Definitions. As used in this subpart-

237.173-3

Policy.

237.173-4

Waiver.

237.173-5

Contract clause.

237.174

Disclosure of information to litigation support contractors.

237.175

Training that uses live vertebrate animals.

Subpart 237.2 - ADVISORY AND ASSISTANCE SERVICES

237.270

Acquisition of audit services.

Subpart 237.5 - MANAGEMENT OVERSIGHT OF SERVICE

CONTRACTS

237.503

Agency-head responsibilities.

Subpart 237.6 - (REMOVED)

Subpart 237.70 - MORTUARY SERVICES

237.7000

Scope.

237.7001

Method of acquisition.

237.7002

Area of performance and distribution of contracts.

237.7003

Solicitation provisions and contract clauses.

Subpart 237.71 - LAUNDRY AND DRY CLEANING SERVICES

237.7100

Scope.

237.7101

Solicitation provisions and contract clauses.

Subpart 237.72 - EDUCATIONAL SERVICE AGREEMENTS

237.7200

Scope.

237.7201

Educational service agreement.

237.7202

Limitations.

237.7203

Duration.

237.7204

Format and clauses for educational service agreements.

Subpart 237.73 - SERVICES OF STUDENTS AT RESEARCH

AND DEVELOPMENT LABORATORIES

237.7300

Scope.

237.7301

Definitions.

237.7302

General.

237.7303

Contract clauses.

Subpart 237.74 - SERVICES AT INSTALLATIONS BEING

CLOSED

237.7400

Scope.

237.7401

Policy.

237.7402

Contract clause.

Subpart 237.75 - ACQUISITION AND MANAGEMENT OF

INDUSTRIAL RESOURCES

237.7501

Definition.

237.7502

Policy.

Subpart 237.76 - CONTINUATION OFESSENTIAL

CONTRACTOR SERVICES

237.7600

Scope.

237.7601

Definitions.

237.7602

Policy.

237.7603

Solicitation provision and contract clause.

Subpart 237.77 - COMPETITION FOR RELIGIOUS-RELATED

SERVICES

237.7700

Scope of subpart.

237.7701

Definition. As used in this subpart—

237.7702

Policy.

Subpart 237.78 - TRANSFER AND ADOPTION OF MILITARY

ANIMALS

237.7800

Scope of subpart.

237.7801

Definition.

237.7802

Policy.

237.7803

Procedures.

237.7804

Contract clause.

237-1

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237-2

SUBPART 237.1 - SERVICE CONTRACTS—GENERAL 237.102-70

Subpart 237.1 - SERVICE CONTRACTS—GENERAL

237.101 Definitions.

As used in this subpart—

“Increased performance of security-guard functions,”

(1) In the case of an installation or facility where no security-guard functions were performed as of September 10,

2001, the entire scope or extent of the performance of security-guard functions at the installation or facility after such date;

and

(2) In the case of an installation or facility where security-guard functions were performed within a lesser scope

of requirements or to a lesser extent as of September 10, 2001, than after such date, the increment of the performance of

security-guard functions at the installation or facility that exceeds such lesser scope of requirements or extent of performance.

“Senior mentors” means retired flag, general, or other military officers or retired senior civilian officials who provide

expert experience-based mentoring, teaching, training, advice, and recommendations to senior military officers, staff, and

students as they participate in war games, warfighting courses, operational planning, operational exercises, and decision-

making exercises.

237.102 Policy.

(b)(1) Preference for certain commercial services. See 212.272 for procedures for implementation of the preference

for commercial facilities-related services, knowledge-based services (except engineering services), medical services, or

transportation services, as required by section 876 of the National Defense Authorization Act for Fiscal Year 2017 (Pub. L.

114-328).

(2) Public-private competitions. See PGI 207.302 for information on the Governmentwide moratorium and restrictions

on public-private competitions conducted pursuant to Office of Management and Budget (OMB) Circular A-76.

(c) In addition to the prohibition on award of contracts for the performance of inherently governmental functions,

contracting officers shall not award contracts for functions that are exempt from private sector performance. See 207.503 (e)

for the associated documentation requirement.

(e) Program officials shall obtain assistance from contracting officials through the Peer Review process at 201.170 .

237.102-70 Prohibition on contracting for firefighting or security-guard functions.

(a) Under 10 U.S.C. 2465, the DoD is prohibited from entering into contracts for the performance of firefighting or

security-guard functions at any military installation or facility unless—

(1) The contract is to be carried out at a location outside the United States and its outlying areas at which members of

the armed forces would have to be used for the performance of firefighting or security-guard functions at the expense of unit

readiness;

(2) The contract will be carried out on a Government-owned but privately operated installation;

(3) The contract (or renewal of a contract) is for the performance of a function under contract on September 24, 1983;

or

(4) The contract—

(i) Is for the performance of firefighting functions;

(ii) Is for a period of 1 year or less; and

(iii) Covers only the performance of firefighting functions that, in the absence of the contract, would have to

be performed by members of the armed forces who are not readily available to perform such functions by reason of a

deployment.

(b) Under Section 2907 of Pub. L. 103-160, this prohibition does not apply to services at installations being closed (see

Subpart 237.74).

(c)(1) Under section 332 of Public Law 107-314, as amended by section 333 of Public Law 109-364 and section 343 of

Public Law 110-181, this prohibition does not apply to any contract that is entered into for any increased performance of

security-guard functions at a military installation or facility undertaken in response to the terrorist attacks on the United States

on September 11, 2001, if–

(i) Without the contract, members of the Armed Forces are or would be used to perform the increased security-guard

functions;

(ii) The agency has determined that—

237.1-1

237.102-71 DEFENSE FEDERAL ACQUISITION REGULATION

(A) Recruiting and training standards for the personnel who are to perform the security-guard functions are

comparable to the recruiting and training standards for DoD personnel who perform the same security-guard functions;

(B) Contractor personnel performing such functions will be effectively supervised, reviewed, and evaluated; and

(C) Performance of such functions will not result in a reduction in the security of the installation or facility;

(iii) Contract performance will not extend beyond September 30, 2012; and

(iv) The total number of personnel employed to perform security-guard functions under all contracts entered into

pursuant to this authority does not exceed the following limitations:

(A) For fiscal year 2007, the total number of such personnel employed under such contracts on October 1, 2006.

(B) For fiscal year 2008, the number equal to 90 percent of the total number of such personnel employed under

such contracts on October 1, 2006.

(C) For fiscal year 2009, the number equal to 80 percent of the total number of such personnel employed under

such contracts on October 1, 2006.

(D) For fiscal year 2010, the number equal to 70 percent of the total number of such personnel employed under

such contracts on October 1, 2006.

(E) For fiscal year 2011, the number equal to 60 percent of the total number of such personnel employed under

such contracts on October 1, 2006.

(F) For fiscal year 2012, the number equal to 50 percent of the total number of such personnel employed under

such contracts on October 1, 2006.

(2) Follow the procedures at PGI 237.102-70 (c) to ensure that the personnel limitations specified in paragraph (c)(1)

(iv) of this subsection are not exceeded.

237.102-71 Limitation on service contracts for military flight simulators.

(a) Definitions. As used in this subsection—

(1) “Military flight simulator” means any system to simulate the form, fit, and function of a military aircraft that has no

commonly available commercial variant.

(2) “Service contract” means any contract entered into by DoD, the principal purpose of which is to furnish services in

the United States through the use of service employees as defined in 41 U.S.C. 6701.

(b) Under Section 832 of Pub. L. 109-364, as amended by Section 883(b) of Pub. L. 110-181, DoD is prohibited from

entering into a service contract to acquire a military flight simulator. However, the Secretary of Defense may waive this

prohibition with respect to a contract, if the Secretary—

(1) Determines that a waiver is in the national interest; and

(2) Provides an economic analysis to the congressional defense committees at least 30 days before the waiver takes

effect. This economic analysis shall include, at a minimum—

(i) A clear explanation of the need for the contract; and

(ii) An examination of at least two alternatives for fulfilling the requirements that the contract is meant to fulfill,

including the following with respect to each alternative:

(A) A rationale for including the alternative.

(B) A cost estimate of the alternative and an analysis of the quality of each cost estimate.

(C) A discussion of the benefits to be realized from the alternative.

(D) A best value determination of each alternative and a detailed explanation of the life-cycle cost calculations

used in the determination.

(c) When reviewing requirements or participating in acquisition planning that would result in a military department

or defense agency acquiring a military flight simulator, the contracting officer shall notify the program officials of the

prohibition in paragraph (b) of this subsection. If the program officials decide to request a waiver from the Secretary of

Defense under paragraph (b) of this subsection, the contracting officer shall follow the procedures at PGI 237.102-71 .

237.102-72 Contracts for management services.

In accordance with Section 802 of the National Defense Authorization Act for Fiscal Year 2008 (Pub. L. 110-181), DoD

may award a contract for the acquisition of services the primary purpose of which is to perform acquisition support functions

with respect to the development or production of a major system, only if—

(a) The contract prohibits the contractor from performing inherently governmental functions;

(b) The DoD organization responsible for the development or production of the major system ensures that Federal

employees are responsible for determining—

237.1-2

SUBPART 237.1 - SERVICE CONTRACTS—GENERAL 237.104

(1) Courses of action to be taken in the best interest of the Government; and

(2) Best technical performance for the warfighter; and

(c) The contract requires that the prime contractor for the contract may not advise or recommend the award of a contract

or subcontract for the development or production of the major system to an entity owned in whole or in part by the prime

contractor.

237.102-73 Prohibition on contracts for services of senior mentors.

DoD is prohibited from entering into contracts for the services of senior mentors. See PGI 237.102-73 for references to

DoD policy and implementation guidance.

237.102-74 Taxonomy for the acquisition of services, and supplies and equipment.

See PGI 237.102-74 for further guidance on the taxonomy for the acquisition of services and the acquisition of supplies

and equipment.

237.102-75 Defense Acquisition Guidebook.

See PGI 237.102-75 for information on the Defense Acquisition Guidebook, Chapter 10, Acquisition of Services.

237.102-76 Acquisition of computer software and computer software documentation under services contracts.

(a) See 227.7202 for policy on the acquisition of commercial computer software and commercial computer software

documentation for services contracts that require the development or modification of commercial computer software.

(b) See 227.7203 for policy on the acquisition of other than commercial computer software and other than commercial

computer software documentation for services contracts that require the development or modification of other than

commercial computer software.

237.102-77 Acquisition requirements roadmap tool.

See PGI 237.102-77 for guidance on using the Acquisition Requirements Roadmap Tool to develop and organize

performance requirements into draft versions of the performance work statement, the quality assurance surveillance plan, and

the performance requirements summary.

237.102-78 Market research report guide for improving the tradecraft in services acquisition.

See PGI 210.070 for guidance on use of the market research report guide to conduct and document market research for

service acquisitions.

237.102-79 Private sector notification requirements in support of in-sourcing actions.

In accordance with 10 U.S.C. 2463, contracting officers shall provide written notification to affected incumbent

contractors of Government in-sourcing determinations. Notification shall be provided within 20 business days of the

contracting officer's receipt of a decision from the cognizant component in-sourcing program official. The notification will

summarize the requiring official's final determination as to why the service is being in-sourced and shall be coordinated with

the component's in-sourcing program official. No formal hiring or contract-related actions may be initiated prior to such

notification, except for preliminary internal actions associated with hiring or contract modification. See the OASD (RFM)

memorandum entitled “Private Sector Notification Requirements in Support of In-sourcing Actions,” dated January 29, 2013,

for further information, which is available at PGI 237.102-79 .

237.104 Personal services contracts.

(b)(i) Authorization to acquire the personal services of experts and consultants is included in 10 U.S.C. 129b. Personal

service contracts for expert and consultant services must also be authorized by a determination and findings (D&F) in

accordance with department/agency regulations.

(A) Generally, the D&F should authorize one contract at a time; however, an authorizing official may issue a

blanket D&F for classes of contracts.

(B) Prepare each D&F in accordance with FAR 1.7 and include a determination that—

(1) The duties are of a temporary or intermittent nature;

(2) Acquisition of the services is advantageous to the national defense;

(3) DoD personnel with necessary skills are not available;

237.1-3

237.104 DEFENSE FEDERAL ACQUISITION REGULATION

(4) Excepted appointment cannot be obtained;

(5) A nonpersonal services contract is not practicable;

(6) Statutory authority, 5 U.S.C. 3109 and other legislation, apply; and

(7) Any other determination required by statues has been made.

(ii) Personal services contracts for health care are authorized by 10 U.S.C. 1091.

(A) This authority may be used to acquire—

(1) Direct health care services provided in medical treatment facilities;

(2) Health care services at locations outside of medical treatment facilities (such as the provision of medical

screening examinations at military entrance processing stations); and

(3) Services of clinical counselors, family advocacy program staff, and victim’s services representatives to

members of the Armed Forces and covered beneficiaries who require such services, provided in medical treatment facilities

or elsewhere. Persons with whom a personal services contract may be entered into under this authority include clinical social

workers, psychologists, psychiatrists, and other comparable professionals who have advanced degrees in counseling or

related academic disciplines and who meet all requirements for State licensure and board certification requirements, if any,

within their fields of specialization.

(B) Sources for personal services contracts with individuals under the authority of 10 U.S.C. 1091 shall be

selected through the procedures in this section. These procedures do not apply to contracts awarded to business entities other

than individuals. Selections made using the procedures in this section are exempt by statute from FAR Part 6 competition

requirements (see 206.001 (b)).

(C) Approval requirements for—

(1) Direct health care personal services contracts (see paragraphs (b)(ii)(A)(1) and (2) of this section) and a

pay cap are in DoDI 6025.5, Personal Services Contracts for Health Care Providers.

(i) A request to enter into a personal services contract for direct health care services must be approved

by the commander of the medical/dental treatment facility where the services will be performed.

(ii) A request to enter into a personal services contract for a location outside of a medical treatment

facility must be approved by the chief of the medical facility who is responsible for the area in which the services will be

performed.

(2) Services of clinical counselors, family advocacy program staff, and victim’s services representatives

(see paragraph (b)(ii)(A)(3) of this section), shall be in accordance with agency procedures.

(D) The contracting officer must ensure that the requiring activity provides a copy of the approval with the

purchase request.

(E) The contracting officer must provide adequate advance notice of contracting opportunities to individuals

residing in the area of the facility. The notice must include the qualification criteria against which individuals responding will

be evaluated. The contracting officer shall solicit applicants through at least one local publication which serves the area of the

facility. Acquisitions under this section for personal service contracts are exempt from the posting and synopsis requirements

of FAR Part 5.

(F) The contracting officer shall provide the qualifications of individuals responding to the notice to the

commander of the facility for evaluation and ranking in accordance with agency procedures. Individuals must be considered

solely on the basis of the professional qualifications established for the particular personal services being acquired and the

Government’s estimate of reasonable rates, fees, or other costs. The commander of the facility shall provide the contracting

officer with rationale for the ranking of individuals, consistent with the required qualifications.

(G) Upon receipt from the facility of the ranked listing of applicants, the contracting officer shall either—

(1) Enter into negotiations with the highest ranked applicant. If a mutually satisfactory contract cannot be

negotiated, the contracting officer shall terminate negotiations with the highest ranked applicant and enter into negotiations

with the next highest.

(2) Enter into negotiations with all qualified applicants and select on the basis of qualifications and rates,

fees, or other costs.

(H) In the event only one individual responds to an advertised requirement, the contracting officer is authorized

to negotiate the contract award. In this case, the individual must still meet the minimum qualifications of the requirement and

the contracting officer must be able to make a determination that the price is fair and reasonable.

(I) If a fair and reasonable price cannot be obtained from a qualified individual, the requirement should be

canceled and acquired using procedures other than those set forth in this section.

(iii)(A) In accordance with 10 U.S.C. 129b(d), an agency may enter into a personal services contract if—

237.1-4

SUBPART 237.1 - SERVICE CONTRACTS—GENERAL 237.170-2

(1) The personal services—

(i) Are to be provided by individuals outside the United States, regardless of their nationality;

(ii) Directly support the mission of a defense intelligence component or counter-intelligence

organization of DoD; or

(iii) Directly support the mission of the special operations command of DoD; and

(2) The head of the contracting activity provides written approval for the proposed contract. The approval

shall include a determination that addresses the following:

(i) The services to be procured are urgent or unique;

(ii) It would not be practical to obtain such services by other means; and

(iii) For acquisition of services in accordance with paragraph (b)(iii)(A)(1)(i) of this section, the services

to be acquired are necessary and appropriate for supporting DoD activities and programs outside the United States.

(B) The contracting officer shall ensure that the applicable requirements of paragraph (b)(iii)(A)(2) of this section

have been satisfied and shall include the approval documentation in the contract file.

(iv) The requirements of 5 U.S.C. 3109, Employment of Experts and Consultants; Temporary or Intermittent, do not

apply to contracts entered into in accordance with paragraph (b)(iii) of this section.

(d) See 237.503 (c) for requirements for certification and approval of requirements for services to prevent contracts from

being awarded or administered in a manner that constitutes an unauthorized personal services contract.

(f)(i) Payment to each expert or consultant for personal services under 5 U.S.C. 3109 shall not exceed the highest rate

fixed by the Classification Act Schedules for grade GS-15 (see 5 CFR 304.105(a)).

(ii) The contract may provide for the same per diem and travel expenses authorized for a Government employee,

including actual transportation and per diem in lieu of subsistence for travel between home or place of business and official

duty station.

(iii) Coordinate with the civilian personnel office on benefits, taxes, personnel ceilings, and maintenance of records.

237.106 Funding and term of service contracts.

(1) Personal service contracts for expert or consultant services shall not exceed 1 year. The nature of the duties must be

—

(i) Temporary (not more than 1 year); or

(ii) Intermittent (not cumulatively more than 130 days in 1 year).

(2) The contracting officer may enter into a contract, exercise an option, or place an order under a contract for severable

services for a period that begins in one fiscal year and ends in the next fiscal year if the period of the contract awarded, option

exercised, or order placed does not exceed 1 year (10 U.S.C. 3133).

237.109 Services of quasi-military armed forces.

See 237.102-70 for prohibition on contracting for firefighting or security-guard functions.

237.170 Approval of contracts and task orders for services.

237.170-1 Scope.

This section—

(a) Implements 10 U.S.C. 4501; and

(b) Applies to services acquired for DoD, regardless of whether the services are acquired through—

(1) A DoD contract or task order; or

(2) A contract or task order awarded by an agency other than DoD.

237.170-2 Approval requirements.

(a) Acquisition of services through a contract or task order that is not performance based.

(1) For acquisitions at or below $100 million, obtain the approval of the official designated by the department or

agency.

(2) For acquisitions exceeding $100 million, obtain the approval of the senior procurement executive.

(b) Acquisition of services through use of a contract or task order issued by a non-DoD agency. Comply with the review,

approval, and reporting requirements established in accordance with subpart 217.7 when acquiring services through use of a

contract or task order issued by a non-DoD agency.

237.1-5

237.171 DEFENSE FEDERAL ACQUISITION REGULATION

237.171 Training for contractor personnel interacting with detainees.

237.171-1 Scope.

This section prescribes policies to prevent the abuse of detainees, as required by Section 1092 of the National Defense

Authorization Act for Fiscal Year 2005 (Pub. L. 108-375).

237.171-2 Definition.

“Combatant commander,” “detainee,” and “personnel interacting with detainees,” as used in this section, are defined in the

clause at 252.237-7019 , Training for Contractor Personnel Interacting with Detainees.

237.171-3 Policy.

(a) Each DoD contract in which contractor personnel, in the course of their duties, interact with detainees shall include a

requirement that such contractor personnel—

(1) Receive Government-provided training regarding the international obligations and laws of the United States

applicable to the detention of personnel, including the Geneva Conventions; and

(2) Provide a copy of the training receipt document to the contractor.

(b) The combatant commander responsible for the area where the detention or interrogation facility is located will arrange

for the training and a training receipt document to be provided to contractor personnel. For information on combatant

commander geographic areas of responsibility and point of contact information for each command, see PGI 237.171-3 (b).

237.171-4 Contract clause.

Use the clause at 252.237-7019 , Training for Contractor Personnel Interacting with Detainees, in solicitations and

contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial products and

commercial services, that are for the acquisition of services if—

(a) The clause at 252.225-7040 , Contractor Personnel Supporting U.S. Armed Force(s) Deployed Outside the United

States, is included in the solicitation or contract; or

(b) The services will be performed at a facility holding detainees, and contractor personnel in the course of their duties

may be expected to interact with the detainees.

237.172 Service contracts surveillance.

(a) Ensure that quality assurance surveillance plans are prepared in conjunction with the preparation of the statement of

work or statement of objectives for solicitations and contracts for services. These plans should be tailored to address the

performance risks inherent in the specific contract type and the work effort addressed by the contract. (See FAR subpart

46.4.) Retain quality assurance surveillance plans in the contract file. See http://sam.dau.mil, Step Four – Requirements

Definition, for examples of quality assurance surveillance plans.

(b) See PGI 216.505-70 for guidance regarding minimum labor category qualifications for orders issued under multiple

award services contracts.

237.173 Prohibition on interrogation of detainees by contractor personnel.

237.173-1 Scope.

This section prescribes policies that prohibit interrogation of detainees by contractor personnel, as required by section

1038 of the National Defense Authorization Act for Fiscal Year 2010 (Pub. L. 111-84).

237.173-2 Definitions. As used in this subpart-

“Detainee” means any person captured, detained, held, or otherwise under the effective control of DoD personnel (military

or civilian) in connection with hostilities. This includes, but is not limited to, enemy prisoners of war, civilian internees,

and retained personnel. This does not include DoD personnel or DoD contractor personnel being held for law enforcement

purposes.

“Interrogation of detainees” means a systematic process of formally and officially questioning a detainee for the purpose

of obtaining reliable information to satisfy foreign intelligence collection requirements.

237.1-6

SUBPART 237.1 - SERVICE CONTRACTS—GENERAL 237.175

237.173-3 Policy.

(a) No detainee may be interrogated by contractor personnel.

(b) Contractor personnel with proper training and security clearances may be used as linguists, interpreters, report writers,

information technology technicians, and other employees filling ancillary positions, including as trainers of and advisors to

interrogators, in interrogations of detainees if—

(1) Such personnel are subject to the same laws, rules, procedures, and policies (including DoD Instruction 1100.22,

Policy and Procedures for Determining Workforce Mix, (http://www.dtic.mil/whs/directives/corres/pdf/110022p.pdf);

DoD Directive 2310.01E, The Department of Defense Detainee Program (http://www.dtic.mil/whs/directives/corres/

pdf/231001p.pdf); and DoD Directive 3115.09, DoD Intelligence Interrogations, Detainee Debriefings, and Tactical

Questioning, (http://www.dtic.mil/whs/directives/corres/pdf/311509p.pdf)); pertaining to detainee operations and

interrogations as those that apply to Government personnel in such positions in such interrogations; and

(2) Appropriately qualified and trained DoD personnel (military or civilian) are available to oversee the contractor’s

performance and to ensure that contractor personnel do not perform activities that are prohibited under this section.

237.173-4 Waiver.

The Secretary of Defense may waive the prohibition in 237.173-3 (a) for a period of 60 days, if the Secretary determines

such a waiver is vital to the national security interests of the United States. The Secretary may renew a waiver issued pursuant

to this paragraph for an additional 30-day period, if the Secretary determines that such a renewal is vital to the national

security interests of the United States. Not later than five days after issuance of the waiver, the Secretary shall submit written

notification to Congress. See specific waiver procedures at DoDI 1100.22.

237.173-5 Contract clause.

Insert the clause at 252.237-7010 , Prohibition on Interrogation of Detainees by Contractor Personnel, in solicitations and

contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial products and

commercial services, that are for the provision of services.

237.174 Disclosure of information to litigation support contractors.

See 204.74 for disclosure of information to litigation support contractors.

237.175 Training that uses live vertebrate animals.

Use the clause at 235.072 (a), when contracting for training that will use live vertebrate animals.

237.1-7

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237.1-8

SUBPART 237.2 - ADVISORY AND ASSISTANCE SERVICES 237.270

Subpart 237.2 - ADVISORY AND ASSISTANCE SERVICES

237.270 Acquisition of audit services.

(a) General policy.

(1) Do not contract for audit services unless—

(i) The cognizant DoD audit organization determines that expertise required to perform the audit is not available

within the DoD audit organization; or

(ii) Temporary audit assistance is required to meet audit reporting requirements mandated by law or DoD regulation.

(2) See 215.101-2-70(b)(3) for the prohibition on the use of the lowest price technically acceptable source selection

process when acquiring audit services.

(3) See PGI 237.270 for a list of DoD publications that govern the conduct of audits.

(b) Contract period. Except in unusual circumstances, award contracts for recurring audit services for a 1-year period with

at least 2 option years.

(c) Approvals. Do not issue a solicitation for audit services unless the requiring activity provides evidence that the

cognizant DoD audit organization has approved the statement of work. The requiring agency shall obtain the same evidence

of approval for subsequent material changes to the statement of work.

(d) Transparency requirement for firms used to support DoD audits.

(1) This paragraph (d) implements the requirements of section 1006 of the National Defense Authorization Act for

Fiscal Year 2019 (Pub. L. 115-232) and section 1011 of the National Defense Authorization Act for Fiscal Year 2020 (Pub. L.

116-92) for transparency of accounting firms used to support DoD audits; and extends the statutory requirement, as a matter

of DoD policy, to firms other than accounting firms in order to ensure consistent availability of data for contracting officer

evaluation and appropriate use.

(2) This requirement applies to solicitations and contracts for—

(i) Financial statement auditing required under 31 U.S.C. 3521(e); or

(ii) Audit remediation services in support of the Financial Improvement and Audit Remediation Plan described in 10

U.S.C. 240b.

(3) Any firm responding to a solicitation or awarded a contract for the acquisition of the services described in paragraph

(d)(2) of this section is required to represent with regard to whether it has been subject to disciplinary proceedings within the

last 3 years and, if the offeror represents that it has, to disclose to DoD before any contract action (including award, renewals,

and modifications)—

(i) The details of any disciplinary proceedings, with respect to the firm or its associated persons (including principals

and employees), before an entity with the authority to enforce compliance with rules or laws applying to audit services or

audit remediation services offered by accounting firms or firms other than accounting firms; and

(ii) For subsequent contract actions after contract award, whether there has been any change with regard to

previously reported disciplinary proceedings since the last contract action.

(e) Solicitation provisions and contract clauses.

(1) Use the provision at 252.237-7000 , Notice of Special Standards of Responsibility, in solicitations for audit services.

(2) Use the clause at 252.237-7001 , Compliance with Audit Standards, in solicitations and contracts for audit services.

(3) Use the provision at 252.237-7025, Preaward Transparency Requirements for Firms Offering to Support

Department of Defense Audits—Representation and Disclosure, in solicitations, including solicitations using FAR part 12

procedures for the acquisition of commercial products and commercial services, that include the clause at 252.237-7026,

Postaward Transparency Requirements for Firms that Support Department of Defense Audits.

(4) Use the clause at 252.237-7026, Postaward Transparency Requirements for Firms that Support Department of

Defense Audits, in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the

acquisition of commercial products and commercial services, that—

(i) Exceed the simplified acquisition threshold; and

(ii) Are for the acquisition of financial statement auditing or audit remediation services as described in paragraph (d)

(2) of this section.

237.2-1

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237.2-2

SUBPART 237.5 - MANAGEMENT OVERSIGHT OF SERVICE CONTRACTS 237.503

Subpart 237.5 - MANAGEMENT OVERSIGHT OF SERVICE CONTRACTS

237.503 Agency-head responsibilities.

(c) The agency head or designee shall employ procedures to ensure that requirements for service contracts are vetted

and approved as a safeguard to prevent contracts from being awarded or administered in a manner that constitutes

an unauthorized personal services contract. Contracting officers shall follow the procedures at PGI 237.503 , include

substantially similar certifications in conjunction with service contract requirements, and place the certification in the contract

file. The program manager or other official responsible for the requirement, at a level specified by the agency, should execute

the certification. In addition, contracting officers and program managers should remain aware of the descriptive elements at

FAR 37.104(d) to ensure that a service contract does not inadvertently become administered as a personal-services contract.

237.5-1

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237.5-2

SUBPART 237.6 - (REMOVED)

Subpart 237.6 - (REMOVED)

(June 25, 2004)

237.6-1

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237.6-2

SUBPART 237.70 - MORTUARY SERVICES 237.7003

Subpart 237.70 - MORTUARY SERVICES

237.7000 Scope.

This subpart—

(a) Applies to contracts for mortuary services (the care of remains) for military personnel within the United States; and

(b) May be used as guidance in areas outside the United States for mortuary services for deceased military and civilian

personnel.

237.7001 Method of acquisition.

(a) Requirements type contract. By agreement among the military activities, one activity in each geographical area will

contract for the estimated requirements for the care of remains for all military activities in the area. Use a requirements type

contract (see FAR 16.503) when the estimated annual requirements for the activities in the area are ten or more.

(b) Purchase order. Where no contract exists, use DD Form 1155, Order for Supplies or Services, to obtain mortuary

services.

237.7002 Area of performance and distribution of contracts.

Follow the procedures at PGI 237.7002 for—

(a) Defining the geographical area to be covered by the contract; and

(b) Distributing copies of the contract.

237.7003 Solicitation provisions and contract clauses.

(a) Use the following clauses in all mortuary service solicitations and contracts, except do not use the clauses at

252.237-7004 , Area of Performance, in solicitations or contracts that include port of entry requirements:

(1) 252.237-7003 , Requirements, (insert activities authorized to place orders in paragraph (e) of the clause).

(2) 252.237-7004 , Area of Performance.

(3) 252.237-7005 , Performance and Delivery.

(4) 252.237-7006 , Subcontracting.

(5) 252.237-7007 , Termination for Default.

(6) 252.237-7008 , Group Interment.

(7) 252.237-7009 , Permits.

(8) 252.237-7011 , Preparation History.

(b) Use the clause at FAR 52.245-1, Government Property, with its Alternate I, in solicitations and contracts that include

port of entry requirements.

237.70-1

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237.70-2

SUBPART 237.71 - LAUNDRY AND DRY CLEANING SERVICES 237.7101

Subpart 237.71 - LAUNDRY AND DRY CLEANING SERVICES

237.7100 Scope.

This subpart—

(a) Applies to contracts for laundry and dry cleaning services within the United States; and

(b) May be used as guidance in areas outside the United States.

237.7101 Solicitation provisions and contract clauses.

(a) Use the provision at 252.237-7012 , Instruction to Offerors (Count-of-Articles), in solicitations for laundry and dry

cleaning services to be provided on a count-of-articles basis.

(b) Use the provision at 252.237-7013 , Instruction to Offerors (Bulk Weight), in solicitations for laundry services to be

provided on a bulk weight basis.

(c) Use the clause at 252.237-7014 , Loss or Damage (Count-of-Articles), in solicitations and contracts for laundry and dry

cleaning services to be provided on a count-of-articles basis.

(d) Use the clause at 252.237-7015 , Loss or Damage (Weight of Articles), in solicitations and contracts for laundry and

dry cleaning services to be provided on a bulk weight basis.

(1) Insert a reasonable per pound price in paragraph (b) of the clause, based on the average per pound value. When the

contract requires laundry services on a bag type basis, insert reasonable per pound prices by bag type.

(2) Insert an appropriate percentage in paragraph (e) of the clause, not to exceed eight percent.

(e) Use the basic or an alternate of the clause at 252.237-7016 , Delivery Tickets, in all solicitations and contracts for

laundry and dry cleaning services.

(1) Use the basic clause when services are not to be provided on a bulk weight basis.

(2) Use the alternate I clause when services are for bag type laundry to be provided on a bulk weight basis.

(3) Use the alternate II clause when services are unsorted laundry to be provided on a bulk weight basis.

(f) Use the clause at 252.237-7017 , Individual Laundry, in solicitations and contracts for laundry and dry cleaning

services to be provided to individual personnel.

(1) Insert the number of pieces of outer garments in paragraphs (d)(1) and (2) of the clause.

(2) The number of pieces and composition of a bundle in paragraphs (d)(1) and (2) of the clause may be modified to

meet local conditions.

(g) Use the clause at 252.237-7018 , Special Definitions of Government Property, in all solicitations and contracts for

laundry and dry cleaning services.

237.71-1

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237.71-2

SUBPART 237.72 - EDUCATIONAL SERVICE AGREEMENTS 237.7204

Subpart 237.72 - EDUCATIONAL SERVICE AGREEMENTS

237.7200 Scope.

(a) This subpart prescribes acquisition procedures for educational services from schools, colleges, universities, or other

educational institutions. This subpart does not include tuition assistance agreements, i.e., payment by the Government of

partial tuition under the off-duty educational program.

(b) As used in the subpart—

(1) “Facilities” does not include the institution's dining rooms or dormitories; and

(2) “Fees” does not include charges for meals or lodging.

237.7201 Educational service agreement.

(a) An educational service agreement is not a contract, but is an ordering agreement under which the Government may

order educational services.

(b) Educational service agreements provide for ordering educational services when—

(1) The Government pays normal tuition and fees for educational services provided to a student by the institution under

its normal schedule of tuition and fees applicable to all students generally; and

(2) Enrollment is at the institution under the institution's normal rules and in courses and curricula which the institution

offers to all students meeting admission requirements.

237.7202 Limitations.

Educational service agreements are not used to provide special courses or special fees for Government students.

237.7203 Duration.

(a) Educational service agreements are for an indefinite duration and remain in effect until terminated.

(b) The issuing activity must establish procedures to review each educational service agreement at least once each year.

Review dates should consider the institution's academic calendar and occur at least 30 days before the beginning of a term.

The purpose of the review is to incorporate changes to reflect requirements of any statute, Executive Order, FAR, or DFARS.

(c) If the contracting officer and the institution do not agree on required changes, terminate the agreement.

237.7204 Format and clauses for educational service agreements.

Educational service agreements under this subpart shall be in the following format. Add to the schedule any other

provisions necessary to describe the requirements, if they are consistent with the following provisions and the policy of

acquiring educational services in the form of standard course offerings at the prevailing rates of the institution.

EDUCATIONAL SERVICE AGREEMENT

Agreement No. ______________

1. This agreement entered into on the __________ day of ______________ _____, is between the Government,

represented by the Contracting Officer, and the Contractor, _________(name of institution)________________, an

educational institution located in _________(city)_________, ____(state)__________.

2. This agreement is for educational services to be provided by the Contractor to Government personnel at the

Contractor's institution. The Contractor shall provide instruction with standard offerings of courses available to the public.

3. The Government shall pay for services under the Contractor's normal schedule of tuition and fees applicable to the

public and in effect at the time the services are performed.

4. The Government will review this agreement annually before the anniversary of its effective date for the purpose

of incorporating changes required by statutes, executive orders, the Federal Acquisition Regulation, or the Defense Federal

Acquisition Regulation Supplement. Changes required to be made by modification to this agreement or by issuance of

a superseding agreement. If mutual agreement on the changes cannot be reached, the Government will terminate this

agreement.

5. The parties may amend this agreement only by mutual consent.

6. This agreement shall start on the date in paragraph 1 and shall continue until terminated.

7. The estimated annual cost of this agreement is $_________. This estimate is for administrative purposes only and

does not impose any obligation on the Government to request any services or make any payment.

8. Advance payments are authorized by 10 U.S.C. 2396(a)(3).

9. Submit invoices to: ____________(name and address of activity)______________.

237.72-1

237.7204 DEFENSE FEDERAL ACQUISITION REGULATION

SCHEDULE PROVISIONS

1. Ordering procedures and services to be provided.

(a) The Contractor shall promptly deliver to the Contracting Officer one copy of each catalog applicable to this agreement,

and one copy of any subsequent revision.

(b) The Government will request educational services under this agreement by a (insert type of request, such as, delivery

order, official Government order, or other written communication). The (insert type of request, such as, delivery order,

official Government order, or other written communication) will contain the number of this agreement and will designate

as students at the Contractor's institution one or more Government-selected persons who have already been accepted for

admission under the Contractor's usual admission standards.

(c) All students under this agreement shall register in the same manner, be subject to the same academic regulations, and

have the same privileges, including the use of all facilities and equipment as any other students enrolled in the institution.

(d) Upon enrolling each student under this agreement, the Contractor shall, where the resident or nonresident status

involves a difference in tuition or fees—

(i) Determine the resident or nonresident status of the student;

(ii) Notify the student and the Contracting Officer of the determination. If there is an appeal of the determination;

(iii) If there is an appeal of the determination, process the appeal under the Contractor's standard procedures;

(iv) Notify the student and Contracting Officer of the result; and

(v) Make the determination a part of the student's permanent record.

(e) The Contractor shall not furnish any instruction or other services to any student under this agreement before the

effective date of a request for services in the form specified in paragraph (b) of this schedule.

2. Change in curriculum. The Contracting Officer may vary the curriculum for any student enrolled under this

agreement but shall not require or make any change in any course without the Contractor's consent.

3. Payment.

(a) The Government shall pay the Contractor the normal tuition and fees which the Contractor charges any students

pursuing the same or similar curricula, except for any tuition and fees which this agreement excludes. The Contractor may

change any tuition and fees, provided—

(1) The Contractor publishes the revisions in a catalog or otherwise publicly announces the revisions;

(2) Applies the revisions uniformly to all students studying the same or similar curricula;

(3) Provides the Contracting Officer notice of changes before their effective date.

(b) The Contractor shall not establish any tuition or fees which apply solely to students under this agreement.

(c) If the Contractor regularly charges higher tuition and fees for nonresident students, the Contractor may charge

the Government the normal nonresident tuition and fees for students under this agreement who are nonresidents. The

Government shall not claim resident tuition and fees for any student solely on the basis of the student residing in the State as

a consequence of enrollment under this agreement.

(d) The Contractor shall charge the Government only the tuition and fees which relate directly to enrollment as a student.

Tuition and fees may include—

(i) Penalty fees for late registration or change of course caused by the Government;

(ii) Mandatory health fees and health insurance charges; and

(iii) Any flat rate charge applicable to all students registered for research that appears in the Contractor's publicly

announced fee schedule.

(e) The Contractor shall not charge the Government for—

(i) Permit charges, such as vehicle registration or parking fees, unless specifically authorized in the request for

service; and

(ii) Any equipment, refundable deposits, or any items or services (such as computer time) related to student research.

(f) Normally, the Contractor shall not directly charge individual students for application fees or any other fee chargeable

to this agreement. However, if the Contractor's standard procedures require payment of any fee before the student is enrolled

under this agreement, the Contractor may charge the student. When the Contractor receives payment from the Government,

the Contractor shall fully reimburse the student.

(g) For each term the Contractor enrolls students under this agreement, the Contractor shall submit _______ copies of an

invoice listing charges for each student separately. The Contractor shall submit invoices within ______ days after the start of

the term and shall include—

(i) Agreement number and inclusive dates of the term;

(ii) Name of each student;

237.72-2

SUBPART 237.72 - EDUCATIONAL SERVICE AGREEMENTS 237.7204

(iii) A list showing each course for each student if the school charges by credit hour;

(iv) The resident or nonresident status of each student (if applicable to the Contractor's school); and

(v) A breakdown of charges for each student, including credit hours, tuition, application fee, and other fees. Provide

a total for each student and a grand total for all students listed on the invoice.

(h) If unforeseen events require additional charges that are otherwise payable under the Contractor's normal tuition and fee

schedule, the Contractor may submit a supplemental invoice or make the adjustment on the next regular invoice under this

agreement. The Contractor shall clearly identify and explain the supplemental invoice or the adjustment.

(i) The Contractor shall apply any credits resulting from withdrawal of students, or from any other cause under

its standard procedures, to subsequent invoices submitted under this agreement. Credits should appear on the first invoice

submitted after the action resulting in the credits. If no subsequent invoice is submitted, the Contractor shall deliver to the

Contracting Officer a check drawn to the order of the office designated for contract administration. The Contractor shall

identify the reason for the credit and the applicable term dates in all cases.

4. Withdrawal of students.

(a) The Government may, at its option and at any time, withdraw financial support for any student by issuing official

orders. The Government will furnish ______ copies of the orders to the Contractor within a reasonable time after publication.

(b) The Contractor may request withdrawal by the Government of any student for academic or disciplinary reasons.

(c) If withdrawal occurs before the end of a term, the Government will pay any tuition and fees due for the current term.

The Contractor shall credit the Government with any charges eligible for refund under the Contractor's standard procedures

for any students in effect on the date of withdrawal.

(d) Withdrawal of students by the Government will not be the basis for any special charge or claim by the Contractor other

than charges under the Contractor's standard procedures.

5. Transcripts. Within a reasonable time after withdrawal of a student for any reason, or after graduation, the Contractor

shall send to the Contracting Officer (or to an address supplied by the Contracting Officer) one copy of an official transcript

showing all work by the student at the institution until such withdrawal or graduation.

6. Student teaching. The Government does not anticipate the Contractor awarding fellowships and assistantships to

students attending school under this agreement. However, for graduate students, should both the student and the Contractor

decide it to be in the student's best interests to assist in the institution's teaching program, the Contractor may provide nominal

compensation for part-time service. Base the compensation on the Contractor's practices and procedures for other students

of similar accomplishment in that department or field. The Contractor shall apply the compensation as a credit against any

invoices presented for payment for any period in which the student performed the part-time teaching service.

7. Termination of agreement.

(a) Either party may terminate this agreement by giving 30 days advance written notice of the effective date of

termination. In the event of termination, the Government shall have the right, at its option, to continue to receive educational

services for those students already enrolled in the contractor's institution under this agreement until such time that the

students complete their courses or curricula or the Government withdraws them from the Contractor's institution. The terms

and conditions of this agreement in effect on the effective date of the termination shall continue to apply to such students

remaining in the Contractor's institution.

(b) Withdrawal of students under Schedule provision 4 shall not be considered a termination within the meaning of this

provision 7.

(c) Termination by either party shall not be the basis for any special charge or claim by the Contractor, other than as

provided by the Contractor's standard procedures.

GENERAL PROVISIONS

Use the following clauses in educational service agreements:

1. FAR 52.202-1, Definitions, and add the following paragraphs (h) through (m).

(h) “Term” means the period of time into which the Contractor divides the academic year for purposes of instruction. This

includes “semester,” “trimester,” “quarter,” or any similar word the Contractor may use.

(i) “Course” means a series of lectures or instructions, and laboratory periods, relating to one specific representation

of subject matter, such as Elementary College Algebra, German 401, or Surveying. Normally, a student completes a course in

one term and receives a certain number of semester hours credit (or equivalent) upon successful completion.

(j) “Curriculum” means a series of courses having a unified purpose and belonging primarily to one major academic field.

It will usually include certain required courses and elective courses within established criteria. Examples include Business

Administration, Civil Engineering, Fine and Applied Arts, and Physics. A curriculum normally covers more than one term

and leads to a degree or diploma upon successful completion.

237.72-3

237.7204 DEFENSE FEDERAL ACQUISITION REGULATION

(k) “Catalog” means any medium by which the Contractor publicly announces terms and conditions for enrollment in

the Contractor's institution, including tuition and fees to be charged. This includes “bulletin,” “announcement,” or any other

similar word the Contractor may use.

(l) “Tuition” means the amount of money charged by an educational institution for instruction, not including fees.

(m) “Fees” means those applicable charges directly related to enrollment in the Contractor's institution. Unless specifically

allowed in the request for services, fees shall not include—

(1) Any permit charge, such as parking and vehicle registration; or

(2) Charges for services of a personal nature, such as food, housing, and laundry.

2. FAR 52.203-3, Gratuities.

3. FAR 52.203-5, Covenant Against Contingent Fees.

4. FAR 52.204-1, Approval of Contract, if required by department/agency procedures.

5. FAR 52.215-2, Audit and Records—Negotiation.

6. FAR 52.215-8, Order of Precedence—Uniform Contract Format.

7. Conflicts Between Agreement and Catalog. Insert the following clause:

CONFLICTS BETWEEN AGREEMENT AND CATALOG

If there is any inconsistency between this agreement and any catalog or other document incorporated in this agreement by

reference or any of the Contractor's rules and regulations, the provisions of this agreement shall govern.

8. FAR 52.222-3, Convict Labor.

9. Under FAR 22.802, FAR 22.807, and FAR 22.810, use the appropriate clause from FAR 52.222-26, Equal

Opportunity.

10. FAR 52.233-1, Disputes.

11. Assignment of Claims. Insert the following clause:

ASSIGNMENT OF CLAIMS

No claim under this agreement shall be assigned.

12. FAR 52.252-4, Alterations in Contract, if required by department/agency procedures.

SIGNATURE PAGE

Agreement No. _____________________ Date _________________________

THE UNITED STATES OF AMERICA

BY: _____________________________

(Contracting Officer)

Activity __________________________

Location _________________________

237.72-4

SUBPART 237.72 - EDUCATIONAL SERVICE AGREEMENTS 237.7204

(NAME OF CONTRACTOR)

BY: __________________________

(Title) ________________________

237.72-5

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237.72-6

SUBPART 237.73 - SERVICES OF STUDENTS AT RESEARCH AND DEVELOPMENT LABORATORIES 237.7303

Subpart 237.73 - SERVICES OF STUDENTS AT

RESEARCH AND DEVELOPMENT LABORATORIES

237.7300 Scope.

This subpart prescribes procedures for acquisition of temporary or intermittent services of students at institutions of higher

learning for the purpose of providing technical support at defense research and development laboratories (10 U.S.C. 4143).

237.7301 Definitions.

As used in this subpart—

(a) “Institution of higher learning” means any public or private post-secondary school, junior college, college, university,

or other degree granting educational institution that—

(1) Is located in the United States or its outlying areas;

(2) Has an accredited education program approved by an appropriate accrediting body; and

(3) Offers a program of study at any level beyond high school.

(b) “Nonprofit organization” means any organization described by Section 501(c)(3) of Title 26 of the U.S.C. which is

exempt from taxation under Section 501(a) of Title 26.

(c) “Student” means an individual enrolled (or accepted for enrollment) at an institution of higher learning before the term

of the student technical support contract. The individual shall remain in good standing in a curriculum designed to lead to the

granting of a recognized degree, during the term of the contract.

(d) “Technical support” means any scientific or engineering work in support of the mission of the DoD laboratory

involved. It does not include administrative or clerical services.

237.7302 General.

Generally, agencies will acquire services of students at institutions of higher learning by contract between a nonprofit

organization employing the student and the Government. When it is in the best interest of the Government, contracts may be

made directly with students. These services are not subject to the requirements of FAR Part 19, FAR 13.003(b)(1), or DFARS

Part 219. Award authority for these contracts is 10 U.S.C. 3204(a) and 10 U.S.C. 4143.

237.7303 Contract clauses.

Contracts made directly with students are nonpersonal service contracts but shall include the clauses at FAR 52.232-3,

Payments Under Personal Services Contracts, and FAR 52.249-12, Termination (Personal Services).

237.73-1

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237.73-2

SUBPART 237.74 - SERVICES AT INSTALLATIONS BEING CLOSED 237.7402

Subpart 237.74 - SERVICES AT INSTALLATIONS BEING CLOSED

237.7400 Scope.

This subpart prescribes procedures for contracting, through use of other than full and open competition, with local

governments for police, fire protection, airfield operation, or other community services at military installations to be closed

under the Defense Authorization Amendments and Base Closure and Realignment Act (Pub. L. 100-526), as amended, and

the Defense Base Closure and Realignment Act of 1990 (Pub. L. 101-510), as amended.

237.7401 Policy.

The authority in 206.302-5 (b)(ii) to contract with local governments—

(a) May be exercised without regard to the provisions of 10 U.S.C. Chapter 146, Contracting for Performance of Civilian

Commercial or Industrial Type Functions;

(b) May not be exercised earlier than 180 days before the date the installation is scheduled to be closed;

(c) Requires a determination by the head of the contracting activity that the services being acquired under contract with the

local government are in the best interests of the Department of Defense.

237.7402 Contract clause.

Use the clause at 252.237-7022 , Services at Installations Being Closed, in solicitations and contracts based upon the

authority of this subpart.

237.74-1

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237.74-2

SUBPART 237.75 - ACQUISITION AND MANAGEMENT OF INDUSTRIAL RESOURCES 237.7502

Subpart 237.75 - ACQUISITION AND MANAGEMENT OF INDUSTRIAL RESOURCES

237.7501 Definition.

“Facilities project,” as used in this subpart, means a Government project to provide, modernize, or replace real property

for use by a contractor in performing a Government contract or subcontract.

237.7502 Policy.

(a) Comply with DoD Directive 4275.5, Acquisition and Management of Industrial Resources, in processing requests for

facilities projects.

(b) Departments and agencies shall submit reports of facilities projects to the House and Senate Armed Services

Committees—

(1) At least 30 days before starting facilities projects involving real property (10 U.S.C. 2662); and

(2) In advance of starting construction for a facilities project regardless of cost. Use DD Form 1391, FY__ Military

Construction Project Data, to notify congressional committees of projects that are not included in the annual budget.

237.75-1

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237.75-2

SUBPART 237.76 - CONTINUATION OFESSENTIAL CONTRACTOR SERVICES 237.7603

Subpart 237.76 - CONTINUATION OFESSENTIAL CONTRACTOR SERVICES

237.7600 Scope.

This subpart prescribes procedures for the acquisition of essential contractor services which support mission-essential

functions.

237.7601 Definitions.

As used in this subpart, “essential contractor service” and “mission-essential functions” are defined in the clause at

252.237-7023 , Continuation of Essential Contractor Services.

237.7602 Policy.

(a) Contractors providing services designated as essential contractor services shall be prepared to continue providing

such services, in accordance with the terms and conditions of their contracts, during periods of crisis. As a general rule, the

designation of services as essential contractor services will not apply to an entire contract but will apply only to those service

functions that have been specifically identified as essential contractor services by the functional commander or civilian

equivalent.

(b) Contractors who provide Government-determined essential contractor services shall provide a written plan to be

incorporated in the contract to ensure the continuation of these services in crisis situations. Contracting officers shall consult

with a functional manager to assess the sufficiency of the contractor-provided written plan. Contractors will activate such

plans only during periods of crisis, as authorized by the contracting officer, who does so at the direction of the appropriate

functional commander or civilian equivalent.

(c) The contracting officer shall follow the procedures at PGI 207.105 (b)(20)(C) in preparing an acquisition plan.

237.7603 Solicitation provision and contract clause.

(a) Use the clause at 252.237-7023 , Continuation of Essential Contractor Services in all solicitations and contracts for

services that are in support of mission-essential functions.

(b) Use the provision at 252.237-7024 , Notice of Continuation of Essential Contractor Services in all solicitations for

services that include the clause 252.237-7023 .

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-2

SUBPART 237.77 - COMPETITION FOR RELIGIOUS-RELATED SERVICES 237.7702

Subpart 237.77 - COMPETITION FOR RELIGIOUS-RELATED SERVICES

237.7700 Scope of subpart.

This subpart provides policy and guidance for the acquisition of religious-related services to be performed on a United

States military installation in accordance with section 898 of the National Defense Authorization Act for Fiscal Year 2016

(Pub. L. 114-92).

237.7701 Definition. As used in this subpart—

“Nonprofit organization” means any organization that is—

(1) Described in section 501(c) of the Internal Revenue Code of 1986; and

(2) Exempt from tax under section 501(a) of that Code.

237.7702 Policy.

(a) A nonprofit organization shall not be precluded from competing for a contract for religious-related services to be

performed on a United States military installation.

(b) See 219.270 when an acquisition for religious-related services to be performed on a United States military installation

is set aside for any of the small business concerns identified in FAR 19.000(a)(3).

NO DFARS TEXT

237.77-1

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237.77-2

237.7804

Subpart 237.78 - TRANSFER AND ADOPTION OF MILITARY ANIMALS

237.7800 Scope of subpart.

This subpart implements 10 U.S.C. 2387, which requires, under certain circumstances, the transfer of a contract working

dog to the Department of the Air Force, 341st Training Squadron, for veterinary screening and care in accordance with 10

U.S.C. 2583.

237.7801 Definition.

As used in this subpart—

Contract working dog means a dog that—

(1) Performs a service for DoD pursuant to a contract; and

(2) Is trained and kenneled by an entity that provides such a dog pursuant to such a contract.

237.7802 Policy.

(a) In accordance with 10 U.S.C. 2387, DoD will transfer a contract working dog to the Department of the Air Force,

341st Training Squadron, for veterinary screening and care after the service life of the dog has terminated.

(b) The service life of a contract working dog may be terminated if—

(1) The final contractual obligation of the dog preceding transfer is with DoD; and

(2) The dog cannot be used by another department or agency of the Federal Government due to age, injury, or

performance.

(c) A contract working dog that has reached the end of its service life will be transferred for care, reclassification as a

military animal, and placement for adoption in accordance with 10 U.S.C 2583.

237.7803 Procedures.

Contracting officers, at the request of the requiring activity, may issue a determination that the service life of a contract

working dog has terminated if the conditions in 237.7802 Policy.(b) have been documented by the requiring activity.

237.7804 Contract clause.

Use the clause at 252.237-7027 Transfer and Adoption of Military Animals., Transfer and Adoption of Military Animals,

in solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of

commercial products and commercial services, that require the services of a contract working dog.

237.77-1

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237.77-2

PART 238 - RESERVED

238-1

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238-2

PART 238 - RESERVED

238.0-1

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238.0-2

PART 239 - ACQUISITION OF INFORMATION TECHNOLOGY

Sec.

239.001

Applicability.

Subpart 239.1 - GENERAL

239.101

Policy.

Subpart 239.70 - EXCHANGE OR SALE OF INFORMATION

TECHNOLOGY

239.7001

Policy.

Subpart 239.71 - SECURITY AND PRIVACY FOR COMPUTER

SYSTEMS

239.7100

Scope of subpart.

239.7101

Definition.

239.7102

Policy and responsibilities.

239.7102-1

General.

239.7102-2

Compromising emanations—TEMPEST or other standard.

239.7102-3

Information assurance contractor training and certification.

239.7103

Contract clauses.

Subpart 239.72 - STANDARDS

239.7201

Solicitation requirements.

Subpart 239.73 - REQUIREMENTS FOR INFORMATION

RELATING TO SUPPLY CHAIN RISK

239.7300

Scope of subpart.

239.7301

Definitions.

239.7302

Applicability.

239.7303

Authorized individuals.

239.7304

Determination and notification.

239.7305

Exclusion and limitation on disclosure.

239.7306

Solicitation provision and contract clause.

Subpart 239.74 - TELECOMMUNICATIONS SERVICES

239.7400

Scope.

239.7401

Definitions.

239.7402

Policy.

239.7403

Reserved.

239.7404

Reserved.

239.7405

Delegated authority for telecommunications resources.

239.7406

Certified cost or pricing data and data other than certified cost or

pricing data.

239.7407

Type of contract.

239.7408

Special construction.

239.7408-1

General.

239.7408-2

Applicability of construction labor standards for special

construction.

239.7409

Special assembly.

239.7410

Cancellation and termination.

239.7411

Contract clauses.

Subpart 239.75 - Reserved

Subpart 239.76 - CLOUD COMPUTING

239.7600

Scope of subpart.

239.7601

Definitions.

239.7602

Policy and responsibilities.

239.7602-1

General.

239.7602-2

Required storage of data within the United States or outlying areas.

239.7603

Procedures.

239.7604

Solicitation provision and contract clause.

239-1

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239-2

SUBPART 239.1 - GENERAL 239.101

239.001 Applicability.

Notwithstanding FAR 39.001, this part applies to acquisitions of information technology, including national security

systems.

Subpart 239.1 - GENERAL

239.101 Policy.

(1) A contracting officer may not enter into a contract in excess of the simplified acquisition threshold for information

technology products or services that are not commercial products or commercial services unless the head of the contracting

activity determines in writing that no commercial products or commercial services are suitable to meet the agency's needs, as

determined through the use of market research appropriate to the circumstances (see FAR 10.001(a)(3)) (section 855 of the

National Defense Authorization Act for Fiscal Year 2016 (Pub. L. 114-92)).

(2) See subpart 208.74 when acquiring commercial software or software maintenance.

(3) See 227.7202 for policy on the acquisition of commercial computer software and commercial computer software

documentation.

(4) See 227.7203 for policy on the acquisition of other than commercial computer software and other than commercial

computer software documentation.

239.1-1

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239.1-2

SUBPART 239.70 - EXCHANGE OR SALE OF INFORMATION TECHNOLOGY 239.7001

Subpart 239.70 - EXCHANGE OR SALE OF INFORMATION TECHNOLOGY

239.7001 Policy.

Agencies shall follow the procedures in DoD Manual 4140.01, Volume 9, DoD Supply Chain Materiel Management

Procedures: Materiel Programs, when considering the exchange or sale of Government-owned information technology.

239.70-1

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239.70-2

SUBPART 239.71 - SECURITY AND PRIVACY FOR COMPUTER SYSTEMS 239.7102-3

Subpart 239.71 - SECURITY AND PRIVACY FOR COMPUTER SYSTEMS

239.7100 Scope of subpart.

This subpart includes information assurance and Privacy Act considerations. Information assurance requirements are in

addition to provisions concerning protection of privacy of individuals (see FAR Subpart 24.1).

239.7101 Definition.

“Information assurance,” as used in this subpart, means measures that protect and defend information, that is entered,

processed, transmitted, stored, retrieved, displayed, or destroyed, and information systems, by ensuring their availability,

integrity, authentication, confidentiality, and non-repudiation. This includes providing for the restoration of information

systems by incorporating protection, detection, and reaction capabilities.

239.7102 Policy and responsibilities.

239.7102-1 General.

(a) Agencies shall ensure that information assurance is provided for information technology in accordance with current

policies, procedures, and statutes, to include—

(1) The National Security Act;

(2) The Clinger-Cohen Act;

(3) National Security Telecommunications and Information Systems Security Policy No. 11;

(4) Federal Information Processing Standards;

(5) DoD Directive 8500.1, Information Assurance;

(6) DoD Instruction 8500.2, Information Assurance Implementation;

(7) DoD Directive 8140.01, Cyberspace Workforce Management; and

(8) DoD Manual 8570.01-M, Information Assurance Workforce Improvement Program.

(b) For all acquisitions, the requiring activity is responsible for providing to the contracting officer—

(1) Statements of work, specifications, or statements of objectives that meet information assurance requirements as

specified in paragraph (a) of this subsection;

(2) Inspection and acceptance contract requirements; and

(3) A determination as to whether the information technology requires protection against compromising emanations.

239.7102-2 Compromising emanations—TEMPEST or other standard.

For acquisitions requiring information assurance against compromising emanations, the requiring activity is responsible

for providing to the contracting officer—

(a) The required protections, i.e., an established National TEMPEST standard (e.g., NSTISSAM TEMPEST 1-92) or a

standard used by other authority;

(b) The required identification markings to include markings for TEMPEST or other standard, certified equipment

(especially if to be reused);

(c) Inspection and acceptance requirements addressing the validation of compliance with TEMPEST or other standards;

and

(d) A date through which the accreditation is considered current for purposes of the proposed contract.

239.7102-3 Information assurance contractor training and certification.

(a) For acquisitions that include information assurance functional services for DoD information systems, or that require

any appropriately cleared contractor personnel to access a DoD information system to perform contract duties, the requiring

activity is responsible for providing to the contracting officer—

(1) A list of information assurance functional responsibilities for DoD information systems by category (e.g., technical

or management) and level (e.g., computing environment, network environment, or enclave); and

(2) The information assurance training, certification, certification maintenance, and continuing education or

sustainment training required for the information assurance functional responsibilities.

(b) After contract award, the requiring activity is responsible for ensuring that the certifications and certification status of

all contractor personnel performing information assurance functions as described in DoD 8570.01-M, Information Assurance

Workforce Improvement Program, are in compliance with the manual and are identified, documented, and tracked.

239.71-1

239.7103 DEFENSE FEDERAL ACQUISITION REGULATION

(c) The responsibilities specified in paragraphs (a) and (b) of this section apply to all DoD information assurance duties

supported by a contractor, whether performed full-time or part-time as additional or embedded duties, and when using a DoD

contract, or a contract or agreement administered by another agency (e.g., under an interagency agreement).

(d) See PGI 239.7102-3 for guidance on documenting and tracking certification status of contractor personnel, and for

additional information regarding the requirements of DoD 8570.01-M.

239.7103 Contract clauses.

(a) Use the clause at 252.239-7000 , Protection Against Compromising Emanations, in solicitations and contracts

involving information technology that requires protection against compromising emanations.

(b) Use the clause at 252.239-7001 , Information Assurance Contractor Training and Certification, in solicitations and

contracts involving contractor performance of information assurance functions as described in DoD 8570.01-M.

239.71-2

SUBPART 239.72 - STANDARDS 239.7201

Subpart 239.72 - STANDARDS

239.7201 Solicitation requirements.

Contracting officers shall ensure that all applicable Federal Information Processing Standards are incorporated into

solicitations.

239.72-1

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239.72-2

SUBPART 239.73 - REQUIREMENTS FOR INFORMATION RELATING TO SUPPLY CHAIN RISK 239.7302

Subpart 239.73 - REQUIREMENTS FOR

INFORMATION RELATING TO SUPPLY CHAIN RISK

239.7300 Scope of subpart.

This subpart implements 10 U.S.C. 3252 and elements of DoD Instruction 5200.44, Protection of Mission Critical

Functions to Achieve Trusted Systems and Networks (TSN), at https://www.esd.whs.mil/Portals/54/Documents/DD/

issuances/dodi/520044p.pdf?ver=2018-11-08-075800-903.

239.7301 Definitions.

As used in this subpart—

“Covered item of supply” means an item of information technology that is purchased for inclusion in a covered system,

and the loss of integrity of which could result in a supply chain risk for a covered system (see 10 U.S.C. 3252).

“Covered system” means a national security system, as that term is defined at 44 U.S.C. 3552(b) (see 10 U.S.C. 3252). It

is any information system, including any telecommunications system, used or operated by an agency or by a contractor of an

agency, or other organization on behalf of an agency—

(1) The function, operation, or use of which—

(i) Involves intelligence activities;

(ii) Involves cryptologic activities related to national security;

(iii) Involves command and control of military forces;

(iv) Involves equipment that is an integral part of a weapon or weapons system; or

(v) Is critical to the direct fulfillment of military or intelligence missions, but this does not include a system that is to

be used for routine administrative and business applications, including payroll, finance, logistics, and personnel management

applications; or

(2) Is protected at all times by procedures established for information that have been specifically authorized under

criteria established by an Executive order or an Act of Congress to be kept classified in the interest of national defense or

foreign policy.

“Information technology” (see 40 U.S.C 11101(6)) means, in lieu of the definition at FAR 2.1, any equipment, or

interconnected system(s) or subsystem(s) of equipment, that is used in the automatic acquisition, storage, analysis, evaluation,

manipulation, management, movement, control, display, switching, interchange, transmission, or reception of data or

information by the agency.

(1) For purposes of this definition, equipment is used by an agency if the equipment is used by the agency directly or is

used by a contractor under a contract with the agency that requires—

(i) Its use; or

(ii) To a significant extent, its use in the performance of a service or the furnishing of a product.

(2) The term “information technology” includes computers, ancillary equipment (including imaging peripherals, input,

output, and storage devices necessary for security and surveillance), peripheral equipment designed to be controlled by the

central processing unit of a computer, software, firmware and similar procedures, services (including support services), and

related resources.

(3) The term “information technology” does not include any equipment acquired by a contractor incidental to a

contract.

“Supply chain risk” means the risk that an adversary may sabotage, maliciously introduce unwanted function, or otherwise

subvert the design, integrity, manufacturing, production, distribution, installation, operation, or maintenance of a covered

system so as to surveil, deny, disrupt, or otherwise degrade the function, use, or operation of such system (see 10 U.S.C.

3252).

239.7302 Applicability.

Notwithstanding FAR 39.001, this subpart shall be applied to acquisition of information technology for covered systems

(see 10 U.S.C. 3252) for procurements involving—

(a) A source selection for a covered system or a covered item of supply involving either a performance specification (see

10 U.S.C. 3206(a)(3)(B)), or an evaluation factor (see 10 U.S.C. 3206(b)(1)), relating to supply chain risk;

239.73-1

239.7303 DEFENSE FEDERAL ACQUISITION REGULATION

(b) The consideration of proposals for and issuance of a task or delivery order for a covered system or a covered item of

supply where the task or delivery order contract concerned includes a requirement relating to supply chain risk (see 10 U.S.C.

3406(d)(3) and FAR 16.505(b)(1)(iv)(D)); or

(c) Any contract action involving a contract for a covered system or a covered item of supply where such contract includes

a requirement relating to supply chain risk.

239.7303 Authorized individuals.

(a) Subject to 239.7304 , the following individuals are authorized to take the actions authorized by 239.7305 :

(1) The Secretary of Defense.

(2) The Secretary of the Army.

(3) The Secretary of the Navy.

(4) The Secretary of the Air Force.

(b) The individuals authorized at paragraph (a) may not delegate the authority to take the actions at 239.7305 or the

responsibility for making the determination required by 239.7304 to an official below the level of—

(1) For the Department of Defense, the Under Secretary of Defense for Acquisition and Sustainment; and

(2) For the military departments, the service acquisition executive for the department concerned.

239.7304 Determination and notification.

The individuals authorized in 239.7303 may exercise the authority provided in 239.7305 only after—

(a) Obtaining a joint recommendation by the Under Secretary of Defense for Acquisition and Sustainment and the Chief

Information Officer of the Department of Defense, on the basis of a risk assessment by the Under Secretary of Defense for

Intelligence, that there is a significant supply chain risk to a covered system;

(b) Making a determination in writing, in unclassified or classified form, with the concurrence of the Under Secretary of

Defense for Acquisition and Sustainment, that—

(1) Use of the authority in 239.7305 (a),(b), or (c) is necessary to protect national security by reducing supply chain

risk;

(2) Less intrusive measures are not reasonably available to reduce such supply chain risk; and

(3) In a case where the individual authorized in 239.7303 plans to limit disclosure of information under 239.7305

(d), the risk to national security due to the disclosure of such information outweighs the risk due to not disclosing such

information; and

(c)(1) Providing a classified or unclassified notice of the determination made under paragraph (b) of this section—

(i) In the case of a covered system included in the National Intelligence Program or the Military Intelligence

Program, to the Select Committee on Intelligence of the Senate, the Permanent Select Committee on Intelligence of the

House of Representatives, and the congressional defense committees; and

(ii) In the case of a covered system not otherwise included in paragraph (a) of this section, to the congressional

defense committees; and

(2) The notice shall include—

(i) The following information (see 10 U.S.C. 3204(e)(2)):

(A) A description of the agency's needs.

(B) An identification of the statutory exception from the requirement to use competitive procedures and a

demonstration, based on the proposed contractor's qualifications or the nature of the procurement, of the reasons for using

that exception.

(C) A determination that the anticipated cost will be fair and reasonable.

(D) A description of the market survey conducted or a statement of the reasons a market survey was not

conducted.

(E) A listing of the sources, if any, that expressed in writing an interest in the procurement.

(F) A statement of the actions, if any, the agency may take to remove or overcome any barrier to competition

before a subsequent procurement for such needs;

(ii) The joint recommendation by the Under Secretary of Defense for Acquisition and Sustainment and the Chief

Information Officer of the Department of Defense as specified in paragraph (a) of this section;

(iii) A summary of the risk assessment by the Under Secretary of Defense for Intelligence that serves as the basis for

the joint recommendation specified in paragraph (a) of this section; and

239.73-2

SUBPART 239.73 - REQUIREMENTS FOR INFORMATION RELATING TO SUPPLY CHAIN RISK 239.7306

(iv) A summary of the basis for the determination, including a discussion of less intrusive measures that were

considered and why they were not reasonably available to reduce supply chain risk.

239.7305 Exclusion and limitation on disclosure.

Subject to 239.7304 , the individuals authorized in 239.7303 may, in the course of procuring information technology,

whether as a service or as a supply, that is a covered system, is a part of a covered system, or is in support of a covered

system—

(a) Exclude a source that fails to meet qualification standards established in accordance with the requirements of 10 U.S.C.

3243, for the purpose of reducing supply chain risk in the acquisition of covered systems;

(b) Exclude a source that fails to achieve an acceptable rating with regard to an evaluation factor providing for the

consideration of supply chain risk in the evaluation of proposals for the award of a contract or the issuance of a task or

delivery order;

(c) Withhold consent for a contractor to subcontract with a particular source or direct a contractor for a covered system to

exclude a particular source from consideration for a subcontract under the contract; and

(d) Limit, notwithstanding any other provision of law, in whole or in part, the disclosure of information relating to the

basis for carrying out any of the actions authorized by paragraphs (a) through (c) of this section, and if such disclosures are so

limited—

(1) No action undertaken by the individual authorized under such authority shall be subject to review in a bid protest

before the Government Accountability Office or in any Federal court; and

(2) The authorized individual shall—

(i) Notify appropriate parties of action taken under paragraphs (a) through (d) of this section and the basis for such

action only to the extent necessary to effectuate action;

(ii) Notify other Department of Defense components or other Federal agencies responsible for procurements that

may be subject to the same or similar supply chain risk, in a manner and to the extent consistent with the requirements of

national security; and

(iii) Ensure the confidentiality of any such notifications.

239.7306 Solicitation provision and contract clause.

(a) Insert the provision at 252.239-7017, Notice of Supply Chain Risk, in all solicitations, including solicitations using

FAR part 12 procedures for the acquisition of commercial products and commercial services, for information technology,

whether acquired as a service or as a supply, that is a covered system, is a part of a covered system, or is in support of a

covered system, as defined at 239.7301 .

(b) Insert the clause at 252.239-7018, Supply Chain Risk, in all solicitations and contracts, including solicitations and

contracts using FAR part 12 procedures for the acquisition of commercial products and commercial services, for information

technology, whether acquired as a service or as a supply, that is a covered system, is a part of a covered system, or is in

support of a covered system, as defined at 239.7301 .

239.73-3

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239.73-4

SUBPART 239.74 - TELECOMMUNICATIONS SERVICES 239.7402

Subpart 239.74 - TELECOMMUNICATIONS SERVICES

239.7400 Scope.

This subpart prescribes policy and procedures for acquisition of telecommunications services and maintenance of

telecommunications security. Telecommunications services meet the definition of information technology.

239.7401 Definitions.

As used in this subpart—

“Common carrier” means any entity engaged in the business of providing telecommunications services which are

regulated by the Federal Communications Commission or other governmental body.

“Foreign carrier” means any person, partnership, association, joint-stock company, trust, governmental body, or

corporation not subject to regulation by a U.S. governmental regulatory body and not doing business as a citizen of the

United States, providing telecommunications services outside the territorial limits of the United States.

“Governmental regulatory body” means the Federal Communications Commission, any statewide regulatory body, or any

body with less than statewide jurisdiction when operating under the State authority. The following are not “governmental

regulatory bodies”—

(1) Regulatory bodies whose decisions are not subject to judicial appeal; and

(2) Regulatory bodies which regulate a company owned by the same entity which creates the regulatory body.

“Long-haul telecommunications” means all general and special purpose long-distance telecommunications facilities and

services (including commercial satellite services, terminal equipment, and local circuitry supporting the long-haul service)

to or from the post, camp, base, or station switch and/or main distribution frame (except for trunk lines to the first-serving

commercial central office for local communications services).

“Noncommon carrier” means any entity other than a common carrier offering telecommunications facilities, services, or

equipment for lease.

“Securing,” “sensitive information,” and “telecommunications systems” have the meaning given in the clause at

252.239-7016 , Telecommunications Security Equipment, Devices, Techniques, and Services.

“Telecommunications” means the transmission, emission, or reception of signals, signs, writing, images, sounds, or

intelligence of any nature, by wire, cable, satellite, fiber optics, laser, radio, or any other electronic, electric, electromagnetic,

or acoustically coupled means.

“Telecommunications services” means the services acquired, whether by lease or contract, to meet the Government's

telecommunications needs. The term includes the telecommunications facilities and equipment necessary to provide such

services.

239.7402 Policy.

(a) Acquisition. DoD policy is to acquire telecommunications services from common and noncommon telecommunications

carriers—

(1) On a competitive basis, except when acquisition using other than full and open competition is justified;

(2) Recognizing the regulations, practices, and decisions of the Federal Communications Commission (FCC) and other

governmental regulatory bodies on rates, cost principles, and accounting practices; and

(3) Making provision in telecommunications services contracts for adoption of—

(i) FCC approved practices; or

(ii) The generally accepted practices of the industry on those issues concerning common carrier services where—

(A) The governmental regulatory body has not expressed itself;

(B) The governmental regulatory body has declined jurisdiction; or

(C) There is no governmental regulatory body to decide.

(b) Security.

(1) The contracting officer shall ensure, in accordance with agency procedures, that purchase requests identify—

(i) The nature and extent of information requiring security during telecommunications;

(ii) The requirement for the contractor to secure telecommunications systems;

(iii) The telecommunications security equipment, devices, techniques, or services with which the contractor's

telecommunications security equipment, devices, techniques, or services must be interoperable; and

(iv) The approved telecommunications security equipment, devices, techniques, or services, such as found in the

National Security Agency's Information Systems Security Products and Services Catalogue.

239.74-1

239.7403 DEFENSE FEDERAL ACQUISITION REGULATION

(2) Contractors and subcontractors shall provide all telecommunications security techniques or services required for

performance of Government contracts.

(3) Except as provided in paragraph (b)(4) of this section, contractors and subcontractors shall normally provide all

required property, to include telecommunications security equipment or related devices, in accordance with FAR 45.102. In

some cases, such as for communications security (COMSEC) equipment designated as controlled cryptographic item (CCI),

contractors or subcontractors must also meet ownership eligibility conditions.

(4) The head of the agency may authorize provision of the necessary property as Government-furnished property or

acquisition as contractor-acquired property, as long as conditions of FAR 45.102(b) are met.

(c) Foreign carriers. For information on contracting with foreign carriers, see PGI 239.7402 (c).

(d) Long-haul telecommunications services. When there is a requirement for procurement of long-haul

telecommunications services, follow PGI 239.7402 (d).

239.7403 Reserved.

239.7404 Reserved.

239.7405 Delegated authority for telecommunications resources.

The contracting officer may enter into a telecommunications service contract on a month-to-month basis or for any longer

period or series of periods, not to exceed a total of 10 years. See PGI 239.7405 for documents relating to this contracting

authority, which the General Services Administration has delegated to DoD.

239.7406 Certified cost or pricing data and data other than certified cost or pricing data.

(a) Common carriers are not required to submit certified cost or pricing data before award of contracts for tariffed services.

Rates or preliminary estimates quoted by a common carrier for tariffed telecommunications services are considered to be

prices set by regulation within the provisions of 10 U.S.C. 3703. This is true even if the tariff is set after execution of the

contract.

(b) Rates or preliminary estimates quoted by a common carrier for nontariffed telecommunications services or by a

noncommon carrier for any telecommunications service are not considered prices set by law or regulation.

(c) Contracting officers shall obtain sufficient data to determine that the prices are reasonable in accordance with FAR

15.403-3 or 15.403-4. See PGI 239.7406 for examples of instances where additional data may be necessary to determine price

reasonableness.

239.7407 Type of contract.

When acquiring telecommunications services, the contracting officer may use a basic agreement (see FAR 16.702) in

conjunction with communication service authorizations. When using this method, follow the procedures at PGI 239.7407 .

239.7408 Special construction.

239.7408-1 General.

(a) “Special construction” normally involves a common carrier giving a special service or facility related to the

performance of the basic telecommunications service requirements. This may include—

(1) Moving or relocating equipment;

(2) Providing temporary facilities;

(3) Expediting provision of facilities; or

(4) Providing specially constructed channel facilities to meet Government requirements.

(b) Use this subpart instead of FAR Part 36 for acquisition of “special construction.”

(c) Special construction costs may be—

(1) A contingent liability for using telecommunications services for a shorter time than the minimum to reimburse the

contractor for unamortized nonrecoverable costs. These costs are usually expressed in terms of a termination liability, as

provided in the contract or by tariff;

(2) A onetime special construction charge;

(3) Recurring charges for constructed facilities;

(4) A minimum service charge;

239.74-2

SUBPART 239.74 - TELECOMMUNICATIONS SERVICES 239.7411

(5) An expediting charge; or

(6) A move or relocation charge.

(d) When a common carrier submits a proposal or quotation which has special construction requirements, the contracting

officer shall require a detailed special construction proposal. Analyze all special construction proposals to—

(1) Determine the adequacy of the proposed construction;

(2) Disclose excessive or duplicative construction; and

(3) When different forms of charge are possible, provide for the form of charge most advantageous to the Government.

(e) When possible, analyze and approve special construction charges before receiving the service. Impose a ceiling on

the special construction costs before authorizing the contractor to proceed, if prior approval is not possible. The contracting

officer must approve special construction charges before final payment.

239.7408-2 Applicability of construction labor standards for special construction.

(a) The construction labor standards in FAR Subpart 22.4 ordinarily do not apply to special construction. However, if

the special construction includes construction, alteration, or repair (as defined in FAR 22.401) of a public building or public

work, the construction labor standards may apply. Determine applicability under FAR 22.402.

(b) Each CSA or other type contract which is subject to construction labor standards under FAR 22.402 shall cite that fact.

239.7409 Special assembly.

(a) Special assembly is the designing, manufacturing, arranging, assembling, or wiring of equipment to provide

telecommunications services that cannot be provided with general use equipment.

(b) Special assembly rates and charges shall be based on estimated costs. The contracting officer should negotiate special

assembly rates and charges before starting service. When it is not possible to negotiate in advance, use provisional rates and

charges subject to adjustment, until final rates and charges are negotiated. The CSAs authorizing the special assembly shall be

modified to reflect negotiated final rates and charges.

239.7410 Cancellation and termination.

(a)(1) Cancellation is stopping a requirement after placing of an order but before service starts.

(2) Termination is stopping a requirement after placing an order and after service starts.

(b) Determine cancellation or termination charges under the provisions of the applicable tariff or agreement/contract.

239.7411 Contract clauses.

(a) In addition to other appropriate FAR and DFARS clauses, use the following clauses in solicitations, contracts, and

basic agreements for telecommunications services. Modify the clauses only if necessary to meet the requirements of a

governmental regulatory agency.

(1) 252.239-7002 , Access.

(2) 252.239-7004 , Orders for Facilities and Services.

(3) 252.239-7007 , Cancellation or Termination of Orders.

(b) Use the following clauses in solicitations, contracts, and basic agreements for telecommunications services when the

acquisition includes or may include special construction. Modify the clauses only if necessary to meet the requirements of a

governmental regulatory agency—

(1) 252.239-7011 , Special Construction and Equipment Charges; and

(2) 252.239-7012 , Title to Telecommunication Facilities and Equipment.

(c) Use the basic or alternate of the clause at 252.239-7013 , Term of Agreement and Continuation of Services, in basic

agreements for telecommunications services.

(1) Use the basic clause in basic agreements that do not supersede an existing basic agreement with the contractor.

(2) Use the alternate I clause in basic agreements that supersede an existing basic agreement with the contractor.

Complete paragraph (c)(1) of the clause with the basic agreement number, date, and contacting office that issued the basic

agreement being superseded.

(d) Use the clause at 252.239-7016 , Telecommunications Security Equipment, Devices, Techniques, and Services, in

solicitations and contracts when performance of a contract requires secure telecommunications.

239.74-3

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239.74-4

SUBPART 239.75 - RESERVED

Subpart 239.75 - Reserved

239.75-1

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239.75-2

SUBPART 239.76 - CLOUD COMPUTING 239.7602-1

Subpart 239.76 - CLOUD COMPUTING

239.7600 Scope of subpart.

This subpart prescribes policies and procedures for the acquisition of cloud computing services.

239.7601 Definitions.

As used in this subpart—

“Authorizing official,” as described in DoD Instruction 8510.01, Risk Management Framework (RMF) for DoD

Information Technology (IT), means the senior Federal official or executive with the authority to formally assume

responsibility for operating an information system at an acceptable level of risk to organizational operations (including

mission, functions, image, or reputation), organizational assets, individuals, other organizations, and the Nation.

“Cloud computing” means a model for enabling ubiquitous, convenient, on-demand network access to a shared pool of

configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned

and released with minimal management effort or service provider interaction. This includes other commercial terms, such

as on-demand self-service, broad network access, resource pooling, rapid elasticity, and measured service. It also includes

commercial offerings for software-as-a-service, infrastructure-as-a-service, and platform-as-a-service.

“Government data” means any information, document, media, or machine readable material regardless of physical form or

characteristics, that is created or obtained by the Government in the course of official Government business.

“Government-related data” means any information, document, media, or machine readable material regardless of physical

form or characteristics that is created or obtained by a contractor through the storage, processing, or communication of

Government data. This does not include a contractor’s business records (e.g., financial records, legal records, etc.) or data

such as operating procedures, software coding, or algorithms that are not uniquely applied to the Government data.

“Information system” means a discrete set of information resources organized for the collection, processing, maintenance,

use, sharing, dissemination, or disposition of information.

“Media” means physical devices or writing surfaces including, but not limited to, magnetic tapes, optical disks, magnetic

disks, large-scale integration memory chips, and printouts onto which information is recorded, stored, or printed within an

information system.

239.7602 Policy and responsibilities.

239.7602-1 General.

(a) Generally, DoD shall acquire cloud computing services using commercial terms and conditions that are consistent with

Federal law, and an agency’s needs, including those requirements specified in this subpart. Some examples of commercial

terms and conditions are license agreements, End User License Agreements (EULAs), Terms of Service (TOS), or other

similar legal instruments or agreements. Contracting officers shall incorporate any applicable service provider terms and

conditions into the contract by attachment or other appropriate mechanism. Contracting officers shall carefully review

commercial terms and conditions and consult counsel to ensure these are consistent with Federal law, regulation, and the

agency’s needs.

(b)(1) Except as provided in paragraph (b)(2) of this section, the contracting officer shall only award a contract to acquire

cloud computing services from a cloud service provider (e.g., contractor or subcontractor, regardless of tier) that has been

granted provisional authorization by Defense Information Systems Agency, at the level appropriate to the requirement,

to provide the relevant cloud computing services in accordance with the Cloud Computing Security Requirements Guide

(SRG) (version in effect at the time the solicitation is issued or as authorized by the contracting officer) found at https://

public.cyber.mil/dccs/ .

(2) The contracting officer may award a contract to acquire cloud computing services from a cloud service provider that

has not been granted provisional authorization when—

(i) The requirement for a provisional authorization is waived by the DoD Chief Information Officer; or

(ii) The cloud computing service requirement is for a private, on-premises version that will be provided from U.S.

Government facilities. Under this circumstance, the cloud service provider must obtain a provisional authorization prior to

operational use.

(c) When contracting for cloud computing services, the contracting officer shall ensure the following information is

provided by the requiring activity:

(1) Government data and Government-related data descriptions.

239.76-1

239.7602-2 DEFENSE FEDERAL ACQUISITION REGULATION

(2) Data ownership, licensing, delivery and disposition instructions specific to the relevant types of Government data and

Government-related data (e.g., DD Form 1423, Contract Data Requirements List; work statement task; line item). Disposition

instructions shall provide for the transition of data in commercially available, or open and non-proprietary format (and for

permanent records, in accordance with disposition guidance issued by National Archives and Record Administration).

(3) Appropriate requirements to support applicable inspection, audit, investigation, or other similar authorized activities

specific to the relevant types of Government data and Government-related data, or specific to the type of cloud computing

services being acquired.

(4) Appropriate requirements to support and cooperate with applicable system-wide search and access capabilities for

inspections, audits, investigations.

239.7602-2 Required storage of data within the United States or outlying areas.

(a) Cloud computing service providers are required to maintain within the 50 states, the District of Columbia, or outlying

areas of the United States, all Government data that is not physically located on DoD premises, unless otherwise authorized

by the authorizing official, as described in DoD Instruction 8510.01, in accordance with the SRG.

(b) The contracting officer shall provide written notification to the contractor when the contractor is permitted to maintain

Government data at a location outside the 50 States, the District of Columbia, and outlying areas of the United States. See

PGI 239.7602-2 for additional guidance.

239.7603 Procedures.

Follow the procedures relating to cloud computing at PGI 239.7603 .

239.7604 Solicitation provision and contract clause.

(a) Use the provision at 252.239-7009 , Representation of Use of Cloud Computing, in solicitations, including solicitations

using FAR part 12 procedures for the acquisition of commercial products and commercial services, for information

technology services.

(b) Use the clause at 252.239-7010 , Cloud Computing Services, in solicitations and contracts, including solicitations and

contracts using FAR part 12 procedures for the acquisition of commercial products and commercial services, for information

technology services.

239.76-2

PART 240 - RESERVED

240-1

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240-2

PART 240 - RESERVED

240.0-1

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240.0-2

PART 241 - ACQUISITION OF UTILITY SERVICES

Sec.

Subpart 241.1 - GENERAL

241.101

Definitions.

241.102

Applicability.

241.103

Statutory and delegated authority.

Subpart 241.2 - ACQUIRING UTILITY SERVICES

241.201

Policy.

241.202

Procedures.

241.205

Separate contracts.

Subpart 241.5 - SOLICITATION PROVISION AND CONTRACT

CLAUSES

241.501

Solicitation provision and contract clauses.

241.501-70

Additional clauses.

241-1

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241-2

SUBPART 241.1 - GENERAL 241.103

Subpart 241.1 - GENERAL

241.101 Definitions.

As used in this part—

“Independent regulatory body” means the Federal Energy Regulatory Commission, a state-wide agency, or an agency

with less than state-wide jurisdiction when operating pursuant to state authority. The body has the power to fix, establish, or

control the rates and services of utility suppliers.

“Nonindependent regulatory body” means a body that regulates a utility supplier which is owned or operated by the same

entity that created the regulatory body, e.g., a municipal utility.

“Regulated utility supplier” means a utility supplier regulated by an independent regulatory body.

“Service power procurement officer” means for the—

Army, the Chief of Engineers;

Navy, the Commander, Naval Facilities Engineering Command;

Air Force, the head of a contracting activity; and

Defense Logistics Agency, the head of a contracting activity.

241.102 Applicability.

(a) This part applies to purchases of utility services from nonregulated and regulated utility suppliers. It includes the

acquisition of liquefied petroleum gas as a utility service when purchased from regulated utility suppliers.

(b)(7) This part does not apply to third party financed projects. However, it may be used for any purchased utility services

directly resulting from such projects, including those authorized by—

(A) 10 U.S.C. 2394 for energy, fuels, and energy production facilities for periods not to exceed 30 years;

(B) 10 U.S.C. 2394a for renewable energy for periods not to exceed 25 years;

(C) 10 U.S.C. 2917 for geothermal resources that result in energy production facilities;

(D) 10 U.S.C. 2809 for potable and waste water treatment plants for periods not to exceed 32 years; and

(E) 10 U.S.C. 2812 for lease/purchase of energy production facilities for periods not to exceed 32 years.

241.103 Statutory and delegated authority.

(1) The contracting officer may enter into a utility service contract related to the conveyance of a utility system for a

period not to exceed 50 years (10 U.S.C.2688(d)(2)).

(2) The contracting officer may enter into an energy savings contract under 10 U.S.C. 2913 for a period not to exceed

25 years.

(3) See 217.174 for authority to enter into multiyear contracts for electricity from renewable energy sources.

(4) See PGI 241.103 for statutory authorities and maximum contract periods for utility and energy contracts.

241.1-1

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241.1-2

SUBPART 241.2 - ACQUIRING UTILITY SERVICES 241.205

Subpart 241.2 - ACQUIRING UTILITY SERVICES

241.201 Policy.

(1) DoD, as a matter of comity, generally complies with the current regulations, practices, and decisions of independent

regulatory bodies. This policy does not extend to nonindependent regulatory bodies.

(2) Purchases of utility services outside the United States may use—

(i) Formats and technical provisions consistent with local practice; and

(ii) Dual language forms and contracts.

(3) Rates established by an independent regulatory body—

(i) Are considered “prices set by law or regulation”;

(ii) Are sufficient to set prices without obtaining certified cost or pricing data (see FAR subpart 15.4); and

(iii) Are a valid basis on which prices can be determined fair and reasonable.

(4) Compliance with the regulations, practices, and decisions of independent regulatory bodies as a matter of comity is

not a substitute for the procedures at FAR 41.202(a).

241.202 Procedures.

(1) Connection and service charges. The Government may pay a connection charge when required to cover the cost

of the necessary connecting facilities. A connection charge based on the estimated labor cost of installing and removing the

facility shall not include salvage cost. A lump-sum connection charge shall be no more than the agreed cost of the connecting

facilities less net salvage. The order of precedence for contractual treatment of connection and service charges is—

(i) No connection charge.

(ii) Termination liability. Use when an obligation is necessary to secure the required services. The obligation must

be not more than the agreed connection charge, less any net salvage material costs. Use of a termination liability instead of a

connection charge requires the approval of the service power procurement officer or designee.

(iii) Connection charge, refundable. Use a refundable connection charge when the supplier refuses to provide

the facilities based on lack of capital or published rules which prohibit providing up-front funding. The contract should

provide for refund of the connection charge within five years unless a longer period or omission of the refund requirement is

authorized by the service power procurement officer or designee.

(iv) Connection and service charges, nonrefundable. The Government may pay certain nonrefundable, nonrecurring

charges including service initiation charges, a contribution in aid of construction, membership fees, and charges required by

the supplier's rules and regulations to be paid by the customer. If possible, consider sharing with other than Government users

the use of (and costs for) facilities when large nonrefundable charges are required.

(2) Construction and labor requirements.Follow the procedures at PGI 241.202 (2) for construction and labor

requirements associated with connection and service charges.

241.205 Separate contracts.

Follow the procedures at PGI 241.205 when acquiring utility services by separate contract.

241.2-1

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241.2-2

SUBPART 241.5 - SOLICITATION PROVISION AND CONTRACT CLAUSES 241.501-70

Subpart 241.5 - SOLICITATION PROVISION AND CONTRACT CLAUSES

241.501 Solicitation provision and contract clauses.

(d) (1) Use a clause substantially the same as the clause at FAR 52.241-7, Change in Rates or Terms and Conditions of

Service for Regulated Services, when the utility services to be provided are subject to an independent regulatory body.

(2) Use a clause substantially the same as the clause at FAR 52.241-8, Change in Rates or Terms and Conditions of

Service for Unregulated Services, when the utility services to be provided are not subject to a regulatory body or are subject

to a nonindependent regulatory body.

241.501-70 Additional clauses.

(a) If the Government must execute a superseding contract and capital credits, connection charge credits, or termination

liability exist, use the clause at 252.241-7000 , Superseding Contract.

(b) Use the clause at 252.241-7001 , Government Access, when the clause at FAR 52.241-5, Contractor's Facilities, is

used.

241.5-1

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241.5-2

PART 242 - CONTRACT ADMINISTRATION

Sec.

242.002

Interagency agreements.

Subpart 242.1 - (REMOVED)

Subpart 242.2 - CONTRACT ADMINISTRATION SERVICES

242.200

RESERVED

242.200-70

Scope of subpart.

242.202

Assignment of contract administration.

Subpart 242.3 - CONTRACT ADMINISTRATION OFFICE

FUNCTIONS

242.301

General.

242.302

Contract administration functions.

Subpart 242.4 - Reserved

Subpart 242.5 - POSTAWARD ORIENTATION

242.503

Postaward conferences.

242.503-2

Postaward conference procedure.

Subpart 242.6 - CORPORATE ADMINISTRATIVE

CONTRACTING OFFICER

242.602

Assignment and location.

Subpart 242.7 - INDIRECT COST RATES

242.705

Final indirect cost rates.

242.705-1

Contracting officer determination procedure.

242.705-2

Auditor determination procedure.

242.708

Quick-closeout procedure.

242.770

Reserved.

242.771

Independent research and development and bid and proposal costs.

242.771-1

Scope.

242.771-2

Policy.

242.771-3

Responsibilities.

Subpart 242.8 - DISALLOWANCE OF COSTS

242.803

Disallowing costs after incurrence.

Subpart 242.11 - PRODUCTION SURVEILLANCE AND

REPORTING

242.1104

Surveillance requirements.

242.1105

Assignment of criticality designator.

242.1106

Reporting requirements.

242.1107

Contract clause.

Subpart 242.12 - NOVATION AND CHANGE-OF-NAME

AGREEMENTS

242.1203

Processing agreements.

242.1204

Applicability of novation agreements.

Subpart 242.14 - TRAFFIC AND TRANSPORTATION

MANAGEMENT

Subpart 242.15 - CONTRACTOR PERFORMANCE

INFORMATION

242.1502

Policy.

Subpart 242.70 - CONTRACTOR BUSINESS SYSTEMS

242.7000

Contractor business system deficiencies.

242.7001

Contract clause.

Subpart 242.71 - VOLUNTARY REFUNDS

242.7100

General.

Subpart 242.72 - CONTRACTOR MATERIAL MANAGEMENT

AND ACCOUNTING SYSTEM

242.7200

Scope of subpart.

242.7201

Definitions.

242.7202

Policy.

242.7203

Review procedures.

242.7204

Contract clause.

Subpart 242.73 - CONTRACTOR INSURANCE/PENSION

REVIEW

242.7301

General.

242.7302

Requirements.

242.7303

Responsibilities.

Subpart 242.74 - TECHNICAL REPRESENTATION AT

CONTRACTOR FACILITIES

242.7400

General.

242.7401

Procedures.

Subpart 242.75 - CONTRACTOR ACCOUNTING SYSTEMS

AND RELATED CONTROLS

242.7501

Definitions.

242.7502

Policy.

242.7503

Contract clause.

242-1

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242-2

SUBPART 242.1 - (REMOVED) 242.002

242.002 Interagency agreements.

(b)(i) DoD requires reimbursement, at a rate set by the Under Secretary of Defense (Comptroller/Chief Financial Officer),

from non-DoD organizations, except for—

(A) Quality assurance, contract administration, and audit services provided under a no-charge reciprocal

agreement;

(B) Services performed under subcontracts awarded by the Small Business Administration under FAR Subpart

19.8; and

(C) Quality assurance performed for the Canadian Department of National Defence and pricing services

performed for Public Works and Government Services Canada (PWGSC), operating as Public Services and Procurement

Canada (PSPC).

(ii) Departments and agencies may request an exception from the reimbursement policy in paragraph (b)(i) of this

section from the Under Secretary of Defense (Comptroller/Chief Financial Officer). A request must show that an exception is

in the best interest of the Government.

(iii) Departments and agencies must pay for services performed by non-DoD activities, foreign governments, or

international organizations, unless otherwise provided by reciprocal agreements.

(S-70)(i) Foreign governments and international organizations may request contract administration services on

their direct purchases from U.S. producers. Direct purchase is the purchase of defense supplies in the United States through

commercial channels for use by the foreign government or international organization.

(ii) PWGSC, operating as PSPC, is permitted to submit its requests for contract administration services directly to

the cognizant contract administration office.

(iii) Other foreign governments (including Canadian government organizations other than PSPC and international

organizations send their requests for contract administration services to the DoD Central Control Point (CCP) at the

Headquarters, Defense Contract Management Agency, International and Federal Business Team. Contract administration

offices provide services only upon request from the CCP. The CCP shall follow the procedures at PGI 242.002 (S-70)(iii).

Subpart 242.1 - (REMOVED)

(November 09, 1999)

242.1-1

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242.1-2

SUBPART 242.2 - CONTRACT ADMINISTRATION SERVICES 242.202

Subpart 242.2 - CONTRACT ADMINISTRATION SERVICES

242.200 RESERVED

242.200-70 Scope of subpart.

This subpart does not address the contract administration role of a contracting officer's representative (see 201.602 ).

242.202 Assignment of contract administration.

(a)(i) DoD activities shall not retain any contract for administration that requires performance of any contract

administration function at or near contractor facilities, except contracts for—

(A) The National Security Agency;

(B) Research and development with universities;

(C) Flight training;

(D) Management and professional support services;

(E) Mapping, charting, and geodesy services;

(F) Base, post, camp, and station purchases;

(G) Operation or maintenance of, or installation of equipment at, radar or communication network sites;

(H) Communications services;

(I) Installation, operation, and maintenance of space-track sensors and relays;

(J) Dependents Medicare program contracts;

(K) Stevedoring contracts;

(L) Construction and maintenance of military and civil public works, including harbors, docks, port facilities,

military housing, development of recreational facilities, water resources, flood control, and public utilities;

(M) Architect-engineer services;

(N) Airlift and sealift services (Air Mobility Command and Military Sealift Command may perform contract

administration services at contractor locations involved solely in performance of airlift or sealift contracts);

(O) Subsistence supplies;

(P) Ballistic missile sites (contract administration offices may perform supporting administration of these

contracts at missile activation sites during the installation, test, and checkout of the missiles and associated equipment);

(Q) Operation and maintenance of, or installation of equipment at, military test ranges, facilities, and

installations; and

(R) The Defense Energy Support Center, Defense Logistics Agency.

(ii) Contract administration functions for base, post, camp, and station contracts on a military installation are

normally the responsibility of the installation or tenant commander. However, the Defense Contract Management Agency

(DCMA) shall, upon request of the military department, and subject to prior agreement, perform contract administration

services on a military installation.

(iii) DCMA shall provide preaward survey assistance for post, camp, and station work performed on a military

installation. The contracting office and the DCMA preaward survey monitor should jointly determine the scope of the survey

and individual responsibilities.

(iv) To avoid duplication, contracting offices shall not locate their personnel at contractor facilities, except—

(A) In support of contracts retained for administration in accordance with paragraph (a)(i) of this section; or

(B) As permitted under Subpart 242.74.

(e)(1)(A) In special circumstances, a contract administration office may request support from a component not listed in

the Federal Directory of Contract Administration Services Components (available via the Internet at https://piee.eb.mil/

pcm/xhtml/unauth/index.xhtml ). An example is a situation where the contractor's work site is on a military base and a base

organization is asked to provide support. Before formally sending the request, coordinate with the office concerned to ensure

that resources are available for, and capable of, providing the support.

(B) When requesting support on a subcontract that includes foreign military sale (FMS) requirements, the

contract administration office shall—

(1) Mark “FMS Requirement” on the face of the documents; and

(2) For each FMS case involved, provide the FMS case identifier, associated item quantities, DoD prime

contract number, and prime contract line/subline item number.

242.2-1

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242.2-2

SUBPART 242.3 - CONTRACT ADMINISTRATION OFFICE FUNCTIONS 242.302

Subpart 242.3 - CONTRACT ADMINISTRATION OFFICE FUNCTIONS

242.301 General.

Contract administration services performed outside the United States should be performed in accordance with FAR 42.301

unless there are no policies and procedures covering a given situation. In this case, coordinate proposed actions with the

appropriate U.S. country teams or commanders of unified and specified commands.

242.302 Contract administration functions.

(a)(7) See 242.7502 for ACO responsibilities with regard to receipt of an audit report identifying significant accounting

system or related internal control deficiencies.

(9) For additional contract administration functions related to IR&D projects and B&P projects performed by major

contractors, see 242.771-3(a).

(12) Also perform all payment administration in accordance with any applicable payment clauses.

(13)(A) Do not delegate the responsibility to make payments to the Defense Contract Management Agency (DCMA).

(B) Follow the procedures at PGI 242.302(a)(13)(B) (DFARS/PGI view) for designation of payment offices.

(39) See 223.370 for contract administration responsibilities on contracts for ammunition and explosives.

(56) Within DoD, maintaining surveillance of aircraft flight and ground operations is accomplished by incorporating

into the contract, task order, or delivery order the requirements of the applicable version of the combined regulation/

instruction entitled “Contractor’s Flight and Ground Operations” (Air Force Instruction 10-220, Army Regulation 95-20,

Naval Air Systems Command (NAVAIR) Instruction 3710.1 (Series), Coast Guard Instruction M13020.3 (Series), and

Defense Contract Management Agency Instruction 8210-1 (Series)). See PGI 242.302(a)(56).

(67) Also support program offices and buying activities in precontractual efforts leading to a solicitation or award.

(S-70) Serve as the single point of contact for all Single Process Initiative (SPI) Management Council activities. The

ACO shall negotiate and execute facility wide class modifications and agreements for SPI processes, when authorized by the

affected components.

(S-71) DCMA has responsibility for reviewing earned value management system (EVMS) plans and for verifying

initial and continuing contractor compliance with DoD EVMS criteria. The contracting officer shall not retain this function.

(S-72) Ensure implementation of the Synchronized Predeployment and Operational Tracker (SPOT) by the contractor

and maintain surveillance over contractor compliance with SPOT business rules available at the website provided at PGI

207.105 (b)(20)(C)(9) for contracts incorporating the clause at 252.225-7040 , Contractor Personnel Supporting U.S.

Armed Forces Deployed Outside the United States. See PGI 242.302 (a)(S-72) for guidance on assessing contractor’s

implementation of SPOT.

(S-73) Maintain surveillance over contractor compliance with trafficking in persons requirements for all DoD contracts

for services incorporating the clause at FAR 52.222-50, Combating Trafficking in Persons, and, when necessary, its Alternate

I, as identified in the clause prescription at FAR 22.1705. (See PGI 222.1703 .)

(S-74) Approve or disapprove contractor business systems, as identified in the clause at 252.242-7005 , Contractor

Business Systems.

(S-75) See PGI 242.302 (a)(S-75) for guidelines for monitoring contractor costs.

(S-76) Review and audit contractor identification of contractor-approved suppliers for the acquisition of electronic

parts, as identified in the clause at 252.246-7008 , Sources of Electronic Parts.

(b)(S-70) Issue, negotiate, and execute orders under basic ordering agreements for overhaul, maintenance, and repair.

(S-71)(A) Except for classified contracts, negotiate or settle questioned direct costs in an incurred cost audit.

The procuring contracting officer may delegate this authority to the contract administration office (CAO) only upon prior

coordination and agreement with the CAO. Upon such delegation, the procuring contracting officer shall provide the CAO

access within 30 days to all supporting documentation in their possession related to the questioned direct costs in an incurred

cost audit.

(B) After settlement of the questioned direct costs, the CAO shall provide the procuring contracting office the

results of the settlement. The procuring contracting office shall make any adjustments resulting from the settlement on

affected contracts and report such adjustments to the CAO.

242.3-1

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242.3-2

SUBPART 242.4 - RESERVED

Subpart 242.4 - Reserved

242.4-1

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242.4-2

SUBPART 242.5 - POSTAWARD ORIENTATION 242.503-2

Subpart 242.5 - POSTAWARD ORIENTATION

242.503 Postaward conferences.

242.503-2 Postaward conference procedure.

(a) DD Form 1484, Post-Award Conference Record, may be used in conducting the conference and in preparing the

conference report.

(b) For contracts that include the clause at 252.234-7004 , Cost and Software Data Reporting, postaward conferences shall

include a discussion of the contractor’s standard cost and software data reporting (CSDR) process that satisfies the guidelines

contained in the DoD 5000.04-M-1, CSDR Manual, and the requirements in the Government-approved CSDR plan for the

contract, DD Form 2794, and related Resource Distribution Table.

242.5-1

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242.5-2

SUBPART 242.6 - CORPORATE ADMINISTRATIVE CONTRACTING OFFICER 242.602

Subpart 242.6 - CORPORATE ADMINISTRATIVE CONTRACTING OFFICER

242.602 Assignment and location.

(c)(2) If the agencies cannot agree, refer the matter to the Principal Director, Defense Pricing, Contracting, and Acquisition

Policy.

242.6-1

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242.6-2

SUBPART 242.7 - INDIRECT COST RATES 242.771-3

Subpart 242.7 - INDIRECT COST RATES

242.705 Final indirect cost rates.

See DoD Class Deviation 2012-O0013, DCAA Policy and Procedure for Sampling Low-Risk Incurred Cost Proposals,

issued on July 24, 2012. Effective immediately, for the purposes of satisfying the audit requirements at FAR 4.804-5(a)(12),

42.705-1(b)(2), and 42.705-2(b)(2)(i), Department of Defense contracting officers shall continue to rely on either a DCAA

audit report or a DCAA memorandum documenting that, based on a risk assessment and a proposal adequacy evaluation

pursuant to FAR 42.705-1(b)(1)(iii), DCAA deemed the incurred cost proposal to be low-risk and did not select it for further

audit in accordance with the attached DCAA Policy dated July 6, 2012. This deviation is effective until incorporated in the

DFARS or rescinded.

242.705-1 Contracting officer determination procedure.

(a) Applicability and responsibility.

(1) The corporate administrative contracting officer and individual administrative contracting officers shall jointly

decide how to conduct negotiations. Follow the procedures at 242.705-1 (a)(1) when negotiations are conducted on a

coordinated basis.

242.705-2 Auditor determination procedure.

(b) Procedures.

(2)(iii) When agreement cannot be reached with the contractor, the auditor will issue a DCAA Form 1, Notice of

Contract Costs Suspended and/or Disapproved, in addition to the advisory report to the administrative contracting officer.

242.708 Quick-closeout procedure.

(a) Defense Contract Management Agency administrative contracting officers are authorized to negotiate the settlement of

direct and indirect costs for a specific contract, task order, or delivery order to be closed in advance of the determination of

final direct costs and indirect rates set forth in FAR 42.705, regardless of the dollar value or percentage of unsettled direct or

indirect costs allocable to the contract, task order, or delivery order.

(2) In lieu of the thresholds at FAR 42.708(a)(2)(i) and (ii), the amount of unsettled direct costs and indirect costs to be

allocated to the contract, task order, or delivery order will be considered relatively insignificant when the total unsettled direct

costs and indirect costs to be allocated to any one contract, task order, or delivery order do not exceed $2 million, regardless

of the total contract, task order, or delivery order amount.

242.770 Reserved.

242.771 Independent research and development and bid and proposal costs.

242.771-1 Scope.

This section implements 10 U.S.C. 3762, Independent research and development costs: allowable costs; 10 U.S.C. 3763,

Bid and proposal costs: allowable costs; and 10 U.S.C. 3847, Defense Contract Audit Agency: annual report.

242.771-2 Policy.

Defense contractors are encouraged to engage in independent research and development (IR&D) projects that will advance

the needs of DoD for future technology and advanced capability (see 231.205-18(c)(iii)).

242.771-3 Responsibilities.

(a) The cognizant administrative contracting officer (ACO) or corporate ACO shall determine cost allowability of IR&D

costs and bid and proposal (B&P) costs as set forth in 231.205-18 and FAR 31.205-18.

(b) The Defense Contract Audit Agency (DCAA) shall—

(1) For the DoD-wide B&P program, submit an annual report to the Principal Director, Defense Pricing, Contracting,

and Acquisition Policy, Office of the Under Secretary of Defense for Acquisition and Sustainment, in connection with 10

U.S.C. 3763(c); the Defense Contract Management Agency or the military department responsible for performing contract

administration functions is responsible for providing DCAA with statistical information, as necessary; and

242.7-1

242.771-3 DEFENSE FEDERAL ACQUISITION REGULATION

(2) For IR&D costs and B&P costs incurred under any DoD contract in the previous Government fiscal year, submit an

annual report to the congressional defense committees as required by 10 U.S.C. 3847.

(c) The Office of the Under Secretary of Defense for Research and Engineering (OASD R&E), is responsible for

establishing a regular method for communication—

(1)(i) From DoD to contractors, of timely and comprehensive information regarding planned or expected needs of DoD

for future technology and advanced capability, by posting information on communities of interest and upcoming meetings on

the Defense Technical Information Center (DTIC) website at https://defenseinnovationmarketplace.dtic.mil/communities-of-

interest ; and

(ii) From contractors to DoD, of brief technical descriptions of contractor IR&D projects; and

(2) By providing OUSD(R&E) contact information: [email protected].

242.7-2

SUBPART 242.8 - DISALLOWANCE OF COSTS 242.803

Subpart 242.8 - DISALLOWANCE OF COSTS

242.803 Disallowing costs after incurrence.

(a) Contracting officer receipt of vouchers. Contracting officer receipt of vouchers is applicable only for cost-

reimbursement contracts with the Canadian Commercial Corporation. See 225.870-5 (b) for invoice procedures.

(b) Auditor receipt of voucher.

(i) The contract auditor is the authorized representative of the contracting officer for—

(A) Receiving vouchers from contractors electronically or by other delivery methods as directed by the terms of

the contract;

(B) Approving interim vouchers, that were selected using sampling methodologies for provisional payment and

sending them to the disbursing office after a pre-payment review. Interim vouchers not selected for a pre-payment review

will be considered to be provisionally approved and will be sent directly to the disbursing office. All provisionally approved

interim vouchers are subject to a later audit of actual costs incurred;

(C) Reviewing completion/final vouchers and sending them to the administrative contracting officer; and

(D) Issuing DCAA Forms 1, Notice of Contract Costs Suspended and/or Disapproved, to deduct costs where

allowability is questionable.

(ii) The administrative contracting officer—

(A) Approves all completion/final vouchers and sends them to the disbursing officer; and

(B) May issue or direct the issuance of DCAA Form 1 on any cost when there is reason to believe it should be

suspended or disallowed.

242.8-1

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242.8-2

SUBPART 242.11 - PRODUCTION SURVEILLANCE AND REPORTING 242.1107

Subpart 242.11 - PRODUCTION SURVEILLANCE AND REPORTING

242.1104 Surveillance requirements.

(a) The cognizant contract administration office (CAO)—

(i) Shall perform production surveillance on all contractors that have Criticality Designator A or B contracts;

(ii) Shall not perform production surveillance on contractors that have only Criticality Designator C contracts, unless

specifically requested by the contracting officer; and

(iii) When production surveillance is required, shall—

(A) Conduct a periodic risk assessment of the contractor to determine the degree of production surveillance

needed for all contracts awarded to that contractor. The risk assessment shall consider information provided by the contractor

and the contracting officer;

(B) Develop a production surveillance plan based on the risk level determined during a risk assessment;

(C) Modify the production surveillance plan to incorporate any special surveillance requirements for individual

contracts, including any requirements identified by the contracting officer; and

(D) Monitor contract progress and identify potential contract delinquencies in accordance with the production

surveillance plan. Contracts with Criticality Designator C are exempt from this requirement unless specifically requested by

the contracting officer.

242.1105 Assignment of criticality designator.

(1) Contracting officers shall—

(i) Assign criticality designator A to items with a priority 01, 02, 03, or 06 (if emergency supply of clothing) under

DoD Manual 4140.01, Volume 5, DoD Supply Chain Materiel Management Procedures: Delivery of Materiel; and

(ii) Ordinarily assign criticality designator C to unilateral purchase orders.

(2) Only the contracting officer shall change the assigned designator.

242.1106 Reporting requirements.

(a) See DoDI 5000.2, Operation of the Defense Acquisition System, for reporting requirements for defense technology

projects and acquisition programs.

(b)(i) Within four working days after receipt of the contractor's report, the CAO must provide the report and any required

comments to the contracting officer and, unless otherwise specified in the contract, the inventory control manager.

(ii) If the contractor's report indicates that the contract is on schedule and the CAO agrees, the CAO does not need to

add further comments. In all other cases, the CAO must add comments and recommend a course of action.

242.1107 Contract clause.

(b) When using the clause at FAR 52.242-2, include the following instructions in the contract schedule—

(i) Frequency and timing of reporting (normally five working days after each reporting period);

(ii) Contract line items, exhibits, or exhibit line items requiring reports;

(iii) Offices (with addressees/codes) where reports should be sent (always include the contracting office and contract

administration office); and

(iv) The following requirements for report content—

(A) The problem, actual or potential, and its cause;

(B) Items and quantities affected;

(C) When the delinquency started or will start;

(D) Actions taken to overcome the delinquency;

(E) Estimated recovery date; and/or

(F) Proposed schedule revision.

242.11-1

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242.11-2

SUBPART 242.12 - NOVATION AND CHANGE-OF-NAME AGREEMENTS 242.1204

Subpart 242.12 - NOVATION AND CHANGE-OF-NAME AGREEMENTS

242.1203 Processing agreements.

The responsible contracting officer shall process and execute novation and change-of-name agreements in accordance with

the procedures at PGI 242.1203 .

242.1204 Applicability of novation agreements.

(i) When a novation agreement is required and the transferee intends to incur restructuring costs as defined at

231.205-70 , the cognizant contracting officer shall include the following provision as paragraph (b)(7) of the novation

agreement instead of the paragraph (b)(7) provided in the sample format at FAR 42.1204(i):

“(7)(i) Except as set forth in subparagraph (7)(ii) below, the Transferor and the Transferee agree that the Government

is not obligated to pay or reimburse either of them for, or otherwise give effect to, any costs, taxes, or other expenses, or any

related increases, directly or indirectly arising out of or resulting from the transfer or this Agreement, other than those that the

Government in the absence of this transfer or Agreement would have been obligated to pay or reimburse under the terms of

the contracts.

(ii) The Government recognizes that restructuring by the Transferee incidental to the acquisition/merger may be

in the best interests of the Government. Restructuring costs that are allowable under Part 31 of the Federal Acquisition

Regulation (FAR) or Part 231 of the Defense Federal Acquisition Regulation Supplement (DFARS) may be reimbursed under

flexibly-priced novated contracts, provided the Transferee demonstrates that the restructuring will reduce overall costs to the

Department of Defense (DoD) (and to the National Aeronautics and Space Administration (NASA), where there is a mix of

DoD and NASA contracts), and the requirements included in DFARS 231.205-70 are met. Restructuring costs shall not be

allowed on novated contracts unless there is an audit of the restructuring proposal; a determination by the contracting officer

of overall reduced costs to DoD/NASA; and an Advance Agreement setting forth a cumulative cost ceiling for restructuring

projects and the period to which such costs shall be assigned.”

242.12-1

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242.12-2

SUBPART 242.14 - TRAFFIC AND TRANSPORTATION MANAGEMENT

Subpart 242.14 - TRAFFIC AND TRANSPORTATION MANAGEMENT

242.14-1

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242.14-2

SUBPART 242.15 - CONTRACTOR PERFORMANCE INFORMATION 242.1502

Subpart 242.15 - CONTRACTOR PERFORMANCE INFORMATION

242.1502 Policy.

(g) Past performance evaluations in the Contractor Performance Assessment Reporting System—

(i) Shall include an assessment of the contractor's performance against, and efforts to achieve, the goals identified in

its comprehensive small business subcontracting plan when the contract contains the clause at 252.219-7004, Small Business

Subcontracting Plan (Test Program); and

(ii) Shall, unless exempted by the head of the contracting activity, include a notation on contractors that have

denied multiple requests for submission of data other than certified cost or pricing data over the preceding 3-year period, but

nevertheless received an award ( 10 U.S.C. 3705(b)(2)(B) ).

242.15-1

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242.15-2

SUBPART 242.70 - CONTRACTOR BUSINESS SYSTEMS 242.7000

Subpart 242.70 - CONTRACTOR BUSINESS SYSTEMS

242.7000 Contractor business system deficiencies.

(a) Definitions. As used in this subpart——

“Acceptable contractor business systems” and “contractor business systems” are defined in the clause at 252.242-7005 ,

Contractor Business Systems.

“Covered contract” means a contract that is subject to the Cost Accounting Standards under 41 U.S.C. chapter 15, as

implemented in regulations found at 48 CFR 9903.201-1 (see the FAR Appendix) (10 U.S.C. 3841 note prec., as amended by

section 816 of Public Law 112-81).

“Significant deficiency” is defined in the clause at 252.242-7005 , Contractor Business Systems.

(b) Determination to withhold payments. If the contracting officer makes a final determination to disapprove a contractor’s

business system in accordance with the clause at 252.242-7005 , Contractor Business Systems, the contracting officer shall—

(1) In accordance with agency procedures, identify one or more covered contracts containing the clause at

252.242-7005 , Contractor Business Systems, from which payments will be withheld. When identifying the covered contracts

from which to withhold payments, the contracting officer shall ensure that the total amount of payment withholding under

252.242-7005 does not exceed 10 percent of progress payments, performance-based payments, and interim payments under

cost-reimbursement, labor-hour, and time-and-materials contracts billed under each of the identified covered contracts.

Similarly, the contracting officer shall ensure that the total amount of payment withholding under the clause at 252.242-7005

, Contractor Business Systems, for each business system does not exceed five percent of progress payments, performance-

based payments, and interim payments under cost-reimbursement, labor-hour, and time-and-materials contracts billed under

each of the identified covered contracts. The contracting officer has the sole discretion to identify the covered contracts from

which to withhold payments.

(2) Promptly notify the contractor, in writing, of the contracting officer’s determination to implement payment

withholding in accordance with the clause at 252.242-7005 , Contractor Business Systems. The notice of payment

withholding shall be included in the contracting officer’s written final determination for the contractor business system and

shall inform the contractor that—

(i) Payments shall be withheld from the contract or contracts identified in the written determination in accordance

with the clause at 252.242-7005 , Contractor Business Systems, until the contracting officer determines that there are no

remaining significant deficiencies; and

(ii) The contracting officer reserves the right to take other actions within the terms and conditions of the contract.

(3) Provide all contracting officers administering the selected contracts from which payments will be withheld, a copy

of the determination. The contracting officer shall also provide a copy of the determination to the auditor; payment office;

affected contracting officers at the buying activities; and cognizant contracting officers in contract administration activities.

(c) Monitoring contractor’s corrective action. The contracting officer, in consultation with the auditor or functional

specialist, shall monitor the contractor's progress in correcting the deficiencies. The contracting officer shall notify the

contractor of any decision to decrease or increase the amount of payment withholding in accordance with the clause at

252.242-7005 , Contractor Business Systems.

(d) Correction of significant deficiencies. (1) If the contractor notifies the contracting officer that the contractor has

corrected the significant deficiencies, the contracting officer shall request the auditor or functional specialist to review

the correction to verify that the deficiencies have been corrected. If, after receipt of verification, the contracting officer

determines that the contractor has corrected all significant deficiencies as directed by the contracting officer’s final

determination, the contracting officer shall discontinue the withholding of payments, release any payments previously

withheld, and approve the system, unless other significant deficiencies remain.

(2) Prior to the receipt of verification, the contracting officer may discontinue withholding payments pending receipt of

verification, and release any payments previously withheld, if the contractor submits evidence that the significant deficiencies

have been corrected, and the contracting officer, in consultation with the auditor or functional specialist, determines that

there is a reasonable expectation that the corrective actions have been implemented and are expected to correct the significant

deficiencies.

(3) Within 90 days of receipt of the contractor notification that the contractor has corrected the significant deficiencies,

the contracting officer shall—

(i) Make a determination that—

(A) The contractor has corrected all significant deficiencies as directed by the contracting officer’s final

determination in accordance with paragraph (d)(1) of this section;

242.70-1

242.7001 DEFENSE FEDERAL ACQUISITION REGULATION

(B) There is a reasonable expectation that the corrective actions have been implemented in accordance with

paragraph (d)(2) of this section; or

(C) The contractor has not corrected all significant deficiencies as directed by the contracting officer’s final

determination in accordance with paragraph (d)(1) of this section, or there is not a reasonable expectation that the corrective

actions have been implemented in accordance with paragraph (d)(2) of this section; or

(ii) Reduce withholding directly related to the significant deficiencies covered under the corrective action plan by

at least 50 percent of the amount being withheld from progress payments and performance-based payments, and direct the

contractor, in writing, to reduce the percentage withheld on interim cost vouchers by at least 50 percent, until the contracting

officer makes a determination in accordance with paragraph (d)(3)(i) of this section.

(4) If, at any time, the contracting officer determines that the contractor has failed to correct the significant deficiencies

identified in the contractor's notification, the contracting officer will continue, reinstate, or increase withholding from

progress payments and performance-based payments, and direct the contractor, in writing, to continue, reinstate, or increase

the percentage withheld on interim cost vouchers to the percentage initially withheld, until the contracting officer determines

that the contractor has corrected all significant deficiencies as directed by the contracting officer’s final determination.

(e) For sample formats for written notifications of contracting officer determinations to initiate payment withholding,

reduce payment withholding, and discontinue payment withholding in accordance with the clause at DFARS 252.242-7005 ,

Contractor Business Systems, see PGI 242.7000 .

242.7001 Contract clause.

Use the clause at 252.242-7005, Contractor Business Systems, in solicitations and contracts (other than in contracts with

educational institutions, Federally Funded Research and Development Centers (FFRDCs), or University Associated Research

Centers (UARCs) operated by educational institutions) when—

(a) The resulting contract will be a covered contract as defined in 242.7000 (a); and

(b) The solicitation or contract includes any of the following clauses:

(1) 252.215-7002 , Cost Estimating System Requirements.

(2) 252.234-7002 , Earned Value Management System.

(3) 252.242-7004 , Material Management and Accounting System.

(4) 252.242-7006 , Accounting System Administration.

(5) 252.244-7001 , Contractor Purchasing System Administration.

(6) 252.245-7003 , Contractor Property Management System Administration.

242.70-2

SUBPART 242.71 - VOLUNTARY REFUNDS 242.7100

Subpart 242.71 - VOLUNTARY REFUNDS

242.7100 General.

A voluntary refund is a payment or credit (adjustment under one or more contracts or subcontracts) to the Government

from a contractor or subcontractor that is not required by any contractual or other legal obligation. Follow the procedures at

PGI 242.7100 for voluntary refunds.

242.71-1

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242.71-2

SUBPART 242.72 - CONTRACTOR MATERIAL MANAGEMENT AND ACCOUNTING SYSTEM 242.7203

Subpart 242.72 - CONTRACTOR MATERIAL

MANAGEMENT AND ACCOUNTING SYSTEM

242.7200 Scope of subpart.

(a) This subpart provides policies, procedures, and standards for use in the evaluation of a contractor's material

management and accounting system (MMAS).

(b) The policies, procedures, and standards in this subpart—

(1) Apply only when the contractor has contracts exceeding the simplified acquisition threshold that are not for the

acquisition of commercial products or commercial services and are either—

(i) Cost-reimbursement contracts; or

(ii) Fixed-price contracts with progress payments made on the basis of costs incurred by the contractor as work

progresses under the contract; and

(2) Do not apply to small businesses, educational institutions, or nonprofit organizations.

242.7201 Definitions.

“Acceptable material management and accounting system,” “material management and accounting system,” and “valid

time-phased requirements” are defined in the clause at 252.242-7004 , Material Management and Accounting System.

“Significant deficiency” is defined in the clause at 252.242.7004, Material Management and Accounting System.

242.7202 Policy.

(a) DoD policy is for its contractors to have an MMAS that conforms to the standards in paragraph (d) of the clause at

252.242-7004 , Material Management and Accounting System, so that the system—

(1) Reasonably forecasts material requirements;

(2) Ensures the costs of purchased and fabricated material charged or allocated to a contract are based on valid time-

phased requirements; and

(3) Maintains a consistent, equitable, and unbiased logic for costing of material transactions.

(b) The cognizant contracting officer, in consultation with the auditor and functional specialist, if appropriate, shall—

(1) Determine the acceptability of the contractor’s MMAS and approve or disapprove the system; and

(2) Pursue correction of any deficiencies.

(c) In evaluating the acceptability of the contractor’s MMAS, the contracting officer, in consultation with the auditor and

functional specialist, if appropriate, shall determine whether the contractor’s MMAS complies with the system criteria for an

acceptable MMAS as prescribed in the clause at 252.242-7004 , Material Management and Accounting System.

242.7203 Review procedures.

(a) Criteria for conducting reviews.Conduct an MMAS review when—

(1) A contractor has $40 million of qualifying sales to the Government during the contractor's preceding fiscal year;

and

(2) The administrative contracting officer (ACO), with advice from the auditor, determines an MMAS review is needed

based on a risk assessment of the contractor's past experience and current vulnerability.

(b) Qualifying sales. Qualifying sales are sales for which certified cost or pricing data were required under 10 U.S.C.

3702, as implemented in FAR 15.403, or that are contracts priced on other than a firm-fixed-price or fixed-price with

economic price adjustment basis. Sales include prime contracts, subcontracts, and modifications to such contracts and

subcontracts.

(c) Disposition of findings—

(1) Reporting of findings. The auditor or functional specialist shall document findings and recommendations in a report

to the contracting officer. If the auditor or functional specialist identifies any significant MMAS deficiencies, the report shall

describe the deficiencies in sufficient detail to allow the contracting officer to understand the deficiencies.

(2) Initial determination. (i) The contracting officer shall review findings and recommendations and, if there are

no significant deficiencies, shall promptly notify the contractor, in writing, that the contractor's MMAS is acceptable and

approved; or

(ii) If the contracting officer finds that there are one or more significant deficiencies (as defined in the clause at

252.242-7004 , Material Management and Accounting System) due to the contractor’s failure to meet one or more of the

242.72-1

242.7204 DEFENSE FEDERAL ACQUISITION REGULATION

MMAS system criteria in the clause at 252.242-7004 , Material Management and Accounting System, the contracting officer

shall—

(A) Promptly make an initial written determination on any significant deficiencies and notify the contractor, in

writing, providing a description of each significant deficiency in sufficient detail to allow the contractor to understand the

deficiency;

(B) Request the contractor to respond, in writing, to the initial determination within 30 days; and

(C) Promptly evaluate the contractor's response to the initial determination in consultation with the auditor or

functional specialist, and make a final determination.

(3) Final determination. (i) The ACO shall make a final determination and notify the contractor that—

(A) The contractor's MMAS is acceptable and approved, and no deficiencies remain, or

(B) Significant deficiencies remain. The notice shall identify any remaining significant deficiencies, and indicate

the adequacy of any proposed or completed corrective action. The contracting officer shall—

(1) Request that the contractor, within 45 days of receipt of the final determination, either correct the

deficiencies or submit an acceptable corrective action plan showing milestones and actions to eliminate the deficiencies;

(2) Disapprove the system in accordance with the clause at 252.242-7004 , Material Management and

Accounting System; and

(3) Withhold payments in accordance with the clause at 252.242-7005 , Contractor Business Systems, if the

clause is included in the contract.

(ii) Follow the procedures relating to monitoring a contractor's corrective action and the correction of significant

deficiencies in PGI 242.7203 .

(d) System approval. The contracting officer shall promptly approve a previously disapproved MMAS and notify the

contractor when the contracting officer determines that there are no remaining significant deficiencies.

(e) Contracting officer notifications. The cognizant contracting officer shall promptly distribute copies of a determination

to approve a system, disapprove a system and withhold payments, or approve a previously disapproved system and release

withheld payments to the auditor; payment office; affected contracting officers at the buying activities; and cognizant

contracting officers in contract administration activities.

242.7204 Contract clause.

Use the clause at 252.242-7004 , Material Management and Accounting System, in all solicitations and contracts

exceeding the simplified acquisition threshold that are not for the acquisition of commercial products or commercial services

and—

(a) Are not awarded to small businesses, educational institutions, or nonprofit organizations; and

(b) Are either—

(1) Cost-reimbursement contracts; or

(2) Fixed-price contracts with progress payments made on the basis of costs incurred by the contractor as work

progresses under the contract.

242.72-2

SUBPART 242.73 - CONTRACTOR INSURANCE/PENSION REVIEW 242.7303

Subpart 242.73 - CONTRACTOR INSURANCE/PENSION REVIEW

242.7301 General.

(a) The administrative contracting officer (ACO) is responsible for determining the allowability of insurance/pension costs

in Government contracts and for determining the need for a Contractor/Insurance Pension Review (CIPR). Defense Contract

Management Agency (DCMA) insurance/pension specialists and Defense Contract Audit Agency (DCAA) auditors assist

ACOs in making these determinations, conduct CIPRs when needed, and perform other routine audits as authorized under

FAR 42.705 and 52.215-2. A CIPR is a DCMA/DCAA joint review that—

(1) Provides an in-depth evaluation of a contractor's—

(i) Insurance programs;

(ii) Pension plans;

(iii) Other deferred compensation plans; and

(iv) Related policies, procedures, practices, and costs; or

(2) Concentrates on specific areas of the contractor’s insurance programs, pension plans, or other deferred

compensation plans.

(b) DCMA is the DoD Executive Agent for the performance of all CIPRs.

(c) DCAA is the DoD agency designated for the performance of contract audit responsibilities related to Cost Accounting

Standards administration as described in FAR subparts 30.2 and 30.6 as they relate to a contractor’s insurance programs,

pension plans, and other deferred compensation plans.

242.7302 Requirements.

(a)(1) An in-depth CIPR as described at DFARS 242.7301 (a)(1) shall be conducted only when—

(i) A contractor has $50 million of qualifying sales to the Government during the contractor’s preceding fiscal year;

and

(ii) The ACO, with advice from DCMA insurance/pension specialists and DCAA auditors, determines a CIPR is

needed based on a risk assessment of the contractor’s past experience and current vulnerability.

(2) Qualifying sales are sales for which certified cost or pricing data were required under 10 U.S.C. 3702, as

implemented in FAR 15.403, or that are contracts priced on other than a firm-fixed-price or fixed-price with economic price

adjustment basis. Sales include prime contracts, subcontracts, and modifications to such contracts and subcontracts.

(b) A special CIPR that concentrates on specific areas of a contractor’s insurance programs, pension plans, or other

deferred compensation plans shall be performed for a contractor (including, but not limited to, a contractor meeting the

requirements in paragraph (a) of this section) when any of the following circumstances exists, but only if the circumstance(s)

may result in a material impact on Government contract costs:

(1) Information or data reveals a deficiency in the contractor's insurance/pension program.

(2) The contractor proposes or implements changes in its insurance, pension, or deferred compensation plans.

(3) The contractor is involved in a merger, acquisition, or divestiture.

(4) The Government needs to follow up on contractor implementation of prior CIPR recommendations.

(c) The DCAA auditor shall use relevant findings and recommendations of previously performed CIPRs in determining

the scope of any audits of insurance and pension costs.

(d) When a Government organization believes that a review of the contractor’s insurance/pension program should be

performed, that organization should provide a recommendation for a review to the ACO. If the ACO concurs, the review

should be performed as part of an ACO-initiated special CIPR or as part of a CIPR already scheduled for the near future.

242.7303 Responsibilities.

Follow the procedures at PGI 242.7303 when conducting a CIPR.

242.73-1

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242.73-2

SUBPART 242.74 - TECHNICAL REPRESENTATION AT CONTRACTOR FACILITIES 242.7401

Subpart 242.74 - TECHNICAL REPRESENTATION AT CONTRACTOR FACILITIES

242.7400 General.

(a) Program managers may conclude that they need technical representation in contractor facilities to perform non-contract

administration service (CAS) technical duties and to provide liaison, guidance, and assistance on systems and programs. In

these cases, the program manager may assign technical representatives under the procedures in 242.7401 .

(b) A technical representative is a representative of a DoD program, project, or system office performing non-CAS

technical duties at or near a contractor facility. A technical representative is not—

(1) A representative of a contract administration or contract audit component; or

(2) A contracting officer's representative (see 201.602 ).

242.7401 Procedures.

When the program, project, or system manager determines that a technical representative is required, follow the

procedures at PGI 242.7401 .

242.74-1

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242.74-2

SUBPART 242.75 - CONTRACTOR ACCOUNTING SYSTEMS AND RELATED CONTROLS 242.7502

Subpart 242.75 - CONTRACTOR ACCOUNTING SYSTEMS AND RELATED CONTROLS

242.7501 Definitions.

As used in this subpart—

“Acceptable accounting system,” and “accounting system” are defined in the clause at 252.242-7006 , Accounting System

Administration.

“Significant deficiency” is defined in the clause at 252.242-7006 , Accounting System Administration.

242.7502 Policy.

(a) Contractors receiving cost-reimbursement, incentive type, time-and-materials, or labor-hour contracts, or contracts

which provide for progress payments based on costs or on a percentage or stage of completion, shall maintain an accounting

system.

(b) The cognizant contracting officer, in consultation with the auditor or functional specialist, shall—

(1) Determine the acceptability of a contractor’s accounting system and approve or disapprove the system; and

(2) Pursue correction of any deficiencies.

(c) In evaluating the acceptability of a contractor’s accounting system, the contracting officer, in consultation with the

auditor or functional specialist, shall determine whether the contractor’s accounting system complies with the system criteria

for an acceptable accounting system as prescribed in the clause at 252.242-7006 , Accounting System Administration.

(d) Disposition of findings—

(1) Reporting of findings. The auditor shall document findings and recommendations in a report to the contracting

officer. If the auditor identifies any significant accounting system deficiencies, the report shall describe the deficiencies in

sufficient detail to allow the contracting officer to understand the deficiencies. Follow the procedures at PGI 242.7502 for

reporting of deficiencies.

(2) Initial determination. (i) The contracting officer shall review findings and recommendations and, if there are no

significant deficiencies, shall promptly notify the contractor, in writing, that the contractor's accounting system is acceptable

and approved; or

(ii) If the contracting officer finds that there are one or more significant deficiencies (as defined in the clause at

252.242-7006 , Accounting System Administration) due to the contractor’s failure to meet one or more of the accounting

system criteria in the clause at 252.242-7006 , the contracting officer shall—

(A) Promptly make an initial written determination on any significant deficiencies and notify the contractor, in

writing, providing a description of each significant deficiency in sufficient detail to allow the contractor to understand the

deficiency;

(B) Request the contractor to respond, in writing, to the initial determination within 30 days; and

(C) Promptly evaluate the contractor‘s response to the initial determination, in consultation with the auditor or

functional specialist, and make a final determination.

(3) Final determination. (i) The contracting officer shall make a final determination and notify the contractor, in

writing, that-

(A) The contractor's accounting system is acceptable and approved, and no significant deficiencies remain, or

(B) Significant deficiencies remain. The notice shall identify any remaining significant deficiencies, and indicate

the adequacy of any proposed or completed corrective action. The contracting officer shall-

(1) Request that the contractor, within 45 days of receipt of the final determination, either correct the

deficiencies or submit an acceptable corrective action plan showing milestones and actions to eliminate the deficiencies;

(2) Make a determination to disapprove the system in accordance with the clause at 252.242-7006 ,

Accounting System Administration; and

(3) Withhold payments in accordance with the clause at 252.242-7005 , Contractor Business Systems, if the

clause is included in the contract.

(ii) Follow the procedures relating to monitoring a contractor's corrective action and the correction of significant

deficiencies in PGI 242.7502 .

(e) System approval. The contracting officer shall promptly approve a previously disapproved accounting system and

notify the contractor when the contracting officer determines that there are no remaining significant deficiencies.

(f) Contracting officer notifications. The cognizant contracting officer shall promptly distribute copies of a determination

to approve a system, disapprove a system and withhold payments, or approve a previously disapproved system and release

242.75-1

242.7503 DEFENSE FEDERAL ACQUISITION REGULATION

withheld payments to the auditor; payment office; affected contracting officers at the buying activities; and cognizant

contracting officers in contract administration activities.

(g) Mitigating the risk of accounting system deficiencies on specific proposals.

(1) Field pricing teams shall discuss identified accounting system deficiencies and their impact in all reports on

contractor proposals until the deficiencies are resolved.

(2) The contracting officer responsible for negotiation of a proposal generated by an accounting system with an

identified deficiency shall evaluate whether the deficiency impacts the negotiations. See PGI 242.7502 (g)(2). If it does not,

the contracting officer should proceed with negotiations. If it does, the contracting officer should consider other alternatives,

e.g.—

(i) Allowing the contractor additional time to correct the accounting system deficiency and submit a corrected

proposal;

(ii) Considering another type of contract;

(iii) Using additional cost analysis techniques to determine the reasonableness of the cost elements affected by the

accounting system's deficiency;

(iv) Reducing the negotiation objective for profit or fee; or

(v) Including a contract (reopener) clause that provides for adjustment of the contract amount after award.

(3) The contracting officer who incorporates a reopener clause into the contract is responsible for negotiating price

adjustments required by the clause. Any reopener clause necessitated by an accounting system deficiency should—

(i) Clearly identify the amounts and items that are in question at the time of negotiation;

(ii) Indicate a specific time or subsequent event by which the contractor will submit a supplemental proposal,

including certified cost or pricing data, identifying the cost impact adjustment necessitated by the deficient accounting

system;

(iii) Provide for the contracting officer to adjust the contract price unilaterally if the contractor fails to submit the

supplemental proposal; and

(iv) Provide that failure of the Government and the contractor to agree to the price adjustment shall be a dispute

under the Disputes clause.

242.7503 Contract clause.

Use the clause at 252.242-7006 , Accounting System Administration, in solicitations and contracts when contemplating—

(a) A cost-reimbursement, incentive type, time-and-materials, or labor-hour contract; or

(b) A contract with progress payments made on the basis of costs incurred by the contractor or on a percentage or stage of

completion.

242.75-2

PART 243 - CONTRACT MODIFICATIONS

Sec.

Subpart 243.1 - GENERAL

243.107

RESERVED

243.107-70

Notification of substantial impact on employment.

243.170

Identification of foreign military sale (FMS) requirements.

243.171

Obligation or deobligation of funds.

243.172

Application of modifications.

Subpart 243.2 - CHANGE ORDERS

243.204

Administration.

243.204-70

Definitization of change orders.

243.204-70-1

Scope.

243.204-70-2

Price ceiling.

243.204-70-3

Definitization schedule.

243.204-70-4

Limitations on obligations.

243.204-70-5

Exceptions.

243.204-70-6

Allowable Profit.

243.204

–70–7 Plans and reports.

243.204-71

Certification of requests for equitable adjustment.

243.205

Contract clauses.

243.205-70

Pricing of contract modifications.

243.205-71

Requests for equitable adjustment.

243.205-72

Unpriced change orders.

243-1

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243-2

SUBPART 243.1 - GENERAL 243.172

Subpart 243.1 - GENERAL

243.107 RESERVED

243.107-70 Notification of substantial impact on employment.

The Secretary of Defense is required to notify the Secretary of Labor if a modification of a major defense contract or

subcontract will have a substantial impact on employment. The clause prescribed at 249.7003 (c) requires that the contractor

notify its employees, its subcontractors, and State and local officials when a contract modification will have a substantial

impact on employment.

243.170 Identification of foreign military sale (FMS) requirements.

Follow the procedures at PGI 243.170 for identifying contract modifications that add FMS requirements.

243.171 Obligation or deobligation of funds.

Follow the procedures at PGI 243.171 when obligating or deobligating funds.

243.172 Application of modifications.

Follow the procedures at 204.1671 for determining the sequence for application of modifications to a contract or order.

243.1-1

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243.1-2

SUBPART 243.2 - CHANGE ORDERS 243.204-70-6

Subpart 243.2 - CHANGE ORDERS

243.204 Administration.

Follow the procedures at PGI 243.204 for administration of change orders.

243.204-70 Definitization of change orders.

243.204-70-1 Scope.

(a) This subsection applies to unpriced change orders with an estimated value exceeding $5 million.

(b) Unpriced change orders for foreign military sales and special access programs are not subject to this subsection, but the

contracting officer shall apply the policy and procedures to them to the maximum extent practicable. If the contracting officer

determines that it is impracticable to adhere to the policy and procedures of this subsection for an unpriced change order for a

foreign military sale or a special access program, the contracting officer shall provide prior notice, through agency channels,

to the Office of the Principal Director, Defense Pricing, Contracting, and Acquisition Policy (Contract Policy) via email at

[email protected].

Price Ceiling.

Unpriced change orders shall include a not-to-exceed price.

243.204-70-2 Price ceiling.

Unpriced change orders shall include a not-to-exceed price.

243.204-70-3 Definitization schedule.

(a) Unpriced change orders shall contain definitization schedules that provide for definitization by the earlier of—

(1) The date that is 180 days after issuance of the change order (this date may be extended but may not exceed the date

that is 180 days after the contractor submits a qualifying proposal); or

(2) The date on which the amount of funds obligated under the change order is equal to more than 50 percent of the not-

to-exceed price.

(b) Submission of a qualifying proposal in accordance with the definitization schedule is a material element of the

contract. If the contractor does not submit a timely qualifying proposal, the contracting officer may suspend or reduce

progress payments under FAR 32.503-6, or take other appropriate action.

243.204-70-4 Limitations on obligations.

(a) The Government shall not obligate more than 50 percent of the not-to-exceed price before definitization. However, if a

contractor submits a qualifying proposal before 50 percent of the not-to-exceed price has been obligated by the Government,

the limitation on obligations before definitization may be increased to no more than 75 percent (see 232.102-70 for coverage

on provisional delivery payments).

(b) Obligations should be consistent with the contractor’s requirements for the undefinitized period.

243.204-70-5 Exceptions.

(a) The limitations in 243.204-70 -2, 243.204-70 -3, and 243.204-70 -4 do not apply to unpriced change orders for the

purchase of initial spares.

(b) The limitations in 243.204-70 -4(a) do not apply to unpriced change orders for ship construction and ship repair.

(c) The head of the agency may waive the limitations in 243.204-70 -2, 243.204-70 -3, and 243.204-70 -4 for unpriced

change orders if the head of the agency determines that the waiver is necessary to support—

(1) A contingency operation; or

(2) A humanitarian or peacekeeping operation.

243.204-70-6 Allowable Profit.

When the final price of an unpriced change order is negotiated after a substantial portion of the required performance has

been completed, the head of the contracting activity shall ensure the profit allowed reflects—

(a) Any reduced cost risk to the contractor for costs incurred during contract performance before negotiation of the final

price;

243.2-1

243.204–70–7 DEFENSE FEDERAL ACQUISITION REGULATION

(b) Any reduced cost risk to the contractor for costs expected to be incurred during performance of the remainder of the

contract; and

(c) The extent to which costs have been incurred prior to definitization of the unpriced change order (see 215.404-71 -3 (d)

(2)). The risk assessment shall be documented in the price negotiation memorandum.

243.204–70–7 Plans and reports.

To provide for enhanced management and oversight of unpriced change orders, departments and agencies shall—

(a) Include in the Consolidated Undefinitized Contract Action (UCA) Management Plan required by 217.7405 , the actions

planned and taken to ensure that unpriced change orders are definitized in accordance with this subsection; and

(b) Include in the Consolidated UCA Management Report required by 217.7405 , each unpriced change order with an

estimated value exceeding $5 million.

243.204-71 Certification of requests for equitable adjustment.

(a) A request for equitable adjustment to contract terms that exceeds the simplified acquisition threshold may not be paid

unless the contractor certifies the request in accordance with the clause at 252.243-7002 .

(b) To determine if the dollar threshold for requiring certification is met, add together the absolute value of each cost

increase and each cost decrease. See PGI 243.204 -71(b) for an example.

(c) The certification required by 10 U.S.C. 3862(a), as implemented in the clause at 252.243-7002 , is different from

the certification required by 41 U.S.C. 7103, Disputes. If the contractor has certified a request for equitable adjustment in

accordance with 10 U.S.C. 3862(a), and desires to convert the request to a claim under the Contract Disputes statute, the

contractor shall certify the claim in accordance with FAR subpart 33.2.

243.205 Contract clauses.

243.205-70 Pricing of contract modifications.

Use the clause at 252.243-7001 , Pricing of Contract Modifications, in solicitations and contracts when anticipating and

using a fixed price type contract.

243.205-71 Requests for equitable adjustment.

Use the clause at 252.243-7002 , Requests for Equitable Adjustment, in solicitations and contracts, including solicitations

and contracts using FAR part 12 procedures for the acquisition of commercial products and commercial services, that are

estimated to exceed the simplified acquisition threshold.

243.205-72 Unpriced change orders.

See the clause prescriptions at 217.7406 for all unpriced change orders with an estimated value exceeding $5 million.

243.2-2

PART 244 - SUBCONTRACTING POLICIES AND PROCEDURES

Sec.

Subpart 244.1 - GENERAL

244.101

Definitions.

Subpart 244.2 - CONSENT TO SUBCONTRACTS

244.201

Consent and advance notification requirements.

244.201-1

Consent requirements.

244.202

Contracting officers evaluation.

244.202-2

Considerations.

Subpart 244.3 - CONTRACTORS' PURCHASING SYSTEMS

REVIEWS

244.301

Objective.

244.302

Requirements.

244.303

Extent of review.

244.305

Granting, withholding, or withdrawing approval.

244.305-70

Policy.

244.305-71

Contract clause.

Subpart 244.4 - SUBCONTRACTS FOR COMMERCIAL

PRODUCTS, COMMERCIAL SERVICES, AND

COMMERCIAL COMPONENTS

244.402

Policy requirements.

244.403

Contract clause.

244-1

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244-2

SUBPART 244.1 - GENERAL 244.101

Subpart 244.1 - GENERAL

244.101 Definitions.

As used in this subpart——

“Acceptable purchasing system” and “purchasing system” are defined in the clause at 252.244-7001 , Contractor

Purchasing System Administration.

“Significant deficiency” is defined in the clause at 252.244-7001 , Contractor Purchasing System Administration.

244.1-1

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244.1-2

SUBPART 244.2 - CONSENT TO SUBCONTRACTS 244.202-2

Subpart 244.2 - CONSENT TO SUBCONTRACTS

244.201 Consent and advance notification requirements.

244.201-1 Consent requirements.

(a) In accordance with section 824 of the National Defense Authorization Act for Fiscal Year 2019 (Pub. L. 115-232),

notwithstanding the requirements in FAR 44.201-1(a), the contracting officer shall not withhold consent to subcontract

without the written approval of the program manager, or comparable requiring activity official exercising program

management responsibilities, if the contractor has an approved purchasing system, as defined in FAR 44.101.

(S-70) In solicitations and contracts for information technology, whether acquired as a service or as a supply, that is

a covered system or covered item of supply as those terms are defined at 239.7301 , consider the need for a consent to

subcontract requirement regarding supply chain risk (see subpart 239.73). For additional guidance see PGI 244.201-1 .

244.202 Contracting officers evaluation.

244.202-2 Considerations.

(a) Where other than lowest price is the basis for subcontractor selection, has the contractor adequately substantiated the

selection as offering the greatest value to the Government?

244.2-1

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244.2-2

SUBPART 244.3 - CONTRACTORS' PURCHASING SYSTEMS REVIEWS 244.305-70

Subpart 244.3 - CONTRACTORS' PURCHASING SYSTEMS REVIEWS

244.301 Objective.

The administrative contracting officer (ACO) is solely responsible for initiating reviews of the contractor's purchasing

systems, but other organizations may request that the ACO initiate such reviews.

244.302 Requirements.

(a) In lieu of the threshold at FAR 44.302(a), the ACO shall determine the need for a CPSR if a contractor’s sales to the

Government are expected to exceed $50 million during the next 12 months.

244.303 Extent of review.

(a) Also review the adequacy of rationale documenting commercial product or commercial service determinations to

ensure compliance with the definition of “commercial product” or “commercial service” in FAR 2.101.

(b) Also review the adequacy of the contractor’s counterfeit electronic part detection and avoidance system under DFARS

252.246-7007 , Contractor Counterfeit Electronic Part Detection and Avoidance System.

244.305 Granting, withholding, or withdrawing approval.

244.305-70 Policy.

Use this subsection instead of FAR 44.305-2(c) and 44.305-3(b).

(a) The cognizant contracting officer, in consultation with the purchasing system analyst or auditor, shall—

(1) Determine the acceptability of the contractor’s purchasing system and approve or disapprove the system; and

(2) Pursue correction of any deficiencies.

(b) In evaluating the acceptability of the contractor’s purchasing system, the contracting officer, in consultation with the

purchasing system analyst or auditor, shall determine whether the contractor’s purchasing system complies with the system

criteria for an acceptable purchasing system as prescribed in the clause at 252.244-7001 , Contractor Purchasing System

Administration.

(c) Disposition of findings—

(1) Reporting of findings. The purchasing system analyst or auditor shall document findings and recommendations in

a report to the contracting officer. If the auditor or purchasing system analyst identifies any significant purchasing system

deficiencies, the report shall describe the deficiencies in sufficient detail to allow the contracting officer to understand the

deficiencies.

(2) Initial determination. (i) The contracting officer shall review all findings and recommendations and, if there are

no significant deficiencies, shall promptly notify the contractor that the contractor's purchasing system is acceptable and

approved; or

(ii) If the contracting officer finds that there are one or more significant deficiencies (as defined in the clause at

252.244-7001 , Contractor Purchasing System Administration) due to the contractor’s failure to meet one or more of the

purchasing system criteria in the clause at 252.244-7001 , the contracting officer shall—

(A) Promptly make an initial written determination on any significant deficiencies and notify the contractor, in

writing, providing a description of each significant deficiency in sufficient detail to allow the contractor to understand the

deficiency;

(B) Request the contractor to respond, in writing, to the initial determination within 30 days; and

(C) Evaluate the contractor's response to the initial determination in consultation with the auditor or purchasing

system analyst, and make a final determination.

(3) Final determination. (i) The contracting officer shall make a final determination and notify the contractor, in

writing, that—

(A) The contractor's purchasing system is acceptable and approved, and no significant deficiencies remain, or

(B) Significant deficiencies remain. The notice shall identify any remaining significant deficiencies, and indicate

the adequacy of any proposed or completed corrective action. The contracting officer shall—

(1) Request that the contractor, within 45 days of receipt of the final determination, either correct the

deficiencies or submit an acceptable corrective action plan showing milestones and actions to eliminate the deficiencies;

(2) Disapprove the system in accordance with the clause at 252.244-7001 , Contractor Purchasing System

Administration; and

244.3-1

244.305-71 DEFENSE FEDERAL ACQUISITION REGULATION

(3) Withhold payments in accordance with the clause at 252.242-7005 , Contractor Business Systems, if the

clause is included in the contract.

(ii) Follow the procedures relating to monitoring a contractor's corrective action and the correction of significant

deficiencies in PGI 244.305-70 .

(d) System approval. The contracting officer shall promptly approve a previously disapproved purchasing system and

notify the contractor when the contracting officer determines that there are no remaining significant deficiencies.

(e) Contracting officer notifications. The cognizant contracting officer shall promptly distribute copies of a determination

to approve a system, disapprove a system and withhold payments, or approve a previously disapproved system and release

withheld payments to the auditor; payment office; affected contracting officers at the buying activities; and cognizant

contracting officers in contract administration activities.

(f) Mitigating the risk of purchasing system deficiencies on specific proposals.

(1) Source selection evaluation teams shall discuss identified purchasing system deficiencies and their impact in all

reports on contractor proposals until the deficiencies are resolved.

(2) The contracting officer responsible for negotiation of a proposal generated by a purchasing system with an

identified deficiency shall evaluate whether the deficiency impacts the negotiations. If it does not, the contracting officer

should proceed with negotiations. If it does, the contracting officer should consider other alternatives, e.g.—

(i) Allowing the contractor additional time to correct the purchasing system deficiency and submit a corrected

proposal;

(ii) Considering another type of contract, e.g., a fixed-price incentive (firm target) contract instead of firm-fixed-

price;

(iii) Using additional cost analysis techniques to determine the reasonableness of the cost elements affected by the

purchasing system's deficiency;

(iv) Segregating the questionable areas as a cost-reimbursable line item;

(v) Reducing the negotiation objective for profit or fee; or

(vi) Including a contract (reopener) clause that provides for adjustment of the contract amount after award.

(3) The contracting officer who incorporates a reopener clause into the contract is responsible for negotiating price

adjustments required by the clause. Any reopener clause necessitated by a purchasing system deficiency should—

(i) Clearly identify the amounts and items that are in question at the time of negotiation;

(ii) Indicate a specific time or subsequent event by which the contractor will submit a supplemental proposal,

including certified cost or pricing data, identifying the cost impact adjustment necessitated by the deficient purchasing

system;

(iii) Provide for the contracting officer to adjust the contract price unilaterally if the contractor fails to submit the

supplemental proposal; and

(iv) Provide that failure of the Government and the contractor to agree to the price adjustment shall be a dispute

under the Disputes clause.

244.305-71 Contract clause.

Use the Contractor Purchasing System Administration basic clause or its alternate as follows:

(a) Use the clause at 252.244-7001 , Contractor Purchasing System Administration—Basic, in solicitations and contracts

containing the clause at FAR 52.244-2, Subcontracts.

(b) Use the clause at 252.244-7001 , Contractor Purchasing System Administration—Alternate I, in solicitations and

contracts that contain the clause at 252.246-7007 , Contractor Counterfeit Electronic Part Detection and Avoidance System,

but do not contain FAR 52.244-2, Subcontracts.

244.3-2

SUBPART 244.4 - SUBCONTRACTS FOR COMMERCIAL PRODUCTS, COMMERCIAL SERVICES, AND COMMERCIAL COMPONENTS 244.403

Subpart 244.4 - SUBCONTRACTS FOR COMMERCIAL PRODUCTS,

COMMERCIAL SERVICES, AND COMMERCIAL COMPONENTS

244.402 Policy requirements.

(a) Contractors are required to determine whether a particular subcontract item meets the definition of a commercial

product or commercial service. This requirement does not affect the contracting officer’s responsibilities or determinations

made under FAR 15.403-1(c)(3). Contractors are expected to exercise reasonable business judgment in making such

determinations, consistent with the guidelines for conducting market research in FAR Part 10.

(S-70) In accordance with 10 U.S.C. 3457(c) , items that are valued at less than $10,000 per item that are purchased by

a contractor for use in the performance of multiple contracts with the Department of Defense and other parties and are not

identifiable to any particular contract when purchased shall be treated as commercial products, even though the items may not

meet the definition of “commercial product” at FAR 2.101 and do not require a commercial product determination.

244.403 Contract clause.

Use the clause at 252.244-7000 , Subcontracts for Commercial Products and Commercial Services, in solicitations and

contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial products and

commercial services.

244.4-1

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244.4-2

PART 245 - GOVERNMENT PROPERTY

Sec.

Subpart 245.1 - GENERAL

245.101

Definitions.

245.102

Policy.

245.103

General.

245.103-70

Furnishing Government property to contractors.

245.103-71

Transferring Government property accountability.

245.103-72

Government-furnished property attachments to solicitations and

awards.

245.103-73

Government property under sustainment contracts.

245.103-74

Contracting office responsibilities.

245.104

Responsibility and liability for Government property.

245.105

Contractors property management system compliance.

245.107

Contract clauses.

Subpart 245.2 - SOLICITATION AND EVALUATION

PROCEDURES

245.201

Solicitation.

245.201-70

Security classification.

Subpart 245.3 - AUTHORIZING THE USE AND RENTAL OF

GOVERNMENT PROPERTY

245.302

Contracts with foreign governments or international organizations.

Subpart 245.4 - TITLE TO GOVERNMENT PROPERTY

245.402

Title to contractor-acquired property.

245.402-70

Policy.

245.402-71

Delivery of contractor-acquired property.

Subpart 245.5 - SUPPORT GOVERNMENT PROPERTY

ADMINISTRATION

245.570

Storage at the Government's expense.

Subpart 245.6 - REPORTING, REUTILIZATION, AND

DISPOSAL

245.602

Reutilization of Government property.

245.602-1

Inventory disposal schedules.

245.602-3

Screening.

245.602-70

Plant clearance procedures.

245.604

Sale of surplus personal property.

245.604-1

Sales procedures.

Subpart 245.70 - Reserved

245-1

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245-2

SUBPART 245.1 - GENERAL 245.102

Subpart 245.1 - GENERAL

245.101 Definitions.

“Mapping, charting, and geodesy property,” as used in this subpart, is defined in the clause at 252.245-7000, Government-

Furnished Mapping, Charting, and Geodesy Property.

245.102 Policy.

See the policy guidance at PGI 245.102-70 .

(1) Mapping, charting, and geodesy property. All Government-furnished mapping, charting, and geodesy (MC&G)

property is under the control of the Director, National Geospatial Intelligence Agency.

(i) MC&G property shall not be duplicated, copied, or otherwise reproduced for purposes other than those necessary

for contract performance.

(ii) Upon completion of contract performance, the contracting officer shall—

(A) Contact the Director, National Geospatial-Intelligence Agency, 7500 Geoint Drive, Springfield, VA 22150,

for disposition instructions;

(B) Direct the contractor to destroy or return all Government-furnished MC&G property not consumed during

contract performance; and

(C) Specify the destination and means of shipment for property to be returned to the Government.

(2) Government supply sources. When a contractor will be responsible for preparing requisitioning documentation to

acquire Government-furnished property (GFP) from Government supply sources, include in the contract the requirement to

prepare the documentation in accordance with DLM 4000.25, Defense Logistics Management Standards (DLMS), Volume 2,

Supply Standards and Procedures. Copies are available from the address cited at PGI 251.102.

(3) Acquisition and management of industrial resources. See Subpart 237.75 for policy relating to facilities projects.

(4) GFP identification.

(i) It is DoD policy that GFP be tagged, labeled, or marked based on DoD marking standards (MIL Standard 130) or

other standards, when the requiring activity determines that such items are subject to serialized item management (serially-

managed items). The list of GFP subject to serialized item management will be identified in the contract in accordance with

245.102, Government-furnished property attachments to solicitations and awards.

(ii) Exceptions. The Contractor will not be required to tag, label, or mark—

(A) GFP that was previously tagged, labeled, or marked;

(B) Items, as determined by the head of the agency, that are to be used to support a contingency operation; or to

facilitate defense against or recovery from nuclear, biological, chemical, or radiological attack;

(C) Items for which a determination and findings has been executed concluding that it is more cost effective

for the Government requiring activity to assign, mark, and register the unique item identification after delivery of an item

acquired from a small business concern or a commercial product acquired under FAR part 12 or part 8.

(1) The determination and findings shall be executed by—

(i) The Component Acquisition Executive for an Acquisition Category (ACAT) I program; or

(ii) The head of the contracting activity for all other programs.

(2) A copy of the executed determination and findings shall be provided to the Office of the Principal

Director, Defense Pricing, Contracting, and Acquisition Policy (Contracting eBusiness) via email at osd.pentagon.ousd-a-

[email protected].

(D) Items that are contractor-acquired property;

(E) Property under any statutory leasing authority;

(F) Property to which the Government has acquired a lien or title solely because of partial, advance, progress, or

performance-based payments;

(G) Intellectual property or software; or

(H) Real property.

(5) Reporting loss of Government property. It is DoD policy that all Government property be reported in the GFP

module or Wide Area WorkFlow module of the Procurement Integrated Enterprise Environment (PIEE) as required by the

clause at 252.245-7005, Management and Reporting of Government Property.

245.1-1

245.103 DEFENSE FEDERAL ACQUISITION REGULATION

245.103 General.

245.103-70 Furnishing Government property to contractors.

Follow the procedures at PGI 245.103-70 for furnishing Government property to contractors.

245.103-71 Transferring Government property accountability.

Follow the procedures at PGI 245.103-71 for transferring Government property accountability.

245.103-72 Government-furnished property attachments to solicitations and awards.

When performance will require the use of GFP, contracting officers shall include the GFP attachment to solicitations and

awards. See PGI PGI 245.103-72 Government-furnished property attachments to solicitations and awards. for links to the

formats and procedures for preparing the GFP attachment.

245.103-73 Government property under sustainment contracts.

See PGI 245.103-73 for information on the reporting requirements for Government inventory held by contractors under

sustainment contracts in accordance with DoD Manual 4140.01, Volume 6, DoD Supply Chain Materiel Management

Procedures: Materiel Returns, Retention, and Disposition.

245.103-74 Contracting office responsibilities.

See PGI 245.103-74 for contracting office responsibilities.

245.104 Responsibility and liability for Government property.

In addition to the contract types listed at FAR 45.104, contractors are not held liable for loss of Government property

under negotiated fixed-price contracts awarded on a basis other than submission of certified cost or pricing data.

245.105 Contractors property management system compliance.

(a) Definitions—

(1) “Acceptable property management system” and “property management system” are defined in the clause at

252.245-7003 , Contractor Property Management System Administration.

(2) “Significant deficiency” is defined in the clause at 252.245-7003 , Contractor Property Management System

Administration.

(b) Policy. The cognizant contracting officer, in consultation with the property administrator, shall—

(1) Determine the acceptability of the system and approve or disapprove the system; and

(2) Pursue correction of any deficiencies.

(c) In evaluating the acceptability of a contractor’s property management system, the contracting officer, in consultation

with the property administrator, shall determine whether the contractor’s property management system complies with the

system criteria for an acceptable property management system as prescribed in the clause at 252.245-7003 , Contractor

Property Management System Administration.

(d) Disposition of findings—

(1) Reporting of findings. The property administrator shall document findings and recommendations in a report to

the contracting officer. If the property administrator identifies any significant property system deficiencies, the report shall

describe the deficiencies in sufficient detail to allow the contracting officer to understand the deficiencies.

(2) Initial determination. (i) The contracting officer shall review findings and recommendations and, if there are no

significant deficiencies, shall promptly notify the contractor, in writing, that the contractor’s property management system is

acceptable and approved; or

(ii) If the contracting officer finds that there are one or more significant deficiencies (as defined in the clause at

252.245-7003 , Contractor Property Management System Administration) due to the contractor’s failure to meet one or more

of the property management system criteria in the clause at 252.245-7003 , the contracting officer shall—

(A) Promptly make an initial written determination on any significant deficiencies and notify the contractor, in

writing, providing a description of each significant deficiency in sufficient detail to allow the contractor to understand the

deficiency;

(B) Request the contractor to respond, in writing, to the initial determination within 30 days and;

245.1-2

SUBPART 245.1 - GENERAL 245.107

(C) Evaluate the contractor’s response to the initial determination, in consultation with the property administrator,

and make a final determination.

(3) Final determination. (i) The contracting officer shall make a final determination and notify the contractor, in

writing, that—

(A) The contractor's property management system is acceptable and approved, and no significant deficiencies

remain, or

(B) Significant deficiencies remain. The notice shall identify any remaining significant deficiencies, and indicate

the adequacy of any proposed or completed corrective action. The contracting officer shall—

(1) Request that the contractor, within 45 days of receipt of the final determination, either correct the

deficiencies or submit an acceptable corrective action plan showing milestones and actions to eliminate the deficiencies;

(2) Disapprove the system in accordance with the clause at 252.245-7003 , Contractor Property

Management System Administration; and

(3) Withhold payments in accordance with the clause at 252.242-7005 , Contractor Business Systems, if the

clause is included in the contract.

(ii) Follow the procedures relating to monitoring a contractor's corrective action and the correction of significant

deficiencies in PGI 245.105 .

(e) System approval. The contracting officer shall promptly approve a previously disapproved property management

system and notify the contractor when the contracting officer determines, in consultation with the property administrator, that

there are no remaining significant deficiencies.

(f) Contracting officer notifications. The cognizant contracting officer shall promptly distribute copies of a determination

to approve a system, disapprove a system and withhold payments, or approve a previously disapproved system and release

withheld payments to the auditor; payment office; affected contracting officers at the buying activities; and cognizant

contracting officers in contract administration activities.

245.107 Contract clauses.

(1)(i) In lieu of the prescription at FAR 45.107(d), use the clause at FAR 52.245-1, Government Property, in all

purchase orders for repair, maintenance, overhaul, or modification of Government property regardless of the unit acquisition

cost of the items to be repaired.

(ii) For negotiated fixed-price contracts awarded on a basis other than submission of certified cost or pricing data for

which Government property is provided, use the clause at FAR 52.245-1, Government Property, without its Alternate I.

(2) Use the clause at 252.245-7000, Government-Furnished Mapping, Charting, and Geodesy Property, in solicitations

and contracts when mapping, charting, and geodesy property is to be furnished.

(3) Use the clause at 252.245-7003 , Contractor Property Management System Administration, in solicitations and

contracts containing the clause at FAR 52.245-1, Government Property.

(4) Use the clause at 252.245-7005, Management and Reporting of Government Property, in solicitations and

contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of commercial products and

commercial services, that contain the clause at FAR 52.245-1, Government Property.

245.1-3

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245.1-4

SUBPART 245.2 - SOLICITATION AND EVALUATION PROCEDURES 245.201-70

Subpart 245.2 - SOLICITATION AND EVALUATION PROCEDURES

245.201 Solicitation.

245.201-70 Security classification.

Follow the procedures at PGI 245.201-70 for security classification.

245.2-1

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245.2-2

SUBPART 245.3 - AUTHORIZING THE USE AND RENTAL OF GOVERNMENT PROPERTY 245.302

Subpart 245.3 - AUTHORIZING THE USE AND

RENTAL OF GOVERNMENT PROPERTY

245.302 Contracts with foreign governments or international organizations.

(1) General.

(i) Approval. A contractor may use Government property on work for foreign governments and international

organizations only when approved in writing by the contracting officer having cognizance of the property. The contracting

officer may grant approval, provided—

(A) The use will not interfere with foreseeable requirements of the United States;

(B) The work is undertaken as a DoD foreign military sale; or

(C) For a direct commercial sale, the foreign country or international organization would be authorized to

contract with the department concerned under the Arms Export Control Act.

(ii) Use charges.

(A) The Use and Charges clause is applicable on direct commercial sales to foreign governments or international

organizations.

(B) When a particular foreign government or international organization has funded the acquisition of property,

do not assess the foreign government or international organization rental charges or nonrecurring recoupments for the use of

such property.

(2) Special tooling and special test equipment.

(i) DoD normally recovers a fair share of nonrecurring costs of special tooling and special test equipment by

including these costs in its calculation of the nonrecurring cost recoupment charge when major defense equipment is sold

by foreign military sales or direct commercial sales to foreign governments or international organizations. “Major defense

equipment” is defined in DoD Directive 2140.2, Recoupment of Nonrecurring Costs on Sales of U.S. Items, as any item of

significant military equipment on the United States Munitions List having a nonrecurring research, development, test, and

evaluation cost of more than $50 million or a total production cost of more than $200 million.

(ii) When the cost thresholds in paragraph (2)(i) of this section are not met, the contracting officer shall assess rental

charges for use of special tooling and special test equipment pursuant to the Use and Charges clause if administratively

practicable.

(3) Waivers.

(i) Rental charges for use of U.S. production and research property on commercial sales transactions to the

Government of Canada are waived for all commercial contracts. This waiver is based on an understanding wherein the

Government of Canada has agreed to waive its rental charges.

(ii) Requests for waiver or reduction of charges for the use of Government property on work for foreign

governments or international organizations shall be submitted to the contracting officer, who is authorized to approve the

requests in consultation with the appropriate functional specialist.

245.3-1

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245.3-2

SUBPART 245.4 - TITLE TO GOVERNMENT PROPERTY 245.402-71

Subpart 245.4 - TITLE TO GOVERNMENT PROPERTY

245.402 Title to contractor-acquired property.

245.402-70 Policy.

Review the guidance at PGI 245.402-70 with regard to oversight and surveillance of contractor-acquired property.

245.402-71 Delivery of contractor-acquired property.

Follow the procedures at PGI 245.402-71 for the delivery of contractor-acquired property.

245.4-1

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245.4-2

SUBPART 245.5 - SUPPORT GOVERNMENT PROPERTY ADMINISTRATION 245.570

Subpart 245.5 - SUPPORT GOVERNMENT PROPERTY ADMINISTRATION

245.570 Storage at the Government's expense.

All storage contracts or agreements shall be separately priced and shall include all costs associated with the storage.

245.5-1

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245.5-2

SUBPART 245.6 - REPORTING, REUTILIZATION, AND DISPOSAL 245.604-1

Subpart 245.6 - REPORTING, REUTILIZATION, AND DISPOSAL

245.602 Reutilization of Government property.

245.602-1 Inventory disposal schedules.

For termination inventory, plant clearance officers shall verify inventory schedules, either directly or through appropriate

technical personnel, to determine the following:

(a) Allocability.

(1) Review contract requirements, delivery schedules, bills of material, and other pertinent documents to determine

whether schedules include property that—

(i) Is appropriate for use on the contract; or

(ii) Exceeds the quantity required for completion of the contract, but could be diverted to other commercial work or

Government use.

(2) Review the contractor's—

(i) Recent purchases of similar material;

(ii) Plans for current and scheduled production;

(iii) Stock record entries; and

(iv) Bills of material for similar items.

(b) Quantity. Take measures to provide assurance that available inventory is in accordance with quantities listed on the

inventory schedules. Quantities may be verified by actual item count, acceptance of labeled quantities in unopened/sealed

packages, scale counts, or other appropriate methods.

(c) Condition. Ensure that the physical condition of the property is reasonably consistent with the Federal Condition Code

supplied by the contractor.

245.602-3 Screening.

Property will be screened DoD-wide, including the contracting agency, requiring agency, and, as appropriate, the General

Services Administration. The requiring agency shall have priority for retention of listed items. All required screening

must be completed before any sale of contractor inventory, including contractor inventory in overseas locations (foreign

excess personal property) can take place. Upon request of the prospective reutilization, transfer, donation, or sales customer,

the plant clearance officer shall arrange for inspection of property at the contractor's plant in such a manner as to avoid

interruption of the contractor's operations, and consistent with any security requirements.

245.602-70 Plant clearance procedures.

Follow the procedures at PGI 245.602-70 for establishing and processing a plant clearance case.

245.604 Sale of surplus personal property.

245.604-1 Sales procedures.

(1) Best value sales approach. Plant clearance officers shall determine a best value sales approach, to include due

consideration for costs, risks, and benefits, e.g., potential sales proceeds.

(2) Invitation for bid procedures. The plant clearance officer may direct the contractor to issue informal invitations for bid

(orally, telephonically, or by other informal media), provided—

(i) Maximum practical competition is obtained;

(ii) Sources solicited are recorded; and

(iii) Informal bids are confirmed in writing.

(3) Sale approval and award. Plant clearance officers shall—

(i) Evaluate bids to establish that the sale price is fair and reasonable, taking into consideration—

(A) Knowledge or tests of the market;

(B) Current published prices for the property;

(C) The nature, condition, quantity, and location of the property; and

(D) Past sale history for like or similar items;

245.6-1

245.604-1 DEFENSE FEDERAL ACQUISITION REGULATION

(ii) Approve award to the responsible bidder whose bid is most advantageous to the Government. The plant clearance

officer shall not approve award to any bidder who is an ineligible transferee, as defined in 252.245-7005, Management and

Reporting of Government Property; and

(iii) Notify the contractor of the bidder to whom an award will be made within 5 working days from receipt of bids.

(4) Negotiated sales.

(i) Negotiated sales include purchases or retention at less than cost by the contractor. Negotiated sales may be made

when—

(A) The plant clearance officer determines that this method is essential to expeditious plant clearance; and

(B) The Government's interests are adequately protected.

(ii) Negotiated sales shall be at fair and reasonable prices, not less than those reasonably expected under competitive

sales.

(iii) Conditions justifying negotiated sales are—

(A) No acceptable bids are received under competitive sale;

(B) Anticipated sales proceeds do not warrant competitive sale;

(C) Specialized nature of the property would not create bidder interest;

(D) Removal of the property would reduce its value or result in disproportionate handling expenses; or

(E) Such action is essential to the Government's interests.

(5) Plant clearance officers shall consider any special disposal requirements such as demilitarization or trade security

control requirements in accordance with DoDM 4160.28-M, Defense Demilitarization Manual, and DoDI 2030.08,

Implementation of Trade Security Controls (TSCs) for Transfers of DoD Personal Property to Parties Outside DoD Control,

respectively. See PGI 245.6.

245.6-2

SUBPART 245.70 - RESERVED

Subpart 245.70 - Reserved

245.70-1

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245.70-2

PART 246 - QUALITY ASSURANCE

Sec.

Subpart 246.1 - GENERAL

246.101

Definitions.

246.102

Policy.

246.103

Contracting office responsibilities.

Subpart 246.2 - CONTRACT QUALITY REQUIREMENTS

246.202

Types of contract quality requirements.

246.202-4

Higher-level contract quality requirements.

246.270

Safety of facilities, infrastructure, and equipment for military

operations.

246.270-1

Scope.

246.270-2

Policy.

246.270-3

Exceptions.

246.270-4

Contract clause.

Subpart 246.3 - CONTRACT CLAUSES

246.370

Notification of potential safety issues.

Subpart 246.4 - GOVERNMENT CONTRACT QUALITY

ASSURANCE

246.401

General.

246.402

Government contract quality assurance at source.

246.404

Government contract quality assurance for acquisitions at or below

the simplified acquisition threshold.

246.406

Foreign governments.

246.407

Nonconforming supplies or services.

246.408

Single-agency assignments of Government contract quality

assurance.

246.408-70

Subsistence.

246.408-71

Aircraft.

246.470

Government contract quality assurance actions.

246.470-1

Assessment of additional costs.

246.470-2

Quality evaluation data.

246.471

Authorizing shipment of supplies.

246.472

Inspection stamping.

Subpart 246.5 - ACCEPTANCE

246.504

Certificate of conformance.

Subpart 246.6 - MATERIAL INSPECTION AND RECEIVING

REPORTS

246.601

General.

Subpart 246.7 - WARRANTIES

246.702

General.

246.702-70

Definitions.

246.704

Authority for use of warranties.

246.705

Limitations.

246.706

Warranty terms and conditions.

246.708

Warranties of data.

246.710

Contract clauses.

246.710-70

Warranty attachments.

Subpart 246.8 - CONTRACTOR LIABILITY FOR LOSS OF OR

DAMAGE TO PROPERTY OF THE GOVERNMENT

246.870

Contractors Counterfeit Electronic Part Detection and Avoidance.

246.870-0

Scope. This section—

246.870-1

Definition.

246.870-2

Policy.

246.870-3

Contract clauses.

246-1

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246-2

SUBPART 246.1 - GENERAL 246.103

Subpart 246.1 - GENERAL

246.101 Definitions.

“Discipline Working Group,” as used in this subpart, is defined in the clause at 252.246-7004 , Safety of Facilities,

Infrastructure, and Equipment for Military Operations.

246.102 Policy.

Departments and agencies shall also—

(1) Develop and manage a systematic, cost-effective Government contract quality assurance program to ensure

that contract performance conforms to specified requirements. Apply Government quality assurance to all contracts for

services and products designed, developed, purchased, produced, stored, distributed, operated, maintained, or disposed of by

contractors.

(2) Conduct quality audits to ensure the quality of products and services meet contractual requirements.

(3) Base the type and extent of Government contract quality assurance actions on the particular acquisition.

(4) Provide contractors the maximum flexibility in establishing efficient and effective quality programs to meet

contractual requirements. Contractor quality programs may be modeled on military, commercial, national, or international

quality standards.

246.103 Contracting office responsibilities.

(1) The contracting office must coordinate with the quality assurance activity before changing any quality requirement.

(2) The activity responsible for technical requirements may prepare instructions covering the type and extent of

Government inspections for acquisitions that are complex, have critical applications, or have unusual requirements. Follow

the procedures at PGI 246.103 (2) for preparation of instructions.

246.1-1

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246.1-2

SUBPART 246.2 - CONTRACT QUALITY REQUIREMENTS 246.270-4

Subpart 246.2 - CONTRACT QUALITY REQUIREMENTS

246.202 Types of contract quality requirements.

246.202-4 Higher-level contract quality requirements.

(1) Higher-level contract quality requirements are used in addition to a standard inspection requirement.

(2) Higher-level contract quality requirements, including nongovernment quality system standards adopted to meet

DoD needs, are listed in the DoD Index of Specifications and Standards.

246.270 Safety of facilities, infrastructure, and equipment for military operations.

246.270-1 Scope.

This section implements section 807 of the National Defense Authorization Act for Fiscal Year 2010 (Pub. L. 111-84). It

establishes policies and procedures intended to ensure the safety and habitability of facilities, infrastructure, and equipment

acquired for use by DoD military or civilian personnel during military operations performed outside the United States, Guam,

Puerto Rico, and the Virgin Islands.

246.270-2 Policy.

(a) Contracts (including task and delivery orders) for the construction, installation, repair, maintenance, or operation of

facilities, infrastructure, and equipment configured for occupancy, including but not limited to, existing host nation facilities,

new construction, and relocatable buildings acquired for use by DoD military or civilian personnel, shall require a pre-

occupancy safety and habitability inspection.

(b) To minimize safety and health risks, each contract covered by this policy shall require the contractor’s compliance with

the Unified Facilities Criteria (UFC) 1-200-01 and its referenced standards for—

Fire protection;

Structural integrity;

Electrical systems;

Plumbing;

Water treatment;

Waste disposal; and

Telecommunications networks.

(c) Existing host nation facilities constructed to standards equivalent to or more stringent than UFC 1-200-01 are

acceptable upon a written determination of the acceptability of the standards by the Discipline Working Group.

(d) Inspections to ensure compliance with UFC 1-200-01 standards shall be conducted in accordance with the inspection

clause of the contract.

246.270-3 Exceptions.

The combatant commander may waive compliance with the foregoing standards when it is impracticable to comply with

such standards under prevailing operational conditions.

246.270-4 Contract clause.

Use the clause at 252.246-7004 , Safety of Facilities, Infrastructure, and Equipment for Military Operations, in

solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of

commercial products and commercial services, for the construction, installation, repair, maintenance, or operation of

facilities, infrastructure, or for equipment configured for occupancy, planned for use by DoD military or civilian personnel

during military operations.

246.2-1

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246.2-2

SUBPART 246.3 - CONTRACT CLAUSES 246.370

Subpart 246.3 - CONTRACT CLAUSES

246.370 Notification of potential safety issues.

(a) Use the clause at 252.246-7003 , Notification of Potential Safety Issues, in solicitations and contracts, including

solicitations and contracts using FAR part 12 procedures for the acquisition of commercial products and commercial services,

for the acquisition of—

(1) Repairable or consumable parts identified as critical safety items;

(2) Systems and subsystems, assemblies, and subassemblies integral to a system; or

(3) Repair, maintenance, logistics support, or overhaul services for systems and subsystems, assemblies, subassemblies,

and parts integral to a system.

(b) Follow the procedures at PGI 246.370 for the handling of notifications received under the clause at 252.246-7003 .

246.3-1

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246.3-2

SUBPART 246.4 - GOVERNMENT CONTRACT QUALITY ASSURANCE 246.406

Subpart 246.4 - GOVERNMENT CONTRACT QUALITY ASSURANCE

246.401 General.

The requirement for a quality assurance surveillance plan shall be addressed and documented in the contract file for each

contract except for those awarded using simplified acquisition procedures. For contracts for services, the contracting officer

should prepare a quality assurance surveillance plan to facilitate assessment of contractor performance, see 237.172 . For

contracts for supplies, the contracting officer should address the need for a quality assurance surveillance plan.

246.402 Government contract quality assurance at source.

Do not require Government contract quality assurance at source for contracts or delivery orders valued below $350,000,

unless—

(1) Mandated by DoD regulation;

(2) Required by a memorandum of agreement between the acquiring department or agency and the contract

administration agency; or

(3) The contracting officer determines that—

(i) Contract technical requirements are significant (e.g., the technical requirements include drawings, test

procedures, or performance requirements);

(ii) The product being acquired—

(A) Has critical characteristics;

(B) Has specific features identified that make Government contract quality assurance at source necessary; or

(C) Has specific acquisition concerns identified that make Government contract quality assurance at source

necessary; and

(iii) The contract is being awarded to—

(A) A manufacturer or producer; or

(B) A non-manufacturer or non-producer and specific Government verifications have been identified as necessary

and feasible to perform.

246.404 Government contract quality assurance for acquisitions at or below the simplified acquisition threshold.

Do not require Government contract quality assurance at source for contracts or delivery orders valued at or below the

simplified acquisition threshold unless the criteria at 246.402 have been met.

246.406 Foreign governments.

(1) Quality assurance among North Atlantic Treaty Organization (NATO) countries.

(i) NATO Standardization Agreement (STANAG) 4107, Mutual Acceptance of Government Quality Assurance and

Usage of the Allied Quality Assurance Publications—

(A) Contains the processes, procedures, terms, and conditions under which one NATO member nation will

perform quality assurance for another NATO member nation or NATO organization;

(B) Standardizes the development, updating, and application of the Allied Quality Assurance Publications; and

(C) Has been ratified by the United States and other nations in NATO with certain reservations identified in

STANAG 4107.

(ii) Departments and agencies shall follow STANAG 4107 when—

(A) Asking a NATO member nation to perform quality assurance; or

(B) Performing quality assurance when requested by a NATO member nation or NATO organization.

(2) International military sales (non-NATO).Departments and agencies shall—

(i) Perform quality assurance services on international military sales contracts or in accordance with existing

agreements;

(ii) Inform host or U.S. Government personnel and contractors on the use of quality assurance publications; and

(iii) Delegate quality assurance to the host government when satisfactory services are available.

(3) Reciprocal quality assurance agreements.A Memorandum of Understanding (MOU) with a foreign country may

contain an annex that provides for the reciprocal performance of quality assurance services. MOUs should be checked to

determine whether such an annex exists for the country where a defense contract will be performed. (See Subpart 225.8 for

more information about MOUs.)

246.4-1

246.407 DEFENSE FEDERAL ACQUISITION REGULATION

246.407 Nonconforming supplies or services.

(f) If nonconforming material or services are discovered after acceptance, the defect appears to be the fault of the

contractor, any warranty has expired, and there are no other contractual remedies, the contracting officer—

(i) Shall notify the contractor in writing of the nonconforming material or service;

(ii) Shall request that the contractor repair or replace the material, or perform the service, at no cost to the

Government; and

(iii) May accept consideration if offered. For guidance on solicitation of a refund, see Subpart 242.71.

(S-70) The head of the design control activity is the approval authority for acceptance of any nonconforming aviation

or ship critical safety items or nonconforming modification, repair, or overhaul of such items (see 209.270 ). Authority for

acceptance of minor nonconformances in aviation or ship critical safety items may be delegated as determined appropriate by

the design control activity. See additional information at PGI 246.407 .

246.408 Single-agency assignments of Government contract quality assurance.

246.408-70 Subsistence.

(a) The Surgeons General of the military departments are responsible for—

(1) Acceptance criteria;

(2) Technical requirements; and

(3) Inspection procedures needed to assure wholesomeness of foods.

(b) The contracting office may designate any Federal activity, capable of assuring wholesomeness and quality in food, to

perform quality assurance for subsistence contract items. The designation may—

(1) Include medical service personnel of the military departments; and

(2) Be on a reimbursable basis.

246.408-71 Aircraft.

(a) The Federal Aviation Administration (FAA) has certain responsibilities and prerogatives in connection with some

commercial aircraft and of aircraft equipment and accessories (Pub. L. 85-726 (72 Stat 776, 49 U.S.C. 1423)). This includes

the issuance of various certificates applicable to design, manufacture, and airworthiness.

(b) FAA evaluations are not a substitute for normal DoD evaluations of the contractor's quality assurance measures. Actual

records of FAA evaluations may be of use to the contract administration office (CAO) and should be used to their maximum

advantage.

(c) The CAO shall ensure that the contractor possesses any required FAA certificates prior to acceptance.

246.470 Government contract quality assurance actions.

246.470-1 Assessment of additional costs.

(a) Under the clause at FAR 52.246-2, Inspection of Supplies—Fixed-Price, after considering the factors in paragraph

(c) of this subsection, the quality assurance representative (QAR) may believe that the assessment of additional costs is

warranted. If so, the representative shall recommend that the contracting officer take the necessary action and provide a

recommendation as to the amount of additional costs. Costs are based on the applicable Federal agency, foreign military sale,

or public rate in effect at the time of the delay, reinspection, or retest.

(b) If the contracting officer agrees with the QAR, the contracting officer shall—

(1) Notify the contractor, in writing, of the determination to exercise the Government's right under the clause at FAR

52.246-2, Inspection of Supplies—Fixed-Price; and

(2) Demand payment of the costs in accordance with the collection procedures contained in FAR Subpart 32.6.

(c) In making a determination to assess additional costs, the contracting officer shall consider—

(1) The frequency of delays, reinspection, or retest under both current and prior contracts;

(2) The cause of such delay, reinspection, or retest; and

(3) The expense of recovering the additional costs.

246.470-2 Quality evaluation data.

The contract administration office shall establish a system for the collection, evaluation, and use of the types of quality

evaluation data specified in PGI 246.470-2 .

246.4-2

SUBPART 246.4 - GOVERNMENT CONTRACT QUALITY ASSURANCE 246.472

246.471 Authorizing shipment of supplies.

(a) General.

(1) Ordinarily, a representative of the contract administration office signs or stamps the shipping papers that accompany

Government source-inspected supplies to release them for shipment. This is done for both prime and subcontracts.

(2) An alternative procedure (see paragraph (b) of this section) permits the contractor to assume the responsibility for

releasing the supplies for shipment.

(3) The alternative procedure may include prime contractor release of supplies inspected at a subcontractor's facility.

(4) The use of the alternative procedure releases DoD manpower to perform technical functions by eliminating routine

signing or stamping of the papers accompanying each shipment.

(b) Alternative Procedures—Contract Release for Shipment.

(1) For foreign military sales contracts, do not use alternative procedures.

(2) The contract administration office may authorize, in writing, the contractor to release supplies for shipment when—

(i) The stamping or signing of the shipping papers by a representative of the contract administration office

interferes with the operation of the Government contract quality assurance program or takes too much of the Government

representative's time;

(ii) There is sufficient continuity of production to permit the Government to establish a systematic and continuing

evaluation of the contractor's control of quality; and

(iii) The contractor has a record of satisfactory quality, including that pertaining to preparation for shipment.

(3) The contract administration office shall withdraw, in writing, the authorization when there is an indication that the

conditions in paragraph (b)(2) of this section no longer exist.

(4) When the alternative procedure is used, require the contractor to—

(i) Type or stamp, and sign, the following statement on the required copy or copies of the shipping paper(s), or on an

attachment—

The supplies in this shipment—

1. Have been subjected to and have passed all examinations and tests required by the contract;

2. Were shipped in accordance with authorized shipping instructions;

3. Conform to the quality, identity, and condition called for by the contract; and

4. Are of the quantity shown on this document.

This shipment was—

1. Released in accordance with section 246.471 of the Defense FAR Supplement; and

2. Authorized by (name and title of the authorized representative of the contract administration office) in a letter dated (date

of authorizing letter). (Signature and title of contractor's designated official.)

(ii) Release and process, in accordance with established instructions, the DD Form 250, Material Inspection and

Receiving Report, or other authorized receiving report.

246.472 Inspection stamping.

(a) DoD quality inspection approval marking designs (stamps) may be used for both prime contracts and subcontracts.

Follow the procedures at PGI 246.472 (a) for use of DoD inspection stamps.

(b) Policies and procedures regarding the use of National Aeronautics and Space Administration (NASA) quality status

stamps are contained in NASA publications. When requested by NASA centers, the DoD inspector shall use NASA quality

status stamps in accordance with current NASA requirements.

246.4-3

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246.4-4

SUBPART 246.5 - ACCEPTANCE 246.504

Subpart 246.5 - ACCEPTANCE

246.504 Certificate of conformance.

Before authorizing a certificate of conformance for aviation or ship critical safety items, obtain the concurrence of the

head of the design control activity (see 209.270 ).

246.5-1

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246.5-2

SUBPART 246.6 - MATERIAL INSPECTION AND RECEIVING REPORTS 246.601

Subpart 246.6 - MATERIAL INSPECTION AND RECEIVING REPORTS

246.601 General.

See Appendix F, Material Inspection and Receiving Report, for procedures and instructions for the use, preparation, and

distribution of—

(1) The Material Inspection and Receiving Report (DD Form 250 series); and

(2) Supplier's commercial shipping/packing lists used to evidence Government contract quality assurance.

246.6-1

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246.6-2

SUBPART 246.7 - WARRANTIES 246.708

Subpart 246.7 - WARRANTIES

246.702 General.

246.702-70 Definitions.

As used in this subpart—

“Acceptance,” as used in this subpart and in the warranty clauses at FAR 52.246-17, Warranty of Supplies of a

Noncomplex Nature; FAR 52.246-18, Warranty of Supplies of a Complex Nature; FAR 52.246-19, Warranty of Systems

and Equipment Under Performance Specifications or Design Criteria; and FAR 52.246-20, Warranty of Services, includes

the execution of an official document (e.g., DD Form 250, Material Inspection and Receiving Report) by an authorized

representative of the Government.

“Defect” means any condition or characteristic in any supply or service furnished by the contractor under the contract that

is not in compliance with the requirements of the contract.

“Enterprise” means the entity (e.g., a manufacturer or vendor) responsible for granting the warranty and/or assigning

unique item identifiers to serialized warranty items.

“Enterprise identifier” means a code that is uniquely assigned to an enterprise by an issuing agency.

“Issuing agency” means an organization responsible for assigning a globally unique identifier to an enterprise, as indicated

in the Register of Issuing Agency Codes for International Standards Organization/International Electrotechnical Commission

15459, located at http://www.aimglobal.org/?Reg_Authority15459.

“Serialized item” means each item produced is assigned a serial number that is unique among all the collective tangible

items produced by the enterprise, or each item of a particular part, lot, or batch number is assigned a unique serial number

within that part, lot, or batch number assignment within the enterprise identifier. The enterprise is responsible for ensuring

unique serialization within the enterprise identifier or within the part, lot, or batch numbers, and that serial numbers, once

assigned, are never used again.

“Unique item identifier” means a set of data elements marked on an item that is globally unique and unambiguous.

“Warranty tracking” means the ability to trace a warranted item from delivery through completion of the effectivity of the

warranty.

246.704 Authority for use of warranties.

(1) The chief of the contracting office must approve use of a warranty, except in acquisitions for—

(i) Commercial products or commercial services (see FAR 46.709);

(ii) Technical data, unless the warranty provides for extended liability (see 246.708 );

(iii) Supplies and services in fixed-price type contracts containing quality assurance provisions that reference higher-

level contract quality requirements (see 246.202-4 ); or

(iv) Supplies and services in construction contracts when using the warranties that are contained in Federal, military,

or construction guide specifications.

(2) The chief of the contracting office shall approve the use of a warranty only when the benefits are expected to

outweigh the cost.

246.705 Limitations.

(a) In addition to the exceptions provided in FAR 46.705(a), warranties in the clause at 252.246-7001 , Warranty of Data,

may be used in cost-reimbursement contracts.

246.706 Warranty terms and conditions.

(b)(5) Markings. For non-commercial other than commercial products, use MIL-STD-129, Marking for Shipments and

Storage, and MIL-STD-130, Identification Marking of U.S. Military Property, when marking warranty items.

246.708 Warranties of data.

Obtain warranties on technical data when practicable and cost effective. Consider the factors in FAR 46.703 in deciding

whether to obtain warranties of technical data. Consider the following in deciding whether to use extended liability provisions

—

(1) The likelihood that correction or replacement of the nonconforming data, or a price adjustment, will not give

adequate protection to the Government; and

246.7-1

246.710 DEFENSE FEDERAL ACQUISITION REGULATION

(2) The effectiveness of the additional remedy as a deterrent against furnishing nonconforming data.

246.710 Contract clauses.

(1) Use a clause substantially the same as the basic or one of the alternates of the clause at 252.246-7001 , Warranty

of Data, in solicitations and contracts that include the clause at 252.227-7013 , Rights in Technical Data and Computer

Software, when there is a need for greater protection or period of liability than provided by the inspection and warranty

clauses prescribed in FAR part 46.

(i) Use the basic clause in solicitations and contracts that are not firm-fixed price or fixed-price incentive.

(ii) Use alternate I in fixed-price-incentive solicitations and contracts.

(iii) Use alternate II in firm-fixed-price solicitations and contracts.

(2) Use the clause at 252.246-7002 , Warranty of Construction (Germany), instead of the clause at FAR 52.246-21,

Warranty of Construction, in solicitations and contracts for construction when a fixed-price contract will be awarded and

contract performance will be in Germany.

(3) When the solicitation includes the clause at 252.211-7003 , Item Unique Identification and Valuation, which is

prescribed in 211.274-5 (a), and it is anticipated that the resulting contract will include a warranty for serialized items—

(i) Use the provision at 252.246-7005 , Notice of Warranty Tracking of Serialized Items, in the solicitation if the

Government does not specify a warranty and offerors will be required to enter data with the offer;

(ii) Use the clause at 252.246-7006 , Warranty Tracking of Serialized Items, in the solicitation and contract; and

(iii) Include the following warranty attachments, available at https://www.pdrep.csd.disa.mil/pdrep_files/other/

wsr.htm, in the solicitation and contract and see 246.710-70 :

(A) Warranty Tracking Information.

(B) Source of Repair Instructions.

246.710-70 Warranty attachments.

Follow the procedures at PGI 246.710-70 regarding warranty attachments.

246.7-2

SUBPART 246.8 - CONTRACTOR LIABILITY FOR LOSS OF OR DAMAGE TO PROPERTY OF THE GOVERNMENT 246.870-2

Subpart 246.8 - CONTRACTOR LIABILITY FOR LOSS OF

OR DAMAGE TO PROPERTY OF THE GOVERNMENT

246.870 Contractors Counterfeit Electronic Part Detection and Avoidance.

246.870-0 Scope. This section—

(a) Partially implements section 818(c) and (e) of the National Defense Authorization Act for Fiscal Year 2012 (Pub. L.

112-81), as amended by section 817 of the National Defense Authorization Act for Fiscal Year 2015 (Pub. L. 113-291) and

section 885 of the National Defense Authorization Act for Fiscal Year 2016 (Pub. L. 114-92); and

(b) Prescribes policy and procedures for preventing counterfeit electronic parts and suspect counterfeit electronic parts

from entering the supply chain when procuring electronic parts or end items, components, parts, or assemblies that contain

electronic parts.

246.870-1 Definition.

“Authorized supplier,” as used in this subpart, means a supplier, distributor, or an aftermarket manufacturer with a

contractual arrangement with, or the express written authority of, the original manufacturer or current design activity to buy,

stock, repackage, sell, or distribute the part.

246.870-2 Policy.

(a) Sources of electronic parts.

(1) Except as provided in paragraph (a)(2) of this section, the Government requires contractors and subcontractors at all

tiers, to—

(i) Obtain electronic parts that are in production by the original manufacturer or an authorized aftermarket

manufacturer or currently available in stock from—

(A) The original manufacturers of the parts;

(B) Their authorized suppliers; or

(C) Suppliers that obtain such parts exclusively from the original manufacturers of the parts or their authorized

suppliers; and

(ii) Obtain electronic parts that are not in production by the original manufacturer or an authorized aftermarket

manufacturer, and that are not currently available in stock from a source listed in paragraph (a)(1)(i) of this section, from

suppliers identified by the Contractor as contractor-approved suppliers, provided that—

(A) For identifying and approving such contractor-approved suppliers, the contractor uses established counterfeit

prevention industry standards and processes (including inspection, testing, and authentication), such as the DoD-adopted

standards at https://assist.dla.mil;

(B) The contractor assumes responsibility for the authenticity of parts provided by such contractor-approved

suppliers (see 231.205-71); and

(C) The selection of such contractor-approved suppliers is subject to review, audit, and approval by the

Government, generally in conjunction with a contractor purchasing system review or other surveillance of purchasing

practices by the contract administration office, or if the Government obtains credible evidence that a contractor–approved

supplier has provided counterfeit parts. The contractor may proceed with the acquisition of electronic parts from a contractor-

approved supplier unless otherwise notified by DoD.

(2) The Government requires contractors and subcontractors to comply with the notification, inspection, testing,

and authentication requirements of paragraph (b)(3)(ii) of the clause at 252.246-7008, Sources of Electronic Parts, if the

contractor—

(i) Obtains an electronic part from—

(A) A source other than any of the sources identified in paragraph (a)(1) of this section, due to nonavailability

from such sources; or

(B) A subcontractor (other than the original manufacturer) that refuses to accept flowdown of this clause; or

(ii) Cannot confirm that an electronic part is new or not previously used and that it has not been comingled in

supplier new production or stock with used, refurbished, reclaimed, or returned parts.

(3) Contractors and subcontractors are still required to comply with the requirements of paragraphs (a)(1) or (2) of this

section, as applicable, if—

(i) Authorized to purchase electronic parts from the Federal Supply Schedule;

246.8-1

246.870-3 DEFENSE FEDERAL ACQUISITION REGULATION

(ii) Purchasing electronic parts from suppliers accredited by the Defense Microelectronics Activity; or

(iii) Requisitioning electronic parts from Government inventory/stock under the authority of the clause at

252.251-7000 , Ordering from Government Supply Sources.

(A) The cost of any required inspection, testing, and authentication of such parts may be charged as a direct cost.

(B) The Government is responsible for the authenticity of the requisitioned electronic parts. If any such part is

subsequently found to be counterfeit or suspect counterfeit, the Government will—

(1)Promptly replace such part at no charge; and

(2)Consider an adjustment in the contract schedule to the extent that replacement of the counterfeit or

suspect counterfeit electronic parts caused a delay in performance.

(b) Contractor counterfeit electronic part detection and avoidance system.

(1) Contractors that are subject to the cost accounting standards and that supply electronic parts or products that include

electronic parts, and their subcontractors that supply electronic parts or products that include electronic parts, are required

to establish and maintain an acceptable counterfeit electronic part detection and avoidance system. Failure to do so may

result in disapproval of the purchasing system by the contracting officer and/or withholding of payments (see 252.244-7001 ,

Contractor Purchasing System Administration).

(2)System criteria. A counterfeit electronic part detection and avoidance system shall include risk-based policies

and procedures that address, at a minimum, the following areas (see the clause at 252.246-7007 , Contractor Counterfeit

Electronic Part Detection and Avoidance System):

(i) The training of personnel.

(ii) The inspection and testing of electronic parts, including criteria for acceptance and rejection.

(iii) Processes to abolish counterfeit parts proliferation.

(iv) Processes for maintaining electronic part traceability.

(v) Use of suppliers in accordance with paragraph (a) of this section.

(vi) The reporting and quarantining of counterfeit electronic parts and suspect counterfeit electronic parts.

(vii) Methodologies to identify suspect counterfeit electronic parts and to rapidly determine if a suspect counterfeit

electronic part is, in fact, counterfeit.

(viii) Design, operation, and maintenance of systems to detect and avoid counterfeit electronic parts and suspect

counterfeit electronic parts.

(ix) Flow down of counterfeit detection and avoidance requirements.

(x) Process for keeping continually informed of current counterfeiting information and trends.

(xi) Process for screening the Government-Industry Data Exchange Program (GIDEP) reports and other credible

sources of counterfeiting information.

(xii) Control of obsolete electronic parts.

246.870-3 Contract clauses.

(a)(1) Except as provided in paragraph (a)(2) of this section, use the clause at 252.246-7007 , Contractor Counterfeit

Electronic Part Detection and Avoidance System, in solicitations and contracts when procuring—

(i) Electronic parts;

(ii) End items, components, parts, or assemblies containing electronic parts; or

(iii) Services, if the contractor will supply electronic parts or components, parts, or assemblies containing electronic

parts as part of the service.

(2) Do not use the clause in solicitations and contracts that are set aside for small business.

(b) Use the clause at 252.246-7008 , Sources of Electronic Parts, in solicitations and contracts, including solicitations and

contracts using FAR part 12 procedures for the acquisition of commercial products and commercial services, when procuring

—

(1) Electronic parts;

(2) End items, components, parts, or assemblies containing electronic parts; or

(3) Services, if the contractor will supply electronic parts or components, parts, or assemblies containing electronic

parts as part of the service.

246.8-2

PART 247 - TRANSPORTATION

Sec.

247.001

Definitions.

Subpart 247.1 - GENERAL

247.101

Policies.

Subpart 247.2 - CONTRACTS FOR TRANSPORTATION OR

FOR TRANSPORTATION-RELATED SERVICES

247.200

Scope of subpart.

247.206

Preparation of solicitations and contracts.

247.207

Solicitation provisions, contract clauses, and special requirements.

247.270

Stevedoring contracts.

247.270-1

Definitions.

247.270-2

Technical provisions.

247.270-3

Evaluation of bids and proposals.

247.270-4

Contract clauses.

247.271

Contracts for the preparation of personal property for shipment or

storage or for performance of intra-city or intra-area movement.

247.271-1

Policy.

247.271-2

Procedures.

247.271-3

Solicitation provisions, schedule formats, and contract clauses.

Subpart 247.3 - TRANSPORTATION IN SUPPLY CONTRACTS

247.301

General.

247.301-70

Definition.

247.301-71

Evaluation factor or subfactor.

247.305

Solicitation provisions, contract clauses, and transportation factors.

247.305-10

Packing, marking, and consignment instructions.

247.370

DD Form 1384, Transportation Control and Movement Document.

247.371

DD Form 1653, Transportation Data for Solicitations.

247.372

DD Form 1654, Evaluation of Transportation Cost Factors.

Subpart 247.5 - OCEAN TRANSPORTATION BY U.S.-FLAG

VESSELS

247.570

Scope.

247.571

Definitions.

247.572

Policy.

247.573

General.

247.574

Solicitation provisions and contract clauses.

247-1

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247-2

SUBPART 247.1 - GENERAL 247.101

247.001 Definitions.

For definitions of "Civil Reserve Air Fleet" and "Voluntary Intermodal Sealift Agreement," see Joint Pub 1-02, DoD

Dictionary of Military and Associated Terms. See additional information at PGI 247.001 for the Voluntary Intermodal Sealift

Agreement program.

Subpart 247.1 - GENERAL

247.101 Policies.

(h) Shipping documents covering f.o.b. origin shipments.

(i) Procedures for the contractor to obtain bills of lading are in the clause at 252.247-7028 , Application for U.S.

Government Shipping Documentation/ Instructions.

(ii) The term “commercial bills of lading” includes the use of any commercial form or procedure.

247.1-1

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247.1-2

SUBPART 247.2 - CONTRACTS FOR TRANSPORTATION OR FOR TRANSPORTATION-RELATED SERVICES 247.270-3

Subpart 247.2 - CONTRACTS FOR TRANSPORTATION

OR FOR TRANSPORTATION-RELATED SERVICES

247.200 Scope of subpart.

This subpart does not apply to the operation of vessels owned by, or bareboat chartered by, the Government. See additional

guidance at PGI 247.200 for procurement of transportation or related services.

247.206 Preparation of solicitations and contracts.

Consistent with FAR 15.304 and 215.304 , consider using the following as evaluation factors or subfactors:

(1) Record of claims involving loss or damage; and

(2) Commitment of transportation assets to readiness support (e.g., Civil Reserve Air Fleet and Voluntary Intermodal

Sealift Agreement).

247.207 Solicitation provisions, contract clauses, and special requirements.

(1) Use the clause at 252.247-7003 , Pass-Through of Motor Carrier Fuel Surcharge Adjustment to the Cost Bearer, in

solicitations and contracts using FAR part 12 procedures for the acquisition of commercial products and commercial services,

that are for carriage in which a motor carrier, broker, or freight forwarder will provide or arrange truck transportation services

that provide for a fuel-related adjustment.

(2) Use the clause at 252.247-7028, Application for U.S. Government Shipping Documentation/Instructions in

solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of

commercial products and commercial services, when shipping under Bills of Lading and Domestic Route Order under FOB

origin contracts, Export Traffic Release regardless of FOB terms, or foreign military sales shipments.

247.270 Stevedoring contracts.

247.270-1 Definitions.

(a) “Commodity rate” is—

(1) The price quoted for handling a ton (weight or measurement) of a specified commodity; and

(2) Computed by dividing the hourly stevedoring gang cost by the estimated number of tons of the specified

commodity that can be handled in one hour.

(b) “Gang cost” is—

(1) The total hourly wages paid to the workers in the gang, in accordance with the collective bargaining agreement

between the maritime industry and the unions at a specific port; and

(2) Payments for workmen's compensation, social security taxes, unemployment insurance, taxes, liability and property

damage insurance, general and administrative expenses, and profit.

(c) “Stevedoring” is the—

(1) Loading of cargo from an agreed point of rest on a pier or lighter and its storage aboard a vessel; or

(2) Breaking out and discharging of cargo from any space in the vessel to an agreed point of rest dockside or in a

lighter.

247.270-2 Technical provisions.

(a) Because conditions vary at different ports, and sometimes within the same port it is not practical to develop standard

technical provisions covering all phases of stevedoring operations.

(b) When including rail car, truck, or intermodal equipment loading and unloading, or other dock and terminal work under

a stevedoring contract, include these requirements as separate items of work.

247.270-3 Evaluation of bids and proposals.

As a minimum, require that offers include—

(a) Tonnage or commodity rates that apply to the bulk of the cargo worked under normal conditions;

(b) Labor-hour rates that apply to services not covered by commodity rates, or to work performed under hardship

conditions; and

(c) Rates for equipment rental.

247.2-1

247.270-4 DEFENSE FEDERAL ACQUISITION REGULATION

247.270-4 Contract clauses.

Use the following clauses in solicitations and contracts for stevedoring services as indicated:

(a) 252.247-7000 , Hardship Conditions.

(b) 252.247-7002 , Revision of Prices, when using negotiation.

(c) 252.247-7007 , Liability and Insurance.

247.271 Contracts for the preparation of personal property for shipment or storage or for performance of intra-city

or intra-area movement.

247.271-1 Policy.

(a) Annual contracts. Normally—

(1) Use requirements contracts to acquire services for the—

(i) Preparation of personal property for shipment or storage; and

(ii) Performance of intra-area movement.

(2) Award contracts on a calendar year basis.

(3) Provide for option years.

(4) Award contracts, or exercise option years, before November 1 of each year, if possible.

(b) Areas of performance. Define clearly in the solicitation each area of performance.

(1) Establish one or more areas; however, hold the number to a minimum consistent with local conditions.

(2) Each schedule may provide for the same or different areas of performance. Determine the areas as follows—

(i) Use political boundaries, streets, or any other features as lines of demarcation. Consider such matters as—

(A) Total volume;

(B) Size of overall area; and

(C) The need to service isolated areas of high population density.

(ii) Specifically identify frequently used terminals, and consider them as being included in each area of performance

described in the solicitation.

(c) Maximum requirements-minimum capability.The contracting officer must—

(1) Establish realistic quantities on the Estimated Quantities Report in DoD 4500.9-R, Defense Transportation

Regulation, Part IV;

(2) Ensure that the Government's minimum acceptable daily capability—

(i) Will at least equal the maximum authorized individual weight allowance as prescribed by the Joint Federal Travel

Regulations; and

(ii) Will encourage maximum participation of small business concerns as offerors.

247.271-2 Procedures.

Follow the procedures at PGI 247.271-2 for contracting for the preparation of personal property for shipment or storage.

247.271-3 Solicitation provisions, schedule formats, and contract clauses.

When acquiring services for the preparation of personal property for movement or storage, or for performance of intra-city

or intra-area movement, use the following provisions, clauses, and schedules. Revise solicitation provisions and schedules,

as appropriate, if using negotiation rather than sealed bidding. Overseas commands, except those in Alaska and Hawaii, may

modify these clauses to conform to local practices, laws, and regulations.

(a) In solicitations and resulting contracts, the schedules provided by the installation personal property shipping office.

Follow the procedures at PGI 247.271-3 (c) for use of schedules.

(b) In addition to designating each ordering activity, as required by the clause at FAR 52.216-18, Ordering, identify by

name or position title the individuals authorized to place orders for each activity. When provisions are made for placing

oral orders in accordance with FAR 16.504(a)(4)(vii)), document the oral orders in accordance with department or agency

instructions.

(c) The clause at 252.247-7014 , Demurrage. See additional information at PGI 247.271-3 (c)(1) for demurrage and

detention charges.

(d) The clause at 252.247-7016 , Contractor Liability for Loss and Damage.

(e) The clauses at FAR 52.247-8, Estimated Weight or Quantities Not Guaranteed, and FAR 52.247-13, Accessorial

Services—Moving Contracts.

247.2-2

SUBPART 247.3 - TRANSPORTATION IN SUPPLY CONTRACTS 247.372

Subpart 247.3 - TRANSPORTATION IN SUPPLY CONTRACTS

247.301 General.

See PGI 247.301 for transportation guidance relating to Government Purchase Card purchases.

247.301-70 Definition.

"Integrated logistics managers" or "third-party logistics providers" means providers of multiple logistics services. Some

examples of logistics services are the management of transportation, demand forecasting, information management, inventory

maintenance, warehousing, and distribution.

247.301-71 Evaluation factor or subfactor.

For contracts that will include a significant requirement for transportation of items outside the contiguous United States,

include an evaluation factor or subfactor that favors suppliers, third-party logistics providers, and integrated logistics

managers that commit to using carriers that participate in one of the readiness programs (e.g., Civil Reserve Air Fleet and

Voluntary Intermodal Sealift Agreement).

247.305 Solicitation provisions, contract clauses, and transportation factors.

247.305-10 Packing, marking, and consignment instructions.

Follow the procedures at PGI 247.305-10 for preparation of consignment instructions.

247.370 DD Form 1384, Transportation Control and Movement Document.

The transportation office of the shipping activity prepares the DD Form 1384 to accompany all shipments made through a

military air or water port, in accordance with DoD 4500.9-R, Defense Transportation Regulation, Part II, Chapter 203. A link

to this document is available in PGI 247.370 .

247.371 DD Form 1653, Transportation Data for Solicitations.

The transportation specialist prepares the DD Form 1653 to accompany requirements for the acquisition of supplies. The

completed form should contain recommendations for suitable f.o.b. terms and other suggested transportation provisions for

inclusion in the solicitation.

247.372 DD Form 1654, Evaluation of Transportation Cost Factors.

Contracting personnel may use the DD Form 1654 to furnish information to the transportation office for development of

cost factors for use by the contracting officer in the evaluation of f.o.b. origin offers.

247.3-1

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247.3-2

SUBPART 247.5 - OCEAN TRANSPORTATION BY U.S.-FLAG VESSELS 247.572

Subpart 247.5 - OCEAN TRANSPORTATION BY U.S.-FLAG VESSELS

247.570 Scope.

This subpart—

(a) Implements—

(1) The Cargo Preference Act of 1904 ("the 1904 Act"), 10 U.S.C. 2631, which applies to the ocean transportation of

cargo owned by, or destined for use by, DoD;

(2) Section 1017 of the National Defense Authorization Act for Fiscal Year 2007 (Pub. L. 109-364), which requires

consideration, in solicitations requiring a covered vessel, of the extent to which offerors have had overhaul, repair, and

maintenance work performed in shipyards located in the United States or Guam; and

(3) Section 3504 of the National Defense Authorization Act for Fiscal Year 2009 (Pub. L. 110-417), which addresses

requirements that apply to riding gang members and DoD-exempted individuals (see 252.247-7027 (c)) who perform work on

U.S.-flag vessels under DoD contracts for transportation services documented under chapter 121, title 46 U.S.C.

(b) Does not specifically implement the Cargo Preference Act of 1954 ("the 1954 Act"), 46 U.S.C. 1241(b). The 1954 Act

is applicable to DoD, but DFARS coverage is not required because compliance with the 1904 Act historically has resulted in

DoD exceeding the 1954 Act's requirements; and

(c) Does not apply to ocean transportation of the following products, in which case FAR Subpart 47.5 applies:

(1) Products obtained for contributions to foreign assistance programs.

(2) Products owned by agencies other than DoD, unless the products are clearly identifiable for eventual use by DoD.

247.571 Definitions.

As used in this subpart—

(a) “Components,” “foreign flag vessel,” “ocean transportation,” “supplies,” and “U.S.-flag vessel” have the meaning

given in the clause at 252.247-7023 , Transportation of Supplies by Sea.

(b) “Reflagging or repair work” the meaning giasdfasdfven in the clause at 252.247-7025 , Reflagging or Repair Work.

(c) “Covered vessel,” “foreign shipyard,” “overhaul, repair, and maintenance work,” “shipyard,” and “U.S. shipyard” have

the meaning given in the provision at 252.247-7026 , Evaluation Preference for Use of Domestic Shipyards – Applicable to

Acquisition of Carriage by Vessel for DoD Cargo in the Coastwise or Noncontiguous Trade.

247.572 Policy.

(a) In accordance with 10 U.S.C. 2631(a), DoD contractors shall transport supplies, as defined in the clause at

252.247-7023 , Transportation of Supplies by Sea, exclusively on U.S.-flag vessels unless—

(1) Those vessels are not available;

(2) The proposed charges to the Government are higher than charges to private persons for the transportation of like

goods; or

(3) The proposed freight charges are excessive or unreasonable.

(b) Contracts must provide for the use of Government-owned vessels when security classifications prohibit the use of other

than Government-owned vessels.

(c) In accordance with 10 U.S.C. 2631(b)—

(1) Any vessel used under a time charter contract for the transportation of supplies under this section shall have any

reflagging or repair work, as defined in the clause at 252.247-7025 , Reflagging or Repair Work, performed in the United

States or its outlying areas, if the reflagging or repair work is performed—

(i) On a vessel for which the contractor submitted an offer in response to the solicitation for the contract; and

(ii) Prior to acceptance of the vessel by the Government.

(2) The Secretary of Defense may waive this requirement if the Secretary determines that such waiver is critical to the

national security of the United States.

(d) In accordance with Section 1017 of the National Defense Authorization Act for Fiscal Year 2007 (Pub. L. 109-364)—

(1) When obtaining carriage requiring a covered vessel, the contracting officer must consider the extent to which

offerors have had overhaul, repair, and maintenance work for covered vessels performed in shipyards located in the United

States or Guam; and

(2) DoD must submit an annual report to the congressional defense committees, addressing the information provided by

offerors with regard to overhaul, repair, and maintenance for covered vessels performed in the United States or Guam.

247.5-1

247.573 DEFENSE FEDERAL ACQUISITION REGULATION

(e) In accordance with section 3504 of the National Defense Authorization Act for Fiscal Year 2009 (Pub. L. 110-417),

DoD may not award, renew or extend, or exercise an option under a charter of, or contract for carriage of cargo by, a U.S.-

flag vessel documented under chapter 121 of title 46 U.S.C, unless the contract contains the clause at 252.247-7027 .

247.573 General.

(a) Delegated authority. Pursuant to 10 U.S.C. 2631(a) and Secretary of Defense Memorandum dated February 7, 2012,

(see PGI 247.573 ) the authority to make determinations of excessive ocean liner rates and excessive charter rates is delegated

to—

(1) The Commander, United States Transportation Command, for excessive ocean liner rate determinations; and

(2) The Secretary of the Navy for excessive charter rate determinations.

(b) Procedures.

(1) Contracting officers shall follow the procedures at PGI 247.573 (b)(1) when purchase of ocean transportation

services is incidental to a contract for supplies, services, or construction.

(2) Contracting officers shall follow the procedures at PGI 247.573 (b)(2) when direct purchase of ocean transportation

services is the principal purpose of the contract.

(3) Agency and department procedures relating to annual reporting requirements of information received from offerors

in response to solicitation provision 252.247-7026 , Evaluation Preference for Use of Domestic Shipyards—Applicable to

Acquisition of Carriage by Vessel for DoD Cargo in the Coastwise of Noncontiguous Trade, are found at PGI 247.573 (b)(3).

(4) Procedures are provided at PGI 247.573 (b)(4) to accomplish security background checks pursuant to clause

252.247-7027 , Riding Gang Member Requirements.

247.574 Solicitation provisions and contract clauses.

(a)(1) Use the provision at 252.247-7022, Representation of Extent of Transportation by Sea, in all solicitations, including

solicitations using FAR part 12 procedures for the acquisition of commercial products and commercial services, except -

(i) Those for direct purchase of ocean transportation services; or

(ii) Those with an anticipated value at or below the simplified acquisition threshold.

(2) If the solicitation includes the provision at FAR 52.204-7, do not separately list 252.247-7022 in the solicitation.

(b) Use the basic or one of the alternates of the clause at 252.247-7023, Transportation of Supplies by Sea, in all

solicitations and contracts, including solicitations and contracts using FAR part 12 procedures for the acquisition of

commercial products and commercial services, except those for direct purchase of ocean transportation services.

(1) Use the basic clause unless any of the supplies to be transported are commercial products that are -

(i) Shipped in direct support of U.S. military contingency operations, exercises, or forces deployed in humanitarian

or peacekeeping operations when the contract is not a construction contract; or

(ii) Commissary or exchange cargoes transported outside of the Defense Transportation System when the contract is

not a construction contract.

(2) Use the alternate I clause if any of the supplies to be transported are commercial products that are shipped in direct

support of U.S. military contingency operations, exercises, or forces deployed in humanitarian or peacekeeping operations

when the contract is not a construction contract.

(3) Use the alternate II clause if any of the supplies to be transported are commercial products that are commissary

or exchange cargoes transported outside of the Defense Transportation System (10 U.S.C. 2643), when the contract is not a

construction contract.

(c) Use the clause at 252.247-7025, Reflagging or Repair Work, in all time charter solicitations and contracts, including

time charter solicitations and contracts using FAR part 12 procedures for the acquisition of commercial products and

commercial services, that are for the use of a vessel for the transportation of supplies, unless a waiver has been granted in

accordance with 247.572 (c)(2).

(d) Use the provision at 252.247-7026 , Evaluation Preference for Use of Domestic Shipyards–Applicable to Acquisition

of Carriage by Vessel for DoD Cargo in the Coastwise or Noncontiguous Trade, in solicitations, including solicitations using

FAR part 12 procedures for the acquisition of commercial products and commercial services, that require a covered vessel for

carriage of cargo for DoD.

(e) Use the clause at 252.247-7027 , Riding Gang Member Requirements, in solicitations and contracts, including

solicitations and contracts using FAR part 12 procedures for the acquisition of commercial products and commercial services,

that are for the charter of, or contract for carriage of cargo by, a U.S.-flag vessel documented under chapter 121 of title 46

U.S.C.

247.5-2

PART 248 - RESERVED

Sec.

Subpart 248.2 - (REMOVED)

248-1

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248-2

SUBPART 248.2 - (REMOVED)

Subpart 248.2 - (REMOVED)

(October 01, 2001)

248.2-1

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248.2-2

PART 249 - TERMINATION OF CONTRACTS

Sec.

Subpart 249.1 - GENERAL PRINCIPLES

249.105

Duties of termination contracting officer after issuance of notice of

termination.

249.105-1

Termination status reports.

249.105-2

Release of excess funds.

249.109

Settlement agreements.

249.109-7

Settlement by determination.

249.109-70

Limitation on pricing of the terminated effort.

249.110

Settlement negotiation memorandum.

Subpart 249.5 - CONTRACT TERMINATION CLAUSES

249.501

General.

249.501-70

Special termination costs.

Subpart 249.70 - SPECIAL TERMINATION REQUIREMENTS

249.7000

Terminated contracts with Canadian Commercial Corporation.

249.7001

Congressional notification on significant contract terminations.

249.7002

Reserved.

249.7003

Notification of anticipated contract terminations or reductions.

249.7004

Contract clause.

249-1

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249-2

SUBPART 249.1 - GENERAL PRINCIPLES 249.110

Subpart 249.1 - GENERAL PRINCIPLES

249.105 Duties of termination contracting officer after issuance of notice of termination.

249.105-1 Termination status reports.

Follow the procedures at PGI 249.105-1 for reporting status of termination actions.

249.105-2 Release of excess funds.

See PGI 249.105-2 for guidance on recommending the release of excess funds.

249.109 Settlement agreements.

249.109-7 Settlement by determination.

Follow the procedures at PGI 249.109-7 for settlement of a convenience termination by determination.

249.109-70 Limitation on pricing of the terminated effort.

When there is a termination for convenience (partial or whole) or a change that reduces scope, follow the procedures at

PGI 249.109-70 for limitation on pricing of the terminated or reduced effort.

249.110 Settlement negotiation memorandum.

Follow the procedures at PGI 249.110 for preparation of a settlement negotiation memorandum.

249.1-1

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249.1-2

SUBPART 249.5 - CONTRACT TERMINATION CLAUSES 249.501-70

Subpart 249.5 - CONTRACT TERMINATION CLAUSES

249.501 General.

249.501-70 Special termination costs.

(a) The clause at 252.249-7000 , Special Termination Costs, may be used in an incrementally funded contract when its use

is approved by the agency head.

(b) The clause is authorized when—

(1) The contract term is two years or more;

(2) The contract is estimated to require—

(i) Total RDT&E financing in excess of $25 million; or

(ii) Total production investment in excess of $100 million; and

(3) Adequate funds are available to cover the contingent reserve liability for special termination costs.

(c) The contractor and the contracting officer must agree upon an amount that represents their best estimate of the total

special termination costs to which the contractor would be entitled in the event of termination of the contract. Insert this

amount in paragraph (c) of the clause.

(d)(1) Consider substituting an alternate paragraph (c) for paragraph (c) of the basic clause when—

(i) The contract covers an unusually long performance period; or

(ii) The contractor's cost risk associated with contingent special termination costs is expected to fluctuate extensively

over the period of the contract.

(2) The alternate paragraph (c) should provide for periodic negotiation and adjustment of the amount reserved for

special termination costs. Occasions for periodic adjustment may include—

(i) The Government's incremental assignment of funds to the contract;

(ii) The time when certain performance milestones are accomplished by the contractor; or

(iii) Other specific time periods agreed upon by the contracting officer and the contractor.

249.5-1

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249.5-2

SUBPART 249.70 - SPECIAL TERMINATION REQUIREMENTS 249.7001

Subpart 249.70 - SPECIAL TERMINATION REQUIREMENTS

249.7000 Terminated contracts with Canadian Commercial Corporation.

(a) Terminate contracts with the Canadian Commercial Corporation in accordance with—

(1) The Letter of Agreement (LOA) between the Department of Defence Production (Canada) and the U.S. DoD,

“Canadian Agreement” (for a copy of the LOA or for questions on its currency, contact the Office of the Principal

Director, Defense Pricing, Contracting, and Acquisition Policy (Contract Policy) at osd.pentagon.ousd-a-s.mbx.asda-dp-c-

[email protected];

(2) Policies in the Canadian Agreement and Part 249; and

(3) The Canadian Supply Manual, Chapter 8, Annex 8.3, available at http://www.tpsgc-pwgsc.gc.ca/app-acq/ga-sm/

index-eng.html, “Termination for Convenience Process, Public Works and Government Services Canada.”

(b) Contracting officers shall ensure that the Canadian Commercial Corporation submits termination settlement proposals

in the format prescribed in FAR 49.602 and that they contain the amount of settlements with subcontractors. The termination

contracting officer (TCO) shall prepare an appropriate settlement agreement. (See FAR 49.603.) The letter transmitting a

settlement proposal must certify—

(1) That disposition of inventory has been completed; and

(2) That the Contract Claims Resolution Board of the Public Works and Government Services Canada has approved

settlements with Canadian subcontractors when the Procedures Manual on Termination of Contracts requires such approval.

(c)(1) The Canadian Commercial Corporation will—

(i) Settle all Canadian subcontractor termination claims under the Canadian Agreement; and

(ii) Submit schedules listing serviceable and usable contractor inventory for screening to the TCO (see FAR 45.6).

(2) After screening, the TCO must provide guidance to the Canadian Commercial Corporation for disposition of the

contractor inventory.

(3) Settlement of Canadian subcontractor claims are not subject to the approval and ratification of the TCO. However,

when the proposed negotiated settlement exceeds the total contract price of the prime contract, the TCO shall obtain from the

U.S. contracting officer prior to final settlement—

(i) Ratification of the proposed settlement; and

(ii) A contract modification increasing the contract price and obligating the additional funds.

(d) The Canadian Commercial Corporation should send all termination settlement proposals submitted by U.S.

subcontractors and suppliers to the TCO of the cognizant contract administration office of the Defense Contract Management

Agency for settlement. The TCO will inform the Canadian Commercial Corporation of the amount of the net settlement of

U.S. subcontractors and suppliers so that this amount can be included in the Canadian Commercial Corporation termination

proposal. The Canadian Commercial Corporation is responsible for execution of the settlement agreement with these

subcontractors.

(e) The Canadian Commercial Corporation will continue administering contracts that the U.S. contracting officer

terminates.

(f) The Canadian Commercial Corporation will settle all Canadian subcontracts in accordance with the policies, practices,

and procedures of the Canadian Government.

(g) The U.S. agency administering the contract with the Canadian Commercial Corporation shall provide any services

required by the Canadian Commercial Corporation, including disposal of inventory, for settlement of any subcontracts placed

in the United States. Settlement of such U.S. subcontracts will be in accordance with this regulation.

249.7001 Congressional notification on significant contract terminations.

Congressional notification is required for any termination involving a reduction in employment of 100 or more contractor

employees. Proposed terminations must be cleared through department/agency liaison offices before release of the

termination notice, or any information on the proposed termination, to the contractor. Follow the procedures at PGI 249.7001

for congressional notification and release of information.

See DoD Class Deviation 2011-O0002, Congressional Notification on Significant Contract Terminations, issued on

October 8, 2010. The class deviation eliminates the congressional notification requirement for firms performing in Iraq or

Afghanistan if the firm is not incorporated in the United States. This deviation is effective until incorporated in the DFARS or

rescinded.

249.70-1

249.7002 DEFENSE FEDERAL ACQUISITION REGULATION

249.7002 Reserved.

249.7003 Notification of anticipated contract terminations or reductions.

(a) Section 1372 of the National Defense Authorization Act for Fiscal Year 1994 (Pub. L. 103-160) and section 824

of the National Defense Authorization Act for Fiscal Year 1997 (Pub. L. 104-201) are intended to help establish benefit

eligibility under the Workforce Innovation and Opportunity Act (29 U.S.C. Chapter 32) for employees of DoD contractors

and subcontractors adversely affected by termination or substantial reductions in major defense programs.

(b) Departments and agencies are responsible for establishing procedures to—

(1) Identify which contracts (if any) under major defense programs will be terminated or substantially reduced as a

result of the funding levels provided in an appropriations act; and

(2) Within 60 days of the enactment of such an act, provide notice of the anticipated termination of or substantial

reduction in the funding of affected contracts—

(i) Directly to the Secretary of Labor; and

(ii) Through the contracting officer to each prime contractor.

(c) When subcontracts have been issued, the prime contractor is responsible for—

(1) Providing notice of the termination or substantial reduction in funding to all first-tier subcontractors with a

subcontract valued equal to or greater than $700,000; and

(2) Requiring that each subcontractor—

(i) Provide such notice to each of its subcontractors for subcontracts valued greater than $150,000; and

(ii) Impose a similar notice and flowdown requirement in subcontracts valued greater than $150,000 at all tiers.

249.7004 Contract clause.

Use the clause at 252.249-7002, Notification of Anticipated Contract Termination or Reduction, in all contracts under a

major defense program.

249.70-2

PART 250 - EXTRAORDINARY CONTRACTUAL ACTIONS

Sec.

Subpart 250.0 - Reserved

Subpart 250.1 - EXTRAORDINARY CONTRACTUAL

ACTIONS

250.100

Definitions.

250.101

General.

250.101-2

Policy.

250.101-2-70

Limitations on payment.

250.101-3

Records.

250.102

Delegation of and limitations on exercise of authority.

250.102-1

Delegation of authority.

250.102-1-70

Delegations.

250.102-2

Contract adjustment boards.

250.103

Contract adjustments.

250.103-3

Contract adjustment.

250.103-5

Processing cases.

250.103-6

Disposition.

250.104

Residual powers.

250.104-3

Special procedures for unusually hazardous or nuclear risks.

250.104-3-70

Indemnification under contracts involving both research and

development and other work.

Subpart 250.2 - DELETED (NO DFARS TEXT)

Subpart 250.3 - DELETED (NO DFARS TEXT)

Subpart 250.4 - DELETED (NO DFARS TEXT)

250-1

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250-2

SUBPART 250.1 - EXTRAORDINARY CONTRACTUAL ACTIONS 250.103-3

Subpart 250.0 - Reserved

Subpart 250.1 - EXTRAORDINARY CONTRACTUAL ACTIONS

250.100 Definitions.

“Secretarial level,” as used in this subpart, means—

(1) An official at or above the level of an Assistant Secretary (or Deputy) of Defense or of the Army, Navy, or Air

Force; and

(2) A contract adjustment board established by the Secretary concerned.

250.101 General.

250.101-2 Policy.

250.101-2-70 Limitations on payment.

See 10 U.S.C. 3862 for limitations on Congressionally directed payment of a request for equitable adjustment to contract

terms or a request for relief under Pub. L. 85-804.

250.101-3 Records.

Follow the procedures at 250.101-3 for preparation of records.

250.102 Delegation of and limitations on exercise of authority.

250.102-1 Delegation of authority.

(b) Authority under FAR 50.104 to approve actions obligating $75,000 or less may not be delegated below the level of the

head of the contracting activity.

(d) In accordance with the acquisition authority of the Under Secretary of Defense (Acquisition and Sustainment

(USD(A&S)) under 10 U.S.C. 133, in addition to the Secretary of Defense and the Secretaries of the military departments, the

USD(A&S) may exercise authority to indemnify against unusually hazardous or nuclear risks.

250.102-1-70 Delegations.

(a) Military departments.The Departments of the Army, Navy, and Air Force will specify delegations and levels of

authority for actions under the Act and the Executive Order in departmental supplements or agency acquisition guidance.

(b) Defense agencies.Subject to the restrictions on delegations of authority in 250.102-1 (b) and FAR 50.102-1, the

directors of the defense agencies may exercise and redelegate the authority contained in the Act and the Executive Order. The

agency supplements or agency acquisition guidance shall specify the delegations and levels of authority.

(1) Requests to obligate the Government in excess of $75,000 must be submitted to the USD(A&S) for approval.

(2) Requests for indemnification against unusually hazardous or nuclear risks must be submitted to the USD(A&S) for

approval before using the indemnification clause at FAR 52.250-1, Indemnification Under Public Law 85-804.

(c) Approvals.The Secretary of the military department or the agency director must approve any delegations in writing.

250.102-2 Contract adjustment boards.

The Departments of the Army, Navy, and Air Force each have a contract adjustment board. The board consists of a

Chair and not less than two nor more than six other members, one of whom may be designated the Vice-Chair. A majority

constitutes a quorum for any purpose and the concurring vote of a majority of the total board membership constitutes an

action of the board. Alternates may be appointed to act in the absence of any member.

250.103 Contract adjustments.

250.103-3 Contract adjustment.

(a) Contractor requests should be filed with the procuring contracting officer (PCO). However, if filing with the PCO is

impractical, requests may be filed with an authorized representative, an administrative contracting officer, or the Office of

General Counsel of the applicable department or agency, for forwarding to the cognizant PCO.

250.0-1

250.103-5 DEFENSE FEDERAL ACQUISITION REGULATION

250.103-5 Processing cases.

(1) At the time the request is filed, the activity shall prepare the record described at PGI 250.101-3 (1)(i) and forward it

to the appropriate official within 30 days after the close of the month in which the record is prepared.

(2) The officer or official responsible for the case shall forward to the contract adjustment board, through departmental

channels, the documentation described at PGI 250.103-5 .

(3) Contract adjustment boards will render decisions as expeditiously as practicable. The Chair shall sign a

memorandum of decision disposing of the case. The decision shall be dated and shall contain the information required by

FAR 50.103-6. The memorandum of decision shall not contain any information classified “Confidential” or higher. The

board's decision will be sent to the appropriate official for implementation.

250.103-6 Disposition.

For requests denied or approved below the Secretarial level, follow the disposition procedures at PGI 250.103-6 .

250.104 Residual powers.

250.104-3 Special procedures for unusually hazardous or nuclear risks.

250.104-3-70 Indemnification under contracts involving both research and development and other work.

When indemnification is to be provided on contracts requiring both research and development work and other work, the

contracting officer shall insert an appropriate clause using the authority of both 10 U.S.C. 3861 and Pub. L. 85-804.

(a) The use of Pub. L. 85-804 is limited to work which cannot be indemnified under 10 U.S.C. 3861 and is subject to

compliance with FAR 50.104.

(b) Indemnification under 10 U.S.C. 3861 is covered by 235.070 .

250.1-2

SUBPART 250.2 - DELETED (NO DFARS TEXT)

Subpart 250.2 - DELETED (NO DFARS TEXT)

250.2-1

This page intentionally left blank.

250.2-2

SUBPART 250.3 - DELETED (NO DFARS TEXT)

Subpart 250.3 - DELETED (NO DFARS TEXT)

250.3-1

This page intentionally left blank.

250.3-2

SUBPART 250.4 - DELETED (NO DFARS TEXT)

Subpart 250.4 - DELETED (NO DFARS TEXT)

250.4-1

This page intentionally left blank.

250.4-2

PART 251 - USE OF GOVERNMENT SOURCES BY CONTRACTORS

Sec.

Subpart 251.1 - CONTRACTOR USE OF GOVERNMENT

SUPPLY SOURCES

251.101

Policy.

251.102

Authorization to use Government supply sources.

251.107

Contract clause.

Subpart 251.2 - CONTRACTOR USE OF INTERAGENCY

FLEET MANAGEMENT SYSTEM (IFMS)

251.202

Authorization.

251.205

Contract clause.

251-1

This page intentionally left blank.

251-2

SUBPART 251.1 - CONTRACTOR USE OF GOVERNMENT SUPPLY SOURCES 251.107

Subpart 251.1 - CONTRACTOR USE OF GOVERNMENT SUPPLY SOURCES

251.101 Policy.

(a)(1) Notwithstanding the restriction at FAR 51.101(a)(1), contracting officers may authorize contractors to use Defense

Logistics Agency Energy as a source of fuel in performance of other than cost-reimbursement contracts, when the fuel is

funded by the Defense Working Capital Fund. When providing this authorization to contractors, follow the procedures at PGI

PGI 251.101 Policy..

251.102 Authorization to use Government supply sources.

(e) When authorizing contractor use of Government supply sources, follow the procedures at PGI 251.102 .

(3)(ii) The contracting officer may also authorize the contractor to use the DD Form 1155 when requisitioning from the

Department of Veterans Affairs.

(f) The authorizing agency is also responsible for promptly considering requests of the DoD supply source for authority

to refuse to honor requisitions from a contractor that is indebted to DoD and has failed to pay proper invoices in a timely

manner.

251.107 Contract clause.

Use the clause at 252.251-7000 , Ordering From Government Supply Sources, in solicitations and contracts which include

the clause at FAR 52.251-1, Government Supply Sources.

See DoD Class Deviation 2013-O0012, Authorization for Contractors to Use Government Supply Sources in Support

of Operation Enduring Freedom, issued on April 24, 2013. This deviation encourages contracting officers to authorize

contractors (including contractors with fixed-price contracts) to use appropriate Government supply sources, including

DLA (for construction materials) and GSA Central Asia and South Caucasus Supply Catalog under the GSA Global Supply

Program, in performance of contracts in support of Operation Enduring Freedom. This constitutes a deviation from the policy

at FAR 51.101. This class deviation remains in effect until incorporated in the DFARS or otherwise rescinded.

251.1-1

This page intentionally left blank.

251.1-2

SUBPART 251.2 - CONTRACTOR USE OF INTERAGENCY FLEET MANAGEMENT SYSTEM (IFMS) 251.205

Subpart 251.2 - CONTRACTOR USE OF INTERAGENCY

FLEET MANAGEMENT SYSTEM (IFMS)

251.202 Authorization.

(a)(2)(A) See FAR 28.307-2(c) for policy on contractor insurance.

(B) See FAR 28.308 for policy on self-insurance.

(C) See FAR 31.205-19 for allowability of insurance costs.

(5) Paragraph (d) of the clause at 252.251-7001 satisfies the requirement of FAR 51.202(a)(5) for a written statement.

251.205 Contract clause.

Use the clause at 252.251-7001 , Use of Interagency Fleet Management System (IFMS) Vehicles and Related Services, in

solicitations and contracts which include the clause at FAR 52.251-2, Interagency Fleet Management System (IFMS) Vehicles

and Related Services.

251.2-1

This page intentionally left blank.

251.2-2

Revised August 15, 2024

PART 252 - SOLICITATION PROVISIONS AND CONTRACT CLAUSES

Sec.

Subpart 252.1 - INSTRUCTIONS FOR USING PROVISIONS

AND CLAUSES

252.101

Using part 252.

252.103

Identification of provisions and clauses.

Subpart 252.2 - TEXT OF PROVISIONS AND CLAUSES

252.201

RESERVED

252.201-7000

Contracting Officer's Representative.

252.203

RESERVED

252.203-7000

Requirements Relating to Compensation of Former DoD Officials.

252.203-7001

Prohibition on Persons Convicted of Fraud or Other Defense

Contract-Related Felonies.

252.203-7002

Requirement to Inform Employees of Whistleblower Rights.

252.203-7003

Agency Office of the Inspector General.

252.203-7004

Display of Hotline Posters.

252.203-7005

Representation Relating to Compensation of Former DoD

Officials.

252.204

RESERVED

252.204-7000

Disclosure of Information.

252.204-7001

Reserved.

252.204-7002

Payment for Contract Line or Subline Items Not Separately Priced.

252.204-7003

Control of Government Personnel Work Product.

252.204-7004

Antiterrorism Awareness Training for Contractors.

252.204-7005

Reserved.

252.204-7006

Billing Instructions-Cost Vouchers.

252.204-7007

Alternate A, Annual Representations and Certifications.

252.204-7008

Compliance with Safeguarding Covered Defense Information

Controls.

252.204-7009

Limitations on the Use or Disclosure of Third-Party Contractor

Reported Cyber Incident Information.

252.204-7010

Requirement for Contractor to Notify DoD if the Contractors

Activities are Subject to Reporting Under the U.S.-International

Atomic Energy Agency Additional Protocol.

252.204-7011

Reserved.

252.204-7012

Safeguarding Covered Defense Information and Cyber Incident

Reporting.

252.204-7013

Reserved.

252.204-7014

Limitations on the Use or Disclosure of Information by Litigation

Support Contractors.

252.204-7015

Notice of Authorized Disclosure of Information for Litigation

Support.

252.204-7016

Covered Defense Telecommunications Equipment or Services—

Representation.

252.204-7017

Prohibition on the Acquisition of Covered Defense

Telecommunications Equipment or Services—Representation.

252.204-7018

Prohibition on the Acquisition of Covered Defense

Telecommunications Equipment or Services.

252.204-7019

Notice of NISTSP 800-171 DoD Assessment Requirements.

252.204-7020

NIST SP 800-171DoD Assessment Requirements.

252.204-7021

Cybersecurity Maturity Model Certification Requirements.

252.204-7022

Expediting Contract Closeout.

252.204-7023

Reporting Requirements for Contracted Services.

252.204-7024

Notice on the Use of the Supplier Performance Risk System.

252.205

RESERVED

252.205-7000

Provision of Information to Cooperative Agreement Holders.

252.206

RESERVED

252.206-7000

Domestic Source Restriction.

252.208

RESERVED

252.208-7000

Intent to Furnish Precious Metals as Government-Furnished

Material.

252.209

RESERVED

252.209-7000

Reserved.

252.209-7001

Reserved.

252.209-7002

Disclosure of Ownership or Control by a Foreign Government

252.209-7003

Reserved.

252.209-7004

Subcontracting with Firms that are Owned or Controlled by the

Government of a Country that is a State Sponsor of Terrorism.

252.209-7005

Reserved.

252.209-7006

Limitations on Contractors Acting as Lead System Integrators.

252.209-7007

Prohibited Financial Interests for Lead System Integrators.

252.209-7008

Notice of Prohibition Relating to Organizational Conflict of

Interest—Major Defense Acquisition Program.

252.209-7009

Organizational Conflict of Interest—Major Defense Acquisition

Program.

252.209-7010

Critical Safety Items.

252.209-7011

Representation for Restriction on the Use of Certain Institutions of

Higher Education.

252.209-7998

Representation Regarding Conviction of a Felony Criminal

Violation under any Federal or State Law.

252.209-7999

Representation by Corporations Regarding an Unpaid Delinquent

Tax Liability or a Felony Conviction under any Federal Law.

252.211

RESERVED

252.211-7000

Reserved.

252.211-7001

Reserved.

252.211-7002

Availability for Examination of Specifications, Standards,

Plans, Drawings, Data Item Descriptions, and Other Pertinent

Documents.

252.211-7003

Item Unique Identification and Valuation.

252.211-7004

Reserved

252.211-7005

Reserved.

252.211-7006

Reserved.

252.211-7007

Reserved.

252.211-7008

Use of Government-Assigned Serial Numbers

252.212

RESERVED

252.212-7000

Reserved.

252.212-7001

Reserved.

252.212-7002

Reserved.

252.213

RESERVED

252.213-7000

Reserved.

252.215

RESERVED

252.215-7000

Reserved.

252.215-7001

Reserved.

252.215-7002

Cost Estimating System Requirements.

252.215-7003

Requirement for Submission of Data Other Than Certified Cost or

Pricing Data—Canadian Commercial Corporation.

252.215-7004

Requirement for Submission of Data Other Than Certified Cost or

Pricing Data—Modifications—Canadian Commercial Corporation.

252.215-7005

Reserved.

252.215-7006

Use of Employees or Individual Subcontractors Who are Members

of the Selected Reserve.

252.215-7007

Notice of Intent to Resolicit.

252.215-7008

Only One Offer.

252.215-7009

Proposal Adequacy Checklist.

252.215-7010

Requirements for Certified Cost or Pricing Data and Data Other

Than Certified Cost or Pricing Data.

252.215-7011

Requirements for Submission of Proposals to the Administrative

Contracting Officer and Contract Auditor.

252.215-7012

Requirements for Submission of Proposals via Electronic Media.

252.215-7013

Supplies and Services Provided by Nontraditional Defense

Contractors.

252.215-7014

Exception from Certified Cost or Pricing Data Requirements for

Foreign Military Sales Indirect Offsets.

252.215-7015

Program Should-Cost Review.

252.215-7016

Notification to Offerors—Postaward Debriefings.

252.216

RESERVED

252.216-7000

Economic Price Adjustment—Basic Steel, Aluminum, Brass,

Bronze, or Copper Mill Products.

252.216-7001

Economic Price Adjustment-Nonstandard Steel Items.

252.216-7002

Alternate A, Time-and-Materials/Labor-Hour Proposal

Requirements - Other Than Commercial Acquisition with

Adequate Price Competition.

252.216-7003

Economic Price Adjustment—Wage Rates or Material Prices

Controlled by a Foreign Government.

252.216-7004

Award Fee Reduction or Denial for Jeopardizing the Health or

Safety of Government Personnel.

252.216-7005

[Reserved].

252.216-7006

[Reserved].

252.216-7007

Economic Price Adjustment—Basic Steel, Aluminum, Brass,

Bronze, or Copper Mill Products—Representation.

252.216-7008

Economic Price Adjustment—Wage Rates or Material Prices

Controlled by a Foreign Government—Representation.

252.216-7009

Allowability of Legal Costs Incurred in Connection With a

Whistleblower Proceeding.

252.216-7010

Postaward Debriefings for Task Orders and Delivery Orders.

252.217

RESERVED

252.217-7000

Exercise of Option to Fulfill Foreign Military Sales Commitments.

252.217-7001

Surge Option.

252.217-7002

Offering Property for Exchange.

252.217-7003

Changes.

252.217-7004

Job Orders and Compensation.

252-1

Revised August 15, 2024

252.217-7005

Inspection and Manner of Doing Work.

252.217-7006

Title.

252.217-7007

Payments.

252.217-7008

Bonds.

252.217-7009

Default.

252.217-7010

Performance.

252.217-7011

Access to Vessel.

252.217-7012

Liability and Insurance.

252.217-7013

Guarantees.

252.217-7014

Discharge of Liens.

252.217-7015

Safety and Health.

252.217-7016

Plant Protection.

252.217-7017

Reserved.

252.217-7018

Reserved.

252.217-7019

Reserved.

252.217-7020

Reserved.

252.217-7021

Reserved.

252.217-7022

Reserved.

252.217-7023

Reserved.

252.217-7024

Reserved.

252.217-7025

Reserved.

252.217-7026

Identification of Sources of Supply.

252.217-7027

Contract Definitization.

252.217-7028

Over and Above Work.

252.219

RESERVED

252.219-7000

Advancing Small Business Growth.

252.219-7001

Reserved.

252.219-7002

Reserved.

252.219-7003

Small Business Subcontracting Plan (DoD Contracts).

252.219-7004

Small Business Subcontracting Plan (Test Program).

252.219-7005

Reserved.

252.219-7006

Reserved.

252.219-7007

Reserved.

252.219-7008

Reserved.

252.219-7009

Section 8(a) Direct Award.

252.219-7010

Notification of Competition Limited to Eligible 8(a) Participants—

Partnership Agreement.

252.219-7011

Notification to Delay Performance.

252.219-7012

Competition for Religious-Related Services.

252.222

RESERVED

252.222-7000

Restrictions on Employment of Personnel.

252.222-7001

Reserved.

252.222-7002

Compliance with Local Labor Laws (Overseas).

252.222-7003

Permit from Italian Inspectorate of Labor.

252.222-7004

Compliance with Spanish Social Security Laws and Regulations.

252.222-7005

Prohibition on Use of Nonimmigrant Aliens—Guam.

252.222-7006

Restrictions on the Use of Mandatory Arbitration Agreements.

252.223

RESERVED

252.223-7000

Reserved.

252.223-7001

Hazard Warning Labels.

252.223-7002

Safety Precautions for Ammunition and Explosives.

252.223-7003

Change in Place of Performance—Ammunition and Explosives.

252.223-7004

Reserved.

252.223-7005

Reserved.

252.223-7006

Prohibition on Storage, Treatment, and Disposal of Toxic or

Hazardous Materials.

252.223-7007

Safeguarding Sensitive Conventional Arms, Ammunition, and

Explosives.

252.223-7008

Prohibition of Hexavalent Chromium.

252.223-7009

Prohibition of Procurement of Fluorinated Fire-Fighting Agent for

Use on Military Installations.

252.225

RESERVED

252.225-7000

Buy American—Balance of Payments Program Certificate.

252.225-7001

Buy American and Balance of Payments Program.

252.225-7002

Qualifying Country Sources as Subcontractors.

252.225-7003

Report of Intended Performance Outside the United States and

Canada—Submission with Offer.

252.225-7004

Report of Intended Performance Outside the United States and

Canada—Submission after Award.

252.225-7005

Identification of Expenditures in the United States.

252.225-7006

Acquisition of the American Flag.

252.225-7007

Prohibition on Acquisition of Certain Items from Communist

Chinese Military Companies.

252.225-7008

Restriction on Acquisition of Specialty Metals.

252.225-7009

Restriction on Acquisition of Certain Articles Containing Specialty

Metals.

252.225-7010

Commercial Derivative Military Article—Specialty Metals

Compliance Certificate.

252.225-7011

Restriction on Acquisition of Supercomputers.

252.225-7012

Preference for Certain Domestic Commodities.

252.225-7013

Duty-Free Entry.

252.225-7014

Reserved.

252.225-7015

Restriction on Acquisition of Hand or Measuring Tools.

252.225-7016

Restriction on Acquisition of Ball and Roller Bearings.

252.225-7017

Photovoltaic Devices.

252.225-7018

Photovoltaic Devices—Certificate.

252.225-7019

Restriction on Acquisition of Anchor and Mooring Chain.

252.225-7020

Trade Agreements Certificate.

252.225-7021

Trade Agreements.

252.225-7022

Reserved.

252.225-7023

Preference for Products or Services from Afghanistan.

252.225-7024

Requirement for Products or Services from Afghanistan.

252.225-7025

Restriction on Acquisition of Forgings.

252.225-7026

Acquisition Restricted to Products or Services from Afghanistan.

252.225-7027

Restriction on Contingent Fees for Foreign Military Sales.

252.225-7028

Exclusionary Policies and Practices of Foreign Governments.

252.225-7029

Acquisition of Uniform Components for Afghan Military or

Afghan National Police.

252.225-7030

Restriction on Acquisition of Carbon, Alloy, and Armor Steel

Plate.

252.225-7031

Secondary Arab Boycott of Israel.

252.225-7032

Waiver of United Kingdom Levies—Evaluation of Offers.

252.225-7033

Waiver of United Kingdom Levies.

252.225-7034

Reserved.

252.225-7035

Buy American—Free Trade Agreements—Balance of Payments

Program Certificate.

252.225-7036

Buy American—Free Trade Agreements—Balance of Payments

Program.

252.225-7037

Reserved.

252.225-7038

Reserved.

252.225-7039

Defense Contractors Performing Private Security Functions

Outside the United States.

252.225-7040

Contractor Personnel Supporting U.S. Armed Forces Deployed

Outside the United States.

252.225-7041

Correspondence in English.

252.225-7042

Authorization to Perform.

252.225-7043

Antiterrorism/Force Protection for Defense Contractors Outside

the United States.

252.225-7044

Balance of Payments Program—Construction Material.

252.225-7045

Balance of Payments Program—Construction Material Under

Trade Agreements.

252.225-7046

Exports by Approved Community Members in Response to the

Solicitation.

252.225-7047

Exports by Approved Community Members in Performance of the

Contract.

252.225-7048

Export-Controlled Items.

252.225-7049

Prohibition on Acquisition of Certain Foreign Commercial Satellite

Services—Representations.

252.225-7050

Disclosure of Ownership or Control by the Government of a

Country that is a State Sponsor of Terrorism.

252.225-7051

Prohibition on Acquisition of Certain Foreign Commercial Satellite

Services.

252.225-7052

Restriction on the Acquisition of Certain Magnets, Tantalum, and

Tungsten.

252.225-7053

Representation Regarding Prohibition on Use of Certain Energy

Sourced from Inside the Russian Federation.

252.225-7054

Prohibition on Use of Certain Energy Sourced from Inside the

Russian Federation.

252.225-7055

Representation Regarding Business Operations with the Maduro

Regime.

252.225-7056

Prohibition Regarding Business Operations with the Maduro

Regime.

252.225-7057

Preaward Disclosure of Employment of Individuals Who Work in

the People’s Republic of China.

252.225-7058

Postaward Disclosure of Employment of Individuals Who Work in

the People’s Republic of China.

252.225-7059

Prohibition on Certain Procurements from the Xinjiang Uyghur

Autonomous Region–Representation.

252.225-7060

Prohibition on Certain Procurements from the Xinjiang Uyghur

Autonomous Region.

252.225-7061

Restriction on the Acquisition of Personal Protective Equipment

and Certain Other Items from Non-Allied Foreign Nations.

252.225-7062

Restriction on Acquisition of Large Medium-Speed Diesel

Engines.

252.225-7063

Restriction on Acquisition of Components of T–AO 205 and T-

ARC Class Vessels.

252.225-7064

Restriction on Acquisition of Certain Satellite Components.

252.226

RESERVED

252.226-7001

Utilization of Indian Organizations, Indian-Owned Economic

Enterprises, and Native Hawaiian Small Business Concerns.

252.226-7002

Representation for Demonstration Project for Contractors

Employing Persons with Disabilities.

252-2

Revised August 15, 2024

252.226-7003

Drug-Free Work Force.

252.227

RESERVED

252.227-7000

Non-Estoppel.

252.227-7001

Release of Past Infringement.

252.227-7002

Readjustment of Payments.

252.227-7003

Termination.

252.227-7004

License Grant.

252.227-7005

License Term.

252.227-7006

License Grant—-Running Royalty.

252.227-7007

License Term—Running Royalty.

252.227-7008

Computation of Royalties.

252.227-7009

Reporting and Payment of Royalties.

252.227-7010

License to Other Government Agencies.

252.227-7011

Assignments.

252.227-7012

Patent License and Release Contract.

252.227-7013

Rights in Technical Data—Other Than Commercial Products and

Commercial Services.

252.227-7014

Rights in Other Than Commercial Computer Software and Other

Than Commercial Computer Software Documentation.

252.227-7015

Technical Data - Commercial Products and Commercial Services.

252.227-7016

Rights in Bid or Proposal Information.

252.227-7017

Identification and Assertion of Use, Release, or Disclosure

Restrictions.

252.227-7018

Rights in Other Than Commercial Technical Data and Computer

Software—Small Business Innovation Research (SBIR) Program.

252.227-7019

Validation of Asserted Restrictions—Computer Software.

252.227-7020

Rights in Special Works.

252.227-7021

Rights in Data—Existing Works.

252.227-7022

Government Rights (Unlimited).

252.227-7023

Drawings and Other Data to Become Property of Government.

252.227-7024

Notice and Approval of Restricted Designs.

252.227-7025

Limitations on the Use or Disclosure of Government-Furnished

Information Marked with Restrictive Legends.

252.227-7026

Deferred Delivery of Technical Data or Computer Software.

252.227-7027

Deferred Ordering of Technical Data or Computer Software.

252.227-7028

Technical Data or Computer Software Previously Delivered to the

Government.

252.227-7029

Reserved.

252.227-7030

Technical Data—Withholding of Payment.

252.227-7031

Reserved.

252.227-7032

Rights in Technical Data and Computer Software (Foreign).

252.227-7033

Rights in Shop Drawings.

252.227-7034

Reserved.

252.227-7035

Reserved.

252.227-7036

Reserved.

252.227-7037

Validation of Restrictive Markings on Technical Data.

252.227-7038

Patent Rights—Ownership by the Contractor (Large Business).

252.227-7039

Patents—Reporting of Subject Inventions.

252.228

RESERVED

252.228-7000

Reimbursement for War-Hazard Losses.

252.228-7001

Ground and Flight Risk.

252.228-7002

Reserved

252.228-7003

Capture and Detention.

252.228-7004

Reserved.

252.228-7005

Mishap Reporting and Investigation Involving Aircraft, Missiles,

and Space Launch Vehicles.

252.228-7006

Compliance with Spanish Laws and Insurance.

252.228-7007

Public Aircraft and State Aircraft Operations—Liability.

252.229

RESERVED

252.229-7000

Reserved.

252.229-7001

Tax Relief.

252.229-7002

Customs Exemptions (Germany).

252.229-7003

Tax Exemptions (Italy).

252.229-7004

Status of Contractor as a Direct Contractor (Spain).

252.229-7005

Tax Exemptions (Spain).

252.229-7006

Value Added Tax Exclusion (United Kingdom)

252.229-7007

Verification of United States Receipt of Goods.

252.229-7008

Relief from Import Duty (United Kingdom).

252.229-7009

Relief from Customs Duty and Value Added Tax on Fuel

(Passenger Vehicles) (United Kingdom).

252.229-7010

Relief from Customs Duty on Fuel (United Kingdom).

252.229-7011

Reporting of Foreign Taxes - U.S. Assistance Programs.

252.229-7012

Tax Exemptions (Italy)—Representation.

252.229-7013

Tax Exemptions (Spain)—Representation.

252.229-7014

Full Exemption from Two-Percent Excise Tax on Certain Foreign

Procurements.

252.231

RESERVED

252.231-7000

Supplemental Cost Principles.

252.232

RESERVED

252.232-7000

Advance Payment Pool.

252.232-7001

Reserved.

252.232-7002

Progress Payments for Foreign Military Sales Acquisitions.

252.232-7003

Electronic Submission of Payment Requests and Receiving

Reports.

252.232-7004

DoD Progress Payment Rates.

252.232-7005

Reimbursement of Subcontractor Advance Payments—DoD

Mentor-Protégé Program.

252.232-7006

Wide Area WorkFlow Payment Instructions.

252.232-7007

Limitation of Governments Obligation.

252.232-7008

Assignment of Claims (Overseas).

252.232-7009

Mandatory Payment by Governmentwide Commercial Purchase

Card.

252.232-7010

Levies on Contract Payments.

252.232-7011

Payments in Support of Emergencies and Contingency Operations.

252.232-7012

Performance-Based Payments—Whole-Contract Basis.

252.232-7013

Performance-Based Payments—Deliverable-Item Basis.

252.232-7014

Reserved

252.232-7015

Performance-Based Payments—Representation.

252.232-7016

Notice of Progress Payments or Performance-Based Payments.

252.232-7017

Reserved.

252.232-7018

Progress Payments-Multiple Lots.

252.233

RESERVED

252.233-7000

Reserved.

252.233-7001

Choice of Law (Overseas).

252.234

RESERVED

252.234-7001

Notice of Earned Value Management System.

252.234-7002

Earned Value Management System.

252.234

–7003 Notice of Cost and Software Data Reporting System.

252.234-7004

Cost and Software Data Reporting System.

252.235

RESERVED

252.235-7000

Indemnification Under 10 U.S.C. 3861—Fixed Price.

252.235-7001

Indemnification Under 10 U.S.C. 3861—Cost Reimbursement.

252.235-7002

Animal Welfare.

252.235-7003

Frequency Authorization.

252.235-7004

Protection of Human Subjects.

252.235-7005

Reserved.

252.235-7006

Reserved.

252.235-7007

Reserved.

252.235-7008

Reserved.

252.235-7009

Reserved.

252.235-7010

Acknowledgment of Support and Disclaimer.

252.235-7011

Final Scientific or Technical Report.

252.236

RESERVED

252.236-7000

Modification Proposals—Price Breakdown.

252.236-7001

Contract Drawings and Specifications.

252.236-7002

Obstruction of Navigable Waterways.

252.236-7003

Payment for Mobilization and Preparatory Work.

252.236-7004

Payment for Mobilization and Demobilization.

252.236-7005

Airfield Safety Precautions.

252.236-7006

Cost Limitation.

252.236-7007

Additive or Deductive Items.

252.236-7008

Contract Prices—Bidding Schedules.

252.236-7009

Reserved.

252.236-7010

Overseas Military Construction—Preference for United States

Firms.

252.236-7011

Overseas Architect-Engineer Services—Restriction to United

States Firms.

252.236-7012

Military Construction on Kwajalein Atoll—Evaluation Preference.

252.236-7013

Requirement for Competition Opportunity for American Steel

Producers, Fabricators, and Manufacturers.

252.237

RESERVED

252.237-7000

Notice of Special Standards of Responsibility.

252.237-7001

Compliance with Audit Standards.

252.237-7002

Reserved.

252.237-7003

Requirements.

252.237-7004

Area of Performance.

252.237-7005

Performance and Delivery.

252.237-7006

Subcontracting.

252.237-7007

Termination for Default.

252.237-7008

Group Interment.

252.237-7009

Permits.

252.237-7010

Prohibition on Interrogation of Detainees by Contractor Personnel.

252.237-7011

Preparation History.

252.237-7012

Instruction to Offerors (Count-of-Articles).

252.237-7013

Instruction to Offerors (Bulk Weight).

252.237-7014

Loss or Damage (Count-of-Articles).

252.237-7015

Loss or Damage (Weight of Articles).

252.237-7016

Delivery Tickets.

252.237-7017

Individual Laundry.

252.237-7018

Special Definitions of Government Property.

252.237-7019

Training for Contractor Personnel Interacting with Detainees.

252.237-7020

Reserved.

252-3

252.237-7021

Reserved.

252.237-7022

Services at Installations Being Closed.

252.237-7023

Continuation of Essential Contractor Services.

252.237-7024

Notice of Continuation of Essential Contractor Services.

252.237-7025

Preaward Transparency Requirements for Firms Offering to

Support Department of Defense Audits—Representation and

Disclosure.

252.237-7026

Postaward Transparency Requirements for Firms that Support

Department of Defense Audits.

252.237-7027

Transfer and Adoption of Military Animals.

252.239

RESERVED

252.239-7000

Protection Against Compromising Emanations.

252.239-7001

Information Assurance Contractor Training and Certification.

252.239-7002

Access.

252.239-7003

Reserved.

252.239-7004

Orders for Facilities and Services.

252.239-7005

Reserved.

252.239-7006

Reserved.

252.239-7007

Cancellation or Termination of Orders.

252.239-7008

Reserved.

252.239-7009

Representation of Use of Cloud Computing.

252.239-7010

Cloud Computing Services.

252.239-7011

Special Construction and Equipment Charges.

252.239-7012

Title to Telecommunication Facilities and Equipment.

252.239-7013

Term of Agreement and Continuation of Services.

252.239-7014

Reserved.

252.239-7015

Reserved.

252.239-7016

Telecommunications Security Equipment, Devices, Techniques,

and Services.

252.239-7017

Notice of Supply Chain Risk.

252.239-7018

Supply Chain Risk.

252.241

RESERVED

252.241-7000

Superseding Contract.

252.241-7001

Government Access.

252.242

RESERVED

252.242-7000

Reserved.

252.242-7001

Reserved.

252.242-7002

Reserved.

252.242-7003

Reserved.

252.242-7004

Material Management and Accounting System.

252.242-7005

Contractor Business Systems.

252.242-7006

Accounting System Administration.

252.243

RESERVED

252.243-7000

Reserved.

252.243-7001

Pricing of Contract Modifications.

252.243-7002

Requests for Equitable Adjustment.

252.244

RESERVED

252.244-7000

Subcontracts for Commercial Products or Commercial Services.

252.244-7001

Contractor Purchasing System Administration.

252.245

RESERVED

252.245-7000

Government-Furnished Mapping, Charting, and Geodesy Property.

252.245-7001

Reserved.

252.245-7002

Reserved.

252.245-7003

Contractor Property Management System Administration.

252.245-7004

Reserved.

252.245-7005

Management and Reporting of Government Property.

252.246

RESERVED

252.246-7000

Reserved.

252.246-7001

Warranty of Data.

252.246-7002

Warranty of Construction (Germany).

252.246-7003

Notification of Potential Safety Issues.

252.246-7004

Safety of Facilities, Infrastructure, and Equipment for Military

Operations.

252.246-7005

Notice of Warranty Tracking of Serialized Items.

252.246-7006

Warranty Tracking of Serialized Items.

252.246-7007

Contractor Counterfeit Electronic Part Detection and Avoidance

System.

252.246-7008

Sources of Electronic Parts.

252.247

RESERVED

252.247-7000

Hardship Conditions.

252.247-7001

Reserved.

252.247-7002

Revision of Prices.

252.247-7003

Pass-Through of Motor Carrier Fuel Surcharge Adjustment to the

Cost Bearer.

252.247-7004

Reserved.

252.247-7005

Reserved.

252.247-7006

Reserved.

252.247-7007

Liability and Insurance.

252.247-7008

Reserved.

252.247-7009

Reserved.

252.247-7010

Reserved.

252.247-7011

Reserved.

252.247-7012

Reserved.

252.247-7013

Reserved.

252.247-7014

Demurrage.

252.247-7015

Reserved.

252.247-7016

Contractor Liability for Loss or Damage.

252.247-7017

Reserved.

252.247-7018

Reserved.

252.247-7019

Reserved.

252.247-7020

Reserved.

252.247-7021

Reserved.

252.247-7022

Representation of Extent of Transportation by Sea.

252.247-7023

Transportation of Supplies by Sea.

252.247-7024

Reserved.

252.247-7025

Reflagging or Repair Work.

252.247-7026

Evaluation Preference for Use of Domestic Shipyards —

Applicable to Acquisition of Carriage by Vessel for DoD Cargo in

the Coastwise or Noncontiguous Trade.

252.247-7027

Riding Gang Member Requirements.

252.247-7028

Application for U.S. Government Shipping Documentation/

Instructions.

252.249

RESERVED

252.249-7000

Special Termination Costs.

252.249-7001

Reserved.

252.249-7002

Notification of Anticipated Contract Termination or Reduction.

252.251

RESERVED

252.251-7000

Ordering From Government Supply Sources.

252.251-7001

Use of Interagency Fleet Management System (IFMS) Vehicles

and Related Services.

252-4

SUBPART 252.1 - INSTRUCTIONS FOR USING PROVISIONS AND CLAUSES 252.103

Subpart 252.1 - INSTRUCTIONS FOR USING PROVISIONS AND CLAUSES

252.101 Using part 252.

(b) Numbering.

(2) Provisions or clauses that supplement the FAR.

(ii)(B) DFARS provisions or clauses use a four digit sequential number in the 7000 series, e.g., -7000, -7001, -7002.

Department or agency supplemental provisions or clauses use four digit sequential numbers in the 9000 series.

252.103 Identification of provisions and clauses.

For guidance on numbering department or agency provisions and clauses, see PGI 252.103

252.1-1

This page intentionally left blank.

252.1-2

SUBPART 252.2 - TEXT OF PROVISIONS AND CLAUSES 252.203-7001

Subpart 252.2 - TEXT OF PROVISIONS AND CLAUSES

252.201 RESERVED

252.201-7000 Contracting Officer's Representative.

As prescribed in 201.602-70 , use the following clause:

CONTRACTING OFFICER'S REPRESENTATIVE (DEC 1991)

(a) Definition. “Contracting officer's representative” means an individual designated in accordance with subsection

201.602-2 of the Defense Federal Acquisition Regulation Supplement and authorized in writing by the contracting officer to

perform specific technical or administrative functions.

(b) If the Contracting Officer designates a contracting officer's representative (COR), the Contractor will receive a copy of

the written designation. It will specify the extent of the COR's authority to act on behalf of the contracting officer. The COR

is not authorized to make any commitments or changes that will affect price, quality, quantity, delivery, or any other term or

condition of the contract.

(End of clause)

252.203 RESERVED

252.203-7000 Requirements Relating to Compensation of Former DoD Officials.

As prescribed in 203.171-4 (a), use the following clause:

REQUIREMENTS RELATING TO COMPENSATION OF FORMER DOD OFFICIALS (SEP 2011)

(a) Definition. “Covered DoD official,” as used in this clause, means an individual that—

(1) Leaves or left DoD service on or after January 28, 2008; and

(2)(i) Participated personally and substantially in an acquisition as defined in 41 U.S.C. 131 with a value in excess of

$10 million, and serves or served—

(A) In an Executive Schedule position under subchapter II of chapter 53 of Title 5, United States Code;

(B) In a position in the Senior Executive Service under subchapter VIII of chapter 53 of Title 5, United States

Code; or

(C) In a general or flag officer position compensated at a rate of pay for grade O-7 or above under section 201 of

Title 37, United States Code; or

(ii) Serves or served in DoD in one of the following positions: program manager, deputy program manager,

procuring contracting officer, administrative contracting officer, source selection authority, member of the source selection

evaluation board, or chief of a financial or technical evaluation team for a contract in an amount in excess of $10 million.

(b) The Contractor shall not knowingly provide compensation to a covered DoD official within 2 years after the official

leaves DoD service, without first determining that the official has sought and received, or has not received after 30 days

of seeking, a written opinion from the appropriate DoD ethics counselor regarding the applicability of post-employment

restrictions to the activities that the official is expected to undertake on behalf of the Contractor.

(c) Failure by the Contractor to comply with paragraph (b) of this clause may subject the Contractor to rescission of this

contract, suspension, or debarment in accordance with 41 U.S.C. 2105(c).

(End of clause)

252.203-7001 Prohibition on Persons Convicted of Fraud or Other Defense Contract-Related Felonies.

As prescribed in 203.570-3 , use the following clause:

PROHIBITION ON PERSONS CONVICTED OF FRAUD OR

OTHER DEFENSE-CONTRACT-RELATED FELONIES (JAN 2023)

252.2-1

252.203-7002 DEFENSE FEDERAL ACQUISITION REGULATION

(a) Definitions. As used in this clause—

(1) “Arising out of a contract with the DoD” means any act in connection with—

(i) Attempting to obtain;

(ii) Obtaining; or

(iii) Performing a contract or first-tier subcontract of any agency, department, or component of the Department of

Defense (DoD).

(2) “Conviction of fraud or any other felony” means any conviction for fraud or a felony in violation of state or Federal

criminal statutes, whether entered on a verdict or plea, including a plea of nolo contendere, for which sentence has been

imposed.

(3) “Date of conviction” means the date judgment was entered against the individual.

(b) Any individual who is convicted after September 29, 1988, of fraud or any other felony arising out of a contract with

the DoD is prohibited from serving—

(1) In a management or supervisory capacity on this contract;

(2) On the board of directors of the Contractor;

(3) As a consultant, agent, or representative for the Contractor; or

(4) In any other capacity with the authority to influence, advise, or control the decisions of the Contractor with regard to

this contract.

(c) Unless waived, the prohibition in paragraph (b) of this clause applies for not less than 5 years from the date of

conviction.

(d) 10 U.S.C. 4656 provides that the Contractor shall be subject to a criminal penalty of not more than $500,000 if

convicted of knowingly—

(1) Employing a person under a prohibition specified in paragraph (b) of this clause; or

(2) Allowing such a person to serve on the board of directors of the contractor or first-tier subcontractor.

(e) In addition to the criminal penalties contained in 10 U.S.C. 4656, the Government may consider other available

remedies, such as—

(1) Suspension or debarment;

(2) Cancellation of the contract at no cost to the Government; or

(3) Termination of the contract for default.

(f) The Contractor may submit written requests for waiver of the prohibition in paragraph (b) of this clause to the

Contracting Officer. Requests shall clearly identify—

(1) The person involved;

(2) The nature of the conviction and resultant sentence or punishment imposed;

(3) The reasons for the requested waiver; and

(4) An explanation of why a waiver is in the interest of national security.

(g) Subcontracts. The Contractor agrees to include the substance of this clause, appropriately modified to reflect the

identity and relationship of the parties, in all first-tier subcontracts exceeding the simplified acquisition threshold in Part 2 of

the Federal Acquisition Regulation, except those for commercial products, commercial services, or commercial components.

(h) Pursuant to 10 U.S.C. 4656(c), defense contractors and subcontractors may obtain information as to whether a

particular person has been convicted of fraud or any other felony arising out of a contract with the DoD by contacting The

Office of Justice Programs, The Denial of Federal Benefits Office, U.S. Department of Justice, telephone 301-937-1542;

www.ojp.usdoj.gov/BJA/grant/DPFC.html.

(End of clause)

252.203-7002 Requirement to Inform Employees of Whistleblower Rights.

As prescribed in 203.970 , use the following clause:

REQUIREMENT TO INFORM EMPLOYEES OF WHISTLEBLOWER RIGHTS (DEC 2022)

(a) The Contractor shall inform its employees in writing, in the predominant native language of the workforce, of

contractor employee whistleblower rights and protections under 10 U.S.C. 4701, as described in subpart 203.9 of the Defense

Federal Acquisition Regulation Supplement.

252.2-2

SUBPART 252.2 - TEXT OF PROVISIONS AND CLAUSES 252.203-7004

(b) The Contractor shall include the substance of this clause, including this paragraph (b), in all subcontracts.

(End of clause)

252.203-7003 Agency Office of the Inspector General.

As prescribed in 203.1004 (a), use the following clause:

AGENCY OFFICE OF THE INSPECTOR GENERAL (AUG 2019)

The agency office of the Inspector General referenced in paragraphs (c) and (d) of FAR clause 52.203-13, Contractor Code

of Business Ethics and Conduct, is the DoD Office of Inspector General at the following address:

Department of Defense Office of Inspector General

Administrative Investigations

Contractor Disclosure Program

4800 Mark Center Drive, Suite 14L25

Alexandria, VA 22350-1500

Toll Free Telephone: 866-429-8011

Website: https://www.dodig.mil/Programs/Contractor-Disclosure-Program/.

(End of clause)

252.203-7004 Display of Hotline Posters.

As prescribed in 203.1004 (b)(2)(ii), use the following clause:

DISPLAY OF HOTLINE POSTERS (JAN 2023)

(a) Definition. As used in this clause—

“United States” means the 50 States, the District of Columbia, and outlying areas.

(b) Display of hotline poster(s).

(1)(i) The Contractor shall display prominently the DoD fraud, waste, and abuse hotline poster prepared by the

DoD Office of the Inspector General, in effect at time of contract award, in common work areas within business segments

performing work under Department of Defense (DoD) contracts.

(ii) For contracts performed outside the United States, when security concerns can be appropriately demonstrated,

the contracting officer may provide the contractor the option to publicize the program to contractor personnel in a manner

other than public display of the poster, such as private employee written instructions and briefings.

(2) If the contract is funded, in whole or in part, by Department of Homeland Security (DHS) disaster relief funds and

the work is to be performed in the United States, the DHS fraud hotline poster shall be displayed in addition to the DoD

hotline poster. If a display of a DHS fraud hotline poster is required, the Contractor may obtain such poster from—

(i) DHS Office of Inspector General/MAIL STOP 0305, Attn: Office of Investigations – Hotline, 245 Murray Lane

SW, Washington, DC 20528-0305; or

(ii) Via the internet at https://www.oig.dhs.gov/assets/Hotline/DHS_OIG_Hotline-optimized.jpg.

(c)(1) The DoD hotline poster may be obtained from: Defense Hotline, The Pentagon, Washington, D.C. 20301-1900, or is

also available via the internet at https://www.dodig.mil/Resources/Posters-and-Brochures/.

(2) If a significant portion of the employee workforce does not speak English, then the poster is to be displayed in the

foreign languages that a significant portion of the employees speak.

(3) Additionally, if the Contractor maintains a company website as a method of providing information to employees, the

Contractor shall display an electronic version of the required poster at the website.

(d) Subcontracts. The Contractor shall include the substance of this clause, including this paragraph (d), in all subcontracts

that exceed the threshold specified in Defense Federal Acquisition Regulation Supplement 203.1004 (b)(2)(ii) on the date of

subcontract award, except when the subcontract is for the acquisition of a commercial product or commercial service.

(End of clause)

252.2-3

252.203-7005 DEFENSE FEDERAL ACQUISITION REGULATION

252.203-7005 Representation Relating to Compensation of Former DoD Officials.

As prescribed in 203.171-4 (b), insert the following provision:

REPRESENTATION RELATING TO COMPENSATION OF FORMER DOD OFFICIALS (SEP 2022)

(a) Definition. “Covered DoD official” is defined in the clause at 252.203-7000 , Requirements Relating to Compensation

of Former DoD Officials.

(b) By submission of this offer, the Offeror represents, to the best of its knowledge and belief, that all covered DoD

officials employed by or otherwise receiving compensation from the Offeror, and who are expected to undertake activities on

behalf of the Offeror for any resulting contract, are presently in compliance with all applicable post-employment restrictions,

including those contained in 18 U.S.C. 207, 41 U.S.C. 2101-2107, 5 CFR part 2641, section 1045 of the National Defense

Authorization Act for Fiscal Year 2018 (Pub. L. 115-91), and Federal Acquisition Regulation 3.104-2.

(End of provision)

252.204 RESERVED

252.204-7000 Disclosure of Information.

As prescribed in 204.404-70 (a), use the following clause:

DISCLOSURE OF INFORMATION (OCT 2016)

(a) The Contractor shall not release to anyone outside the Contractor's organization any unclassified information,

regardless of medium (e.g., film, tape, document), pertaining to any part of this contract or any program related to this

contract, unless—

(1) The Contracting Officer has given prior written approval;

(2) The information is otherwise in the public domain before the date of release; or

(3) The information results from or arises during the performance of a project that involves no covered defense

information (as defined in the clause at DFARS 252.204-7012 ) and has been scoped and negotiated by the contracting

activity with the contractor and research performer and determined in writing by the contracting officer to be fundamental

research (which by definition cannot involve any covered defense information), in accordance with National Security

Decision Directive 189, National Policy on the Transfer of Scientific, Technical and Engineering Information, in effect on

the date of contract award and the Under Secretary of Defense (Acquisition and Sustainment) memoranda on Fundamental

Research, dated May 24, 2010, and on Contracted Fundamental Research, dated June 26, 2008 (available at DFARS PGI

204.4 ).

(b) Requests for approval under paragraph (a)(1) shall identify the specific information to be released, the medium to be

used, and the purpose for the release. The Contractor shall submit its request to the Contracting Officer at least 10 business

days before the proposed date for release.

(c) The Contractor agrees to include a similar requirement, including this paragraph (c), in each subcontract under this

contract. Subcontractors shall submit requests for authorization to release through the prime contractor to the Contracting

Officer.

(End of clause)

252.204-7001 Reserved.

252.204-7002 Payment for Contract Line or Subline Items Not Separately Priced.

As prescribed in 204.7109 (a), use the following clause:

PAYMENT FOR CONTRACT LINE OR SUBLINE ITEMS NOT SEPARATELY PRICED (APR 2020)

(a) If the schedule in this contract contains any contract line or subline items identified as not separately priced (NSP), it

means that the unit price for the NSP line or subline item is included in the unit price of another, related line or subline item.

252.2-4

SUBPART 252.2 - TEXT OF PROVISIONS AND CLAUSES 252.204-7006

(b) The Contractor shall not invoice the Government for an item that includes in its price an NSP item until—

(1) The Contractor has also delivered the NSP item included in the price of the item being invoiced; and

(2) The Government has accepted the NSP item.

(c) This clause does not apply to technical data.

(End of clause)

252.204-7003 Control of Government Personnel Work Product.

As prescribed in 204.404-70 (b), use the following clause:

CONTROL OF GOVERNMENT PERSONNEL WORK PRODUCT (APR 1992)

The Contractor’s procedures for protecting against unauthorized disclosure of information shall not require Department of

Defense employees or members of the Armed Forces to relinquish control of their work products, whether classified or not,

to the Contractor.

(End of clause)

252.204-7004 Antiterrorism Awareness Training for Contractors.

As prescribed in 204.7203 , use the following clause:

ANTITERRORISM AWARENESS TRAINING FOR CONTRACTORS (JAN 2023)

(a) Definition. As used in this clause—

“Military installation” means a base, camp, post, station, yard, center, or other activity under the jurisdiction of the

Secretary of a military department or, in the case of an activity in a foreign country, under the operational control of the

Secretary of a military department or the Secretary of Defense (see 10 U.S.C. 2801(c)(4)).

(b) Training. Contractor personnel who require routine physical access to a Federally-controlled facility or military

installation shall complete Level I antiterrorism awareness training within 30 days of requiring access and annually

thereafter. In accordance with Department of Defense Instruction O-2000.16 Volume 1, DoD Antiterrorism (AT) Program

Implementation: DoD AT Standards, Level I antiterrorism awareness training shall be completed—

(1) Through a DoD-sponsored and certified computer or web-based distance learning instruction for Level I

antiterrorism awareness; or

(2) Under the instruction of a Level I antiterrorism awareness instructor.

(c) Additional information. Information and guidance pertaining to DoD antiterrorism awareness training is available at

https://jko.jten.mil/ or as otherwise identified in the performance work statement.

(d) Subcontracts. The Contractor shall include the substance of this clause, including this paragraph (d), in subcontracts,

including subcontracts for commercial products and commercial services, when subcontractor performance requires routine

physical access to a Federally-controlled facility or military installation.

(End of clause)

252.204-7005 Reserved.

252.204-7006 Billing Instructions-Cost Vouchers.

As prescribed in 204.7109 (b), use the following clause:

BILLING INSTRUCTIONS-COST VOUCHERS (MAY 2023)

When submitting a request for payment using a cost voucher, the Contractor shall—

(a) Identify the contract line item(s) on the payment request that reasonably reflect contract work performance; and

252.2-5

252.204-7007 DEFENSE FEDERAL ACQUISITION REGULATION

(b) Separately identify a payment amount for each contract line item included in the payment request.

(End of clause)

252.204-7007 Alternate A, Annual Representations and Certifications.

As prescribed in 204.1202 , use the following provision:

ALTERNATE A, ANNUAL REPRESENTATIONS AND CERTIFICATIONS ( NOV 2023 )

Substitute the following paragraphs (b), (d), and (e) for paragraphs (b) and (d) of the provision at FAR 52.204-8:

(b)(1) If the provision at FAR 52.204-7, System for Award Management, is included in this solicitation, paragraph (e) of

this provision applies.

(2) If the provision at FAR 52.204-7, System for Award Management, is not included in this solicitation, and the

Offeror has an active registration in the System for Award Management (SAM), the Offeror may choose to use paragraph (e)

of this provision instead of completing the corresponding individual representations and certifications in the solicitation. The

Offeror shall indicate which option applies by checking one of the following boxes:

___ (i) Paragraph (e) applies.

___ (ii) Paragraph (e) does not apply and the Offeror has completed the individual representations and certifications

in the solicitation.

(d)(1) The following representations or certifications in the SAM database are applicable to this solicitation as indicated:

(i) 252.204-7016 , Covered Defense Telecommunications Equipment or Services—Representation. Applies to all

solicitations.

(ii) 252.216-7008 , Economic Price Adjustment—Wage Rates or Material Prices Controlled by a Foreign

Government. Applies to solicitations for fixed-price supply and service contracts when the contract is to be performed wholly

or in part in a foreign country, and a foreign government controls wage rates or material prices and may during contract

performance impose a mandatory change in wages or prices of materials.

(iii) 252.225-7042 , Authorization to Perform. Applies to all solicitations when performance will be wholly or in part

in a foreign country.

(iv) 252.225-7049 , Prohibition on Acquisition of Certain Foreign Commercial Satellite Services—Representations.

Applies to solicitations for the acquisition of commercial satellite services.

(v) 252.225-7050 , Disclosure of Ownership or Control by the Government of a Country that is a State Sponsor of

Terrorism. Applies to all solicitations expected to result in contracts of $150,000 or more.

(vi) 252.229-7012 , Tax Exemptions (Italy)—Representation. Applies to solicitations and contracts when contract

performance will be in Italy.

(vii) 252.229-7013 , Tax Exemptions (Spain)—Representation. Applies to solicitations and contracts when contract

performance will be in Spain.

(ix) 252.247-7022 , Representation of Extent of Transportation by Sea. Applies to all solicitations except those for

direct purchase of ocean transportation services or those with an anticipated value at or below the simplified acquisition

threshold.

(2) The following representations or certifications in SAM are applicable to this solicitation as indicated by the

Contracting Officer: [Contracting Officer check as appropriate.]

___ (i) 252.209-7002 , Disclosure of Ownership or Control by a Foreign Government.

___ (ii) 252.225-7000 , Buy American—Balance of Payments Program Certificate.

___ (iii) 252.225-7020 , Trade Agreements Certificate.

___ Use with Alternate I.

___ (iv) 252.225-7031 , Secondary Arab Boycott of Israel.

___ (v) 252.225-7035 , Buy American—Free Trade Agreements—Balance of Payments Program Certificate.

___ Use with Alternate I.

___ Use with Alternate II.

___ Use with Alternate III.

___Use with Alternate IV.

___ Use with Alternate V.

252.2-6

SUBPART 252.2 - TEXT OF PROVISIONS AND CLAUSES 252.204-7009

___ (vi) 252.226-7002 , Representation for Demonstration Project for Contractors Employing Persons with

Disabilities.

___ (vii) 252.232-7015 , Performance-Based Payments—Representation.

(e) The Offeror has completed the annual representations and certifications electronically via the SAM website at https://

www.sam.gov . After reviewing the SAM database information, the Offeror verifies by submission of the offer that the

representations and certifications currently posted electronically that apply to this solicitation as indicated in FAR 52.204–

8(c) and paragraph (d) of this provision have been entered or updated within the last 12 months, are current, accurate,

complete, and applicable to this solicitation (including the business size standard applicable to the NAICS code referenced

for this solicitation), as of the date of this offer, and are incorporated in this offer by reference (see FAR 4.1201); except for

the changes identified below [ Offeror to insert changes, identifying change by provision number, title, date ]. These amended

representation(s) and/or certification(s) are also incorporated in this offer and are current, accurate, and complete as of the

date of this offer.

FAR/DFARS Provision # Title Date Change

Any changes provided by the Offeror are applicable to this solicitation only, and do not result in an update to the

representations and certifications located in the SAM database.

(End of provision)

252.204-7008 Compliance with Safeguarding Covered Defense Information Controls.

As prescribed in 204.7304 (a), use the following provision:

COMPLIANCE WITH SAFEGUARDING COVERED DEFENSE INFORMATION CONTROLS (OCT 2016)

(a) Definitions. As used in this provision—

“Controlled technical information,” “covered contractor information system,” “covered defense information,” “cyber

incident,” “information system,” and “technical information” are defined in clause 252.204-7012 , Safeguarding Covered

Defense Information and Cyber Incident Reporting.

(b) The security requirements required by contract clause 252.204-7012 , shall be implemented for all covered defense

information on all covered contractor information systems that support the performance of this contract.

(c) For covered contractor information systems that are not part of an information technology service or system operated

on behalf of the Government (see 252.204-7012 (b)(2)—

(1) By submission of this offer, the Offeror represents that it will implement the security requirements specified by

National Institute of Standards and Technology (NIST) Special Publication (SP) 800-171 “Protecting Controlled Unclassified

Information in Nonfederal Information Systems and Organizations” (see http://dx.doi.org/10.6028/NIST.SP.800-171) that are

in effect at the time the solicitation is issued or as authorized by the contracting officer not later than December 31, 2017.

(2)(i) If the Offeror proposes to vary from any of the security requirements specified by NIST SP 800-171 that are

in effect at the time the solicitation is issued or as authorized by the Contracting Officer, the Offeror shall submit to the

Contracting Officer, for consideration by the DoD Chief Information Officer (CIO), a written explanation of—

(A) Why a particular security requirement is not applicable; or

(B) How an alternative but equally effective, security measure is used to compensate for the inability to satisfy a

particular requirement and achieve equivalent protection.

(ii) An authorized representative of the DoD CIO will adjudicate offeror requests to vary from NIST SP 800-171

requirements in writing prior to contract award. Any accepted variance from NIST SP 800-171 shall be incorporated into the

resulting contract.

(End of provision)

252.204-7009 Limitations on the Use or Disclosure of Third-Party Contractor Reported Cyber Incident Information.

As prescribed in 204.7304 (b), use the following clause:

252.2-7

252.204-7009 DEFENSE FEDERAL ACQUISITION REGULATION

LIMITATIONS ON THE USE OR DISCLOSURE OF THIRD-PARTY

CONTRACTOR REPORTED CYBER INCIDENT INFORMATION (JAN 2023)

(a) Definitions. As used in this clause—

“Compromise” means disclosure of information to unauthorized persons, or a violation of the security policy of a system,

in which unauthorized intentional or unintentional disclosure, modification, destruction, or loss of an object, or the copying of

information to unauthorized media may have occurred.

“Controlled technical information” means technical information with military or space application that is subject to

controls on the access, use, reproduction, modification, performance, display, release, disclosure, or dissemination. Controlled

technical information would meet the criteria, if disseminated, for distribution statements B through F using the criteria set

forth in DoD Instruction 5230.24, Distribution Statements on Technical Documents. The term does not include information

that is lawfully publicly available without restrictions.

“Covered defense information” means unclassified controlled technical information or other information (as described

in the Controlled Unclassified Information (CUI) Registry at http://www.archives.gov/cui/registry/category-list.html) that

requires safeguarding or dissemination controls pursuant to and consistent with law, regulations, and Governmentwide

policies, and is—

(1) Marked or otherwise identified in the contract, task order, or delivery order and provided to the contractor by or on

behalf of DoD in support of the performance of the contract; or

(2) Collected, developed, received, transmitted, used, or stored by or on behalf of the contractor in support of the

performance of the contract.

“Cyber incident” means actions taken through the use of computer networks that result in a compromise or an actual or

potentially adverse effect on an information system and/or the information residing therein.

“Information system” means a discrete set of information resources organized for the collection, processing, maintenance,

use, sharing, dissemination, or disposition of information.

“Media” means physical devices or writing surfaces including, but is not limited to, magnetic tapes, optical disks,

magnetic disks, large-scale integration memory chips, and printouts onto which covered defense information is recorded,

stored, or printed within a covered contractor information system.

“Technical information” means technical data or computer software, as those terms are defined in the clause at DFARS

252.227-7013 , Rights in Technical Data-Other Than Commercial Products and Commercial Services, regardless of whether

or not the clause is incorporated in this solicitation or contract. Examples of technical information include research and

engineering data, engineering drawings, and associated lists, specifications, standards, process sheets, manuals, technical

reports, technical orders, catalog-item identifications, data sets, studies and analyses and related information, and computer

software executable code and source code.

(b) Restrictions. The Contractor agrees that the following conditions apply to any information it receives or creates in

the performance of this contract that is information obtained from a third-party’s reporting of a cyber incident pursuant to

DFARS clause 252.204-7012 , Safeguarding Covered Defense Information and Cyber Incident Reporting (or derived from

such information obtained under that clause):

(1) The Contractor shall access and use the information only for the purpose of furnishing advice or technical assistance

directly to the Government in support of the Government’s activities related to clause 252.204-7012 , and shall not be used

for any other purpose.

(2) The Contractor shall protect the information against unauthorized release or disclosure.

(3) The Contractor shall ensure that its employees are subject to use and non-disclosure obligations consistent with this

clause prior to the employees being provided access to or use of the information.

(4) The third-party contractor that reported the cyber incident is a third-party beneficiary of the non-disclosure

agreement between the Government and Contractor, as required by paragraph (b)(3) of this clause.

(5) A breach of these obligations or restrictions may subject the Contractor to—

(i) Criminal, civil, administrative, and contractual actions in law and equity for penalties, damages, and other

appropriate remedies by the United States; and

(ii) Civil actions for damages and other appropriate remedies by the third party that reported the cyber incident, as a

third party beneficiary of this clause.

(c) Subcontracts. The Contractor shall include this clause, including this paragraph (c), in subcontracts, or similar

contractual instruments, for services that include support for the Government’s activities related to safeguarding covered

252.2-8

SUBPART 252.2 - TEXT OF PROVISIONS AND CLAUSES 252.204-7010

defense information and cyber incident reporting, including subcontracts for commercial items, without alteration, except to

identify the parties.

(End of clause)

252.204-7010 Requirement for Contractor to Notify DoD if the Contractors Activities are Subject to Reporting Under

the U.S.-International Atomic Energy Agency Additional Protocol.

As prescribed in 204.470-3 , use the following clause:

REQUIREMENT FOR CONTRACTOR TO NOTIFY DOD IF THE CONTRACTOR’S

ACTIVITIES ARE SUBJECT TO REPORTING UNDER THE U.S.-INTERNATIONAL

ATOMIC ENERGY AGENCY ADDITIONAL PROTOCOL (JAN 2009)

(a) If the Contractor is required to report any of its activities in accordance with Department of Commerce regulations

(15 CFR Part 781 et seq.) or Nuclear Regulatory Commission regulations (10 CFR Part 75) in order to implement the

declarations required by the U.S.-International Atomic Energy Agency Additional Protocol (U.S.-IAEA AP), the Contractor

shall—

(1) Immediately provide written notification to the following DoD Program Manager:

[Contracting Officer to insert Program Manager’s name, mailing address, e-mail address, telephone number, and

facsimile number];

(2) Include in the notification—

(i) Where DoD contract activities or information are located relative to the activities or information to be declared to

the Department of Commerce or the Nuclear Regulatory Commission; and

(ii) If or when any current or former DoD contract activities and the activities to be declared to the Department of

Commerce or the Nuclear Regulatory Commission have been or will be co-located or located near enough to one another to

result in disclosure of the DoD activities during an IAEA inspection or visit; and

(3) Provide a copy of the notification to the Contracting Officer.

(b) After receipt of a notification submitted in accordance with paragraph (a) of this clause, the DoD Program Manager

will—

(1) Conduct a security assessment to determine if and by what means access may be granted to the IAEA; or

(2) Provide written justification to the component or agency treaty office for a national security exclusion, in

accordance with DoD Instruction 2060.03, Application of the National Security Exclusion to the Agreements Between the

United States of America and the International Atomic Energy Agency for the Application of Safeguards in the United States

of America. DoD will notify the Contractor if a national security exclusion is applied at the Contractor’s location to prohibit

access by the IAEA.

(c) If the DoD Program Manager determines that a security assessment is required—

(1) DoD will, at a minimum—

(i) Notify the Contractor that DoD officials intend to conduct an assessment of vulnerabilities to IAEA inspections

or visits;

(ii) Notify the Contractor of the time at which the assessment will be conducted, at least 30 days prior to the

assessment;

(iii) Provide the Contractor with advance notice of the credentials of the DoD officials who will conduct the

assessment; and

(iv) To the maximum extent practicable, conduct the assessment in a manner that does not impede or delay

operations at the Contractor’s facility; and

(2) The Contractor shall provide access to the site and shall cooperate with DoD officials in the assessment of

vulnerabilities to IAEA inspections or visits.

(d) Following a security assessment of the Contractor’s facility, DoD officials will notify the Contractor as to—

(1) Whether the Contractor’s facility has any vulnerabilities where potentially declarable activities under the U.S.-

IAEA AP are taking place;

(2) Whether additional security measures are needed; and

(3) Whether DoD will apply a national security exclusion.

(e) If DoD applies a national security exclusion, the Contractor shall not grant access to IAEA inspectors.

252.2-9

252.204-7011 DEFENSE FEDERAL ACQUISITION REGULATION

(f) If DoD does not apply a national security exclusion, the Contractor shall apply managed access to prevent disclosure of

program activities, locations, or information in the U.S. declaration.

(g) The Contractor shall not delay submission of any reports required by the Department of Commerce or the Nuclear

Regulatory Commission while awaiting a DoD response to a notification provided in accordance with this clause.

(h) The Contractor shall incorporate the substance of this clause, including this paragraph (h), in all subcontracts that are

subject to the provisions of the U.S.-IAEA AP.

(End of clause)

252.204-7011 Reserved.

252.204-7012 Safeguarding Covered Defense Information and Cyber Incident Reporting.

As prescribed in 204.7304 (c), use the following clause:

SAFEGUARDING COVERED DEFENSE INFORMATION AND CYBER INCIDENT REPORTING (MAY 2024)

(a) Definitions. As used in this clause—

“Adequate security” means protective measures that are commensurate with the consequences and probability of loss,

misuse, or unauthorized access to, or modification of information.

“Compromise” means disclosure of information to unauthorized persons, or a violation of the security policy of a system,

in which unauthorized intentional or unintentional disclosure, modification, destruction, or loss of an object, or the copying of

information to unauthorized media may have occurred.

“Contractor attributional/proprietary information” means information that identifies the contractor(s), whether directly

or indirectly, by the grouping of information that can be traced back to the contractor(s) (e.g., program description, facility

locations), personally identifiable information, as well as trade secrets, commercial or financial information, or other

commercially sensitive information that is not customarily shared outside of the company.

“Controlled technical information” means technical information with military or space application that is subject to

controls on the access, use, reproduction, modification, performance, display, release, disclosure, or dissemination. Controlled

technical information would meet the criteria, if disseminated, for distribution statements B through F using the criteria set

forth in DoD Instruction 5230.24, Distribution Statements on Technical Documents. The term does not include information

that is lawfully publicly available without restrictions.

“Covered contractor information system” means an unclassified information system that is owned, or operated by or for, a

contractor and that processes, stores, or transmits covered defense information.

“Covered defense information” means unclassified controlled technical information or other information, as described

in the Controlled Unclassified Information (CUI) Registry at http://www.archives.gov/cui/registry/category-list.html, that

requires safeguarding or dissemination controls pursuant to and consistent with law, regulations, and Governmentwide

policies, and is—

(1) Marked or otherwise identified in the contract, task order, or delivery order and provided to the contractor by or on

behalf of DoD in support of the performance of the contract; or

(2) Collected, developed, received, transmitted, used, or stored by or on behalf of the contractor in support of the

performance of the contract.

“Cyber incident” means actions taken through the use of computer networks that result in a compromise or an actual or

potentially adverse effect on an information system and/or the information residing therein.

“Forensic analysis” means the practice of gathering, retaining, and analyzing computer-related data for investigative

purposes in a manner that maintains the integrity of the data.

“Information system” means a discrete set of information resources organized for the collection, processing, maintenance,

use, sharing, dissemination, or disposition of information.

“Malicious software” means computer software or firmware intended to perform an unauthorized process that will have

adverse impact on the confidentiality, integrity, or availability of an information system. This definition includes a virus,

worm, Trojan horse, or other code-based entity that infects a host, as well as spyware and some forms of adware.

“Media” means physical devices or writing surfaces including, but is not limited to, magnetic tapes, optical disks,

magnetic disks, large-scale integration memory chips, and printouts onto which covered defense information is recorded,

stored, or printed within a covered contractor information system.

252.2-10

SUBPART 252.2 - TEXT OF PROVISIONS AND CLAUSES 252.204-7012

‘‘Operationally critical support’’ means supplies or services designated by the Government as critical for airlift, sealift,

intermodal transportation services, or logistical support that is essential to the mobilization, deployment, or sustainment of the

Armed Forces in a contingency operation.

“Rapidly report” means within 72 hours of discovery of any cyber incident.

“Technical information” means technical data or computer software, as those terms are defined in the clause at DFARS

252.227-7013 , Rights in Technical Data—Other Than Commercial Products and Commercial Services, regardless of whether

or not the clause is incorporated in this solicitation or contract. Examples of technical information include research and

engineering data, engineering drawings, and associated lists, specifications, standards, process sheets, manuals, technical

reports, technical orders, catalog-item identifications, data sets, studies and analyses and related information, and computer

software executable code and source code.

(b) Adequate security. The Contractor shall provide adequate security on all covered contractor information systems. To

provide adequate security, the Contractor shall implement, at a minimum, the following information security protections:

(1) For covered contractor information systems that are part of an Information Technology (IT) service or system

operated on behalf of the Government, the following security requirements apply:

(i) Cloud computing services shall be subject to the security requirements specified in the clause 252.239-7010 ,

Cloud Computing Services, of this contract.

(ii) Any other such IT service or system (i.e., other than cloud computing) shall be subject to the security

requirements specified elsewhere in this contract.

(2) For covered contractor information systems that are not part of an IT service or system operated on behalf of

the Government and therefore are not subject to the security requirement specified at paragraph (b)(1) of this clause, the

following security requirements apply:

(i) Except as provided in paragraph (b)(2)(ii) of this clause, the covered contractor information system shall be

subject to the security requirements in National Institute of Standards and Technology (NIST) Special Publication (SP)

800-171, “Protecting Controlled Unclassified Information in Nonfederal Information Systems and Organizations” (available

via the internet at https://csrc.nist.gov/publications/sp800) in effect at the time the solicitation is issued or as authorized by the

Contracting Officer.

(ii)(A) The Contractor shall implement NIST SP 800-171, as soon as practical, but not later than December 31,

2017. For all contracts awarded prior to October 1, 2017, the Contractor shall notify the DoD Chief Information Officer

(CIO), via email at [email protected], within 30 days of contract award, of any security requirements specified by NIST

SP 800-171 not implemented at the time of contract award.

(B) The Contractor shall submit requests to vary from NIST SP 800-171 in writing to the Contracting Officer, for

consideration by the DoD CIO. The Contractor need not implement any security requirement adjudicated by an authorized

representative of the DoD CIO to be nonapplicable or to have an alternative, but equally effective, security measure that may

be implemented in its place.

(C) If the DoD CIO has previously adjudicated the contractor’s requests indicating that a requirement is not

applicable or that an alternative security measure is equally effective, a copy of that approval shall be provided to the

Contracting Officer when requesting its recognition under this contract.

(D) If the Contractor intends to use an external cloud service provider to store, process, or transmit any covered

defense information in performance of this contract, the Contractor shall require and ensure that the cloud service provider

meets security requirements equivalent to those established by the Government for the Federal Risk and Authorization

Management Program (FedRAMP) Moderate baseline (https://www.fedramp.gov/documents-templates/) and that the

cloud service provider complies with requirements in paragraphs (c) through (g) of this clause for cyber incident reporting,

malicious software, media preservation and protection, access to additional information and equipment necessary for forensic

analysis, and cyber incident damage assessment.

(3) Apply other information systems security measures when the Contractor reasonably determines that information

systems security measures, in addition to those identified in paragraphs (b)(1) and (2) of this clause, may be required to

provide adequate security in a dynamic environment or to accommodate special circumstances (e.g., medical devices)

and any individual, isolated, or temporary deficiencies based on an assessed risk or vulnerability. These measures may be

addressed in a system security plan.

(c) Cyber incident reporting requirement.

(1) When the Contractor discovers a cyber incident that affects a covered contractor information system or the covered

defense information residing therein, or that affects the contractor’s ability to perform the requirements of the contract that

are designated as operationally critical support and identified in the contract, the Contractor shall—

252.2-11

252.204-7012 DEFENSE FEDERAL ACQUISITION REGULATION

(i) Conduct a review for evidence of compromise of covered defense information, including, but not limited to,

identifying compromised computers, servers, specific data, and user accounts. This review shall also include analyzing

covered contractor information system(s) that were part of the cyber incident, as well as other information systems on the

Contractor’s network(s), that may have been accessed as a result of the incident in order to identify compromised covered

defense information, or that affect the Contractor’s ability to provide operationally critical support; and

(ii) Rapidly report cyber incidents to DoD at https://dibnet.dod.mil.

(2) Cyber incident report. The cyber incident report shall be treated as information created by or for DoD and shall

include, at a minimum, the required elements at https://dibnet.dod.mil.

(3) Medium assurance certificate requirement.In order to report cyber incidents in accordance with this clause, the

Contractor or subcontractor shall have or acquire a DoD-approved medium assurance certificate to report cyber incidents. For

information on obtaining a DoD-approved medium assurance certificate, see https://public.cyber.mil/eca/.

(d) Malicious software. When the Contractor or subcontractors discover and isolate malicious software in connection with

a reported cyber incident, submit the malicious software to DoD Cyber Crime Center (DC3) in accordance with instructions

provided by DC3 or the Contracting Officer. Do not send the malicious software to the Contracting Officer.

(e) Media preservation and protection. When a Contractor discovers a cyber incident has occurred, the Contractor shall

preserve and protect images of all known affected information systems identified in paragraph (c)(1)(i) of this clause and all

relevant monitoring/packet capture data for at least 90 days from the submission of the cyber incident report to allow DoD to

request the media or decline interest.

(f) Access to additional information or equipment necessary for forensic analysis.Upon request by DoD, the Contractor

shall provide DoD with access to additional information or equipment that is necessary to conduct a forensic analysis.

(g) Cyber incident damage assessment activities. If DoD elects to conduct a damage assessment, the Contracting Officer

will request that the Contractor provide all of the damage assessment information gathered in accordance with paragraph (e)

of this clause.

(h) DoD safeguarding and use of contractor attributional/proprietary information. The Government shall protect against

the unauthorized use or release of information obtained from the contractor (or derived from information obtained from

the contractor) under this clause that includes contractor attributional/proprietary information, including such information

submitted in accordance with paragraph (c). To the maximum extent practicable, the Contractor shall identify and mark

attributional/proprietary information. In making an authorized release of such information, the Government will implement

appropriate procedures to minimize the contractor attributional/proprietary information that is included in such authorized

release, seeking to include only that information that is necessary for the authorized purpose(s) for which the information is

being released.

(i) Use and release of contractor attributional/proprietary information not created by or for DoD. Information

that is obtained from the contractor (or derived from information obtained from the contractor) under this clause that is not

created by or for DoD is authorized to be released outside of DoD—

(1) To entities with missions that may be affected by such information;

(2) To entities that may be called upon to assist in the diagnosis, detection, or mitigation of cyber incidents;

(3) To Government entities that conduct counterintelligence or law enforcement investigations;

(4) For national security purposes, including cyber situational awareness and defense purposes (including with Defense

Industrial Base (DIB) participants in the program at 32 CFR part 236); or

(5) To a support services contractor (“recipient”) that is directly supporting Government activities under a contract

that includes the clause at 252.204-7009 , Limitations on the Use or Disclosure of Third-Party Contractor Reported Cyber

Incident Information.

(j) Use and release of contractor attributional/proprietary information created by or for DoD. Information that is obtained

from the contractor (or derived from information obtained from the contractor) under this clause that is created by or for DoD

(including the information submitted pursuant to paragraph (c) of this clause) is authorized to be used and released outside of

DoD for purposes and activities authorized by paragraph (i) of this clause, and for any other lawful Government purpose or

activity, subject to all applicable statutory, regulatory, and policy based restrictions on the Government’s use and release of

such information.

(k) The Contractor shall conduct activities under this clause in accordance with applicable laws and regulations on the

interception, monitoring, access, use, and disclosure of electronic communications and data.

(l) Other safeguarding or reporting requirements. The safeguarding and cyber incident reporting required by this clause

in no way abrogates the Contractor’s responsibility for other safeguarding or cyber incident reporting pertaining to its

252.2-12

SUBPART 252.2 - TEXT OF PROVISIONS AND CLAUSES 252.204-7014

unclassified information systems as required by other applicable clauses of this contract, or as a result of other applicable

U.S. Government statutory or regulatory requirements.

(m) Subcontracts. The Contractor shall—

(1) Include this clause, including this paragraph (m), in subcontracts, or similar contractual instruments, for

operationally critical support, or for which subcontract performance will involve covered defense information, including

subcontracts for commercial products or commercial services, without alteration, except to identify the parties. The

Contractor shall determine if the information required for subcontractor performance retains its identity as covered defense

information and will require protection under this clause, and, if necessary, consult with the Contracting Officer; and

(2) Require subcontractors to—

(i) Notify the prime Contractor (or next higher-tier subcontractor) when submitting a request to vary from a NIST SP

800-171 security requirement to the Contracting Officer, in accordance with paragraph (b)(2)(ii)(B) of this clause; and

(ii) Provide the incident report number, automatically assigned by DoD, to the prime Contractor (or next higher-tier

subcontractor) as soon as practicable, when reporting a cyber incident to DoD as required in paragraph (c) of this clause.

(End of clause)

252.204-7013 Reserved.

252.204-7014 Limitations on the Use or Disclosure of Information by Litigation Support Contractors.

As prescribed in 204.7403 (a), use the following clause:

LIMITATIONS ON THE USE OR DISCLOSURE OF INFORMATION

BY LITIGATION SUPPORT CONTRACTORS (JAN 2023)

(a) Definitions. As used in this clause—

“Computer software” means computer programs, source code, source code listings, object code listings, design details,

algorithms, processes, flow charts, formulae, and related material that would enable the software to be reproduced, recreated,

or recompiled. Computer software does not include computer data bases or computer software documentation.

“Litigation information” means any information, including sensitive information, that is furnished to the contractor by

or on behalf of the Government, or that is generated or obtained by the contractor in the performance of litigation support

work under a contract. The term does not include information that is lawfully, publicly available without restriction, including

information contained in a publicly available solicitation.

“Litigation support” means administrative, technical, or professional services provided in support of the Government

during or in anticipation of litigation.

"Litigation support contractor" means a contractor (including its experts, technical consultants, subcontractors, and

suppliers) providing litigation support under a contract that contains this clause.

“Sensitive information” means controlled unclassified information of a commercial, financial, proprietary, or privileged

nature. The term includes technical data and computer software, but does not include information that is lawfully, publicly

available without restriction.

“Technical data” means recorded information, regardless of the form or method of the recording, of a scientific or

technical nature (including computer software documentation). The term does not include computer software or data

incidental to contract administration, such as financial and/or management information.

(b) Limitations on use or disclosure of litigation information. Notwithstanding any other provision of this contract, the

Contractor shall—

(1) Access and use litigation information only for the purpose of providing litigation support under this contract;

(2) Not disclose litigation information to any entity outside the Contractor’s organization unless, prior to such

disclosure the Contracting Officer has provided written consent to such disclosure;

(3) Take all precautions necessary to prevent unauthorized disclosure of litigation information;

(4) Not use litigation information to compete against a third party for Government or nongovernment contracts; and

(5) Upon completion of the authorized litigation support activities, destroy or return to the Government at the request of

the Contracting Officer all litigation information in its possession.

(c) Violation of paragraph (b)(1), (b)(2), (b)(3), (b)(4), or (b)(5) of this clause, is a basis for the Government to terminate

this contract.

252.2-13

252.204-7015 DEFENSE FEDERAL ACQUISITION REGULATION

(d) Indemnification and creation of third party beneficiary rights. The Contractor agrees—

(1) To indemnify and hold harmless the Government, its agents, and employees from any claim or liability, including

attorneys’ fees, court costs, and expenses, arising out of, or in any way related to, the misuse or unauthorized modification,

reproduction, release, performance, display, or disclosure of any litigation information; and

(2) That any third party holding proprietary rights or any other legally protectable interest in any litigation information,

in addition to any other rights it may have, is a third party beneficiary under this contract who shall have a right of direct

action against the Contractor, and against any person to whom the Contractor has released or disclosed such litigation

information, for any such unauthorized use or disclosure of such information.

(e) Contractor employees. The Contractor shall ensure that its employees are subject to use and nondisclosure obligations

consistent with this clause prior to the employees being provided access to or use of any litigation information covered by this

clause.

(f) Subcontracts. Include the substance of this clause, including this paragraph (f), in all subcontracts, including

subcontracts for commercial products or commercial services.

(End of clause)

252.204-7015 Notice of Authorized Disclosure of Information for Litigation Support.

As prescribed in 204.7403 (b), use the following clause:

NOTICE OF AUTHORIZED DISCLOSURE OF INFORMATION FOR LITIGATION SUPPORT (JAN 2023)

(a) Definitions. As used in this clause—

“Computer software” means computer programs, source code, source code listings, object code listings, design details,

algorithms, processes, flow charts, formulae, and related material that would enable the software to be reproduced, recreated,

or recompiled. Computer software does not include computer data bases or computer software documentation.

“Litigation support” means administrative, technical, or professional services provided in support of the Government

during or in anticipation of litigation.

"Litigation support contractor" means a contractor (including its experts, technical consultants, subcontractors, and

suppliers) providing litigation support under a contract that contains the clause at 252.204-7014 , Limitations on the Use or

Disclosure of Information by Litigation Support Contractors.

“Sensitive information” means controlled unclassified information of a commercial, financial, proprietary, or privileged

nature. The term includes technical data and computer software, but does not include information that is lawfully, publicly

available without restriction.

“Technical data” means recorded information, regardless of the form or method of the recording, of a scientific or

technical nature (including computer software documentation). The term does not include computer software or data

incidental to contract administration, such as financial and/or management information.

(b) Notice of authorized disclosures. Notwithstanding any other provision of this solicitation or contract, the Government

may disclose to a litigation support contractor, for the sole purpose of litigation support activities, any information, including

sensitive information, received—

(1) Within or in connection with a quotation or offer; or

(2) In the performance of or in connection with a contract.

(c) Subcontracts. Include the substance of this clause, including this paragraph (c), in all subcontracts, including

subcontracts for commercial products or commercial services.

(End of clause)

252.204-7016 Covered Defense Telecommunications Equipment or Services—Representation.

As prescribed in 204.2105 (a), use the following provision:

COVERED DEFENSE TELECOMMUNICATIONS EQUIPMENT OR SERVICES—REPRESENTATION (DEC 2019)

252.2-14

SUBPART 252.2 - TEXT OF PROVISIONS AND CLAUSES 252.204-7017

(a) Definitions. As used in this provision, “covered defense telecommunications equipment or services” has the meaning

provided in the clause 252.204-7018 , Prohibition on the Acquisition of Covered Defense Telecommunications Equipment or

Services.

(b) Procedures. The Offeror shall review the list of excluded parties in the System for Award Management (SAM) (https://

www.sam.gov/) for entities excluded from receiving federal awards for “covered defense telecommunications equipment or

services”.

(c) Representation. The Offeror represents that it [ ] does, [ ] does not provide covered defense telecommunications

equipment or services as a part of its offered products or services to the Government in the performance of any contract,

subcontract, or other contractual instrument.

(End of provision)

252.204-7017 Prohibition on the Acquisition of Covered Defense Telecommunications Equipment or Services—

Representation.

As prescribed in 204.2105 (b), use the following provision:

PROHIBITION ON THE ACQUISITION OF COVERED DEFENSE

TELECOMMUNICATIONS EQUIPMENT OR SERVICES—REPRESENTATION (MAY 2021)

The Offeror is not required to complete the representation in this provision if the Offeror has represented in the provision

at 252.204-7016 , Covered Defense Telecommunications Equipment or Services—Representation, that it “does not provide

covered defense telecommunications equipment or services as a part of its offered products or services to the Government in

the performance of any contract, subcontract, or other contractual instrument.”

(a) Definitions. “Covered defense telecommunications equipment or services,” “covered mission,” “critical technology,”

and “substantial or essential component,” as used in this provision, have the meanings given in the 252.204-7018 clause,

Prohibition on the Acquisition of Covered Defense Telecommunications Equipment or Services, of this solicitation.

(b) Prohibition. Section 1656 of the National Defense Authorization Act for Fiscal Year 2018 (Pub. L. 115-91) prohibits

agencies from procuring or obtaining, or extending or renewing a contract to procure or obtain, any equipment, system, or

service to carry out covered missions that uses covered defense telecommunications equipment or services as a substantial or

essential component of any system, or as critical technology as part of any system.

(c) Procedures. The Offeror shall review the list of excluded parties in the System for Award Management (SAM) at

https://www.sam.gov for entities that are excluded when providing any equipment, system, or service to carry out covered

missions that uses covered defense telecommunications equipment or services as a substantial or essential component of any

system, or as critical technology as part of any system, unless a waiver is granted.

Representation. If in its annual representations and certifications in SAM the Offeror has represented in paragraph (c)

of the provision at 252.204-7016 , Covered Defense Telecommunications Equipment or Services—Representation, that it

“does” provide covered defense telecommunications equipment or services as a part of its offered products or services to the

Government in the performance of any contract, subcontract, or other contractual instrument, then the Offeror shall complete

the following additional representation:

The Offeror represents that it [ ] will [ ] will not provide covered defense telecommunications equipment or services as a

part of its offered products or services to DoD in the performance of any award resulting from this solicitation.

(e) Disclosures. If the Offeror has represented in paragraph (d) of this provision that it “will provide covered defense

telecommunications equipment or services,” the Offeror shall provide the following information as part of the offer:

(1) A description of all covered defense telecommunications equipment and services offered (include brand or

manufacturer; product, such as model number, original equipment manufacturer (OEM) number, manufacturer part number,

or wholesaler number; and item description, as applicable).

(2) An explanation of the proposed use of covered defense telecommunications equipment and services and any factors

relevant to determining if such use would be permissible under the prohibition referenced in paragraph (b) of this provision.

(3) For services, the entity providing the covered defense telecommunications services (include entity name, unique

entity identifier, and Commercial and Government Entity (CAGE) code, if known).

252.2-15

252.204-7018 DEFENSE FEDERAL ACQUISITION REGULATION

(4) For equipment, the entity that produced or provided the covered defense telecommunications equipment (include

entity name, unique entity identifier, CAGE code, and whether the entity was the OEM or a distributor, if known).

(End of provision)

252.204-7018 Prohibition on the Acquisition of Covered Defense Telecommunications Equipment or Services.

As prescribed in 204.2105 (c), use the following clause:

PROHIBITION ON THE ACQUISITION OF COVERED DEFENSE

TELECOMMUNICATIONS EQUIPMENT OR SERVICES (JAN 2023)

(a) Definitions. As used in this clause—

“Covered defense telecommunications equipment or services” means—

(1) Telecommunications equipment produced by Huawei Technologies Company or ZTE Corporation, or any

subsidiary or affiliate of such entities;

(2) Telecommunications services provided by such entities or using such equipment; or

(3) Telecommunications equipment or services produced or provided by an entity that the Secretary of Defense

reasonably believes to be an entity owned or controlled by, or otherwise connected to, the government of a covered foreign

country.

“Covered foreign country” means—

(1) The People’s Republic of China; or

(2) The Russian Federation.

“Covered missions” means—

(1) The nuclear deterrence mission of DoD, including with respect to nuclear command, control, and communications,

integrated tactical warning and attack assessment, and continuity of Government; or

(2) The homeland defense mission of DoD, including with respect to ballistic missile defense.

“Critical technology” means—

(1) Defense articles or defense services included on the United States Munitions List set forth in the International

Traffic in Arms Regulations under subchapter M of chapter I of title 22, Code of Federal Regulations;

(2) Items included on the Commerce Control List set forth in Supplement No. 1 to part 774 of the Export

Administration Regulations under subchapter C of chapter VII of title 15, Code of Federal Regulations, and controlled—

(i) Pursuant to multilateral regimes, including for reasons relating to national security, chemical and biological

weapons proliferation, nuclear nonproliferation, or missile technology; or

(ii) For reasons relating to regional stability or surreptitious listening;

(3) Specially designed and prepared nuclear equipment, parts and components, materials, software, and technology

covered by part 810 of title 10, Code of Federal Regulations (relating to assistance to foreign atomic energy activities);

(4) Nuclear facilities, equipment, and material covered by part 110 of title 10, Code of Federal Regulations (relating to

export and import of nuclear equipment and material);

(5) Select agents and toxins covered by part 331 of title 7, Code of Federal Regulations, part 121 of title 9 of such

Code, or part 73 of title 42 of such Code; or

(6) Emerging and foundational technologies controlled pursuant to section 1758 of the Export Control Reform Act of

2018 (50 U.S.C. 4817).

“Substantial or essential component” means any component necessary for the proper function or performance of a piece of

equipment, system, or service.

(b) Prohibition. In accordance with section 1656 of the National Defense Authorization Act for Fiscal Year 2018 (Pub. L.

115-91), the contractor shall not provide to the Government any equipment, system, or service to carry out covered missions

that uses covered defense telecommunications equipment or services as a substantial or essential component of any system, or

as critical technology as part of any system, unless the covered defense telecommunication equipment or services are covered

by a waiver described in Defense Federal Acquisition Regulation Supplement 204.2104 .

(c) Procedures. The Contractor shall review the list of excluded parties in the System for Award Management (SAM) at

https://www.sam.gov for entities that are excluded when providing any equipment, system, or service, to carry out covered

missions, that uses covered defense telecommunications equipment or services as a substantial or essential component of any

system, or as critical technology as part of any system, unless a waiver is granted.

252.2-16

SUBPART 252.2 - TEXT OF PROVISIONS AND CLAUSES 252.204-7019

(d) Reporting.

(1) In the event the Contractor identifies covered defense telecommunications equipment or services used as

a substantial or essential component of any system, or as critical technology as part of any system, during contract

performance, the Contractor shall report at https://dibnet.dod.mil the information in paragraph (d)(2) of this clause.

(2) The Contractor shall report the following information pursuant to paragraph (d)(1) of this clause:

(i) Within 3 business days from the date of such identification or notification: the contract number; the order

number(s), if applicable; supplier name; brand; model number (original equipment manufacturer number, manufacturer part

number, or wholesaler number); item description; and any readily available information about mitigation actions undertaken

or recommended.

(ii) Within 30 business days of submitting the information in paragraph (d)(2)(i) of this clause: any further available

information about mitigation actions undertaken or recommended. In addition, the Contractor shall describe the efforts it

undertook to prevent use or submission of a covered defense telecommunications equipment or services, and any additional

efforts that will be incorporated to prevent future use or submission of covered telecommunications equipment or services.

(e) Subcontracts. The Contractor shall insert the substance of this clause, including this paragraph (e), in all subcontracts

and other contractual instruments, including subcontracts for the acquisition of commercial products or commercial services.

(End of clause)

252.204-7019 Notice of NISTSP 800-171 DoD Assessment Requirements.

As prescribed in 204.7304(d), use the following provision:

NOTICE OF NIST SP 800–171 DOD ASSESSMENT REQUIREMENTS (NOV 2023)

(a) Definitions.

“Basic Assessment”, “Medium Assessment”, and “High Assessment” have the meaning given in the clause 252.204-7020,

NIST SP 800-171 DoD Assessments.

“Covered contractor information system” has the meaning given in the clause 252.204-7012, Safeguarding Covered

Defense Information and Cyber Incident Reporting, of this solicitation.

(b) Requirement. In order to be considered for award, if the Offeror is required to implement NIST SP 800–171, the

Offeror shall have a current assessment ( i.e., not more than 3 years old unless a lesser time is specified in the solicitation)

(see 252.204–7020) for each covered contractor information system that is relevant to the offer, contract, task order, or

delivery order. The Basic, Medium, and High NIST SP 800–171 DoD Assessments are described in the NIST SP 800–171

DoD Assessment Methodology located at https://www.acq.osd.mil/asda/dpc/cp/cyber/docs/safeguarding/NIST-SP-800-171-

Assessment-Methodology-Version-1.2.1-6.24.2020.pdf .

(c) Procedures.

(1) The Offeror shall verify that summary level scores of a current NIST SP 800-171 DoD Assessment (i.e., not more

than 3 years old unless a lesser time is specified in the solicitation) are posted in the Supplier Performance Risk System

(SPRS) () for all covered contractor information systems relevant to the offer.

(2) If the Offeror does not have summary level scores of a current NIST SP 800-171 DoD Assessment (i.e., not more

than 3 years old unless a lesser time is specified in the solicitation) posted in SPRS, the Offeror may conduct and submit a

Basic Assessment to for posting to SPRS in the format identified in paragraph (d) of this provision.

(d) Summary level scores. Summary level scores for all assessments will be posted 30 days post-assessment in SPRS to

provide DoD Components visibility into the summary level scores of strategic assessments.

(1) Basic Assessments. An Offeror may follow the procedures in paragraph (c)(2) of this provision for posting Basic

Assessments to SPRS.

(i) The email shall include the following information:

(A) Cybersecurity standard assessed (e.g., NIST SP 800-171 Rev 1).

(B) Organization conducting the assessment (e.g., Contractor self-assessment).

(C) For each system security plan (security requirement 3.12.4) supporting the performance of a DoD contract—

(1) All industry Commercial and Government Entity (CAGE) code(s) associated with the information system(s)

addressed by the system security plan; and

(2) A brief description of the system security plan architecture, if more than one plan exists.

(D) Date the assessment was completed.

252.2-17

252.204-7020 DEFENSE FEDERAL ACQUISITION REGULATION

(E) Summary level score (e.g., 95 out of 110, NOT the individual value for each requirement).

(F) Date that all requirements are expected to be implemented (i.e., a score of 110 is expected to be achieved)

based on information gathered from associated plan(s) of action developed in accordance with NIST SP 800-171.

(ii) If multiple system security plans are addressed in the email described at paragraph (d)(1)(i) of this section, the

Offeror shall use the following format for the report:

System Security

Plan

CAGE Codes

supported by this

plan

Brief description

of the plan

architecture

Date of assessment Total Score Date score of 110

will achieved

(2) Medium and High Assessments. DoD will post the following Medium and/or High Assessment summary level

scores to SPRS for each system assessed:

(i) The standard assessed (e.g., NIST SP 800-171 Rev 1).

(ii) Organization conducting the assessment, e.g., DCMA, or a specific organization (identified by Department of

Defense Activity Address Code (DoDAAC)).

(iii) All industry CAGE code(s) associated with the information system(s) addressed by the system security plan.

(iv) A brief description of the system security plan architecture, if more than one system security plan exists.

(v) Date and level of the assessment, i.e., medium or high.

(vi) Summary level score (e.g., 105 out of 110, not the individual value assigned for each requirement).

(vii) Date that all requirements are expected to be implemented (i.e., a score of 110 is expected to be achieved) based

on information gathered from associated plan(s) of action developed in accordance with NIST SP 800-171.

(3) Accessibility.

(i) Assessment summary level scores posted in SPRS are available to DoD personnel, and are protected, in

accordance with the standards set forth in DoD Instruction 5000.79, Defense-wide Sharing and Use of Supplier and Product

Performance Information (PI).

(ii) Authorized representatives of the Offeror for which the assessment was conducted may access SPRS to view

their own summary level scores, in accordance with the SPRS Software User’s Guide for Awardees/Contractors available at

https://www.sprs.csd.disa.mil/pdf/SPRS_Awardee.pdf.

(iii) A High NIST SP 800-171 DoD Assessment may result in documentation in addition to that listed in this section.

DoD will retain and protect any such documentation as “Controlled Unclassified Information (CUI)” and intended for

internal DoD use only. The information will be protected against unauthorized use and release, including through the exercise

of applicable exemptions under the Freedom of Information Act (e.g., Exemption 4 covers trade secrets and commercial or

financial information obtained from a contractor that is privileged or confidential).

(End of provision)

252.204-7020 NIST SP 800-171DoD Assessment Requirements.

As prescribed in 204.7304 (e), use the following clause:

NIST SP 800-171 DOD ASSESSMENT REQUIREMENTS (NOV 2023)

(a) Definitions.

Basic Assessment” means a contractor’s self-assessment of the contractor’s implementation of NIST SP 800-171 that—

(1) Is based on the Contractor’s review of their system security plan(s) associated with covered contractor information

system(s);

(2) Is conducted in accordance with the NIST SP 800-171 DoD Assessment Methodology; and

(3) Results in a confidence level of “Low” in the resulting score, because it is a self-generated score.

“Covered contractor information system” has the meaning given in the clause 252.204-7012, Safeguarding Covered

Defense Information and Cyber Incident Reporting, of this contract.

252.2-18

SUBPART 252.2 - TEXT OF PROVISIONS AND CLAUSES 252.204-7020

“High Assessment” means an assessment that is conducted by Government personnel using NIST SP 800-171A,

Assessing Security Requirements for Controlled Unclassified Information that—

(1) Consists of—

(i) A review of a contractor’s Basic Assessment;

(ii) A thorough document review;

(iii) Verification, examination, and demonstration of a Contractor’s system security plan to validate that NIST SP

800-171 security requirements have been implemented as described in the contractor’s system security plan; and

(iv) Discussions with the contractor to obtain additional information or clarification, as needed; and

(2) Results in a confidence level of “High” in the resulting score.

“Medium Assessment” means an assessment conducted by the Government that—

(1) Consists of—

(i) A review of a contractor’s Basic Assessment;

(ii) A thorough document review; and

(iii) Discussions with the contractor to obtain additional information or clarification, as needed; and

(2) Results in a confidence level of “Medium” in the resulting score.

(b) Applicability. This clause applies to covered contractor information systems that are required to comply with the

National Institute of Standards and Technology (NIST) Special Publication (SP) 800-171, in accordance with Defense

Federal Acquisition Regulation System (DFARS) clause at 252.204-7012, Safeguarding Covered Defense Information and

Cyber Incident Reporting, of this contract.

(c) Requirements. The Contractor shall provide access to its facilities, systems, and personnel necessary for the

Government to conduct a Medium or High NIST SP 800–171 DoD Assessment, as described in NIST SP 800–171 DoD

Assessment Methodology at https://www.acq.osd.mil/asda/dpc/cp/cyber/docs/safeguarding/NIST-SP-800-171-Assessment-

Methodology-Version-1.2.1-6.24.2020.pdf , if necessary.

(d) Procedures. Summary level scores for all assessments will be posted in the Supplier Performance Risk System (SPRS)

() to provide DoD Components visibility into the summary level scores of strategic assessments.

(1) Basic Assessments. A contractor may submit, via encrypted email, summary level scores of Basic Assessments

conducted in accordance with the NIST SP 800-171 DoD Assessment Methodology to for posting to SPRS.

(i) The email shall include the following information:

(A) Version of NIST SP 800-171 against which the assessment was conducted.

(B) Organization conducting the assessment (e.g., Contractor self-assessment).

(C) For each system security plan (security requirement 3.12.4) supporting the performance of a DoD contract—

(1) All industry Commercial and Government Entity (CAGE) code(s) associated with the information

system(s) addressed by the system security plan; and

(2) A brief description of the system security plan architecture, if more than one plan exists.

(D) Date the assessment was completed.

(E) Summary level score (e.g., 95 out of 110, NOT the individual value for each requirement).

(F) Date that all requirements are expected to be implemented (i.e., a score of 110 is expected to be achieved)

based on information gathered from associated plan(s) of action developed in accordance with NIST SP 800-171.

(ii) If multiple system security plans are addressed in the email described at paragraph (b)(1)(i) of this section, the

Contractor shall use the following format for the report:

System Security

Plan

CAGE Codes

supported by this

plan

Brief description

of the plan

architecture

Date of assessment Total Score Date score of 110

will achieved

(2) Medium and High Assessments. DoD will post the following Medium and/or High Assessment summary level

scores to SPRS for each system security plan assessed:

(i) The standard assessed (e.g., NIST SP 800-171 Rev 1).

252.2-19

252.204-7021 DEFENSE FEDERAL ACQUISITION REGULATION

(ii) Organization conducting the assessment, e.g., DCMA, or a specific organization (identified by Department of

Defense Activity Address Code (DoDAAC)).

(iii) All industry CAGE code(s) associated with the information system(s) addressed by the system security plan.

(iv) A brief description of the system security plan architecture, if more than one system security plan exists.

(v) Date and level of the assessment, i.e., medium or high.

(vi) Summary level score (e.g., 105 out of 110, not the individual value assigned for each requirement).

(vii) Date that all requirements are expected to be implemented (i.e., a score of 110 is expected to be achieved) based

on information gathered from associated plan(s) of action developed in accordance with NIST SP 800-171.

(e) Rebuttals.

(1) DoD will provide Medium and High Assessment summary level scores to the Contractor and offer the opportunity

for rebuttal and adjudication of assessment summary level scores prior to posting the summary level scores to SPRS (see

SPRS User’s Guide https://www.sprs.csd.disa.mil/pdf/SPRS_Awardee.pdf).

(2) Upon completion of each assessment, the contractor has 14 business days to provide additional information to

demonstrate that they meet any security requirements not observed by the assessment team or to rebut the findings that may

be of question.

(f) Accessibility.

(1) Assessment summary level scores posted in SPRS are available to DoD personnel, and are protected, in accordance

with the standards set forth in DoD Instruction 5000.79, Defense-wide Sharing and Use of Supplier and Product Performance

Information (PI).

(2) Authorized representatives of the Contractor for which the assessment was conducted may access SPRS to view

their own summary level scores, in accordance with the SPRS Software User’s Guide for Awardees/Contractors available at .

(3) A High NIST SP 800-171 DoD Assessment may result in documentation in addition to that listed in this clause.

DoD will retain and protect any such documentation as “Controlled Unclassified Information (CUI)” and intended for

internal DoD use only. The information will be protected against unauthorized use and release, including through the exercise

of applicable exemptions under the Freedom of Information Act (e.g., Exemption 4 covers trade secrets and commercial or

financial information obtained from a contractor that is privileged or confidential).

(g) Subcontracts.

(1) The Contractor shall insert the substance of this clause, including this paragraph (g), in all subcontracts and other

contractual instruments, including subcontracts for the acquisition of commercial products or commercial services (excluding

commercially available off-the-shelf).

(2) The Contractor shall not award a subcontract or other contractual instrument, that is subject to the implementation

of NIST SP 800–171 security requirements, in accordance with DFARS clause 252.204–7012 of this contract, unless the

subcontractor has completed, within the last 3 years, at least a Basic NIST SP 800–171 DoD Assessment, as described

in https://www.acq.osd.mil/asda/dpc/cp/cyber/docs/safeguarding/NIST-SP-800-171-Assessment-Methodology-

Version-1.2.1-6.24.2020.pdf , for all covered contractor information systems relevant to its offer that are not part of an

information technology service or system operated on behalf of the Government.

(3) If a subcontractor does not have summary level scores of a current NIST SP 800-171 DoD Assessment (i.e.,

not more than 3 years old unless a lesser time is specified in the solicitation) posted in SPRS, the subcontractor may

conduct and submit a Basic Assessment, in accordance with the NIST SP 800-171 DoD Assessment Methodology, to

mailto:webptsmh@navy.mil for posting to SPRS along with the information required by paragraph (d) of this clause.

(End of clause)

252.204-7021 Cybersecurity Maturity Model Certification Requirements.

As prescribed in 204.7503(a) and (b), insert the following clause:

CYBERSECURITY MATURITY MODEL CERTIFICATION REQUIREMENTS (JAN 2023)

(a) Scope. The Cybersecurity Maturity Model Certification (CMMC) CMMC is a framework that measures a contractor’s

cybersecurity maturity to include the implementation of cybersecurity practices and institutionalization of processes (see

https://www.acq.osd.mil/cmmc/index.html).

(b) Requirements. The Contractor shall have a current (i.e. not older than 3 years) CMMC certificate at the CMMC level

required by this contract and maintain the CMMC certificate at the required level for the duration of the contract.

(c) Subcontracts. The Contractor shall—

252.2-20

SUBPART 252.2 - TEXT OF PROVISIONS AND CLAUSES 252.204-7023

(1) Insert the substance of this clause, including this paragraph (c), in all subcontracts and other contractual instruments,

including subcontracts for the acquisition of commercial products or commercial services, excluding commercially available

off-the-shelf items; and

(2) Prior to awarding to a subcontractor, ensure that the subcontractor has a current (i.e., not older than 3 years) CMMC

certificate at the CMMC level that is appropriate for the information that is being flowed down to the subcontractor.

252.204-7022 Expediting Contract Closeout.

As prescribed in 204.804-70, use the following clause:

EXPEDITING CONTRACT CLOSEOUT (MAY 2021)

(a) At the conclusion of all applicable closeout requirements of Federal Acquisition Regulation 4.804, the Government

and Contractor shall mutually agree on the residual dollar amount remaining on the contract. Both the Government and

Contractor agree to waive payment of any residual dollar amount of $1,000 or less to which either party may be entitled at the

time of contract closeout.

(b) A residual dollar amount includes all money owed to either party at the end of the contract and as a result of the

contract, excluding amounts connected in any way with taxation or a violation of law or regulation.

(c) For purposes of determining residual dollar amounts, offsets (e.g., across multiple contracts or orders) may be

considered only to the extent permitted by law.

(End of clause)

252.204-7023 Reporting Requirements for Contracted Services.

Basic. As prescribed in 204.1705 Contract clauses.(a)(i) and (ii), use the following clause:

REPORTING REQUIREMENTS FOR CONTRACTED SERVICES—BASIC (JUL 2021)

(a) Definition. As used in this clause--

“First-tier subcontract” means a subcontract awarded directly by the contractor for the purpose of acquiring services for

performance of a prime contract. It does not include the contractor’s supplier agreements with vendors, such as long-term

arrangements for materials or supplies or services that benefit multiple contracts and/or the costs of which are normally

applied to a contractor’s general and administrative expenses or indirect costs.

(b) The Contractor shall report annually, by October 31, at https://www.sam.gov, on the services performed under this

contract or order, including any first-tier subcontracts, during the preceding Government fiscal year (October 1 - September

30).

(c) The Contractor shall report the following information for the contract or order:

(1) The total dollar amount invoiced for services performed during the preceding Government fiscal year under the

contract or order.

(2) The number of Contractor direct labor hours, to include first-tier subcontractor direct labor hours, as applicable,

expended on the services performed under the contract or order during the previous Government fiscal year.

(d) The Government will review the Contractor’s reported information for reasonableness and consistency with available

contract information. In the event the Government believes that revisions to the Contractor’s reported information are

warranted, the Government will notify the Contractor. Upon notification, the Contractor shall revise the reported information

or provide the Government with a supporting rationale for the information.

(End of clause)

Alternate I. As prescribed in 204.1705 Contract clauses. (a)(i) and (iii), use the following clause, which substitutes

“contract or agreement for each order” in lieu of “contract or order” in paragraph (b) and “order” in lieu of “contract or order”

in paragraphs (c) and (c)(1) and (2), and identifies the dollar threshold and service acquisition portfolio groups for which

orders under the contract or agreement require service contract reporting.

REPORTING REQUIREMENTS FOR CONTRACTED SERVICES—ALTERNATE I (JUL 2021)

252.2-21

252.204-7024 DEFENSE FEDERAL ACQUISITION REGULATION

(a) Definition. As used in this clause--

“First-tier subcontract” means a subcontract awarded directly by the contractor for the purpose of acquiring services for

performance of a prime contract. It does not include the contractor’s supplier agreements with vendors, such as long-term

arrangements for materials or supplies or services that benefit multiple contracts and/or the costs of which are normally

applied to a contractor’s general and administrative expenses or indirect costs.

(b) The contractor shall report annually, by October 31, at https://www.sam.gov, on services performed during the

preceding Government fiscal year (October 1 - September 30) under this contract or agreement for each order, including any

first-tier subcontract, which exceeds $3 million for services in the following service acquisition portfolio groups:

(1) Logistics management services.

(2) Equipment-related services.

(3) Knowledge-based services.

(4) Electronics and communications services.

(c) The Contractor shall report the following information for the order:

(1) The total dollar amount invoiced for services performed during the preceding Government fiscal year under the

order.

(2) The number of Contractor direct labor hours, to include first-tier subcontractor direct labor hours, as applicable,

expended on the services performed under the order during the previous Government fiscal year.

(d) The Government will review the Contractor’s reported information for reasonableness and consistency with available

contract information. In the event the Government believes that revisions to the Contractor’s reported information are

warranted, the Government will notify the Contractor. Upon notification, the Contractor shall revise the reported information

or provide the Government with a supporting rationale for the information.

(End of clause)

252.204-7024 Notice on the Use of the Supplier Performance Risk System.

As prescribed in 204.7604, use the following provision .

NOTICE ON THE USE OF THE SUPPLIER PERFORMANCE RISK SYSTEM (MAR 2023)

(a) Definitions. As used in this provision—

“Item risk” means the probability that a product, based on intended use, will introduce performance risk resulting in safety

issues, mission degradation, or monetary loss.

“Price risk” means a measure of whether a proposed price for a product or service is consistent with historical prices paid

for that item or service.

“Supplier risk” means the probability that an award may subject the procurement to the risk of unsuccessful performance

or to supply chain risk (see Defense Federal Acquisition Regulation Supplement 239.7301).

(b) The Supplier Performance Risk System (SPRS), available at https://piee.eb.mil/, will be used in the evaluation of the

Quoter or Offeror’s performance. SPRS retrieves item, price, quality, delivery, and contractor information on contracts from

Government reporting systems in order to develop risk assessments.

(c) The Contracting Officer will consider SPRS risk assessments during the evaluation of quotations or offers received in

response to this solicitation as follows:

(1) Item risk will be considered to determine whether the procurement represents a high performance risk to the

Government.

(2) Price risk will be considered in determining if a proposed price is consistent with historical prices paid for a product

or a service or otherwise creates a risk to the Government.

(3) Supplier risk, including but not limited to quality and delivery, will be considered to assess the risk of unsuccessful

performance and supply chain risk.

(d) SPRS risk assessments are generated daily. Quoters or Offerors are able to access their risk assessments by following

the access instructions in the SPRS user's guide available at https://www.sprs.csd.disa.mil/reference.htm. Quoters and

Offerors are granted access to SPRS for their own risk assessment classifications only. SPRS reporting procedures and

risk assessment methodology are detailed in the SPRS user's guide. The method to challenge a rating generated by

SPRS is also provided in the user's guide. SPRS evaluation criteria are available at https://www.sprs.csd.disa.mil/pdf/

SPRS_DataEvaluationCriteria.pdf.

252.2-22

SUBPART 252.2 - TEXT OF PROVISIONS AND CLAUSES 252.208-7000

(e) The Contracting Officer may consider any other available and relevant information when evaluating a quotation or an

offer.

(End of provision)

252.205 RESERVED

252.205-7000 Provision of Information to Cooperative Agreement Holders.

As prescribed in 205.470 , use the following clause:

PROVISION OF INFORMATION TO COOPERATIVE AGREEMENT HOLDERS (JUN 2023)

(a) Definition. “Cooperative agreement holder” means a State or local government; a private, nonprofit organization; a

tribal organization (as defined in section 4(c) of the Indian Self-Determination and Education Assistance Act (25 U.S.C.

5304(l))); or an economic enterprise (as defined in section 3(e) of the Indian Financing Act of 1974 (25 U.S.C. 1452(e)))

whether such economic enterprise is organized for profit or nonprofit purposes; which has an agreement with the Under

Secretary of Defense for Acquisition and Sustainment to furnish procurement technical assistance to business entities.

(b) The Contractor shall provide cooperative agreement holders, upon their request, with a list of those appropriate

employees or offices responsible for entering into subcontracts under defense contracts. The list shall include the business

address, telephone number, and area of responsibility of each employee or office.

(c) The Contractor need not provide the listing to a particular cooperative agreement holder more frequently than once a

year.

(End of clause)

252.206 RESERVED

252.206-7000 Domestic Source Restriction.

As prescribed at 206.302-3-70, use the following provision:

DOMESTIC SOURCE RESTRICTION (AUG 2023)

This solicitation is restricted to domestic sources under the authority of 10 U.S.C. 3204(a)(3). Foreign sources, except

Canadian sources, are not eligible for award.

(End of provision)

252.208 RESERVED

252.208-7000 Intent to Furnish Precious Metals as Government-Furnished Material.

As prescribed in 208.7305 (a), use the following clause:

INTENT TO FURNISH PRECIOUS METALS AS GOVERNMENT-FURNISHED MATERIAL (DEC 1991)

(a) The Government intends to furnish precious metals required in the manufacture of items to be delivered under the

contract if the Contracting Officer determines it to be in the Government's best interest. The use of Government-furnished

silver is mandatory when the quantity required is one hundred troy ounces or more. The precious metal(s) will be furnished

pursuant to the Government Furnished Property clause of the contract.

(b) The Offeror shall cite the type (silver, gold, platinum, palladium, iridium, rhodium, and ruthenium) and quantity in

whole troy ounces of precious metals required in the performance of this contract (including precious metals required for any

first article or production sample), and shall specify the national stock number (NSN) and nomenclature, if known, of the

deliverable item requiring precious metals.

252.2-23

252.209 DEFENSE FEDERAL ACQUISITION REGULATION

Precious Metal* Quantity Deliverable Item

(NSN and Nomenclature)

____________________________________________________________________

*If platinum or palladium, specify whether sponge or granules are required.

(c) Offerors shall submit two prices for each deliverable item which contains precious metals—one based on the

Government furnishing precious metals, and one based on the Contractor furnishing precious metals. Award will be made on

the basis which is in the best interest of the Government.

(d) The Contractor agrees to insert this clause, including this paragraph (d), in solicitations for subcontracts and purchase

orders issued in performance of this contract, unless the Contractor knows that the item being purchased contains no precious

metals.

(End of clause)

252.209 RESERVED

252.209-7000 Reserved.

252.209-7001 Reserved.

252.209-7002 Disclosure of Ownership or Control by a Foreign Government

As prescribed in 209.104-70 , use the following provision:

DISCLOSURE OF OWNERSHIP OR CONTROL BY A FOREIGN GOVERNMENT (DEC 2022)

(a) Definitions.As used in this provision—

(1) “Effectively owned or controlled” means that a foreign government or any entity controlled by a foreign

government has the power, either directly or indirectly, whether exercised or exercisable, to control the election, appointment,

or tenure of the Offeror’s officers or a majority of the Offeror’s board of directors by any means, e.g., ownership, contract, or

operation of law (or equivalent power for unincorporated organizations).

(2) “Entity controlled by a foreign government”—

(i) Means—

(A) Any domestic or foreign organization or corporation that is effectively owned or controlled by a foreign

government; or

(B) Any individual acting on behalf of a foreign government.

(ii) Does not include an organization or corporation that is owned, but is not controlled, either directly or indirectly,

by a foreign government if the ownership of that organization or corporation by that foreign government was effective before

October 23, 1992.

(3) “Foreign government” includes the state and the government of any country (other than the United States and its

outlying areas) as well as any political subdivision, agency, or instrumentality thereof.

(4) “Proscribed information” means—

(i) Top Secret information;

252.2-24

SUBPART 252.2 - TEXT OF PROVISIONS AND CLAUSES 252.209-7004

(ii) Communications security (COMSEC) material, excluding controlled cryptographic items when unkeyed or

utilized with unclassified keys;

(iii) Restricted Data as defined in the U.S. Atomic Energy Act of 1954, as amended;

(iv) Special Access Program (SAP) information; or

(v) Sensitive Compartmented Information (SCI).

(b) Prohibition on award. No contract under a national security program may be awarded to an entity controlled by a

foreign government if that entity requires access to proscribed information to perform the contract, unless the Secretary of

Defense or a designee has waived application of 10 U.S.C. 4874.

(c) Disclosure.The Offeror shall disclose any interest a foreign government has in the Offeror when that interest

constitutes control by a foreign government as defined in this provision. If the Offeror is a subsidiary, it shall also disclose

any reportable interest a foreign government has in any entity that owns or controls the subsidiary, including reportable

interest concerning the Offeror’s immediate parent, intermediate parents, and the ultimate parent. Use separate paper as

needed, and provide the information in the following format:

Offeror’s Point of Contact for Questions

about Disclosure

(Name and Phone Number with

Country Code, City Code and Area

Code, as applicable)

Name and Address of Offeror

Name and Address of Entity Controlled

by a Foreign Government

Description of Interest, Ownership

Percentage, and Identification of

Foreign Government

(End of provision)

252.209-7003 Reserved.

252.209-7004 Subcontracting with Firms that are Owned or Controlled by the Government of a Country that is a

State Sponsor of Terrorism.

As prescribed in 209.409 , use the following clause:

SUBCONTRACTING WITH FIRMS THAT ARE OWNED OR CONTROLLED BY THE

GOVERNMENT OF A COUNTRY THAT IS A STATE SPONSOR OF TERRORISM (MAY 2019)

(a) Unless the Government determines that there is a compelling reason to do so, the Contractor shall not enter into any

subcontract in excess of the threshold specified in Federal Acquisition Regulation 9.405-2(b) on the date of subcontract

award with a firm, or a subsidiary of a firm, that is identified in the Exclusions section of the System for Award Management

(SAM Exclusions) as being ineligible for the award of Defense contracts or subcontracts because it is owned or controlled by

the government of a country that is a state sponsor of terrorism.

(b) A corporate officer or a designee of the Contractor shall notify the Contracting Officer, in writing, before entering into

a subcontract with a party that is identified, in SAM Exclusions, as being ineligible for the award of Defense contracts or

subcontracts because it is owned or controlled by the government of a country that is a state sponsor of terrorism. The notice

252.2-25

252.209-7005 DEFENSE FEDERAL ACQUISITION REGULATION

must include the name of the proposed subcontractor and the compelling reason(s) for doing business with the subcontractor

notwithstanding its inclusion in SAM Exclusions.

(End of clause)

252.209-7005 Reserved.

252.209-7006 Limitations on Contractors Acting as Lead System Integrators.

As prescribed in 209.570-4 (a), use the following provision:

LIMITATIONS ON CONTRACTORS ACTING AS LEAD SYSTEM INTEGRATORS (DEC 2022)

(a) Definitions. “Lead system integrator,” “lead system integrator with system responsibility,” and “lead system integrator

without system responsibility,” as used in this provision, have the meanings given in the clause of this solicitation entitled

“Prohibited Financial Interests for Lead System Integrators” (DFARS 252.209-7007 ).

(b) General. Unless an exception is granted, no contractor performing lead system integrator functions in the acquisition

of a major system by the Department of Defense may have any direct financial interest in the development or construction of

any individual system or element of any system of systems.

(c) Representations.

(1) The offeror represents that it does [ ] does not [ ] propose to perform this contract as a lead system integrator with

system responsibility.

(2) The offeror represents that it does [ ] does not [ ] propose to perform this contract as a lead system integrator

without system responsibility.

(3) If the offeror answered in the affirmative in paragraph (c)(1) or (2) of this provision, the offeror represents that

it does [ ] does not [ ] have any direct financial interest as described in paragraph (b) of this provision with respect to the

system(s), subsystem(s), system of systems, or services described in this solicitation.

(d) If the offeror answered in the affirmative in paragraph (c)(3) of this provision, the offeror should contact the

Contracting Officer for guidance on the possibility of submitting a mitigation plan and/or requesting an exception.

(e) If the offeror does have a direct financial interest, the offeror may be prohibited from receiving an award under this

solicitation, unless the offeror submits to the Contracting Officer appropriate evidence that the offeror was selected by a

subcontractor to serve as a lower-tier subcontractor through a process over which the offeror exercised no control.

(f) This provision implements the requirements of 10 U.S.C. 4292.

(End of provision)

252.209-7007 Prohibited Financial Interests for Lead System Integrators.

As prescribed in 209.570-4 (b), use the following clause:

PROHIBITED FINANCIAL INTERESTS FOR LEAD SYSTEM INTEGRATORS (DEC 2022)

(a) Definitions. As used in this clause—

(1) “Lead system integrator” includes “lead system integrator with system responsibility” and “lead system integrator

without system responsibility.”

(2) “Lead system integrator with system responsibility” means a prime contractor for the development or production of

a major system, if the prime contractor is not expected at the time of award to perform a substantial portion of the work on

the system and the major subsystems.

(3) “Lead system integrator without system responsibility” means a prime contractor under a contract for the

procurement of services, the primary purpose of which is to perform acquisition functions closely associated with inherently

governmental functions (see section 7.503(d) of the Federal Acquisition Regulation) with respect to the development or

production of a major system.

(b) Limitations. The Contracting Officer has determined that the Contractor meets the definition of lead system integrator

with [ ] without [ ] system responsibility. Unless an exception is granted, the Contractor shall not have any direct financial

252.2-26

SUBPART 252.2 - TEXT OF PROVISIONS AND CLAUSES 252.209-7009

interest in the development or construction of any individual system or element of any system of systems while performing

lead system integrator functions in the acquisition of a major system by the Department of Defense under this contract.

(c) Agreement. The Contractor agrees that during performance of this contract it will not acquire any direct financial

interest as described in paragraph (b) of this clause, or, if it does acquire or plan to acquire such interest, it will immediately

notify the Contracting Officer. The Contractor further agrees to provide to the Contracting Officer all relevant information

regarding the change in financial interests so that the Contracting Officer can determine whether an exception applies or

whether the Contractor will be allowed to continue performance on this contract. If a direct financial interest cannot be

avoided, eliminated, or mitigated to the Contracting Officer’s satisfaction, the Contracting Officer may terminate this contract

for default for the Contractor’s material failure to comply with the terms and conditions of award or may take other remedial

measures as appropriate in the Contracting Officer’s sole discretion.

(d) Notwithstanding any other clause of this contract, if the Contracting Officer determines that the Contractor

misrepresented its financial interests at the time of award or has violated the agreement in paragraph (c) of this clause,

the Government may terminate this contract for default for the Contractor’s material failure to comply with the terms and

conditions of award or may take other remedial measures as appropriate in the Contracting Officer’s sole discretion.

(e) This clause implements the requirements of 10 U.S.C. 4292.

(End of clause)

252.209-7008 Notice of Prohibition Relating to Organizational Conflict of Interest—Major Defense Acquisition

Program.

As prescribed in 209.571-8 (a), use the following provision:

NOTICE OF PROHIBITION RELATING TO ORGANIZATIONAL CONFLICT

OF INTEREST—MAJOR DEFENSE ACQUISITION PROGRAM (DEC 2010)

(a) Definitions. “Major subcontractor” is defined in the clause at 252.209-7009 , Organizational Conflict of Interest—

Major Defense Acquisition Program.

(b) This solicitation is for the performance of systems engineering and technical assistance for a major defense acquisition

program or a pre-major defense acquisition program.

(c) Prohibition. As required by paragraph (b)(3) of section 207 of the Weapons System Acquisition Reform Act of 2009

(Pub. L. 111-23), if awarded the contract, the contractor or any affiliate of the contractor is prohibited from participating as

a prime contractor or a major subcontractor in the development or production of a weapon system under the major defense

acquisition program or pre-major defense acquisition program, unless the offeror submits, and the Government approves, an

Organizational Conflict of Interest Mitigation Plan.

(d) Request for an exception. If the offeror requests an exception to the prohibition of paragraph (c) of this provision, then

the offeror shall submit an Organizational Conflict of Interest Mitigation Plan with its offer for evaluation.

(e) Incorporation of Organizational Conflict of Interest Mitigation Plan in contract. If the apparently successful offeror

submitted an acceptable Organizational Conflict of Interest Mitigation Plan, and the head of the contracting activity

determines that DoD needs the domain experience and expertise of the highly qualified, apparently successful offeror in

accordance with FAR 209.571-7(c), then the Contracting Officer will incorporate the Organizational Conflict of Interest

Mitigation Plan into the resultant contract, and paragraph (d) of the clause at 252.209-7009 will become applicable.

(End of provision)

252.209-7009 Organizational Conflict of Interest—Major Defense Acquisition Program.

As prescribed in 209.571-8 (b), use the following clause:

ORGANIZATIONAL CONFLICT OF INTEREST — MAJOR DEFENSE ACQUISITION PROGRAM (MAY 2019)

(a) Definition. As used in this clause—

“Major subcontractor” means a subcontractor that is awarded a subcontract that equals or exceeds—

(1) Both the certified cost or pricing data threshold and 10 percent of the value of the contract under which the

subcontracts is awarded; or

252.2-27

252.209-7010 DEFENSE FEDERAL ACQUISITION REGULATION

(2) The threshold specified in the definition of “major subcontractor” at Defense Federal Acquisition Regulation

Supplement 209.571-1 on the date of subcontract award.

(b) This contract is for the performance of systems engineering and technical assistance for a major defense acquisition

program or a pre-major defense acquisition program.

(c) Prohibition. Except as provided in paragraph (d) of this clause, as required by paragraph (b)(3) of section 207 of

the Weapons System Acquisition Reform Act of 2009 (Pub. L. 111-23), the Contractor or any affiliate of the Contractor is

prohibited from participating as a prime contractor or major subcontractor in the development or production of a weapon

system under the major defense acquisition program or pre-major defense acquisition program.

(d) Organizational Conflict of Interest Mitigation Plan. If the Contractor submitted an acceptable Organizational Conflict

of Interest Mitigation Plan that has been incorporated into this contract, then the prohibition in paragraph (c) of this clause

does not apply. The Contractor shall comply with the Organizational Conflict of Interest Mitigation Plan. Compliance with

the Organizational Conflict of Interest Mitigation Plan is a material requirement of the contract. Failure to comply may result

in the Contractor or any affiliate of the Contractor being prohibited from participating as a contractor or major subcontractor

in the development or production of a weapon system under the program, in addition to any other remedies available to the

Government for noncompliance with a material requirement of a contract.

(End of clause)

252.209-7010 Critical Safety Items.

As prescribed in 209.270-5 , use the following clause:

CRITICAL SAFETY ITEMS (AUG 2011)

(a) Definitions.

“Aviation critical safety item” means a part, an assembly, installation equipment, launch equipment, recovery equipment,

or support equipment for an aircraft or aviation weapon system if the part, assembly, or equipment contains a characteristic

any failure, malfunction, or absence of which could cause—

(i) A catastrophic or critical failure resulting in the loss of, or serious damage to, the aircraft or weapon system;

(ii) An unacceptable risk of personal injury or loss of life; or

(iii) An uncommanded engine shutdown that jeopardizes safety.

“Design control activity” means—

(i) With respect to an aviation critical safety item, the systems command of a military department that is specifically

responsible for ensuring the airworthiness of an aviation system or equipment, in which an aviation critical safety item is to

be used; and

(ii) With respect to a ship critical safety item, the systems command of a military department that is specifically

responsible for ensuring the seaworthiness of a ship or ship equipment, in which a ship critical safety item is to be used.

“Ship critical safety item” means any ship part, assembly, or support equipment containing a characteristic, the failure,

malfunction, or absence of which could cause—

(i) A catastrophic or critical failure resulting in loss of, or serious damage to, the ship; or

(ii) An unacceptable risk of personal injury or loss of life.

(b) Identification of critical safety items.One or more of the items being procured under this contract is an aviation or ship

critical safety item. The following items have been designated aviation critical safety items or ship critical safety items by the

designated design control activity:

‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗‗

(Insert additional lines as necessary)

(c) Heightened quality assurance surveillance. Items designated in paragraph (b) of this clause are subject to heightened,

risk-based surveillance by the designated quality assurance representative.

(End of clause)

252.2-28

SUBPART 252.2 - TEXT OF PROVISIONS AND CLAUSES 252.211-7002

252.209-7011 Representation for Restriction on the Use of Certain Institutions of Higher Education.

As prescribed in 209.170-4 Solicitation provision., use the following provision:

REPRESENTATION FOR RESTRICTION ON THE USE OF

CERTAIN INSTITUTIONS OF HIGHER EDUCATION (OCT 2023)

(a) Definitions. As used in this provision—

‘‘Confucius Institute’’ means a cultural institute directly or indirectly funded by the government of the People’s Republic

of China.

‘‘Institution of higher education’’ has the meaning given in 20 U.S.C. 1002.

(b) Restriction. As required by section 1062 of the National Defense Authorization Act for Fiscal Year 2021 (Pub. L.

116-283), DoD may not award a contract with any institution of higher education that hosts a Confucius Institute. Section

1062 prohibits DoD from providing funding to any U.S. institution of higher education hosting a Confucius Institute unless

that institution receives a waiver from the Department of Defense Office of the Under Secretary of Defense for Research

and Engineering (OUSD(R&E)). See the OUSD(R&E) Confucius Institute Waiver Program Guidance to U.S. Institutions of

Higher Education at https://rt.cto.mil/wp-content/uploads/Confucius-Institute-Waiver-Program-Guidance-28Mar2023.pdf.

(c) Representation. By submission of an offer, the Offeror represents that—

(1) It is not an institution of higher education that hosts a Confucius Institute;or

(2) The Offeror has obtained a waiver approved by OUSD(R&E).

(End of provision)

252.209-7998 Representation Regarding Conviction of a Felony Criminal Violation under any Federal or State Law.

See Class Deviation 2012-O0007, Prohibition Against Contracting with Corporations that Have a Felony Conviction,

dated March 9, 2012. Contracting officers shall include the provision at 252.209-7998 in all solicitations that will use funds

made available by Division H of the Consolidated Appropriations Act, 2012, including solicitations for acquisition of

commercial items under FAR part 12, and shall apply the restrictions included in the deviation. This deviation is effective

beginning March 9, 2012, and remains in effect until incorporated in the FAR or DFARS or otherwise rescinded.

252.209-7999 Representation by Corporations Regarding an Unpaid Delinquent Tax Liability or a Felony Conviction

under any Federal Law.

See Class Deviation 2012-O0004, Prohibition Against Contracting With Corporations That Have an Unpaid Delinquent

Tax Liability or a Felony Conviction under Federal Law, dated January 23, 2012. Contracting officers shall include this

provision in all solicitations that will use funds made available by Division A of the Consolidated Appropriations Act, 2012,

including solicitations for acquisition of commercial items under FAR part 12, and shall apply the restrictions included in

the deviation. This deviation is effective beginning January 23, 2012, and remains in effect until incorporated in the FAR or

DFARS or otherwise rescinded.

252.211 RESERVED

252.211-7000 Reserved.

252.211-7001 Reserved.

252.211-7002 Availability for Examination of Specifications, Standards, Plans, Drawings, Data Item Descriptions, and

CATEGORIES

Excludes service and landing craft shafts

All

All greater than 120 inches in diameter

(b) End products and their components delivered under this contract shall contain forging items that are of domestic

manufacture only.

(c) The restriction in paragraph (b) of this clause may be waived upon request from the Contractor in accordance with

subsection 225.7102-3 of the Defense Federal Acquisition Regulation Supplement.

(d) The Contractor shall retain records showing compliance with the restriction in paragraph (b) of this clause until 3 years

after final payment and shall make the records available upon request of the Contracting Officer.

(e) The Contractor shall insert the substance of this clause, including this paragraph (e), in subcontracts for forging items

or for other items that contain forging items.

(End of clause)

252.225-7026 Acquisition Restricted to Products or Services from Afghanistan.

As prescribed in 225.7703-4 (c), use the following clause:

ACQUISITION RESTRICTED TO PRODUCTS OR SERVICES FROM AFGHANISTAN (SEP 2013)

(a) Definitions. As used in this clause—

(1) “Product from Afghanistan” means a product that is mined, produced, or manufactured in Afghanistan.

(2) “Service from Afghanistan” means a service including construction that is performed in Afghanistan predominantly

by citizens or permanent resident aliens of Afghanistan.

(b) The Contractor shall provide only products from Afghanistan or services from Afghanistan under this contract.

(End of clause)

252.225-7027 Restriction on Contingent Fees for Foreign Military Sales.

As prescribed in 225.7307 (a), use the following clause.

252.2-127

252.225-7028 DEFENSE FEDERAL ACQUISITION REGULATION

RESTRICTION ON CONTINGENT FEES FOR FOREIGN MILITARY SALES (APR 2003)

(a) Except as provided in paragraph (b) of this clause, contingent fees, as defined in the Covenant Against Contingent Fees

clause of this contract, are generally an allowable cost, provided the fees are paid to—

(1) A bona fide employee of the Contractor; or

(2) A bona fide established commercial or selling agency maintained by the Contractor for the purpose of securing

business.

(b) For foreign military sales, unless the contingent fees have been identified and payment approved in writing by the

foreign customer before contract award, the following contingent fees are unallowable under this contract:

(1) For sales to the Government(s) of __________, contingent fees in any amount.

(2) For sales to Governments not listed in paragraph (b)(1) of this clause, contingent fees exceeding $50,000 per

foreign military sale case.

(End of clause)

252.225-7028 Exclusionary Policies and Practices of Foreign Governments.

As prescribed in 225.7307 (b), use the following clause:

EXCLUSIONARY POLICIES AND PRACTICES OF FOREIGN GOVERNMENTS (APR 2003)

The Contractor and its subcontractors shall not take into account the exclusionary policies or practices of any foreign

government in employing or assigning personnel, if—

(a) The personnel will perform functions required by this contract, either in the United States or abroad; and

(b) The exclusionary policies or practices of the foreign government are based on race, religion, national origin, or sex.

(End of clause)

252.225-7029 Acquisition of Uniform Components for Afghan Military or Afghan National Police.

As prescribed in 225.7703-4 (d), use the following clause:

ACQUISITION OF UNIFORM COMPONENTS FOR AFGHAN

MILITARY OR AFGHAN NATIONAL POLICE (SEP 2013)

(a) Definitions. As used in this clause—

“Textile component” means any item consisting of fibers, yarns, or fabric, supplied for incorporation into a uniform or a

component of a uniform. It does not include items that do not contain fibers, yarns, or fabric, such as the metallic or plastic

elements of buttons, zippers, or other clothing fasteners.

“United States” means the 50 States, the District of Columbia, and outlying areas.

(b) As required by section 826 of the National Defense Authorization Act for Fiscal Year 2013 (Pub. L. 112-239), the

Contractor shall deliver under this contract only textile components that have been produced in the United States.

(c) There are no exceptions or waivers to this requirement.

(End of clause)

252.225-7030 Restriction on Acquisition of Carbon, Alloy, and Armor Steel Plate.

As prescribed in 225.7011-3 , use the following clause:

RESTRICTION ON ACQUISITION OF CARBON, ALLOY, AND ARMOR STEEL PLATE (DEC 2006)

(a) Carbon, alloy, and armor steel plate shall be melted and rolled in the United States or Canada if the carbon, alloy, or

armor steel plate—

(1) Is in Federal Supply Class 9515 or is described by specifications of the American Society for Testing Materials or

the American Iron and Steel Institute; and

252.2-128

SUBPART 252.2 - TEXT OF PROVISIONS AND CLAUSES 252.225-7032

(2)(i) Will be delivered to the Government for use in a Government-owned facility or a facility under the control of the

Department of Defense; or

(ii) Will be purchased by the Contractor for use in a Government-owned facility or a facility under the control of the

Department of Defense.

(b) This restriction—

(1) Applies to the acquisition of carbon, alloy, or armor steel plate as a finished steel mill product that may be used “as

is” or may be used as an intermediate material for the fabrication of an end product; and

(2) Does not apply to the acquisition of an end product (e.g., a machine tool), to be used in the facility, that contains

carbon, alloy, or armor steel plate as a component.

(End of clause)

252.225-7031 Secondary Arab Boycott of Israel.

As prescribed in 225.7605 , use the following provision:

SECONDARY ARAB BOYCOTT OF ISRAEL (JUN 2005)

(a) Definitions. As used in this provision—

(1) “Foreign person” means any person (including any individual, partnership, corporation, or other form of

association) other than a United States person.

(2) “United States” means the 50 States, the District of Columbia, outlying areas, and the outer Continental Shelf as

defined in 43 U.S.C. 1331.

(3) “United States person” is defined in 50 U.S.C. App. 2415(2) and means—

(i) Any United States resident or national (other than an individual resident outside the United States who is

employed by other than a United States person);

(ii) Any domestic concern (including any permanent domestic establishment of any foreign concern); and

(iii) Any foreign subsidiary or affiliate (including any permanent foreign establishment) of any domestic concern

that is controlled in fact by such domestic concern.

(b) Certification. If the offeror is a foreign person, the offeror certifies, by submission of an offer, that it—

(1) Does not comply with the Secondary Arab Boycott of Israel; and

(2) Is not taking or knowingly agreeing to take any action, with respect to the Secondary Boycott of Israel by Arab

countries, which 50 U.S.C. App. 2407(a) prohibits a United States person from taking.

(End of provision)

252.225-7032 Waiver of United Kingdom Levies—Evaluation of Offers.

As prescribed in 225.1101 (7), use the following provision:

WAIVER OF UNITED KINGDOM LEVIES – EVALUATION OF OFFERS (APR 2003)

(a) Offered prices for contracts or subcontracts with United Kingdom (U.K.) firms may contain commercial exploitation

levies assessed by the Government of the U.K. The offeror shall identify to the Contracting Officer all levies included in the

offered price by describing—

(1) The name of the U.K. firm;

(2) The item to which the levy applies and the item quantity; and

(3) The amount of levy plus any associated indirect costs and profit or fee.

(b) In the event of difficulty in identifying levies included in a price from a prospective subcontractor, the offeror may

seek advice through the Director of Procurement, United Kingdom Defence Procurement Office, British Embassy, 3100

Massachusetts Avenue NW, Washington, DC 20006.

(c) The U.S. Government may attempt to obtain a waiver of levies pursuant to the U.S./U.K. reciprocal waiver agreement

of July 1987.

(1) If the U.K. waives levies before award of a contract, the Contracting Officer will evaluate the offer without the levy.

252.2-129

252.225-7033 DEFENSE FEDERAL ACQUISITION REGULATION

(2) If levies are identified but not waived before award of a contract, the Contracting Officer will evaluate the offer

inclusive of the levies.

(3) If the U.K. grants a waiver of levies after award of a contract, the U.S. Government reserves the right to reduce the

contract price by the amount of the levy waived plus associated indirect costs and profit or fee.

(End of provision)

252.225-7033 Waiver of United Kingdom Levies.

As prescribed in 225.1101 (8), use the following clause:

WAIVER OF UNITED KINGDOM LEVIES (APR 2003)

(a) The U.S. Government may attempt to obtain a waiver of any commercial exploitation levies included in the price of

this contract, pursuant to the U.S./United Kingdom (U.K.) reciprocal waiver agreement of July 1987. If the U.K. grants a

waiver of levies included in the price of this contract, the U.S. Government reserves the right to reduce the contract price by

the amount of the levy waived plus associated indirect costs and profit or fee.

(b) If the Contractor contemplates award of a subcontract exceeding $1 million to a U.K. firm, the Contractor shall provide

the following information to the Contracting Officer before award of the subcontract:

(1) Name of the U.K. firm.

(2) Prime contract number.

(3) Description of item to which the levy applies.

(4) Quantity being acquired.

(5) Amount of levy plus any associated indirect costs and profit or fee.

(c) In the event of difficulty in identifying levies included in a price from a prospective subcontractor, the Contractor may

seek advice through the Director of Procurement, United Kingdom Defence Procurement Office, British Embassy, 3100

Massachusetts Avenue NW, Washington, DC 20006.

(d) The Contractor shall insert the substance of this clause, including this paragraph (d), in any subcontract for supplies

where a lower-tier subcontract exceeding $1 million with a U.K. firm is anticipated.

(End of clause)

252.225-7034 Reserved.

252.225-7035 Buy American—Free Trade Agreements—Balance of Payments Program Certificate.

Basic. As prescribed in 225.1101 (9) and (9)(i), use the following provision:

BUY AMERICAN—FREE TRADE AGREEMENTS—BALANCE

OF PAYMENTS PROGRAM CERTIFICATE—BASIC (FEB 2024)

(a) Definitions. “Bahraini end product,” “commercially available off-the-shelf (COTS) item,” “component,” “critical

component,” “critical item,”“domestic end product,” “Free Trade Agreement country,” “Free Trade Agreement country end

product,” “foreign end product,” “Moroccan end product,” “Panamanian end product,” “Peruvian end product,” “qualifying

country end product,” and “United States,” as used in this provision, have the meanings given in the 252.225-7036, Buy

American—Free Trade Agreements—Balance of Payments Program—Basic clause of this solicitation.

(b) Evaluation. The Government—

(1) Will evaluate offers in accordance with the policies and procedures of part 225 of the Defense Federal Acquisition

Regulation Supplement; and

(2) For line items subject to Buy American—Free Trade Agreements—Balance of Payments Program—Basic clause of

this solicitation, will evaluate offers of qualifying country end products or Free Trade Agreement country end products other

than Bahraini end products, Moroccan end products, Panamanian end products, or Peruvian end products without regard to

the restrictions of the Buy American or the Balance of Payments Program.

(c) Certifications and identification of country of origin.

252.2-130

SUBPART 252.2 - TEXT OF PROVISIONS AND CLAUSES 252.225-7035

(1) For all line items subject to the Buy American—Free Trade Agreements—Balance of Payments Program—Basic

clause of this solicitation, the Offeror certifies that—

(i) Each end product, except the end products listed in paragraph (c)(2) of this provision, is a domestic end product;

and

(ii) Each domestic end product listed in paragraph (c)(3) of this provision contains a critical component or a critical

item; and

(iii) Components of unknown origin are considered to have been mined, produced, or manufactured outside the

United States or a qualifying country.

(2) The Offeror shall identify all end products that are not domestic end products.

(Line Item Number) (Country of Origin)

(ii) The Offeror certifies that the following supplies are Free Trade Agreement country end products other than

Bahraini end products, Moroccan end products, Panamanian end products or Peruvian end products:

(Line Item Number) (Country of Origin)

(iii) The following supplies are other foreign end products, including end products manufactured in the United States

that do not qualify as domestic end products. For those foreign end products that do not consist wholly or predominantly of

iron or steel or a combination of both, the Offeror shall also indicate whether these foreign end products exceed 55 percent

domestic content, except those that are COTS items. If the percentage of the domestic content is unknown, select “no”.

Line Item Number Country of Origin (If known) Exceeds 55% Domestic Content (yes/

no)

(3) The Offeror shall list the line item numbers of domestic end products that contain a critical component or a critical

item (see section 25.105 of the Federal Acquisition Regulation).

Line Item Number: ________List as necessary_____________

(End of provision)

Alternate I. As prescribed in 225.1101(9) and (9)(ii), use the following provision, which does not use the phrases

“Bahraini end product,” “Free Trade Agreement country,” “Free Trade Agreement country end product,” “Moroccan end

product,” “Panamanian end product,” and “Peruvian end products” in paragraph (a); does not use “Free Trade Agreement

country end products other than Bahraini end products, Moroccan end products, Panamanian end products, or Peruvian end

products” in paragraphs (b)(2) and (c)(2)(ii); does not use “Australian or” in paragraph (c)(2)(i); and includes “that are mined,

produced, or manufactured in the United States” in paragraph (c)(2)(ii):

BUY AMERICAN—FREE TRADE AGREEMENTS—BALANCE OF

PAYMENTS PROGRAM CERTIFICATE—ALTERNATE I (FEB 2024)

(a) Definitions. “Commercially available off-the-shelf (COTS) item,” “component,” “critical component,” “critical

item,”“domestic end product,” “foreign end product,” “qualifying country end product,” and “United States,” as used in this

provision, have the meanings given in the 252.225-7036, Buy American—Free Trade Agreements—Balance of Payments

Program—Alternate I clause of this solicitation.

(b) Evaluation. The Government—

(1) Will evaluate offers in accordance with the policies and procedures of part 225 of the Defense Federal Acquisition

Regulation Supplement; and

(2) For line items subject to the Buy American—Free Trade Agreements—Balance of Payments Program—Alternate I

clause of this solicitation, will evaluate offers of qualifying country end products without regard to the restrictions of the Buy

American or the Balance of Payments Program.

(c) Certifications and identification of country of origin.

252.2-131

252.225-7035 DEFENSE FEDERAL ACQUISITION REGULATION

(1) For all line items subject to the Buy American—Free Trade Agreements—Balance of Payments Program—

Alternate I clause of this solicitation, the Offeror certifies that—

(i) Each end product, except the end products listed in paragraph (c)(2) of this provision, is a domestic end product;

and

(ii) Each domestic end product listed in paragraph (c)(3) of this provision contains a critical component or a critical

item; and

(iii) Components of unknown origin are considered to have been mined, produced, or manufactured outside the

United States or a qualifying country.

(2) The Offeror shall identify all end products that are not domestic end products.

(i) The Offeror certifies that the following supplies are qualifying country end products:

(Line Item Number) (Country of Origin)

(ii) The following supplies are other foreign end products, including end products manufactured in the United States

that do not qualify as domestic end products. For those foreign end products that do not consist wholly or predominantly of

iron or steel or a combination of both, the Offeror shall also indicate whether these foreign end products exceed 55 percent

domestic content, except those that are COTS items that are mined, produced, or manufactured in the United States. If the

percentage of the domestic content is unknown, select “no”.

Line Item Number Country of Origin (If known) Exceeds 55% Domestic Content (yes/

no)

(3) The Offeror shall list the line item numbers of domestic end products that contain a critical component or a critical

item (see section 25.105 of the Federal Acquisition Regulation).

Line Item Number: ___________List as necessary______________

(Line Item Number) (Country of Origin (If known))

(End of provision)

Alternate II. As prescribed in 225.1101 (9) and (9)(iii), use the following provision, which adds “South Caucasus/

Central and South Asian (SC/CASA) state” and “South Caucasus/Central and South Asian (SC/CASA) state end product” to

paragraph (a), and uses different paragraphs (b)(2) and (c)(2)(i) than the basic provision:

BUY AMERICAN—FREE TRADE AGREEMENTS—BALANCE OF

PAYMENTS PROGRAM CERTIFICATE—ALTERNATE II (FEB 2024)

(a) Definitions. “Bahraini end product,” “commercially available off-the-shelf (COTS) item,” “component,” “critical

component,” “critical item,” “domestic end product,” “Free Trade Agreement country,” “Free Trade Agreement country

end product,” “foreign end product,” “Moroccan end product,” “Panamanian end product,” “Peruvian end product,”

“qualifying country end product,” “South Caucasus/Central and South Asian (SC/CASA) state,” “South Caucasus/Central

and South Asian (SC/CASA) state end product,” and “United States,” as used in this provision, have the meanings given

in the 252.225-7036, Buy American—Free Trade Agreements—Balance of Payments Program—Alternate II clause of this

solicitation.

(b) Evaluation. The Government—

(1) Will evaluate offers in accordance with the policies and procedures of part 225 of the Defense Federal Acquisition

Regulation Supplement; and

(2) For line items subject to the Buy American—Free Trade Agreements—Balance of Payments Program—Alternate

II clause of this solicitation, will evaluate offers of qualifying country end products, SC/CASA state end products, or Free

Trade Agreement country end products other than Bahraini end products, Moroccan end products, Panamanian end products,

or Peruvian end products without regard to the restrictions of the Buy American or the Balance of Payments Program.

(c) Certifications and identification of country of origin.

252.2-132

SUBPART 252.2 - TEXT OF PROVISIONS AND CLAUSES 252.225-7035

(1) For all line items subject to the Buy American—Free Trade Agreements—Balance of Payments Program—

Alternate II clause of this solicitation, the Offeror certifies that—

(i) Each end product, except the end products listed in paragraph (c)(2) of this provision, is a domestic end product;

and

(ii) Each domestic end product listed in paragraph (c)(3) of this provision contains a critical component or a critical

item; and

(iii) Components of unknown origin are considered to have been mined, produced, or manufactured outside the

United States or a qualifying country.

(2) The Offeror shall identify all end products that are not domestic end products.

(i) The Offeror certifies that the following supplies are qualifying country (except Australian) or SC/CASA state end

products:

(Line Item Number) (Country of Origin)

(ii) The Offeror certifies that the following supplies are Free Trade Agreement country end products other than

Bahraini end products, Moroccan end products, Panamanian end products, or Peruvian end products:

(Line Item Number) (Country of Origin)

(iii) The following supplies are other foreign end products, including end products manufactured in the United States

that do not qualify as domestic end products. For those foreign end products that do not consist wholly or predominantly of

iron or steel or a combination of both, the Offeror shall also indicate whether these foreign end products exceed 55 percent

domestic content, except those that are COTS items. If the percentage of the domestic content is unknown, select “no”.

Line Item Number Country of Origin (If known) Exceeds 55% Domestic Content (yes/

no)

(3) The Offeror shall list the line item numbers of domestic end products that contain a critical component or a critical

item (see section 25.105 of the Federal Acquisition Regulation).

Line Item Number: _________List as necessary___________

(End of provision)

Alternate III. As prescribed in 225.1101 (9) and (9)(iv), use the following provision, which uses different paragraphs (a),

(b)(2), (c)(2)(i), and (c)(2)(ii) than the basic provision:

BUY AMERICAN—FREE TRADE AGREEMENTS—BALANCE OF

PAYMENTS PROGRAM CERTIFICATE—ALTERNATE III (FEB 2024)

(a) Definitions. “Commercially available off-the-shelf (COTS) item,” “component,” “critical component,” “critical item,”

“domestic end product,” “foreign end product,” “qualifying country end product,” “South Caucasus/Central and South Asian

(SC/CASA) state end product,” and “United States,” as used in this provision have the meanings given in the 252.225-7036,

Buy American—Free Trade Agreements—Balance of Payments Program—Alternate III clause of this solicitation.

(b) Evaluation. The Government—

(1) For all line items subject to the Buy American—Free Trade Agreements—Balance of Payments Program—

Alternate III clause of this solicitation, the Offeror certifies that—

(2) For line items subject to the Buy American—Free Trade Agreements—Balance of Payments Program—Alternate

III clause of this solicitation, will evaluate offers of qualifying country end products or SC/CASA state end products without

regard to the restrictions of the Buy American or the Balance of Payments Program.

(c) Certifications and identification of country of origin.

(1) For all line items subject to the Buy American—Free Trade Agreements—Balance of Payments Program—

Alternate III clause of this solicitation, the offeror certifies that—

(i) Each end product, except the end products listed in paragraph (c)(2) of this provision, is a domestic end product;

252.2-133

252.225-7035 DEFENSE FEDERAL ACQUISITION REGULATION

(ii) Each domestic end product listed in paragraph (c)(3) of this provision contains a critical component or a critical

item; and

(iii) Components of unknown origin are considered to have been mined, produced, or manufactured outside the

United States or a qualifying country.

(2) The Offeror shall identify all end products that are not domestic end products.

(i) The Offeror certifies that the following supplies are qualifying country or SC/CASA state end products:

(Line Item Number) (Country of Origin)

(ii) The Offeror certifies that the following supplies are Free Trade Agreement country end products other than

Bahraini end products, Moroccan end products, Panamanian end products, or Peruvian end products:

(Line Item Number) (Country of Origin)

(iii) The following supplies are other foreign end products, including end products manufactured in the United States

that do not qualify as domestic end products. For those foreign end products that do not consist wholly or predominantly of

iron or steel or a combination of both, the Offeror shall also indicate whether these foreign end products exceed 55 percent

domestic content, except those that are COTS items. If the percentage of the domestic content is unknown, select “no”.

Line item Number Country of Origin (If known) Exceeds 55% Domestic Content (yes/

no)

(3) The Offeror shall list the line item numbers of domestic end products that contain a critical component or a critical

item (see section 25.105 of the Federal Acquisition Regulation).

Line Item Number: _________List as necessary_________

(End of provision)

Alternate IV. As prescribed in 225.1101(9) and (9)(v), use the following provision, which adds Korean end product to

paragraph (a); and uses “Free Trade Agreement country end products other than Bahraini end products, Korean end products,

Moroccan end products, Panamanian end products, or Peruvian end products” in paragraphs (b)(2) and (c)(2)(ii), rather than

“Free Trade Agreement country end products other than Bahraini end products, Moroccan end products, Panamanian end

products, or Peruvian end products” in paragraphs (b)(2) and (c)(2)(ii) of the basic provision:

BUY AMERICAN—FREE TRADE AGREEMENTS—BALANCE OF

PAYMENTS PROGRAM CERTIFICATE—ALTERNATE IV (FEB 2024)

(a) Definitions. “Bahraini end product,” “commercially available off-the-shelf (COTS) item,” “component,” “critical

component,” “critical item,” “domestic end product,” “Free Trade Agreement country,” “Free Trade Agreement country end

product,” “foreign end product,” “Korean end product,” “Moroccan end product,” “Panamanian end product,” “Peruvian

end product,” “qualifying country end product,” and “United States,” as used in this provision, have the meanings given in

the 252.225-7036, Buy American—Free Trade Agreements—Balance of Payments Program—Alternate IV clause of this

solicitation.

(b) Evaluation. The Government—

(1) Will evaluate offers in accordance with the policies and procedures of part 225 of the Defense Federal Acquisition

Regulation Supplement; and

(2) For line items subject to the Buy American—Free Trade Agreements—Balance of Payments Program—Alternate

IV clause of this solicitation, will evaluate offers of qualifying country end products or Free Trade Agreement country end

products other than Bahraini end products, Korean end products, Moroccan end products, Panamanian end products, or

Peruvian end products without regard to the restrictions of the Buy American or the Balance of Payments Program.

(c) Certifications and identification of country of origin.

(1) For all line items subject to the Buy American—Free Trade Agreements—Balance of Payments Program—

Alternate IV clause of this solicitation, the Offeror certifies that—

252.2-134

SUBPART 252.2 - TEXT OF PROVISIONS AND CLAUSES 252.225-7035

(i) Each end product, except the end products listed in paragraph (c)(2) of this provision, is a domestic end product;

(ii) Each domestic end product listed in paragraph (c)(3) of this provision contains a critical component or a critical

item; and

(iii) Components of unknown origin are considered to have been mined, produced, or manufactured outside the

United States or a qualifying country.

(2) The Offeror shall identify all end products that are not domestic end products.

(i) The Offeror certifies that the following supplies are qualifying country (except Australian) end products:

(Line Item Number) (Country of Origin)

(ii) The Offeror certifies that the following supplies are Free Trade Agreement country end products other than

Bahraini end products, Korean end products, Moroccan end products, Panamanian end products, or Peruvian end products:

(Line Item Number) (Country of Origin)

(iii) The following supplies are other foreign end products, including end products manufactured in the United States

that do not qualify as domestic end products. For those foreign end products that do not consist wholly or predominantly of

iron or steel or a combination of both, the Offeror shall also indicate whether these foreign end products exceed 55 percent

domestic content, except those that are COTS items. If the percentage of the domestic content is unknown, select “no”.

Line item Number Country of Origin (If known) Exceeds 55% Domestic Content (yes/

no)

(3) The Offeror shall list the line item numbers of domestic end products that contain a critical component or a critical

item (see section 25.105 of the Federal Acquisition Regulation).

Line Item Number: ________List as necessary_____________

(End of provision)

Alternate V. As prescribed in 225.1101 (9) and (9)(vi), use the following provision, which uses different paragraphs (a),

(b)(2), (c)(2)(i), and (c)(2)(ii) than the basic provision:

BUY AMERICAN—FREE TRADE AGREEMENTS—BALANCE OF

PAYMENTS PROGRAM CERTIFICATE—ALTERNATE V (FEB 2024)

(a) Definitions. “Bahraini end product,” “commercially available off-the-shelf (COTS) item,” “component,” “critical

component,” “critical item,” “domestic end product,” “Free Trade Agreement country,” “Free Trade Agreement country end

product,” “foreign end product,” “Korean end product,” “Moroccan end product,” “Panamanian end product,” “Peruvian

end product,” “qualifying country end product,” “South Caucasus/Central and South Asian (SC/CASA) state end product,”

and “United States,” as used in this provision, have the meanings given in the 252.225-7036, Buy American—Free Trade

Agreements—Balance of Payments Program—Alternate V clause of this solicitation.

Alternate V clause of this solicitation.

(b) Evaluation. The Government—

(1) Will evaluate offers in accordance with the policies and procedures of part 225 of the Defense Federal Acquisition

Regulation Supplement; and

(2) For line items subject to the Buy American—Free Trade Agreements—Balance of Payments Program—Alternate V

clause of this solicitation, will evaluate offers of qualifying country end products, SC/CASA state end products, or Free Trade

Agreement end products other than Bahraini end products, Korean end products, Moroccan end products, Panamanian end

products, or Peruvian end products without regard to the restrictions of the Buy American statute or the Balance of Payments

Program.

(c) Certifications and identification of country of origin.

(1) For all line items subject to the Buy American—Free Trade Agreements—Balance of Payments Program—

Alternate V clause of this solicitation, the Offeror certifies that—

252.2-135

252.225-7036 DEFENSE FEDERAL ACQUISITION REGULATION

(i) Each end product, except the end products listed in paragraph (c)(2) of this provision, is a domestic end product;

(ii) Each domestic end product listed in paragraph (c)(3) of this provision contains a critical component or a critical

item; and

(iii) Components of unknown origin are considered to have been mined, produced, or manufactured outside the

United States or a qualifying country.

(2) The Offeror shall identify all end products that are not domestic end products.

(i) The Offeror certifies that the following supplies are qualifying country (except Australian) or SC/CASA state end

products:

(Line Item Number) (Country of Origin)

(ii) The Offeror certifies that the following supplies are Free Trade Agreement country end products other than

Bahraini end products, Korean end products, Moroccan end products, Panamanian end products, or Peruvian end products:

(Line Item Number) (Country of Origin)

(iii) The following supplies are other foreign end products, including end products manufactured in the United States

that do not qualify as domestic end products. For those foreign end products that do not consist wholly or predominantly of

iron or steel or a combination of both, the Offeror shall also indicate whether these foreign end products exceed 55 percent

domestic content, except those that are COTS items. If the percentage of the domestic content is unknown, select “no”.

Line item Number Country of Origin (If known) Exceeds 55% Domestic Content (yes/

no)

(3) The Offeror shall list the line item numbers of domestic end products that contain a critical component or a critical

item (see section 25.105 of the Federal Acquisition Regulation).

Line Item Number: ___________List as necessary______________

(End of provision)

252.225-7036 Buy American—Free Trade Agreements—Balance of Payments Program.

Basic. As prescribed in 225.1101 (10)(i) and (10)(i)(A), use the following clause:

BUY AMERICAN—FREE TRADE AGREEMENTS—BALANCE OF PAYMENTS PROGRAM—BASIC (FEB 2024)

(a) Definitions.As used in this clause—

Bahraini end product means an article that—

(1) Is wholly the growth, product, or manufacture of Bahrain; or

(2) In the case of an article that consists in whole or in part of materials from another country, has been substantially

transformed in Bahrain into a new and different article of commerce with a name, character, or use distinct from that of the

article or articles from which it was transformed. The term refers to a product offered for purchase under a supply contract,

but for purposes of calculating the value of the end product includes services (except transportation services) incidental to its

supply, provided that the value of those incidental services does not exceed the value of the product itself.

“Commercially available off-the-shelf (COTS) item”—

(1) Means any item of supply (including construction material) that is—

(i) A commercial product (as defined in paragraph (1) of the definition of “commercial product” in section 2.101 of

the Federal Acquisition Regulation);

(ii) Sold in substantial quantities in the commercial marketplace; and

(iii) Offered to the Government, under a contract or subcontract at any tier, without modification, in the same form

in which it is sold in the commercial marketplace; and

(2) Does not include bulk cargo, as defined in 46 U.S.C. 40102(4), such as agricultural products and petroleum

products.

“Component” means an article, material, or supply incorporated directly into an end product.

252.2-136

SUBPART 252.2 - TEXT OF PROVISIONS AND CLAUSES 252.225-7036

“Critical component ” means a component that is mined, produced, or manufactured in the United States and deemed

critical to the U.S. supply chain. The list of critical components is at FAR 25.105.

“Critical item” means domestic construction material or a domestic end product that is deemed critical to the U.S. supply

chain. The list of critical items is at FAR 25.105.

“Domestic end product” means—

(1) For an end product that does not consist wholly or predominantly of iron or steel or a combination of both—

(i) An unmanufactured end product that has been mined or produced in the United States; or

(ii) An end product manufactured in the United States if—

(A) The cost of its qualifying country components and its components that are mined, produced, or manufactured

in the United States exceeds 60 percent of the cost of all its components, except that the percentage will be 65 percent for

items delivered in calendar years 2024 through 2028 and 75 percent for items delivered starting in calendar year 2029, unless

an alternate percentage is established for a contract in accordance with Defense Federal Acquisition Regulation Supplement

(DFARS) 225.101(d); or award is made before January 1, 2030, for a foreign end product that exceeds 55 percent domestic

content (see DFARS 225.103(b)(ii)). The cost of components includes transportation costs to the place of incorporation into

the end product and U.S. duty (whether or not a duty-free entry certificate is issued). Components of unknown origin are

treated as foreign. Scrap generated, collected, and prepared for processing in the United States is considered domestic. A

component is considered to have been mined, produced, or manufactured in the United States (regardless of its source in fact)

if the end product in which it is incorporated is manufactured in the United States and the component is of a class or kind for

which the Government has determined that—

(1) Sufficient and reasonably available commercial quantities of a satisfactory quality are not mined,

produced, or manufactured in the United States; or

(2) It is inconsistent with the public interest to apply the restrictions of the Buy American statute; or

(B) The end product is a COTS item; or

(2) For an end product that consists wholly or predominantly of iron or steel or a combination of both, an end product

manufactured in the United States, if the cost of iron and steel not produced in the United States or a qualifying country

constitutes less than 5 percent of the cost of all the components used in the end product (produced in the United States or

a qualifying country means that all manufacturing processes of the iron or steel must take place in the United States or a

qualifying country, except metallurgical processes involving refinement of steel additives). The cost of iron and steel not

produced in the United States or a qualifying country includes but is not limited to the cost of iron or steel mill products

(such as bar, billet, slab, wire, plate, or sheet), castings, or forgings, not produced in the United States or a qualifying country,

utilized in the manufacture of the end product and a good faith estimate of the cost of all iron or steel components not

produced in the United States or a qualifying country, excluding COTS fasteners. Iron or steel components of unknown origin

are treated as foreign. If the end product contains multiple components, the cost of all the materials used in such end product

is calculated in accordance with the explanation of cost of components in paragraph (1)(ii)(A) of this definition.

“End product” means those articles, materials, and supplies to be acquired under this contract for public use.

“Foreign end product” means an end product other than a domestic end product.

“Free Trade Agreement country” means Australia, Bahrain, Chile, Colombia, Costa Rica, Dominican Republic, El

Salvador, Guatemala, Honduras, Korea (Republic of), Mexico, Morocco, Nicaragua, Panama, Peru, or Singapore.

“Free Trade Agreement country end product” means an article that—

(1) Is wholly the growth, product, or manufacture of a Free Trade Agreement country; or

(2) In the case of an article that consists in whole or in part of materials from another country, has been substantially

transformed in a Free Trade Agreement country into a new and different article of commerce with a name, character, or use

distinct from that of the article or articles from which it was transformed. The term refers to a product offered for purchase

under a supply contract, but for purposes of calculating the value of the end product includes services (except transportation

services) incidental to its supply, provided that the value of those incidental services does not exceed the value of the product

itself.

“Moroccan end product” means an article that—

(1) Is wholly the growth, product, or manufacture of Morocco; or

(2) In the case of an article that consists in whole or in part of materials from another country, has been substantially

transformed in Morocco into a new and different article of commerce with a name, character, or use distinct from that of the

article or articles from which it was transformed. The term refers to a product offered for purchase under a supply contract,

but for purposes of calculating the value of the end product includes services (except transportation services) incidental to its

supply, provided that the value of those incidental services does not exceed the value of the product itself.

252.2-137

252.225-7036 DEFENSE FEDERAL ACQUISITION REGULATION

“Panamanian end product” means an article that—

(1) Is wholly the growth, product, or manufacture of Panama; or

(2) In the case of an article that consists in whole or in part of materials from another country, has been substantially

transformed in Panama into a new and different article of commerce with a name, character, or use distinct from that of the

article or articles from which it was transformed. The term refers to a product offered for purchase under a supply contract,

but for purposes of calculating the value of the end product includes services (except transportation services) incidental to its

supply, provided that the value of those incidental services does not exceed the value of the product itself.

“Peruvian end product” means an article that—

(1) Is wholly the growth, product, or manufacture of Peru; or

(2) In the case of an article that consists in whole or in part of materials from another country, has been substantially

transformed in Peru into a new and different article of commerce with a name, character, or use distinct from that of the

article or articles from which it was transformed. The term refers to a product offered for purchase under a supply contract,

but for purposes of calculating the value of the end product includes services (except transportation services) incidental to its

supply, provided that the value of those incidental services does not exceed the value of the product itself.

“Predominantly of iron or steel or a combination of both” means that the cost of the iron and steel content exceeds 50

percent of the total cost of all its components. The cost of iron and steel is the cost of the iron or steel mill products (such as

bar, billet, slab, wire, plate, or sheet), castings, or forgings utilized in the manufacture of the product and a good faith estimate

of the cost of iron or steel components excluding COTS fasteners.

“Qualifying country” means a country with a reciprocal defense procurement memorandum of understanding or

international agreement with the United States in which both countries agree to remove barriers to purchases of supplies

produced in the other country or services performed by sources of the other country, and the memorandum or agreement

complies, where applicable, with the requirements of section 36 of the Arms Export Control Act (22 U.S.C. 2776) and with

10 U.S.C. 2457. Accordingly, the following are qualifying countries:

Australia

Austria

Belgium

Canada

Czech Republic

Denmark

Egypt

Estonia

Finland

France

Germany

Greece

Israel

Italy

Japan

Latvia

Lithuania

Luxembourg

Netherlands

Norway

Poland

Portugal

Slovenia

Spain

Sweden

Switzerland

Turkey

United Kingdom of Great Britain and Northern Ireland.

“Qualifying country component” means a component mined, produced, or manufactured in a qualifying country.

“Qualifying country end product” means—

252.2-138

SUBPART 252.2 - TEXT OF PROVISIONS AND CLAUSES 252.225-7036

(1) An unmanufactured end product mined or produced in a qualifying country; or

(2) An end product manufactured in a qualifying country if—

(i) The cost of the following types of components exceeds 60 percent of the cost of all its components, except that

the percentage will be 65 percent for items delivered in calendar years 2024 through 2028 and 75 percent for items delivered

starting in calendar year 2029, unless an alternate percentage is established for a contract:

(A) Components mined, produced, or manufactured in a qualifying country.

(B) Components mined, produced, or manufactured in the United States.

(C) Components of foreign origin of a class or kind for which the Government has determined that sufficient and

reasonably available commercial quantities of a satisfactory quality are not mined, produced, or manufactured in the United

States; or

(ii) The end product is a COTS item.

“Steel” means an alloy that includes at least 50 percent iron, between 0.02 and 2 percent carbon, and may include other

elements.

“United States” means the 50 States, the District of Columbia, and outlying areas.

(b) Unless otherwise specified, this clause applies to all items in the Schedule.

(c) The Contractor shall deliver under this contract only domestic end products unless, in its offer, it specified delivery of

qualifying country end products, Free Trade Agreement country end products other than Bahraini end products, Moroccan

end products, Panamanian end products, or Peruvian end products, or other foreign end products in the Buy American—Free

Trade Agreements—Balance of Payments Program Certificate—Basic provision of the solicitation. If the Contractor certified

in its offer that it will deliver a qualifying country end product or a Free Trade Agreement country end product other than a

Bahraini end product, a Moroccan end product, a Panamanian end product, or a Peruvian end product, the Contractor shall

deliver a qualifying country end product, a Free Trade Agreement country end product other than a Bahraini end product, a

Moroccan end product, a Panamanian end product, or a Peruvian end product, or, at the Contractor's option, a domestic end

product.

(d) The contract price does not include duty for end products or components for which the Contractor will claim duty-free

entry.

(End of clause)

Alternate I. As prescribed in 225.1101 (10)(i) and (10)(i)(B), use the following clause, which uses a different paragraph (c)

than the basic clause:

BUY AMERICAN—FREE TRADE AGREEMENTS—

BALANCE OF PAYMENTS PROGRAM— ALTERNATE I (FEB 2024)

(a) Definitions.As used in this clause—

Bahraini end product means an article that—

(1) Is wholly the growth, product, or manufacture of Bahrain; or

(2) In the case of an article that consists in whole or in part of materials from another country, has been substantially

transformed in Bahrain into a new and different article of commerce with a name, character, or use distinct from that of the

article or articles from which it was transformed. The term refers to a product offered for purchase under a supply contract,

but for purposes of calculating the value of the end product includes services (except transportation services) incidental to its

supply, provided that the value of those incidental services does not exceed the value of the product itself.

“Commercially available off-the-shelf (COTS) item”—

(1) Means any item of supply (including construction material) that is—

(i) A commercial product (as defined in paragraph (1) of the definition of “commercial product” in section 2.101 of

the Federal Acquisition Regulation (FAR));

(ii) Sold in substantial quantities in the commercial marketplace; and

(iii) Offered to the Government, under a contract or subcontract at any tier, without modification, in the same form

in which it is sold in the commercial marketplace; and

(2) Does not include bulk cargo, as defined in 46 U.S.C. 40102(4), such as agricultural products and petroleum

products.

“Component” means an article, material, or supply incorporated directly into an end product.

252.2-139

252.225-7036 DEFENSE FEDERAL ACQUISITION REGULATION

“Critical component” means a component that is mined, produced, or manufactured in the United States and deemed

critical to the U.S. supply chain. The list of critical components is at FAR 25.105.

“Critical item” means domestic construction material or a domestic end product that is deemed critical to the U.S. supply

chain. The list of critical items is at FAR 25.105.

“Domestic end product” means—

(1) For an end product that does not consist wholly or predominantly of iron or steel or a combination of both—

(i) An unmanufactured end product mined or produced in the United States; or